Exhibit 99.1
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7
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CWHEQ, INC.,
Depositor
COUNTRYWIDE HOME LOANS, INC.,
Seller
PARK MONACO INC.,
Seller
PARK SIENNA LLC,
Seller
COUNTRYWIDE HOME LOANS SERVICING LP,
Master Servicer
THE BANK OF NEW YORK,
Trustee
and
THE BANK OF NEW YORK (DELAWARE),
Co-Trustee
POOLING AND SERVICING AGREEMENT
Dated as of March 1, 2006
HOME EQUITY LOAN ASSET BACKED CERTIFICATES, SERIES 2006-S2
Table of Contents
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Page
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ARTICLE I. DEFINITIONS 6
Section 1.01 Defined Terms...................................................................................6
Section 1.02 Certain Interpretive Provisions................................................................43
ARTICLE II. CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES 43
Section 2.01 Conveyance of Mortgage Loans...................................................................43
Section 2.02 Acceptance by Trustee of the Mortgage Loans....................................................50
Section 2.03 Representations, Warranties and Covenants of the Master Servicer and the Sellers...............56
Section 2.04 Representations and Warranties of the Depositor................................................73
Section 2.05 Delivery of Opinion of Counsel in Connection with Substitutions and Repurchases................74
Section 2.06 Authentication and Delivery of Certificates....................................................75
Section 2.07 Covenants of the Master Servicer...............................................................75
Section 2.08 Sponsor Loss Coverage Obligation...............................................................76
ARTICLE III. ADMINISTRATION AND SERVICING OF MORTGAGE LOANS 76
Section 3.01 Master Servicer to Service Mortgage Loans......................................................76
Section 3.02 Subservicing; Enforcement of the Obligations of Master Servicer................................78
Section 3.03 Rights of the Depositor, the Sellers, the Certificateholders, the NIM Insurer, the
Certificate Insurer and the Trustee in Respect of the Master Servicer..........................79
Section 3.04 Trustee to Act as Master Servicer..............................................................79
Section 3.05 Collection of Mortgage Loan Payments; Certificate Account; Distribution Account;
Pre-Funding Account; Seller Shortfall Interest Requirement; Premium Account....................80
Section 3.06 Collection of Taxes, Assessments and Similar Items; Escrow Accounts............................84
Section 3.07 Access to Certain Documentation and Information Regarding the Mortgage Loans...................84
Section 3.08 Permitted Withdrawals from the Certificate Account, Distribution Account,
Carryover Reserve Fund and the Principal Reserve Fund..........................................85
Section 3.09 [Reserved].....................................................................................88
Section 3.10 Maintenance of Hazard Insurance................................................................88
Section 3.11 Enforcement of Due-On-Sale Clauses; Assumption Agreements......................................88
Section 3.12 Realization Upon Defaulted Mortgage Loans; Determination of Excess Proceeds and
Realized Losses; Repurchase of Certain Mortgage Loans..........................................90
Section 3.13 Trustee to Cooperate; Release of Mortgage Files................................................93
Section 3.14 Documents, Records and Funds in Possession of Master Servicer to be Held for the
Trustee........................................................................................94
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Section 3.15 Servicing Compensation.........................................................................95
Section 3.16 Access to Certain Documentation................................................................95
Section 3.17 Annual Statement as to Compliance..............................................................95
Section 3.18 The Corridor Contract..........................................................................96
Section 3.19 [Reserved].....................................................................................97
Section 3.20 Prepayment Charges.............................................................................97
ARTICLE IV. DISTRIBUTIONS AND ADVANCES BY THE MASTER SERVICER 98
Section 4.01 Advances; Remittance Reports...................................................................98
Section 4.02 Reduction of Servicing Compensation in Connection with Prepayment Interest
Shortfalls....................................................................................100
Section 4.03 [Reserved]....................................................................................100
Section 4.04 Distributions.................................................................................100
Section 4.05 Monthly Statements to Certificateholders......................................................104
Section 4.06 Certificate Insurance Policy; Rights of the Certificate Insurer...............................105
Section 4.07 Termination of the Credit Insurance Policy....................................................109
Section 4.08 Carryover Reserve Fund........................................................................110
ARTICLE V. THE CERTIFICATES 112
Section 5.01 The Certificates..............................................................................112
Section 5.02 Certificate Register; Registration of Transfer and Exchange of Certificates...................113
Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates.............................................117
Section 5.04 Persons Deemed Owners.........................................................................117
Section 5.05 Access to List of Certificateholders' Names and Addresses.....................................117
Section 5.06 Book-Entry Certificates.......................................................................118
Section 5.07 Notices to Depository.........................................................................119
Section 5.08 Definitive Certificates.......................................................................119
Section 5.09 Maintenance of Office or Agency...............................................................119
ARTICLE VI. THE DEPOSITOR, THE MASTER SERVICER AND THE SELLERS 120
Section 6.01 Respective Liabilities of the Depositor, the Master Servicer and the Sellers..................120
Section 6.02 Merger or Consolidation of the Depositor, the Master Servicer or the Sellers..................120
Section 6.03 Limitation on Liability of the Depositor, the Sellers, the Master Servicer, the
Certificate Insurer, the NIM Insurer and Others...............................................120
Section 6.04 Limitation on Resignation of Master Servicer..................................................121
Section 6.05 Errors and Omissions Insurance; Fidelity Bonds................................................122
ARTICLE VII. DEFAULT; TERMINATION OF MASTER SERVICER 122
Section 7.01 Events of Default.............................................................................122
Section 7.02 Trustee to Act; Appointment of Successor......................................................124
Section 7.03 Notification to Certificateholders............................................................126
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ARTICLE VIII. CONCERNING THE TRUSTEE AND THE CO-TRUSTEE 126
Section 8.01 Duties of Trustee.............................................................................126
Section 8.02 Certain Matters Affecting the Trustee.........................................................128
Section 8.03 Trustee Not Liable for Mortgage Loans.........................................................129
Section 8.04 Trustee May Own Certificates..................................................................129
Section 8.05 Master Servicer to Pay Trustee's Fees and Expenses............................................129
Section 8.06 Eligibility Requirements for Trustee..........................................................130
Section 8.07 Resignation and Removal of Trustee............................................................130
Section 8.08 Successor Trustee.............................................................................131
Section 8.09 Merger or Consolidation of Trustee............................................................132
Section 8.10 Appointment of Co-Trustee or Separate Trustee.................................................132
Section 8.11 Tax Matters...................................................................................134
Section 8.12 Co-Trustee....................................................................................136
Section 8.13 Access to Records of the Trustee..............................................................139
Section 8.14 Suits for Enforcement.........................................................................139
Section 8.15 Monitoring of Significance Percentage.........................................................139
ARTICLE IX. TERMINATION 140
Section 9.01 Termination upon Liquidation or Repurchase of all Mortgage Loans..............................140
Section 9.02 Final Distribution on the Certificates........................................................141
Section 9.03 Additional Termination Requirements...........................................................142
ARTICLE X. MISCELLANEOUS PROVISIONS 143
Section 10.01 Amendment.....................................................................................143
Section 10.02 Recordation of Agreement; Counterparts........................................................145
Section 10.03 Governing Law.................................................................................145
Section 10.04 Intention of Parties..........................................................................145
Section 10.05 Notices.......................................................................................147
Section 10.06 Severability of Provisions....................................................................148
Section 10.07 Assignment....................................................................................148
Section 10.08 Limitation on Rights of Certificateholders....................................................148
Section 10.09 Inspection and Audit Rights...................................................................149
Section 10.10 Certificates Nonassessable and Fully Paid.....................................................150
Section 10.11 Rights of NIM Insurer.........................................................................150
Section 10.12 Rights of Certificate Insurer.................................................................151
ARTICLE XI. EXCHANGE ACT REPORTING 152
Section 11.01 Filing Obligations............................................................................152
Section 11.02 Form 10-D Filings.............................................................................152
Section 11.03 Form 8-K Filings..............................................................................153
Section 11.04 Form 10-K Filings.............................................................................153
Section 11.05 Xxxxxxxx-Xxxxx Certification..................................................................154
Section 11.06 Form 15 Filing................................................................................155
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Section 11.07 Report on Assessment of Compliance and Attestation................................................155
Section 11.08 Use of Subservicers and Subcontractors............................................................156
Section 11.09 Amendments........................................................................................157
Section 11.10 Reconciliation of Accounts........................................................................157
Exhibits
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EXHIBIT A Forms of Certificates
EXHIBIT A-1 Form of Class A-1 Certificate
EXHIBIT A-2 Form of Class A-2 Certificate
EXHIBIT A-3 Form of Class A-3 Certificate
EXHIBIT A-4 Form of Class A-4 Certificate
EXHIBIT A-5 Form of Class A-5 Certificate
EXHIBIT A-6 Form of Class A-IO Certificate
EXHIBIT B Form of Class P Certificate
EXHIBIT C Form of Class C Certificate
EXHIBIT D Form of Class A-R Certificate
EXHIBIT E Form of Tax Matters Person Certificate
EXHIBIT F Mortgage Loan Schedule
EXHIBIT F-1 List of Mortgage Loans
EXHIBIT F-2 Mortgage Loans for which All or a Portion of a
Related Mortgage File is not Delivered to the
Trustee on or prior to the Closing Date
EXHIBIT G Forms of Certification of Trustee
EXHIBIT G-1 Form of Initial Certification of Trustee (Initial
Mortgage Loans)
EXHIBIT G-2 Form of Interim Certification of Trustee
EXHIBIT G-3 Form of Delay Delivery Certification
EXHIBIT G-4 Form of Initial Certification of Trustee (Subsequent
Mortgage Loans)
EXHIBIT H Form of Final Certification of Trustee
EXHIBIT I Transfer Affidavit for Class A-R Certificates
EXHIBIT J-1 Form of Transferor Certificate for Class A-R
Certificates
EXHIBIT J-2 Form of Transferor Certificate for Private Certificates
EXHIBIT K Form of Investment Letter (Non-Rule 144A)
EXHIBIT L Form of Rule 144A Letter
EXHIBIT M Form of Request for Document Release
EXHIBIT N Form of Request for File Release
EXHIBIT O Copy of Depository Agreement
EXHIBIT P Form of Subsequent Transfer Agreement
EXHIBIT Q Form of Class A-1 Corridor Contract
EXHIBIT R Form of Certificate Insurance Policy
EXHIBIT S-1 Form of Corridor Contract Assignment Agreement
EXHIBIT S-2 Form of Corridor Contract Administration Agreement
EXHIBIT T Officer's Certificate with respect to Prepayments
EXHIBIT U [Reserved]
EXHIBIT V-1 [Reserved]
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EXHIBIT V-2 [Reserved]
EXHIBIT V-3 [Reserved]
EXHIBIT W Form of Monthly Statement
EXHIBIT X-1 Form of Performance Certification (Subservicer)
EXHIBIT X-2 Form of Performance Certification (Trustee)
EXHIBIT Y Form of Servicing Criteria to be Addressed in Assessment
of Compliance
Statement
EXHIBIT Z List of Item 1119 Parties
EXHIBIT AA Form of Xxxxxxxx-Xxxxx Certification (Replacement Master
Servicer)
SCHEDULE I Prepayment Charge Schedule and Prepayment Charge Summary
SCHEDULE II Collateral Schedule
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POOLING AND SERVICING AGREEMENT, dated as of March 1, 2006, by and
among CWHEQ, INC., a Delaware corporation, as depositor (the "Depositor"),
COUNTRYWIDE HOME LOANS, INC., a New York corporation, as seller ("CHL" or a
"Seller"), PARK MONACO INC., a Delaware corporation, as a seller ("Park
Monaco" or a "Seller"), PARK SIENNA LLC, a Delaware limited liability company,
as a seller ("Park Sienna" or a "Seller", and together with CHL and Park
Monaco, the "Sellers"), COUNTRYWIDE HOME LOANS SERVICING LP, a Texas limited
partnership, as master servicer (the "Master Servicer"), THE BANK OF NEW YORK,
a New York banking corporation, as trustee (the "Trustee"), and THE BANK OF
NEW YORK (DELAWARE), a Delaware banking corporation, as co-trustee (the
"Co-Trustee").
PRELIMINARY STATEMENT
The Depositor is the owner of the Trust Fund that is hereby conveyed
to the Trustee in return for the Certificates. As provided herein, the Trustee
will elect that the Trust Fund (excluding the Carryover Reserve Fund, the
assets held in the Pre-Funding Account and the Trust Fund's rights with
respect to payments received under the Corridor Contract) be treated for
federal income tax purposes as three real estate mortgage investment conduits
(each a "REMIC" or, in the alternative, the "Lower Tier REMIC," the "Middle
Tier REMIC" and the "Master REMIC"). The Lower Tier REMIC will hold as assets
all property of the Trust, other than the Carryover Reserve Fund, the
Pre-Funding Account and the Trust Fund's rights with respect to payments
received under the Corridor Contract, and will be evidenced by (i) the Lower
Tier REMIC Regular Interests, which will be uncertificated and will represent
the "REMIC regular interests" in the Lower Tier REMIC, and (ii) the Class R-1
Interest, which will represent the "REMIC residual interest" in the Lower Tier
REMIC. The Middle Tier REMIC will hold as assets the Lower Tier REMIC Regular
Interests and will be evidenced by Middle Tier REMIC Regular Interests, which
will be uncertificated and will represent the REMIC regular interests in the
Middle Tier REMIC, and the Class R-2 Interest, which will represent the REMIC
residual interest in the Middle Tier REMIC. The Master REMIC will hold as
assets the Middle Tier REMIC Regular Interests and will be evidenced by the
Certificates, each of which (other than the Class A-R Certificate) will
represent ownership of one or more REMIC regular interests in the Master
REMIC. The Class A-R Certificate will represent ownership of the sole Class of
the REMIC residual interest in each REMIC created hereunder. The latest
possible maturity date, for federal income tax purposes, of all REMIC regular
interests created herein shall be the Latest Possible Maturity Date.
The Lower Tier REMIC
The Lower Tier REMIC Regular Interests will have the principal
balances and pass-through rates as set forth in the following table:
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Lower Tier REMIC Initial Principal Balance Pass-Through Rate
Interests
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LT-1................................. (1) (2)
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LT-2................................. (3) (4)
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LT-IO................................ N/A (5)
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R-1.................................. (6) (6)
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(1) The LT-1 Interest shall have a principal balance equal to the aggregate
principal balance of the Initial Mortgage Loans as of the Initial Cut-off
Date.
(2) During the first Accrual Period, the LT-1 Interest shall accrue an amount
of interest equal to the interest accruing on the Initial Mortgage Loans
from the Initial Cut-off Date through May 31, 2006. Thereafter, interest
shall accrue on the LT-1 Interest at a per annum rate equal to the
weighted average of the Adjusted Net Mortgage Rates of the Mortgage
Loans.
(3) The LT-2 Interest shall have a principal balance equal to the Pre-Funded
Amount.
(4) During the first Accrual Period, the LT-2 Interest shall not accrue any
interest. Thereafter, interest shall accrue on the LT-2 interest at a per
annum rate equal to the weighted average of the Adjusted Net Mortgage
Rates of the Mortgage Loans.
(5) The LT-IO shall be entitled to all interest accruing on the Subsequent
Mortgage Loans during the first Accrual Period, and nothing thereafter.
(6) The Class R-1 Interests shall not have any initial principal balance, and
shall not pay any interest or principal.
The Middle Tier REMIC
The Middle Tier REMIC Regular Interests will have the principal balances,
pass-through rates and Corresponding Classes of Certificates as set forth in
the following table:
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Middle Tier REMIC Initial Principal Pass-Through Corresponding
Regular Interests Balance Rate Class of Certificates
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MT-1-NAS-1...................... $74,186,889.50 (2) N/A
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MT-1-NAS-2...................... $6,686,990.50 (2) N/A
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MT-1-NAS-3...................... $796,718.50 (2) N/A
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MT-1-NAS-4...................... $5,486,120.00 (2) N/A
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MT-1-NAS-5...................... $2,695,799.00 (2) N/A
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MT-1-NAS-6...................... $72,752,629.00 (2) N/A
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MT-Support...................... (1) (2) N/A
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MT-A-1.......................... (3) (2) A-1
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MT-A-2.......................... (3) (2) A-2
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MT-A-3.......................... (3) (2) A-3
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MT-A-4.......................... (3) (2) A-4
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MT-A-5.......................... (3) (2) A-5
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MT-A-R.......................... (3) (2) A-R
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MT-Accrual...................... (4) (2) N/A
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MT-IO........................... N/A (5) N/A
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R-2............................. (6) (6) N/A
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(1) The Class MT-Support shall have an initial principal balance equal to 50%
of the aggregate principal balance of the Initial Mortgage Loans as of
the Initial Cut-off Date plus 50% of the Pre-Funded Amount less the sum
of the principal balances of MT-1-NAS-1 through MT-1-NAS-6 Interests
(collectively the "MT-1-NAS Classes").
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(2) Each MT Interest (other than the MT-IO Interest) shall have an interest
rate equal to the weighted average of LT-1 and LT-2 Interests for such
Distribution Date.
(3) The MT-A Interests (the "Accretion Directed Classes") shall have an
initial balance equal to 25% of its Corresponding Class of Certificates
and on each Distribution Date, interest, principal payments and Realized
Losses shall be allocated so as to cause each of the MT-A Interests to
continue to equal 25% of its Corresponding Class of Certificates.
(4) The MT-Accrual Interest (the "Group 1 Accrual Class") shall have a
principal balance equal to the sum of (a) 25% of the Initial Mortgage
Loans as of the Initial Cut-off Date (b) 25% of the Pre-Funded Amount,
and (c) 25% of initial overcollateralization. The initial
overcollateralization is the excess of the sum of the principal balances
of the Initial Mortgage Loans plus the Pre-Funded Amount over the
aggregate Certificate Principal Balance of the Class A Certificates. On
each Distribution Date, interest, principal and Realized Losses shall be
allocated so as to cause the MT-Accrual Interest to equal the excess of
50% of the principal balance of the Mortgage Loans as of the end of the
Accrual Period over the principal balance of the Accretion Directed
Classes (after taking into account distributions for such Distribution
Date).
(5) The MT-IO shall be entitled to receive the amounts due the LT-IO
Interest.
(6) The Class R-2 Interest shall not have any principal balance and shall not
pay any interest or principal.
On each Distribution Date, 50% of the reduction in the principal balances
as a result of the receipt of principal from the Mortgage Loans, proceeds from
the liquidation of any REO Properties, and net Realized Losses shall be paid
first to the MT-Support Interest until its principal balance is reduced to
zero, and then sequentially to the Class MT-1-NAS-1 through MT-1-NAS-5 until
such classes are reduced to zero. The other 50% of reductions in the principal
balances of the Mortgage Loans shall be allocated to the Accretion Directed
Classes and the Accrual Classes as described above in Note (4).
The Master REMIC
The following table specifies the class designation, pass through rate,
and principal amount for each class of Master REMIC Interest:
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Class Original Certificate Pass-Through
Principal Balance Rate
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A-1.................................. $525,000,000 (1)
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A-2.................................. $112,692,000 (2)
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A-3.................................. $258,112,000 (2)
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A-4.................................. $49,196,000 (2)
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A-5.................................. $105,000,000 (2)
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A-IO................................ (3) (4)
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C.................................... (5) (6)
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A-R.................................. $100 (7)
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P.................................... $100 (8)
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(1) The Pass-Through Rate for the Class A-1 Certificates will be equal to the
lesser of (a) One-Month LIBOR plus 0.110%, and (b) the Net Rate Cap. For
federal income tax purposes, the Pass-Through Rate on the
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Class A-1 Certificates is equal to the lesser of (a) LIBOR plus 0.110%
and (b) a rate equal to the weighted average interest rate of the
MT-1-NAS, Accretion Directed, Accrual and MT-Support Classes (the "MT
Interests").
(2) The Pass-Through Rates for the Class A-2, Class A-3, Class A-4 and Class
A-5 Certificates will be equal to the lesser of (a) 5.62700%, 5.84100%,
6.09100% and 5.75300% per annum, respectively and (b) the Net Rate Cap.
For federal income tax purposes, the Pass-Through Rates for the Class
A-2, Class A-3, Class A-4 and Class A-5 Certificates on the first
Distribution Date will equal the fixed rates provided in the immediately
preceding sentence.
(3) The Class A-IO Certificates are interest only notional amount
certificates that do not have any principal balance. For federal income
tax purposes, on each Distribution Date, the notional amount of the Class
A-IO Certificates will equal the sum of the principal balances of the MT
Interests.
(4) The Pass-Through Rate for the Class A-IO Certificates for an Accrual
Period will equal the lesser of (i) 4.00% and (ii) the product of (x) the
Net Rate Cap minus the weighted average Pass-Through Rate of the Class A
Certificates for that Accrual Period (weighted on the basis of the
Certificate Principal Balance of each Class of Class A Certificates and
adjusting the Pass-Through Rate of the Class A-1 Certificates to an
effective rate reflecting the accrual of interest based on a 360-day year
consisting of twelve 30-day months), and (y) a fraction, the numerator of
which is the aggregate Stated Principal Balance of the Mortgage Loans as
of the first day of the related Due Period (after giving effect to
Principal Prepayments received during the Prepayment Period that ends
during such Due Period) and the denominator of which is the Notional
Amount of the Class A-IO Certificates for that Distribution Date. For
federal income tax purposes, the Pass-Through Rate on the Class A-IO
Certificates shall equal the excess of the weighted average interest rate
of the Class MT Interests over the Class A-IO Rate.
(5) The Class C Certificates shall have a Certificate Principal Balance equal
to the Overcollateralized Amount and a notional balance equal to the sum
of the principal balances of the MT Interests. The Class C Certificates
will not accrue interest on their Certificate Principal Balance.
(6) For each Interest Accrual Period the Class C Certificates are entitled to
an amount (the "Class C Distributable Amount") equal to the sum of (a)
the interest payable on the MT-IO Interest, (b) a specified portion of
the interest on the MT Interests equal to the excess of the Class A-IO
Rate over the product of two and the weighted average of the rates on the
Accretion Directed Classes (capped at the rate on its Corresponding Class
of Certificates) and MT-Accrual Interest (subject to a cap of 0.00%). The
Pass-Through Rate of the Class C Certificates shall be a rate sufficient
to entitle it to all interest accrued on the Mortgage Loans less the
interest accrued on the other interests issued by the Master REMIC. The
Class C Distributable Amount for any Distribution Date is payable from
current interest on the Mortgage Loans to the extent not used to increase
the Overcollateralized Amount and any Overcollateralization Reduction
Amount for that Distribution Date.
(7) The Class A-R Certificates represent the sole class of residual interest
in each REMIC created hereunder. The Class A-R Certificates are not
entitled to distributions of interest.
4
(8) For any Distribution Date, the Class P Certificates are entitled to all
Prepayment Charges collected during the related Prepayment Period and all
amounts deposited for such Distribution Date in connection with the full
or partial waiver of such Prepayment Charges pursuant to Section 3.20. On
the Class P Principal Distribution Date, the Class P Certificates are
entitled to receive $100.00 from the Principal Reserve Fund.
The foregoing REMIC structure is intended to cause all of the cash from
the Mortgage Loans to flow through to the Master REMIC as cash flow on a REMIC
regular interest, without creating any shortfall--actual or potential (other
than for credit losses) to any REMIC regular interest.
For any purpose for which the interest rate in respect of any Lower
Tier REMIC regular interest created hereunder is calculated, the interest rate
on the Mortgage Loans shall be appropriately adjusted to account for the
difference between the monthly day count convention of the Mortgage Loans and
the monthly day count convention of the regular interests issued by each of
the REMICs. For purposes of calculating the interest rates for each of the
interests issued by REMIC, such rates shall be adjusted to equal a monthly day
count convention based on a 30 day month for each Interest Period and a
360-day year so that the Mortgage Loans and all regular interests will be
using the same monthly day count convention.
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ARTICLE I.
DEFINITIONS
Section 1.01 Defined Terms.
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
Account: Any Escrow Account, the Certificate Account, the
Distribution Account or any other account related to the Trust Fund or the
Mortgage Loans.
Accrual Period: With respect to any Distribution Date and each Class
of Adjustable Rate Certificates, the period commencing on the immediately
preceding Distribution Date (or, in the case of the first Distribution Date,
the Closing Date) and ending on the day immediately preceding such
Distribution Date. With respect to any Distribution Date and each Class of
Fixed Rate Certificates, the Class A-IO Certificates and the Class C
Certificates, the calendar month preceding the month in which such
Distribution Date occurs. All calculations of interest on the Adjustable Rate
Certificates will be made on the basis of the actual number of days elapsed in
the related Accrual Period and on a 360-day year. All calculations of interest
on each Class of Fixed Rate Certificates, the Class A-IO Certificates and the
Class C Certificates will be made on the basis of a 360-day year consisting of
twelve 30-day months.
Adjustable Rate Certificates: The Class A-1 Certificates.
Adjusted Net Mortgage Rate: As to each Mortgage Loan, the Mortgage
Rate less the related Expense Fee Rate.
Advance: The aggregate of the advances required to be made by the
Master Servicer with respect to any Distribution Date pursuant to Section
4.01, the amount of any such advances being equal to the aggregate of payments
of principal of, and interest on the Stated Principal Balance of, the Mortgage
Loans (net of the Servicing Fees) that were due on the related Due Date and
not received by the Master Servicer as of the close of business on the related
Determination Date including an amount equivalent to interest on the Stated
Principal Balance of each Mortgage Loan as to which the related Mortgaged
Property is an REO Property or as to which the related Mortgaged Property has
been liquidated but such Mortgage Loan has not yet become a Liquidated
Mortgage Loan; provided, however, that the net monthly rental income (if any)
from such REO Property deposited in the Certificate Account for such
Distribution Date pursuant to Section 3.12 may be used to offset such Advance
for the related REO Property; provided, further, that for the avoidance of
doubt, no Advances shall be required to be made in respect of any Liquidated
Mortgage Loan.
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 Certificate 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 Date, (ii) Principal Prepayments
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received in respect of such Mortgage Loans after the last day of the related
Prepayment Period and (iii) Liquidation Proceeds and Subsequent Recoveries
received in respect of such Mortgage Loans after the last day of the related
Due Period.
Applied Realized Loss Amount: With respect to any Distribution Date,
the amount, if any, by which, the aggregate Certificate Principal Balance of
the Certificates (after all distributions of principal on such Distribution
Date) exceeds the sum of (x) the Stated Principal Balance of the Mortgage
Loans for such Distribution Date and (y) the amount on deposit in the
Pre-Funding Account.
Appraised Value: The appraised value of the Mortgaged Property based
upon the appraisal made for the originator of the related Mortgage Loan by an
independent fee appraiser at the time of the origination of the related
Mortgage Loan, or the sales price of the Mortgaged Property at the time of
such origination, whichever is less, or 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.
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 5.06). As of the Closing
Date, each Class of Interest-Bearing 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 the Certificate Insurer or banking institutions in the State of
New York or California or the city in which the Corporate Trust Office of the
Trustee is located are authorized or obligated by law or executive order to be
closed.
Carryover Reserve Fund: The separate Eligible Account created and
initially maintained by the Trustee pursuant to Section 4.07 in the name of
the Trustee for the benefit of the Certificateholders and designated "The Bank
of New York in trust for registered Holders of CWHEQ, Inc., Home Equity Loan
Asset Backed Certificates, Series 2006-S2". Funds in the Carryover Reserve
Fund shall be held in trust for the Certificateholders for the uses and
purposes set forth in this Agreement.
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, Exhibit B, Exhibit C and Exhibit D.
Certificate Account: The separate Eligible Account created and
initially maintained by the Master Servicer pursuant to Section 3.05(b) with a
depository institution in the name of the Master Servicer for the benefit of
the Trustee on behalf of the Certificateholders and the Certificate Insurer
and designated "Countrywide Home Loans Servicing LP in trust for registered
Holders of CWHEQ, Inc., Home Equity Loan Asset Backed Certificates, Series
2006-
7
S2". Funds in the Certificate Account shall be held in trust for the
Certificateholders for the uses and purposes set forth in this Agreement.
Certificate Insurance Policy: The irrevocable Certificate Insurance
Policy, No. 06030039, including any endorsements thereto, issued by FGIC with
respect to the Class A Certificates, in the form attached hereto as Exhibit R.
Certificate Insurance Policy Payments Account: The separate Eligible
Account created and maintained by the Trustee pursuant to Section 4.06(c) in
the name of the Trustee for the benefit of the Class A Certificateholders and
designated "The Bank of New York in trust for registered holders of CWHEQ,
Inc., Home Equity Loan Asset Backed Certificates, Series 2006-S2, Class A
Certificates". Funds in the Certificate Insurance Policy Payments Account
shall be held in trust for the Class A Certificateholders for the uses and
purposes set forth in this Agreement.
Certificate Insurance Policy Premium Rate: 0.11% per annum.
Certificate Insurance Premium: For any Distribution Date, an amount
equal to the product of (x) the Certificate Insurance Policy Premium Rate and
(y) the aggregate Certificate Principal Balance of the Class A Certificates
immediately prior to such Distribution Date. In addition, to the extent the
Credit Insurance Policy is terminated and pursuant to the provisions of this
Agreement a replacement credit insurance policy issued by a credit insurer
that fulfills the requirements set forth in Section 4.07 and is acceptable to
the Certificate Insurer has not been obtained by the Depositor, then the
Certificate Insurer shall be entitled to an additional premium payable on each
Distribution Date in an amount equal to 27.777778% of the amount that would
have been paid as premium on the Credit Insurance Policy on such Distribution
Date had the Credit Insurance Policy not been terminated. The Certificate
Insurance Premium shall be computed on the basis of a 360-day year consisting
of twelve 30-day months.
Certificate Insurance Reimbursement Amount: As to any Distribution
Date, (i) all Insured Amounts paid by the Certificate Insurer for which the
Certificate Insurer has not been reimbursed prior to such Distribution Date
pursuant to Section 4.04 hereof, plus (ii) interest accrued on such Insured
Amounts paid by the Certificate Insurer and not previously repaid, calculated
at the Late Payment Rate from the date the payments of the Insured Amounts
were made, plus (iii) any other amounts then due and owing to the Certificate
Insurer pursuant to the Insurance and Indemnity Agreement plus interest
accrued on such amount not previously reimbursed calculated at the Late
Payment Rate.
Certificate Insurer: FGIC in its capacity as insurer under the
Certificate Insurance Policy, and any permitted successor or assign.
Certificate Insurer Contact Person: The officer designated by the
Master Servicer to provide information to the Certificate Insurer pursuant to
Section 4.06(i).
Certificate Insurer Default: As defined in Section 4.06(l).
Certificate Owner: With respect to a Book-Entry Certificate, the
person that is the beneficial owner of such Book-Entry Certificate.
8
Certificate Principal Balance: As to any Certificate (other than the
Class C Certificates) and as of any Distribution Date, the Initial Certificate
Principal Balance of such Certificate (A) 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
4.04(b), (ii) with respect to the Class A Certificates only, payments under
the Certificate Insurance Policy relating to principal (except that any
payment under the Certificate Insurance Policy with respect to an Applied
Realized Loss Amount allocated to the Class A Certificates shall not result in
a further reduction of the Certificate Principal Balance of the Class A
Certificates) and (iii) any Applied Realized Loss Amounts allocated to such
Certificate on previous Distribution Dates pursuant to Section 4.04(g), and
(B) increased by any Subsequent Recoveries allocated to such Certificate
pursuant to Section 4.04(h) on such Distribution Date. References herein to
the Certificate Principal Balance of a Class of Certificates shall mean the
Certificate Principal Balances of all Certificates in such Class. The Class C
Certificates do not have a Certificate Principal Balance. With respect to any
Certificate (other than the Class C Certificates) of a Class and any
Distribution Date, the portion of the Certificate Principal Balance of such
Class represented by such Certificate equal to the product of the Percentage
Interest evidenced by such Certificate and the Certificate Principal Balance
of such Class. Exclusively for the purpose of determining any subrogation
rights of the Certificate Insurer arising under Section 4.06 hereof, the
"Certificate Principal Balance" of the Class A Certificates shall not be
reduced by the amount of any payments made by the Certificate Insurer in
respect of principal on such Certificates under the Certificate Insurance
Policy, except to the extent such payment shall have been reimbursed to the
Certificate Insurer pursuant to the provisions of this Agreement.
Certificate Register: The register maintained pursuant to Section
5.02 hereof.
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 Class of Book-Entry Certificates),
except that solely for the purpose of giving any consent pursuant to this
Agreement, any Certificate registered in the name of the Depositor or any
affiliate of the Depositor shall be deemed not to be Outstanding and the
Voting Interest evidenced thereby shall not be taken into account in
determining whether the requisite amount of Voting Interests necessary to
effect such consent has been obtained; provided that if any such Person
(including the Depositor) owns 100% of the Voting Interests evidenced by a
Class of Certificates, such Certificates shall be deemed to be Outstanding for
purposes of any provision hereof (other than the second sentence of Section
10.01 hereof) that requires the consent of the Holders of Certificates of a
particular Class as a condition to the taking of any action hereunder. The
Trustee is entitled to rely conclusively on a certification of the Depositor
or any affiliate of the Depositor in determining which Certificates are
registered in the name of an affiliate of the Depositor.
Certification Party: As defined in Section 11.05.
Certifying Person: As defined in Section 11.05.
CHL: Countrywide Home Loans, Inc., a New York corporation, and its
successors and assigns.
9
CHL Mortgage Loans: The Mortgage Loans identified as such on the
Mortgage Loan Schedule for which CHL is the applicable Seller.
Class: All Certificates bearing the same Class designation as set
forth in Section 5.01 hereof.
Class A Certificates: Collectively, the Class A-1, Class A-2, Class
A-3, Class A-4 and Class A-5 Certificates.
Class A Available Funds: With respect to any Class of Class A
Certificates and any Distribution Date, funds allocated from amounts available
pursuant to this Agreement to make distributions on that Class of Class A
Certificates on such Distribution Date, other than any Insured Amounts.
Class A Principal Distribution Amount: With respect to any
Distribution Date, the excess of (x) the aggregate Certificate Principal
Balance of the Class A Certificates immediately prior to that Distribution
Date, over (y) the aggregate Stated Principal Balance of the Mortgage Loans
for that Distribution Date minus the Overcollateralization Target Amount for
such Distribution Date.
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 distributions as set forth herein.
Class A-2 Certificate: Any Certificate designated as a "Class A-2
Certificate" on the face thereof, in the form of Exhibit A-2 hereto,
representing the right to distributions as set forth herein.
Class A-3 Certificate: Any Certificate designated as a "Class A-3
Certificate" on the face thereof, in the form of Exhibit A-3 hereto,
representing the right to distributions as set forth herein.
Class A-4 Certificate: Any Certificate designated as a "Class A-4
Certificate" on the face thereof, in the form of Exhibit A-4 hereto,
representing the right to distributions as set forth herein.
Class A-5 Certificate: Any Certificate designated as a "Class A-5
Certificate" on the face thereof, in the form of Exhibit A-5 hereto,
representing the right to distributions as set forth herein.
Class A-5 Portion: With respect to any Distribution Date, a
percentage, expressed as a fraction, the numerator of which is the Certificate
Principal Balance of the Class A-5 Certificates immediately prior to such
Distribution Date and the denominator of which is the aggregate Certificate
Principal Balance of all Classes of the Class A Certificates immediately prior
to such Distribution Date.
10
Class A-IO Certificate: Any Certificate designated as a "Class A-IO
Certificate" on the face thereof, in the form of Exhibit A-6 hereto,
representing the right to distributions as set forth herein.
Class A-IO Rate: For federal income tax purposes, a rate equal to the
greater of: (i) the pass through rate in respect of the Accretion Directed
Classes subjecting each such Class to a cap and a floor equal to the
Pass-Through Rate in respect of its Corresponding Class of Certificates and
(ii) the Class MT Weighted Average Rate.
Class A-R Certificate: Any Certificate designated as a "Class A-R
Certificate" on the face thereof, in the form of Exhibit D hereto or, in the
case of the Tax Matters Person Certificate, Exhibit E hereto, in either case
representing the right to distributions as set forth herein.
Class C Certificate: Any Certificate designated as a "Class C
Certificate" on the face thereof, in the form of Exhibit C hereto,
representing the right to distributions as set forth herein.
Class C Distributable Amount: As defined in the Preliminary
Statement.
Class MT Weighted Average Rate: For federal income tax purposes, the
weighted average of the pass through rates of the MT-1-NAS Interests and the
MT-Support Interest subject to the following adjustments: (i) for the first
Distribution Date the MT-1-NAS-1 Interest rate shall be reduced by 4% per
annum, (ii) for the first and second Distribution Dates the rate on the
MT-1-NAS-2 shall be reduced by 4% per annum, (iii) for the first through the
third Distribution Dates the rate on the MT-1-NAS-3 shall be reduced by 4% per
annum, (iv) for the first through the fourth Distribution Dates the rate on
the MT-1-NAS-4 shall be reduced by 4% per annum, (v) for the first through the
fifth Distribution Dates the rate on the MT-1-NAS-5 shall be reduced by 4% per
annum, and (vi) for the first through the sixth Distribution Dates the rate on
the MT-1-NAS-6 shall be reduced by 4% per annum.
Class P Certificate: Any Certificate designated as a "Class P
Certificate" on the face thereof, in the form of Exhibit B hereto,
representing the right to distributions as set forth herein.
Class P Principal Distribution Date: The first Distribution Date that
occurs after the end of the latest Prepayment Charge Period for all Mortgage
Loans that have a Prepayment Charge Period.
Closing Date: March 30, 2006.
Co-Trustee: The Bank of New York (Delaware), a Delaware banking
corporation, not in its individual capacity, but solely in its capacity as
co-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.
Code: The Internal Revenue Code of 1986, including any successor or
amendatory provisions.
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Collateral Schedule: Schedule II hereto.
Combined Loan-to-Value Ratio: The fraction, expressed as a
percentage, the numerator of which is the sum of (x) original principal
balance of the related Mortgage Loan and (y) the outstanding principal balance
of any senior mortgage loans at the date of origination of the related
Mortgage Loan and the denominator of which is the Appraised Value of the
related Mortgaged Property.
Commission: The U.S. Securities and Exchange Commission.
Compensating Interest: With respect to the Mortgage Loans and any
Distribution Date, an amount equal to the lesser of (x) one-half of the
Servicing Fee for the related Due Period and (y) the aggregate Prepayment
Interest Shortfalls for such Distribution Date.
Confirmation: The confirmation, reference number XXXXX0000, with a
trade date of March 27, 2006 evidencing a transaction between the Corridor
Contract Counterparty and CHL relating to the Corridor Contract.
Corporate Trust Office: The designated office of the Trustee in the
State of New York 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 is located at 000 Xxxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000 (Attention: Corporate Trust MBS Administration), telephone:
(000) 000-0000, facsimile: (000) 000-0000.
Corridor Contract: With respect to the Class A-1 Certificates, the
transaction evidenced by the Confirmation (as assigned to the Corridor
Contract Administrator pursuant to the Corridor Contract Assignment
Agreement), a form of which is attached hereto as Exhibit Q.
Corridor Contract Administration Agreement: The corridor contract
administration agreement dated as of the Closing Date among CHL, the Trustee
and the Corridor Contract Administrator, a form of which is attached hereto as
Exhibit S-2.
Corridor Contract Administrator: The Bank of New York, in its
capacity as corridor contract administrator under the Corridor Contract
Administration Agreement.
Corridor Contract Assignment Agreement: The Assignment Agreement
dated as of the Closing Date among CHL, the Corridor Contract Administrator
and the Corridor Contract Counterparty, a form of which is attached hereto as
Exhibit S-1.
Corridor Contract Counterparty: Bear Xxxxxxx Financial Products Inc.
and its successors.
Corridor Contract Termination Date: The Distribution Date in January
2008.
Covered Certificates: The Class A-1 Certificates.
Covered Mortgage Loan: A Mortgage Loan listed on the Mortgage Loan
Schedule as being covered by the Credit Insurance Policy.
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Credit Bureau Risk Score: A statistical credit score obtained by CHL
in connection with the origination of a Mortgage Loan.
Credit Insurance Policy: The Credit Insurance Policy issued by the
Credit Insurer with respect to certain Mortgage Loans identified in the
Mortgage Loan Schedule.
Credit Insurance Premium: For any Distribution Date, the fee payable
to the Credit Insurer equal to the product of (x) the Credit Insurance Premium
Rate and (y) the aggregate Stated Principal Balance of the Covered Loans for
the Distribution Date, computed on the basis of a 360-day year consisting of
twelve 30-day months.
Credit Insurance Premium Rate: With respect to a Covered Mortgage
Loan and any Distribution Date, 0.900% per annum.
Credit Insurer: Old Republic Insurance Company, or any replacement
Credit Insurer, as applicable.
Current Interest: With respect to each Class of Interest-Bearing
Certificates and each Distribution Date, the interest accrued at the
applicable Pass-Through Rate for the applicable Accrual Period on the
Certificate Principal Balance or Notional Amount of such Class immediately
prior to such Distribution Date.
Cut-off Date: When used with respect to any Mortgage Loan the
"Cut-off Date" shall mean the Initial Cut-off Date or the related Subsequent
Cut-off Date, as the case may be.
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 payments of principal due on or prior to the Cut-off
Date, whether or not received, and all Principal Prepayments received on or
prior to the Cut-off Date, 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.
Deficiency Amount: With respect to the Class A Certificates, an
amount, if any equal to the sum of:
(a) with respect to any Distribution Date, the excess, if any, of (i)
the aggregate amount of Current Interest on the Class A Certificates net of
any interest shortfalls resulting from Prepayment Interest Shortfalls and any
interest shortfalls resulting from the application of the Relief Act, or
similar state or local laws, over (ii) the Interest Funds available after
making the distributions required pursuant to Section 4.04(a)(i) and (ii) on
such Distribution Date; and
(b) (i) with respect to any Distribution Date other than the Final
Insured Distribution Date for the Class A Certificates, the excess, if any, of
(a) the aggregate Certificate
13
Principal Balance of the Class A Certificates over (b) the sum of the Stated
Principal Balance of the Mortgage Loans for such Distribution Date and the
amount on deposit in the Pre-Funding Account, in the case of (a) and (b) after
taking into account all distributions to be made on such Distribution Date;
and (ii) with respect to the Final Insured Distribution Date, the aggregate
Certificate Principal Balance of the Class A Certificates on such Distribution
Date after taking into account any reduction of the Certificate Principal
Balance of the Class A Certificates from all sources other than the
Certificate Insurance Policy.
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 5.06.
Delay Delivery Mortgage Loans: (i) The Initial Mortgage Loans
identified on the schedule of Mortgage Loans hereto set forth on Exhibit F-2
hereof for which all or a portion of a related Mortgage File is not delivered
to the Trustee on or prior to the Closing Date, and (ii) the Subsequent
Mortgage Loans identified on the schedule of Subsequent Mortgage Loans set
forth in Annex A to each related Subsequent Transfer Agreement for which all
or a portion of the related Mortgage File is not delivered to the Trustee on
or prior to the related Subsequent Transfer Date. The Depositor shall deliver
(or cause delivery of) the Mortgage Files to the Trustee: (A) with respect to
at least 50% of the Initial Mortgage Loans, not later than the Closing Date
and with respect to at least 10% of the Subsequent Mortgage Loans conveyed on
a Subsequent Transfer Date, not later than such Subsequent Transfer Date, (B)
with respect to at least an additional 40% of the Initial Mortgage Loans, not
later than 20 days after the Closing Date, and not later than 20 days after
the relevant Subsequent Transfer Date with respect to the remaining Subsequent
Mortgage Loans conveyed on such Subsequent Transfer Date, and (C) with respect
to the remaining Initial Mortgage Loans, not later than thirty days after the
Closing Date. To the extent that Countrywide Home Loans, Inc. shall be in
possession of any Mortgage Files with respect to any Delay Delivery Mortgage
Loan, until delivery of such Mortgage File to the Trustee as provided in
Section 2.01, Countrywide Home Loans, Inc. shall hold such files as agent and
in trust for the Trustee.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by
a Replacement Mortgage Loan.
Delinquency Trigger Event: Exists with respect to any Distribution
Date if the Rolling Sixty-Day Delinquency Rate for the outstanding Mortgage
Loans equals or exceeds 4.50%.
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
14
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 Balance of this Certificate"
or, if not the foregoing, the Percentage Interest appearing on the face
thereof, as applicable.
Depositor: CWHEQ, Inc., a Delaware corporation, or its successor in
interest.
Depository: The initial Depository shall be The Depository Trust
Company, the nominee of which is Cede & Co., 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 Book-Entry Certificates,
the agreement among the Depositor and the initial Depository, dated as of the
Closing Date, substantially in the form of Exhibit O.
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 22nd
day of the month of such Distribution Date or, if such 22nd 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 3.05(c) in the name of the
Trustee for the benefit of the Certificateholders and the Certificate Insurer
and designated "The Bank of New York, in trust for registered Holders of
CWHEQ, Inc., Home Equity Loan Asset Backed Certificates, Series 2006-S2".
Funds in the Distribution Account shall be held in trust for the
Certificateholders for the uses and purposes set forth in this Agreement.
Distribution Account Deposit Date: As to any Distribution Date, 1:00
p.m. Pacific time on the Business Day immediately preceding such Distribution
Date.
Distribution Date: The 25th day of each month, or if such day is not
a Business Day, on the first Business Day thereafter, commencing in April
2006.
Due Date: With respect to any Mortgage Loan and Due Period, the due
date for Scheduled Payments of interest and/or principal on that Mortgage Loan
occurring in such Due Period as provided in the related Mortgage Note.
15
Due for Payment: With respect to an Insured Amount, the Distribution
Date on which Insured Amounts are due and payable pursuant to the terms of
this Agreement.
Due Period: With respect to any Distribution Date, the period
beginning on the second day of the calendar month preceding the calendar month
in which such Distribution Date occurs and ending on the first day of the
month in which such Distribution Date occurs.
XXXXX: The Commission's Electronic Data Gathering, Analysis, and
Retrieval system.
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 (or, in the case of a depository institution or trust company that is
the principal subsidiary of a holding company, the debt obligations of such
holding company, if Xxxxx'x is not a Rating Agency) 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 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
without reduction or withdrawal of their then-current ratings of the
Certificates (without regard to the Certificate Insurance Policy, in the case
of the Class A Certificates) as evidenced by a letter from each Rating Agency
to the Trustee. Eligible Accounts may bear interest, and may include, if
otherwise qualified under this definition, accounts maintained with the
Trustee.
Eligible Repurchase Month: As defined in Section 3.12(d) hereof.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
ERISA-Qualifying Underwriting: A best efforts or firm commitment
underwriting or private placement that meets the applicable requirements of
the Underwriter's Exemption.
ERISA-Restricted Certificates: The Class A-R Certificates, Class P
Certificates, Class C Certificates and Certificates of any Class that ceases
to satisfy the applicable rating requirement under the Underwriter's
Exemption.
Escrow Account: As defined in Section 3.06 hereof.
Event of Default: As defined in Section 7.01 hereof.
16
Excess Cashflow: With respect to any Distribution Date the sum of (i)
the amount remaining after the distribution of interest to Certificateholders
for such Distribution Date, pursuant to Section 4.04(a)(vi), (ii) the amount
remaining after the distribution of principal to Certificateholders for such
Distribution Date, pursuant to Section 4.04(b)(iv) and (iii) the
Overcollateralization Reduction Amount for such Distribution Date.
Excess Overcollateralization Amount: With respect to any Distribution
Date, the excess, if any, of the Overcollateralized Amount for such
Distribution Date over the Overcollateralization Target Amount for such
Distribution Date.
Excess Proceeds: With respect to any Liquidated Mortgage Loan, the
amount, if any, by which the sum of any Liquidation Proceeds and Subsequent
Recoveries are in excess of the sum of (i) the unpaid principal balance of
such Liquidated Mortgage Loan as of the date of liquidation of such Liquidated
Mortgage Loan plus (ii) interest at the Mortgage Rate from the Due Date as to
which interest was last paid or advanced to Certificateholders (and not
reimbursed to the Master Servicer) up to the Due Date in the month in which
Liquidation Proceeds are required to be distributed on the Stated Principal
Balance of such Liquidated Mortgage Loan outstanding during each Due Period as
to which such interest was not paid or advanced.
Exchange Act: The Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
Exchange Act Reports: Any reports on Form 10-D, Form 8-K and Form
10-K required to be filed by the Depositor with respect to the Trust Fund
under the Exchange Act.
Expense Fee Rate: With respect to any Mortgage Loan, the sum of (i)
the Servicing Fee Rate, (ii) the Trustee Fee Rate and (iii) with respect to
any Covered Mortgage Loan, the related Credit Insurance Premium Rate.
Extra Principal Distribution Amount: With respect to any Distribution
Date, the lesser of (1) the Overcollateralization Deficiency Amount for such
Distribution Date and (2) the Excess Cashflow available for payment thereof
for such Distribution Date.
Xxxxxx Xxx: The Federal National Mortgage Association, a federally
chartered and privately owned corporation organized and existing under the
Federal National Mortgage Association Charter Act, or any successor thereto.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
FGIC: Financial Guaranty Insurance Company, a New York stock
insurance corporation, or any successor thereto.
Final Insured Distribution Date: With respect to the Class A
Certificates and the Certificate Insurance Policy, the earlier of (i) the
Distribution Date in May 2036 and (ii) the final Distribution Date that occurs
in connection with an Optional Termination.
17
Fixed Rate Certificates: The Class A-2, Class A-3, Class A-4 and
Class A-5 Certificates.
Form 10-D Disclosure Item: With respect to any Person, any material
litigation or governmental proceedings pending against such Person, or against
any of the Trust Fund, the Depositor, the Trustee, any co-trustee, the Master
Servicer or any Subservicer, if such Person has actual knowledge thereof.
Form 10-K Disclosure Item: With respect to any Person, (a) Form 10-D
Disclosure Item, and (b) any affiliations or relationships between such Person
and any Item 1119 Party.
Xxxxxxx Mac: The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of
the Emergency Home Finance Act of 1970, as amended, or any successor thereto.
Funding Period: The period from the Closing Date to and including the
earlier to occur of (x) the date the amount in the Pre-Funding Account is less
than $40,000 and (y) May 12, 2006.
Initial Certificate Account Deposit: An amount equal to the aggregate
of all amounts in respect of (i) principal of the Initial Mortgage Loans due
after the Initial Cut-off Date and received by the Master Servicer before the
Closing Date and not applied in computing the Cut-off Date Principal Balance
thereof and (ii) interest on the Initial Mortgage Loans due after the Initial
Cut-off Date and received by the Master Servicer before the Closing Date.
Initial Certificate Principal Balance: With respect to any
Certificate (other than the Class C Certificates) the Certificate Principal
Balance of such Certificate or any predecessor Certificate on the Closing
Date.
Initial Cut-off Date: In the case of any Initial Mortgage Loan, the
later of (x) March 1, 2006 and (y) the date of origination of such Mortgage
Loan.
Initial Mortgage Loan: A Mortgage Loan conveyed to the Trustee on the
Closing Date pursuant to this Agreement as identified on the Mortgage Loan
Schedule delivered to the Trustee on the Closing Date.
Insolvency Proceeding: As defined in Section 4.06(h).
Insurance and Indemnity Agreement: The Insurance and Indemnity
Agreement, dated as of the Closing Date, by and among the Certificate Insurer,
as insurer, the Depositor, as depositor, Countrywide, as sponsor and a seller,
the Master Servicer, as master servicer, and the Trustee, as trustee.
Insurance Policy: With respect to any Mortgage Loan included in the
Trust Fund, any insurance policy, including the Credit 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
Policy.
18
Insurance Proceeds: Proceeds paid in respect of the Mortgage Loans
(other than by the Certificate Insurer under the Certificate Insurance Policy)
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 Master 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 procedures that the Master
Servicer would follow in servicing mortgage loans held for its own account, in
each case other than any amount included in such Insurance Proceeds in respect
of Insured Expenses and received either prior to or in connection with such
Mortgage Loan becoming a Liquidated Mortgage Loan.
Insured Amounts: With respect to any Class of Class A Certificates
and any Distribution Date, the (i) Deficiency Amount for such Class and
Distribution Date and (ii) any Preference Amount.
Insured Expenses: Expenses covered by an Insurance Policy or any
other insurance policy with respect to the Mortgage Loans.
Interest-Bearing Certificates: The Class A and Class A-IO
Certificates.
Interest Carry Forward Amount: With respect to each Class of
Interest-Bearing Certificates and each Distribution Date, the excess of (i)
the Current Interest for such Class with respect to prior Distribution Dates
over (ii) the amount actually distributed to such Class with respect to
interest on such prior Distribution Dates.
Interest Determination Date: With respect to the Adjustable Rate
Certificates, the second LIBOR Business Day preceding the commencement of each
Accrual Period.
Interest Funds: With respect to any Distribution Date, an amount
equal to (x) the Interest Remittance Amount for such Distribution Date, plus,
solely for the purpose of calculating the Deficiency Amount, the amounts on
deposit in the Premium Account after taking into account any deposit to the
Premium Account on such Distribution Date pursuant to Section 3.08(b)(vi),
less (y) the sum of (i) the Trustee Fee for such Distribution Date and (ii)
the Credit Insurance Premium for such Distribution Date.
Interest Remittance Amount: With respect to any Distribution Date,
(x) the sum, without duplication, of (i) all scheduled interest collected
during the related Due Period with respect to the Mortgage Loans less the
Servicing Fee, (ii) all interest on prepayments received during the related
Prepayment Period with respect to the Mortgage Loans, other than Prepayment
Interest Excess, (iii) all Advances relating to interest with respect to the
Mortgage Loans, (iv) all Compensating Interest with respect to the Mortgage
Loans, (v) Liquidation Proceeds with respect to the Mortgage Loans collected
during the related Due Period (to the extent such Liquidation Proceeds relate
to interest), (vi) any payments received under the Credit Insurance Policy
attributable to interest for the related Due Period, (vii) any Loss Coverage
Payment attributable to interest for the related Due Period, and (viii) the
Seller Shortfall Interest Requirement, less (y) all reimbursements to the
Master Servicer during the related Due Period for Advances of interest
previously made.
Investment Letter: As defined in Section 5.02(b).
19
Item 1119 Party: The Depositor, any Seller, the Master Servicer, the
Trustee, any Subservicer, any originator identified in the Prospectus
Supplement, the Credit Insurer and the Corridor Contract Counterparty, and any
other material transaction party, as identified in Exhibit Z hereto, as
updated pursuant to Section 11.04.
Late Payment Rate: With respect to any Distribution Date, the lesser
of (i) the greater of (a) the per annum rate of interest publicly announced
from time to time by Citibank, N.A. as its prime or base lending rate (any
change in such rate of interest to be effective on the date such change is
announced by Citibank, N.A.) and (b) the then applicable highest rate of
interest on the Class A Certificates and (ii) the maximum rate permissible
under applicable usury or similar laws limiting interest rates as determined
by the Certificate Insurer. The Late Payment Rate shall be computed on the
basis of the actual number of days elapsed over a year of 360 days.
Latest Possible Maturity Date: The Distribution Date following the
third anniversary of the scheduled maturity date of the Mortgage Loan having
the latest scheduled maturity date as of the Cut-off Date.
LIBOR Business Day: Any day on which banks in the City of London,
England and New York City, U.S.A. are open and conducting transactions in
foreign currency and exchange.
Limited Exchange Act Reporting Obligations: The obligations of the
Master Servicer under Section 3.17(b), Section 6.02 and Section 6.04 with
respect to notice and information to be provided to the Depositor and Article
XI (except Section 11.07(a)(1) and (2)).
Liquidated Mortgage 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 Master 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, including Insurance Proceeds, received
in connection with the partial or complete liquidation of Mortgage Loans,
whether through trustee's sale, foreclosure sale or otherwise or amounts
received in connection with any condemnation or partial release of a Mortgaged
Property and any other proceeds received in connection with an REO Property
received in connection with or prior to such Mortgage Loan becoming a
Liquidated Mortgage Loan (other than the amount of such net proceeds
representing any profit realized by the Master Servicer in connection with the
disposition of any such properties), less the sum of related unreimbursed
Advances, Servicing Fees and Servicing Advances.
Loan Number and Borrower Identification Mortgage Loan Schedule: With
respect to any Subsequent Transfer Date, the Loan Number and Borrower
Identification Mortgage Loan Schedule delivered in connection with such
Subsequent Transfer Date pursuant to Section 2.01(f). Each Loan Number and
Borrower Identification Mortgage Loan Schedule shall contain the information
specified in the definition of "Mortgage Loan Schedule" with
20
respect to the Subsequent Mortgage Loans conveyed on such Subsequent Transfer
Date, and each Loan Number and Borrower Identification Mortgage Loan Schedule
shall be deemed to be included in the Mortgage Loan Schedule.
Loss Coverage Payment: With respect to any Distribution Date on or
prior to the Distribution Date on which the Sponsor Loss Coverage Amount is
reduced to zero, the amount of Realized Losses on the Covered Loans with
respect to which a claim for payment was denied by the Credit Insurer due to
an exclusion in the Credit Insurance Policy but for which there are no
breaches of the representations and warranties set forth in Section 2.03 with
respect to such Covered Loans. Notwithstanding the preceding sentence, with
respect to the Distribution Date on which the amount described in the
preceding sentence exceeds the Sponsor Loss Coverage Amount, the Loss Coverage
Payment for such Distribution Date shall be the Sponsor Loss Coverage Amount.
Majority Holder: The Holders of Certificates evidencing at least 51%
of the Voting Rights allocated to such Class of Certificates.
Master Servicer: Countrywide Home Loans Servicing LP, a Texas limited
partnership, and its successors and assigns, in its capacity as master
servicer hereunder.
Master Servicer Advance Date: As to any Distribution Date, the
Business Day immediately preceding such Distribution Date.
Master Servicer Prepayment Charge Payment Amount: The amounts (i)
payable by the Master Servicer in respect of any Prepayment Charges waived
other than in accordance with the standard set forth in the first sentence of
Section 3.20(a), or (ii) collected from the Master Servicer in respect of a
remedy for the breach of the representation made by CHL set forth in Section
3.20(c).
MERS: Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any
successor thereto.
MERS Mortgage Loan: Any Mortgage Loan registered with MERS on the
MERS(R) System.
MERS(R) System: The system of recording transfers of mortgages
electronically maintained by MERS.
MIN: The Mortgage Identification Number for any MERS Mortgage Loan.
Modified Mortgage Loan: As defined in Section 3.12(a).
MOM Loan: Any Mortgage Loan, as to which MERS is acting as mortgagee,
solely as nominee for the originator of such Mortgage Loan and its successors
and assigns.
Monthly Statement: The statement delivered to the Certificateholders
pursuant to Section 4.05.
21
Moody's: Xxxxx'x Investors Service, Inc. and its successors.
Mortgage: The mortgage, deed of trust or other instrument creating a
second lien on or second priority ownership interest in an estate in fee
simple in real property securing a Mortgage Note.
Mortgage File: The mortgage documents listed in Section 2.01 hereof
pertaining to a particular Mortgage Loan and any additional documents
delivered to the Trustee to be added to the Mortgage File pursuant to this
Agreement.
Mortgage Loan Schedule: The list of Mortgage Loans (as from time to
time amended by the Master Servicer to reflect the deletion of Liquidated
Mortgage Loans and Deleted Mortgage Loans and the addition of (x) Replacement
Mortgage Loans pursuant to the provisions of this Agreement and (y) Subsequent
Mortgage Loans pursuant to the provisions of this Agreement and any Subsequent
Transfer Agreement) transferred to the Trustee as part of the Trust Fund and
from time to time subject to this Agreement, attached hereto as Exhibit F-1,
setting forth in the following information with respect to each Mortgage Loan:
(i) the loan number;
(ii) [Reserved];
(iii) the Appraised Value;
(iv) the Mortgage Rate;
(v) the maturity date;
(vi) the original principal balance;
(vii) the Cut-off Date Principal Balance;
(viii) the first payment date of the Mortgage Loan;
(ix) the Scheduled Payment in effect as of the Cut-off Date;
(x) the Combined Loan-to-Value Ratio at origination;
(xi) a code indicating whether the residential dwelling at
the time of origination was represented to be owner-occupied;
(xii) a code indicating whether the residential dwelling is
either (a) a detached single-family dwelling, (b) a two-family
residential property, (c) a three-family residential property, (d) a
four-family residential property, (e) planned unit development, (f) a
low-rise condominium unit, (g) a high-rise condominium unit or (h)
manufactured housing;
(xiii) the purpose of the Mortgage Loan;
22
(xiv) a code indicating if such Mortgage Loan is a Covered
Mortgage Loan, if applicable; and
(xv) a code indicating whether the Mortgage Loan is a CHL
Mortgage Loan, a Park Monaco Mortgage Loan or a Park Sienna Mortgage
Loan.
Such schedule shall also set forth the total of the amounts described under
(vii) above for all of the Mortgage Loans. The Mortgage Loan Schedule shall be
deemed to include each Loan Number and Borrower Identification Mortgage Loan
Schedule delivered pursuant to Section 2.01(f) and all the related Subsequent
Mortgage Loans and Subsequent Mortgage Loan information included therein.
Mortgage Loans: Such of the mortgage loans transferred and assigned
to the Trustee pursuant to the provisions hereof and any Subsequent Transfer
Agreement as from time to time are held as 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. Any mortgage loan that was intended by the
parties hereto to be transferred to the Trust Fund as indicated by such
Mortgage Loan Schedule which is in fact not so transferred for any reason,
including a breach of the representation contained in Section 2.02 hereof,
shall continue to be a Mortgage Loan hereunder until the Purchase Price with
respect thereto has been paid to the Trust Fund.
Mortgage Note: The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan.
Mortgage Pool: The aggregate of the Mortgage Loans identified in the
Mortgage Loan Schedule.
Mortgage Rate: The annual rate of interest borne by a Mortgage Note
as set forth in the Mortgage Loan Schedule.
Mortgaged Property: The underlying property securing a Mortgage Loan.
Mortgagor: The obligors on a Mortgage Note.
NAS Factor: For any Distribution Date set forth below, the percentage
set forth in the following table:
Distribution Date Percentage
----------------------------------------------------- -----------------
April 2006 -- March 2009 0%
April 2009 -- March 2011 45%
April 2011 -- March 2012 80%
April 2012 -- March 2013 100%
April 2013 and thereafter 300%
23
NAS Principal Distribution Amount: For any Distribution Date, an
amount equal to the product of (i) the Class A-5 Portion for such Distribution
Date, (ii) any amounts distributed to the Class A Certificates pursuant to
Section 4.04(b)(ii) for such Distribution Date and (iii) the NAS Factor for
such Distribution Date.
Net Mortgage Rate: As to each Mortgage Loan, and at any time, the per
annum rate equal to the Mortgage Rate less the Servicing Fee Rate.
Net Rate Cap: For each Distribution Date, (1) the weighted average
Adjusted Net Mortgage Rate of the Mortgage Loans as of the first day of the
related Due Period (after giving effect to Principal Prepayments received
during the Prepayment Period that ends during such Due Period), less (2) the
Certificate Insurance Policy Premium Rate, multiplied by a fraction, the
numerator of which is (a) the aggregate Certificate Principal Balance of the
Class A Certificates and the denominator of which is (b) the aggregate Stated
Principal Balance of the Mortgage Loans as of the first day of the related Due
Period (after giving effect to Principal Prepayments received during the
Prepayment Period that ends during such Due Period) plus any amounts on
deposit in the Pre-Funding Account as of the first day of that Due Period. The
Net Rate Cap shall be adjusted in the case of the Class A-1 Certificates only,
to an effective rate reflecting the calculation of interest on the basis of
the actual number of days elapsed during the related Accrual Period and a
360-day year.
Net Rate Carryover: With respect to any Class of Class A Certificates
and any Distribution Date, the sum of (A) the excess of (i) the amount of
interest that such Class would otherwise have accrued for such Distribution
Date had the Pass-Through Rate for such Class and the related Accrual Period
not been determined based on the Net Rate Cap, over (ii) the amount of
interest accrued on such Class at the applicable Net Rate Cap for such
Distribution Date and (B) the Net Rate Carryover for such Class for all
previous Distribution Dates not previously paid pursuant to Section 4.04,
together with interest thereon at the then-applicable Pass-Through Rate for
such Class, without giving effect to the applicable Net Rate Cap.
NIM Insurer: Any insurer guarantying at the request of CHL certain
payments under notes backed or secured by the Class C and/or Class P
Certificates.
Nonrecoverable Advance: Any portion of an Advance previously made or
proposed to be made by the Master Servicer that, in the good faith judgment of
the Master Servicer, will not or, in the case of a current delinquency, would
not, be ultimately recoverable by the Master Servicer from the related
Mortgagor, related Liquidation Proceeds or otherwise.
Non-United States Person: A Person that is not a citizen or resident
of the United States, a corporation, partnership, 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.
24
Notional Amount: With respect to the Class A-IO Certificates and any
Distribution Date (i) through the September 2006 Distribution Date, an amount
equal to the lesser of (1) the aggregate Stated Principal Balance of the
Mortgage Loans and the amounts on deposit in the Pre-Funding Account, each as
of the first day of the related Due Period and (2) the Notional Amount
specified in the table below and (ii) after the September 2006 Distribution
Date, $0.
Distribution Date Notional Amount
----------------- ---------------
April 2006 $325,210,293
May 2006 $176,836,514
June 2006 $163,462,533
July 2006 $161,869,096
August 2006 $150,896,856
September 2006 $145,505,258
Officer's Certificate: A certificate (i) in the case of the
Depositor, signed by the Chairman of the Board, the Vice Chairman of the
Board, the President, a Managing Director, a Vice President (however
denominated), an Assistant Vice President, the Treasurer, the Secretary, or
one of the Assistant Treasurers or Assistant Secretaries of the Depositor,
(ii) in the case of the Master Servicer, signed by the President, an Executive
Vice President, a Vice President, an Assistant Vice President, the Treasurer,
or one of the Assistant Treasurers or Assistant Secretaries of Countrywide GP,
Inc., its general partner, (iii) if provided for in this Agreement, signed by
a Servicing Officer, as the case may be, and delivered to the Depositor and
the Trustee, as the case may be, as required by this Agreement, or (iv) in the
case of any other Person, signed by an authorized officer of such Person.
One-Month LIBOR: With respect to any Accrual Period for the
Adjustable Rate Certificates, 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 as quoted on the Bloomberg Terminal on such Interest
Determination Date. If such rate is not quoted on the Bloomberg Terminal (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 for the Adjustable
Rate Certificates 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 for
the Adjustable Rate Certificates.
Opinion of Counsel: A written opinion of counsel, who may be counsel
for the Depositor or the Master Servicer, reasonably acceptable to each
addressee of such opinion; provided that with respect to Section 6.04 or
10.01, or the interpretation or application of the REMIC Provisions, such
counsel must (i) in fact be independent of the Depositor and the Master
Servicer, (ii) not have any direct financial interest in the Depositor or the
Master Servicer or in any affiliate of either and (iii) not be connected with
the Depositor or the Master Servicer as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar
functions.
25
Optional Termination: The termination of the Trust Fund provided
hereunder pursuant to the purchase of the Mortgage Loans pursuant to clause
(a) of the first sentence of Section 9.01 hereof.
Optional Termination Date: The first Distribution Date on which the
aggregate Stated Principal Balance of the Mortgage Loans is less than or equal
to 10% of the sum of the aggregate Cut-off Date Principal Balance of the
Initial Mortgage Loans and the Pre-Funded Amount.
Original Value: The value of the property underlying a Mortgage Loan
based, in the case of the purchase of the underlying Mortgaged Property, on
the lower of an appraisal satisfactory to the Master Servicer or the sales
price of such property or, in the case of a refinancing, on an appraisal
satisfactory to the Master Servicer.
OTS: The Office of Thrift Supervision.
Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and authenticated under
this Agreement except:
(i) Certificates theretofore canceled by the Trustee or
delivered to the Trustee for cancellation; and
(ii) Certificates in exchange for which or in lieu of which
other Certificates have been executed and delivered by the Trustee
pursuant to this Agreement.
Outstanding Mortgage Loan: As of any Distribution Date, 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 Mortgage Loan, prior to the end of the related Prepayment Period.
Overcollateralization Deficiency Amount: With respect to any
Distribution Date, the amount, if any, by which the Overcollateralization
Target Amount exceeds the Overcollateralized Amount on such Distribution Date
(after giving effect to the distribution of the Principal Distribution Amount
(other than the portion thereof consisting of the Extra Principal Distribution
Amount) on such Distribution Date).
Overcollateralization Reduction Amount: With respect to any
Distribution Date, an amount equal to the lesser of (i) the Excess
Overcollateralization Amount for such Distribution Date and (ii) the Principal
Remittance Amount for such Distribution Date.
Overcollateralization Target Amount: With respect to any Distribution
Date (a) through the Distribution Date in September 2006, $0, (b) after the
Distribution Date in September 2006, an amount equal to 0.50% of the sum of
the aggregate Cut-off Date Principal Balance of the Initial Mortgage Loans and
the Pre-Funded Amount; provided, however, that if a Delinquency Trigger Event
is in effect on any Distribution Date, the Overcollateralization Target Amount
will equal 0.75% of the sum of the aggregate Cut-off Date Principal Balance of
the Initial Mortgage Loans and the Pre-Funded Amount.
26
Overcollateralized Amount: With respect to any Distribution Date, the
amount, if any, by which (x) the sum of the aggregate Stated Principal Balance
of the Mortgage Loans for such Distribution Date and any amount on deposit in
the Pre-Funding Account exceeds (y) the aggregate Certificate Principal
Balance of the Class A Certificates as of such Distribution Date (after giving
effect to distribution of the Principal Remittance Amount to be made on such
Distribution Date and, in the case of the Distribution Date immediately
following the end of the Funding Period, any amounts to be released from the
Pre-Funding Account).
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.
Park Monaco: Park Monaco Inc., a Delaware corporation, and its
successors and assigns.
Park Monaco Mortgage Loans: The Mortgage Loans identified as such on
the Mortgage Loan Schedule for which Park Monaco is the applicable Seller.
Park Sienna: Park Sienna LLC, a Delaware limited liability company,
and its successors and assigns.
Park Sienna Mortgage Loans: The Mortgage Loans identified as such on
the Mortgage Loan Schedule for which Park Sienna is the applicable Seller.
Pass-Through Rate: With respect to any Accrual Period and each Class
of Interest-Bearing Certificates, the per annum rate set forth or calculated
in the manner described in the Preliminary Statement.
Percentage Interest: With respect to any Interest-Bearing
Certificate, a fraction, expressed as a percentage, the numerator of which is
the Certificate Principal Balance represented by such Certificate and the
denominator of which is the aggregate Certificate Principal Balance of the
related Class. With respect to the Class C, Class P and Class A-R
Certificates, the portion of the Class evidenced thereby, expressed as a
percentage, as stated on the face of such Certificate or equal to the
percentage obtained by dividing the Denomination of such Certificate by the
aggregate of the Denominations of all Certificates of the same Class.
Performance Certification: As defined in Section 11.05.
Permitted Investments: At any time, any one or more of the following
obligations and securities:
(i) obligations of the United States or any agency thereof,
provided such obligations are 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 each Rating Agency has confirmed in writing is sufficient
for the ratings originally assigned to the
27
Certificates by such Rating Agency (without regard to the Certificate
Insurance Policy, in the case of the Class A Certificates);
(iii) 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 each Rating Agency has
confirmed in writing is sufficient for the ratings originally
assigned to the Certificates by such Rating Agency (without regard to
the Certificate Insurance Policy, in the case of the Class A
Certificates);
(iv) certificates of deposit, demand or time deposits, or
bankers' acceptances issued by any depository institution or trust
company incorporated under the laws of the United States or of any
state thereof and subject to supervision and examination by federal
and/or state banking authorities, provided that the commercial paper
and/or long term unsecured debt obligations of such depository
institution or trust company (or in the case of the principal
depository institution in a holding company system, the commercial
paper or long-term unsecured debt obligations of such holding
company, but only if Xxxxx'x is not a Rating Agency) are then rated
one of the two highest long-term and the highest short-term ratings
of each such Rating Agency for such securities, or such lower ratings
as each Rating Agency has confirmed in writing is sufficient for the
ratings originally assigned to the Certificates by such Rating Agency
(without regard to the Certificate Insurance Policy, in the case of
the Class A Certificates);
(v) 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 (iv) above;
(vi) 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 (except (x) if
the Rating Agency is Moody's, such rating shall be the highest
commercial paper rating of S&P for any such securities) and (y), or
such lower rating as each Rating Agency has confirmed in writing is
sufficient for the ratings originally assigned to the Certificates by
such Rating Agency (without regard to the Certificate Insurance
Policy, in the case of the Class A Certificates);
(vii) interests in any money market fund which at the date
of acquisition of the interests in such fund and throughout the time
such interests are held in such fund has the highest applicable long
term rating by each Rating Agency or such lower rating as each Rating
Agency has confirmed in writing is sufficient for the ratings
originally assigned to the Certificates by such Rating Agency
(without regard to the Certificate Insurance Policy, in the case of
the Class A Certificates);
(viii) short term investment funds sponsored by any trust
company or national banking association incorporated under the laws
of the United States or
28
any state 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 each Rating Agency has confirmed in
writing is sufficient for the ratings originally assigned to the
Certificates by such Rating Agency (without regard to the Certificate
Insurance Policy, in the case of the Class A Certificates); and
(ix) such other relatively risk free 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 (without regard to the Certificate
Insurance Policy, in the case of the Class A Certificates), as
evidenced by a signed writing delivered by each Rating Agency, and
reasonably acceptable to the NIM Insurer, as evidenced by a signed
writing delivered by the NIM Insurer, and the Certificate Insurer, as
evidenced by a signed writing delivered by the Certificate Insurer;
provided, that no such instrument shall be a Permitted Investment if such
instrument (i) evidences the right to receive interest only payments with
respect to the obligations underlying such instrument, (ii) is purchased at a
premium or (iii) is purchased at a deep discount; provided further that no
such instrument shall be a Permitted Investment (A) if such instrument
evidences principal and interest payments derived from obligations underlying
such instrument and the interest payments with respect to such instrument
provide a yield to maturity of greater than 120% of the yield to maturity at
par of such underlying obligations, or (B) if it may be redeemed at a price
below the purchase price (the foregoing clause (B) not to apply to investments
in units of money market funds pursuant to clause (vii) above); provided
further that no amount beneficially owned by any REMIC (including, without
limitation, any amounts collected by the Master Servicer but not yet deposited
in the Certificate Account) may be invested in investments (other than money
market funds) treated as equity interests for Federal income tax purposes,
unless the Master Servicer shall receive an Opinion of Counsel, at the expense
of Master Servicer, to the effect that such investment will not adversely
affect the status of any such REMIC as a REMIC under the Code or result in
imposition of a tax on any such REMIC. Permitted Investments that are subject
to prepayment or call may not be purchased at a price in excess of par.
Permitted Transferee: Any Person other than (i) the United States,
any State or political subdivision thereof, or any agency or instrumentality
of any of the foregoing, (ii) a foreign government, International Organization
or any agency or instrumentality of either of the foregoing, (iii) an
organization (except certain farmers' cooperatives described in section 521 of
the Code) 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 Class A-R Certificate, (iv) rural electric and
telephone cooperatives described in section 1381(a)(2)(C) of the Code, (v) an
"electing large partnership" as defined in section 775 of the Code, (vi) a
Person that is not a citizen or resident of the United States, a corporation,
partnership, 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, or an estate
whose income from sources without the United States is includible in gross
income for United States
29
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 unless such Person has furnished the
transferor and the Trustee with a duly completed Internal Revenue Service Form
W-8ECI, and (vii) any other Person so designated by the Trustee based upon an
Opinion of Counsel that the Transfer of an Ownership Interest in a Class A-R
Certificate to such Person may cause any REMIC formed hereunder 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 the Federal Home Loan
Mortgage Corporation, a majority of its board of directors is not selected by
such government unit.
Person: Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust,
unincorporated organization or government, or any agency or political
subdivision thereof.
Plan: An "employee benefit plan" as defined in section 3(3) of ERISA
that is subject to Title I of ERISA, a "plan" as defined in section 4975 of
the Code that is subject to section 4975 of the Code, or any Person investing
on behalf of or with plan assets (as defined in 29 CFR ss.2510.3-101 or
otherwise under ERISA) of such an employee benefit plan or plan.
Pool Stated Principal Balance: The aggregate of the Stated Principal
Balances of the Mortgage Loans which were Outstanding Mortgage Loans.
Pre-Funded Amount: The amount deposited in the Pre-Funding Account on
the Closing Date, which shall equal $2,474,753.53.
Pre-Funding Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3.05 in the name of the Trustee
for the benefit of the Certificateholders and the Certificate Insurer and
designated "The Bank of New York, in trust for registered holders of CWHEQ,
Inc., Home Equity Loan Asset Backed Certificates, Series 2006-S2." Funds in
the Pre-Funding Account shall be held in trust for the Certificateholders for
the uses and purposes set forth in this Agreement and shall not be a part of
any REMIC created hereunder, provided, however that any investment income
earned from Permitted Investments made with funds in the Pre-Funding Account
will be for the account of CHL.
Preference Amount: Any payment of principal or interest on a Class A
Certificate which has become Due for Payment and which was made to a Holder by
or on behalf of the Trust, which has been deemed a preferential transfer and
was previously recovered from the Holder pursuant to the United States
Bankruptcy Code in accordance with a final, non-appealable order of a court of
competent jurisdiction.
Preference Claim: As defined in Section 4.06(h).
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Premium Account: The separate Eligible Account created and maintained
by the Trustee pursuant to Section 3.05 in the name of the Trustee for the
benefit of the Certificateholders and the Certificate Insurer and designated
"The Bank of New York, in trust for registered holders of CWHEQ, Inc., Home
Equity Loan Asset Backed Certificates, Series 2006-S2." Funds in the Premium
Account shall be held in trust for the Certificateholders and the Certificate
Insurer for the uses and purposes set forth in this Agreement.
Prepayment Assumption: The applicable rate of prepayment, as
described in the Prospectus Supplement relating to the Certificates.
Prepayment Charge: With respect to any Mortgage Loan, the charges or
premiums, if any, due in connection with a full or partial prepayment of such
Mortgage Loan within the related Prepayment Charge Period in accordance with
the terms thereof (other than any Master Servicer Prepayment Charge Payment
Amount).
Prepayment Charge Period: With respect to any Mortgage Loan, the
period of time during which a Prepayment Charge may be imposed.
Prepayment Charge Schedule: As of the Initial Cut-off Date with
respect to each Initial Mortgage Loan and as of the Subsequent Cut-off Date
with respect to each Subsequent Mortgage Loan, a list attached hereto as
Schedule I (including the Prepayment Charge Summary attached thereto), setting
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 state of origination of the related Mortgage Loan;
(iv) the date on which the first monthly payment was due on
the related Mortgage Loan;
(v) the term of the related Prepayment Charge; and
(vi) the principal balance of the related Mortgage Loan as
of the Cut-off Date.
As of the Closing Date, the Prepayment Charge Schedule shall contain
the necessary information for each Initial Mortgage Loan. The Prepayment
Charge Schedule shall be amended by the Master Servicer upon the sale of any
Subsequent Mortgage Loans to the Trust Fund. In addition, the Prepayment
Charge Schedule shall be amended from time to time by the Master Servicer in
accordance with the provisions of this Agreement and a copy of each related
amendment shall be furnished by the Master Servicer to the Class P and Class C
Certificateholders and the NIM Insurer.
Prepayment Interest Excess: With respect to any Distribution Date,
for each Mortgage Loan that was the subject of a Principal Prepayment during
the period from the related
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Due Date to the end of the related Prepayment Period, any payment of interest
received in connection therewith (net of any applicable Servicing Fee)
representing interest accrued for any portion of such month of receipt.
Prepayment Interest Shortfall: With respect to any Distribution Date,
for each Mortgage Loan that was the subject of a partial Principal Prepayment
or a Principal Prepayment in full during the period from the beginning of the
related Prepayment Period to the Due Date in such Prepayment Period (other
than a Principal Prepayment in full resulting from the purchase of a Mortgage
Loan pursuant to Section 2.02, 2.03, 2.04, 3.12 or 9.01 hereof) and for each
Mortgage Loan that became a Liquidated Mortgage Loan during the related Due
Period, 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 (or liquidation) or in the case of a
partial Principal Prepayment on the amount of such prepayment (or Liquidation
Proceeds) exceeds (ii) the amount of interest paid or collected in connection
with such Principal Prepayment or such Liquidation Proceeds.
Prepayment Period: As to any Distribution Date and related Due Date,
the period beginning with the opening of business on the sixteenth day of the
calendar month preceding the month in which such Distribution Date occurs (or,
with respect to the first Distribution Date, the period beginning with the
opening of business on the day immediately following the Initial Cut-off Date)
and ending on the close of business on the fifteenth day of the month in which
such Distribution Date occurs.
Prime Rate: The prime commercial lending rate of The Bank of New
York, as publicly announced to be in effect from time to time. The Prime Rate
shall be adjusted automatically, without notice, on the effective date of any
change in such prime commercial lending rate. The Prime Rate is not
necessarily The Bank of New York's lowest rate of interest.
Principal Distribution Amount: With respect to each Distribution
Date, the sum of (i) the Principal Remittance Amount for such Distribution
Date, (ii) the Extra Principal Distribution Amount for such Distribution Date,
and (iii) with respect to the Distribution Date immediately following the end
of the Funding Period, the amount, if any, remaining in the Pre-Funding
Account at the end of the Funding Period (net of any investment income
therefrom), minus (iv) the Overcollateralization Reduction Amount for such
Distribution Date.
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, 2.04, 3.12 and 9.01
hereof) that is received in advance of its scheduled Due Date to the extent it
is not accompanied by an amount as to interest representing scheduled interest
due on any date or dates in any month or months subsequent to the month of
prepayment. Partial Principal Prepayments shall be applied by the Master
Servicer in accordance with the terms of the related Mortgage Note.
Principal Remittance Amount: With respect to any Distribution Date,
(a) the sum, without duplication, of: (i) the scheduled principal collected
with respect to the Mortgage Loans during the related Due Period or advanced
with respect to such Distribution Date, (ii) Principal Prepayments collected
in the related Prepayment Period with respect to the Mortgage Loans, (iii)
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the Stated Principal Balance of each Mortgage Loan that was repurchased by a
Seller or purchased by the Master Servicer with respect to such Distribution
Date, (iv) the amount, if any, by which the aggregate unpaid principal balance
of any Replacement Mortgage Loans delivered by the Sellers in connection with
a substitution of a Mortgage Loan is less than the aggregate unpaid principal
balance of any Deleted Mortgage Loans, (v) any payments received under the
Credit Insurance Policy attributable to principal for the related Due Period,
(vi) any Loss Coverage Payment attributable to principal for the related Due
Period, and (vii) all Liquidation Proceeds (to the extent such Liquidation
Proceeds related to principal) and Subsequent Recoveries collected during the
related Due Period; less (b) all Advances relating to principal and certain
expenses reimbursable pursuant to Section 6.03 and reimbursed during the
related Due Period.
Principal Reserve Fund: The separate Eligible Account created and
initially maintained by the Trustee pursuant to Section 3.08 in the name of
the Trustee for the benefit of the Certificateholders and designated "The Bank
of New York in trust for registered Holders of CWHEQ, Inc., Home Equity Loan
Asset Backed Certificates, Series 2006-S2". Funds in the Principal Reserve
Fund shall be held in trust for the Certificateholders for the uses and
purposes set forth in this Agreement.
Private Certificates: The Class C and Class P Certificates.
Prospectus: The prospectus dated February 7, 2006, relating to asset
backed securities to be sold by the Depositor.
Prospectus Supplement: The prospectus supplement dated March 29,
2006, relating to the public offering of the certain Classes of Certificates
offered thereby.
PTCE 95-60: As defined in Section 5.02(b).
PUD: A Planned Unit Development.
Purchase Price: With respect to any Mortgage Loan (x) required to be
(1) repurchased by a Seller or purchased by the Master Servicer, as
applicable, pursuant to Section 2.02, 2.03 or 3.12 hereof or (2) repurchased
by the Depositor pursuant to Section 2.04 hereof, or (y) that the Master
Servicer has a right to purchase pursuant to Section 3.12 hereof, an amount
equal to the sum of (i) 100% of the unpaid principal balance (or, if such
purchase or repurchase, as the case may be, is effected by the Master
Servicer, the Stated Principal Balance) of the Mortgage Loan as of the date of
such purchase, (ii) accrued interest thereon at the applicable Mortgage Rate
(or, if such purchase or repurchase, as the case may be, is effected by the
Master Servicer, at the Net Mortgage Rate) from (a) the date through which
interest was last paid by the Mortgagor (or, if such purchase or repurchase,
as the case may be, is effected by the Master Servicer, the date through which
interest was last advanced and not reimbursed by the Master Servicer) to (b)
the Due Date in the month in which the Purchase Price is to be distributed to
Certificateholders and (iii) any costs, expenses and damages incurred by the
Trust Fund resulting from any violation of any predatory or abusive lending
law in connection with such Mortgage Loan.
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Rating Agency: Each of Moody's and S&P. 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 Liquidated Mortgage Loan, an
amount (not less than zero or more than the Stated Principal Balance of the
Mortgage Loan) as of the date of such liquidation, equal to (i) the Stated
Principal Balance of such Liquidated Mortgage Loan as of the date of such
liquidation, minus (ii) the Liquidation Proceeds, if any, received in
connection with such liquidation during the month in which such liquidation
occurs, to the extent applied as recoveries of principal of the Liquidated
Mortgage Loan. With respect to each Mortgage Loan that has become the subject
of a Deficient Valuation, (i) if the value of the related Mortgaged Property
was reduced below the principal balance of the related Mortgage Note, the
amount by which the value of the Mortgaged Property was reduced below the
principal balance of the related Mortgage Note, and (ii) if the principal
amount due under the related Mortgage Note has been reduced, 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
that has become the subject of a Debt Service Reduction and any Distribution
Date, the amount, if any, by which the related Scheduled Payment was reduced.
Record Date: With respect to any Distribution Date and the
Adjustable-Rate Certificates, the Business Day immediately preceding such
Distribution Date, or if such Certificates are no longer Book-Entry
Certificates, the last Business Day of the month preceding the month of such
Distribution Date. With respect to the Fixed-Rate Certificates and the Class
A-IO, Class A-R, Class C and Class P Certificates, the last Business Day of
the month preceding the month of a Distribution Date.
Reference Bank Rate: With respect to any Accrual Period, 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 amounts approximately equal to
the outstanding aggregate Certificate Principal Balance of the Adjustable-Rate
Certificates on such Interest Determination Date, 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 U.S. dollars to
leading European banks for a period of one month in amounts approximately
equal to the aggregate Certificate Principal Balance of the Adjustable-Rate
Certificates on such Interest Determination Date.
Reference Banks: Barclays Bank PLC, Deutsche Bank and NatWest, N.A.,
provided that if any of the foregoing banks are not suitable to serve as a
Reference Bank, then any leading banks selected by the Trustee which are
engaged in transactions in Eurodollar deposits in the international
Eurocurrency market (i) with an established place of business in
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Xxxxxx, Xxxxxxx, (xx) not controlling, under the control of or under common
control with the Depositor, CHL or the Master Servicer and (iii) which have
been designated as such by the Trustee.
Refinancing Mortgage Loan: Any Mortgage Loan originated in connection
with the refinancing of an existing mortgage loan.
Regular Certificate: Any Certificate other than the Class A-R
Certificates.
Regulation AB: Subpart 229.1100 - Asset Backed Securities (Regulation
AB), 17 C.F.R. ss.ss.229.1100-229.1123, as such may be amended from time to
time, and subject to such clarification and interpretation as have been
provided by the Commission in the adopting release (Asset Backed Securities,
Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005))
or by the staff of the Commission, or as may be provided by the Commission or
its staff from time to time and publicly available.
Relief Act: The Servicemembers Civil Relief Act.
REMIC Provisions: Provisions of the federal income tax law relating
to real estate mortgage investment conduits which appear at section 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related provisions,
and regulations and rulings promulgated thereunder, as the foregoing may be in
effect from time to time.
Remittance Report: A report prepared by the Master Servicer and
delivered to the Trustee, the Certificate Insurer and the NIM Insurer in
accordance with Section 4.04.
REO Property: A Mortgaged Property acquired by the Master Servicer
through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Mortgage Loan.
Replacement Mortgage Loan: A Mortgage Loan substituted by a Seller
for a Deleted Mortgage Loan which must, on the date of such substitution, as
confirmed in a Request for File Release, (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 the same or higher
credit quality characteristics than that of the Deleted Mortgage Loan; (iii)
be accruing interest at a rate not more than 1% per annum higher or lower than
that of the Deleted Mortgage Loan; (iv) have a Combined Loan-to-Value Ratio no
higher than that of the Deleted Mortgage Loan; (v) have a remaining term to
maturity not 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) provide for a Prepayment Charge on terms
substantially similar to those of the Prepayment Charge, if any, of the
Deleted Mortgage Loan; (viii) have the same occupancy type and lien priority
as the Deleted Mortgage Loan; and (ix) comply with each representation and
warranty set forth in Section 2.03 as of the date of substitution; provided,
however, that notwithstanding the foregoing, to the extent that compliance
with clause (ix) of this definition would cause a proposed Replacement
Mortgage Loan to fail to comply with one or more of clauses (i), (iii), (vii)
and/or (viii) of this definition, then such proposed Replacement Mortgage Loan
must comply with clause (ix) and, with the consent of the Certificate Insurer,
need not comply with one or more of clauses (i), (iii), (vii) and/or (viii),
to the extent, and only to the
35
extent, necessary to assure that the Replacement Mortgage Loan otherwise
complies with clause (ix).
Reportable Event: Any event required to be reported on Form 8-K, and
in any event, the following:
(a) entry into a definitive agreement related to the Trust Fund,
the Certificates or the Mortgage Loans, or an amendment to a Transaction
Document, even if the Depositor is not a party to such agreement (e.g., a
servicing agreement with a servicer contemplated by Item 1108(a)(3) of
Regulation AB);
(b) termination of a Transaction Document (other than by expiration
of the agreement on its stated termination date or as a result of all parties
completing their obligations under such agreement), even if the Depositor is
not a party to such agreement (e.g., a servicing agreement with a servicer
contemplated by Item 1108(a)(3) of Regulation AB);
(c) with respect to the Master Servicer only, if the Master Servicer
becomes aware of any bankruptcy or receivership with respect to CHL, the
Depositor, the Master Servicer, any Subservicer, the Trustee, the Corridor
Contract Counterparty, any enhancement or support provider contemplated by
Items 1114(b) or 1115 of Regulation AB, or any other material party
contemplated by Item 1101(d)(1) of Regulation AB;
(d) with respect to the Trustee, the Master Servicer and the
Depositor only, the occurrence of an early amortization, performance trigger
or other event, including an Event of Default under this Agreement;
(e) any amendment to this Agreement;
(f) the resignation, removal, replacement, substitution of the Master
Servicer, any Subservicer, the Trustee or any co-trustee;
(g) with respect to the Master Servicer only, if the Master Servicer
becomes aware that (i) any material enhancement or support specified in Item
1114(a)(1) through (3) of Regulation AB or Item 1115 of Regulation AB that was
previously applicable regarding one or more classes of the Certificates has
terminated other than by expiration of the contract on its stated termination
date or as a result of all parties completing their obligations under such
agreement; (ii) any material enhancement specified in Item 1114(a)(1) through
(3) of Regulation AB or Item 1115 of Regulation AB has been added with respect
to one or more classes of the Certificates; or (iii) any existing material
enhancement or support specified in Item 1114(a)(1) through (3) of Regulation
AB or Item 1115 of Regulation AB with respect to one or more classes of the
Certificates has been materially amended or modified; and
(h) with respect to the Trustee, the Master Servicer and the
Depositor only, a required distribution to Holders of the Certificates is not
made as of the required Distribution Date under this Agreement.
Reporting Subcontractor: With respect to the Master Servicer or the
Trustee, any Subcontractor determined by such Person pursuant to Section
11.08(b) to be "participating in the
36
servicing function" within the meaning of Item 1122 of Regulation AB.
References to a Reporting Subcontractor shall refer only to the Subcontractor
of such Person and shall not refer to Subcontractors generally.
Representing Party: As defined in Section 2.03(e).
Request for Document Release: A Request for Document Release
submitted by the Master Servicer to the Trustee, substantially in the form of
Exhibit M.
Request for File Release: A Request for File Release submitted by the
Master Servicer to the Trustee, substantially in the form of Exhibit N.
Required Carryover Reserve Fund Deposit: With respect to any
Distribution Date, an amount equal to the excess of (i) $1,000 over (ii) the
amount of funds on deposit in the Carryover Reserve Fund.
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, including with respect to the Covered Mortgage Loans, the
Credit Insurance Policy.
Responsible Officer: When used with respect to the Trustee, any Vice
President, any Assistant Vice President, the Secretary, any Assistant
Secretary, any Trust Officer or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also 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.
Rolling Sixty-Day Delinquency Rate: With respect to any Distribution
Date, the average of the Sixty-Day Delinquency Rates for such Distribution
Date and the two immediately preceding Distribution Dates.
Rule 144A: Rule 144A under the Securities Act.
Rule 144A Letter: As defined in Section 5.02(b).
S&P: Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc. and its successors.
Xxxxxxxx-Xxxxx Certification: As defined in Section 11.05.
Scheduled Payment: With respect to any Mortgage Loan, the scheduled
monthly payment of principal and/or interest due on any Due Date on such
Mortgage Loan which is payable by the related Mortgagor from time to time
under the related Mortgage Note, determined: (a) after giving effect to (i)
any Deficient Valuation and/or Debt Service Reduction with respect to such
Mortgage Loan and (ii) any reduction in the amount of interest collectible
from the related Mortgagor pursuant to the Relief Act or any similar state or
local law; (b) without giving effect to any extension granted or agreed to by
the Master Servicer pursuant to
37
Section 3.05(a); and (c) on the assumption that all other amounts, if any, due
under such Mortgage Loan are paid when due.
Securities Act: The Securities Act of 1933, as amended.
Seller Shortfall Interest Requirement: With respect to the Master
Servicer Advance Date in each of April 2006, May 2006 and June 2006, is the
sum of:
(a) the product of: (1) the excess of the aggregate Stated Principal
Balance for the related Distribution Date of all the Mortgage Loans in the
Mortgage Pool (including the Subsequent Mortgage Loans, if any) owned by the
Trust Fund at the beginning of the related Due Period, over the aggregate
Stated Principal Balance for the related Distribution Date of such Mortgage
Loans (including such Subsequent Mortgage Loans, if any) that have a scheduled
payment of interest due in the related Due Period, and (2) a fraction, the
numerator of which is the weighted average Net Mortgage Rate of all the
Mortgage Loans in the Mortgage Pool (including such Subsequent Mortgage Loans,
if any) (weighted on the basis of the Stated Principal Balances thereof for
the related Distribution Date) and the denominator of which is 12; and
(b) the product of: (1) the amount on deposit in the Pre-Funding
Account at the beginning of the related Due Period, and (2) a fraction, the
numerator of which is the weighted average Net Mortgage Rate of the Mortgage
Loans (including Subsequent Mortgage Loans, if any, transferred to the Trust
Fund during the related Due Period with a scheduled payment of interest due in
the related Due Period) owned by the Trust Fund at the beginning of the
related Due Period (weighted on the basis of the Stated Principal Balances
thereof for such Distribution Date) and the denominator of which is 12.
Sellers: CHL, in its capacity as seller of the CHL Mortgage Loans to
the Depositor, Park Monaco, in its capacity as seller of the Park Monaco
Mortgage Loans to the Depositor and Park Sienna, in its capacity as seller of
the Park Sienna Mortgage Loans to the Depositor.
Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses incurred in the performance by the Master Servicer
of its servicing obligations hereunder, including, but not limited to, the
cost of (i) the preservation, restoration and protection of a Mortgaged
Property, (ii) any enforcement or judicial proceedings, including
foreclosures, (iii) the management and liquidation of any REO Property and
(iv) compliance with the obligations under Section 3.10.
Servicing Criteria: The "servicing criteria" set forth in Item
1122(d) of Regulation AB.
Servicing Fee: As to each Mortgage Loan and any Distribution Date, an
amount equal to one month's interest at the Servicing Fee Rate on the Stated
Principal Balance of such Mortgage Loan for the preceding Distribution Date
or, in the event of any payment of interest that accompanies a Principal
Prepayment in full made by the Mortgagor, interest at the Servicing Fee Rate
on the Stated Principal Balance of such Mortgage Loan for the period covered
by such payment of interest.
38
Servicing Fee Rate: With respect to each Mortgage Loan, 0.50% per
annum.
Servicing Officer: Any officer of the Master 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 Master Servicer on the Closing Date pursuant to this
Agreement, as such list may from time to time be amended.
Sixty-Day Delinquency Rate: With respect to any Distribution Date, a
fraction, expressed as a percentage, the numerator of which is the aggregate
Stated Principal Balance for such Distribution Date of all Mortgage Loans 60
or more days delinquent as of the close of business on the last day of the
calendar month preceding such Distribution Date (including Mortgage Loans in
foreclosure, bankruptcy and REO Properties) and the denominator of which is
the aggregate Stated Principal Balance for such Distribution Date of all
Mortgage Loans.
Sponsor Loss Coverage Amount: With respect to any Distribution Date,
the amount by which 1.00% of the sum of the aggregate Cut-off Date Principal
Balance of the Initial Mortgage Loans and the Pre-Funded Amount exceeds the
aggregate amount of Loss Coverage Payments, if any, made prior to such
Distribution Date.
Sponsor Loss Coverage Obligation: The obligation of CHL described in
Section 2.08 with respect to Loss Coverage Payments.
Stated Principal Balance: With respect to any Mortgage Loan or
related REO Property (i) as of the Cut-off Date, the unpaid principal balance
of the Mortgage Loan as of such date (before any adjustment to the
amortization schedule for any moratorium or similar waiver or grace period),
after giving effect to any partial prepayments or Liquidation Proceeds
received prior to such date and to the payment of principal due on or prior to
such date and irrespective any delinquency in payment by the related
Mortgagor, and (ii) as of any other Distribution Date, the Stated Principal
Balance of the Mortgage Loan as of its Cut-off Date, minus the sum of (a) the
principal portion of the Scheduled Payments (x) due with respect to such
Mortgage Loan during each Due Period ending prior to such Distribution Date
and (y) that were received by the Master Servicer as of the close of business
on the Determination Date related to such Distribution Date or with respect to
which Advances were made as of the Master Servicer Advance Date related to
such Distribution Date, (b) all Principal Prepayments with respect to such
Mortgage Loan received by the Master Servicer during each Prepayment Period
ending prior to such Distribution Date and (c) all Liquidation Proceeds
collected with respect to such Mortgage Loan during each Due Period ending
prior to such Distribution Date, to the extent applied by the Master Servicer
as recoveries of principal in accordance with Section 3.12. The Stated
Principal Balance of any Mortgage Loan that becomes a Liquidated Mortgage Loan
will be zero on each date following the Due Period in which such Mortgage Loan
becomes a Liquidated Mortgage Loan. References herein to the Stated Principal
Balance of the Mortgage Loans at any time shall mean the aggregate Stated
Principal Balance of all Mortgage Loans in the Trust Fund as of such time.
Subcontractor: Any vendor, subcontractor or other Person that is not
responsible for the overall servicing (as "servicing" is commonly understood
by participants in the mortgage-backed securities market) of Mortgage Loans
but performs one or more discrete functions
39
identified in Item 1122(d) of Regulation AB with respect to the Mortgage Loans
under the direction or authority of the Master Servicer or a Subservicer or
the Trustee, as the case may be.
Subsequent Certificate Account Deposit: With respect to any
Subsequent Transfer Date, an amount equal to the aggregate of all amounts in
respect of (i) principal of the related Subsequent Mortgage Loans due after
the related Subsequent Cut-off Date and received by the Master Servicer on or
before such Subsequent Transfer Date and not applied in computing the Cut-off
Date Principal Balance thereof and (ii) interest on the such Subsequent
Mortgage Loans due after such Subsequent Cut-off Date and received by the
Master Servicer on or before the Subsequent Transfer Date.
Subsequent Cut-off Date: In the case of any Subsequent Mortgage Loan,
the later of (x) the first day of the month of the related Subsequent Transfer
Date and (y) the date of origination of such Subsequent Mortgage Loan.
Subsequent Mortgage Loan: Any Mortgage Loan conveyed to the Trustee
on a Subsequent Transfer Date, and listed on the related Loan Number and
Borrower Identification Mortgage Loan Schedule delivered pursuant to Section
2.01(f). When used with respect to a single Subsequent Transfer Date,
"Subsequent Mortgage Loan" shall mean a Subsequent Mortgage Loan conveyed to
the Trustee on such Subsequent Transfer Date.
Subsequent Recoveries: As to any Distribution Date, with respect to a
Liquidated Mortgage Loan that resulted in a Realized Loss in a prior calendar
month, unexpected amounts received by the Master Servicer (net of any related
expenses permitted to be reimbursed pursuant to Section 3.08 and 3.12)
specifically related to such Liquidated Mortgage Loan after the classification
of such Mortgage Loan as a Liquidated Mortgage Loan.
Subsequent Transfer Agreement: A Subsequent Transfer Agreement
substantially in the form of Exhibit P hereto, executed and delivered by the
Sellers, the Depositor and the Trustee as provided in Section 2.01(d).
Subsequent Transfer Date: For any Subsequent Transfer Agreement, the
"Subsequent Transfer Date" identified in such Subsequent Transfer Agreement;
provided, however, the Subsequent Transfer Date for any Subsequent Transfer
Agreement must be a Business Day and may not be a date earlier than the date
on which the Subsequent Transfer Agreement is executed and delivered by the
parties thereto pursuant to Section 2.01(d).
Subsequent Transfer Date Purchase Amount: With respect to any
Subsequent Transfer Date, the "Subsequent Transfer Date Purchase Amount"
identified in the related Subsequent Transfer Agreement which shall be an
estimate of the aggregate Stated Principal Balances of the Subsequent Mortgage
Loans identified in such Subsequent Transfer Agreement.
Subsequent Transfer Date Transfer Amount: With respect to any
Subsequent Transfer Date, an amount equal to the lesser of (i) the aggregate
Stated Principal Balances as of the related Subsequent Cut-off Dates of the
Subsequent Mortgage Loans conveyed on such Subsequent Transfer Date, as listed
on the related Loan Number and Borrower Identification Mortgage Loan Schedule
delivered pursuant to Section 2.01(f) and (ii) the amount on deposit in the
Pre-Funding Account.
40
Subservicer: As defined in Section 3.02(a).
Subservicing Agreement: As defined in Section 3.02(a).
Substitution Adjustment Amount: The meaning ascribed to such term
pursuant to Section 2.03(e).
Substitution Amount: With respect to any Mortgage Loan substituted
pursuant to Section 2.03(e), the excess of (x) the principal balance of the
Mortgage Loan that is substituted for, over (y) the principal balance of the
related substitute Mortgage Loan, each balance being determined as of the date
of substitution.
Tax Matters Person: The person designated as "tax matters person" in
the manner provided under Treasury regulation ss. 1.860F-4(d) and Treasury
regulation ss. 301.6231(a)(7)-1. Initially, this person shall be the Trustee.
Tax Matters Person Certificate: The Class A-R Certificate with a
Denomination of $0.05 and in the form of Exhibit E hereto.
Terminator: As defined in Section 9.01.
Transaction Documents: This Agreement, the Corridor Contract, the
Corridor Contract Administration Agreement, the Credit Insurance Policy, the
Certificate Insurance Policy, the Insurance and Indemnity Agreement and any
other document or agreement entered into in connection with the Trust Fund,
the Certificates or the Mortgage Loans.
Transfer: Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate.
Transfer Affidavit: As defined in Section 5.02(c).
Transferor Certificate: As defined in Section 5.02(b).
Trust Fund: The corpus of the trust created hereunder consisting of
(i) the Mortgage Loans and all interest and principal received on or with
respect thereto after the Cut-off Date to the extent not applied in computing
the Cut-off Date Principal Balance thereof, exclusive of interest not required
to be deposited in the Certificate Account pursuant to Section 3.05(b)(2);
(ii) the Certificate Account, the Distribution Account, the Principal Reserve
Fund, the Carryover Reserve Fund, the Pre-Funding Account, the Premium Account
and all amounts deposited therein pursuant to the applicable provisions of
this Agreement; (iii) the rights to receive certain proceeds of the Corridor
Contract as provided in the Corridor Contract Administration Agreement; (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 Loan; (vi) rights under the
Credit Insurance Policy; (vii) the rights of the Trustee for the benefit of
the Class A Certificateholders under the Certificate Insurance Policy; and
(vi) all proceeds of the conversion, voluntary or involuntary, of any of the
foregoing into cash or other liquid property.
41
Trustee: The Bank of New York, a New York banking corporation, 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.
Trustee Advance Notice: As defined in Section 4.01(d).
Trustee Advance Rate: With respect to any Advance made by the Trustee
pursuant to Section 4.01(d), a per annum rate of interest determined as of the
date of such Advance equal to the Prime Rate in effect on such date plus
5.00%.
Trustee Fee: As to any Distribution Date, an amount equal to
one-twelfth of the Trustee Fee Rate multiplied by the sum of (i) the Pool
Stated Principal Balance and (ii) any amounts remaining in the Pre-Funding
Account (excluding any investment earnings thereon) with respect to such
Distribution Date.
Trustee Fee Rate: With respect to each Mortgage Loan, the per annum
rate agreed upon in writing on or prior to the Closing Date by the Trustee and
the Depositor, which is 0.009% per annum.
Underwriter's Exemption: Prohibited Transaction Exemption 2002-41, 67
Fed. Reg. 54487 (2002), as amended (or any successor thereto), or any
substantially similar administrative exemption granted by the U.S. Department
of Labor.
Underwriters: Countrywide Securities Corporation, X.X. Xxxxxx
Securities Inc. and BNP Paribas Securities Corp.
Unpaid Realized Loss Amount: For any Class of Certificates and any
Distribution Date, (x) the portion of the aggregate Applied Realized Loss
Amount allocated to that Class and remaining unpaid (in the case of any Class
of Class A Certificates, without regard to any payment made by the Certificate
Insurer in respect of that Class under the Certificate Insurance Policy) minus
(y) (1) any increase in the Certificate Principal Balance of that Class due to
the allocation of Subsequent Recoveries to the Certificate Principal Balance
of that Class pursuant to Section 4.04(h) or (2) in the case of any Class of
Class A Certificates, the amount of any Subsequent Recovery paid to the
Certificate Insurer in respect of that Class.
Voting Rights: The voting rights of all the Certificates that are
allocated to any Certificates for purposes of the voting provisions hereunder.
Voting Rights allocated to each Class of Certificates shall be allocated 97%
to the Certificates other than the Class A-R, Class C and Class P Certificates
(with the allocation among the Certificates to be in proportion to the
Certificate Principal Balance of each Class relative to the Certificate
Principal Balance of all other such Classes), and 1% to each of the Class A-R,
Class C and Class P Certificates. Voting Rights will be allocated among the
Certificates of each such Class in accordance with their respective Percentage
Interests. Notwithstanding any of the foregoing, on any date on which any
Class A Certificates are outstanding or any amounts are owed the Certificate
Insurer under this Agreement, unless a Certificate Insurer Default shall have
occurred and be continuing, the
42
Certificate Insurer will be entitled to exercise the Voting Rights of the
Class A Certificateholders, without the consent of the Class A
Certificateholders, and the Class A Certificateholders may exercise such
rights only with the prior written consent of the Certificate Insurer.
Section 1.02 Certain Interpretive Provisions.
All terms defined in this Agreement shall have the defined meanings
when used in any certificate, agreement or other document delivered pursuant
hereto unless otherwise defined therein. For purposes of this Agreement and
all such certificates and other documents, unless the context otherwise
requires: (a) accounting terms not otherwise defined in this Agreement, and
accounting terms partly defined in this Agreement to the extent not defined,
shall have the respective meanings given to them under generally accepted
accounting principles; (b) the words "hereof," "herein" and "hereunder" and
words of similar import refer to this Agreement (or the certificate, agreement
or other document in which they are used) as a whole and not to any particular
provision of this Agreement (or such certificate, agreement or document); (c)
references to any Section, Schedule or Exhibit are references to Sections,
Schedules and Exhibits in or to this Agreement, and references to any
paragraph, subsection, clause or other subdivision within any Section or
definition refer to such paragraph, subsection, clause or other subdivision of
such Section or definition; (d) the term "including" means "including without
limitation"; (e) references to any law or regulation refer to that law or
regulation as amended from time to time and include any successor law or
regulation; (f) references to any agreement refer to that agreement as amended
from time to time; and (g) references to any Person include that Person's
permitted successors and assigns.
ARTICLE II.
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
Section 2.01 Conveyance of Mortgage Loans.
(a) Each Seller hereby sells, transfers, assigns, sets over and
otherwise conveys to the Depositor, without recourse, all the right, title and
interest of such Seller in and to the applicable Initial Mortgage Loans,
including all interest and principal received and receivable by such Seller on
or with respect to applicable Initial Mortgage Loans after the Initial Cut-off
Date (to the extent not applied in computing the Cut-off Date Principal
Balance thereof) or deposited into the Certificate Account by the Master
Servicer on behalf of such Seller as part of the Initial Certificate Account
Deposit as provided in this Agreement, other than principal due on the
applicable Initial Mortgage Loans on or prior to the Initial Cut-off Date and
interest accruing prior to the Initial Cut-off Date. The Master Servicer
confirms that, on behalf of the Sellers, concurrently with the transfer and
assignment, it has deposited into the Certificate Account the Initial
Certificate Account Deposit.
Immediately upon the conveyance of the Initial Mortgage Loans
referred to in the preceding paragraph, the Depositor (i) sells, transfers,
assigns, sets over and otherwise conveys to the Trustee for benefit of the
Certificateholders and the Certificate Insurer, without recourse,
43
all right title and interest in the Initial Mortgage Loans and (ii) causes the
Certificate Insurer to deliver the Certificate Insurance Policy to the
Trustee.
CHL further agrees (x) to cause The Bank of New York to enter into
the Corridor Contract Administration Agreement as Corridor Contract
Administrator and (y) to assign all of its right, title and interest in and to
the interest rate corridor transaction evidenced by each Confirmation, and to
cause all of its obligations in respect of such transaction to be assumed by,
the Corridor Contract Administrator, on the terms and conditions set forth in
the Corridor Contract Assignment Agreement.
(b) Subject to the execution and delivery of the related Subsequent
Transfer Agreement as provided by Section 2.01(d) and the terms and conditions
of this Agreement, each Seller sells, transfers, assigns, sets over and
otherwise conveys to the Depositor, without recourse, on each Subsequent
Transfer Date, all the right, title and interest of such Seller in and to the
related Subsequent Mortgage Loans, including all interest and principal
received and receivable by such Seller on or with respect to such Subsequent
Mortgage Loans after the related Subsequent Cut-off Date (to the extent not
applied in computing the Cut-off Date Principal Balance thereof) or deposited
into the Certificate Account by the Master Servicer on behalf of such Seller
as part of any related Subsequent Certificate Account Deposit as provided in
this Agreement, other than principal due on such Subsequent Mortgage Loans on
or prior to the related Subsequent Cut-off Date and interest accruing prior to
the related Subsequent Cut-off Date.
Immediately upon the conveyance of the Subsequent Mortgage Loans
referred to in the preceding paragraph, the Depositor sells, transfers,
assigns, sets over and otherwise conveys to the Trustee for benefit of the
Certificateholders and the Certificate Insurer, without recourse, all right
title and interest in the Subsequent Mortgage Loans.
(c) Each 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 of this Agreement, hereby sells, transfers, assigns and otherwise
conveys to the Trustee for the use and benefit of the Certificateholders,
without recourse, all right title and interest in the portion of the Trust
Fund not otherwise conveyed to the Trustee pursuant to Section 2.01(a) or (b).
(d) On any Business Day during the Funding Period designated by CHL
to the Trustee, the Sellers, the Depositor and the Trustee shall complete,
execute and deliver a Subsequent Transfer Agreement. After the execution and
delivery of such Subsequent Transfer Agreement, on the Subsequent Transfer
Date, the Trustee shall set aside in the Pre-Funding Account an amount equal
to the related Subsequent Transfer Date Purchase Amount.
(e) The transfer of Subsequent Mortgage Loans on the Subsequent
Transfer Date is subject to the satisfaction of each of the following
conditions:
(1) the Trustee, the Underwriters and the Certificate
Insurer will be provided Opinions of Counsel addressed to the Rating
Agencies as with respect to the sale of the Subsequent Mortgage Loans
conveyed on such Subsequent Transfer Date
44
(such opinions being substantially similar to the opinions delivered
on the Closing Date to the Rating Agencies and the Certificate
Insurer with respect to the sale of the Initial Mortgage Loans on the
Closing Date), to be delivered as provided in Section 2.01(f);
(2) the execution and delivery of such Subsequent Transfer
Agreement or conveyance of the related Subsequent Mortgage Loans does
not result in a reduction or withdrawal of any ratings assigned to
the Certificates by the Rating Agencies (without regard to the
Certificate Insurance Policy, in the case of the Class A
Certificates);
(3) the Depositor shall deliver to the Trustee and the
Certificate Insurer an Officer's Certificate confirming the
satisfaction of each of the conditions set forth in this Section
2.01(e) required to be satisfied by such Subsequent Transfer Date;
(4) each Subsequent Mortgage Loan conveyed on such
Subsequent Transfer Date satisfies the representations and warranties
applicable to it under this Agreement, provided, however, that with
respect to a breach of a representation and warranty with respect to
a Subsequent Mortgage Loan set forth in this clause (4), the
obligation under Section 2.03(e) of this Agreement of the applicable
Seller, to cure, repurchase or replace such Subsequent Mortgage Loan
shall constitute the sole remedy against such Seller respecting such
breach available to Certificateholders, the Depositor, the
Certificate Insurer or the Trustee;
(5) the Subsequent Mortgage Loans conveyed on such
Subsequent Transfer Date were selected in a manner reasonably
believed not to be adverse to the interests of the Certificateholders
or the Certificate Insurer;
(6) no Subsequent Mortgage Loan conveyed on such Subsequent
Transfer Date was 30 or more days delinquent;
(7) following the conveyance of the Subsequent Mortgage
Loans on such Subsequent Transfer Date, the characteristics of the
Mortgage Loans will not vary by more than the amount specified below
from the characteristics listed below; provided that for the purpose
of making such calculations, the characteristics for any Initial
Mortgage Loan made will be taken as of the Initial Cut-off Date and
the characteristics for any Subsequent Mortgage Loans will be taken
as of the Subsequent Cut-off Date;
Permitted
Variance or
Characteristic Value Range
---------------------- ---------------- ---------------
Average Stated Principal Balance................................ $47,091 5%
Weighted Average Mortgage Rate.................................. 8.107 0.10%
Weighted Average Original Combined Loan-to-Value Ratio.......... 86.30% 1.00%
Weighted Average Remaining Term to Maturity..................... 179 months 3 months
Weighted Average FICO Score..................................... 708 points 5 points
Occupancy Type - Investment Properties.......................... 2.37% 1.00%
Purpose - Cash Out.............................................. 59.39% 1.00% higher
45
2.00% lower
(8) none of the Sellers or the Depositor is insolvent and
neither of the Sellers nor the Depositor will be rendered insolvent
by the conveyance of Subsequent Mortgage Loans on such Subsequent
Transfer Date; and
(9) the Trustee, the Underwriters and the Certificate
Insurer will be provided with an Opinion of Counsel, which Opinion of
Counsel shall not be at the expense of either the Trustee or the
Trust Fund, addressed to the Trustee, to the effect that such
purchase of Subsequent Mortgage Loans will not (i) result in the
imposition of the tax on "prohibited transactions" on the Trust Fund
or contributions after the Startup Date, as defined in Sections
860F(a)(2) and 860G(d) of the Code, respectively or (ii) cause any
REMIC formed hereunder to fail to qualify as a REMIC, such opinion to
be delivered as provided in Section 2.01(f).
The Trustee shall not be required to investigate or otherwise verify
compliance with these conditions, except for its own receipt of documents
specified above, and shall be entitled to rely on the required Officer's
Certificate.
(f) Within six Business Days after each Subsequent Transfer Date,
upon (1) delivery to the Trustee and the Certificate Insurer by the Depositor
of the Opinions of Counsel referred to in Section 2.01(e)(1) and (e)(9), (2)
delivery to the Trustee by CHL (on behalf of each Seller) of a Loan Number and
Borrower Identification Mortgage Loan Schedule reflecting the Subsequent
Mortgage Loans conveyed on such Subsequent Transfer Date, (3) deposit in the
Certificate Account by the Master Servicer on behalf of the Sellers of the
applicable Subsequent Certificate Account Deposit, and (4) delivery to the
Trustee and the Certificate Insurer by the Depositor of an Officer's
Certificate confirming the satisfaction of each of the conditions precedent
set forth in this Section 2.01(f), the Trustee shall pay the applicable Seller
the Subsequent Transfer Date Transfer Amount from such funds that were set
aside in the Pre-Funding Account pursuant to Section 2.01(d). The positive
difference, if any, between the Subsequent Transfer Date Transfer Amount and
the Subsequent Transfer Date Purchase Amount shall be re-invested by the
Trustee in the Pre-Funding Account.
The Trustee shall not be required to investigate or otherwise verify
compliance with the conditions set forth in the preceding paragraph, except
for its own receipt of documents specified above, and shall be entitled to
rely on the required Officer's Certificate.
Within thirty days after each Subsequent Transfer Date, the Depositor
shall deliver to the Trustee and the Certificate Insurer a letter of a
nationally recognized firm of independent public accountants stating whether
or not the Subsequent Mortgage Loans conveyed on such Subsequent Transfer Date
conform to the characteristics described in Section 2.01(e)(6) and (7).
(g) In connection with the transfer and assignment of each Mortgage
Loan, the Depositor has delivered to, and deposited with, the Trustee (or, in
the case of the Delay Delivery Mortgage Loans, will deliver to, and deposit
with, the Trustee within the time periods specified in the definition of Delay
Delivery Mortgage Loans) (except as provided in clause (vi)
46
below) for the benefit of the Certificateholders, the following documents or
instruments with respect to each such Mortgage Loan so assigned (with respect
to each Mortgage Loan, clause (i) through (vi) below, together, the "Mortgage
File" for each such Mortgage Loan):
(i) the original Mortgage Note, endorsed by manual or
facsimile signature in blank in the following form: "Pay to the order
of ________________ without recourse", with all intervening
endorsements that show a complete chain of endorsement from the
originator to the Person endorsing the Mortgage Note (each such
endorsement being sufficient to transfer all right, title and
interest of the party so endorsing, as noteholder or assignee
thereof, in and to that Mortgage Note), or, if the original Mortgage
Note has been lost or destroyed and not replaced, an original lost
note affidavit, stating that the original Mortgage Note was lost or
destroyed, together with a copy of the related Mortgage Note and all
such intervening endorsements;
(ii) in the case of each Mortgage Loan that is not a MERS
Mortgage Loan, the original recorded Mortgage or a copy of such
Mortgage, with recording information, and in the case of each MERS
Mortgage Loan, the original Mortgage or a copy of such Mortgage, with
recording information, noting the presence of the MIN of the Mortgage
Loan and language indicating that the Mortgage Loan is a MOM Loan if
the Mortgage Loan is a MOM Loan, with evidence of recording indicated
thereon, or a copy of the Mortgage certified by the public recording
office in which such Mortgage has been recorded;
(iii) in the case of each Mortgage Loan that is not a MERS
Mortgage Loan, a duly executed assignment of the Mortgage to "Home
Equity Loan Asset Backed Certificates, Series 2006-S2, CWHEQ, Inc.,
by The Bank of New York, a New York banking corporation, as trustee
under the Pooling and Servicing Agreement dated as of March 1, 2006,
without recourse" or a copy of such assignment, with recording
information, (each such assignment, when duly and validly completed,
to be in recordable form and sufficient to effect the assignment of
and transfer to the assignee thereof, under the Mortgage to which
such assignment relates);
(iv) the original recorded assignment or assignments of the
Mortgage or a copy of such assignments, with recording information,
together with all interim recorded assignments of such Mortgage or a
copy of such assignments, with recording information (in each case
noting the presence of a MIN in the case of each MERS Mortgage Loan);
(v) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any; and
(vi) the original or duplicate original lender's title
policy or a copy of lender's title policy or a printout of the
electronic equivalent and all riders thereto or, in the event such
original title policy has not been received from the insurer,
47
such original or duplicate original lender's title policy and all
riders thereto shall be delivered within one year of the Closing
Date.
In addition, in connection with the assignment of any MERS Mortgage
Loan, each Seller agrees that it will cause, at such Seller's own expense, the
MERS(R) System to indicate (and provide evidence to the Trustee that it has
done so) that such Mortgage Loans have been assigned by such Seller to the
Trustee in accordance with this Agreement for the benefit of the
Certificateholders by including (or deleting, in the case of Mortgage Loans
which are repurchased in accordance with this Agreement) in such computer
files (a) the code "[IDENTIFY TRUSTEE SPECIFIC CODE]" in the field "[IDENTIFY
THE FIELD NAME FOR TRUSTEE]" which identifies the Trustee and (b) the code
"[IDENTIFY SERIES SPECIFIC CODE NUMBER]" in the field "Pool Field" which
identifies the series of the Certificates issued in connection with such
Mortgage Loans. The Sellers further agree that they will not, and will not
permit the Master Servicer to, and the Master Servicer agrees that it will
not, alter the codes referenced in this paragraph with respect to any Mortgage
Loan during the term of this Agreement unless and until such Mortgage Loan is
repurchased in accordance with the terms of this Agreement.
In the event that in connection with any Mortgage Loan that is not a
MERS Mortgage Loan a Seller cannot deliver the original recorded Mortgage or
all interim recorded assignments of the Mortgage satisfying the requirements
of clause (ii), (iii) or (iv) concurrently with the execution and delivery
hereof, such Seller shall deliver or cause to be delivered to the Trustee a
true copy of such Mortgage and of each such undelivered interim assignment of
the Mortgage each certified by such Seller, the applicable title company,
escrow agent or attorney, or the originator of such Mortgage, as the case may
be, to be a true and complete copy of the original Mortgage or assignment of
Mortgage submitted for recording. For any such Mortgage Loan that is not a
MERS Mortgage Loan each Seller shall promptly deliver or cause to be delivered
to the Trustee such original Mortgage and such assignment or assignments with
evidence of recording indicated thereon upon receipt thereof from the public
recording official, or a copy thereof, certified, if appropriate, by the
relevant recording office, but in no event shall any such delivery be made
later than 270 days following the Closing Date; provided that in the event
that by such date such Seller is unable to deliver or cause to be delivered
each such Mortgage and each interim assignment by reason of the fact that any
such documents have not been returned by the appropriate recording office, or,
in the case of each interim assignment, because the related Mortgage has not
been returned by the appropriate recording office, such Seller shall deliver
or cause to be delivered such documents to the Trustee as promptly as possible
upon receipt thereof. If the public recording office in which a Mortgage or
interim assignment thereof is recorded retains the original of such Mortgage
or assignment, a copy of the original Mortgage or assignment so retained, with
evidence of recording thereon, certified to be true and complete by such
recording office, shall satisfy a Seller's obligations in Section 2.01. If any
document submitted for recording pursuant to this Agreement is (x) lost prior
to recording or rejected by the applicable recording office, the applicable
Seller shall immediately prepare or cause to be prepared a substitute and
submit it for recording, and shall deliver copies and originals thereof in
accordance with the foregoing or (y) lost after recording, the applicable
Seller shall deliver to the Trustee a copy of such document certified by the
applicable public recording office to be a true and complete copy of the
original recorded document. Each Seller shall promptly forward or cause to be
forwarded to the Trustee (x) from time to time additional
48
original documents evidencing an assumption or modification of a Mortgage Loan
and (y) any other documents required to be delivered by the Depositor or the
Master Servicer to the Trustee within the time periods specified in this
Section 2.01.
With respect to each Mortgage Loan other than a MERS Mortgage Loan as
to which the related Mortgaged Property and Mortgage File are located in (a)
the State of California or (b) any other jurisdiction under the laws of which
the recordation of the assignment specified in clause (iii) above is not
necessary to protect the Trustee's and the Certificateholders' interest in the
related Mortgage Loan, as evidenced by an Opinion of Counsel delivered by CHL
to the Trustee and a copy to the Rating Agencies, in lieu of recording the
assignment specified in clause (iii) above, the applicable Seller may deliver
an unrecorded assignment in blank, in form otherwise suitable for recording to
the Trustee; provided that if the related Mortgage has not been returned from
the applicable public recording office, such assignment, or any copy thereof,
of the Mortgage may exclude the information to be provided by the recording
office. As to any Mortgage Loan other than a MERS Mortgage Loan, the
procedures of the preceding sentence shall be applicable only so long as the
related Mortgage File is maintained in the possession of the Trustee in the
State or jurisdiction described in such sentence. In the event that with
respect to Mortgage Loans other than MERS Mortgage Loans (I) any Seller, the
Depositor, the Master Servicer, the Certificate Insurer or the NIM Insurer
gives written notice to the Trustee that recording is required to protect the
right, title and interest of the Trustee on behalf of the Certificateholders
in and to any Mortgage Loan, (II) a court recharacterizes any sale of the
Mortgage Loans as a financing, or (III) as a result of any change in or
amendment to the laws of the State or jurisdiction described in the first
sentence of this paragraph or any applicable political subdivision thereof, or
any change in official position regarding application or interpretation of
such laws, including a holding by a court of competent jurisdiction, such
recording is so required, the Trustee shall complete the assignment in the
manner specified in clause (iii) above and CHL shall submit or cause to be
submitted for recording as specified above or, should CHL fail to perform such
obligations, the Trustee shall cause the Master Servicer, at the Master
Servicer's expense, to cause each such previously unrecorded assignment to be
submitted for recording as specified above. In the event a Mortgage File is
released to the Master Servicer as a result of the Master Servicer's having
completed a Request for Document Release, the Trustee shall complete the
assignment of the related Mortgage in the manner specified in clause (iii)
above.
The Trustee or its agent shall maintain possession of the Mortgage
Files in the State of California and shall not remove the Mortgage Files from
the State of California without the written consent of the Certificate
Insurer. In the event that a Seller fails to record an assignment of a
Mortgage Loan as herein provided within 90 days of notice of an event set
forth in clause (I), (II) or (III) of the preceding paragraph, the Master
Servicer shall prepare and, if required hereunder, file such assignments for
recordation in the appropriate real property or other records office. Each
Seller hereby appoints the Master Servicer (and any successor servicer
hereunder) as its attorney-in-fact with full power and authority acting in its
stead for the purpose of such preparation, execution and filing.
In the case of Mortgage Loans that become the subject of a Principal
Prepayment between the Closing Date (in the case of Initial Mortgage Loans) or
related Subsequent Transfer Date (in the case of Subsequent Mortgage Loans)
and the Cut-off Date, CHL shall deposit or
49
cause to be deposited in the Certificate Account the amount required to be
deposited therein with respect to such payment pursuant to Section 3.05
hereof.
Notwithstanding anything to the contrary in this Agreement, within
thirty days after the Closing Date (in the case of Initial Mortgage Loans) or
within twenty days after the related Subsequent Transfer Date (in the case of
Subsequent Mortgage Loans), CHL (on behalf of each Seller) shall either (i)
deliver to the Trustee the Mortgage File as required pursuant to this Section
2.01 for each Delay Delivery Mortgage Loan or (ii) (A) repurchase the Delay
Delivery Mortgage Loan or (B) substitute the Delay Delivery Mortgage Loan for
a Replacement Mortgage Loan, which repurchase or substitution shall be
accomplished in the manner and subject to the conditions set forth in Section
2.03, provided that if CHL fails to deliver a Mortgage File for any Delay
Delivery Mortgage Loan within the period provided in the prior sentence, the
cure period provided for in Section 2.02 or in Section 2.03 shall not apply to
the initial delivery of the Mortgage File for such Delay Delivery Mortgage
Loan, but rather CHL shall have five (5) Business Days to cure such failure to
deliver. CHL shall promptly provide each Rating Agency with written notice of
any cure, repurchase or substitution made pursuant to the proviso of the
preceding sentence. On or before the thirtieth (30th) day (or if such
thirtieth day is not a Business Day, the succeeding Business Day) after the
Closing Date (in the case of Initial Mortgage Loans) or within twenty days
after the related Subsequent Transfer Date (in the case of Subsequent Mortgage
Loans), the Trustee shall, in accordance with the provisions of Section 2.02,
send a Delay Delivery Certification substantially in the form annexed hereto
as Exhibit G-3 (with any applicable exceptions noted thereon) for all Delay
Delivery Mortgage Loans delivered within thirty (30) days after such date. The
Trustee will promptly send a copy of such Delay Delivery Certification to each
Rating Agency.
Each Seller has entered into this Agreement in consideration for the
purchase of the Mortgage Loans sold by such Seller to the Depositor and has
agreed to take the actions specified herein. The Depositor, concurrently with
the execution and delivery of this Agreement, hereby sells, transfers, assigns
and otherwise conveys to the Trustee for the use and benefit of the
Certificateholders, without recourse, all right title and interest in the
portion of the Trust Fund not otherwise conveyed to the Trust Fund pursuant to
Sections 2.01(a) or (b).
Section 2.02 Acceptance by Trustee of the Mortgage Loans.
(a) The Trustee acknowledges receipt, subject to the limitations
contained in and any exceptions noted in the Initial Certification in the form
annexed hereto as Exhibit G-1 and in the list of exceptions attached thereto,
of the documents referred to in clauses (i) and (iii) of Section 2.01(g) above
with respect to the Initial Mortgage Loans and all other assets included in
the Trust Fund and declares that it holds and will hold such documents and the
other documents delivered to it constituting the Mortgage Files, and that it
holds or will hold such other assets included in the Trust Fund, in trust for
the exclusive use and benefit of all present and future Certificateholders.
The Trustee agrees to execute and deliver on the Closing Date to the
Depositor, the Master Servicer, CHL (on behalf of each Seller) and the
Certificate Insurer, an Initial Certification substantially in the form
annexed hereto as Exhibit G-1 to the effect that, as to each Initial Mortgage
Loan listed in the Mortgage Loan Schedule (other than any Initial Mortgage
50
Loan paid in full or any Initial Mortgage Loan specifically identified in such
certification as not covered by such certification), the documents described
in Section 2.01(g)(i) and, in the case of each Initial Mortgage Loan that is
not a MERS Mortgage Loan, the documents described in Section 2.01(g)(iii) with
respect to such Initial Mortgage Loans as are in the Trustee's possession and
based on its review and examination and only as to the foregoing documents,
such documents appear regular on their face and relate to such Initial
Mortgage Loan. The Trustee agrees to execute and deliver within 30 days after
the Closing Date to the Depositor, the Master Servicer, CHL (on behalf of each
Seller) and the Certificate Insurer, an Interim Certification substantially in
the form annexed hereto as Exhibit G-2 to the effect that, as to each Initial
Mortgage Loan listed in the Mortgage Loan Schedule (other than any Initial
Mortgage Loan paid in full or any Initial Mortgage Loan specifically
identified in such certification as not covered by such certification) all
documents required to be delivered to the Trustee pursuant to the Agreement
with respect to such Initial Mortgage Loans are in its possession (except
those documents described in Section 2.01(g)(vi)) and based on its review and
examination and only as to the foregoing documents, (i) such documents appear
regular on their face and relate to such Initial Mortgage Loan, and (ii) the
information set forth in items (i), (iv), (v), (vi), (viii) and (ix) of the
definition of the "Mortgage Loan Schedule" accurately reflects information set
forth in the Mortgage File. On or before the thirtieth (30th) day after the
Closing Date (or if such thirtieth day is not a Business Day, the succeeding
Business Day), the Trustee shall deliver to the Depositor, the Master
Servicer, CHL (on behalf of each Seller) and the Certificate Insurer a Delay
Delivery Certification with respect to the Initial Mortgage Loans
substantially in the form annexed hereto as Exhibit G-3, with any applicable
exceptions noted thereon. The Trustee shall be under no duty or obligation to
inspect, review or examine such documents, instruments, certificates or other
papers to determine that the same are genuine, enforceable or appropriate for
the represented purpose or that they have actually been recorded in the real
estate records or that they are other than what they purport to be on their
face.
Not later than 180 days after the Closing Date, the Trustee shall
deliver to the Depositor, the Master Servicer, CHL (on behalf of each Seller),
the Certificate Insurer and any Certificateholder that so requests, a Final
Certification with respect to the Initial Mortgage Loans substantially in the
form annexed hereto as Exhibit H, with any applicable exceptions noted
thereon.
In connection with the Trustee's completion and delivery of such
Final Certification, the Trustee shall review each Mortgage File with respect
to the Initial Mortgage Loans to determine that such Mortgage File contains
the following documents:
(i) the original Mortgage Note, endorsed by manual or
facsimile signature in blank in the following form: "Pay to the order
of ________________ without recourse", with all intervening
endorsements that show a complete chain of endorsement from the
originator to the Person endorsing the Mortgage Note (each such
endorsement being sufficient to transfer all right, title and
interest of the party so endorsing, as noteholder or assignee
thereof, in and to that Mortgage Note), or, if the original Mortgage
Note has been lost or destroyed and not replaced, an original lost
note affidavit, stating that the original Mortgage Note was lost or
destroyed, together with a copy of the related Mortgage Note and all
such intervening endorsements;
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(ii) in the case of each Initial Mortgage Loan that is not a
MERS Mortgage Loan, the original recorded Mortgage or a copy of such
Mortgage, with recording information, and in the case of each Initial
Mortgage Loan that is a MERS Mortgage Loan, the original Mortgage or
a copy of such Mortgage, with recording information, noting the
presence of the MIN of the Initial Mortgage Loan and language
indicating that the Mortgage Loan is a MOM Loan if the Initial
Mortgage Loan is a MOM Loan, with evidence of recording indicated
thereon, or a copy of the Mortgage certified by the public recording
office in which Mortgage has been recorded;
(iii) in the case of each Initial Mortgage Loan that is not
a MERS Mortgage Loan, a duly executed assignment of the Mortgage or a
copy thereof with recording information, in either case in the form
permitted by Section 2.01;
(iv) the original recorded assignment or assignments of the
Mortgage or a copy of such assignments, with recording information,
together with all interim recorded assignments of such Mortgage or a
copy of such assignments, with recording information (in each case
noting the presence of a MIN in the case of each MERS Mortgage Loan);
(v) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any; and
(vi) the original or duplicate original lender's title
policy or a copy of lender's title policy or a printout of the
electronic equivalent and all riders thereto.
If, in the course of such review, the Trustee finds any document or
documents constituting a part of such Mortgage File that do not meet the
requirements of clauses (i)-(iv) and (vi) above, the Trustee shall include
such exceptions in such Final Certification (and the Trustee shall state in
such Final Certification whether any Mortgage File does not then include the
original or duplicate original lender's title policy or a printout of the
electronic equivalent and all riders thereto). If the public recording office
in which a Mortgage or assignment thereof is recorded retains the original of
such Mortgage or assignment, a copy of the original Mortgage or assignment so
retained, with evidence of recording thereon, certified to be true and
complete by such recording office, shall be deemed to satisfy the requirements
of clause (ii), (iii) or (iv) above, as applicable. CHL shall promptly correct
or cure such defect referred to above within 90 days from the date it was so
notified of such defect and, if CHL does not correct or cure such defect
within such period, CHL shall either (A) if the time to cure such defect
expires prior to the end of the second anniversary of the Closing Date,
substitute for the related Initial 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 (B) purchase such Initial Mortgage
Loan from the Trust Fund within 90 days from the date CHL was notified of such
defect in writing at the Purchase Price of such Initial Mortgage Loan;
provided that any such substitution pursuant to (A) above or repurchase
pursuant to (B) above shall not be effected prior to the delivery to the
Trustee of the Opinion of Counsel required by Section 2.05 hereof and any
substitution pursuant to (A) above shall not be effected prior to the
additional delivery to the Trustee of a Request for File Release. No
substitution will be made in any calendar month after
52
the Determination Date for such month. The Purchase Price for any such Initial
Mortgage Loan shall be deposited by CHL in the Certificate Account and, upon
receipt of such deposit and Request for File Release with respect thereto, the
Trustee shall release the related Mortgage File to CHL and shall execute and
deliver at CHL's request such instruments of transfer or assignment as CHL has
prepared, in each case without recourse, as shall be necessary to vest in CHL,
or a designee, the Trustee's interest in any Initial Mortgage Loan released
pursuant hereto. If pursuant to the foregoing provisions CHL repurchases an
Initial Mortgage Loan that is a MERS Mortgage Loan, the Master Servicer shall
cause MERS to execute and deliver an assignment of the Mortgage in recordable
form to transfer the Mortgage from MERS to CHL and shall cause such Mortgage
to be removed from registration on the MERS(R) System in accordance with MERS'
rules and regulations.
The Trustee shall retain possession and custody of each Mortgage File
in accordance with and subject to the terms and conditions set forth herein.
Each Seller shall promptly deliver to the Trustee, upon the execution or
receipt thereof, the originals of such other documents or instruments
constituting the Mortgage File that come into the possession of such Seller
from time to time.
It is understood and agreed that the obligation of CHL to substitute
for or to purchase any Mortgage Loan that does not meet the requirements of
Section 2.02(a) above shall constitute the sole remedy respecting such defect
available to the Trustee, the Depositor and any Certificateholder against any
Seller.
It is understood and agreed that the obligation of CHL to substitute
for or to purchase, pursuant to Section 2.02(a), any Initial Mortgage Loan
whose Mortgage File contains any document or documents that does not meet the
requirements of clauses (i)-(iv) and (vi) above and which defect is not
corrected or cured by CHL within 90 days from the date it was notified of such
defect, shall constitute the sole remedy respecting such defect available to
the Trustee, the Depositor and any Certificateholder against any Seller.
(b) The Trustee agrees to execute and deliver on the Subsequent
Transfer Date to the Depositor, the Master Servicer, CHL (on behalf of each
Seller) and the Certificate Insurer an Initial Certification substantially in
the form annexed hereto as Exhibit G-4 to the effect that, as to each
Subsequent Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Subsequent Mortgage Loan paid in full or any Subsequent Mortgage Loan
specifically identified in such certification as not covered by such
certification), the documents described in Section 2.01(g)(i) and, in the case
of each Subsequent Mortgage Loan that is not a MERS Mortgage Loan, the
documents described in Section 2.01(g)(iii), with respect to such Subsequent
Mortgage Loan are in its possession, and based on its review and examination
and only as to the foregoing documents, such documents appear regular on their
face and relate to such Subsequent Mortgage Loan.
The Trustee agrees to execute and deliver within 30 days after the
Subsequent Transfer Date to the Depositor, the Master Servicer, CHL (on behalf
of each Seller) and the Certificate Insurer an Interim Certification
substantially in the form annexed hereto as Exhibit G-2 to the effect that, as
to each Subsequent Mortgage Loan listed in the Mortgage Loan Schedule (other
than any Subsequent Mortgage Loan paid in full or any Subsequent Mortgage Loan
53
specifically identified in such certification as not covered by such
certification), all documents required to be delivered to it pursuant to this
Agreement with respect to such Subsequent Mortgage Loan are in its possession
(except those described in Section 2.01(g)(vi)) and based on its review and
examination and only as to the foregoing documents, (i) such documents appear
regular on their face and relate to such Subsequent Mortgage Loan, and (ii)
the information set forth in items (i), (iv), (v), (vi), (viii) and (ix) of
the definition of the "Mortgage Loan Schedule" accurately reflects information
set forth in the Mortgage File. On or before the thirtieth (30th) day after
the Subsequent Transfer Date (or if such thirtieth day is not a Business Day,
the succeeding Business Day), the Trustee shall deliver to the Depositor, the
Master Servicer, CHL (on behalf of each Seller) and the Certificate Insurer a
Delay Delivery Certification with respect to the Subsequent Mortgage Loans
substantially in the form annexed hereto as Exhibit G-3, with any applicable
exceptions noted thereon, together with a Subsequent Certification
substantially in the form annexed hereto as Exhibit G-4. The Trustee shall be
under no duty or obligation to inspect, review or examine such documents,
instruments, certificates or other papers to determine that the same are
genuine, enforceable or appropriate for the represented purpose or that they
have actually been recorded in the real estate records or that they are other
than what they purport to be on their face.
Not later than 180 days after the Subsequent Transfer Date, the
Trustee shall deliver to the Depositor, the Master Servicer, CHL (on behalf of
each Seller), the Certificate Insurer and to any Certificateholder that so
requests a Final Certification with respect to the Subsequent Mortgage Loans
substantially in the form annexed hereto as Exhibit H, with any applicable
exceptions noted thereon.
In connection with the Trustee's completion and delivery of such
Final Certification, the Trustee shall review each Mortgage File with respect
to the Subsequent Mortgage Loans to determine that such Mortgage File contains
the following documents:
(i) the original Mortgage Note, endorsed by manual or
facsimile signature in blank in the following form: "Pay to the order
of ________________ without recourse", with all intervening
endorsements that show a complete chain of endorsement from the
originator to the Person endorsing the Mortgage Note (each such
endorsement being sufficient to transfer all right, title and
interest of the party so endorsing, as noteholder or assignee
thereof, in and to that Mortgage Note), or, if the original Mortgage
Note has been lost or destroyed and not replaced, an original lost
note affidavit, stating that the original Mortgage Note was lost or
destroyed, together with a copy of the related Mortgage Note and all
such intervening endorsements;
(ii) in the case of each Subsequent Mortgage Loan that is
not a MERS Mortgage Loan, the original recorded Mortgage or a copy of
such Mortgage, with recording information, and in the case of each
Subsequent Mortgage Loan that is a MERS Mortgage Loan, the original
Mortgage or a copy of such Mortgage, with recording information,
noting the presence of the MIN of the Subsequent Mortgage Loan and
language indicating that the Subsequent Mortgage Loan is a MOM Loan
if the Subsequent Mortgage Loan is a MOM Loan, with evidence of
recording indicated thereon, or a copy of the Mortgage certified by
the public recording office in which Mortgage has been recorded;
54
(iii) in the case of each Subsequent Mortgage Loan that is
not a MERS Mortgage Loan, a duly executed assignment of the Mortgage
or a copy thereof with recording information, in either case in the
form permitted by Section 2.01;
(iv) the original recorded assignment or assignments of the
Mortgage or a copy of such assignments, with recording information,
together with all interim recorded assignments of such Mortgage or a
copy of such assignments, with recording information (in each case
noting the presence of a MIN in the case of each MERS Mortgage Loan);
(v) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any; and
(vi) the original or duplicate original lender's title
policy or a copy of lender's title policy or a printout of the
electronic equivalent and all riders thereto.
If, in the course of such review, the Trustee finds any document or
documents constituting a part of such Mortgage File that do not meet the
requirements of clauses (i)-(iv) and (vi) above, the Trustee shall include
such exceptions in such Final Certification (and the Trustee shall state in
such Final Certification whether any Mortgage File does not then include the
original or duplicate original lender's title policy or a printout of the
electronic equivalent and all riders thereto). If the public recording office
in which a Mortgage or assignment thereof is recorded retains the original of
such Mortgage or assignment, a copy of the original Mortgage or assignment so
retained, with evidence of recording thereon, certified to be true and
complete by such recording office, shall be deemed to satisfy the requirements
of clause (ii), (iii) or (iv) above, as applicable. CHL shall promptly correct
or cure such defect referred to above within 90 days from the date it was so
notified of such defect and, if CHL does not correct or cure such defect
within such period, CHL shall either (A) if the time to cure such defect
expires prior to the end of the second anniversary of the Closing Date,
substitute for the related Subsequent 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 (B) purchase such Subsequent
Mortgage Loan from the Trust Fund within 90 days from the date CHL was
notified of such defect in writing at the Purchase Price of such Subsequent
Mortgage Loan; provided that any such substitution pursuant to (A) above or
repurchase pursuant to (B) above shall not be effected prior to the delivery
to the Trustee of the Opinion of Counsel required by Section 2.05 hereof and
any substitution pursuant to (A) above shall not be effected prior to the
additional delivery to the Trustee of a Request for File Release. No
substitution will be made in any calendar month after the Determination Date
for such month. The Purchase Price for any such Subsequent Mortgage Loan shall
be deposited by CHL in the Certificate Account and, upon receipt of such
deposit and Request for File Release with respect thereto, the Trustee shall
release the related Mortgage File to CHL and shall execute and deliver at
CHL's request such instruments of transfer or assignment as CHL has prepared,
in each case without recourse, as shall be necessary to vest in CHL, or a
designee, the Trustee's interest in any Subsequent Mortgage Loan released
pursuant hereto. If pursuant to the foregoing provisions CHL repurchases a
Subsequent Mortgage Loan that is a MERS Mortgage Loan, the Master Servicer
shall cause MERS to execute and deliver an assignment of the Mortgage in
recordable form to transfer the Mortgage from MERS to CHL and
55
shall cause such Mortgage to be removed from registration on the MERS(R)
System in accordance with MERS' rules and regulations.
The Trustee shall retain possession and custody of each Mortgage File
in accordance with and subject to the terms and conditions set forth herein.
Each Seller shall promptly deliver to the Trustee, upon the execution or
receipt thereof, the originals of such other documents or instruments
constituting the Mortgage File that come into the possession of such Seller
from time to time.
It is understood and agreed that the obligation of the Sellers to
substitute for or to purchase, pursuant to Section 2.02(b), any Subsequent
Mortgage Loan whose Mortgage File contains any document or documents that does
not meet the requirements of clauses (i)-(iv) and (vi) above and which defect
is not corrected or cured by such Seller within 90 days from the date it was
notified of such defect, shall constitute the sole remedy respecting such
defect available to the Trustee, the Depositor and any Certificateholder
against the Sellers.
Section 2.03 Representations, Warranties and Covenants of the Master
Servicer and the Sellers.
(a) The Master Servicer hereby represents and warrants to the
Depositor, the Certificate Insurer and the Trustee as follows, as of the date
hereof with respect to the Initial Mortgage Loans, and the related Subsequent
Transfer Date with respect to the Subsequent Mortgage Loans:
(1) The Master Servicer is duly organized as a Texas limited
partnership and is validly existing and in good standing under the
laws of the State of Texas and is duly authorized and qualified to
transact any and all business contemplated by this Agreement to be
conducted by the Master Servicer in any state in which a Mortgaged
Property is located or is otherwise not required under applicable law
to effect such qualification and, in any event, is in compliance with
the doing business laws of any such state, to the extent necessary to
ensure its ability to enforce each Mortgage Loan, 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.
(2) The Master Servicer has the full partnership power and
authority to sell and 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 partnership action on the part of the Master
Servicer 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 Master Servicer, enforceable
against the Master Servicer 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
56
equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
(3) The execution and delivery of this Agreement by the
Master Servicer, the servicing of the Mortgage Loans by the Master
Servicer 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 Master Servicer and will not (A) result in a material
breach of any term or provision of the certificate of limited
partnership, partnership agreement or other organizational document
of the Master Servicer or (B) materially conflict with, result in a
material breach, violation or acceleration of, or result in a
material default under, the terms of any other material agreement or
instrument to which the Master Servicer is a party or by which it may
be bound, or (C) constitute a material violation of any statute,
order or regulation applicable to the Master Servicer of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over the Master Servicer; and the Master Servicer is not
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 Master Servicer's ability to
perform or meet any of its obligations under this Agreement.
(4) The Master Servicer is an approved servicer of
conventional mortgage loans for Xxxxxx Mae and 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.
(5) No litigation is pending or, to the best of the Master
Servicer's knowledge, threatened, against the Master Servicer that
would materially and adversely affect the execution, delivery or
enforceability of this Agreement or the ability of the Master
Servicer to service the Mortgage Loans or to perform any of its other
obligations under this Agreement or any Subsequent Transfer Agreement
in accordance with the terms hereof or thereof.
(6) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution,
delivery and performance by the Master Servicer of, or compliance by
the Master Servicer with, this Agreement or the consummation of the
transactions contemplated hereby, or if any such consent, approval,
authorization or order is required, the Master Servicer has obtained
the same.
(7) The Master Servicer is a member of MERS in good
standing, and will comply in all material respects with the rules and
procedures of MERS in connection with the servicing of the Mortgage
Loans for as long as such Mortgage Loans are registered with MERS.
(b) CHL hereby represents and warrants to the Depositor, the
Certificate Insurer and the Trustee as follows, as of the Initial Cut-off Date
in the case of the Initial Mortgage Loans and as of the related Subsequent
Cut-off Date in the case of the Subsequent
57
Mortgage Loans (unless otherwise indicated or the context otherwise requires,
percentages with respect to the Initial Mortgage Loans in the Trust Fund are
measured by the Cut-off Date Principal Balance of the Initial Mortgage Loans
in the Trust Fund):
(1) CHL is duly organized as a New York corporation and is
validly existing and in good standing under the laws of the State of
New York and is duly authorized and qualified to transact any and all
business contemplated by this Agreement and each Subsequent Transfer
Agreement to be conducted by CHL 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 CHL
Mortgage Loans in accordance with the terms of this Agreement and
each Subsequent Transfer Agreement and to perform any of its other
obligations under this Agreement and each Subsequent Transfer
Agreement in accordance with the terms hereof and thereof.
(2) CHL has the full corporate power and authority to sell
each CHL Mortgage Loan, and to execute, deliver and perform, and to
enter into and consummate the transactions contemplated by this
Agreement and each Subsequent Transfer Agreement and has duly
authorized by all necessary corporate action on the part of CHL the
execution, delivery and performance of this Agreement and each
Subsequent Transfer Agreement; and this Agreement and each Subsequent
Transfer Agreement, assuming the due authorization, execution and
delivery hereof by the other parties hereto, constitutes a legal,
valid and binding obligation of CHL, enforceable against CHL 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.
(3) The execution and delivery of this Agreement and each
Subsequent Transfer Agreement by CHL, the sale of the CHL Mortgage
Loans by CHL under this Agreement and each Subsequent Transfer
Agreement, the consummation of any other of the transactions
contemplated by this Agreement and each Subsequent Transfer
Agreement, and the fulfillment of or compliance with the terms hereof
and thereof are in the ordinary course of business of CHL and will
not (A) result in a material breach of any term or provision of the
charter or by-laws of CHL 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 CHL is a party or by which it may be bound, or
(C) constitute a material violation of any statute, order or
regulation applicable to CHL of any court, regulatory body,
administrative agency or governmental body having jurisdiction over
CHL; and CHL 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 CHL's ability to
perform or meet any of its obligations under this Agreement and each
Subsequent Transfer Agreement.
58
(4) CHL is an approved seller of conventional mortgage loans
for Xxxxxx Mae and 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.
(5) No litigation is pending or, to the best of CHL's
knowledge, threatened, against CHL that would materially and
adversely affect the execution, delivery or enforceability of this
Agreement or any Subsequent Transfer Agreement or the ability of CHL
to sell the CHL Mortgage Loans or to perform any of its other
obligations under this Agreement or any Subsequent Transfer Agreement
in accordance with the terms hereof or thereof.
(6) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution,
delivery and performance by CHL of, or compliance by CHL with, this
Agreement or any Subsequent Transfer Agreement or the consummation of
the transactions contemplated hereby, or if any such consent,
approval, authorization or order is required, CHL has obtained the
same.
(7) The information set forth on Exhibit F-1 hereto with
respect to each Initial Mortgage Loan is true and correct in all
material respects as of the Closing Date.
(8) CHL will treat the transfer of the CHL Mortgage Loans to
the Depositor as a sale of the CHL Mortgage Loans for all tax,
accounting and regulatory purposes.
(9) No Mortgage Loan is one payment or more delinquent as of
the applicable Cut-off Date.
(10) No Mortgage Loan had a Combined Loan-to-Value Ratio at
origination in excess of 100.00%.
(11) Each Mortgage Loan is secured by a valid and
enforceable second lien on the related Mortgaged Property subject
only to (1) the lien of non-delinquent current real property taxes
and assessments, (2) covenants, conditions and restrictions, rights
of way, easements and other matters of public record as of the date
of recording of such Mortgage, such exceptions appearing of record
being acceptable to mortgage lending institutions generally or
specifically reflected in the appraisal made in connection with the
origination of the related Mortgage Loan, (3) other matters to which
like properties are commonly subject that do not materially interfere
with the benefits of the security intended to be provided by such
Mortgage (4) any senior mortgage loan secured by such Mortgaged
Property and identified in the Mortgage File related to such Mortgage
Loan.
(12) Immediately prior to the assignment of each CHL
Mortgage Loan to the Depositor, CHL had good title to, and was the
sole owner of, such CHL Mortgage Loan free and clear of any pledge,
lien, encumbrance or security interest and had full right and
authority, subject to no interest or participation of, or agreement
with, any other party, to sell and assign the same pursuant to this
Agreement.
59
(13) There is no delinquent tax or assessment lien against
any Mortgaged Property.
(14) There is no valid offset, claim, defense or
counterclaim to any Mortgage Note or Mortgage, including the
obligation of the Mortgagor to pay the unpaid principal of or
interest on such Mortgage Note.
(15) There are no mechanics' liens or claims for work, labor
or material affecting any Mortgaged Property that are or may be a
lien prior to, or equal with, the lien of such Mortgage, except those
that are insured against by the title insurance policy referred to in
item (18) below.
(16) As of the Closing Date in the case of the Initial
Mortgage Loans and as of the related Subsequent Transfer Date in the
case of the Subsequent Mortgage Loans, to the best of CHL's
knowledge, each Mortgaged Property is free of material damage and is
in good repair.
(17) As of the Closing Date in the case of the Initial
Mortgage Loans and as of the related Subsequent Transfer Date in the
case of the Subsequent Mortgage Loans, neither CHL nor any prior
holder of any Mortgage has modified the Mortgage in any material
respect (except that a Mortgage Loan may have been modified by a
written instrument that has been recorded or submitted for
recordation, if necessary, to protect the interests of the
Certificateholders and the original or a copy of which has been
delivered to the Trustee); satisfied, cancelled or subordinated such
Mortgage in whole or in part; released the related Mortgaged Property
in whole or in part from the lien of such Mortgage; or executed any
instrument of release, cancellation, modification (except as
expressly permitted above) or satisfaction with respect thereto.
(18) A lender's policy of title insurance together with a
condominium endorsement and extended coverage endorsement, if
applicable, in an amount at least equal to the Cut-off Date Principal
Balance of each such Mortgage Loan or a commitment (binder) to issue
the same was effective on the date of the origination of each
Mortgage Loan, each such policy is valid and remains in full force
and effect, and each such policy was issued by a title insurer
qualified to do business in the jurisdiction where the Mortgaged
Property is located and acceptable to Xxxxxx Mae and Xxxxxxx Mac and
is in a form acceptable to Xxxxxx Mae and Xxxxxxx Mac, which policy
insures the Sellers and successor owners of indebtedness secured by
the insured Mortgage, as to the second priority lien, of the Mortgage
subject to the exceptions set forth in paragraph (11) above; to the
best of CHL's knowledge, no claims have been made under such mortgage
title insurance policy and no prior holder of the related Mortgage,
including any Seller, has done, by act or omission, anything that
would impair the coverage of such mortgage title insurance policy.
(19) No Initial Mortgage Loan was the subject of a Principal
Prepayment in full between the Initial Cut-off Date and the Closing
Date. No Subsequent Mortgage Loan was the subject of a Principal
Prepayment in full between the Subsequent Cut-off Date and the
Subsequent Transfer Date.
60
(20) To the best of CHL's knowledge, all of the improvements
that were included for the purpose of determining the Appraised Value
of the Mortgaged Property lie wholly within the boundaries and
building restriction lines of such property, and no improvements on
adjoining properties encroach upon the Mortgaged Property.
(21) To the best of CHL's knowledge, no improvement located
on or being part of the Mortgaged Property is in violation of any
applicable zoning law or regulation. To the best of CHL's knowledge,
all inspections, licenses and certificates required to be made or
issued with respect to all occupied portions of the Mortgaged
Property and, with respect to the use and occupancy of the same,
including but not limited to certificates of occupancy and fire
underwriting certificates, have been made or obtained from the
appropriate authorities, unless the lack thereof would not have a
material adverse effect on the value of such Mortgaged Property, and
the Mortgaged Property is lawfully occupied under applicable law.
(22) The Mortgage Note and the related Mortgage are genuine,
and each is the legal, valid and binding obligation of the maker
thereof, enforceable in accordance with its terms and under
applicable law, except that (a) the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium, receivership and other
similar laws relating to creditors' rights generally and (b) the
remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought. To the best of CHL's knowledge, all parties to the Mortgage
Note and the Mortgage had legal capacity to execute the Mortgage Note
and the Mortgage and each Mortgage Note and Mortgage have been duly
and properly executed by such parties.
(23) The proceeds of the Mortgage Loan have been fully
disbursed, there is no requirement for future advances thereunder,
and any and all requirements as to completion of any on-site or
off-site improvements and as to disbursements of any escrow funds
therefor have been complied with. All costs, fees and expenses
incurred in making, or closing or recording the Mortgage Loan were
paid.
(24) The related Mortgage contains customary and enforceable
provisions that render the rights and remedies of the holder thereof
adequate for the realization against the Mortgaged Property of the
benefits of the security, including, (i) in the case of a Mortgage
designated as a deed of trust, by trustee's sale, and (ii) otherwise
by judicial foreclosure.
(25) With respect to each Mortgage constituting a deed of
trust, a trustee, duly qualified under applicable law to serve as
such, has been properly designated and currently so serves and is
named in such Mortgage, and no fees or expenses are or will become
payable by the Certificateholders to the trustee under the deed of
trust, except in connection with a trustee's sale after default by
the Mortgagor.
(26) [Reserved].
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(27) There exist no deficiencies with respect to escrow
deposits and payments, if such are required, for which customary
arrangements for repayment thereof have not been made, and no escrow
deposits or payments of other charges or payments due the Sellers
have been capitalized under the Mortgage or the related Mortgage
Note.
(28) The origination, underwriting, servicing and collection
practices with respect to each Mortgage Loan have been in all
respects legal, proper, prudent and customary in the mortgage lending
and servicing business, as conducted by prudent lending institutions
which service mortgage loans of the same type in the jurisdiction in
which the Mortgaged Property is located.
(29) There is no pledged account or other security other
than real estate securing the Mortgagor's obligations.
(30) No Mortgage Loan has a shared appreciation feature, or
other contingent interest feature.
(31) Each Mortgage Loan contains a customary "due on sale"
clause.
(32) No less than approximately the percentage specified in
the Collateral Schedule of the Initial Mortgage Loans are secured by
single family detached dwellings. No more than approximately the
percentage specified in the Collateral Schedule of the Initial
Mortgage Loans are secured by two- to four-family dwellings. No more
than approximately the percentage specified in the Collateral
Schedule of the Initial Mortgage Loans are secured by low-rise
condominium units. No more than approximately the percentage
specified in the Collateral Schedule of the Initial Mortgage Loans
are secured by high-rise condominium units. No more than
approximately the percentage specified in the Collateral Schedule of
the Initial Mortgage Loans are secured by manufactured housing. No
more than approximately the percentage specified in the Collateral
Schedule of the Initial Mortgage Loans are secured by PUDs.
(33) Each Initial Mortgage Loan was originated on or after
the date specified in the Collateral Schedule.
(34) [Reserved];
(35) Approximately the percentage specified in the
Collateral Schedule of the Initial Mortgage Loans provide for a
Prepayment Charge.
(36) On the basis of representations made by the Mortgagors
in their loan applications, no more than approximately the percentage
specified in the Collateral Schedule of the Initial Mortgage Loans,
respectively, are secured by investor properties, and no less than
approximately the percentage specified in the Collateral Schedule of
the Initial Mortgage Loans respectively, are secured by
owner-occupied Mortgaged Properties that are primary residences.
(37) At the Cut-off Date, the improvements upon each
Mortgaged Property are covered by a valid and existing hazard
insurance policy with a generally
62
acceptable carrier that provides for fire and extended coverage and
coverage for such other hazards as are customary in the area where
the Mortgaged Property is located in an amount that is at least equal
to the lesser of (i) the maximum insurable value of the improvements
securing such Mortgage Loan or (ii) the greater of (a) the
outstanding principal balance of the Mortgage Loan and (b) an amount
such that the proceeds of such policy shall be sufficient to prevent
the Mortgagor and/or the mortgagee from becoming a co-insurer. If the
Mortgaged Property is a condominium unit, it is included under the
coverage afforded by a blanket policy for the condominium unit. All
such individual insurance policies and all flood policies referred to
in item (38) below contain a standard mortgagee clause naming the
applicable Seller or the original mortgagee, and its successors in
interest, as mortgagee, and the applicable Seller has received no
notice that any premiums due and payable thereon have not been paid;
the Mortgage obligates the Mortgagor thereunder to maintain all such
insurance, including flood insurance, at the Mortgagor's cost and
expense, and upon the Mortgagor's failure to do so, authorizes the
holder of the Mortgage to obtain and maintain such insurance at the
Mortgagor's cost and expense and to seek reimbursement therefor from
the Mortgagor.
(38) If the Mortgaged Property is in an area identified in
the Federal Register by the Federal Emergency Management Agency as
having special flood hazards, a flood insurance policy in a form
meeting the requirements of the current guidelines of the Flood
Insurance Administration is in effect with respect to such Mortgaged
Property with a generally acceptable carrier in an amount
representing coverage not less than the least of (A) the original
outstanding principal balance of the Mortgage Loan, (B) the minimum
amount required to compensate for damage or loss on a replacement
cost basis, or (C) the maximum amount of insurance that is available
under the Flood Disaster Protection Act of 1973, as amended.
(39) To the best of CHL's knowledge, there is no proceeding
occurring, pending or threatened for the total or partial
condemnation of the Mortgaged Property.
(40) There is no material monetary default existing under
any Mortgage or the related Mortgage Note and, to the best of CHL's
knowledge, there is no material event that, with the passage of time
or with notice and the expiration of any grace or cure period, would
constitute a default, breach, violation or event of acceleration
under the Mortgage or the related Mortgage Note; and no Seller has
waived any default, breach, violation or event of acceleration.
(41) Each Mortgaged Property is improved by a one- to
four-family residential dwelling, including condominium units and
dwelling units in PUDs. To the best of CHL's knowledge, no
improvement to a Mortgaged Property includes a cooperative or a
mobile home or constitutes other than real property under state law.
(42) Each Mortgage Loan is being serviced by the Master
Servicer.
(43) Any future advances made prior to the Cut-off Date have
been consolidated with the outstanding principal amount secured by
the Mortgage, and the secured principal amount, as consolidated,
bears a single interest rate and single
63
repayment term reflected on the Mortgage Loan Schedule. The
consolidated principal amount does not exceed the original principal
amount of the Mortgage Loan. The Mortgage Note does not permit or
obligate the Master Servicer to make future advances to the Mortgagor
at the option of the Mortgagor.
(44) All taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or
ground rents that previously became due and owing have been paid, or
an escrow of funds has been established in an amount sufficient to
pay for every such item that remains unpaid and that has been
assessed, but is not yet due and payable. Except for (A) payments in
the nature of escrow payments, and (B) interest accruing from the
date of the Mortgage Note or date of disbursement of the Mortgage
proceeds, whichever is later, to the day that precedes by one month
the Due Date of the first installment of principal and interest,
including without limitation, taxes and insurance payments, the
Master Servicer has not advanced funds, or induced, solicited or
knowingly received any advance of funds by a party other than the
Mortgagor, directly or indirectly, for the payment of any amount
required by the Mortgage.
(45) The Mortgage Loans originated by CHL were underwritten
in all material respects in accordance with CHL's underwriting
guidelines for closed-end second lien mortgage loans or, with respect
to Mortgage Loans purchased by CHL were underwritten in all material
respects in accordance with customary and prudent underwriting
guidelines generally used by originators of closed-end second lien
mortgage loans.
(46) Prior to the approval of the Mortgage Loan application,
an appraisal of the related Mortgaged Property was obtained from a
qualified appraiser, duly appointed by the originator, who had no
interest, direct or indirect, in the Mortgaged Property or in any
loan made on the security thereof, and whose compensation is not
affected by the approval or disapproval of the Mortgage Loan; such
appraisal is in a form acceptable to Xxxxxx Xxx and Xxxxxxx Mac.
(47) None of the Mortgage Loans is a graduated payment
mortgage loan or a growing equity mortgage loan, and no Mortgage Loan
is subject to a buydown or similar arrangement.
(48) The Mortgage Rates borne by the Initial Mortgage Loans
as of the Cut-off Date ranged between the approximate per annum
percentages specified on the Collateral Schedule and the weighted
average Mortgage Rate of the Initial Mortgage Loans as of the Cut-off
Date was approximately the per annum rate specified on the Collateral
Schedule.
(49) The Mortgage Loans were selected from among the
outstanding one- to four-family mortgage loans in the applicable
Seller's portfolio at the Closing Date as to which the
representations and warranties made as to the Mortgage Loans set
forth in this Section 2.03(b) and Sections 2.03(c) and 2.03(d) can be
made. No selection was
64
made in a manner that would adversely affect the interests of
Certificateholders or the Certificate Insurer.
(50) [Reserved].
(51) Each of the Initial Mortgage Loans in the Mortgage Pool
has a Due Date on or before the date specified in the Collateral
Schedule.
(52) The Mortgage Loans, individually and in the aggregate,
conform in all material respects to the descriptions thereof in the
Prospectus Supplement.
(53) There is no obligation on the part of any Seller under
the terms of the Mortgage or related Mortgage Note to make payments
in addition to those made by the Mortgagor.
(54) Any leasehold estate securing a Mortgage Loan has a
term of not less than five years in excess of the term of the related
Mortgage Loan.
(55) Each Mortgage Loan represents a "qualified mortgage"
within the meaning of Section 860(a)(3) of the Code (but without
regard to the rule in Treasury Regulation ss. 1.860G-2(f)(2) that
treats a defective obligation as a qualified mortgage, or any
substantially similar successor provision) and applicable Treasury
regulations promulgated thereunder.
(56) No Mortgage Loan was either a "consumer credit
contract" or a "purchase money loan" as such terms are defined in 16
C.F.R. ss. 433 nor is any Mortgage Loan a "mortgage" as defined in 15
U.S.C. ss. 1602(aa).
(57) To the extent required under applicable law, each
originator and subsequent mortgagee or servicer of the Mortgage Loan
complied with all licensing requirements and was authorized to
transact and do business in the jurisdiction in which the related
Mortgaged Property is located at all times when it held or serviced
the Mortgage Loan. Any and all requirements of any federal, state or
local laws or regulations, including, without limitation, usury,
truth-in-lending, real estate settlement procedures, consumer credit
protection, anti-predatory lending, fair credit reporting, unfair
collection practice, equal credit opportunity, fair housing and
disclosure laws and regulations, applicable to the solicitation,
origination, collection and servicing of such Mortgage Loan have been
complied with in all material respects; and any obligations of the
holder of the Mortgage Note, Mortgage and other loan documents have
been complied with in all material respects; servicing of each
Mortgage Loan has been in accordance with prudent mortgage servicing
standards, any applicable laws, rules and regulations and in
accordance with the terms of the Mortgage Notes, Mortgage and other
loan documents, whether such origination and servicing was done by
the applicable Seller, its affiliates, or any third party which
originated the Mortgage Loan on behalf of, or sold the Mortgage Loan
to, any of them, or any servicing agent of any of the foregoing.
65
(58) The Mortgaged Property complies with all applicable
laws, rules and regulations relating to environmental matters,
including but not limited to those relating to radon, asbestos and
lead paint and no Seller nor, to the best of CHL's knowledge, the
Mortgagor, has received any notice of any violation or potential
violation of such law.
(59) There is no action, suit or proceeding pending, or to
the best of CHL's knowledge, threatened or likely to be asserted with
respect to the Mortgage Loan against or affecting any Seller before
or by any court, administrative agency, arbitrator or governmental
body.
(60) No action, inaction, or event has occurred and no state
of fact exists or has existed that has resulted or will result in the
exclusion from, denial of, or defense to coverage under any
applicable hazard insurance policy, irrespective of the cause of such
failure of coverage. In connection with the placement of any such
insurance, no commission, fee, or other compensation has been or will
be received by CHL or any designee of CHL or any corporation in which
CHL or any officer, director, or employee had a financial interest at
the time of placement of such insurance.
(61) Each Mortgage Loan has a fully assignable life of loan
tax service contract which may be assigned without the payment of any
fee.
(62) No Mortgagor has notified CHL or the Master Servicer on
CHL's behalf, and CHL has no knowledge, of any relief requested or
allowed to a Mortgagor under the Relief Act or any similar state or
local law.
(63) Each Mortgage Loan was (A) originated no earlier than
six months prior to the time the applicable Seller purchased such
Mortgage Loan pursuant to a mortgage loan purchase agreement or other
similar agreement and (B) underwritten or reunderwritten by CHL in
accordance with CHL's underwriting guidelines in effect at the time
the loan was underwritten or reunderwritten, as applicable.
(64) Each Mortgage Loan, at the time it was originated and
as of the Closing Date or the related Subsequent Transfer Date, as
applicable, complied in all material respects with applicable local,
state and federal laws, including, but not limited to, all predatory
and abusive lending laws.
(65) None of the Mortgage Loans is a "high cost" mortgage
loan as defined by applicable federal, state and local predatory and
abusive lending laws.
(66) Each Prepayment Charge is enforceable and was
originated in compliance with all applicable federal, state and local
laws.
(67) None of the Mortgage Loans that are secured by property
located in the State of Illinois are in violation of the provisions
of the Illinois Interest Act; 815 Ill. Comp. Stat. 205/0.01 (2004).
66
(68) There is no Mortgage Loan in the Trust Fund that was
originated on or after March 7, 2003, which is a "high cost home
loan" as defined under the Georgia Fair Lending Act.
(69) No Mortgage Loan in the Trust Fund is a High Cost Loan
or Covered Loan, as applicable (as such terms are defined in the
then-current Standard & Poor's LEVELS(R) Glossary which is now
Version 5.6(d), Appendix E) and no Mortgage Loan originated on or
after October 1, 2002 through March 6, 2003 is governed by the
Georgia Fair Lending Act.
(70) Each Mortgage Loan is secured by a "single family
residence" within the meaning of Section 25(e)(10) of the Internal
Revenue Code of 1986 (as amended) (the "Code"). The fair market value
of the manufactured home securing each Mortgage Loan was at least
equal to 80% of the adjusted issue price of the contract at either
(i) the time the contract was originated (determined pursuant to the
REMIC Provisions) or (ii) the time the contract is transferred to the
purchaser. Each Mortgage Loan is a "qualified mortgage" under Section
860G(a)(3) of the Code.
(71) No Mortgage Loan in the Trust Fund is a "high cost
home," "covered" (excluding home loans defined as "covered home
loans" in the New Jersey Home Ownership Security Act of 2002 that
were originated between November 26, 2003 and July 7, 2004), "high
risk home" or "predatory" loan under any applicable state, federal or
local law (or a similarly classified loan using different terminology
under a law imposing heightened regulatory scrutiny or additional
legal liability for residential mortgage loans having high interest
rates, points and/or fees).
(72) There is no Mortgage Loan in the Trust Fund that was
originated on or after October 1, 2002 and before March 7, 2003,
which is secured by property located in the State of Georgia.
(73) The representations in Section 2.03(c)(1) - (6) and
2.03(d)(1) - (6) are true and correct.
(74) The Mortgage Loans listed on the Mortgage Loan Schedule
as being covered by the Credit Insurance Policy are eligible for such
coverage.
(c) Park Monaco hereby represents and warrants to the Depositor, the
Certificate Insurer and the Trustee as follows, as of the Cut-off Date:
(1) Park Monaco is duly organized as a Delaware corporation
and is validly existing and in good standing under the laws of the
State of Delaware and is duly authorized and qualified to transact
any and all business contemplated by this Agreement and each
Subsequent Transfer Agreement to be conducted by Park Monaco in any
state in which a Mortgaged Property securing a Park Monaco Mortgage
Loan is located or is otherwise not required under applicable law to
effect such qualification and, in any event, is in compliance with
the doing business laws of any such state, to the extent necessary to
ensure its ability to enforce each Park Monaco Mortgage Loan, to sell
the Park Monaco Mortgage Loans in accordance with the terms of this
Agreement and each Subsequent
67
Transfer Agreement and to perform any of its other obligations under
this Agreement in accordance with the terms hereof.
(2) Park Monaco has the full company power and authority to
sell each Park Monaco Mortgage Loan, and to execute, deliver and
perform, and to enter into and consummate the transactions
contemplated by this Agreement and each Subsequent Transfer Agreement
and has duly authorized by all necessary corporate action on the part
of Park Monaco the execution, delivery and performance of this
Agreement and each Subsequent Transfer Agreement; and this Agreement
and each Subsequent Transfer Agreement, assuming the due
authorization, execution and delivery hereof by the other parties
hereto, constitutes a legal, valid and binding obligation of Park
Monaco, enforceable against Park Monaco 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.
(3) The execution and delivery of this Agreement and each
Subsequent Transfer Agreement by Park Monaco, the sale of the Park
Monaco Mortgage Loans by Park Monaco under this Agreement and each
Subsequent Transfer Agreement, the consummation of any other of the
transactions contemplated by this Agreement and each Subsequent
Transfer Agreement, and the fulfillment of or compliance with the
terms hereof are in the ordinary course of business of Park Monaco
and will not (A) result in a material breach of any term or provision
of the certificate of incorporation or by-laws of Park Monaco 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 Park Monaco is a
party or by which it may be bound, or (C) constitute a material
violation of any statute, order or regulation applicable to Park
Monaco of any court, regulatory body, administrative agency or
governmental body having jurisdiction over Park Monaco; and Park
Monaco 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 Park Monaco's
ability to perform or meet any of its obligations under this
Agreement.
(4) No litigation is pending or, to the best of Park
Monaco's knowledge, threatened, against Park Monaco that would
materially and adversely affect the execution, delivery or
enforceability of this Agreement or any Subsequent Transfer Agreement
or the ability of Park Monaco to sell the Park Monaco Mortgage Loans
or to perform any of its other obligations under this Agreement or
any Subsequent Transfer Agreement in accordance with the terms hereof
or thereof.
(5) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution,
delivery and performance by Park Monaco of, or compliance by Park
Monaco with, this Agreement or any Subsequent
68
Transfer Agreement or the consummation of the transactions
contemplated hereby, or if any such consent, approval, authorization
or order is required, Park Monaco has obtained the same.
(6) Park Monaco will treat the transfer of the Park Monaco
Mortgage Loans to the Depositor as a sale of the Park Monaco Mortgage
Loans for all tax, accounting and regulatory purposes.
(7) Immediately prior to the assignment of each Park Monaco
Mortgage Loan to the Depositor, Park Monaco had good title to, and
was the sole owner of, such Park Monaco Mortgage Loan free and clear
of any pledge, lien, encumbrance or security interest and had full
right and authority, subject to no interest or participation of, or
agreement with, any other party, to sell and assign the same pursuant
to this Agreement.
(d) Park Sienna hereby represents and warrants to the Depositor, the
Certificate Insurer and the Trustee as follows, as of the Cut-off Date:
(1) Park Sienna is duly organized as a Delaware limited
liability company and is validly existing and in good standing under
the laws of the State of Delaware and is duly authorized and
qualified to transact any and all business contemplated by this
Agreement and each Subsequent Transfer Agreement to be conducted by
Park Sienna in any state in which a Mortgaged Property securing a
Park Sienna Mortgage Loan is located or is otherwise not required
under applicable law to effect such qualification and, in any event,
is in compliance with the doing business laws of any such state, to
the extent necessary to ensure its ability to enforce each Park
Sienna Mortgage Loan, to sell the Park Sienna Mortgage Loans in
accordance with the terms of this Agreement and each Subsequent
Transfer Agreement and to perform any of its other obligations under
this Agreement in accordance with the terms hereof.
(2) Park Sienna has the full company power and authority to
sell each Park Sienna Mortgage Loan, and to execute, deliver and
perform, and to enter into and consummate the transactions
contemplated by this Agreement and each Subsequent Transfer Agreement
and has duly authorized by all necessary company action on the part
of Park Sienna the execution, delivery and performance of this
Agreement and each Subsequent Transfer Agreement; and this Agreement
and each Subsequent Transfer Agreement, assuming the due
authorization, execution and delivery hereof by the other parties
hereto, constitutes a legal, valid and binding obligation of Park
Sienna, enforceable against Park Sienna 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.
(3) The execution and delivery of this Agreement and each
Subsequent Transfer Agreement by Park Sienna, the sale of the Park
Sienna Mortgage Loans by Park Sienna under this Agreement and each
Subsequent Transfer Agreement,
69
the consummation of any other of the transactions contemplated by
this Agreement and each Subsequent Transfer Agreement and the
fulfillment of or compliance with the terms hereof are in the
ordinary course of business of Park Sienna and will not (A) result in
a material breach of any term or provision of the certificate of
formation or limited liability company agreement of Park Sienna 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 Park Sienna is
a party or by which it may be bound, or (C) constitute a material
violation of any statute, order or regulation applicable to Park
Sienna of any court, regulatory body, administrative agency or
governmental body having jurisdiction over Park Sienna; and Park
Sienna 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 Park Sienna's
ability to perform or meet any of its obligations under this
Agreement.
(4) No litigation is pending or, to the best of Park
Sienna's knowledge, threatened, against Park Sienna that would
materially and adversely affect the execution, delivery or
enforceability of this Agreement or any Subsequent Transfer Agreement
or the ability of Park Sienna to sell the Park Sienna Mortgage Loans
or to perform any of its other obligations under this Agreement or
any Subsequent Transfer Agreement in accordance with the terms hereof
or thereof.
(5) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution,
delivery and performance by Park Sienna of, or compliance by Park
Sienna with, this Agreement or any Subsequent Transfer Agreement or
the consummation of the transactions contemplated hereby, or if any
such consent, approval, authorization or order is required, Park
Sienna has obtained the same.
(6) Park Sienna will treat the transfer of the Park Sienna
Mortgage Loans to the Depositor as a sale of the Park Sienna Mortgage
Loans for all tax, accounting and regulatory purposes.
(7) Immediately prior to the assignment of each Park Sienna
Mortgage Loan to the Depositor, Park Sienna had good title to, and
was the sole owner of, such the Park Sienna Mortgage Loan free and
clear of any pledge, lien, encumbrance or security interest and had
full right and authority, subject to no interest or participation of,
or agreement with, any other party, to sell and assign the same
pursuant to this Agreement.
(e) Upon discovery by any of the parties hereto of a breach of a
representation or warranty set forth in Section 2.03(a) through (d) that
materially and adversely affects the interests of the Certificateholders or
the Certificate Insurer in any Mortgage Loan, the party discovering such
breach shall give prompt notice thereof to the other parties, the NIM Insurer
and the Certificate Insurer. Each of the Master Servicer and the Sellers
(each, a "Representing Party") hereby covenants with respect to the
representations and warranties set forth in Sections 2.03(a) through (d) that
within 90 days of the earlier of the discovery by such Representing Party or
receipt of written notice by such Representing Party from any party of a
breach of any representation or warranty set forth herein made that materially
and adversely affects the
70
interests of the Certificateholders in any Mortgage Loan or the Certificate
Insurer, it shall cure such breach in all material respects and, if such
breach is not so cured, shall, (i) if such 90-day period expires 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
(a) 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 the
Opinion of Counsel required by Section 2.05 hereof, (b) any such substitution
pursuant to (i) above shall not be effected prior to the additional delivery
to the Trustee of a Request for File Release and (c) any such substitution
pursuant to (i) above shall include a payment by the applicable Representing
Party of any amount as calculated under item (iii) of the definition of
"Purchase Price". Any Representing Party liable for a breach under this
Section 2.03 shall promptly reimburse the Master Servicer or the Trustee for
any expenses reasonably incurred by the Master Servicer or the Trustee in
respect of enforcing the remedies for such breach. To enable the Master
Servicer to amend the Mortgage Loan Schedule, any Representing Party liable
for a breach under this Section 2.03 shall, unless it cures such breach in a
timely fashion pursuant to this Section 2.03, promptly notify the Master
Servicer whether such Representing Party intends either to repurchase, or to
substitute for, the Mortgage Loan affected by such breach. With respect to the
representations and warranties described in this Section that are made to the
best of the Representing Party's knowledge, if it is discovered by any of the
Depositor, the Master Servicer, the Sellers, the Certificate Insurer 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 Representing Party's lack of knowledge with
respect to the substance of such representation or warranty, such inaccuracy
shall be deemed a breach of the applicable representation or warranty.
With respect to any Replacement Mortgage Loan or Loans, the
applicable Seller delivering such Replacement Mortgage Loan shall deliver to
the Trustee for the benefit of the Certificateholders and the Certificate
Insurer the related Mortgage Note, Mortgage and assignment of the Mortgage,
and such other documents and agreements as are required by Section 2.01, with
the Mortgage Note endorsed and the Mortgage assigned as required by Section
2.01. No substitution 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 applicable Seller delivering such Replacement
Mortgage Loan on such Distribution Date. 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
applicable Seller shall be entitled to retain all amounts received in respect
of such Deleted Mortgage Loan. The Master 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 the Master Servicer 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 applicable Seller delivering such Replacement Mortgage Loan 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
71
forth in Section 2.03(b), (c) or (d) with respect to such Mortgage Loan. Upon
any such substitution and the deposit to the Certificate Account of the amount
required to be deposited therein in connection with such substitution as
described in the following paragraph, the Trustee shall release to the
Representing Party the Mortgage File relating to such Deleted Mortgage Loan
and held for the benefit of the Certificateholders and shall execute and
deliver at the Master Servicer's direction such instruments of transfer or
assignment as have been prepared by the Master Servicer, in each case without
recourse, as shall be necessary to vest in the applicable Seller, or its
respective designee, title to the Trustee's interest in any Deleted Mortgage
Loan substituted for pursuant to this Section 2.03.
For any month in which any Seller substitutes one or more Replacement
Mortgage Loans for one or more Deleted Mortgage Loans, the Master Servicer
will determine the amount (if any) by which the aggregate principal balance of
all such 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 all such Deleted
Mortgage Loans. An amount equal to the aggregate of the deficiencies described
in the preceding sentence (such amount, the "Substitution Adjustment Amount")
shall be forwarded by the applicable Seller to the Master Servicer and
deposited by the Master Servicer into the Certificate Account not later than
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 a Seller shall have repurchased a Mortgage Loan,
the Purchase Price therefor shall be deposited in the Certificate Account
pursuant to Section 3.05 on the Determination Date for the Distribution Date
in the month following the month during which such Seller became obligated to
repurchase or replace such Mortgage Loan and upon such deposit of the Purchase
Price, the delivery of the Opinion of Counsel required by Section 2.05, if
any, and the receipt of a Request for File Release, the Trustee shall release
the related Mortgage File held for the benefit of the Certificateholders to
such Seller, and the Trustee shall execute and deliver at such Person's
direction the related instruments of transfer or assignment prepared by such
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 such 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 Sellers to cure, repurchase or replace any Mortgage Loan as
to which a breach has occurred and is continuing shall constitute the sole
remedy against the Sellers respecting such breach available to
Certificateholders, the Depositor or the Trustee.
(f) The representations and warranties set forth in this Section 2.03
shall survive delivery of the respective Mortgage Files to the Trustee for the
benefit of the Certificateholders and the Certificate Insurer with respect to
each Mortgage Loan.
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Section 2.04 Representations and Warranties of the Depositor.
The Depositor hereby represents and warrants to the Master Servicer,
the Certificate Insurer and the Trustee as follows, as of the date hereof and
as of each Subsequent Transfer Date:
(1) 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 and each Subsequent Transfer Agreement.
(2) 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 each Subsequent
Transfer Agreement and has duly authorized, by all necessary
corporate action on its part, the execution, delivery and performance
of this Agreement and each Subsequent Transfer Agreement; and this
Agreement and each Subsequent Transfer 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,
reorganization, moratorium and other similar laws affecting
creditors' rights generally and (ii) general principles of equity,
regardless of whether enforcement is sought in a proceeding in equity
or at law.
(3) The execution and delivery of this Agreement and each
Subsequent Transfer 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.
(4) 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 any Subsequent Transfer Agreement
or the ability of the Depositor to perform its obligations under this
Agreement or any Subsequent Transfer Agreement in accordance with the
terms hereof or thereof.
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(5) 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 any Subsequent Transfer 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 and the
Certificate Insurer with respect to each Mortgage Loan, as of the Closing Date
or the related Subsequent Transfer Date, as applicable, following the transfer
of such Mortgage Loan to it by the Sellers, the Depositor had good title to
the Initial Mortgage Loans or related Subsequent Mortgage Loans, as
applicable, 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 the two immediately preceding paragraphs shall survive delivery
of the Mortgage Files to the Trustee. Upon discovery by the Depositor or the
Trustee, of a breach of any of the foregoing representations and warranties
set forth in the immediately preceding paragraph (referred to herein as a
"breach"), which breach materially and adversely affects the interest of the
Certificateholders, the party discovering such breach shall give prompt
written notice to the others and to each Rating Agency, the Certificate
Insurer and the NIM Insurer. The Depositor hereby covenants with respect to
the representations and warranties made by it in this Section 2.04 that within
90 days of the earlier of the discovery by it or receipt of written notice by
it from any party of a breach of any representation or warranty set forth
herein made 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, shall repurchase or
replace the affected Mortgage Loan or Loans in accordance with the procedure
set forth in Section 2.03(e).
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, 2.03 or
2.04 shall be made unless the Representing Party making such repurchase or
substitution delivers to the Trustee and the Certificate Insurer an Opinion of
Counsel (which such Representing Party shall use reasonable efforts to
obtain), addressed to the Trustee and the Certificate Insurer to the effect
that such repurchase or substitution would not (i) result in the imposition of
the tax on "prohibited transactions" of the Trust Fund or contributions after
the Closing Date, as defined in sections 860F(a)(2) and 860G(d) of the Code,
respectively or (ii) cause the any REMIC formed hereunder 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, 2.03 or 2.04) upon the earlier of
(a) the occurrence of a default or imminent default with respect to such loan
and (b) receipt by the Trustee and the Certificate Insurer 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.
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(b) Upon discovery by the Depositor, any Seller, the Master Servicer
or the Trustee that any Mortgage Loan does not constitute a "qualified
mortgage" within the meaning of section 860G(a)(3) of the Code, the party
discovering such fact shall promptly (and in any event within five Business
Days of discovery) give written notice thereof to the other parties, the
Certificate Insurer and the NIM Insurer. In connection therewith, the Trustee
shall require CHL, at CHL's option, to either (i) substitute, if the
conditions in Section 2.03(e) 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 CHL 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 Authentication and Delivery of Certificates.
The Trustee acknowledges the transfer and assignment to it of the
Trust Fund and, concurrently with such transfer and assignment, has executed,
authenticated and delivered, to or upon the order of the Depositor, the
Certificates in authorized denominations evidencing the entire ownership of
the Trust Fund. The Trustee agrees to hold the Trust Fund and exercise the
rights referred to above for the benefit of all present and future Holders of
the Certificates and to perform the duties set forth in this Agreement.
Section 2.07 Covenants of the Master Servicer.
The Master Servicer hereby covenants to the Depositor, the
Certificate Insurer and the Trustee as follows:
(a) the Master Servicer shall comply in the performance of its
obligations under this Agreement with all reasonable rules and requirements of
the insurer under each Required Insurance Policy;
(b) no written information, certificate of an officer, statement
furnished in writing or written report delivered to the Depositor, any
affiliate of the Depositor or the Trustee and prepared by the Master Servicer
pursuant to this Agreement will contain any untrue statement of a material
fact or omit to state a material fact necessary to make the information,
certificate, statement or report not misleading; and
(c) the Master Servicer shall ensure that the Covered Mortgage Loans
are serviced in accordance with the requirements of the Credit Insurance
Policy.
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Section 2.08 Sponsor Loss Coverage Obligation.
CHL hereby agrees that, for the benefit of the Certificateholders and
the Certificate Insurer, on the Business Day immediately preceding each
Distribution Date it will remit to the Trustee for deposit into the
Distribution Account the amount of any Loss Coverage Payment due for such
Distribution Date as specified in the remittance report delivered by the
Master Servicer. The obligation of CHL to remit Loss Coverage Payments will
terminate when the Sponsor Loss Coverage Amount has been reduced to zero.
ARTICLE III.
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01 Master Servicer to Service Mortgage Loans.
For and on behalf of the Certificateholders, the Master Servicer
shall service and administer the Mortgage Loans in accordance with customary
and usual standards of practice of prudent mortgage loan lenders in the
respective states in which the Mortgaged Properties are located, including
taking all required and appropriate actions under each Required Insurance
Policy and taking all required and appropriate actions under the Credit
Insurance Policy on behalf of the Trustee, other than the payment of the
Credit Insurance Premium and obtaining the approval of the Credit Insurer with
respect to the appointment of a successor servicer. In connection with such
servicing and administration, the Master Servicer shall have full power and
authority, acting alone and/or through subservicers as provided in Section
3.02 hereof, subject to the terms hereof (i) to execute and deliver, on behalf
of the Certificateholders and the Trustee, customary consents or waivers and
other instruments and documents, (ii) to consent to transfers of any Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages (but only
in the manner provided in this Agreement), (iii) to collect any Insurance
Proceeds, other Liquidation Proceeds and Subsequent Recoveries, and (iv)
subject to Section 3.12(b), to effectuate foreclosure or other conversion of
the ownership of the Mortgaged Property securing any Mortgage Loan; provided
that the Master Servicer shall take no action that is inconsistent with or
prejudices the interests of the Trustee or the Certificateholders in any
Mortgage Loan or the rights and interests of the Depositor and the Trustee
under this Agreement. The Master Servicer shall represent and protect the
interest of the Trustee in the same manner as it currently protects its own
interest in mortgage loans in its own portfolio in any claim, proceeding or
litigation regarding a Mortgage Loan and shall not make or permit any
modification, waiver or amendment of any term of any Mortgage Loan which would
(i) cause any REMIC formed hereunder to fail to qualify as a REMIC, (ii)
result in the imposition of any tax under section 860(a) or 860(d) of the Code
or (iii) cause any Covered Mortgage Loan to not be covered by the Credit
Insurance Policy, but in any case the Master Servicer shall not act in any
manner that is a lesser standard than that provided in the first sentence of
this Section 3.01. Without limiting the generality of the foregoing, the
Master Servicer, in its own name or in the name of the Depositor and the
Trustee, is hereby authorized and empowered by the Depositor and the Trustee,
when the Master 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 Mortgaged
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Properties held for the benefit of the Certificateholders. The Master 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 Master 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 Master Servicer.
The Master Servicer further is authorized and empowered by the Trustee, on
behalf of the Certificateholders and the Trustee, in its own name or in the
name of the Subservicer, when the Master Servicer or the Subservicer, as the
case may be, believes it appropriate in its best judgment to register any
Mortgage Loan on the MERS(R) System, or cause the removal from the
registration of any Mortgage Loan on the MERS(R) System, to execute and
deliver, on behalf of the Trustee and the Certificateholders or any of them,
any and all instruments of assignment and other comparable instruments with
respect to such assignment or re-recording of a Mortgage in the name of MERS,
solely as nominee for the Trustee and its successors and assigns.
In accordance with the standards of the preceding paragraph, the
Master 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, which advances shall be reimbursable in the first instance from
related collections from the Mortgagors pursuant to Section 3.06, and further
as provided in Section 3.08. All costs incurred by the Master Servicer, if
any, in effecting the timely payments of taxes and assessments on the
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.
The Master Servicer shall deliver a list of Servicing Officers to the
Trustee by the Closing Date.
In addition, the Master Servicer shall administer the Credit
Insurance Policy on behalf of itself, the Sellers, the Depositor, and the
Trustee for the benefit of the Certificateholders and the Certificate Insurer,
when it is necessary to make claims and receive payments under the Credit
Insurance Policy. In connection with its activities as Master Servicer of the
Mortgage Loans, the Master Servicer agrees to present, on behalf of itself,
the Trustee and the Certificateholders, claims to the insurer under any
primary insurance policies and, in this regard, to take any reasonable action
necessary to permit recovery under any primary insurance policies respecting
defaulted Mortgage Loans. Any amounts collected by the Master Servicer under
any primary insurance policies shall be deposited in the Certificate Account.
The Master Servicer shall take whatever action is appropriate to
maximize the amounts payable under the Credit Insurance Policy and to service
the Covered Mortgage Loans in the manner required by the Credit Insurance
Policy. The Master Servicer shall prepare and submit all claims eligible for
submission under the Credit Insurance Policy and shall, except as otherwise
specified in this Agreement, perform all of the obligations of the insured
under the Credit Insurance Policy.
In the event that a shortfall in any collection on or liability with
respect to any Mortgage Loan results from or is attributable to adjustments to
Mortgage Rates, Scheduled Payments or Stated Principal Balances that were made
by the Master Servicer in a manner not
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consistent with the terms of the related Mortgage Note and this Agreement, the
Master Servicer, upon discovery or receipt of notice thereof, immediately
shall deliver to the Trustee for deposit in the Distribution Account from its
own funds the amount of any such shortfall and shall indemnify and hold
harmless the Trust Fund, the Trustee, the Depositor and any successor master
servicer in respect of any such liability. Such indemnities shall survive the
termination or discharge of this Agreement. Notwithstanding the foregoing,
this Section 3.01 shall not limit the ability of the Master Servicer to seek
recovery of any such amounts from the related Mortgagor under the terms of the
related Mortgage Note, as permitted by law and shall not be an expense of the
Trust.
Section 3.02 Subservicing; Enforcement of the Obligations of Master
Servicer.
(a) The Master Servicer may arrange for the subservicing of any
Mortgage Loan by a subservicer (each, a "Subservicer") pursuant to a
subservicing agreement (each, a "Subservicing Agreement"); provided that (i)
such subservicing arrangement and the terms of the related subservicing
agreement must provide for the servicing of such Mortgage Loans in a manner
consistent with the servicing arrangements contemplated hereunder, (ii) that
such subservicing agreements would not result in a withdrawal or a downgrading
by any Rating Agency of the ratings on any Class of Certificates (without
regard to the Certificate Insurance Policy in the case of the Class A
Certificates), as evidenced by a letter to that effect delivered by each
Rating Agency to the Depositor, the Certificate Insurer and the NIM Insurer
and (iii) the Certificate Insurer shall have consented to such subservicing
agreements (which consents shall not be unreasonably withheld) with
Subservicers, for the servicing and administration of the Mortgage Loans. The
Master Servicer shall deliver to the Trustee copies of all Sub-Servicing
Agreements, and any amendments or modifications thereof, promptly upon the
Master Servicer's execution and delivery of such instruments. The Master
Servicer, with the written consent of the Certificate Insurer (which consents
shall not be unreasonably withheld), shall be entitled to terminate any
Subservicing Agreement and the rights and obligations of any Subservicer
pursuant to any Subservicing Agreement in accordance with the terms and
conditions of such Subservicing Agreement. Notwithstanding the provisions of
any subservicing agreement, any of the provisions of this Agreement relating
to agreements or arrangements between the Master Servicer or a subservicer or
reference to actions taken through a Master Servicer or otherwise, the Master
Servicer shall remain obligated and liable to the Depositor, the Trustee and
the Certificateholders for the servicing and administration of the Mortgage
Loans in accordance with the provisions of this Agreement without diminution
of such obligation or liability by virtue of such subservicing agreements or
arrangements or by virtue of indemnification from the subservicer and to the
same extent and under the same terms and conditions as if the Master Servicer
alone were servicing and administering the Mortgage Loans. Every subservicing
agreement entered into by the Master Servicer shall contain a provision giving
the successor Master Servicer the option to terminate such agreement without
cost in the event a successor Master Servicer is appointed. All actions of
each subservicer performed pursuant to the related subservicing agreement
shall be performed as an agent of the Master Servicer with the same force and
effect as if performed directly by the Master Servicer.
(b) For purposes of this Agreement, the Master Servicer shall be
deemed to have received any collections, recoveries or payments with respect
to the Mortgage Loans that
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are received by a subservicer regardless of whether such payments are remitted
by the subservicer to the Master Servicer.
Section 3.03 Rights of the Depositor, the Sellers, the
Certificateholders, the NIM Insurer, the Certificate
Insurer and the Trustee in Respect of the Master Servicer.
None of the Trustee, the Sellers, the Certificateholders, the NIM
Insurer, the Certificate Insurer or the Depositor shall have any
responsibility or liability for any action or failure to act by the Master
Servicer, and none of them is obligated to supervise the performance of the
Master Servicer hereunder or otherwise. The Master Servicer shall afford (and
any Subservicing Agreement shall provide that each Subservicer shall afford)
the Depositor, the NIM Insurer, the Certificate Insurer and the Trustee, upon
reasonable notice, during normal business hours, access to all records
maintained by the Master Servicer (and any such Subservicer) in respect of the
Master Servicer's rights and obligations hereunder and access to officers of
the Master Servicer (and those of any such Subservicer) responsible for such
obligations. Upon request, the Master Servicer shall furnish to the Depositor,
the NIM Insurer, the Certificate Insurer and the Trustee its (and any such
Subservicer's) most recent financial statements and such other information
relating to the Master Servicer's capacity to perform its obligations under
this Agreement that it possesses. To the extent such information is not
otherwise available to the public, the Depositor, the NIM Insurer, the
Certificate Insurer and the Trustee shall not disseminate any information
obtained pursuant to the preceding two sentences without the Masters
Servicer's (or any such Subservicer's) written consent, except as required
pursuant to this Agreement or to the extent that it is necessary to do so (i)
in working with legal counsel, auditors, taxing authorities or other
governmental agencies, rating agencies or reinsurers or (ii) pursuant to any
law, rule, regulation, order, judgment, writ, injunction or decree of any
court or governmental authority having jurisdiction over the Depositor, the
Trustee, the NIM Insurer, the Certificate Insurer or the Trust Fund, and in
either case, the Depositor, the NIM Insurer, the Certificate Insurer or the
Trustee, as the case may be, shall use its reasonable best efforts to assure
the confidentiality of any such disseminated non-public information. The
Depositor may, but is not obligated to, enforce the obligations of the Master
Servicer under this Agreement and may, but is not obligated to, perform, or
cause a designee to perform, any defaulted obligation of the Master Servicer
under this Agreement or exercise the rights of the Master Servicer under this
Agreement; provided by virtue of such performance by the Depositor of its
designee. The Depositor shall not have any responsibility or liability for any
action or failure to act by the Master Servicer and is not obligated to
supervise the performance of the Master Servicer under this Agreement or
otherwise.
Section 3.04 Trustee to Act as Master Servicer.
In the event that the Master Servicer shall for any reason no longer
be the Master Servicer hereunder (including by reason of an Event of Default
or termination by the Depositor), the Trustee or, with the consent of the
Certificate Insurer, its designee shall thereupon assume all of the rights and
obligations of the Master Servicer hereunder arising thereafter (except that
the Trustee shall not be (i) liable for losses of the Master Servicer pursuant
to Section 3.10 hereof or any acts or omissions of the predecessor Master
Servicer hereunder, (ii) obligated to make Advances if it is prohibited from
doing so by applicable law, (iii) obligated to effectuate
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repurchases or substitutions of Mortgage Loans hereunder, including pursuant
to Section 2.02 or 2.03 hereof, (iv) responsible for expenses of the Master
Servicer pursuant to Section 2.03 or (v) deemed to have made any
representations and warranties hereunder, including pursuant to Section 2.03
or the first paragraph of Section 6.02 hereof). If the Master Servicer shall
for any reason no longer be the Master Servicer (including by reason of any
Event of Default or termination by the Depositor), the Trustee (or any other
successor servicer) may, at its option, succeed to any rights and obligations
of the Master Servicer under any subservicing agreement in accordance with the
terms thereof; provided that the Trustee (or any other successor servicer)
shall not incur any liability or have any obligations in its capacity as
servicer under a subservicing agreement arising prior to the date of such
succession unless it expressly elects to succeed to the rights and obligations
of the Master Servicer thereunder; and the Master Servicer shall not thereby
be relieved of any liability or obligations under the subservicing agreement
arising prior to the date of such succession.
The Master Servicer shall, upon request of the Trustee, but at the
expense of the Master Servicer, deliver to the assuming party all documents
and records relating to each subservicing agreement and the Mortgage Loans
then being serviced thereunder and an accounting of amounts collected held by
it and otherwise use its best efforts to effect the orderly and efficient
transfer of the subservicing agreement to the assuming party.
Section 3.05 Collection of Mortgage Loan Payments; Certificate
Account; Distribution Account; Pre-Funding Account;
Seller Shortfall Interest Requirement; Premium Account.
(a) The Master Servicer shall make reasonable efforts in accordance
with customary and usual standards of practice of prudent mortgage lenders in
the respective states in which the Mortgaged Properties are located 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 Master Servicer may in its discretion (i) waive any late
payment charge or, subject to Section 3.20, any Prepayment Charge or penalty
interest in connection with the prepayment of a Mortgage Loan and (ii) extend
the due dates for payments due on a Mortgage Note for a period not greater
than 270 days. In the event of any such arrangement, the Master Servicer shall
make Advances on the related Mortgage Loan during the scheduled period in
accordance with the amortization schedule of such Mortgage Loan without
modification thereof by reason of such arrangements. In addition, the NIM
Insurer's prior written consent shall be required for any waiver of Prepayment
Charges, if the aggregate number of outstanding Mortgage Loans that have been
granted such waivers exceeds 5% of the aggregate number of Initial Mortgage
Loans and Subsequent Mortgage Loans, and the NIM Insurer's and the Certificate
Insurer's prior written consent shall be required for the extension of the due
dates for payments due on a Mortgage Note, if the aggregate number of
outstanding Mortgage Loans that have been granted such extensions exceeds 5%
of the aggregate number of Initial Mortgage Loans and Subsequent Mortgage
Loans. The Master 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.
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(b) The Master Servicer shall establish and maintain a Certificate
Account into which the Master Servicer shall deposit or cause to be deposited
on a daily basis within two Business Days of receipt, except as otherwise
specifically provided herein, the following payments and collections remitted
by Subservicers or received by it in respect of 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:
(1) all payments on account of principal, including
Principal Prepayments, on the Mortgage Loans;
(2) all payments on account of interest on the Mortgage
Loans (net of the related Servicing Fee and Prepayment Interest
Excess permitted under Section 3.15 hereof to the extent not
previously paid to or withheld by the Master Servicer);
(3) all Insurance Proceeds (including proceeds from the
Credit Insurance Policy);
(4) all Liquidation Proceeds and Subsequent Recoveries,
other than proceeds to be applied to the restoration or repair of the
Mortgaged Property or released to the Mortgagor in accordance with
the Master Servicer's normal servicing procedures;
(5) all Compensating Interest;
(6) any amount required to be deposited by the Master
Servicer pursuant to Section 3.05(e) in connection with any losses on
Permitted Investments;
(7) any amounts required to be deposited by the Master
Servicer pursuant to Section 3.10 hereof;
(8) the Purchase Price and any Substitution Adjustment
Amount;
(9) all Advances made by the Master Servicer or the Trustee
pursuant to Section 4.01 hereof;
(10) all Prepayment Charges and Master Servicer Prepayment
Charge Payment Amounts; and
(11) any other amounts required to be deposited hereunder.
The foregoing requirements for remittance by the Master Servicer into
the Certificate 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 remitted
by the Master Servicer. In the event that the Master Servicer shall remit any
amount not required to be remitted and not otherwise subject to withdrawal
pursuant to Section 3.08 hereof, it may at any time withdraw or direct the
institution maintaining the Certificate Account, to withdraw such amount from
the Certificate Account, any provision herein to the contrary notwithstanding.
Such withdrawal or direction may be accomplished by
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delivering written notice thereof to the institution maintaining the
Certificate Account, that describes the amounts deposited in error in the
Certificate Account. The Master Servicer shall maintain adequate records with
respect to all withdrawals made pursuant to this Section. All funds deposited
in the Certificate Account shall be held in trust for the Certificateholders
until withdrawn in accordance with Section 3.08.
No later than 1:00 p.m. Pacific time on the Business Day prior to the
Master Servicer Advance Date in each of April 2006, May 2006 and June 0000,
XXX shall remit to the Master Servicer, and the Master Servicer shall deposit
in the Certificate Account, the Seller Shortfall Interest Requirement (if any)
for such Master Servicer Advance Date.
(c) The Trustee shall establish and maintain, on behalf of the
Certificateholders and the Certificate Insurer, the Distribution Account. The
Trustee shall, promptly upon receipt, deposit in the Distribution Account and
retain therein the following:
(1) the aggregate amount remitted by the Master Servicer
pursuant to the second paragraph of Section 3.08(a);
(2) any Loss Coverage Payment made by CHL pursuant to
Section 2.08;
(3) any amount required to be deposited by the Master
Servicer pursuant to Section 3.05(e) in connection with any losses on
Permitted Investments; and
(4) any amount to be deposited by the Trustee in the
Distribution Account pursuant to Section 3.05(d).
The foregoing requirements for remittance by the Master Servicer and
deposit by the Trustee into the Distribution Account shall be exclusive. In
the event that the Master Servicer shall remit any amount not required to be
remitted and not otherwise subject to withdrawal pursuant to Section 3.08
hereof, it may at any time direct the Trustee to withdraw such amount from the
Distribution Account, any provision herein to the contrary notwithstanding.
Such direction may be accomplished by delivering a written notice to the
Trustee that describes the amounts deposited in error in the Distribution
Account. All funds deposited in the Distribution Account shall be held by the
Trustee in trust for the Certificateholders until disbursed in accordance with
this Agreement or withdrawn in accordance with Section 3.08. In no event shall
the Trustee incur liability for withdrawals from the Distribution Account at
the direction of the Master Servicer.
(d) If the Pre-Funded Amount is greater than zero, the Trustee shall
establish and maintain, on behalf of the Certificateholders and the
Certificate Insurer, the Pre-Funding Account, and on the Closing Date, CHL
shall remit the Pre-Funded Amount to the Trustee for deposit in the
Pre-Funding Account.
On the Business Day before the Distribution Date following the end of
the Funding Period, the Trustee shall (i) withdraw the amount on deposit in
the Pre-Funding Account (net of investment income), (ii) promptly deposit such
amount in the Distribution
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Account, and (iii) distribute each amount to the Certificates on the
Distribution Date pursuant to Section 4.04.
(e) Each institution that maintains the Certificate Account, the
Distribution Account, the Premium Account or the Pre-Funding Account shall
invest the funds in each such account, as directed by the Master Servicer, in
Permitted Investments, which shall mature not later than (x) in the case of
the Certificate Account, the second Business Day next preceding the related
Distribution Account Deposit Date (except that if such Permitted Investment is
an obligation of the institution that maintains such Certificate Account, then
such Permitted Investment shall mature not later than the Business Day next
preceding such Distribution Account Deposit Date) and (y) in the case of the
Distribution Account, the Premium Account and the Pre-Funding Account, the
Business Day immediately preceding the first Distribution Date that follows
the date of such investment (except that if such Permitted Investment is an
obligation of the institution that maintains such Distribution Account, the
Premium Account or Pre-Funding Account, then such Permitted Investment shall
mature not later than such Distribution Date), in each case, 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. In
the case of (i) the Certificate Account and the Distribution Account, all
income and gain net of any losses realized from any such investment shall be
for the benefit of the Master Servicer as servicing compensation and shall be
remitted to it monthly as provided herein, (ii) the Pre-Funding Account, all
income and gain net of any losses realized from any such investment shall be
for the benefit of the Depositor and shall be remitted to the Depositor as
provided herein and (iii) the Premium Account, all income and gain net of any
losses realized from any such investment shall be for the benefit of the
Certificateholders and shall be remitted to the Premium Account. The amount of
any losses incurred in the Certificate Account or the Distribution Account in
respect of any such investments shall be deposited by the Master Servicer in
the Certificate Account or paid to the Trustee for deposit into the
Distribution Account out of the Master Servicer's own funds immediately as
realized. The amount of any losses incurred in the Pre-Funding Account in
respect of any such investments shall be paid by the Master Servicer to the
Trustee for deposit into the Pre-Funding Account out of the Master Servicer's
own funds immediately as realized. The Trustee shall not be liable for the
amount of any loss incurred in respect of any investment or lack of investment
of funds held in the Certificate Account, the Distribution Account, the
Premium Account or the Pre-Funding Account and made in accordance with this
Section 3.05. The Master Servicer shall not be liable for the amount of any
loss incurred in respect of any investment or lack of investment of funds held
in the Premium Account and made in accordance with this Section 3.05.
(f) The Master Servicer shall give at least 30 days advance notice to
the Trustee, each Seller, the Certificate Insurer, each Rating Agency and the
Depositor of any proposed change of location of the Certificate Account prior
to any change thereof. The Trustee shall give at least 30 days advance notice
to the Master Servicer, each Seller, the Certificate Insurer, each Rating
Agency and the Depositor of any proposed change of the location of the
Distribution Account, the Pre-Funding Account, the Premium Account or the
Carryover Reserve Fund prior to any change thereof.
(g) Except as otherwise expressly provided in this Agreement, if any
default occurs under any Permitted Investment, the Trustee may and, subject to
Sections 8.01 and
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8.02(a)(4), at the request of the Holders of Certificates representing more
than 50% of the Voting Rights, the Certificate Insurer or the NIM Insurer,
shall take any action appropriate to enforce payment or performance, including
the institution and prosecution of appropriate proceedings.
(h) Upon its initial receipt of written instructions from the Master
Servicer pursuant to Section 3.08(b)(vi) directing the Trustee to deposit an
amount in the Premium Account, the Trustee shall establish and maintain, on
behalf of the Certificateholders and the Certificate Insurer, the Premium
Account.
Section 3.06 Collection of Taxes, Assessments and Similar Items;
Escrow Accounts.
To the extent required by the related Mortgage Note, the Master
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 Master Servicer) for the payment of taxes, assessments,
hazard insurance premiums or comparable items for the account of the
Mortgagors. Nothing herein shall require the Master 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 Master Servicer out of related collections for any payments made
pursuant to Sections 3.01 hereof (with respect to taxes and assessments and
insurance premiums) and 3.10 hereof (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 Mortgagors on balances in the Escrow Account or to clear and
terminate the Escrow Account at the termination of this Agreement in
accordance with Section 9.01 hereof. The Escrow Accounts shall not be a part
of the Trust Fund.
Section 3.07 Access to Certain Documentation and Information
Regarding the Mortgage Loans.
The Master Servicer shall afford the Depositor, the NIM Insurer, the
Trustee and the Certificate Insurer reasonable access to all records and
documentation regarding the Mortgage Loans and all accounts, insurance
policies and other matters relating to this Agreement, such access being
afforded without charge, but only upon reasonable request and during normal
business hours at the offices of the Master Servicer designated by it. Upon
request, the Master Servicer shall furnish to the Trustee, the Certificate
Insurer and the NIM Insurer its most recent publicly available financial
statements and any other information relating to its capacity to perform its
obligations under this Agreement reasonably requested by the NIM Insurer or
the Certificate Insurer.
Upon reasonable advance notice in writing if required by federal
regulation, the Master Servicer will provide to each Certificateholder or
Certificate Owner that is a savings and loan association, bank or insurance
company certain reports and reasonable access to information and documentation
regarding the Mortgage Loans sufficient to permit such Certificateholder or
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Certificate Owner to comply with applicable regulations of the OTS or other
regulatory authorities with respect to investment in the Certificates;
provided that the Master Servicer shall be entitled to be reimbursed by each
such Certificateholder or Certificate Owner for actual expenses incurred by
the Master Servicer in providing such reports and access.
Section 3.08 Permitted Withdrawals from the Certificate Account,
Distribution Account, Carryover Reserve Fund and the
Principal Reserve Fund.
(a) The Master Servicer may from time to time make withdrawals from
the Certificate Account for the following purposes:
(i) to pay to the Master Servicer (to the extent not
previously paid to or withheld by the Master Servicer), as servicing
compensation in accordance with Section 3.15, 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 to the Master Servicer, those other amounts
set forth in Section 3.15;
(ii) to reimburse each of the Master Servicer and the
Trustee for Advances made by it with respect to the Mortgage Loans,
such right of reimbursement pursuant to this subclause (ii) being
limited to amounts received on particular Mortgage Loan(s)
(including, for this purpose, Liquidation Proceeds, Insurance
Proceeds and Subsequent Recoveries (other than proceeds of the Credit
Insurance Policy)) that represent late recoveries of payments of
principal and/or interest on such particular Mortgage Loan(s) in
respect of which any such Advance was made;
(iii) [Reserved];
(iv) to reimburse each of the Master Servicer and the
Trustee for any Nonrecoverable Advance previously made;
(v) to reimburse the Master Servicer from Insurance Proceeds
(other than proceeds of the Credit Insurance Policy) for Insured
Expenses covered by the related Insurance Policy;
(vi) to pay the Master Servicer any unpaid Servicing Fees
and to reimburse it for any unreimbursed Servicing Advances, the
Master Servicer's right to reimbursement of Servicing Advances
pursuant to this subclause (vi) with respect to any Mortgage Loan
being limited to amounts received on particular Mortgage Loan(s)
(including, for this purpose, Liquidation Proceeds, Insurance
Proceeds and Subsequent Recoveries and purchase and repurchase
proceeds) that represent late recoveries of the payments for which
such advances were made pursuant to Section 3.01 or Section 3.06;
(vii) to pay to the applicable Seller, the Depositor or the
Master Servicer, as applicable, with respect to each Mortgage Loan or
property acquired in respect thereof that has been purchased pursuant
to Section 2.02, 2.03, 2.04 or
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3.12, all amounts received thereon and not taken into account in
determining the related Purchase Price of such repurchased Mortgage
Loan;
(viii) to reimburse the applicable Seller, the Master
Servicer, the NIM Insurer or the Depositor for expenses incurred by
any of them in connection with the Mortgage Loans or Certificates and
reimbursable pursuant to Section 6.03 hereof; provided that such
amount shall only be withdrawn following the withdrawal from the
Certificate Account for deposit into the Distribution Account
pursuant to the following paragraph;
(ix) to pay any lender-paid primary mortgage insurance
premiums (other than the Credit Insurance Premium);
(x) to withdraw any amount deposited in the Certificate
Account and not required to be deposited therein; and
(xi) to clear and terminate the Certificate Account upon
termination of this Agreement pursuant to Section 9.01 hereof.
In addition, no later than 1:00 p.m. Pacific time on the Distribution
Account Deposit Date, the Master Servicer shall withdraw from the Certificate
Account and remit to the Trustee the Interest Remittance Amount, the Principal
Remittance Amount, Prepayment Charges collected and the Master Servicer
Prepayment Charge Payment Amount, and the Trustee shall deposit such amount in
the Distribution Account.
The Trustee shall establish and maintain, on behalf of the
Certificateholders, a Principal Reserve Fund in the name of the Trustee. On
the Closing Date, CHL shall deposit into the Principal Reserve Fund $200.00.
Funds on deposit in the Principal Reserve Fund shall not be invested. The
Principal Reserve Fund shall be treated as an "outside reserve fund" under
applicable Treasury regulations and shall not be part of any REMIC created
under this Agreement.
On the Business Day before the first Distribution Date, the Trustee
shall transfer $100.00 from the Principal Reserve Fund to the Distribution
Account, and on the first Distribution Date, the Trustee shall withdraw $100
and distribute such amount to the Class A-R Certificates in reduction of the
Certificate Principal Balance thereof.
On the Business Day before the Class P Principal Distribution Date,
the Trustee shall transfer from the Principal Reserve Fund to the Distribution
Account $100.00 and shall distribute such amount to the Class P Certificates
on the Class P Principal Distribution Date. Following the distributions to be
made in accordance with the preceding sentence, the Trustee shall then
terminate the Principal Reserve Fund.
The Master Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Certificate Account pursuant to subclauses (i), (ii),
(iv), (v), (vi), (vii), (viii), (ix) and (x) above. Prior to making any
withdrawal from the Certificate Account pursuant to subclause (iv), the Master
Servicer shall deliver to the Trustee an Officer's Certificate of a Servicing
Officer indicating the
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amount of any previous Advance determined by the Master Servicer to be a
Nonrecoverable Advance and identifying the related Mortgage Loan(s), and their
respective portions of such Nonrecoverable Advance.
(b) The Trustee shall withdraw funds from the Distribution Account
for distribution to the Certificateholders and the Certificate Insurer in the
manner specified in this Agreement (and to withhold from the amounts so
withdrawn, the amount of any taxes that it is authorized to retain pursuant to
the penultimate paragraph of Section 8.11). In addition, the Trustee may from
time to time make withdrawals from the Distribution Account for the following
purposes:
(i) to pay the Trustee the Trustee Fee on each Distribution
Date;
(ii) to pay to the Master Servicer, as additional servicing
compensation, earnings on or investment income with respect to funds
in or credited to the Distribution Account;
(iii) to withdraw pursuant to Section 3.05 any amount
deposited in the Distribution Account and not required to be
deposited therein;
(iv) to reimburse the Trustee for any unreimbursed Advances
made by it pursuant to Section 4.01(d) hereof, such right of
reimbursement pursuant to this subclause (iv) being limited to (x)
amounts received on the related Mortgage Loan(s) in respect of which
any such Advance was made and (y) amounts not otherwise reimbursed to
the Trustee pursuant to Section 3.08(a)(ii) hereof;
(v) to reimburse the Trustee for any Nonrecoverable Advance
previously made by the Trustee pursuant to Section 4.01(d) hereof,
such right of reimbursement pursuant to this subclause (v) being
limited to amounts not otherwise reimbursed to the Trustee pursuant
to Section 3.08(a)(iv) hereof;
(vi) to pay to the Co-Trustee, for payment to the Credit
Insurer as provided below, the Credit Insurance Premium or, upon
receipt with written instructions by the Master Servicer, deposit
72.222222% of the Credit Insurance Premium into the Premium Account;
and
(vii) to clear and terminate the Distribution Account upon
termination of the Agreement pursuant to Section 9.01 hereof.
The Co-Trustee shall from time to time upon receipt of written
instructions from the Master Servicer or instructions from the Trustee pay (or
cause to be paid) the applicable Credit Insurance Premium to the Credit
Insurer in accordance with such instructions.
(c) The Trustee shall withdraw funds from the Carryover Reserve Fund
for distribution to the Certificateholders in the manner specified in this
Agreement (and to withhold from the amounts so withdrawn, the amount of any
taxes that it is authorized to retain pursuant to the penultimate paragraph of
Section 8.11). In addition, the Trustee may from time to time make withdrawals
from the Carryover Reserve Fund for the following purposes:
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(1) to withdraw any amount deposited in the Carryover
Reserve Fund and not required to be deposited therein; and
(2) to clear and terminate the Carryover Reserve Fund upon
termination of the Agreement pursuant to Section 9.01 hereof.
Section 3.09 [Reserved].
Section 3.10 Maintenance of Hazard Insurance.
The Master Servicer shall cause to be maintained, for each Mortgage
Loan, hazard insurance with extended coverage in an amount that is at least
equal to the lesser of (i) the maximum insurable value of the improvements
securing such Mortgage Loan and (ii) the greater of (a) the outstanding
principal balance of the Mortgage Loan and (b) an amount such that the
proceeds of such policy shall be sufficient to prevent the related Mortgagor
and/or mortgagee from becoming a co-insurer. Each such policy of standard
hazard insurance shall contain, or have an accompanying endorsement that
contains, a standard mortgagee clause. The Master Servicer shall also cause
flood insurance to be maintained on property acquired upon foreclosure or deed
in lieu of foreclosure of any Mortgage Loan, to the extent described below.
Pursuant to Section 3.05 hereof, any amounts collected by the Master Servicer
under any such policies (other than the amounts to be applied to the
restoration or repair of the related Mortgaged Property or property thus
acquired or amounts released to the Mortgagor in accordance with the Master
Servicer's normal servicing procedures) shall be deposited in the Certificate
Account. Any cost incurred by the Master Servicer in maintaining any such
insurance shall not, for the purpose of calculating monthly distributions to
the Certificateholders or remittances to the Trustee for their benefit, be
added to the principal balance of the Mortgage Loan, notwithstanding that the
terms of the Mortgage Loan so permit. Such costs shall be recoverable by the
Master Servicer out of late payments by the related Mortgagor or out of
Liquidation Proceeds or Subsequent Recoveries to the extent permitted by
Section 3.08 hereof. It is understood and agreed that no earthquake or other
additional insurance is to be required of any Mortgagor or maintained on
property acquired in respect of a Mortgage other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance. If the Mortgaged Property is located at the
time of origination of the Mortgage Loan in a federally designated special
flood hazard area and such area is participating in the national flood
insurance program, the Master Servicer shall cause flood insurance to be
maintained with respect to such Mortgage Loan. Such flood insurance shall be
in an amount equal to the lesser of (i) the original principal balance of the
related Mortgage Loan, (ii) the replacement value of the improvements that are
part of such Mortgaged Property, or (iii) the maximum amount of such insurance
available for the related Mortgaged Property under the Flood Disaster
Protection Act of 1973, as amended. If the hazard policy contains a deductible
clause, the Master Servicer will be required to deposit from its own funds
into the Certificate Account the amounts that would have been deposited
therein but for the deductible clause.
Section 3.11 Enforcement of Due-On-Sale Clauses; Assumption
Agreements.
(a) Except as otherwise provided in this Section 3.11(a), when any
property subject to a Mortgage has been or is about to be conveyed by the
Mortgagor, the Master Servicer
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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 Master
Servicer is not 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 Master 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 Master
Servicer is authorized, subject to Section 3.11(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 Mortgage
Loan shall continue to be covered (if so covered before the Master Servicer
enters such agreement) by the applicable Required Insurance Policies. The
Master Servicer, subject to Section 3.11(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. The Master Servicer
shall notify the Trustee that any such substitution, modification or
assumption agreement has been completed by forwarding to the Trustee the
executed original of such substitution or assumption agreement, which document
shall be added to the related Mortgage File and shall, for all purposes, be
considered a part of such Mortgage File to the same extent as all other
documents and instruments constituting a part thereof.
(b) Subject to the Master Servicer's duty to enforce any due-on-sale
clause to the extent set forth in Section 3.11(a) hereof, in any case in which
a Mortgaged Property has been conveyed to a Person by a Mortgagor, and such
Person is to enter into an assumption agreement or modification agreement or
supplement to the Mortgage Note or Mortgage that requires the signature of the
Trustee, or if an instrument of release signed by the Trustee is required
releasing the Mortgagor from liability on the Mortgage Loan, the Master
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 Mortgage Loan) may be changed. In addition, the
substitute Mortgagor and the Mortgaged Property must be acceptable to the
Master Servicer in accordance with its underwriting standards as then in
effect. The Master Servicer shall notify the Trustee that any such
substitution or assumption agreement has been completed by forwarding to the
Trustee the original of such substitution or assumption agreement, which in
the case of the original shall be added to the related Mortgage File and
shall, for all purposes, be considered a
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part of such Mortgage File to the same extent as all other documents and
instruments constituting a part thereof. Any fee collected by the Master
Servicer for entering into an assumption or substitution of liability
agreement will be retained by the Master Servicer as additional servicing
compensation.
Section 3.12 Realization Upon Defaulted Mortgage Loans;
Determination of Excess Proceeds and Realized Losses;
Repurchase of Certain Mortgage Loans.
(a) The Master Servicer may agree to a modification of any Mortgage
Loan (the "Modified Mortgage Loan") if (i) CHL purchases the Modified Mortgage
Loan from the Trust Fund immediately following the modification as described
below and (ii) the Stated Principal Balance of such Mortgage Loan, when taken
together with the aggregate of the Stated Principal Balances of all other
Mortgage Loans that have been so modified since the Closing Date at the time
of those modifications, does not exceed an amount equal to 5% of the aggregate
Certificate Principal Balance of the related Certificates. Effective
immediately after the modification, and, in any event, on the same Business
Day on which the modification occurs, all interest of the Trustee in the
Modified Mortgage Loan shall automatically be deemed transferred and assigned
to CHL and all benefits and burdens of ownership thereof, including the right
to accrued interest thereon from the date of modification and the risk of
default thereon, shall pass to CHL. The Master Servicer shall promptly deliver
to the Trustee a certification of a Servicing Officer to the effect that all
requirements of this paragraph have been satisfied with respect to the
Modified Mortgage Loan. For federal income tax purposes, the Trustee shall
account for such purchase as a prepayment in full of the Modified Mortgage
Loan. CHL shall remit the Purchase Price to the Master Servicer for deposit
into the Certificate Account pursuant to Section 3.05 within one Business Day
after the purchase of the Modified Mortgage Loan. Upon receipt by the Trustee
of written notification of any such deposit signed by a Servicing Officer, the
Trustee shall release to CHL or its designee the related Mortgage File and
shall execute and deliver such instruments of transfer or assignment, in each
case without recourse, as shall be necessary to vest in CHL any Modified
Mortgage Loan previously transferred and assigned pursuant hereto. CHL
covenants and agrees to indemnify the Trust Fund against any liability for any
"prohibited transaction" taxes and any related interest, additions, and
penalties imposed on the Trust Fund established hereunder as a result of any
modification of a Mortgage Loan effected pursuant to this subsection (a), any
holding of a Modified Mortgage Loan by the Trust Fund or any purchase of a
Modified Mortgage Loan by CHL (but such obligation shall not prevent CHL or
any other appropriate Person from in good faith contesting any such tax in
appropriate proceedings and shall not prevent CHL from withholding payment of
such tax, if permitted by law, pending the outcome of such proceedings). CHL
shall have no right of reimbursement for any amount paid pursuant to the
foregoing indemnification, except to the extent that the amount of any tax,
interest, and penalties, together with interest thereon, is refunded to the
Trust Fund or CHL. If the Master Servicer agrees to a modification of any
Mortgage Loan pursuant to this Section 3.12(a), and if such Mortgage Loan
carries a Prepayment Charge provision, CHL shall deliver to the Trustee the
amount of the Prepayment Charge, if any, that would have been due had such
Mortgage Loan been prepaid at the time of such modification, for deposit into
the Certificate Account (not later than 1:00 p.m. Pacific time on the Master
Servicer Advance Date immediately succeeding the date of such modification)
for distribution in accordance with the terms of this Agreement.
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(b) The Master 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 Master 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 Master 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 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 Certificate Account
pursuant to Section 3.08 hereof). The Master Servicer shall be responsible for
all other costs and expenses incurred by it in any such proceedings; provided
that it shall be entitled to reimbursement thereof from the proceeds of
liquidation of the related Mortgaged Property and any related Subsequent
Recoveries, as contemplated in Section 3.08 hereof. If the Master Servicer has
knowledge that a Mortgaged Property that the Master 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 Master Servicer, the Master Servicer will, prior to acquiring the
Mortgaged Property, consider such risks and only take action in accordance
with its established environmental review procedures.
With respect to any REO Property, the deed or certificate of sale
shall be taken in the name of the Trustee for the benefit of the
Certificateholders (or 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 Master Servicer shall ensure that the title to such REO Property
references this Agreement and the Trustee's capacity thereunder. Pursuant to
its efforts to sell such REO Property, the Master Servicer shall either itself
or through an agent selected by the Master 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 Master Servicer deems to be in the best
interest of the Master Servicer and the Certificateholders for the period
prior to the sale of such REO Property. The Master 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 Certificate
Account no later than the close of business on each Determination Date. The
Master Servicer shall perform the tax reporting and withholding related to
foreclosures, abandonments and cancellation of indebtedness income as
specified by Sections 1445, 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 Master Servicer shall dispose of such Mortgaged Property as
soon as practicable in a manner that
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maximizes the Liquidation Proceeds, but in no event later than three years
after its acquisition by the Trust Fund or, at the expense of the Trust Fund,
the Master Servicer shall request, 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. In the event the Trustee and the Certificate Insurer shall have
been supplied with an Opinion of Counsel (such opinion not to be an expense of
the Trustee or the Certificate Insurer) 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 the
Trust Fund as defined in section 860F of the Code or cause any REMIC formed
hereunder to fail to qualify as a REMIC at any time that any Certificates are
outstanding, and the Trust Fund may continue to hold such Mortgaged Property
(subject to any conditions contained in such Opinion of Counsel) after the
expiration of such three-year period. 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 the Trust Fund 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 Master Servicer has
agreed to indemnify and hold harmless the Trust Fund with respect to the
imposition of any such taxes.
The decision of the Master Servicer to foreclose on a defaulted
Mortgage Loan shall be subject to a determination by the Master 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 Master 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 related 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 this Agreement, to be payments on account of
principal and interest on the related Mortgage Notes and shall be deposited
into the Certificate 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 and
any Subsequent Recoveries, net of any payment to the Master Servicer as
provided above, shall be deposited in the Certificate Account as provided in
Section 3.05 for distribution on the related Distribution Date, except that
any Excess Proceeds shall be retained by the Master Servicer as additional
servicing compensation.
The proceeds of any Liquidated Mortgage Loan, as well as any recovery
resulting from a partial collection of Liquidation Proceeds or any income from
an REO Property, will be applied in the following order of priority: first, to
reimburse the Master Servicer for any related unreimbursed Servicing Advances
and Servicing Fees, pursuant to Section 3.08(a)(vi) or this Section 3.12;
second, to reimburse the Master Servicer for any unreimbursed Advances,
pursuant
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to Section 3.08(a)(ii) or this Section 3.12; 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 Due
Date occurring in the month in which such amounts are required to be
distributed; and fourth, as a recovery of principal of the Mortgage Loan.
(c) [Reserved].
(d) The Master Servicer, in its sole discretion, shall have the right
to elect (by written notice sent to the Trustee and the Certificate Insurer)
to purchase for its own account from the Trust Fund any Mortgage Loan that is
150 days or more delinquent at a price equal to the Purchase Price; provided,
however, that the Master Servicer may only exercise this right on or before
the last day of the calendar month in which such Mortgage Loan became 150 days
delinquent (such month, the "Eligible Repurchase Month"); provided further,
that any such Mortgage Loan which becomes current but thereafter becomes
delinquent may be purchased by the Master Servicer pursuant to this Section in
any ensuing Eligible Repurchase Month. The Purchase Price for any Mortgage
Loan purchased hereunder shall be deposited in the Certificate Account. Any
purchase of a Mortgage Loan pursuant to this Section 3.12(d) shall be
accomplished by remittance to the Master Servicer for deposit in the
Certificate Account of the Purchase Price. The Trustee, upon receipt of
certification from the Master Servicer of such deposit and a Request for File
Release from the Master Servicer, shall release or cause to be released to the
purchaser of such Mortgage Loan the related Mortgage File and shall execute
and deliver such instruments of transfer or assignment prepared by the
purchaser of such Mortgage Loan, in each case without recourse, as shall be
necessary to vest in the purchaser of such Mortgage Loan any Mortgage Loan
released pursuant hereto and the purchaser of such Mortgage Loan shall succeed
to all the Trustee's right, title and interest in and to such Mortgage Loan
and all security and documents related thereto. Such assignment shall be an
assignment outright and not for security. The purchaser of such Mortgage Loan
shall thereupon own such Mortgage Loan, and all security and documents, free
of any further obligation to the Trustee or the Certificateholders with
respect thereto.
Section 3.13 Trustee to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Master Servicer of a notification that payment in full will be escrowed in a
manner customary for such purposes, the Master Servicer will promptly notify
the Trustee by delivering a Request for File Release. Upon receipt of such
request, the Trustee shall promptly release the related Mortgage File to the
Master Servicer, and the Trustee shall at the Master Servicer's direction
execute and deliver to the Master Servicer the request for reconveyance, deed
of reconveyance or release or satisfaction of mortgage or such instrument
releasing the lien of the Mortgage in each case provided by the Master
Servicer, together with the Mortgage Note with written evidence of
cancellation thereon. The Master Servicer is authorized to cause the removal
from the registration on the MERS(R) System of such Mortgage and to execute
and deliver, on behalf of the Trust Fund and the Certificateholders or any of
them, any and all instruments of satisfaction or cancellation or of partial or
full release. No expenses incurred in connection with any instrument of
satisfaction or deed of reconveyance shall be chargeable to the Certificate
Account, the Distribution Account, the Carryover Reserve Fund or the related
subservicing account. From time to time and as shall be appropriate for the
servicing or foreclosure of any Mortgage Loan,
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including for such purpose, collection under any policy of flood insurance any
fidelity bond or errors or omissions policy, or for the purposes of effecting
a partial release of any Mortgaged Property from the lien of the Mortgage or
the making of any corrections to the Mortgage Note or the Mortgage or any of
the other documents included in the Mortgage File, the Trustee shall, upon
delivery to the Trustee of a Request for Document Release or a Request for
File Release, as applicable, release the documents specified in such request
or the Mortgage File, as the case may be, to the Master Servicer. Subject to
the further limitations set forth below, the Master Servicer shall cause the
Mortgage File or documents so released to be returned to the Trustee when the
need therefor by the Master Servicer no longer exists, unless the Mortgage
Loan is liquidated and the proceeds thereof are deposited in the Certificate
Account, in which case the Master Servicer shall deliver to the Trustee a
Request for File Release for any remaining documents in the Mortgage File not
in the possession of the Master Servicer.
If the Master Servicer at any time seeks to initiate a foreclosure
proceeding in respect of any Mortgaged Property as authorized by this
Agreement, the Master Servicer shall deliver or cause to be delivered to the
Trustee, for signature, as appropriate, any court pleadings, requests for
trustee's sale or other documents necessary to effectuate such foreclosure or
any legal action brought to obtain judgment against the Mortgagor on the
Mortgage Note or the Mortgage or to obtain a deficiency judgment or to enforce
any other remedies or rights provided by the Mortgage Note or the Mortgage or
otherwise available at law or in equity. Notwithstanding the foregoing, the
Master Servicer shall cause possession of any Mortgage File or of the
documents therein that shall have been released by the Trustee to be returned
to the Trustee within 21 calendar days after possession thereof shall have
been released by the Trustee unless (i) the Mortgage Loan has been liquidated
and the Liquidation Proceeds relating to the Mortgage Loan have been deposited
in the Certificate Account, and the Master Servicer shall have delivered to
the Trustee a Request for File Release or (ii) the Mortgage File or document
shall have been delivered to an attorney or to a public trustee or other
public official as required by law for purposes of initiating or pursuing
legal action or other proceedings for the foreclosure of the Mortgaged
Property and the Master Servicer shall have delivered to the Trustee an
Officer's Certificate of a Servicing Officer certifying as to the name and
address of the Person to which the Mortgage File or the documents therein were
delivered and the purpose or purposes of such delivery.
Section 3.14 Documents, Records and Funds in Possession of Master
Servicer to be Held for the Trustee.
Notwithstanding any other provisions of this Agreement, the Master
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 Master Servicer from time to time and shall account fully to
the Trustee for any funds received by the Master Servicer or that otherwise
are collected by the Master Servicer as Liquidation Proceeds, Insurance
Proceeds or Subsequent Recoveries in respect of any Mortgage Loan. All
Mortgage Files and funds collected or held by, or under the control of, the
Master Servicer in respect of any Mortgage Loans, whether from the collection
of principal and interest payments or from Liquidation Proceeds or Subsequent
Recoveries including but not limited to, any funds on deposit in the
Certificate Account, shall be held by the Master Servicer for and on behalf of
the Trust Fund and shall be and remain the sole and exclusive property of the
Trust Fund, subject to the applicable
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provisions of this Agreement. The Master Servicer also agrees that it shall
not create, incur or subject any Mortgage File or any funds that are deposited
in the Certificate Account, the Distribution Account, the Carryover Reserve
Fund or in any Escrow Account (as defined in Section 3.06), 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 Master Servicer shall be entitled to set off against and deduct from any
such funds any amounts that are properly due and payable to the Master
Servicer under this Agreement.
Section 3.15 Servicing Compensation.
As compensation for its activities hereunder, the Master Servicer
shall be entitled to retain or withdraw from the Certificate Account out of
each payment of interest on a Mortgage Loan included in the Trust Fund an
amount equal to interest at the applicable Servicing Fee Rate on the Stated
Principal Balance of the related Mortgage Loan for the period covered by such
interest payment.
Additional servicing compensation in the form of any Excess Proceeds,
assumption fees, late payment charges, Prepayment Interest Excess, and all
income and gain net of any losses realized from Permitted Investments shall be
retained by the Master Servicer to the extent not required to be deposited in
the Certificate Account pursuant to Section 3.05 or 3.12(b) hereof. The Master
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 3.10 hereof and maintenance of the
other forms of insurance coverage required by Section 3.10 hereof) and shall
not be entitled to reimbursement therefor except as specifically provided in
Sections 3.08 and 3.12 hereof.
Section 3.16 Access to Certain Documentation.
The Master Servicer shall provide to the OTS and the FDIC and to
comparable regulatory authorities supervising Holders of the Certificates and
Certificate Owners and the examiners and supervisory agents of the OTS, the
FDIC and such other authorities, access to the documentation regarding the
Mortgage Loans required by applicable regulations of the OTS and the FDIC.
Such access shall be afforded without charge, but only upon reasonable and
prior written request and during normal business hours at the offices of the
Master Servicer designated by it. Nothing in this Section shall limit the
obligation of the Master Servicer to observe any applicable law prohibiting
disclosure of information regarding the Mortgagors and the failure of the
Master Servicer to provide access as provided in this Section as a result of
such obligation shall not constitute a breach of this Section.
Section 3.17 Annual Statement as to Compliance.
(a) The Master Servicer shall deliver to the Depositor, the
Certificate Insurer and the Trustee on or before March 15 of each year,
commencing with its 2007 fiscal year, an Officer's Certificate stating, as to
the signer thereof, that (i) a review of the activities of the
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Master Servicer during the preceding calendar year (or applicable portion
thereof) and of the performance of the Master Servicer under this Agreement,
has been made under such officer's supervision and (ii) to the best of such
officer's knowledge, based on such review, the Master Servicer has fulfilled
all its obligations under this Agreement, in all material respects throughout
such year (or applicable portion thereof), or, if there has been a failure to
fulfill any such obligation in any material respect, specifying each such
failure known to such officer and the nature and status thereof and (iii) to
the best of such officer's knowledge, each Subservicer has fulfilled all its
obligations under its Subservicing Agreement in all material respects
throughout such year, or, if there has been a failure to fulfill any such
obligation in any material respect specifying each such failure known to such
officer and the nature and status thereof.
(b) The Master Servicer shall cause each Subservicer to deliver to
the Depositor and the Trustee on or before March 15 of each year, commencing
with its 2007 fiscal year, an Officer's Certificate stating, as to the signer
thereof, that (i) a review of the activities of such Subservicer during the
preceding calendar year (or applicable portion thereof) and of the performance
of the Subservicer under the applicable Subservicing Agreement or primary
servicing agreement, has been made under such officer's supervision and (ii)
to the best of such officer's knowledge, based on such review, such
Subservicer has fulfilled all its obligations under the applicable
Subservicing Agreement or primary servicing agreement, in all material
respects throughout such year (or applicable portion thereof), or, if there
has been a failure to fulfill any such obligation in any material respect,
specifying each such failure known to such officer and the nature and status
thereof.
(c) The Trustee shall forward a copy of each such statement to each
Rating Agency. Copies of such statement shall be provided by the Trustee to
any Certificateholder or Certificate Owner upon request at the Master
Servicer's expense, provided such statement is delivered by the Master
Servicer to the Trustee.
Section 3.18 The Corridor Contract.
CHL shall cause The Bank of New York to enter into the Corridor
Contract Administration Agreement and shall assign all of its right, title and
interest in and to the interest rate corridor transaction evidenced by the
Corridor Contract to, and shall cause all of its obligations in respect of
such transaction to be assumed by, the Corridor Contract Administrator, on the
terms and conditions set forth in the Corridor Contract Assignment Agreement.
The Trustee's rights to receive certain proceeds of the Corridor Contract as
provided in the Corridor Contract Administration Agreement will be an asset of
the Trust Fund but will not be an asset of any REMIC. The Trustee shall
deposit any amounts received from time to time with respect to the Corridor
Contract into the Carryover Reserve Fund. The Master Servicer shall deposit
any amounts received on behalf of the Trustee from time to time with respect
to the Corridor Contract into the Carryover Reserve Fund.
No later than two Business Days following each Distribution Date, the
Trustee shall provide the Corridor Contract Administrator with information
regarding the Certificate Principal Balance of the Class A-1 Certificates
after all distributions on such Distribution Date.
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The Trustee shall direct the Corridor Contract Administrator to
terminate the Corridor Contract upon the occurrence of certain events of
default or termination events to the extent specified thereunder. Upon any
such termination, the Corridor Contract Counterparty will be obligated to pay
the Corridor Contract Administrator an amount in respect of such termination,
and the portion of such amount that is distributable to the Trust Fund
pursuant to the Corridor Contract Administration Agreement and received by the
Trustee or the Master Servicer for the benefit of the Trust Fund, as the case
may be, in respect of such termination shall be deposited and held in the
Carryover Reserve Fund to pay Net Rate Carryover for the Class A-1
Certificates as provided in Section 4.04(d) on the Distribution Dates
following such termination to and including the Corridor Contract Termination
Date, but shall not be available for distribution to the Class C Certificates
pursuant to Section 4.07(c) until such Corridor Contract Termination Date. On
the Corridor Contract Termination Date, after all other distributions on such
date, if any such amount in respect of early termination of the Corridor
Contract remains in the Carryover Reserve Fund, such amounts shall be
distributed by the Trustee to the Class C Certificates.
Section 3.19 [Reserved].
Section 3.20 Prepayment Charges.
(a) Notwithstanding anything in this Agreement to the contrary, in
the event of a Principal Prepayment in full or in part of a Mortgage Loan, the
Master Servicer may not waive any Prepayment Charge or portion thereof
required by the terms of the related Mortgage Note unless (i) such Mortgage
Loan is in default or the Master Servicer believes that such a default is
imminent, and the Master Servicer determines that such waiver would maximize
recovery of Liquidation Proceeds for such Mortgage Loan, taking into account
the value of such Prepayment Charge, or (ii) (A) the enforceability thereof is
limited (1) by bankruptcy, insolvency, moratorium, receivership, or other
similar law relating to creditors' rights generally or (2) due to acceleration
in connection with a foreclosure or other involuntary payment, or (B) the
enforceability is otherwise limited or prohibited by applicable law. In the
event of a Principal Prepayment in full or in part with respect to any
Mortgage Loan, the Master Servicer shall deliver to the Trustee an Officer's
Certificate substantially in the form of Exhibit T no later than the third
Business Day following the immediately succeeding Determination Date with a
copy to the Class P Certificateholders. If the Master Servicer has waived or
does not collect all or a portion of a Prepayment Charge relating to a
Principal Prepayment in full or in part due to any action or omission of the
Master Servicer, other than as provided above, the Master Servicer shall
deliver to the Trustee, together with the Principal Prepayment in full or in
part, the amount of such Prepayment Charge (or such portion thereof as had
been waived) for deposit into the Certificate Account (not later than 1:00
p.m. Pacific time on the immediately succeeding Master Servicer Advance Date,
in the case of such Prepayment Charge) for distribution in accordance with the
terms of this Agreement.
(b) Upon discovery by the Master Servicer or a Responsible Officer of
the Trustee of a breach of the foregoing subsection (a), the party discovering
the breach shall give prompt written notice to the other parties.
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(c) CHL represents and warrants to the Depositor and the Trustee, as
of the Closing Date and each Subsequent Transfer Date, that the information in
the Prepayment Charge Schedule (including the attached prepayment charge
summary) is complete and accurate in all material respects at the dates as of
which the information is furnished and each Prepayment Charge is permissible
and enforceable in accordance with its terms under applicable state law,
except as the enforceability thereof is limited due to acceleration in
connection with a foreclosure or other involuntary payment.
(d) Upon discovery by the Master Servicer or a Responsible Officer of
the Trustee of a breach of the foregoing clause (c) that materially and
adversely affects right of the Holders of the Class P Certificates to any
Prepayment Charge, the party discovering the breach shall give prompt written
notice to the other parties hereto. Within 60 days of the earlier of discovery
by the Master Servicer or receipt of notice by the Master Servicer of breach,
the Master Servicer shall cure the breach in all material respects or shall
pay into the Certificate Account the amount of the Prepayment Charge that
would otherwise be due from the Mortgagor, less any amount representing such
Prepayment Charge previously collected and paid by the Master Servicer into
the Certificate Account.
ARTICLE IV.
DISTRIBUTIONS AND ADVANCES BY THE MASTER SERVICER
Section 4.01 Advances; Remittance Reports.
(a) Within two Business Days after each Determination Date, the
Master Servicer shall deliver to the Trustee by facsimile or electronic mail
(or by such other means as the Master Servicer and the Trustee, as the case
may be, may agree from time to time) a Remittance Report with respect to the
related Distribution Date. The Trustee shall not be responsible to recompute,
recalculate or verify any information provided to it by the Master Servicer.
(b) Subject to the conditions of this Article IV, the Master
Servicer, as required below, shall make an Advance and deposit such Advance in
the Certificate Account. Each such Advance shall be remitted to the
Certificate Account no later than 1:00 p.m. Pacific time on the Master
Servicer Advance Date in immediately available funds. The Trustee will provide
notice to the Master Servicer by facsimile by the close of business on any
Master Servicer Advance Date in the event that the amount remitted by the
Master Servicer to the Trustee on the Distribution Account Deposit Date is
less than the Advances required to be made by the Master Servicer for such
Distribution Date. The Master Servicer shall be obligated to make any such
Advance only to the extent that such advance would not be a Nonrecoverable
Advance. If the Master 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 Master 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 and the Trustee an Officer's Certificate
setting forth the basis for such determination.
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(c) In lieu of making all or a portion of such Advance from its own
funds, the Master Servicer may (i) cause to be made an appropriate entry in
its records relating to the Certificate Account that any Amount Held for
Future Distributions has been used by the Master Servicer in discharge of its
obligation to make any such Advance and (ii) transfer such funds from the
Certificate Account to the Distribution Account. Any funds so applied and
transferred shall be replaced by the Master Servicer by deposit in the
Certificate Account no later than the close of business on the Business Day
immediately preceding the Distribution Date on which such funds are required
to be distributed pursuant to this Agreement. The Master Servicer shall be
entitled to be reimbursed from the Certificate Account for all Advances of its
own funds made pursuant to this Section as provided in Section 3.08. The
obligation to make Advances with respect to any Mortgage Loan shall continue
until such Mortgage Loan is paid in full or becomes a Liquidated Mortgage Loan
or until the purchase or repurchase thereof (or substitution therefor) from
the Trustee pursuant to any applicable provision of this Agreement, except as
otherwise provided in this Section 4.01.
(d) If the Master Servicer determines that it will be unable to
comply with its obligation to make the Advances as and when described in
paragraphs (b) and (c) immediately above, it shall use its best efforts to
give written notice thereof to the Trustee (each such notice a "Trustee
Advance Notice"; and such notice may be given by facsimile), not later than
3:00 p.m., New York time, on the Business Day immediately preceding the
related Master Servicer Advance Date, specifying the amount that it will be
unable to deposit (each such amount an "Advance Deficiency") and certifying
that such Advance Deficiency constitutes an Advance hereunder and is not a
Nonrecoverable Advance. If the Trustee receives a Trustee Advance Notice on or
before 3:30 p.m., (New York time) on a Master Servicer Advance Date, the
Trustee shall, not later than 3:00 p.m., (New York time), on the related
Distribution Date, deposit in the Distribution Account an amount equal to the
Advance Deficiency identified in such Trustee Advance Notice unless it is
prohibited from so doing by applicable law. Notwithstanding the foregoing, the
Trustee shall not be required to make such deposit if the Trustee shall have
received written notification from the Master Servicer that the Master
Servicer has deposited or caused to be deposited in the Certificate Account an
amount equal to such Advance Deficiency. All Advances made by the Trustee
pursuant to this Section 4.01(d) shall accrue interest on behalf of the
Trustee at the Trustee Advance Rate from and including the date such Advances
are made to but excluding the date of repayment, with such interest being an
obligation of the Master Servicer and not the Trust Fund. The Master Servicer
shall reimburse the Trustee for the amount of any Advance made by the Trustee
pursuant to this Section 4.01(d) together with accrued interest, not later
than 6:00 p.m. (New York time) on the Business Day following the related
Distribution Date. In the event that the Master Servicer does not reimburse
the Trustee in accordance with the requirements of the preceding sentence, the
Trustee shall immediately (i) terminate all of the rights and obligations of
the Master Servicer under this Agreement in accordance with Section 7.01 and
(ii) subject to the limitations set forth in Section 3.04, assume all of the
rights and obligations of the Master Servicer hereunder.
(e) The Master Servicer shall, not later than the close of business
on the second Business Day immediately preceding each Distribution Date,
deliver to the Trustee a report (in form and substance reasonably satisfactory
to the Trustee) that indicates (i) the Mortgage Loans with respect to which
the Master Servicer has determined that the related Scheduled Payments should
be advanced and (ii) the amount of the related Scheduled Payments.
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The Master Servicer shall deliver to the Trustee on the related Master
Servicer Advance Date an Officer's Certificate of a Servicing Officer
indicating the amount of any proposed Advance determined by the Master
Servicer to be a Nonrecoverable Advance.
Section 4.02 Reduction of Servicing Compensation in Connection with
Prepayment Interest Shortfalls.
In the event that any Mortgage Loan is the subject of a Prepayment
Interest Shortfall, the Master Servicer shall remit any related Compensating
Interest as part of the related Interest Remittance Amount as provided in this
Agreement. The Master Servicer shall not be entitled to any recovery or
reimbursement for Compensating Interest from the Depositor, the Trustee, any
Seller, the Trust Fund or the Certificateholders.
Section 4.03 [Reserved].
Section 4.04 Distributions.
(a) On each Distribution Date, the Interest Funds for such
Distribution Date shall be distributed by the Trustee from the Distribution
Account in the following order of priority:
(i) to the Certificate Insurer, the Certificate Insurance
Policy Premium for such Distribution Date;
(ii) to the Class A-IO Certificates, the Current Interest
for such Class and such Distribution Date;
(iii) concurrently to each Class of Class A Certificates,
the Current Interest for each such Class and such Distribution Date,
pro rata, based on their respective entitlements;
(iv) to the Certificate Insurer, the Certificate Insurance
Reimbursement Amount for such Distribution Date;
(v) concurrently to each Class of Class A Certificates, the
Interest Carry Forward Amount for each such Class and such
Distribution Date, pro rata, based on their respective entitlements;
and
(vi) any remainder as part of the Excess Cashflow.
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(b) On each Distribution Date, the Principal Distribution Amount for
such Distribution Date shall be distributed by the Trustee from the
Distribution Account in the following order of priority (with the Principal
Distribution Amount exclusive of the portion thereof consisting of the Extra
Principal Distribution Amount being applied first and the Extra Principal
Distribution Amount being applied thereafter):
(i) to the Certificate Insurer, any Certificate Insurance
Policy Premium for such Distribution Date remaining unpaid after
application of Interest Funds on such Distribution Date;
(ii) to the Class A Certificates, in an amount up to the
Class A Principal Distribution Amount, sequentially:
(a) the NAS Principal Distribution Amount to the
Class A-5 Certificates, until the Certificate Principal
Balance thereof is reduced to zero, and
(b) sequentially, to the Class X-0, Xxxxx X-0,
Class A-3, Class A-4 and Class A-5 Certificates, in that
order, in each case until the Certificate Principal Balance
thereof is reduced to zero;
(iii) to the Certificate Insurer, any Certificate Insurance
Reimbursement Amount for such Distribution Date remaining unpaid
after application of Interest Funds on such Distribution Date; and
(iv) any remainder as part of the Excess Cashflow.
(c) With respect to any Distribution Date, any Excess Cashflow shall
be distributed to the Classes of Certificates in the following order of
priority:
(1) to the Holders of the Class or Classes of Class A
Certificates then entitled to receive distributions in respect of
principal, in an aggregate amount equal to the Extra Principal
Distribution Amount, payable to such Holders as part of the Principal
Distribution Amount pursuant to Section 4.04(b) above;
(2) concurrently, to the Holders of each Class of Class A
Certificates, pro rata based on the Unpaid Realized Loss Amounts for
such Classes, in each case in an amount equal to the Unpaid Realized
Loss Amount for such Class; provided, however that to the extent an
Applied Realized Loss Amount was covered under the Certificate
Insurance Policy, then any related amounts otherwise payable to the
Class A Certificates pursuant to this clause (2) shall instead be
paid to the Certificate Insurer
(3) to each Class of Class A Certificates (in the case of
the Class A-1 Certificates, after application of amounts received by
the Trust Fund in respect of the Corridor Contract to cover Net Rate
Carryover), pro rata based on the Certificate Principal Balances
thereof, to the extent needed to pay any Net Rate Carryover for each
such Class; provided that any Excess Cashflow remaining after such
allocation to pay Net Rate Carryover based on the Certificate
Principal Balances of those Certificates shall be
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distributed to each Class of Class A Certificates with respect to
which there remains any unpaid Net Rate Carryover (after the
distribution based on Certificate Principal Balances), pro rata,
based on the amount of such unpaid Net Rate Carryover;
(4) to the Carryover Reserve Fund, in an amount equal to the
Required Carryover Reserve Fund Deposit (after giving effect to other
deposits and withdrawals therefrom on such Distribution Date without
regard to any amounts allocated to the Trust Fund in respect of the
Corridor Contract not required to cover Net Rate Carryover on the
Class A-1 Certificates on such Distribution Date);
(5) to the Class C Certificateholders, the Class C
Distributable Amount for such Distribution Date; and
(6) to the Class A-R Certificates, any remaining amount.
(d) On each Distribution Date on or prior to the Corridor Contract
Termination Date, amounts received by the Trustee in respect of the Corridor
Contract for such Distribution Date shall be withdrawn from the Carryover
Reserve Fund and distributed to the Class A-1 Certificates to the extent
needed to pay any Net Rate Carryover with respect to such Class. Any amounts
remaining in the Carryover Reserve Fund in respect of the Corridor Contract
shall be distributed to the Holders of the Class C Certificates as provided in
Section 4.07(c).
(e) To the extent that a Class of Interest-Bearing Certificates
receives interest in excess of the applicable Net Rate Cap, if such interest
is paid pursuant to Section 4.04(c), then it shall be deemed to have been paid
to the Carryover Reserve Fund and then paid by the Carryover Reserve Fund to
those Certificateholders. For purposes of the Code, amounts deemed deposited
in the Carryover Reserve Fund shall be deemed to have first been distributed,
in the case of any such amounts relating to the Corridor Contract, to the
Class C Certificates.
(f) On each Distribution Date, all Prepayment Charges (including
amounts deposited in connection with the full or partial waiver of such
Prepayment Charges pursuant to Section 3.20) shall be allocated to the Class P
Certificates. On the Class P Principal Distribution Date, the Trustee shall
make the $100.00 distribution to the Class P Certificates as specified in
Section 3.08.
(g) On each Distribution Date, the Trustee shall allocate any Applied
Realized Loss Amount to reduce the Certificate Principal Balances of the Class
A Certificates, pro rata, based on their respective Certificate Principal
Balances, until the Certificate Principal Balances of such Classes have been
reduced to zero. On each Distribution Date, the Certificate Insurer is
obligated to pay to the Class A Certificates an amount equal to the Applied
Realized Loss Amount allocated to the Class A Certificates on such
Distribution Date; provided, however, if the Premium Account is funded
pursuant to Section 3.08(b)(vi), the Certificate Insurer shall only be
obligated to pay any Applied Realized Loss Amount to the extent that funds on
deposit in the Premium Account (after giving effect to all deposits to be made
to the Premium Account on such Distribution Date) are insufficient to cover
the Applied Realized Loss Amount for such Distribution Date.
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(h) On each Distribution Date, the Trustee shall allocate the amount
of the Subsequent Recoveries with respect to the Mortgage Loans, if any, to
increase the Certificate Principal Balances of the Class A Certificates to
which Applied Realized Loss Amounts have been previously allocated, on a pro
rata basis according to their respective Certificate Principal Balances and in
each case by not more than the amount of the Unpaid Realized Loss Amount of
such Class; provided, however, that to the extent an Applied Realized Loss
Amount was covered under the Certificate Insurance Policy, then any related
Subsequent Recovery otherwise payable to the Class A Certificateholders will
instead be paid to the Certificate Insurer.
Holders of Certificates to which any Subsequent Recoveries have been
allocated shall 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.
(i) On any Distribution Date on which there are any amounts on
deposit in the Premium Account (after taking into account any deposit to the
Premium Account on such Distribution Date pursuant to Section 3.08(b)(vi)) and
(i) any amounts payable to the Class A Certificates pursuant to Sections
4.04(a)(iii) or 4.04(a)(v) remain unpaid, (ii) Applied Realized Loss Amounts
are allocable to the Class A Certificates on such Distribution Date and/or
(iii) Unpaid Realized Loss Amounts are outstanding after making all
distributions on such Distribution Date but prior to any draw on the
Certificate Insurance Policy, the Trustee shall apply the amounts on deposit
in the Premium Account in the following amounts and order of priority:
(i) first, concurrently to each Class of Class A
Certificates, the unpaid Current Interest for each such Class and
such Distribution Date, pro rata, based on their respective
entitlements;
(ii) second, concurrently to each Class of Class A
Certificates, the unpaid Interest Carry Forward Amount for each such
Class and such Distribution Date, pro rata, based on their respective
entitlements;
(iii) third, concurrently, to each Class of Class A
Certificates, as a distribution of principal, in an amount up to the
Applied Realized Loss Amount allocable to such Class pursuant to
Section 4.04(g) on such Distribution Date, pro rata, based on the
amount of Applied Realized Loss Amounts allocable to each such Class
on such Distribution Date; and
(iv) fourth, concurrently, to each Class of Class A
Certificates, pro rata based on the Unpaid Realized Loss Amounts for
such Classes, in each case in an amount up to the Unpaid Realized
Loss Amount for such Class; provided, however that to the extent an
Applied Realized Loss Amount was covered under the Certificate
Insurance Policy, then any related amounts otherwise payable to the
Class A Certificates pursuant to this paragraph shall instead be paid
to the Certificate Insurer.
(j) Subject to Section 9.02 hereof respecting the final distribution,
on each Distribution Date the Trustee shall make distributions to each
Certificateholder of record on the
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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
five Business Days prior to the related Record Date and (ii) such Holder shall
hold Regular Certificates with an aggregate initial Certificate Principal
Balance 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 9.02 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.
Payments to the Certificate Insurer shall be made by wire transfer of
immediately available funds to the following account, unless the Certificate
Insurer notifies the Trustee in writing: Account Name: Financial Guaranty
Insurance Company, JPMorgan Chase Bank, ABA #000000000, Account Number
904951812 , RE: CWHEQ Home Equity Loan Trust 2006-S2, Policy Number 06030039.
On or before 5:00 p.m. Pacific time on the fifth Business Day
following each Determination Date (but in no event later than 5:00 p.m.
Pacific time on the third Business Day before the related Distribution Date),
the Master Servicer shall deliver a report to the Trustee (in the form of a
computer readable magnetic tape or by such other means as the Master Servicer
and the Trustee may agree from time to time) containing such data and
information as agreed to by the Master Servicer and the Trustee such as to
permit the Trustee to prepare the Monthly Statement and make the required
distributions for the related Distribution Date (the "Remittance Report"). The
Trustee shall not be responsible to recompute, recalculate or verify
information provided to it by the Master Servicer and shall be permitted to
conclusively rely on any information provided to it by the Master Servicer.
Section 4.05 Monthly Statements to Certificateholders.
(a) Concurrently with each distribution on a Distribution Date, the
Trustee will forward by mail to each Rating Agency, the Certificate Insurer
and the NIM Insurer and make available to Certificateholders and the
Certificate Insurer on the Trustee's website
(xxxx://xxx.xxxxxxxxxxxxxxxxxxxx.xxx) a statement generally setting forth the
information contained in Exhibit W.
(b) The Trustee's responsibility for disbursing the above information
to the Certificateholders is limited to the availability, timeliness and
accuracy of the information derived from the Master Servicer.
(c) Within a reasonable period of time after the end of each calendar
year, the Trustee shall cause to be furnished to each Person who at any time
during the calendar year was a Certificateholder, a statement containing the
information regarding (i) the amount of distributions to that
Certificateholder allocable to principal, separately identifying (A) the
aggregate amount of any Principal Prepayments included therein and (B) the
aggregate of all scheduled payments of principal included therein, (ii) the
amount of distributions to that Certificateholder allocable to interest and
(iii) the related amount of the Servicing Fees paid to or retained by the
Master Servicer, in each case aggregated for such calendar year or applicable
portion thereof during which such Person was a Certificateholder. Such
obligation of the Trustee
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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 Class A-R Certificates the Form 1066 and each
Form 1066Q and shall respond promptly to written requests made not more
frequently than quarterly by any Holder of Class A-R Certificates with respect
to the following matters:
(1) The original projected principal and interest cash flows
on the Closing Date on each related Class of regular and residual
interests created hereunder and on the Mortgage Loans, based on the
Prepayment Assumption;
(2) The projected remaining principal and interest cash
flows as of the end of any calendar quarter with respect to each
related Class of regular and residual interests created hereunder and
the Mortgage Loans, based on the Prepayment Assumption;
(3) The applicable Prepayment Assumption and any interest
rate assumptions used in determining the projected principal and
interest cash flows described above;
(4) 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 related
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;
(5) 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
the related REMIC with respect to such regular interests or bad debt
deductions claimed with respect to the Mortgage Loans;
(6) The amount and timing of any non-interest expenses of
the related REMIC; and
(7) Any taxes (including penalties and interest) imposed on
the related 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 (1), (2), (3) and (4) above shall
be provided by the Depositor pursuant to Section 8.11.
Section 4.06 Certificate Insurance Policy; Rights of the Certificate
Insurer.
(a) If, on the second Business Day before any Distribution Date, the
Trustee determines that a there will be a Deficiency Amount for such
Distribution Date after giving effect to distributions from all other sources
on such Distribution Date, including, without
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limitation, the funds, if any, in the Premium Account, the Trustee shall
determine the amount of any such deficiency and shall give notice to the
Certificate Insurer by telephone or telecopy of the amount of such deficiency,
confirmed in writing by notice substantially in the form of Exhibit A to the
Certificate Insurance Policy, by 12:00 p.m., New York time on such second
Business Day. The Trustee's responsibility for delivering the notice to the
Certificate Insurer as provided in the preceding sentence is limited to the
availability, timeliness and accuracy of the information provided by the
Master Servicer.
(b) In the event the Trustee receives a certified copy of an order of
the appropriate court that any scheduled payment of principal or interest on a
Class A Certificate has been voided in whole or in part as a preference
payment under applicable bankruptcy law, the Trustee shall (i) promptly notify
the Certificate Insurer and (ii) comply with the provisions of the Certificate
Insurance Policy, to obtain payment by the Certificate Insurer of such voided
scheduled payment. In addition, the Trustee shall mail notice to all Holders
of the Class A Certificates so affected that, in the event that any such
Holder's scheduled payment is so recovered, such Holder will be entitled to
payment pursuant to the terms of the Certificate Insurance Policy, a copy of
which shall be made available to such Holders by the Trustee. The Trustee
shall furnish to the Certificate Insurer its records listing the payments on
the affected Class A Certificates, if any, that have been made by the Trustee
and subsequently recovered from the affected Holders, and the dates on which
such payments were made by the Trustee.
(c) At the time of the execution hereof, and for the purposes hereof,
the Trustee shall establish a special purpose trust account in the name of the
Trustee for the benefit of Holders of the Class A Certificates (the
"Certificate Insurance Policy Payments Account") over which the Trustee shall
have exclusive control and sole right of withdrawal. The Certificate Insurance
Policy Payments Account shall be an Eligible Account. The Trustee shall
deposit any amount paid under the Certificate Insurance Policy into the
Certificate Insurance Policy Payments Account and distribute such amount only
for the purposes of making the payments to Holders of the Class A
Certificates, in respect of the related Deficiency Amount for which the
related claim was made under the Certificate Insurance Policy. Such amounts
shall be allocated by the Trustee to Holders of Class A Certificates affected
by such shortfalls in the same manner as principal and interest payments are
to be allocated with respect to such Certificates pursuant to Section 4.04. It
shall not be necessary for such payments to be made by checks or wire
transfers separated from the checks or wire transfers used to make regular
payments hereunder with funds withdrawn from the Distribution Account.
However, any payments made on the Class A Certificates from funds in the
Certificate Insurance Policy Payments Account shall be noted as provided in
subsection (e) below. Funds held in the Certificate Insurance Policy Payments
Account shall not be invested by the Trustee.
(d) Any funds received from the Certificate Insurer for deposit into
the Certificate Insurance Policy Payments Account pursuant to the Certificate
Policy in respect of a Distribution Date or otherwise as a result of any claim
under the Certificate Insurance Policy shall be applied by the Trustee
directly to the payment in full (i) of the related Deficiency Amount on such
Distribution Date or (ii) of other amounts payable under the Certificate
Insurance Policy. Funds received by the Trustee as a result of any claim under
the Certificate Insurance Policy shall be used solely for payment to the
Holders of the Class A Certificates and may not be applied for any other
purpose, including, without limitation, satisfaction of any costs,
106
expenses or liabilities of the Trustee, the Master Servicer or the Trust Fund.
Any funds remaining in the Certificate Insurance Policy Payments Account on
the first Business Day after each Distribution Date shall be remitted promptly
to the Certificate Insurer in accordance with the instructions set forth in
Section 4.04(j).
(e) The Trustee shall keep complete and accurate records in respect
of (i) all funds remitted to it by the Certificate Insurer and deposited into
the Certificate Insurance Policy Payments Account and (ii) the allocation of
such funds to (A) payments of interest on and principal in respect of any
Class A Certificates and (B) the amount of funds available to make
distributions on the Class A Certificates pursuant to Sections 4.04(a), (b),
(c), (d), (g) and (h). The Certificate Insurer shall have the right to inspect
such records at reasonable times during normal business hours upon three
Business Days' prior notice to the Trustee.
(f) The Trustee acknowledges, and each Holder of a Class A
Certificate by its acceptance of the Class A 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 any Class A
Certificates, the Certificate Insurer will be fully subrogated to the rights
of the Holders of such Class A Certificates to receive such principal and
interest from the Trust Fund. The Holders of the Class A Certificates, by
acceptance of the Class A Certificates, assign their rights as Holders of the
Class A Certificates to the extent of the Certificate Insurer's interest with
respect to amounts paid under the Certificate Insurance Policy. Anything
herein to the contrary notwithstanding, solely for purposes of determining the
Certificate Insurer's rights, as applicable, as subrogee for payments
distributable pursuant to Section 4.04, any payment with respect to
distributions to the Class A Certificates which is made with funds received
pursuant to the terms of the Certificate Insurance Policy shall not be
considered payment of the Class A Certificates from the Trust Fund and shall
not result in the distribution or the provision for the distribution in
reduction of the Certificate Principal Balance of the Class A Certificates
within the meaning of Article IV.
(g) Upon its becoming aware of the occurrence of an Event of Default,
the Trustee shall promptly notify the Certificate Insurer of such Event of
Default.
(h) The Trustee shall promptly notify the Certificate Insurer of
either of the following as to which it has actual knowledge: (A) the
commencement of any proceeding by or against the Depositor commenced under the
United States bankruptcy code or any other applicable bankruptcy, insolvency,
receivership, rehabilitation or similar law (an "Insolvency Proceeding") and
(B) the making of any claim in connection with any Insolvency Proceeding
seeking the avoidance as a preferential transfer (a "Preference Claim") of any
distribution made with respect to the Class A Certificates as to which it has
actual knowledge. Each Holder of a Class A Certificate, by its purchase of
Class A Certificates, and the Trustee hereby agrees that the Certificate
Insurer (so long as no Certificate Insurer Default exists) may at any time
during the continuation of any proceeding relating to a Preference Claim
direct all matters relating to such Preference Claim, including, without
limitation, (i) the direction of any appeal of any order relating to any
Preference Claim and (ii) the posting of any surety, supersedes or performance
bond pending any such appeal. In addition and without limitation of the
foregoing, the Certificate Insurer shall be subrogated to the rights of the
Trustee and each Holder of a Class A
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Certificate in the conduct of any Preference Claim, including, without
limitation, all rights of any party to an adversary proceeding action with
respect to any court order issued in connection with any such Preference
Claim.
(i) The Master Servicer shall designate a Certificate Insurer Contact
Person who shall be available to the Certificate Insurer to provide reasonable
access to information regarding the Mortgage Loans. The initial Certificate
Insurer Contact Person is to the attention of Secondary Marketing.
(j) The Trustee shall surrender the Certificate Insurance Policy to
the Certificate Insurer for cancellation upon the reduction of the Certificate
Principal Balance of the Class A Certificates to zero.
(k) The Trustee shall send to the Certificate Insurer the reports
prepared pursuant to Section 3.17 and the statements prepared pursuant to
Section 4.05, as well as any other statements or communications sent to
Holders of the Class A Certificates, in each case at the same time such
reports, statements and communications are otherwise sent.
(l) For so long as there is no continuing default by the Certificate
Insurer under its obligations under the Certificate Insurance Policy (a
"Certificate Insurer Default"), each Holder of a Class A Certificate agrees
that the Certificate Insurer shall be treated by the Depositor, the Sellers,
the Master Servicer and the Trustee as if the Certificate Insurer were the
Holder of all of the Class A Certificates, for the purpose (and solely for the
purpose) of the giving of any consent, the making of any direction or the
exercise of any voting or other control rights otherwise given to the Holders
of the Class A Certificates hereunder.
(m) With respect to this Section 4.06, the terms "Receipt" and
"Received" shall mean actual delivery to the Certificate Insurer, if any,
prior to 12:00 p.m., New York time, on a Business Day; delivery either on a
day that is not a Business Day or after 12:00 p.m., New York time, shall be
deemed to be Receipt on the next succeeding Business Day. If any notice or
certificate given under the Certificate Insurance Policy by the Trustee is not
in proper form or is not properly completed, executed or delivered, it shall
be deemed not to have been Received. The Certificate Insurer shall promptly so
advise the Trustee and the Trustee may submit an amended notice.
(n) All notices, statements, reports, certificates or opinions
required by this Agreement to be sent to the Rating Agencies or the Class A
Certificateholders shall also be sent at such time to the Certificate Insurer
at the notice address set forth in Section 10.05.
(o) The Certificate Insurer shall be an express third party
beneficiary of this Agreement for the purpose of enforcing the provisions
hereof to the extent of the Certificate Insurer's rights explicitly specified
herein as if a party hereto.
(p) All references herein to the ratings assigned to the Certificates
and to the interests of any Certificateholders shall be without regard to the
Certificate Insurance Policy, in the case of the Class A Certificates.
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Section 4.07 Termination of the Credit Insurance Policy.
If on any given date (i) the rating of the Credit Insurer's
claims-paying ability is downgraded to or below "A+" from S&P or "A1" from
Xxxxx'x or (ii) the Credit Insurer fails to make any payment due under the
Credit Insurance Policy, the Certificate Insurer may direct the Master
Servicer to direct the Co-Trustee to terminate the Credit Insurance Policy
(either by not paying the renewal premium or by terminating the Credit
Insurance Policy in accordance with its terms) and both the Master Servicer
and the Co-Trustee shall act in accordance with such direction. In the event
that the Master Servicer (at the direction of the Certificate Insurer) directs
the Co-Trustee to terminate the Credit Insurance Policy or if the Credit
Insurance Policy is terminated for any other reason other than exhaustion of
its coverage, the Master Servicer shall use its best efforts to obtain a
comparable policy from an insurer that is acceptable to the Certificate
Insurer and the Rating Agencies and that meets the following conditions: (i)
such credit insurance policy must be issued by a credit insurer that has a
rating with respect to its claims-paying ability at or above "AA" from S&P or
"Aa2" from Xxxxx'x, (ii) such credit insurance policy must cover the Covered
Mortgage Loans outstanding as of such date and (iii) such action will not
result in a withdrawal or a downgrading by any Rating Agency of the ratings on
any Class of Certificates (without regard to the Certificate Insurance Policy
in the case of the Class A Certificates), as evidenced by a letter to that
effect delivered by each Rating Agency to the Depositor and the Certificate
Insurer. If the premium cost of a replacement policy exceeds the premium cost
of the Credit Insurance Policy, the Master Servicer, at the direction of the
Certificate Insurer, will either (i) obtain a replacement policy with reduced
coverage so that its premium cost will not exceed the premium cost of the
Credit Insurance Policy or (ii) from interest collections on the Mortgage
Loans for each Due Period, deposit into the Premium Account 72.222222% of the
amounts that would have been paid as premium on the Credit Insurance Policy
had it not been terminated, which amounts will be available to make payments
to the Class A Certificates prior to making any draws on the Certificate
Insurance Policy, and the remaining 27.777778% of the amounts that would have
been paid as premium on the Credit Insurance Policy had it not been terminated
shall be paid to the Certificate Insurer as a supplemental premium payment.
The amount remaining in the Premium Account after termination of this
Agreement, the payment in full of the Class A Certificates and the payment in
full of amounts owing to the Certificate Insurer will be paid to the Class C
Certificates.
In addition, if during the period which the Depositor is required to
file Exchange Act Reports with respect to the Trust Fund, the Credit Insurer
shall fail to provide to the Depositor with any information required to comply
with the Depositor's reporting obligations under the related Exchange Act
Reports, within 5 days of the Depositor's request therefor, then the
Co-Trustee shall act at the written direction of the Depositor as to whether
to terminate the Credit Insurance Policy (either by not paying the renewal
premium or by terminating the Credit Insurance Policy in accordance with its
terms); provided, however, that the Depositor shall not direct the Co-Trustee
to terminate the Credit Insurance Policy until it has procured one or more
replacement credit insurance policies covering the then-outstanding Covered
Loans from an insurer under a policy or policies acceptable to the Certificate
Insurer and the Rating Agencies and that meets the following conditions: (i)
such credit insurance policy must be issued by a credit insurer that has a
rating with respect to its claims-paying ability at or above "AA" from S&P or
"Aa2" from Xxxxx'x, (ii) such credit insurance policy must cover the Covered
Mortgage Loans outstanding as of such date and (iii) such action will not
result in a withdrawal or a
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downgrading by any Rating Agency of the ratings on any Class of Certificates
(without regard to the Certificate Insurance Policy in the case of the Class A
Certificates), as evidenced by a letter to that effect delivered by each
Rating Agency to the Depositor and the Certificate Insurer.
Section 4.08 Carryover Reserve Fund.
(a) On the Closing Date, the Trustee shall establish and maintain in
its name, in trust for the benefit of the Holders of the Certificates, the
Carryover Reserve Fund and shall deposit $1,000 therein. The Carryover Reserve
Fund shall be an Eligible Account, and funds on deposit therein shall be held
separate and apart from, and shall not be commingled with, any other moneys,
including without limitation, other moneys held by the Trustee pursuant to
this Agreement.
(b) On each Distribution Date, the Trustee shall deposit all amounts
received in respect of the Corridor Contract in the Carryover Reserve Fund.
The Trustee shall make withdrawals from the Carryover Reserve Fund to make
distributions in respect of Net Rate Carryover as to the extent required by
Section 4.04.
(c) Any amounts received in respect of the Corridor Contract with
respect to a Distribution Date and remaining after the distributions required
pursuant to Section 4.04(d) shall be distributed to the Class C Certificates;
provided, however, that if the Corridor Contract is subject to early
termination, early termination payments received in respect of the Corridor
Contract shall be deposited by the Trustee in the Carryover Reserve Fund and
withdrawn from the Carryover Reserve Fund to pay any Net Rate Carryover for
the applicable Classes of Certificates as provided in Section 4.04(d) on the
Distribution Dates following such termination to and including the Corridor
Contract Termination Date, but such early termination payments shall not be
available for distribution to the Class C Certificates on future Distribution
Dates until the Corridor Contract Termination Date.
(d) (1) Funds in the Carryover Reserve Fund in respect of amounts
received under the Corridor Contract may be invested in Permitted Investments
at the written direction of the Majority Holder of the Class C Certificates,
which Permitted Investments shall mature not later than the Business Day
immediately preceding the first Distribution Date that follows the date of
such investment (except that if such Permitted Investment is an obligation of
the institution that maintains the Carryover Reserve Fund, then such Permitted
Investment shall mature not later than such Distribution Date) and shall not
be sold or disposed of prior to maturity. All such Permitted Investments shall
be made in the name of the Trustee, for the benefit of the Certificateholders.
In the absence of such written direction, all funds in the Carryover Reserve
Fund in respect of amounts received under the Corridor Contract shall be
invested by the Trustee in The Bank of New York cash reserves. Any net
investment earnings on such amounts shall be payable pro rata to the Holders
of the Class C Certificates in accordance with their Percentage Interests. Any
losses incurred in the Carryover Reserve Fund in respect of any such
investments shall be charged against amounts on deposit in the Carryover
Reserve Fund (or such investments) immediately as realized.
(2) The Trustee shall not be liable for the amount of any
loss incurred in respect of any investment or lack of investment of
funds held in the Carryover Reserve Fund and made in accordance with
this Section 4.07. The Carryover Reserve Fund shall
110
not constitute an asset of any REMIC created hereunder. The Class C
Certificates shall evidence ownership of the Carryover Reserve Fund
for federal tax purposes
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ARTICLE V.
THE CERTIFICATES
Section 5.01 The Certificates.
The Certificates shall be substantially in the forms attached hereto
as Exhibits A-1 through A-6, Exhibit B, Exhibit C, Exhibit D and Exhibit E.
The Certificates shall be issuable in registered form, in the minimum dollar
denominations, integral dollar multiples in excess thereof and aggregate
dollar denominations as set forth in the following table:
Original Certificate
Principal Balance/
Integral Multiples in Original Notional
Class Minimum Denomination Excess of Minimum Amount
------------------------------- ---------------------------- ---------------------------- ----------------------------
A-1 $25,000 $1,000 $ 525,000,000
A-2 $25,000 $1,000 $ 112,692,000
A-3 $25,000 $1,000 $ 258,112,000
A-4 $25,000 $1,000 $ 49,196,000
A-5 $25,000 $1,000 $ 105,000,000
A-IO $100,000(1) $1,000 $ 325,210,293
A-R $99.95(2) N/A $100
C N/A N/A N/A
P (3) (3) $100
(1) Minimum denomination is based on the Notional Amount of such Class.
(2) The Tax Matters Person Certificate may be issued in a denomination of
$0.05.
(3) The minimum denomination for the Class P Certificates is a 20% Percentage
Interest. Any Percentage Interest in excess of 20% is an authorized
denomination.
The Certificates shall be executed by manual or facsimile signature
on behalf of the Trustee by an authorized officer. Certificates bearing the
manual or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Trustee shall
bind the Trustee, notwithstanding that such individuals or any of them have
ceased to be so authorized prior to the 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 a certificate of authentication substantially in the form set
forth as attached hereto executed by the Trustee by manual signature, and such
certificate of authentication upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the
date of their authentication. 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.
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Section 5.02 Certificate Register; Registration of Transfer and
Exchange of Certificates.
(a) The Trustee shall maintain 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 state securities laws, in order to assure
compliance with the Securities Act and such state securities laws, the
Certificateholder desiring to effect such Transfer and such
Certificateholder's prospective transferee shall (except in connection with
any transfer of a Private Certificate to an affiliate of the Depositor (either
directly or through a nominee) in connection with the initial issuance of the
Certificates) each certify to the Trustee in writing the facts surrounding the
Transfer in substantially the forms set forth in Exhibit J-2 and, in the case
of a Class A-R Certificate, Exhibit J-1 (the "Transferor Certificate") and (i)
deliver a letter in substantially the form of either Exhibit K (in the case of
the Class P and Class C Certificates only) (the "Investment Letter") or
Exhibit L (in the case of any Private Certificate) (the "Rule 144A Letter") or
(ii) there shall be delivered to the Trustee at the expense of the
Certificateholder desiring to effect such transfer an Opinion of Counsel that
such Transfer may be made pursuant to an exemption from the Securities Act;
provided, however, that in the case of the delivery of an Investment Letter in
connection with the transfer of any Class C or Class P Certificate to a
transferee that is formed with the purpose of issuing notes backed by such
Class
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C or Class P Certificate, as the case may be, clause (b) and (c) of the form
of Investment Letter shall not be applicable and shall be deleted by such
transferee. The Depositor shall provide to any Holder of a Private Certificate
and any prospective transferee designated by any such Holder, information
regarding the related Certificates and the Mortgage Loans and such other
information as shall be necessary to satisfy the condition to eligibility set
forth in Rule 144A(d)(4) for transfer of any such Certificate without
registration thereof under the Securities Act pursuant to the registration
exemption provided by Rule 144A. The Trustee and the Master Servicer shall
cooperate with the Depositor in providing the Rule 144A information referenced
in the preceding sentence, including providing to the Depositor such
information regarding the Certificates, the Mortgage Loans and other matters
regarding the Trust Fund as the Depositor shall reasonably request to meet its
obligation under the preceding sentence. Each Holder of a Private Certificate
desiring to effect such Transfer shall, and does hereby agree to, indemnify
the Trustee, the Depositor, the Trust Fund, each Seller, the Master Servicer,
the Certificate Insurer and the NIM Insurer 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 (other than a transfer
of an ERISA-Restricted Certificate to an affiliate of the Depositor (either
directly or through a nominee) in connection with the initial issuance of the
Certificates) 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 (in the event such Certificate
is a Private Certificate, such requirement is satisfied only by the Trustee's
receipt of a representation letter from the transferee substantially in the
form of Exhibit K or Exhibit L, or in the event such Certificate is a Residual
Certificate, such requirement is satisfied only by the Trustee's receipt of a
representation letter from the transferee substantially in the form of Exhibit
I), to the effect that (x) such transferee is not a Plan, or (y) in the case
of an ERISA-Restricted Certificate that has been the subject of an
ERISA-Qualifying Underwriting, a representation that the transferee is an
insurance company which is purchasing such Certificate with funds contained in
an "insurance company general account" (as such term is defined in section
V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60")) and that
the purchase and holding of such Certificate satisfy the requirements for
exemptive relief under Sections I and III of PTCE 95-60 or (ii) in the case of
any ERISA-Restricted Certificate presented for registration in the name of an
employee benefit plan or arrangement subject to ERISA, or a plan or
arrangement subject to Section 4975 of the Code (or comparable provisions of
any subsequent enactments), or a trustee of any such plan or arrangement or
any other person acting on behalf of any such plan or arrangement, an Opinion
of Counsel satisfactory to the Trustee, addressed to the Trustee and the
Master Servicer, to the effect that the purchase or holding of such
ERISA-Restricted Certificate will not result in a non-exempt prohibited
transaction under ERISA or the Code and will not subject the Trustee or the
Master 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 Master Servicer, or the Trust Fund. For purposes of the preceding
sentence, one of such representations, as appropriate, shall be deemed to have
been made to the Trustee by the transferee's acceptance of an ERISA-Restricted
Certificate (or the acceptance by a Certificate Owner of the beneficial
interest in any such Class of ERISA-Restricted Certificates) unless the
Trustee shall have received from the transferee an Opinion of Counsel as
described in clause (ii) or a representation letter acceptable in form and
substance to the Trustee. Notwithstanding anything else to the contrary
herein, any purported transfer of an ERISA-Restricted Certificate to
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or on behalf of an employee benefit plan subject to Section 406 of ERISA or a
plan subject to Section 4975 of the Code without the delivery to the Trustee
of an Opinion of Counsel satisfactory to the Trustee meeting the requirements
of clause (i) of the first sentence of this paragraph as described above shall
be void and of no effect. The Trustee shall be under no liability to any
Person for any registration of transfer of any ERISA-Restricted Certificate
that is in fact not permitted by this Section 5.02(b) or for making any
payments due on such Certificate to the Holder thereof or taking any other
action with respect to such Holder under the provisions of this Agreement so
long as the Trustee, with respect to the transfer of such Classes of
Certificates, required delivery of such certificates and other documentation
or evidence as are expressly required by the terms of this Agreement and
examined such certificates and other documentation or evidence to determine
compliance as to form with the express requirements hereof. 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 or
arrangement subject to Section 406 of ERISA or a plan or arrangement subject
to Section 4975 of the Code or a Person acting on behalf of any such plan or
arrangement at the time it became a Holder or, at such subsequent time as it
became such a plan or arrangement or Person acting on behalf of such a plan or
arrangement, 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 arrangement or Person acting on behalf
of a plan or arrangement.
(c) Each Person who has or who acquires any Ownership Interest in a
Class A-R Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions, and
the rights of each Person acquiring any Ownership Interest in a Class A-R
Certificate are expressly subject to the following provisions:
(1) Each Person holding or acquiring any Ownership Interest
in a Class A-R Certificate shall be a Permitted Transferee and shall
promptly notify the Trustee of any change or impending change in its
status as a Permitted Transferee.
(2) Except in connection with (i) the registration of the
Tax Matters Person Certificate in the name of the Trustee or (ii) any
registration in the name of, or transfer of a Class A-R Certificate
to, an affiliate of the Depositor (either directly or through a
nominee) in connection with the initial issuance of the Certificates,
no Ownership Interest in a Class A-R Certificate may be registered or
transferred, and the Trustee shall not register the Transfer of any
Class A-R Certificate, unless 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 I.
(3) Each Person holding or acquiring any Ownership Interest
in a Class A-R Certificate shall agree (A) to obtain a Transfer
Affidavit from any other Person to whom such Person attempts to
Transfer its Ownership Interest in a Class A-R Certificate, (B) to
obtain a Transfer Affidavit from any Person for whom such Person is
acting as nominee, trustee or agent in connection with any Transfer
of a Class A-R Certificate and (C) not to Transfer its Ownership
Interest in a Class A-R Certificate, or to cause the Transfer of an
Ownership Interest in a Class A-R Certificate to any other
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Person, if it has actual knowledge that such Person is not a
Permitted Transferee or that such Transfer Affidavit is false.
(4) Any attempted or purported Transfer of any Ownership
Interest in a Class A-R Certificate in violation of the provisions of
this Section 5.02(c) shall be absolutely null and void and shall vest
no rights in the purported Transferee. If any purported transferee
shall become a Holder of a Class A-R Certificate in violation of the
provisions of this Section 5.02(c), then the last preceding Permitted
Transferee shall be restored to all rights as Holder thereof
retroactive to the date of registration of Transfer of such Class A-R
Certificate. The Trustee shall be under no liability to any Person
for any registration of Transfer of a Class A-R Certificate that is
in fact not permitted by Section 5.02(b) and this Section 5.02(c) or
for making any payments due on such Certificate to the Holder thereof
or taking any other action with respect to such Holder under the
provisions of this Agreement so long as the Transfer was registered
after receipt of the related Transfer Affidavit and Transferor
Certificate. The Trustee shall be entitled but not obligated to
recover from any Holder of a Class A-R Certificate that was in fact
not a Permitted Transferee at the time it became a Holder or, at such
subsequent time as it became other than a Permitted Transferee, all
payments made on such Class A-R Certificate at and after either such
time. Any such payments so recovered by the Trustee shall be paid and
delivered by the Trustee to the last preceding Permitted Transferee
of such Certificate.
(5) The Master Servicer shall use its best efforts to make
available, upon receipt of written request from the Trustee, all
information necessary to compute any tax imposed under section
860E(e) of the Code as a result of a Transfer of an Ownership
Interest in a Class A-R Certificate to any Holder who is not a
Permitted Transferee.
The restrictions on Transfers of a Class A-R Certificate set forth in
this Section 5.02(c) shall cease to apply (and the applicable portions of the
legend on a Class A-R Certificate may be deleted) with respect to Transfers
occurring after delivery to the Trustee of an Opinion of Counsel, which
Opinion of Counsel shall not be an expense of the Trustee, any Seller or the
Master Servicer, to the effect that the elimination of such restrictions will
not cause any REMIC formed hereunder to fail to qualify as a REMIC at any time
that the Certificates are outstanding or result in the imposition of any tax
on the Trust Fund, a Certificateholder or another Person. Each Person holding
or acquiring any Ownership Interest in a Class A-R Certificate, by acceptance
of its Ownership Interest, shall be deemed to consent 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 Class A-R Certificate is not transferred, directly
or indirectly, to a Person that is not a Permitted Transferee and (b) to
provide for a means to compel the Transfer of a Class A-R 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 affidavits, certifications
and opinions referred to above in this Section 5.02 shall not be an expense of
the Trust Fund, the Trustee, the Depositor, any Seller or the Master Servicer.
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Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate is surrendered to the Trustee, or
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Certificate and of the ownership thereof and (b) there is
delivered to the Master Servicer and the Trustee (and with respect to the
Class A Certificates, the Certificate Insurer) 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 5.03, the Trustee
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Any replacement Certificate issued pursuant to this Section 5.03 shall
constitute complete and indefeasible evidence of ownership 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 5.03 shall be canceled and destroyed
by the Trustee in accordance with its standard procedures without liability on
its part.
Section 5.04 Persons Deemed Owners.
The Master Servicer, the Trustee, the NIM Insurer, the Certificate
Insurer and any agent of the Master Servicer, the Trustee, the NIM Insurer or
the Certificate Insurer may treat the person in whose name any Certificate is
registered as the owner of such Certificate for the purpose of receiving
distributions as provided in this Agreement and for all other purposes
whatsoever, and none of the Master Servicer, the Trustee, the NIM Insurer, the
Certificate Insurer or any agent of the Master Servicer, the Trustee, the NIM
Insurer or the Certificate Insurer shall be affected by any notice to the
contrary.
Section 5.05 Access to List of Certificateholders' Names and
Addresses.
If three or more Certificateholders or Certificate Owners (a) request
such information in writing from the Trustee, (b) state that such
Certificateholders or Certificate Owners desire to communicate with other
Certificateholders or Certificate Owners with respect to their rights under
this Agreement or under the Certificates and (c) provide a copy of the
communication that such Certificateholders or Certificate Owners propose to
transmit or if the Depositor or Master Servicer shall request such information
in writing from the Trustee, then the Trustee shall, within ten Business Days
after the receipt of such request, provide the Depositor, the Master Servicer
or such Certificateholders or Certificate Owners 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 or Certificate
Owner, 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.
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Section 5.06 Book-Entry Certificates.
The Book-Entry Certificates, upon original issuance, shall be issued
in the form of one typewritten Certificate (or more than one, if required by
the Depository) for each Class of such 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 5.08. Unless and until definitive,
fully registered Certificates ("Definitive Certificates") have been issued to
the Certificate Owners of such Certificates pursuant to Section 5.08:
(a) the provisions of this Section shall be in full force and effect;
(b) the Depositor, the Sellers, the Master Servicer 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 5.08, 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 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.
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Section 5.07 Notices to Depository.
Whenever any notice or other communication is required to be given to
Certificateholders of the 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 5.08 Definitive Certificates.
If, after Book-Entry Certificates have been issued with respect to
any Certificates, (a) the Depositor 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 or (b) 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 Certificate Owners of such Class 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 authenticate 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 5.09 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 in New York City where Certificates
may be surrendered for registration of transfer or exchange. The Trustee
initially designates its offices at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Corporate Trust MBS Administration, as offices for such
purposes. The Trustee will give prompt written notice to the
Certificateholders and the Certificate Insurer of any change in such location
of any such office or agency.
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ARTICLE VI.
THE DEPOSITOR, THE MASTER SERVICER AND THE SELLERS
Section 6.01 Respective Liabilities of the Depositor, the Master
Servicer and the Sellers.
The Depositor, the Master Servicer and each Seller shall each be
liable in accordance herewith only to the extent of the obligations
specifically and respectively imposed upon and undertaken by them herein.
Section 6.02 Merger or Consolidation of the Depositor, the Master
Servicer or the Sellers.
The Depositor will keep in full effect its existence, rights and
franchises as a corporation under the laws of the United States or under the
laws of one of the states thereof and will each obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, or any of the Mortgage Loans and to perform
its duties under this Agreement. The Master Servicer will keep in effect its
existence, rights and franchises as a limited partnership under the laws of
the United States or under the laws of one of the states thereof and will
obtain and preserve its qualification or registration to do business as a
foreign partnership in each jurisdiction in which such qualification or
registration is or shall be necessary to protect the validity and
enforceability of this Agreement or any of the Mortgage Loans and to perform
its duties under this Agreement.
Any Person into which the Depositor, the Master Servicer or any
Seller may be merged or consolidated, or any Person resulting from any merger
or consolidation to which the Depositor, the Master Servicer or any Seller
shall be a party, or any person succeeding to the business of the Depositor,
the Master Servicer or any Seller, shall be the successor of the Depositor,
the Master Servicer or such Seller, as the case may be, hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding; provided that
the successor or surviving Person to the Master Servicer shall be qualified to
service mortgage loans on behalf of Xxxxxx Mae and Xxxxxxx Mac.
As a condition to the effectiveness of any merger or consolidation,
at least 15 calendar days prior to the effective date of any merger or
consolidation of the Master Servicer, the Master Servicer shall provide (x)
written notice to the Depositor of any successor pursuant to this Section and
(y) in writing and in form and substance reasonably satisfactory to the
Depositor, all information reasonably requested by the Depositor in order to
comply with its reporting obligation under Item 6.02 of Form 8-K with respect
to a replacement Master Servicer.
Section 6.03 Limitation on Liability of the Depositor, the Sellers,
the Master Servicer, the Certificate Insurer, the NIM
Insurer and Others.
None of the Depositor, the Sellers, the NIM Insurer, the Certificate
Insurer or the Master Servicer or any of the directors, officers, employees or
agents of the Depositor, the Sellers, the NIM Insurer, the Certificate Insurer
or the Master Servicer shall be under any
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liability to the Trustee (except as provided in Section 8.05), the Trust Fund
or the Certificateholders for any action taken or for refraining from the
taking of any action in good faith pursuant to this Agreement, or for errors
in judgment; provided that this provision shall not protect the Depositor, the
Sellers, the Master Servicer or any such Person against any breach of
representations or warranties made by it herein or protect the Depositor, the
Sellers, the Master Servicer or any such Person from any liability that would
otherwise be imposed by reasons of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder. The Depositor, the Sellers, the NIM Insurer,
the Certificate Insurer, the Master Servicer and any director, officer,
employee or agent of the Depositor, the Sellers, the NIM Insurer, the
Certificate Insurer or the Master Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
respecting any matters arising hereunder. The Depositor, the Sellers, the NIM
Insurer, the Master Servicer and any director, officer, employee or agent of
the Depositor, the Sellers, the NIM Insurer or the Master Servicer shall be
indemnified by the Trust Fund and held harmless against any loss, liability or
expense incurred in connection with any audit, controversy or judicial
proceeding relating to a governmental taxing authority or any legal action
relating to this Agreement or the Certificates, other than any loss, liability
or expense related to any specific Mortgage Loan or Mortgage Loans (except as
any such loss, liability or expense shall be otherwise reimbursable pursuant
to this Agreement) and any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or gross negligence in the performance of
duties hereunder or by reason of reckless disregard of obligations and duties
hereunder. None of the Depositor, the Sellers, the NIM Insurer or the Master
Servicer shall be under any obligation to appear in, prosecute or defend any
legal action that is not incidental to its respective duties hereunder and
that in its opinion may involve it in any expense or liability; provided that
any of the Depositor, the Sellers, the NIM Insurer or the Master Servicer may,
in its discretion undertake any such action that it may deem necessary or
desirable in respect of this Agreement and the rights and duties of the
parties hereto and interests of the Trustee and the Certificateholders
hereunder. In such event, the legal expenses and costs of such action and any
liability resulting therefrom shall be, expenses, costs and liabilities of the
Trust Fund, and the Depositor, the Sellers, the NIM Insurer and the Master
Servicer shall be entitled to be reimbursed therefor out of the Certificate
Account as provided by Section 3.08 hereof.
Section 6.04 Limitation on Resignation of Master Servicer.
The Master Servicer shall not resign from the obligations and duties
hereby imposed on it except (i) upon determination that its duties hereunder
are no longer permissible under applicable law or (ii) upon appointment of a
successor servicer that is acceptable to the Certificate Insurer and is
reasonably acceptable to the Trustee and the written confirmation from each
Rating Agency (which confirmation shall be furnished to the Depositor, the
Trustee, the Certificate Insurer and the NIM Insurer) that such resignation
will not cause such Rating Agency to reduce the then-current rating of the
Certificates (such determination to be made without regard to the Certificate
Insurance Policy). Any such determination pursuant to clause (i) of the
preceding sentence permitting the resignation of the Master Servicer shall be
evidenced by an Opinion of Counsel to such effect delivered to the Trustee and
the Certificate Insurer. No resignation of the Master Servicer shall become
effective until the Trustee or another successor master servicer shall have
assumed the Master Servicer's responsibilities, duties, liabilities (other
than those liabilities arising prior to the appointment of such successor) and
obligations under
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this Agreement and the Depositor shall have received the information described
in the following sentence. As a condition to the effectiveness of any such
resignation, at least 15 calendar days prior to the effective date of such
resignation, the Master Servicer shall provide (x) written notice to the
Depositor of any successor pursuant to this Section and (y) in writing and in
form and substance reasonably satisfactory to the Depositor, all information
reasonably requested by the Depositor in order to comply with its reporting
obligation under Item 6.02 of Form 8-K with respect to the resignation of the
Master Servicer.
Section 6.05 Errors and Omissions Insurance; Fidelity Bonds.
The Master Servicer shall, for so long as it acts as servicer under
this Agreement, obtain and maintain in force (a) a policy or policies of
insurance covering errors and omissions in the performance of its obligations
as servicer hereunder, and (b) a fidelity bond in respect of its officers,
employees and agents. Each such policy or policies and bond shall, together,
comply with the requirements from time to time of Xxxxxx Xxx and Xxxxxxx Mac
for persons performing servicing for mortgage loans purchased by Xxxxxx Mae
and Xxxxxxx Mac. In the event that any such policy or bond ceases to be in
effect, the Master Servicer shall use its reasonable best efforts to obtain a
comparable replacement policy or bond from an insurer or issuer, meeting the
requirements set forth above as of the date of such replacement.
The Master Servicer shall provide the Trustee, the Certificate
Insurer and the NIM Insurer (upon such party's reasonable request) with copies
of any such insurance policies and fidelity bond. The Master Servicer shall be
deemed to have complied with this provision if an Affiliate of the Master
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 Master Servicer.
ARTICLE VII.
DEFAULT; TERMINATION OF MASTER SERVICER
Section 7.01 Events of Default.
"Event of Default," wherever used herein, means any one of the
following events:
(1) any failure by the Master Servicer to deposit in the
Certificate Account or the Distribution Account or remit to the
Trustee any payment (excluding a payment required to be made under
Section 4.01 hereof) required to be made under the terms of this
Agreement, which failure shall continue unremedied for five calendar
days and, with respect to a payment required to be made under Section
4.01(b) or (c) hereof, for one Business Day, after the date on which
written notice of such failure shall have been given to the Master
Servicer by the Trustee, the NIM Insurer, the Certificate Insurer or
the Depositor, or to the Trustee, the NIM Insurer, the Certificate
Insurer and the Master Servicer by the Holders of Certificates
evidencing not less than 25% of the Voting Rights; or
(2) any failure by the Master Servicer to observe or perform
in any material respect any other of the covenants or agreements on
the part of the Master Servicer contained in this Agreement (except
with respect to a failure related to a Limited
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Exchange Act Reporting Obligation) or any representation or warranty
shall prove to be untrue, which failure or breach shall continue
unremedied for a period of 60 days after the date on which written
notice of such failure shall have been given to the Master Servicer
by the Trustee, the NIM Insurer, the Certificate Insurer or the
Depositor, or to the Trustee by the Holders of Certificates
evidencing not less than 25% of the Voting Rights; provided, that the
sixty-day cure period shall not apply to the initial delivery of the
Mortgage File for Delay Delivery Mortgage Loans or the failure to
repurchase or substitute in lieu thereof; or
(3) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of
a receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall have been entered
against the Master Servicer and such decree or order shall have
remained in force undischarged or unstayed for a period of 60
consecutive days; or
(4) the Master Servicer shall consent to the appointment of
a receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or
relating to the Master Servicer or all or substantially all of the
property of the Master Servicer; or
(5) the Master Servicer shall admit in writing its inability
to pay its debts generally as they become due, file a petition to
take advantage of, or commence a voluntary case under, any applicable
insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its
obligations; or
(6) the Master Servicer shall fail to reimburse in full the
Trustee not later than 6:00 p.m. (New York time) on the Business Day
following the related Distribution Date for any Advance made by the
Trustee pursuant to Section 4.01(d) together with accrued and unpaid
interest.
If an Event of Default shall occur, then, and in each and every such
case, so long as such Event of Default shall not have been remedied, the
Trustee shall, but only at the direction of either the Certificate Insurer or
the Holders of Certificates evidencing not less than 25% of the Voting Rights
(subject to the consent of the Certificate Insurer, which consent shall not be
unreasonably withheld), by notice in writing to the Master Servicer (with a
copy to each Rating Agency and the Depositor), terminate all of the rights and
obligations of the Master Servicer under this Agreement and in and to the
Mortgage Loans and the proceeds thereof, other than its rights as a
Certificateholder hereunder. In addition, if during the period that the
Depositor is required to file Exchange Act Reports with respect to the Trust
Fund, the Master Servicer shall fail to observe or perform any of the
obligations that constitute a Limited Exchange Act Reporting Obligation or the
obligations set forth in Section 3.17(a) or Section 11.07(a)(1) and (2), and
such failure continues for the lesser of 10 calendar days or such period in
which the applicable Exchange Act Report can be filed timely (without taking
into account any extensions), so long as such failure shall not have been
remedied, the Trustee shall, but only at the direction of the Depositor and
with the consent of the Certificate Insurer, terminate all of the rights and
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obligations of the Master Servicer under this Agreement and in and to the
Mortgage Loans and the proceeds thereof, other than its rights as a
Certificateholder hereunder. The Depositor shall not be entitled to terminate
the rights and obligations of the Master Servicer if a failure of the Master
Servicer to identify a Subcontractor "participating in the servicing function"
within the meaning of Item 1122 of Regulation AB was attributable solely to
the role or functions of such Subcontractor with respect to mortgage loans
other than the Mortgage Loans.
On or after the receipt by the Master Servicer of such written
notice, all authority and power of the Master Servicer hereunder, whether with
respect to the Mortgage Loans or otherwise, shall pass to and be vested in the
Trustee. The Trustee shall thereupon make any Advance described in Section
4.01 hereof subject to Section 3.04 hereof. The Trustee is hereby authorized
and empowered to execute and deliver, on behalf of the Master Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments,
and to do or accomplish all other acts or things necessary or appropriate to
effect the purposes of such notice of termination, whether to complete the
transfer and endorsement or assignment of the Mortgage Loans and related
documents, or otherwise. Unless expressly provided in such written notice, no
such termination shall affect any obligation of the Master Servicer to pay
amounts owed pursuant to Article VIII. The Master Servicer agrees to cooperate
with the Trustee in effecting the termination of the Master Servicer's
responsibilities and rights hereunder, including, without limitation, the
transfer to the Trustee of all cash amounts which shall at the time be
credited to the Certificate Account, or thereafter be received with respect to
the Mortgage Loans. The Trustee shall promptly notify the Rating Agencies, the
Certificate Insurer and the Depositor of the occurrence of an Event of
Default.
Notwithstanding any termination of the activities of a Master
Servicer hereunder, such Master Servicer shall be entitled to receive, out of
any late collection of a Scheduled Payment on a Mortgage Loan that was due
prior to the notice terminating such Master Servicer's rights and obligations
as Master Servicer hereunder and received after such notice, that portion
thereof to which such Master Servicer would have been entitled pursuant to
Sections 3.08(a)(i) through (viii), and any other amounts payable to such
Master Servicer hereunder the entitlement to which arose prior to the
termination of its activities hereunder.
If the Master Servicer is terminated, the Trustee shall provide the
Depositor in writing and in form and substance reasonably satisfactory to the
Depositor, all information reasonably requested by the Depositor in order to
comply with its reporting obligation under Item 6.02 of Form 8-K with respect
to a successor master servicer in the event the Trustee should succeed to the
duties of the Master Servicer as set forth herein.
Section 7.02 Trustee to Act; Appointment of Successor.
On and after the time the Master Servicer receives a notice of
termination pursuant to Section 7.01 hereof, the Trustee shall, to the extent
provided in Section 3.04, be the successor to the Master Servicer in its
capacity as servicer under this Agreement and the transactions set forth or
provided for herein and shall be subject to all the responsibilities, duties
and liabilities relating thereto placed on the Master Servicer by the terms
and provisions hereof and applicable law including the obligation to make
advances pursuant to Section 4.01. As compensation therefor, the Trustee shall
be entitled to all fees, costs and expenses relating to the
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Mortgage Loans that the Master Servicer would have been entitled to if the
Master Servicer had continued to act hereunder. Notwithstanding the foregoing,
if the Trustee has become the successor to the Master Servicer in accordance
with Section 7.01 hereof, the Trustee may, if it shall be unwilling to so act,
or shall, if it is prohibited by applicable law from making Advances pursuant
to Section 4.01 hereof or if it is otherwise unable to so act, (i) appoint any
established mortgage loan servicing institution acceptable to the Certificate
Insurer (as evidenced by the prior written consent of the Certificate
Insurer), or (ii) if it is unable for 60 days to appoint a successor servicer
acceptable to the Certificate Insurer, 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 (without regard to the Certificate Insurance Policy, in the
case of the Class A Certificates) and the NIM Insurer guaranteed notes
(without giving any effect to any policy or guaranty provided by the NIM
Insurer) by each Rating Agency as the successor to the Master Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Master Servicer hereunder. Any successor Master Servicer
shall 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 that is willing to service the Mortgage Loans and executes and delivers 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 Master Servicer
(other than liabilities and indemnities of the Master Servicer under Section
6.03 hereof incurred prior to termination of the Master Servicer under Section
7.01), with like effect as if originally named as a party to this Agreement;
and provided further that each Rating Agency acknowledges that its rating of
the Certificates in effect immediately prior to such assignment and delegation
will not be qualified or reduced as a result of such assignment and delegation
(without regard to the Certificate Insurance Policy, in the case of the Class
A Certificates). No appointment of a successor to the Master Servicer
hereunder shall be effective until (i) the Trustee shall have consented
thereto, (ii) written notice of such proposed appointment shall have been
provided by the Trustee to each Certificateholder and the Certificate Insurer
and (iii) at least 15 calendar days prior to the effective date of such
appointment, (x) the Trustee shall provide written notice to the Depositor of
such successor pursuant to this Section 7.02 and (y) such successor Master
Servicer shall provide to the Depositor in writing and in form and substance
reasonably satisfactory to the Depositor, all information reasonably requested
by the Depositor in order to comply with its reporting obligation under Item
6.02 of Form 8-K with respect to a replacement master servicer. 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
Master Servicer hereunder, the Trustee, unless the Trustee is prohibited by
law from so acting, shall, subject to Section 3.04 hereof, act in such
capacity as herein above provided. In connection with such appointment and
assumption, the Trustee may make such arrangements for the compensation of
such successor out of payments on Mortgage Loans as it and such successor
shall agree; provided that no such compensation shall be in excess of that
permitted the Master 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
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either case caused by the failure of the Master Servicer to deliver or
provide, or any delay in delivering or providing, any cash, information,
documents or records to it.
Any successor to the Master Servicer as servicer shall give notice to
the Certificate Insurer, the NIM Insurer and the Mortgagors of such change of
servicer and shall, during the term of its service as servicer maintain in
force the policy or policies that the Master Servicer is required to maintain
pursuant to Section 6.05.
In connection with the termination or resignation of the Master
Servicer hereunder, either (i) the successor Master Servicer, including the
Trustee if the Trustee is acting as successor Master Servicer, shall represent
and warrant that it is a member of MERS in good standing and shall agree to
comply in all material respects with the rules and procedures of MERS in
connection with the servicing of the Mortgage Loans that are registered with
MERS, or (ii) the predecessor Master Servicer shall cooperate with the
successor Master Servicer in causing MERS to execute and deliver an assignment
of Mortgage in recordable form to transfer the Mortgage from MERS to the
Trustee and to execute and deliver such other notices, documents and other
instruments as may be necessary or desirable to effect a transfer of such
Mortgage Loan or servicing of such Mortgage Loan on the MERS(R) System to the
successor Master Servicer. The predecessor Master Servicer shall file or cause
to be filed any such assignment in the appropriate recording office. The
successor Master Servicer shall cause such assignment to be delivered to the
Trustee promptly upon receipt of the original with evidence of recording
thereon or a copy certified by the public recording office in which such
assignment was recorded.
Section 7.03 Notification to Certificateholders.
(a) Upon any termination of or appointment of a successor to the
Master Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders, to the Certificate Insurer and to each Rating Agency.
(b) Within 60 days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Certificateholders notice of each such
Event of Default hereunder known to the Trustee, unless such Event of Default
shall have been cured or waived.
ARTICLE VIII.
CONCERNING THE TRUSTEE AND THE CO-TRUSTEE
Section 8.01 Duties of Trustee.
The Trustee, prior to the occurrence of an Event of Default
and after the curing of all Events of Default that may have occurred, shall
undertake to perform such duties and only such duties as are specifically set
forth in this Agreement. In case an Event of Default has occurred and remains
uncured, the Trustee shall exercise such of the rights and powers vested in it
by this Agreement, and use the same degree of care and skill in their exercise
as a prudent person would exercise or use under the circumstances in the
conduct of such person's own affairs.
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The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments
furnished to the Trustee (or the Co-Trustee, to the extent provided in this
Agreement) that are specifically required to be furnished pursuant to any
provision of this Agreement shall examine them to determine whether they
conform to the requirements of this Agreement, to the extent provided in this
Agreement. If any such instrument is found not to conform to the requirements
of this Agreement in a material manner, the Trustee shall take action as it
deems appropriate to have the instrument corrected.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own misconduct, its negligent failure to perform its obligations
in compliance with this Agreement, or any liability that would be imposed by
reason of its willful misfeasance or bad faith; provided that:
(1) prior to the occurrence of an Event of Default, and
after the curing of all such Events of Default that may have
occurred, the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Agreement, the
Trustee shall not be liable, individually or as Trustee, except for
the performance of such duties and obligations as are specifically
set forth in this Agreement, no implied covenants or obligations
shall be read into this Agreement against the Trustee and the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates
or opinions furnished to the Trustee and conforming to the
requirements of this Agreement that it reasonably believed in good
faith to be genuine and to have been duly executed by the proper
authorities respecting any matters arising hereunder;
(2) the Trustee shall not be liable, individually or as
Trustee, for an error of judgment made in good faith by a Responsible
Officer or Responsible Officers of the Trustee, unless the Trustee
was negligent or acted in bad faith or with willful misfeasance;
(3) the Trustee shall not be liable, individually or as
Trustee, with respect to any action taken, suffered or omitted to be
taken by it in good faith in accordance with the direction of the
Holders of each Class of Certificates evidencing not less than 25% of
the Voting Rights of such Class relating to the time, method and
place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee
under this Agreement; and
(4) without in any way limiting the provisions of this
Section 8.01 or Section 8.02 hereof, the Trustee shall be entitled to
rely conclusively on the information delivered to it by the Master
Servicer in a Trustee Advance Notice in determining whether or not it
is required to make an Advance under Section 4.01(d), shall have no
responsibility to ascertain or confirm any information contained in
any Trustee Advance Notice, and shall have no obligation to make any
Advance under Section 4.01(d) in the absence of a Trustee Advance
Notice or actual knowledge by a Responsible Officer that (A) a
required Advance was not made and (B) such required Advance was not a
Nonrecoverable Advance.
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Section 8.02 Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
(1) the Trustee may request and rely upon and shall be
protected in acting or refraining from acting upon any resolution,
Officer's Certificate, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond or other paper or document believed
by it to be genuine and to have been signed or presented by the
proper party or parties;
(2) the Trustee may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in
good faith and in accordance with such Opinion of Counsel;
(3) the Trustee shall not be liable, individually or as
Trustee, 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;
(4) prior to the occurrence of an Event of Default hereunder
and after the curing of all Events of Default that may have occurred,
the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order,
approval, bond or other paper or document, unless requested in
writing so to do by the Certificate Insurer, the NIM Insurer or the
Holders of each Class of Certificates evidencing not less than 25% of
the Voting Rights of such Class; provided, however, that if the
payment within a reasonable time to the Trustee of the costs,
expenses or liabilities likely to be incurred by it in the making of
such investigation is, in the opinion of the Trustee not reasonably
assured to the Trustee by the Certificate Insurer, the NIM Insurer or
such Certificateholders, the Trustee may require reasonable indemnity
against such expense, or liability from the Certificate Insurer, the
NIM Insurer or such Certificateholders as a condition to taking any
such action;
(5) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents, accountants or attorneys;
(6) the Trustee shall not be required to expend its own
funds or otherwise incur any financial liability in the performance
of any of its duties hereunder if it shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity
against such liability is not assured to it;
(7) the Trustee shall not be liable, individually or as
Trustee, for any loss on any investment of funds pursuant to this
Agreement (other than as issuer of the investment security);
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(8) the Trustee shall not be deemed to have knowledge of an
Event of Default until a Responsible Officer of the Trustee shall
have received written notice thereof; and
(9) the Trustee shall be under no obligation to exercise any
of the trusts or powers vested in it by this Agreement or to make any
investigation of matters arising hereunder or to institute, conduct
or defend any litigation hereunder or in relation hereto at the
request, order or direction of the Certificate Insurer, the NIM
Insurer or any of the Certificateholders, pursuant to the provisions
of this Agreement, unless the Certificate Insurer, the NIM Insurer or
such Certificateholders, as applicable, shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses
and liabilities that may be incurred therein or thereby.
(b) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee, may be enforced by the Trustee
without the possession of any of the Certificates, or the production thereof
at the trial or other proceeding relating thereto, and any such suit, action
or proceeding instituted by the Trustee shall be brought in its name for the
benefit of all the Holders of the Certificates, subject to the provisions of
this Agreement.
Section 8.03 Trustee Not Liable for Mortgage Loans.
The recitals contained herein shall be taken as the statements of the
Depositor or the Master Servicer, as the case may be, and the Trustee assumes
no responsibility for their correctness. The Trustee makes no representations
as to the validity or sufficiency of this Agreement or of any Mortgage Loan or
related document or of MERS or the MERS(R) System other than with respect to
the Trustee's execution and authentication of the Certificates. The Trustee
shall not be accountable for the use or application by the Depositor or the
Master Servicer of any funds paid to the Depositor or the Master Servicer in
respect of the Mortgage Loans or deposited in or withdrawn from the
Certificate Account by the Depositor or the Master Servicer.
Section 8.04 Trustee May Own Certificates.
The Trustee in its individual or any other capacity may
become the owner or pledgee of Certificates with the same rights as it would
have if it were not the Trustee.
Section 8.05 Master Servicer to Pay Trustee's Fees and Expenses.
The Master Servicer covenants and agrees to pay or reimburse
the Trustee, upon its request, for all reasonable expenses, disbursements and
advances incurred or made by the Trustee or the Co-Trustee on behalf of the
Trust Fund in accordance with any of the provisions of this Agreement
(including, without limitation: (A) the reasonable compensation and the
expenses and disbursements of its counsel and the Co-Trustee's counsel, but
only for representation of the Trustee and the Co-Trustee acting in their
capacities as trustees hereunder and (B) to the extent that the Trustee or the
Co-Trustee must engage persons not regularly in its employ to perform acts or
services on behalf of the Trust Fund, which acts or services are not in the
ordinary course of the duties of a trustee, paying agent or certificate
registrar, in the absence of a breach or default by any party hereto, the
reasonable compensation, expenses and
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disbursements of such persons, except any such expense, disbursement or
advance as may arise from its negligence, bad faith or willful misconduct).
The Trustee, the Co-Trustee and any director, officer, employee or agent of
the Trustee and the Co-Trustee shall be indemnified by the Master Servicer and
held harmless against any loss, liability or expense (i) incurred in
connection with any legal action relating to this Agreement or the
Certificates, or in connection with the performance of any of the Trustee's or
the Co-Trustee's duties hereunder, other than any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or negligence in the
performance of any of the Trustee's or the Co-Trustee's duties hereunder or by
reason of reckless disregard of the Trustee's or the Co-Trustee's obligations
and duties hereunder or (ii) resulting from any error in any tax or
information return prepared by the Master Servicer. Such indemnity shall
survive the termination of this Agreement or the resignation or removal of the
Trustee or the Co-Trustee hereunder.
Section 8.06 Eligibility Requirements for Trustee.
The Trustee hereunder shall, at all times, be a corporation or
association organized and doing business under the laws of a state or the
United States of America, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least $50,000,000,
subject to supervision or examination by federal or state authority and with a
credit rating that would not cause any of the Rating Agencies to reduce their
respective ratings of any Class of Certificates (without regard to the
Certificate Insurance Policy, in the case of the Class A Certificates) below
the ratings issued on the Closing Date (or having provided such security from
time to time as is sufficient to avoid such reduction). If such corporation or
association publishes reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining authority,
then for the purposes of this Section 8.06 the combined capital and surplus of
such corporation or association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 8.06, the Trustee shall resign immediately in the
manner and with the effect specified in Section 8.07 hereof. The corporation
or national banking association serving as Trustee may have normal banking and
trust relationships with the Depositor, the Sellers and the Master Servicer
and their respective affiliates; provided that such corporation cannot be an
affiliate of the Master Servicer other than the Trustee in its role as
successor to the Master Servicer.
Section 8.07 Resignation and Removal of Trustee.
The Trustee may at any time resign and be discharged from the trusts
hereby created by (1) giving written notice of resignation to the Depositor,
the Certificate Insurer and the Master Servicer and by mailing notice of
resignation by first class mail, postage prepaid, to the Certificateholders at
their addresses appearing on the Certificate Register, the Certificate Insurer
and each Rating Agency, not less than 60 days before the date specified in
such notice when, subject to Section 8.08, such resignation is to take effect,
and (2) acceptance of appointment by a successor trustee in accordance with
Section 8.08 and meeting the qualifications set forth in Section 8.06. If no
successor trustee shall have been so appointed and have accepted appointment
within 30 days after the giving of such notice or resignation, the
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resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor trustee.
As a condition to the effectiveness of any such resignation, at least
15 calendar days prior to the effective date of such resignation, the Trustee
shall provide (x) written notice to the Depositor of any successor pursuant to
this Section and (y) in writing and in form and substance reasonably
satisfactory to the Depositor, all information reasonably requested by the
Depositor in order to comply with its reporting obligation under Item 6.02 of
Form 8-K with respect to the resignation of the Trustee.
If at any time (i) the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.06 hereof and shall fail to resign
after written request thereto by the Certificate Insurer, the NIM Insurer or
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, (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, or (iv) during the period which the Depositor is required to
file Exchange Act Reports with respect to the Trust Fund, the Trustee fails to
comply with its obligations under the last sentence of Section 7.01, the
preceding paragraph, Section 8.09 or Article XI and such failure is not
remedied within the lesser of 10 calendar days or such period in which the
applicable Exchange Act Report can be filed timely (without taking into
account any extensions), then, in the case of clauses (i) through (iii), the
Depositor, the NIM Insurer, the Certificate Insurer or the Master Servicer, or
in the case of clause (iv), the Depositor, may remove the Trustee and appoint
a successor trustee, reasonably acceptable to the NIM Insurer and the
Certificate Insurer, by written instrument, in triplicate, one copy of which
instrument shall be delivered to the Trustee, one copy of which shall be
delivered to the Master Servicer and one copy of which shall be delivered to
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 triplicate, signed
by such Holders or their attorneys-in-fact duly authorized, one complete set
of which instruments shall be delivered by the successor Trustee to the Master
Servicer one complete set to the Trustee so removed, one complete set to the
successor so appointed and one complete set to the Depositor, together with a
written description of the basis for such removal. Notice of any removal of
the Trustee shall be given to each Rating Agency by the successor Trustee.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.07 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 8.08 hereof.
Section 8.08 Successor Trustee.
Any successor trustee appointed as provided in Section 8.07 hereof
shall execute, acknowledge and deliver to the Depositor, its predecessor
trustee and the Master Servicer an
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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. In addition, if the Corridor Contract is still outstanding, the Person
appointed as successor trustee shall execute, acknowledge and deliver to the
predecessor trustee, CHL and the Master Servicer an instrument accepting the
appointment as successor Corridor Contract Administrator under the Corridor
Contract Administration Agreement.
No successor trustee shall accept appointment as provided in this
Section 8.08 unless at the time of such acceptance such successor trustee
shall be eligible under the provisions of Section 8.06 hereof, is reasonably
acceptable to the Certificate Insurer and the NIM Insurer, its appointment
shall not adversely affect the then-current ratings of the Certificates
(without regard to the Certificate Insurance Policy, in the case of the Class
A Certificates) and has provided to the Depositor in writing and in form and
substance reasonably satisfactory to the Depositor, all information reasonably
requested by the Depositor in order to comply with its reporting obligation
under Item 6.02 of Form 8-K with respect to a replacement Trustee.
Upon acceptance of appointment by a successor trustee as provided in
this Section 8.08, the Depositor shall mail notice of the succession of such
trustee hereunder to the Certificate Insurer, the NIM Insurer and all Holders
of Certificates. If the Depositor fails to mail such notice within ten days
after acceptance of appointment by the successor trustee, the successor
trustee shall cause such notice to be mailed at the expense of the Depositor.
Section 8.09 Merger or Consolidation of Trustee.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided that such corporation shall be eligible under the provisions of
Section 8.06 hereof without the execution or filing of any paper or further
act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding.
As a condition to the effectiveness of any merger or consolidation,
at least 15 calendar days prior to the effective date of any merger or
consolidation of the Trustee, the Trustee shall provide (x) written notice to
the Depositor of any successor pursuant to this Section and (y) in writing and
in form and substance reasonably satisfactory to the Depositor, all
information reasonably requested by the Depositor in order to comply with its
reporting obligation under Item 6.02 of Form 8-K with respect to a replacement
Trustee.
Section 8.10 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Fund or property securing any Mortgage Note may at the
time be located, the Master Servicer and the Trustee acting jointly shall have
the power and shall execute and deliver all instruments
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to appoint one or more Persons approved by the Trustee and reasonably
acceptable to the Certificate Insurer and the NIM Insurer to act as co-trustee
or co-trustees jointly with the Trustee, or separate trustee or separate
trustees, of all or any part of the Trust Fund, and to vest in such Person or
Persons, in such capacity and for the benefit of the Certificateholders, such
title to the Trust Fund or any part thereof, whichever is applicable, and,
subject to the other provisions of this Section 8.10, such powers, duties,
obligations, rights and trusts as the Master Servicer and the Trustee may
consider necessary or desirable. If the Master Servicer shall not have joined
in such appointment, or the NIM Insurer or the Certificate Insurer shall not
have approved such appointment, within 15 days after receipt by it of a
request to do so, or in the case an Event of Default shall have occurred and
be continuing, the Trustee shall have the power to make such appointment. No
co-trustee or separate trustee hereunder shall be required to meet the terms
of eligibility as a successor trustee under Section 8.06 and no notice to
Certificateholders of the appointment of any co-trustee or separate trustee
shall be required under Section 8.08.
Every separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and
conditions:
(1) All rights, powers, duties and obligations conferred or
imposed upon the Trustee, except for the obligation of the Trustee
under this Agreement to advance funds on behalf of the Master
Servicer, shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee
is not authorized to act separately without the Trustee joining in
such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as successor to the Master 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;
(2) No trustee hereunder shall be held personally liable by
reason of any act or omission of any other trustee hereunder; and
(3) 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 VIII. Each separate trustee and co-trustee
upon its acceptance of the trusts conferred, shall be vested with the estates
or property specified in its instrument of appointment, either jointly with
the Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Every such instrument shall be filed with the
Trustee and a copy thereof given to the Master Servicer and the Depositor.
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Any separate trustee or co-trustee may, at any time, constitute the
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its
estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
Section 8.11 Tax Matters.
It is intended that the Trust Fund shall constitute, and that the
affairs of the Trust Fund shall be conducted so that each REMIC created
pursuant to the Preliminary Statement 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 and that in such capacity it shall: (a) prepare and
file, or cause to be prepared and filed, in a timely manner, a 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 REMIC created hereunder 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) 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) make or cause to be made elections, on behalf of each
REMIC created hereunder to be treated as a REMIC on the federal tax return of
each such REMIC for its first taxable year (and, if necessary, under
applicable state law); (d) prepare and forward, or cause to be prepared and
forwarded, to the Certificateholders and to the Internal Revenue Service and,
if necessary, state tax authorities, all information returns and reports as
and when required to be provided to them in accordance with the REMIC
Provisions, including without limitation, the calculation of any original
issue discount using the Prepayment Assumption; (e) provide information
necessary for the computation of tax imposed on the transfer of a Class A-R
Certificate to a Person that is not a Permitted Transferee, or an agent
(including a broker, nominee or other middleman) of a Non-Permitted
Transferee, or a pass-through entity in which a Non-Permitted Transferee is
the record holder of an interest (the reasonable cost of computing and
furnishing such information may be charged to the Person liable for such tax);
(f) to the extent that they are under its control conduct the affairs of the
Trust Fund at all times that any Certificates are outstanding so as to
maintain the status of each REMIC created hereunder as a REMIC under the REMIC
Provisions; (g) not knowingly or intentionally take any action or omit to take
any action that would cause the termination of the REMIC status of any REMIC
created hereunder; (h) pay, from the sources specified in the penultimate
paragraph of this Section 8.11, the amount of any federal, state and local
taxes, including prohibited transaction taxes as described below, imposed on
any REMIC created hereunder prior to the termination of the Trust Fund when
and as the same shall be due and payable (but such
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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) sign or cause to be signed federal, state or
local income tax or information returns; (j) maintain records relating to each
REMIC created hereunder, including but not limited to the income, expenses,
assets and liabilities of each such REMIC, and the fair market value 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; and (k) as and when necessary and
appropriate, 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 created 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 any REMIC created
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 ten days after the Closing Date all information or data that the
Trustee requests in writing and determines to be relevant for tax purposes to
the valuations and offering prices of the Certificates, including, without
limitation, the price, yield, prepayment assumption and projected cash flows
of the Certificates and the Mortgage Loans (and, to the extent not part of the
aforementioned, the information referred to in paragraphs (1), (2), (3) and
(4) of Section 4.05(d)). 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
the Trust Fund 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 the Trust Fund 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 the Trust Fund pursuant to sections 23153 and 24872 of the
California Revenue and Taxation Code if 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 Agreement, (ii) (x) the Master Servicer, in the case of
any such minimum tax, and (y) 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 here 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 A-R
Certificateholders, and second with amounts otherwise to be distributed to all
other Certificateholders in the same manner as if such tax were a Realized
Loss. Notwithstanding anything to the contrary contained herein, to the extent
that such tax is payable by the Class A-R Certificates, the Trustee is hereby
authorized to retain on any Distribution Date, from the Holders of the Class
A-R Certificates (and, if necessary, second, from the Holders of the other
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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 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.
The Trustee shall treat the Carryover Reserve Fund as an outside
reserve fund within the meaning of Treasury Regulation 1.860G-2(h) which is
not an asset of any REMIC created hereunder. The Carryover Reserve Fund shall
be treated as owned by the Class C Certificateholders. The rights of the
Holders of each Class of Certificates (other than the Class A-IO, Class P and
Class A-R Certificates) to receive payments from, and the deemed obligations
of such Holders to make payments to, the Carryover Reserve Fund shall be
treated as rights and obligations with respect to notional principal contracts
written by the Corridor Contract Counterparty in respect of any Net Rate
Carryover funded by the Corridor Contract and in respect of any residual
payments from such Corridor Contract received by the Class C Certificates and
(ii) the Holders of the Class C Certificates in respect of any Net Rate
Carryover distributed pursuant to Sections 4.04(c)(4). Thus, the Certificates
(other than the Class A-IO, Class P and Class A-R Certificates), shall be
treated as representing ownership of Master REMIC regular interests coupled
with contractual rights and obligations within the meaning of Treasury
Regulation 1.860G-2(i). For purposes of determining the issue price of the
various Master REMIC regular interests, the Trustee shall assume that the
Corridor Contract has a value of $31,500.
Section 8.12 Co-Trustee.
(a) The Co-Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments
furnished to the Co-Trustee that are specifically required to be furnished
pursuant to any provision of this Agreement shall examine them to determine
whether they conform to the requirements of this Agreement, to the extent
required by this Agreement. If any such instrument is found not to conform to
the requirements of this Agreement in a material manner, the Co-Trustee shall
take action as it deems appropriate to have the instrument corrected. In
addition, the Co-Trustee shall act as the insured under the Credit Insurance
Policy and hereby directs the Master Servicer, on behalf of the Co-Trustee, to
take all actions appropriate or required of the Co-Trustee under the Credit
Insurance Policy, other than the payment of the Credit Insurance Premium and
obtaining the approval of the Credit Insurer with respect to the appointment
of a successor servicer.
(b) No provision of this Agreement shall be construed to relieve the
Co-Trustee from liability for its own negligent action, its own negligent
failure to act or its own misconduct, its negligent failure to perform its
obligations in compliance with this Agreement, or any liability that would be
imposed by reason of its willful misfeasance or bad faith; provided that:
(1) the duties and obligations of the Co-Trustee shall be
determined solely by the express provisions of this Agreement with
the exception of Section 8.10, the Co-Trustee shall not be liable,
individually or as Co-Trustee, except for the performance of such
duties and obligations as are specifically set forth in this
Agreement, no implied covenants or obligations shall be read into
this Agreement against the Co-Trustee and the
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Co-Trustee may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Co-Trustee and conforming
to the requirements of this Agreement that it reasonably believed in
good faith to be genuine and to have been duly executed by the proper
authorities respecting any matters arising hereunder; and
(2) the Co-Trustee shall not be liable, individually or as
Co-Trustee, for an error of judgment made in good faith by a
Responsible Officer or Responsible Officers of the Co-Trustee, unless
the Co-Trustee was negligent or acted in bad faith or with willful
misfeasance.
(c) Except as otherwise provided in paragraph (b) above:
(1) the Co-Trustee may request and rely upon and shall be
protected in acting or refraining from acting upon any resolution,
Officer's Certificate, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond or other paper or document believed
by it to be genuine and to have been signed or presented by the
proper party or parties;
(2) the Co-Trustee may consult with counsel and any Opinion
of Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in
good faith and in accordance with such Opinion of Counsel;
(3) the Co-Trustee shall not be liable, individually or as
Co-Trustee, 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;
(4) the Co-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;
(5) the Co-Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents, accountants or attorneys; and
(6) the Co-Trustee shall not be required to expend its own
funds or otherwise incur any financial liability in the performance
of any of its duties hereunder if it shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity
against such liability is not assured to it.
(d) The recitals contained herein shall be taken as the statements of
the Depositor or the Master Servicer, as the case may be, and the Co-Trustee
assumes no responsibility for their correctness. The Co-Trustee makes no
representations as to the validity or sufficiency of this Agreement or of any
Mortgage Loan or related document or of MERS or the MERS(R) System. The
Co-Trustee shall not be accountable for the use or application by the
Depositor or the Master Servicer of any funds paid to the Depositor or the
Master Servicer in
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respect of the Mortgage Loans or deposited in or withdrawn from the
Certificate Account by the Depositor or the Master Servicer.
(e) The Co-Trustee in its individual or any other capacity may become
the owner or pledgee of Certificates with the same rights as it would have if
it were not the Co-Trustee.
(f) [Reserved].
(g) The Co-Trustee hereunder shall, at all times, be a corporation or
association organized and doing business under the laws of a state or the
United States of America, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least $50,000,000,
subject to supervision or examination by federal or state authority and with a
credit rating that would not cause any of the Rating Agencies to reduce their
respective ratings of any Class of Certificates below the ratings issued on
the Closing Date (or having provided such security from time to time as is
sufficient to avoid such reduction). If such corporation or association
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section 8.12 the combined capital and surplus of such
corporation or association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Co-Trustee shall cease to be eligible in accordance with
the provisions of this Section 8.12, the Co-Trustee shall resign immediately
in the manner and with the effect specified in paragraph (h) below. The
corporation or national banking association serving as Co-Trustee may have
normal banking and trust relationships with the Depositor, the Sellers and the
Master Servicer and their respective affiliates; provided that such
corporation cannot be an affiliate of the Master Servicer other than the
Trustee in its role as successor to the Master Servicer.
(h) The Co-Trustee may at any time resign and be discharged from the
trusts hereby created by giving 30 days prior written notice of resignation to
the Trustee, the Depositor, the Certificate Insurer and the Master Servicer.
Upon such resignation the Trustee (x) may appoint a successor Co-Trustee
meeting the requirements in paragraph (g) above and acceptable to the Master
Servicer, the Certificate Insurer and the NIM Insurer (in their sole
discretion), so long as such Co-Trustee executes and delivers to the other
parties hereto an instrument agreeing to be bound by the provisions of this
Agreement or (y) may if permitted by the Master Servicer (in its sole
discretion) assume the rights and duties of the resigning Co-Trustee so long
as the Trustee executes and delivers an instrument to that effect.
(i) It is expressly understood and agreed that the Co-Trustee's
duties and obligations hereunder are limited to those duties and obligations
expressly assigned to the Co-Trustee in Section 3.08(b) hereof.
Notwithstanding any other provision of this Agreement to the contrary, the
Co-Trustee shall not be entitled to exercise any powers, nor shall the
Co-Trustee have any of the duties and responsibilities of the Trustee or any
other party described in this Agreement. The Co-Trustee shall be entitled to
all of the rights, privileges and protections afforded to the Trustee
hereunder.
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Section 8.13 Access to Records of the Trustee.
The Trustee and the Co-Trustee shall afford the Sellers, the
Depositor, the Master Servicer, the NIM Insurer, the Certificate Insurer and
each Certificate Owner upon reasonable notice during normal business hours
access to all records maintained by the Trustee or the Co-Trustee in respect
of its duties under this Agreement and access to officers of such entity
responsible for performing its duties. Upon request, the Trustee or the
Co-Trustee shall furnish the Depositor, the Master Servicer, the NIM Insurer,
the Certificate Insurer and any requesting Certificate Owner with its most
recent financial statements. The Trustee shall cooperate fully with the
Sellers, the Master Servicer, the Depositor, the NIM Insurer, the Certificate
Insurer and the Certificate Owner for review and copying any books, documents,
or records requested with respect to the Trustee's and the Co-Trustee's
respective duties under this Agreement. The Sellers, the Depositor, the Master
Servicer, the Certificate Insurer and the Certificate Owner shall not have any
responsibility or liability for any action for failure to act by the Trustee
or Co-Trustee and are not obligated to supervise the performance of the
Trustee under this Agreement or otherwise.
Section 8.14 Suits for Enforcement.
If an Event of Default or other material default by the Master
Servicer or the Depositor under this Agreement occurs and is continuing, at
the direction of the Certificateholders holding not less than 51% of the
Voting Rights or the Certificate Insurer, the Trustee shall proceed to protect
and enforce its rights and the rights of the Certificateholders, the
Certificate Insurer or the NIM Insurer under this Agreement by a suit, action,
or proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Agreement or in aid
of the execution of any power granted in this Agreement or for the enforcement
of any other legal, equitable, or other remedy, as the Trustee, being advised
by counsel, and subject to the foregoing, shall deem most effectual to protect
and enforce any of the rights of the Trustee, the NIM Insurer, the Certificate
Insurer and the Certificateholders.
Section 8.15 Monitoring of Significance Percentage.
With respect to each Distribution Date, the Trustee shall calculate
the "significance percentage" (as defined in Item 1115 of Regulation AB) of
each derivative instrument, if any, based on the aggregate Class Principal
Balance of the related Class(es) of Covered Certificates for such derivative
instrument and Distribution Date (after all distributions to be made thereon
on such Distribution Date) and based on the methodology provided in writing by
or on behalf of CHL no later than the fifth Business Day preceding such
Distribution Date. On each Distribution Date, the Trustee shall provide to CHL
a written report (which written report may include similar information with
respect to other derivative instruments relating to securitization
transactions sponsored by CHL) specifying the "significance percentage" of
each derivative instrument, if any, for that Distribution Date. If the
"significance percentage" of any derivative instrument exceeds 7.0% with
respect to any Distribution Date, the Trustee shall make a separate notation
thereof in the written report described in the preceding sentence. Such
written report may contain such assumptions and disclaimers as are deemed
necessary and appropriate by the Trustee.
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ARTICLE IX.
TERMINATION
Section 9.01 Termination upon Liquidation or Repurchase of all
Mortgage Loans.
Subject to Section 9.03, the Trust Fund shall terminate and the
obligations and responsibilities of the Depositor, the Master Servicer, the
Sellers, the Co-Trustee and the Trustee created hereby shall terminate upon
the earlier of (a) the purchase by the Master Servicer, the Certificate
Insurer or NIM Insurer (the party exercising such purchase option, the
"Terminator") of all of the Mortgage Loans (and REO Properties) remaining in
the Trust Fund at the price equal to the sum of (i) 100% of the Stated
Principal Balance of each Mortgage Loan in the Trust Fund (other than in
respect of an REO Property), (ii) accrued interest thereon at the applicable
Mortgage Rate (or, if such repurchase is effected by the Master Servicer, at
the applicable Net Mortgage Rate), (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 Terminator and the Trustee, (iv) any remaining unpaid costs and
damages incurred by the Trust Fund that arises out of an actual violation of
any predatory or abusive lending law or regulation and (v) if the Terminator
is the Certificate Insurer or the NIM Insurer, any unreimbursed Servicing
Advances, and the principal portion of any unreimbursed Advances, made on the
Mortgage Loans prior to the exercise of such repurchase 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 related 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. James's, living on the date hereof and (ii) the
Latest Possible Maturity Date. If any such termination will result in a
Deficiency Amount on the Certificate Insurance Policy, the consent of the
Certificate Insurer will also be required prior to exercising the option
specified in clause (a) of this paragraph.
The right to purchase all Mortgage Loans and REO Properties by the
Terminator pursuant to clause (a) of the immediately preceding paragraph shall
be conditioned upon (1) the Stated Principal Balance of the Mortgage Loans, at
the time of any such repurchase, aggregating ten percent (10%) or less of the
sum of the aggregate Cut-off Date Principal Balance of the Initial Mortgage
Loans and the Pre-Funded Amount and (2) unless the NIM Insurer otherwise
consents, the purchase price for such Mortgage Loans and REO Properties shall
result in a final distribution on any NIM Insurer guaranteed notes that is
sufficient (x) to pay such notes in full and (y) to pay any amounts due and
payable to the NIM Insurer pursuant to the indenture related to such notes and
(3) unless the Certificate Insurer otherwise consents, the purchase price for
such Mortgage Loans and REO Properties shall result in a final distribution on
the Class A Certificates and the Certificate Insurer that is sufficient (x) to
pay such Class A Certificates in full (without the need of any payment by the
Certificate Insurer of any Insured Amount) and (y) to pay any amounts due and
payable to the Certificate Insurer pursuant to the terms hereof and pursuant
to the Insurance and Indemnity Agreement.
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The NIM Insurer's right to purchase all Mortgage Loans and REO
Properties shall be further conditioned upon the written consent of the Master
Servicer. If the NIM Insurer has such purchase right and does not exercise
that right, the Certificate Insurer shall have the purchase right, subject to
the same conditions and restrictions imposed on the NIM Insurer.
Section 9.02 Final Distribution on the Certificates.
If on any Determination Date, (i) the Master Servicer determines that
there are no Outstanding Mortgage Loans and no other funds or assets in the
Trust Fund other than the funds in the Certificate Account, the Master
Servicer shall direct the Trustee to send a final distribution notice promptly
to each related Certificateholder and the Certificate Insurer 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 related
Certificateholders and the Certificate Insurer 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 Corporate Trust Office of the
Trustee. If the Terminator elects to terminate pursuant to clause (a) of
Section 9.01, at least 20 days prior to the date notice is to be mailed to the
affected Certificateholders, such electing party shall notify the Depositor,
the Certificate Insurer and the Trustee of the date such electing party
intends to terminate and of the applicable repurchase price of the related
Mortgage Loans and REO Properties.
Notice of any termination, specifying the Distribution Date on which
related Certificateholders may surrender their Certificates for payment of the
final distribution and cancellation, shall be given promptly by the Trustee by
letter to related 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 related Certificates will be made upon
presentation and surrender of such 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
such Certificates at the office therein specified. The Terminator will give
such notice to each Rating Agency at the time such notice is given to the
affected Certificateholders.
In the event such notice is given, the Master Servicer shall cause
all funds in the Certificate Account to be remitted to the Trustee for deposit
in the Distribution Account on the Business Day prior to the applicable
Distribution Date in an amount equal to the final distribution in respect of
the Certificates. Upon such final deposit and the receipt by the Trustee of a
Request for File Release therefor, the Trustee shall promptly release to the
Master Servicer the Mortgage Files for the Mortgage Loans.
Upon presentation and surrender of the Certificates, the Trustee
shall cause to be distributed to Certificateholders of each affected Class and
the Certificate Insurer the amounts allocable to such Certificates and the
Certificate Insurer held in the Distribution Account (and, if applicable, the
Carryover Reserve Fund) in the order and priority set forth in Section 4.04
hereof
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on the final Distribution Date and in proportion to their respective
Percentage Interests. Notwithstanding the reduction of the Certificate
Principal Balance of any Class of Certificates to zero, such Class will be
outstanding hereunder (solely for the purpose of receiving distributions (if
any) to which it may be entitled pursuant to the terms of this Agreement and
not for any other purpose) until the termination of the respective obligations
and responsibilities of the Depositor, each Seller, the Master Servicer and
the Trustee hereunder in accordance with Article IX.
In the event that any affected Certificateholders shall not surrender
related 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
related 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 one
year after the second notice all related Certificates shall not have been
surrendered for cancellation, the Certificate Insurer, with respect to any
unpaid Certificate Insurance Reimbursement Amounts, and then the Class A-R
Certificates shall be entitled to all unclaimed funds and other assets that
remain subject hereto.
Section 9.03 Additional Termination Requirements.
(a) In the event the Terminator exercises its purchase option, 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 9.03 will not (i) result
in the imposition of taxes on "prohibited transactions" of a REMIC, or (ii)
cause any REMIC created hereunder to fail to qualify as a REMIC at any time
that any Certificates are outstanding:
(1) The Master Servicer shall establish a 90-day liquidation
period and notify the Trustee thereof, which shall in turn specify the first
day of such period in a statement attached to the Trust Fund's final Tax
Return pursuant to Treasury Regulation Section 1.860F-1. The Master Servicer
shall prepare a plan of complete liquidation and shall otherwise 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 delivered to
the Trustee and the Depositor 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 Master Servicer as
agent of the Trustee shall sell all of the assets of the Trust Fund to the
Terminator 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 Class A-R Certificateholders all cash on hand
(other than cash retained to meet claims) related to such Class of
Certificates, and the Trust Fund shall terminate at that time.
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(b) By their acceptance of the Certificates, the Holders thereof
hereby authorize the Master Servicer to specify the 90-day liquidation period
for the Trust Fund, which authorization shall be binding upon all successor
Certificateholders. The Trustee shall attach a statement to the final federal
income tax return for each of any REMIC created hereunder stating that
pursuant to Treasury Regulation Section 1.860F-1, the first day of the 90-day
liquidation period for each the REMIC was the date on which the Trustee sold
the assets of the Trust Fund to the Terminator.
(c) The Trustee as agent for each REMIC created hereunder hereby
agrees to adopt and sign such a plan of complete liquidation upon the written
request of the Master Servicer, and the receipt of the Opinion of Counsel
referred to in Section 9.03(a)(1), and together with the Holders of the Class
A-R Certificates agree to take such other action in connection therewith as
may be reasonably requested by the Terminator.
ARTICLE X.
MISCELLANEOUS PROVISIONS
Section 10.01 Amendment.
This Agreement may be amended from time to time by the Depositor, the
Master Servicer, the Sellers, the Co-Trustee and the Trustee with the consent
of the Certificate Insurer and the NIM Insurer, without the consent of any of
the Certificateholders (i) to cure any ambiguity, (ii) to correct or
supplement any provisions herein, (iii) to conform this Agreement to the
Prospectus Supplement or the Prospectus, (iv) to modify, alter, amend, add to
or rescind any of the terms or provisions contained in this Agreement to
comply with any rules or regulations promulgated by the Securities and
Exchange Commission from time to time, or (v) 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
(without regard to the Certificate Insurance Policy, in the case of the Class
A Certificates), it being understood and agreed that any such letter in and of
itself will not represent a determination as to the materiality of any such
amendment and will represent a determination only as to the credit issues
affecting any such rating. Any amendment described above made solely to
conform this Agreement to the Prospectus or the Prospectus Supplement shall be
deemed not to adversely affect in any material respect the interests of the
Certificateholders. Notwithstanding the foregoing, no amendment that
significantly changes the permitted activities of the trust created by this
Agreement may be made without the consent of Certificateholders representing
not less than 51% of the Voting Rights of each Class of Certificates affected
by such amendment. Each party to this Agreement hereby agrees that it will
cooperate with each other party in amending this Agreement pursuant to clause
(iv) above.
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The Trustee, the Co-Trustee, the Depositor, the Master Servicer and
the Sellers with the consent of the Certificate Insurer and the NIM Insurer
may also at any time and from time to time amend this Agreement, without the
consent of the Certificateholders, to modify, eliminate or add to any of its
provisions to such extent as shall be necessary or appropriate to maintain the
qualification of the Trust Fund as a REMIC under the Code or to avoid or
minimize the risk of the imposition of any tax on the Trust Fund pursuant to
the Code that would be a claim against the Trust Fund 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, 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
Depositor, the Master Servicer, the Sellers, the Co-Trustee and the Trustee
with the consent of the Certificate Insurer, the NIM Insurer and the Holders
of each Class of Certificates affected thereby evidencing not less than 51% of
the Voting Rights of such Class, 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)
adversely affect in any material respect the interests of the Holders of any
Class of Certificates in a manner other than as described in (i), without the
consent of the Holders of Certificates of such Class evidencing 66% or more of
the Voting Rights of such Class, or (iii) reduce the aforesaid percentages of
Certificates the Holders of which are required to consent to any such
amendment without the consent of the Holders of all such Certificates then
outstanding.
Notwithstanding any contrary provision of this Agreement, the
Trustee, the Co-Trustee, the Certificate Insurer and the NIM Insurer shall not
consent to any amendment to this Agreement unless each shall have first
received an Opinion of Counsel satisfactory to the Trustee, the Co-Trustee,
the Certificate Insurer and the NIM Insurer, which opinion shall be an expense
of the party requesting such amendment but in any case shall not be an expense
of the Trustee, the Co-Trustee, the Certificate Insurer or the NIM Insurer, to
the effect that such amendment will not cause the imposition of any tax on the
Trust Fund or the Certificateholders or cause any REMIC formed hereunder to
fail to qualify as a REMIC at any time that any Certificates are outstanding.
Promptly after the execution of any amendment to this Agreement, the
Trustee shall furnish written notification of the substance of such amendment
to the Certificate Insurer and, if the amendment required the consent of
Certificateholders, 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.
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Nothing in this Agreement shall require the Trustee or the Co-Trustee
to enter into an amendment without receiving an Opinion of Counsel, reasonably
satisfactory to the Trustee, the Co-Trustee, the Certificate Insurer and the
NIM Insurer that (i) such amendment is permitted and is not prohibited by this
Agreement and that all requirements for amending this Agreement have been
complied with; and (ii) either (A) the amendment does not adversely affect in
any material respect the interests of any Certificateholder or (B) the
conclusion set forth in the immediately preceding clause (A) is not required
to be reached pursuant to this Section 10.01.
Section 10.02 Recordation of Agreement; Counterparts.
This Agreement is subject to recordation in all appropriate public
offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the properties subject to the Mortgages
are situated, and in any other appropriate public recording office or
elsewhere, such recordation to be effected by the Master Servicer at its
expense.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one
and the same instrument.
Section 10.03 Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED IN THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HERETO AND THE CERTIFICATEHOLDERS SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS.
Section 10.04 Intention of Parties.
(a) 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 Depositor to the Trustee be, and be construed as, an absolute
sale thereof to the Trustee. It is, further, not the intention of the parties
that such conveyance be deemed a pledge thereof by the Depositor to the
Trustee. However, in the event that, notwithstanding the intent of the
parties, such assets are held to be the property of the Depositor, or if for
any other reason this Agreement or any Subsequent Transfer 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) with respect to all such
assets and security interests and (ii) the conveyance provided for in this
Agreement and any Subsequent Transfer Agreement shall be deemed to be an
assignment and a grant pursuant to the terms of this Agreement by the
Depositor to the Trustee, for the benefit of the Certificateholders and the
Certificate Insurer, of a security interest in all of the assets that
constitute the Trust Fund, whether now owned or hereafter acquired.
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The Depositor for the benefit of the Certificateholders and the NIM
Insurer shall, to the extent consistent with this Agreement, take such actions
as may be necessary to ensure that, if this Agreement were deemed to create a
security interest in the 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. The Depositor shall arrange for filing any Uniform Commercial Code
continuation statements in connection with any security interest granted or
assigned to the Trustee for the benefit of the Certificateholders.
(b) The Depositor hereby represents that:
(i) This Agreement creates a valid and continuing security
interest (as defined in the Uniform Commercial Code as enacted in the
State of New York (the "NY UCC")) in the Mortgage Notes in favor of
the Trustee, which security interest is prior to all other liens, and
is enforceable as such as against creditors of and purchasers from
the Depositor.
(ii) The Mortgage Notes constitute "instruments" within the
meaning of the NY UCC.
(iii) Immediately prior to the assignment of each Mortgage
Loan to the Trustee, the Depositor owns and has good and marketable
title to such Mortgage Loan free and clear of any lien, claim or
encumbrance of any Person.
(iv) The Depositor has received all consents and approvals
required by the terms of the Mortgage Loans to the sale of the
Mortgage Loans hereunder to the Trustee.
(v) All original executed copies of each Mortgage Note that
are required to be delivered to the Trustee pursuant to Section 2.01
have been delivered to the Trustee.
(vi) Other than the security interest granted to the Trustee
pursuant to this Agreement, the Depositor has not pledged, assigned,
sold, granted a security interest in, or otherwise conveyed any of
the Mortgage Loans. The Depositor has not authorized the filing of
and is not aware of any financing statements against the Depositor
that include a description of collateral covering the Mortgage Loans
other than any financing statement relating to the security interest
granted to the Trustee hereunder or that has been terminated. The
Depositor is not aware of any judgment or tax lien filings against
the Depositor.
(c) The Master Servicer shall take such action as is reasonably
necessary to maintain the perfection and priority of the security interest of
the Trustee in the Mortgage Loans; provided, however, that the obligation to
deliver the Mortgage File to the Trustee pursuant to Section 2.01 shall be
solely the Depositor's obligation and the Master Servicer shall not be
responsible for the safekeeping of the Mortgage Files by the Trustee.
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(d) It is understood and agreed that the representations and
warranties set forth in subsection (b) above shall survive delivery of the
Mortgage Files to the Trustee. Upon discovery by the Depositor or the Trustee
of a breach of any of the foregoing representations and warranties set forth
in subsection (b) above, which breach materially and adversely affects the
interest of the Certificateholders, the party discovering such breach shall
give prompt written notice to the others and to each Rating Agency.
Section 10.05 Notices.
(a) The Trustee shall use its best efforts to promptly provide notice
to each Rating Agency and the Certificate Insurer with respect to each of the
following of which it has actual knowledge:
(1) Any material change or amendment to this Agreement;
(2) The occurrence of any Event of Default that has not been
cured;
(3) The resignation or termination of the Master Servicer or
the Trustee and the appointment of any successor;
(4) The repurchase or substitution of Mortgage Loans
pursuant to Sections 2.02, 2.03, 2.04 and 3.12; and
(5) The final payment to Certificateholders.
(b) In addition, the Trustee shall promptly furnish to each Rating
Agency copies of the following:
(1) Each report to Certificateholders described in Section
4.05;
(2) Each annual statement as to compliance described in
Section 3.17; and
(3) Each annual independent public accountants' servicing
report described in Section 11.07.
(c) All directions, demands and notices hereunder shall be in writing
and shall be deemed to have been duly given when sent by facsimile
transmission, first class mail or delivered to (i) in the case of the
Depositor, CWHEQ, Inc., 0000 Xxxx Xxxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000,
facsimile number: (000) 000-0000, Attention: Xxxxx X. Xxxxxxx, or such other
address as may be hereafter furnished to the Sellers, the Master Servicer and
the Trustee by the Depositor in writing; (ii) in the case of CHL, Countrywide
Home Loans, Inc., 0000 Xxxx Xxxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000, facsimile
number (000) 000-0000, Attention: Xxxxx X. Xxxxxxx, or such other address as
may be hereafter furnished to the Depositor, the Master Servicer and the
Trustee by the Sellers in writing; (iii) in the case of Park Monaco, Park
Monaco Inc., 0000 Xxxx Xxxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000, facsimile number
(000) 000-0000, Attention: Xxxx Xxx, or such other address as may be hereafter
furnished to the Depositor, the Master Servicer and the Trustee by the Sellers
in writing; (iv) in the case of Park Sienna, Park
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Sienna LLC, 0000 Xxxx Xxxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000, facsimile number
(000) 000-0000, Attention: Xxxx Xxx, or such other address as may be hereafter
furnished to the Depositor, the Master Servicer and the Trustee by the Sellers
in writing; (v) in the case of the Master Servicer, Countrywide Home Loans
Servicing LP, 0000 Xxxxxxxxx Xxxxx, Xxxxx, Xxxxx 00000, facsimile number (805)
520-5623, Attention: Xxxx Xxxx or such other address as may be hereafter
furnished to the Depositor, the Sellers and the Trustee by the Master Servicer
in writing; (vi) in the case of the Trustee, The Bank of New York, 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Corporate Trust MBS
Administration, CWHEQ, Series 2006-S2, or such other address as the Trustee
may hereafter furnish to the parties hereto; (vii) in the case of the
Co-Trustee, The Bank of New York (Delaware), 000 Xxxxx Xxxx Xxxxxx, Xxxxx 000,
Xxxxxx, Xxxxxxxx 00000, Attention: Corporate Trustee Administration, with a
copy to the Trustee at its address set forth above, or such other address as
the Co-Trustee may be hereafter furnished to the Depositor, the Master
Servicer and the Trustee; (viii) in the case of the Rating Agencies, (x)
Xxxxx'x Investors Service, Inc., Attention: ABS Monitoring Department, 00
Xxxxxx Xxxxxx, Xxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, and (y) Standard &
Poor's Ratings Services, a division of The XxXxxx-Xxxx Companies, Attention:
Mortgage Surveillance Group, 00 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000; (ix) in the case of the Corridor Contract Counterparty, Bear Xxxxxxx
Financial Products Inc., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Attention: DPC Manager; and (x) in the case of the Certificate Insurer,
Financial Guaranty Insurance Company, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Research and Risk Management - CWHEQ 2006-S2 or such other
address as may be hereafter furnished by the Certificate Insurer. Notices to
Certificateholders shall be deemed given when mailed, first postage prepaid,
to their respective addresses appearing in the Certificate Register.
Section 10.06 Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions
of this Agreement or of the Certificates or the rights of the Holders thereof.
Section 10.07 Assignment.
Notwithstanding anything to the contrary contained herein, except as
provided pursuant to Section 6.02, this Agreement may not be assigned by the
Master Servicer without the prior written consent of the Trustee and the
Depositor.
Section 10.08 Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust 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.
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No Certificateholder shall have any right to vote (except as provided
herein) or in any manner otherwise control the operation and management of the
Trust Fund, or the obligations of the parties hereto, nor shall anything
herein set forth or contained in the terms of the Certificates be construed so
as to constitute the Certificateholders from time to time as partners or
members of an association; nor shall any Certificateholder be under any
liability to any third party by reason of any action taken by the parties to
this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this
Agreement, unless such Holder previously shall have given to the Trustee a
written notice of an Event of Default and of the continuance thereof, as
hereinbefore provided, the Holders of Certificates evidencing not less than
25% of the Voting Rights shall also have made written request to the Trustee
to institute such action, suit or proceeding in its own name as Trustee
hereunder and shall have offered to the Trustee such reasonable indemnity as
it may require against the costs, expenses, and liabilities to be incurred
therein or thereby, and the Trustee, for 60 days after its receipt of such
notice, request and offer of indemnity shall have neglected or refused to
institute any such action, suit or proceeding; it being understood and
intended, and being expressly covenanted by each Certificateholder with every
other Certificateholder and the Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatever by virtue or by
availing itself or themselves of any provisions of this Agreement to affect,
disturb or prejudice the rights of the Holders of any other of the
Certificates, or to obtain or seek to obtain priority over or preference to
any other such Holder or to enforce any right under this Agreement, except in
the manner herein provided and for the common benefit of all
Certificateholders. For the protection and enforcement of the provisions of
this Section 10.08, each and every Certificateholder and the Trustee shall be
entitled to such relief as can be given either at law or in equity.
Section 10.09 Inspection and Audit Rights.
The Master Servicer agrees that, on reasonable prior notice, it will
permit any representative of the Depositor, any Seller, the Certificate
Insurer, the NIM Insurer or the Trustee during the Master Servicer's normal
business hours, to examine all the books of account, records, reports and
other papers of the Master Servicer relating to the Mortgage Loans, to make
copies and extracts therefrom, to cause such books to be audited by
independent certified public accountants selected by the Depositor, a Seller,
the Certificate Insurer, the NIM Insurer or the Trustee and to discuss its
affairs, finances and accounts relating to the Mortgage Loans with its
officers, employees and independent public accountants (and by this provision
the Master Servicer hereby authorizes such accountants to discuss with such
representative such affairs, finances and accounts), all at such reasonable
times and as often as may be reasonably requested. Any out-of-pocket expense
incident to the exercise by the Depositor, any Seller, the Certificate
Insurer, the NIM Insurer or the Trustee of any right under this Section 10.09
shall be borne by the party requesting such inspection; all other such
expenses shall be borne by the Master Servicer.
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Section 10.10 Certificates Nonassessable and Fully Paid.
It is the intention of the Depositor that Certificateholders shall
not be personally liable for obligations of the Trust Fund, that the interests
in the Trust Fund represented by the Certificates shall be nonassessable for
any reason whatsoever, and that the Certificates, upon due authentication
thereof by the Trustee pursuant to this Agreement, are and shall be deemed
fully paid.
Section 10.11 Rights of NIM Insurer.
(a) The rights of the NIM Insurer under this Agreement shall exist
only so long as either:
(1) the notes certain payments on which are guaranteed by
the NIM Insurer remain outstanding or
(2) the NIM Insurer is owed amounts paid by it with respect
to that guaranty.
(b) The rights of the NIM Insurer under this Agreement are
exercisable by the NIM Insurer only so long as no default by the NIM Insurer
under its guaranty of certain payments under notes backed or secured by the
Class C or Class P Certificates has occurred and is continuing. If the NIM
Insurer is the subject of any insolvency proceeding, the rights of the NIM
Insurer under this Agreement will be exercisable by the NIM Insurer only so
long as:
(1) the obligations of the NIM Insurer under its guaranty of
notes backed or secured by the Class C or Class P Certificates have
not been disavowed and
(2) CHL and the Trustee have received reasonable assurances
that the NIM Insurer will be able to satisfy its obligations under
its guaranty of notes backed or secured by the Class C or Class P
Certificates.
(c) The NIM Insurer is a third party beneficiary of this Agreement to
the same extent as if it were a party to this Agreement and may enforce any of
those rights under this Agreement.
(d) A copy of any documents of any nature required by this Agreement
to be delivered by the Trustee, or to the Trustee or the Rating Agencies,
shall in each case at the same time also be delivered to the NIM Insurer. Any
notices required to be given by the Trustee, or to the Trustee or the Rating
Agencies, shall in each case at the same time also be given to the NIM
Insurer. If the Trustee receives a notice or document that is required
hereunder to be delivered to the NIM Insurer, and if such notice or document
does not indicate that a copy thereof has been previously sent to the NIM
Insurer, the Trustee shall send the NIM Insurer a copy of such notice or
document. If such document is an Opinion of Counsel, the NIM Insurer shall be
an addressee thereof or such Opinion of Counsel shall contain language
permitting the NIM Insurer to rely thereon as if the NIM Insurer were an
addressee thereof.
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(e) Anything in this Agreement that is conditioned on not resulting
in the downgrading or withdrawal of the ratings then assigned to the
Certificates by the Rating Agencies shall also be conditioned on not resulting
in the downgrading or withdrawal of the ratings then assigned by the Rating
Agencies to the notes backed or secured by the Class C or Class P Certificates
(without giving effect to any policy or guaranty provided by the NIM Insurer).
(f) Anything in this Agreement to the contrary notwithstanding, any
and all rights of the NIM Insurer provided for in this Agreement shall be
deemed to apply instead to the Certificate Insurer in the event no NIM Insurer
has yet been named or the NIM Insurer's insurance policy is no longer in
effect, except for any of the NIM Insurer's rights in respect of Prepayment
Charges, including the waiver of Prepayment Charges, and the NIM Insurer's
rights under Section 6.03.
Section 10.12 Rights of Certificate Insurer.
(a) All references in this Agreement and in the Certificates to
actions, rights, accounts, interests, funds or other items being for the
benefit of the Certificateholders shall be deemed to include the Certificate
Insurer as well.
(b) The Trustee, the Sellers, the Master Servicer and the Depositor
shall cooperate with any reasonable request by the Certificate Insurer to
preserve or enforce the rights granted to the Certificate Insurer hereunder.
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ARTICLE XI
EXCHANGE ACT REPORTING
Section 11.01 Filing Obligations.
The Master Servicer, the Trustee and each Seller shall reasonably
cooperate with the Depositor in connection with the satisfaction of the
Depositor's reporting requirements under the Exchange Act with respect to the
Trust Fund. In addition to the information specified below, if so requested by
the Depositor for the purpose of satisfying its reporting obligation under the
Exchange Act, the Master Servicer, the Trustee and each Seller shall (and the
Master Servicer shall cause each Subservicer to) provide the Depositor with
(a) such information which is available to such Person without unreasonable
effort or expense and within such timeframe as may be reasonably requested by
the Depositor to comply with the Depositor's reporting obligations under the
Exchange Act and (b) to the extent such Person is a party (and the Depositor
is not a party) to any agreement or amendment required to be filed, copies of
such agreement or amendment in XXXXX-compatible form.
Section 11.02 Form 10-D Filings.
(a) In accordance with the Exchange Act, the Trustee shall prepare
for filing and file within 15 days after each Distribution Date (subject to
permitted extensions under the Exchange Act) with the Commission with respect
to the Trust Fund, a Form 10-D with copies of the Monthly Statement and, to
the extent delivered to the Trustee, no later than 10 days following the
Distribution Date, such other information identified by the Depositor or the
Master Servicer, in writing, to be filed with the Commission (such other
information, the "Additional Designated Information"). If the Depositor or
Master Servicer directs that any Additional Designated Information is to be
filed with any Form 10-D, the Depositor or Master Servicer, as the case may
be, shall specify the Item on Form 10-D to which such information is
responsive and, with respect to any Exhibit to be filed on Form 10-D, the
Exhibit number. Any information to be filed on Form 10-D shall be delivered to
the Trustee in XXXXX-compatible form or as otherwise agreed upon by the
Trustee and the Depositor or the Master Servicer, as the case may be, at the
Depositor's expense, and any necessary conversion to XXXXX-compatible format
will be at the Depositor's expense. At the reasonable request of, and in
accordance with the reasonable directions of, the Depositor or the Master
Servicer, subject to the two preceding sentences, the Trustee shall prepare
for filing and file an amendment to any Form 10-D previously filed with the
Commission with respect to the Trust Fund. The Master Servicer shall sign the
Form 10-D filed on behalf of the Trust Fund.
(b) No later than each Distribution Date, each of the Master Servicer
and the Trustee shall notify (and the Master Servicer shall cause any
Subservicer to notify) the Depositor and the Master Servicer of any Form 10-D
Disclosure Item, together with a description of any such Form 10-D Disclosure
Item in form and substance reasonably acceptable to the Depositor. In addition
to such information as the Master Servicer and the Trustee are obligated to
provide pursuant to other provisions of this Agreement, if so requested by the
Depositor, each of the Master Servicer and the Trustee shall provide such
information which is available to the Master Servicer and the Trustee, as
applicable, without unreasonable effort or expense regarding the performance
or servicing of the Mortgage Loans (in the case of the Trustee, based on the
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information provided by the Master Servicer) as is reasonably required to
facilitate preparation of distribution reports in accordance with Item 1121 of
Regulation AB. Such information shall be provided concurrently with the
Remittance Reports in the case of the Master Servicer and the Monthly
Statement in the case of the Trustee, commencing with the first such report
due not less than five Business Days following such request.
(c) The Trustee shall not have any responsibility to file any items
(other than those generated by it) that have not been received in a format
suitable (or readily convertible into a format suitable) for electronic filing
via the XXXXX system and shall not have any responsibility to convert any such
items to such format (other than those items generated by it or that are
readily convertible to such format). The Trustee shall have no liability to
the Certificateholders, the Trust Fund, the Master Servicer, the Depositor or
the NIM Insurer with respect to any failure to properly prepare or file any of
Form 10-D to the extent that such failure is not the result of any negligence,
bad faith or willful misconduct on its part.
Section 11.03 Form 8-K Filings.
The Master Servicer shall prepare and file on behalf of the Trust
Fund any Form 8-K required by the Exchange Act. Each Form 8-K must be signed
by the Master Servicer. Each of the Master Servicer (and the Master Servicer
shall cause any Subservicer to promptly notify) and the Trustee shall promptly
notify the Depositor and the Master Servicer (if the notifying party is not
the Master Servicer), but in no event later than one (1) Business Day after
its occurrence, of any Reportable Event of which it has actual knowledge. Each
Person shall be deemed to have actual knowledge of any such event to the
extent that it relates to such Person or any action or failure to act by such
Person. Concurrently with any Subsequent Transfer, CHL shall notify the
Depositor and the Master Servicer, if any material pool characteristic of the
actual asset pool at the time of issuance of the Certificates differs by 5% or
more (other than as a result of the pool assets converting into cash in
accordance with their terms) from the description of the asset pool in the
Prospectus Supplement.
Section 11.04 Form 10-K Filings.
Prior to March 30th of each year, commencing in 2007 (or such earlier
date as may be required by the Exchange Act), the Depositor shall prepare and
file on behalf of the Trust Fund a Form 10-K, in form and substance as
required by the Exchange Act. A senior officer in charge of the servicing
function of the Master Servicer shall sign each Form 10-K filed on behalf of
the Trust Fund. Such Form 10-K shall include as exhibits each (i) annual
compliance statement described under Section 3.17, (ii) annual report on
assessments of compliance with servicing criteria described under Section
11.07 and (iii) accountant's report described under Section 11.07. Each Form
10-K shall also include any Xxxxxxxx-Xxxxx Certification required to be
included therewith, as described in Section 11.05.
If the Item 1119 Parties listed on Exhibit Z have changed since the
Closing Date, no later than March 1 of each year, the Master Servicer shall
provide each of the Master Servicer (and the Master Servicer shall provide any
Subservicer) and the Trustee with an updated Exhibit Z setting forth the Item
1119 Parties. No later than March 15 of each year, commencing in 2007, the
Master Servicer and the Trustee shall notify (and the Master Servicer shall
cause any
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Subservicer to notify) the Depositor and the Master Servicer of any Form 10-K
Disclosure Item, together with a description of any such Form 10-K Disclosure
Item in form and substance reasonably acceptable to the Depositor.
Additionally, each of the Master Servicer and the Trustee shall provide, and
shall cause each Reporting Subcontractor retained by the Master Servicer or
the Trustee, as applicable, and in the case of the Master Servicer shall cause
each Subservicer, to provide, the following information no later than March 15
of each year in which a Form 10-K is required to be filed on behalf of the
Trust Fund: (i) if such Person's report on assessment of compliance with
servicing criteria described under Section 11.07 or related registered public
accounting firm attestation report described under Section 11.07 identifies
any material instance of noncompliance, notification of such instance of
noncompliance and (ii) if any such Person's report on assessment of compliance
with servicing criteria or related registered public accounting firm
attestation report is not provided to be filed as an exhibit to such Form
10-K, information detailing the explanation why such report is not included.
Section 11.05 Xxxxxxxx-Xxxxx Certification.
Each Form 10-K shall include a certification (the "Xxxxxxxx-Xxxxx
Certification") required by Rules 13a-14(d) and 15d-14(d) under the Exchange
Act (pursuant to Section 302 of the Xxxxxxxx-Xxxxx Act of 2002 and the rules
and regulations of the Commission promulgated thereunder (including any
interpretations thereof by the Commission's staff)). No later than March 15 of
each year, beginning in 2007, the Master Servicer and the Trustee shall
(unless such person is the Certifying Person), and the Master Servicer shall
cause each Subservicer and each Reporting Subcontractor and the Trustee shall
cause each Reporting Subcontractor to, provide to the Person who signs the
Xxxxxxxx-Xxxxx Certification (the "Certifying Person") a certification (each,
a "Performance Certification"), in the form attached hereto as Exhibit X-1 (in
the case of a Subservicer or any Reporting Subcontractor of the Master
Servicer or a Subservicer) and Exhibit X-2 (in the case of the Trustee or any
Reporting Subcontractor of the Trustee), on which the Certifying Person, the
entity for which the Certifying Person acts as an officer, and such entity's
officers, directors and Affiliates (collectively with the Certifying Person,
"Certification Parties") can reasonably rely. The senior officer in charge of
the servicing function of the Master Servicer shall serve as the Certifying
Person on behalf of the Trust Fund. Neither the Master Servicer nor the
Depositor will request delivery of a certification under this clause unless
the Depositor is required under the Exchange Act to file an annual report on
Form 10-K with respect to the Trust Fund. In the event that prior to the
filing date of the Form 10-K in March of each year, the Trustee or the
Depositor has actual knowledge of information material to the Xxxxxxxx-Xxxxx
Certification, the Trustee or the Depositor, as the case may be, shall
promptly notify the Master Servicer and the Depositor. The respective parties
hereto agree to cooperate with all reasonable requests made by any Certifying
Person or Certification Party in connection with such Person's attempt to
conduct any due diligence that such Person reasonably believes to be
appropriate in order to allow it to deliver any Xxxxxxxx-Xxxxx Certification
or portion thereof with respect to the Trust Fund.
154
Section 11.06 Form 15 Filing.
Prior to January 30 of the first year in which the Depositor is able
to do so under applicable law, the Depositor shall file a Form 15 relating to
the automatic suspension of reporting in respect of the Trust Fund under the
Exchange Act.
Section 11.07 Report on Assessment of Compliance and Attestation.
(a) On or before March 15 of each calendar year, commencing in 2007:
(1) Each of the Master Servicer and the Trustee shall
deliver to the Depositor and the Master Servicer a report (in form
and substance reasonably satisfactory to the Depositor) regarding the
Master Servicer's or the Trustee's, as applicable, assessment of
compliance with the Servicing Criteria during the immediately
preceding calendar year, as required under Rules 13a-18 and 15d-18 of
the Exchange Act and Item 1122 of Regulation AB. Such report shall be
signed by an authorized officer of such Person and shall address each
of the Servicing Criteria specified on a certification substantially
in the form of Exhibit W hereto delivered to the Depositor
concurrently with the execution of this Agreement. To the extent any
of the Servicing Criteria are not applicable to such Person, with
respect to Asset Backed securities transactions taken as a whole
involving such Person and that are backed by the same asset type
backing the Certificates, such report shall include such a statement
to that effect. The Depositor and the Master Servicer, and each of
their respective officers and directors shall be entitled to rely on
upon each such servicing criteria assessment.
(2) Each of the Master Servicer and the Trustee shall
deliver to the Depositor and the Master Servicer a report of a
registered public accounting firm reasonably acceptable to the
Depositor that attests to, and reports on, the assessment of
compliance made by Master Servicer or the Trustee, as applicable, and
delivered pursuant to the preceding paragraphs. Such attestation
shall be in accordance with Rules 1-02(a)(3) and 2-02(g) of
Regulation S-X under the Securities Act and the Exchange Act,
including, without limitation that in the event that an overall
opinion cannot be expressed, such registered public accounting firm
shall state in such report why it was unable to express such an
opinion. Such report must be available for general use and not
contain restricted use language. To the extent any of the Servicing
Criteria are not applicable to such Person, with respect to Asset
Backed securities transactions taken as a whole involving such Person
and that are backed by the same asset type backing the Certificates,
such report shall include such a statement that that effect.
(3) The Master Servicer shall cause each Subservicer and
each Reporting Subcontractor to deliver to the Depositor an
assessment of compliance and accountant's attestation as and when
provided in paragraphs (a) and (b) of this Section 11.07.
(4) The Trustee shall cause each Reporting Subcontractor to
deliver to the Depositor and the Master Servicer an assessment of
compliance and accountant's attestation as and when provided in
paragraphs (a) and (b) of this Section.
155
(5) The Master Servicer and the Trustee shall execute (and
the Master Servicer shall cause each Subservicer to execute, and the
Master Servicer and the Trustee shall cause each Reporting
Subcontractor to execute) a reliance certificate to enable the
Certification Parties to rely upon each (i) annual compliance
statement provided pursuant to Section 3.17, (ii) annual report on
assessments of compliance with servicing criteria provided pursuant
to this Section 11.07 and (iii) accountant's report provided pursuant
to this Section 11.07 and shall include a certification that each
such annual compliance statement or report discloses any deficiencies
or defaults described to the registered public accountants of such
Person to enable such accountants to render the certificates provided
for in this Section 11.07.
(b) In the event the Master Servicer, any Subservicer, the Trustee or
Reporting Subcontractor is terminated or resigns during the term of this
Agreement, such Person shall provide documents and information required by
this Section 11.07 with respect to the period of time it was subject to this
Agreement or provided services with respect to the Trust Fund, the
Certificates or the Mortgage Loans.
(c) Each assessment of compliance provided by a Subservicer pursuant
to Section 11.07(a)(3) shall address each of the Servicing Criteria specified
on a certification substantially in the form of Exhibit W hereto delivered to
the Depositor concurrently with the execution of this Agreement or, in the
case of a Subservicer subsequently appointed as such, on or prior to the date
of such appointment. An assessment of compliance provided by a Subcontractor
pursuant to Section 11.07(a)(3) or (4) need not address any elements of the
Servicing Criteria other than those specified by the Master Servicer or the
Trustee, as applicable, pursuant to Section 11.07(a)(1).
Section 11.08 Use of Subservicers and Subcontractors.
(a) The Master Servicer shall cause any Subservicer used by the
Master Servicer (or by any Subservicer) for the benefit of the Depositor to
comply with the provisions of Section 3.17 and this Article XI to the same
extent as if such Subservicer were the Master Servicer (except with respect to
the Master Servicer's duties with respect to preparing and filing any Exchange
Act Reports or as the Certifying Person). The Master Servicer shall be
responsible for obtaining from each Subservicer and delivering to the
Depositor any servicer compliance statement required to be delivered by such
Subservicer under Section 3.17, any assessment of compliance and attestation
required to be delivered by such Subservicer under Section 11.07 and any
certification required to be delivered to the Certifying Person under Section
11.05 as and when required to be delivered. As a condition to the succession
to any Subservicer as subservicer under this Agreement by any Person (i) into
which such Subservicer may be merged or consolidated, or (ii) which may be
appointed as a successor to any Subservicer, the Master Servicer shall provide
to the Depositor, at least 15 calendar days prior to the effective date of
such succession or appointment, (x) written notice to the Depositor of such
succession or appointment and (y) in writing and in form and substance
reasonably satisfactory to the Depositor, all information reasonably requested
by the Depositor in order to comply with its reporting obligation under Item
6.02 of Form 8-K.
156
(b) It shall not be necessary for the Master Servicer, any
Subservicer or the Trustee to seek the consent of the Depositor or any other
party hereto to the utilization of any Subcontractor. The Master Servicer or
the Trustee, as applicable, shall promptly upon request provide to the
Depositor (or any designee of the Depositor, such as the Master Servicer or
administrator) a written description (in form and substance satisfactory to
the Depositor) of the role and function of each Subcontractor utilized by such
Person (or in the case of the Master Servicer, any Subservicer), specifying
(i) the identity of each such Subcontractor, (ii) which (if any) of such
Subcontractors are "participating in the servicing function" within the
meaning of Item 1122 of Regulation AB, and (iii) which elements of the
Servicing Criteria will be addressed in assessments of compliance provided by
each Subcontractor identified pursuant to clause (ii) of this paragraph.
As a condition to the utilization of any Subcontractor determined to
be a Reporting Subcontractor, the Master Servicer or the Trustee, as
applicable, shall cause any such Subcontractor used by such Person (or in the
case of the Master Servicer, any Subservicer) for the benefit of the Depositor
to comply with the provisions of Sections 11.07 and 11.09 of this Agreement to
the same extent as if such Subcontractor were the Master Servicer (except with
respect to the Master Servicer's duties with respect to preparing and filing
any Exchange Act Reports or as the Certifying Person) or the Trustee, as
applicable. The Master Servicer or the Trustee, as applicable, shall be
responsible for obtaining from each Subcontractor and delivering to the
Depositor and the Master Servicer, any assessment of compliance and
attestation required to be delivered by such Subcontractor under Section 11.05
and Section 11.07, in each case as and when required to be delivered.
Section 11.09 Amendments.
In the event the parties to this Agreement desire to further clarify
or amend any provision of this Article XI, this Agreement shall be amended to
reflect the new agreement between the parties covering matters in this Article
XI pursuant to Section 10.01, which amendment shall not require any Opinion of
Counsel or Rating Agency confirmations or the consent of any
Certificateholder, the Certificate Insurer or the NIM Insurer.
If, during the period that the Depositor is required to file Exchange
Act Reports with respect to the Trust Fund, the Master Servicer is no longer
an Affiliate of the Depositor, the Depositor shall assume the obligations and
responsibilities of the Master Servicer in this Article XI with respect to the
preparation and filing of the Exchange Act Reports and/or acting as the
Certifying Person, if the Depositor has received indemnity from such successor
Master Servicer satisfactory to the Depositor, and such Master Servicer has
agreed to provide a Xxxxxxxx-Xxxxx Certification to the Depositor
substantially in the form of Exhibit AA and the certifications referred to in
Section 11.07.
Section 11.10 Reconciliation of Accounts.
Any reconciliation of Account performed by any party hereto, or any
Subservicer or Subcontractor, shall be prepared no later than 45 calendar days
after the bank statement cutoff date.
157
IN WITNESS WHEREOF, the parties hereto have caused their names to be
signed hereto by their respective officers thereunto duly authorized as of the
day and year first above written.
CWHEQ, INC., as Depositor
By: /s/ Xxxx Xxxxxxx, Xx.
-------------------------------------
Name: Xxxx Xxxxxxx, Xx.
Title: Vice President
COUNTRYWIDE HOME LOANS, INC.,
as a Seller
By: /s/ Xxxx Xxxxxxx, Xx.
-------------------------------------
Name: Xxxx Xxxxxxx, Xx.
Title: Senior Vice President
PARK MONACO INC.,
as a Seller
By: /s/ Xxxx Xxxxxxx, Xx.
-------------------------------------
Name: Xxxx Xxxxxxx, Xx.
Title: Vice President
PARK SIENNA LLC,
as a Seller
By: /s/ Xxxx Xxxxxxx, Xx.
-------------------------------------
Name: Xxxx Xxxxxxx, Xx.
Title: Assistant Vice President
COUNTRYWIDE HOME LOANS SERVICING LP,
as Master Servicer
By: COUNTRYWIDE GP, INC.
By: /s/ Xxxx Xxxxxxx, Xx.
-------------------------------------
Name: Xxxx Xxxxxxx, Xx.
Title: Senior Vice President
THE BANK OF NEW YORK,
as Trustee
By: /s/ Xxxxx Xxxxxx
-------------------------------------
Name: Xxxxx Xxxxxx
Title: Assistant Treasurer
THE BANK OF NEW YORK (DELAWARE),
as Co-Trustee
By: /s/ Xxxxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxxxx X. Xxxxx
Title Vice President
THE BANK OF NEW YORK
(solely with respect to its obligations
under Section 4.01(d))
By: /s/ Xxxx Xxxxxxxx
-------------------------------------
Name: Xxxx Xxxxxxxx
Title: Vice President
Exhibits A-1
through A-6
[Exhibits A-1 through A-6 are
photocopies of such Certificates as delivered.]
[See appropriate documents delivered at closing.]
A-1
Exhibit B
Exhibit B is a photocopy
of the Class P Certificates
as delivered.
[See appropriate document delivered at closing.]
B-1
Exhibit C
Exhibit C is a photocopy
of the Class C Certificates
as delivered.
[See appropriate document delivered at closing.]
C-1
Exhibit D
Exhibit D is a photocopy
of the Class A-R Certificate
as delivered.
[See appropriate documents delivered at closing.]
D-1
Exhibit E
Exhibit E is a photocopy
of the Tax Matters Person Certificate
as delivered.
[See appropriate documents delivered at closing.]
E-1
Exhibit F-1 and F-2
[Exhibits F-1 and F-2 are schedules of Mortgage Loans]
[Delivered to Trustee at closing and on file with the Trustee.]
F-1
EXHIBIT G-1
FORM OF INITIAL CERTIFICATION OF TRUSTEE
[Date]
[Depositor]
[Sellers]
[Master Servicer]
[Certificate Insurer]
Re: CWHEQ Home Equity Loan Trust, Series 2006-S2
--------------------------------------------
Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing
Agreement dated as of March 1, 2006 (the "Pooling and Servicing Agreement")
among CWHEQ, Inc., as Depositor, Countrywide Home Loans, Inc., as a Seller,
Park Monaco Inc., as a Seller, Park Sienna LLC, as a Seller, Countrywide Home
Loans Servicing LP, as Master Servicer, the undersigned, as Trustee, and The
Bank of New York (Delaware), as Co-Trustee, the undersigned, as Trustee,
hereby certifies that, as to each Mortgage Loan listed in the Mortgage Loan
Schedule (other than any Mortgage Loan paid in full or listed in the attached
list of exceptions) the Trustee has received:
(i) the original Mortgage Note, endorsed by manual or facsimile
signature in blank in the following form: "Pay to the order of ______________,
without recourse", or, if the original Mortgage Note has been lost or
destroyed and not replaced, an original lost note affidavit, stating that the
original Mortgage Note was lost or destroyed, together with a copy of the
related Mortgage Note; and
(ii) a duly executed assignment of the Mortgage or a copy of such
assignment, in either case in the form permitted by Section 2.01 of the
Pooling and Servicing Agreement.
Based on its review and examination and only as to the foregoing
documents, such documents appear regular on their face and related to such
Mortgage Loan.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Pooling and Servicing Agreement. The Trustee makes no representations as to:
(i) the validity, legality, sufficiency, enforceability or genuineness of any
of the documents contained in each Mortgage File of any of
G-1-1
the Mortgage Loans identified on the Mortgage Loan Schedule or (ii) the
collectibility, insurability, effectiveness or suitability of any such
Mortgage Loan.
G-1-2
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
The Bank of New York,
as Trustee
By: ______________________________________
Name:
Title:
G-1-3
EXHIBIT G-2
FORM OF INTERIM CERTIFICATION OF TRUSTEE
[Date]
[Depositor]
[Sellers]
[Master Servicer]
[Certificate Insurer]
Re: CWHEQ Home Equity Loan Trust, Series 2006-S2
--------------------------------------------
Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing
Agreement dated as of March 1, 2006 (the "Pooling and Servicing Agreement")
among CWHEQ, Inc., as Depositor, Countrywide Home Loans, Inc., as a Seller,
Park Monaco Inc., as a Seller, Park Sienna LLC, as a Seller, Countrywide Home
Loans Servicing LP, as Master Servicer, the undersigned, as Trustee, and The
Bank of New York (Delaware), as Co-Trustee, the undersigned, as Trustee,
hereby certifies that [, with respect to the Subsequent Mortgage Loans
delivered in connection with the Subsequent Transfer Agreement, dated as of
__________ (the "Subsequent Transfer Agreement") among CWHEQ, Inc., as
Depositor, Countrywide Home Loans, Inc., as a Seller, Park Monaco Inc., as a
Seller, Park Sienna LLC, as a Seller and The Bank of New York, as Trustee],
except as listed in the following paragraph, as to each [Initial Mortgage
Loan][Subsequent Mortgage Loan] listed in the [Mortgage Loan Schedule][Loan
Number and Borrower Identification Mortgage Loan Schedule] (other than any
[Mortgage Loan][Loan Number and Borrower Identification Mortgage Loan
Schedule] paid in full or listed on the attached list of exceptions) the
Trustee has received:
(i) the original Mortgage Note, endorsed by manual or facsimile
signature in blank in the following form: "Pay to the order of _______________
without recourse", with all intervening endorsements that show a complete
chain of endorsement from the originator to the Person endorsing the Mortgage
Note (each such endorsement being sufficient to transfer all right, title and
interest of the party so endorsing, as noteholder or assignee thereof, in and
to that Mortgage Note), or, if the original Mortgage Note has been lost or
destroyed and not replaced, an original lost note affidavit, stating that the
original Mortgage Note was lost or destroyed, together with a copy of the
related Mortgage Note and all such intervening endorsements;
(ii) the case of each [Initial Mortgage Loan][Subsequent Mortgage
Loan] that is not a MERS Mortgage Loan, the original recorded Mortgage or a
copy of such Mortgage, with recording information, and in the case of each
[Initial Mortgage Loan][Subsequent Mortgage
G-2-1
Loan] that is a MERS Mortgage Loan, the original Mortgage or a copy of such
Mortgage, with recording information, noting thereon the presence of the MIN
of the [Initial Mortgage Loan][Subsequent Mortgage Loan] and language
indicating that the [Initial Mortgage Loan][Subsequent Mortgage Loan] is a MOM
Loan if the [Initial Mortgage Loan][Subsequent Mortgage Loan] is a MOM Loan,
with evidence of recording indicated thereon, or a copy of the Mortgage
certified by the public recording office in which such Mortgage has been
recorded;
(iii) the case of each [Initial Mortgage Loan][Subsequent Mortgage
Loan] that is not a MERS Mortgage Loan, a duly executed assignment of the
Mortgage to "Home Equity Loan Asset Backed Certificates, Series 2006-S2,
CWHEQ, Inc., by The Bank of New York, a New York banking corporation, as
trustee under the Pooling and Servicing Agreement dated as of March 1, 2006,
without recourse" or a copy of such assignment, with recording information,
or, in the case of each [Initial Mortgage Loan][Subsequent Mortgage Loan] with
respect to property located in the State of California that is not a MERS
Mortgage Loan, a duly executed assignment of the Mortgage in blank (each such
assignment, when duly and validly completed, to be in recordable form and
sufficient to effect the assignment of and transfer to the assignee thereof,
under the Mortgage to which such assignment relates);
(iv) the original recorded assignment or assignments of the Mortgage
or a copy of such assignments, with recording information, together with all
interim recorded assignments of such Mortgage or a copy of such assignments,
with recording information (in each case noting the presence of a MIN in the
case of each MERS Mortgage Loan);
(v) the original or copies of each assumption, modification, written
assurance or substitution agreement, if any; and
(vi) the original or duplicate original lender's title policy or a
copy of lender's title policy or a printout of the electronic equivalent and
all riders thereto or, in the event such original title policy has not been
received from the insurer, any one of an original title binder, an original
preliminary title report or an original title commitment, or a copy thereof
certified by the title company, with the original policy of title insurance to
be delivered within one year of the Closing Date.
In the event that in connection with any [Initial Mortgage
Loan][Subsequent Mortgage Loan] that is not a MERS Mortgage Loan the
applicable Seller cannot deliver the original recorded Mortgage or all interim
recorded assignments of the Mortgage satisfying the requirements of clause
(ii), (iii) or (iv), as applicable, the Trustee has received, in lieu thereof,
a true and complete copy of such Mortgage and/or such assignment or
assignments of the Mortgage, as applicable, each certified by the applicable
Seller, the applicable title company, escrow agent or attorney, or the
originator of such [Initial Mortgage Loan][Subsequent Mortgage Loan], as the
case may be, to be a true and complete copy of the original Mortgage or
assignment of Mortgage submitted for recording.
Based on its review and examination and only as to the foregoing
documents, (i) such documents appear regular on their face and related to such
[Initial Mortgage Loan][Subsequent Mortgage Loan], and (ii) the information
set forth in items (i), (iv), (v), (vi),
G-2-2
(viii) and (ix) of the definition of the "Mortgage Loan Schedule" in Section
1.01 of the Pooling and Servicing Agreement accurately reflects information
set forth in the Mortgage File.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Pooling and Servicing Agreement. The Trustee makes no representations as to:
(i) the validity, legality, sufficiency, enforceability or genuineness of any
of the documents contained in each Mortgage File of any of the [Initial
Mortgage Loans][Subsequent Mortgage Loans] identified on the [Mortgage Loan
Schedule][Loan Number and Borrower Identification Mortgage Loan Schedule] or
(ii) the collectibility, insurability, effectiveness or suitability of any
such Mortgage Loan.
G-2-3
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
The Bank of New York,
as Trustee
By: ______________________________________
Name:
Title:
G-2-4
EXHIBIT G-3
FORM OF DELAY DELIVERY CERTIFICATION
[Date]
[Depositor]
[Sellers]
[Master Servicer]
[Certificate Insurer]
Re: CWHEQ Home Equity Loan Trust, Series 2006-S2
--------------------------------------------
Gentlemen:
Reference is made to the Initial Certification of Trustee relating to
the above-referenced series, with the schedule of exceptions attached thereto,
delivered by the undersigned, as Trustee, on the Closing Date in accordance
with Section 2.02 of the Pooling and Servicing Agreement dated as of March 1,
2006 (the "Pooling and Servicing Agreement") among CWHEQ, Inc., as Depositor,
Countrywide Home Loans, Inc., as a Seller, Park Monaco Inc., as a Seller, Park
Sienna LLC, as a Seller, Countrywide Home Loans Servicing LP, as Master
Servicer, the undersigned, as Trustee, and The Bank of New York (Delaware), as
Co-Trustee. The undersigned hereby certifies that [, with respect to the
Subsequent Mortgage Loans delivered in connection with the Subsequent Transfer
Agreement, dated as of __________ (the "Subsequent Transfer Agreement") among
CWHEQ, Inc., as Depositor, Countrywide Home Loans, Inc., as a Seller, Park
Monaco Inc., as a Seller, Park Sienna LLC, as a Seller and The Bank of New
York, as Trustee,] as to each Delay Delivery Mortgage Loan listed on the
Schedule A attached hereto (other than any [Initial Mortgage Loan][Subsequent
Mortgage Loan] paid in full or listed on Schedule B attached hereto) the
Trustee has received:
(1) the original Mortgage Note, endorsed by manual or facsimile
signature in blank in the following form: "Pay to the order of _______________
without recourse", with all intervening endorsements that show a complete
chain of endorsement from the originator to the Person endorsing the Mortgage
Note (each such endorsement being sufficient to transfer all right, title and
interest of the party so endorsing, as noteholder or assignee thereof, in and
to that Mortgage Note), or, if the original Mortgage Note has been lost or
destroyed and not replaced, an original lost note affidavit, stating that the
original Mortgage Note was lost or destroyed, together with a copy of the
related Mortgage Note and all such intervening endorsements;
(2) in the case of each [Initial Mortgage Loan][Subsequent Mortgage
Loan] that is not a MERS Mortgage Loan, a duly executed assignment of the
Mortgage to "Home Equity Loan Asset Backed Certificates, Series 2006-S2,
CWHEQ, Inc., by The Bank of New York, a New York banking corporation, as
trustee under the Pooling and Servicing Agreement
G-3-1
dated as of March 1, 2006, without recourse" or a copy of such assignment,
with recording information, or, in the case of each [Initial Mortgage
Loan][Subsequent Mortgage Loan] with respect to property located in the State
of California that is not a MERS Mortgage Loan, a duly executed assignment of
the Mortgage in blank (each such assignment, when duly and validly completed,
to be in recordable form and sufficient to effect the assignment of and
transfer to the assignee thereof, under the Mortgage to which such assignment
relates).
Based on its review and examination and only as to the foregoing
documents, such documents appear regular on their face and related to such
Mortgage Loan.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Pooling and Servicing Agreement. The Trustee makes no representations as to:
(i) the validity, legality, sufficiency, enforceability or genuineness of any
of the documents contained in each Mortgage File of any of the [Initial
Mortgage Loans][Subsequent Mortgage Loans] identified on the [Mortgage Loan
Schedule][Loan Number and Borrower Identification Mortgage Loan Schedule] or
(ii) the collectibility, insurability, effectiveness or suitability of any
such [Initial Mortgage Loan][Subsequent Mortgage Loan].
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
The Bank of New York,
as Trustee
By: ______________________________________
Name:
Title:
G-3-2
EXHIBIT G-4
FORM OF INITIAL CERTIFICATION OF TRUSTEE
(SUBSEQUENT MORTGAGE LOANS)
[Date]
[Depositor]
[Sellers]
[Master Servicer]
[Certificate Insurer]
Re: CWHEQ Home Equity Loan Trust, Series 2006-S2
--------------------------------------------
Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing
Agreement dated as of March 1, 2006 (the "Pooling and Servicing Agreement")
among CWHEQ, Inc., as Depositor, Countrywide Home Loans, Inc., as a Seller,
Park Monaco Inc., as a Seller, Park Sienna LLC, as a Seller, Countrywide Home
Loans Servicing LP, as Master Servicer, the undersigned, as Trustee, and The
Bank of New York (Delaware), as Co-Trustee, the undersigned hereby certifies
that, as to each Subsequent Mortgage Loan listed in the Loan Number and
Borrower Identification Mortgage Loan Schedule (other than any Subsequent
Mortgage Loan paid in full or listed in the attached list of exceptions) the
Trustee has received:
(1) the original Mortgage Note, endorsed by manual or facsimile
signature in blank in the following form: "Pay to the order of _______________
without recourse", with all intervening endorsements that show a complete
chain of endorsement from the originator to the Person endorsing the Mortgage
Note (each such endorsement being sufficient to transfer all right, title and
interest of the party so endorsing, as noteholder or assignee thereof, in and
to that Mortgage Note), or, if the original Mortgage Note has been lost or
destroyed and not replaced, an original lost note affidavit, stating that the
original Mortgage Note was lost or destroyed, together with a copy of the
related Mortgage Note and all such intervening endorsements; and
(2) a duly executed assignment of the Mortgage or a copy of such
assignment with recording information, in either case in the form permitted by
Section 2.01 of the Pooling and Servicing Agreement.
Based on its review and examination and only as to the foregoing
documents, such documents appear regular on their face and related to such
Mortgage Loan.
G-4-1
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Pooling and Servicing Agreement. The Trustee makes no representations as to:
(i) the validity, legality, sufficiency, enforceability or genuineness of any
of the documents contained in each Mortgage File of any of the Subsequent
Mortgage Loans identified on the Loan Number and Borrower Identification
Mortgage Loan Schedule or (ii) the collectibility, insurability, effectiveness
or suitability of any such Subsequent Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
The Bank of New York,
as Trustee
By: ______________________________________
Name:
Title:
G-4-2
EXHIBIT H
FORM OF FINAL CERTIFICATION OF TRUSTEE
[Date]
[Depositor]
[Master Servicer]
[Sellers]
[Certificate Insurer]
Re: CWHEQ Home Equity Loan Trust, Series 2006-S2
--------------------------------------------
Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing
Agreement dated as of March 1, 2006 (the "Pooling and Servicing Agreement")
among CWHEQ, Inc., as Depositor, Countrywide Home Loans, Inc., as a Seller,
Park Monaco Inc., as a Seller, Park Sienna LLC, as a Seller, Countrywide Home
Loans Servicing LP, as Master Servicer, and the undersigned, as Trustee, the
undersigned, as Trustee, and The Bank of New York (Delaware), as Co-Trustee,
hereby certifies that[, with respect to the Subsequent Mortgage Loans
delivered in connection with the Subsequent Transfer Agreement, dated as of
__________ (the "Subsequent Transfer Agreement") among CWHEQ, Inc., as
Depositor, Countrywide Home Loans, Inc., as a Seller, Park Monaco Inc., as a
Seller, Park Sienna LLC, as a Seller and The Bank of New York, as Trustee,] as
to each [Initial Mortgage Loan][Subsequent Mortgage Loan] listed in the
[Mortgage Loan Schedule][Loan Number and Borrower Identification Mortgage Loan
Schedule] (other than any [Initial Mortgage Loan][Subsequent Mortgage Loan]
paid in full or listed on the attached Document Exception Report) the Trustee
has received:
(i) the original Mortgage Note, endorsed by manual or facsimile
signature in blank in the following form: "Pay to the order of
_________________ without recourse", with all intervening endorsements that
show a complete chain of endorsement from the originator to the Person
endorsing the Mortgage Note (each such endorsement being sufficient to
transfer all right, title and interest of the party so endorsing, as
noteholder or assignee thereof, in and to that Mortgage Note), or, if the
original Mortgage Note has been lost or destroyed and not replaced, an
original lost note affidavit, stating that the original Mortgage Note was lost
or destroyed, together with a copy of the related Mortgage Note and all such
intervening endorsements;
(ii) in the case of each [Initial Mortgage Loan][Subsequent Mortgage
Loan] that is not a MERS Mortgage Loan, the original recorded Mortgage or a
copy of such Mortgage, with recording information, and in the case of each
[Initial Mortgage Loan][Subsequent Mortgage Loan] that is a MERS Mortgage
Loan, the original Mortgage or a copy of such Mortgage, with recording
information, noting the presence of the MIN of the [Initial Mortgage
H-1
Loan][Subsequent Mortgage Loan] and language indicating that the [Initial
Mortgage Loan][Subsequent Mortgage Loan] is a MOM Loan if the [Initial
Mortgage Loan][Subsequent Mortgage Loan] is a MOM Loan, with evidence of
recording indicated thereon, or a copy of the Mortgage certified by the public
recording office in which such Mortgage has been recorded];
(iii) in the case of each [Initial Mortgage Loan][Subsequent Mortgage
Loan] that is not a MERS Mortgage Loan, a duly executed assignment of the
Mortgage to "Home Equity Loan Asset Backed Certificates, Series 2006-S2,
CWHEQ, Inc., by The Bank of New York, a New York banking corporation, as
trustee under the Pooling and Servicing Agreement dated as of March 1, 2006,
without recourse" or a copy of such assignment, with recording information,
or, in the case of each [Initial Mortgage Loan][Subsequent Mortgage Loan] with
respect to property located in the State of California that is not a MERS
Mortgage Loan, a duly executed assignment of the Mortgage in blank (each such
assignment, when duly and validly completed, to be in recordable form and
sufficient to effect the assignment of and transfer to the assignee thereof,
under the Mortgage to which such assignment relates);
(iv) the original recorded assignment or assignments of the Mortgage
or a copy of such assignments, with recording information, together with all
interim recorded assignments of such Mortgage or a copy of such assignments,
with recording information (in each case noting the presence of a MIN in the
case of each MERS Mortgage Loan);
(v) the original or copies of each assumption, modification, written
assurance or substitution agreement, if any; and
(vi) the original or duplicate original lender's title policy or a
copy of lender's title policy or a printout of the electronic equivalent and
all riders thereto or any one of an original title binder, an original
preliminary title report or an original title commitment, or a copy thereof
certified by the title company.
If the public recording office in which a Mortgage or assignment
thereof is recorded has retained the original of such Mortgage or assignment,
the Trustee has received, in lieu thereof, a copy of the original Mortgage or
assignment so retained, with evidence of recording thereon, certified to be
true and complete by such recording office.
Based on its review and examination and only as to the foregoing
documents, (i) such documents appear regular on their face and related to such
Mortgage Loan, and (ii) the information set forth in items (i), (iv), (v),
(vi), (viii) and (ix) of the definition of the "Mortgage Loan Schedule" in
Section 1.01 of the Pooling and Servicing Agreement accurately reflects
information set forth in the Mortgage File.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Pooling and Servicing Agreement. The Trustee makes no representations as to:
(i) the validity, legality, sufficiency, enforceability or genuineness of any
of the documents contained in each Mortgage File of any of the [Initial
Mortgage Loans][Subsequent Mortgage Loans] identified on the [Mortgage Loan
Schedule][Loan Number and Borrower Identification Mortgage Loan Schedule] or
(ii) the
H-2
collectibility, insurability, effectiveness or suitability of any such
[Initial Mortgage Loan][Subsequent Mortgage Loan].
H-3
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
The Bank of New York,
as Trustee
By:_______________________________________
Name:
Title:
H-4
EXHIBIT I
TRANSFER AFFIDAVIT FOR THE CLASS A-R CERTIFICATES
STATE OF )
) ss.:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is an officer of _______________, the proposed
Transferee of an Ownership Interest in a Class A-R Certificate (the
"Certificate") issued pursuant to the Pooling and Servicing Agreement, dated
as of March 1, 2006 (the "Agreement"), by and among CWHEQ, Inc., as depositor
(the "Depositor"), Countrywide Home Loans, Inc., as a Seller, Park Monaco
Inc., as a Seller, Park Sienna LLC, as a Seller, Countrywide Home Loans
Servicing LP, as Master Servicer, The Bank of New York, as Trustee, and The
Bank of New York (Delaware), as Co-Trustee. Capitalized terms used, but not
defined herein or in Exhibit 1 hereto, shall have the meanings ascribed to
such terms in the Agreement. The Transferee has authorized the undersigned to
make this affidavit on behalf of the Transferee.
2. The Transferee is not an employee benefit plan that is subject to
Title I of ERISA or to section 4975 of the Internal Revenue Code of 1986, nor
is it acting on behalf of or with plan assets of any such plan. The Transferee
is, as of the date hereof, and will be, as of the date of the Transfer, a
Permitted Transferee. The Transferee will endeavor to remain a Permitted
Transferee for so long as it retains its Ownership Interest in the
Certificate. The Transferee is acquiring its Ownership Interest in the
Certificate for its own account.
3. The Transferee has been advised of, and understands that (i) a tax
will be imposed on Transfers of the Certificate to Persons that are not
Permitted Transferees; (ii) such tax will be imposed on the transferor, or, if
such Transfer is through an agent (which includes a broker, nominee or
middleman) for a Person that is not a Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability
for the tax if the subsequent Transferee furnished to such Person an affidavit
that such subsequent Transferee is a Permitted Transferee and, at the time of
Transfer, such Person does not have actual knowledge that the affidavit is
false.
4. The Transferee has been advised of, and understands that a tax
will be imposed on a "pass-through entity" holding the Certificate if at any
time during the taxable year of the pass-through entity a Person that is not a
Permitted Transferee is the record holder of an interest in such entity. The
Transferee understands that such tax will not be imposed for any period with
respect to which the record holder furnishes to the pass-through entity an
affidavit that such record holder is a Permitted Transferee and the
pass-through entity does not have actual knowledge that such affidavit is
false. (For this purpose, a "pass-through entity" includes a regulated
investment company, a real estate investment trust or common trust fund, a
partnership, trust or estate, and certain cooperatives and, except as may be
provided in Treasury Regulations, persons holding interests in pass-through
entities as a nominee for another Person.)
I-1
5. The Transferee has reviewed the provisions of Section 5.02(c) of
the Agreement (attached hereto as Exhibit 2 and incorporated herein by
reference) and understands the legal consequences of the acquisition of an
Ownership Interest in the Certificate including, without limitation, the
restrictions on subsequent Transfers and the provisions regarding voiding the
Transfer and mandatory sales. The Transferee expressly agrees to be bound by
and to abide by the provisions of Section 5.02(c) of the Agreement and the
restrictions noted on the face of the Certificate. The Transferee understands
and agrees that any breach of any of the representations included herein shall
render the Transfer to the Transferee contemplated hereby null and void.
6. The Transferee agrees to require a Transfer Affidavit from any
Person to whom the Transferee attempts to Transfer its Ownership Interest in
the Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate substantially in the
form set forth as Exhibit J-1 to the Agreement (a "Transferor Certificate") to
the effect that such Transferee has no actual knowledge that the Person to
which the Transfer is to be made is not a Permitted Transferee.
7. The Transferee does not have the intention to impede the
assessment or collection of any tax legally required to be paid with respect
to the Class A-R Certificates.
8. The Transferee's taxpayer identification number is _____.
9. The Transferee is a U.S. Person as defined in Code section
7701(a)(30).
10. The Transferee is aware that the Class A-R Certificates may be
"noneconomic residual interests" within the meaning of proposed Treasury
regulations promulgated pursuant to the Code and that the transferor of a
noneconomic residual interest will remain liable for any taxes due with
respect to the income on such residual interest, unless no significant purpose
of the transfer was to impede the assessment or collection of tax. In
addition, as the holder of a noneconomic residual interest, the Transferee may
incur tax liabilities in excess of any cash flows generated by the interest
and the Transferee hereby represents that it intends to pay taxes associated
with holding the residual interest as they become due.
11. The Transferee has provided financial statements or other
financial information requested by the Transferor in connection with the
transfer of the Class A-R Certificates to permit the Transferor to assess the
financial capability of the Transferee to pay such taxes.
* * *
I-2
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by
its duly authorized officer and its corporate seal to be hereunto affixed,
duly attested, this ____ day of _____________, 20__.
[NAME OF TRANSFEREE]
By: _____________________________________
Name:
Title:
[Corporate Seal]
ATTEST:
_____________________________
[Assistant] Secretary
Personally appeared before me the above-named _____________, known or
proved to me to be the same person who executed the foregoing instrument and
to be the ____________ of the Transferee, and acknowledged that he executed
the same as his free act and deed and the free act and deed of the Transferee.
Subscribed and sworn before me this ____ day of _______, 20__.
_______________________________________
NOTARY PUBLIC
My Commission expires the ___ day of
, 20__.
I-3
Certain Definitions
"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.
"Permitted Transferee": Any person other than (i) the United States,
any State or political subdivision thereof, or any agency or instrumentality
of any of the foregoing, (ii) a foreign government, International Organization
or any agency or instrumentality of either of the foregoing, (iii) an
organization (except certain farmers' cooperatives described in section 521 of
the Code) 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 Class A-R Certificate, (iv) rural electric and
telephone cooperatives described in section 1381(a)(2)(C) of the Code, (v) an
"electing large partnership" as defined in section 775 of the Code, (vi) a
Person that is not a citizen or resident of the United States, a corporation,
partnership, 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, or 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
unless such Person has furnished the transferor and the Trustee with a duly
completed Internal Revenue Service Form W-8ECI, and (vii) any other Person so
designated by the Trustee based upon an Opinion of Counsel that the Transfer
of an Ownership Interest in a Class A-R Certificate to such Person may cause
any REMIC formed hereunder 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 the Federal Home Loan Mortgage Corporation, a majority
of its board of directors is not selected by such government unit.
"Person": Any individual, corporation, limited liability company,
partnership, joint venture, bank, joint stock company, trust (including any
beneficiary thereof), unincorporated organization or government or any agency
or political subdivision thereof.
"Transfer": Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate, including the acquisition of a Certificate by the
Depositor.
"Transferee": Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
I-4
Section 5.02(c) of the Agreement
(c) Each Person who has or who acquires any Ownership Interest in a
Class A-R Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions, and
the rights of each Person acquiring any Ownership Interest in a Class A-R
Certificate are expressly subject to the following provisions:
(1) Each Person holding or acquiring any Ownership Interest
in a Class A-R Certificate shall be a Permitted Transferee and shall
promptly notify the Trustee of any change or impending change in its
status as a Permitted Transferee.
(2) Except in connection with (i) the registration of the
Tax Matters Person Certificate in the name of the Trustee or (ii) any
registration in the name of, or transfer of a Class A-R Certificate
to, an affiliate of the Depositor (either directly or through a
nominee) in connection with the initial issuance of the Certificates,
no Ownership Interest in a Class A-R Certificate may be registered on
the Closing Date or thereafter transferred, and the Trustee shall not
register the Transfer of any Class A-R Certificate, unless 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 I.
(3) Each Person holding or acquiring any Ownership Interest
in a Class A-R Certificate shall agree (A) to obtain a Transfer
Affidavit from any other Person to whom such Person attempts to
Transfer its Ownership Interest in a Class A-R Certificate, (B) to
obtain a Transfer Affidavit from any Person for whom such Person is
acting as nominee, trustee or agent in connection with any Transfer
of a Class A-R Certificate and (C) not to Transfer its Ownership
Interest in a Class A-R Certificate, or to cause the Transfer of an
Ownership Interest in a Class A-R Certificate to any other Person, if
it has actual knowledge that such Person is not a Permitted
Transferee.
(4) Any attempted or purported Transfer of any Ownership
Interest in a Class A-R Certificate in violation of the provisions of
this Section 5.02(c) shall be absolutely null and void and shall vest
no rights in the purported Transferee. If any purported transferee
shall become a Holder of a Class A-R Certificate in violation of the
provisions of this Section 5.02(c), then the last preceding Permitted
Transferee shall be restored to all rights as Holder thereof
retroactive to the date of registration of Transfer of such Class A-R
Certificate. The Trustee shall be under no liability to any Person
for any registration of Transfer of a Class A-R Certificate that is
in fact not permitted by Section 5.02(b) and this Section 5.02(c) or
for making any payments due on such Certificate to the Holder thereof
or taking any other action with respect to such Holder under the
provisions of this Agreement so long as the Transfer was registered
after receipt of the related Transfer Affidavit and Transferor
Certificate. The Trustee shall be entitled but not obligated to
recover from any Holder of a Class A-R Certificate that was in fact
not a Permitted Transferee at the time it became a Holder or, at such
subsequent time as it became other than a Permitted Transferee, all
payments made on such Class A-R Certificate at and after either such
time. Any such payments so recovered by the Trustee shall be paid and
delivered by the Trustee to the last preceding Permitted Transferee
of such Certificate.
I-5
(5) The Master Servicer shall use its best efforts to make
available, upon receipt of written request from the Trustee, all
information necessary to compute any tax imposed under section
860E(e) of the Code as a result of a Transfer of an Ownership
Interest in a Class A-R Certificate to any Holder who is not a
Permitted Transferee.
The restrictions on Transfers of a Class A-R Certificate set forth in
this Section 5.02(c) shall cease to apply (and the applicable portions of the
legend on a Class A-R Certificate may be deleted) with respect to Transfers
occurring after delivery to the Trustee of an Opinion of Counsel, which
Opinion of Counsel shall not be an expense of the Trustee, the Sellers or the
Master Servicer to the effect that the elimination of such restrictions will
not cause any constituent REMIC of any REMIC formed hereunder to fail to
qualify as a REMIC at any time that the Certificates are outstanding or result
in the imposition of any tax on the Trust Fund, a Certificateholder or another
Person. Each Person holding or acquiring any ownership Interest in a Class A-R
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 Class
A-R Certificate is not transferred, directly or indirectly, to a Person that
is not a Permitted Transferee and (b) to provide for a means to compel the
Transfer of a Class A-R Certificate that is held by a Person that is not a
Permitted Transferee to a Holder that is a Permitted Transferee.
I-6
EXHIBIT J-1
FORM OF TRANSFEROR CERTIFICATE FOR CLASS A-R CERTIFICATES
Date:
CWHEQ, Inc.
as Depositor
0000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
The Bank of New York
as Trustee
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: CWHEQ Home Equity Loan Trust, Series 2006-S2
--------------------------------------------
Ladies and Gentlemen:
In connection with our disposition of the Class A-R Certificates, we
certify that we have no knowledge that the Transferee is not a Permitted
Transferee. All capitalized terms used herein but not defined herein shall
have the meanings assigned to them in the Pooling and Servicing Agreement
dated as of March 1, 2006, among CWHEQ, Inc., as Depositor, Countrywide Home
Loans, Inc., as a Seller, Park Monaco Inc., as a Seller, Park Sienna LLC, as a
Seller, Countrywide Home Loans Servicing LP, as Master Servicer, The Bank of
New York, as Trustee, and The Bank of New York (Delaware), as Co-Trustee.
Very truly yours,
_____________________________________
Name of Transferor
By: _________________________________
Name:
Title:
X-0-0
XXXXXXX X-0
FORM OF TRANSFEROR CERTIFICATE FOR
PRIVATE CERTIFICATES
Date:
CWHEQ, Inc.,
as Depositor
0000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
The Bank of New York,
as Trustee
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: CWHEQ Home Equity Loan Trust, Series 2006-S2, Class [ ]
--------------------------------------------------------
Ladies and Gentlemen:
In connection with our disposition of the above-captioned
Certificates we certify that (a) we understand that the Certificates have not
been registered under the Securities Act of 1933, as amended (the "Act"), and
are being disposed by us in a transaction that is exempt from the registration
requirements of the Act, (b) we have not offered or sold any Certificates to,
or solicited offers to buy any Certificates from, any person, or otherwise
approached or negotiated with any person with respect thereto, in a manner
that would be deemed, or taken any other action which would result in, a
violation of Section 5 of the Act. All capitalized terms used herein but not
defined herein shall have the meanings assigned to them in the Pooling and
Servicing Agreement dated as of March 1, 2006, among CWHEQ, Inc., as
Depositor, Countrywide Home Loans, Inc., as a Seller, Park Monaco Inc., as a
Seller, Park Sienna LLC, as a Seller, Countrywide Home Loans Servicing LP, as
Master Servicer, The Bank of New York, as Trustee, and The Bank of New York
(Delaware), as Co-Trustee.
Very truly yours,
----------------------------------
Name of Transferor
By: _______________________________
Name:
Title:
J-2-1
EXHIBIT K
FORM OF INVESTMENT LETTER (NON-RULE 144A)
Date:
CWHEQ, Inc.,
as Depositor
0000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
The Bank of New York,
as Trustee
000 Xxxxxxx Xx., 0X
Xxx Xxxx, Xxx Xxxx 00000
Re: CWHEQ Home Equity Loan Trust, Series 2006-S2, Class [ ]
--------------------------------------------------------
Ladies and Gentlemen:
In connection with our acquisition of the above-captioned
Certificates we certify that (a) we understand that the Certificates are not
being registered under the Securities Act of 1933, as amended (the "Act"), or
any state securities laws and are being transferred to us in a transaction
that is exempt from the registration requirements of the Act and any such
laws, (b) we are an "accredited investor," as defined in Regulation D under
the Act, and have such knowledge and experience in financial and business
matters that we are capable of evaluating the merits and risks of investments
in the Certificates, (c) we have had the opportunity to ask questions of and
receive answers from the Depositor concerning the purchase of the Certificates
and all matters relating thereto or any additional information deemed
necessary to our decision to purchase the Certificates, (d) either (i) we are
not an employee benefit plan that is subject to the Employee Retirement Income
Security Act of 1974, as amended, or a plan or arrangement that is subject to
Section 4975 of the Internal Revenue Code of 1986, as amended, nor are we
acting on behalf of any such plan or arrangement, or using the assets of any
such plan or arrangement to effect such acquisition or (ii) if the
Certificates have been the subject of an ERISA-Qualifying Underwriting, we are
an insurance company which is purchasing such Certificates with funds
contained in an "insurance company general account" (as such term is defined
in Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE
95-60")) and the purchase and holding of such Certificates are covered under
Sections I and III of PTCE 95-60, (e) we are acquiring the Certificates for
investment for our own account and not with a view to any distribution of such
Certificates (but without prejudice to our right at all times to sell or
otherwise dispose of the Certificates in accordance with clause (g) below),
(f) we have not offered or sold any Certificates to, or solicited offers to
buy any Certificates from, any person, or otherwise approached or negotiated
with any person with respect thereto, or taken any other action which would
result in a violation of Section 5 of the Act, and (g) we will not sell,
transfer or otherwise dispose of any Certificates unless (1) such sale,
transfer or other disposition is made pursuant to an effective registration
statement under the Act or is exempt from such registration requirements, and
if
K-1
requested, we will at our expense provide an opinion of counsel satisfactory
to the addressees of this Certificate that such sale, transfer or other
disposition may be made pursuant to an exemption from the Act, (2) the
purchaser or transferee of such Certificate has executed and delivered to you
a certificate to substantially the same effect as this certificate, and (3)
the purchaser or transferee has otherwise complied with any conditions for
transfer set forth in the Pooling and Servicing Agreement.
All capitalized terms used herein but not defined herein shall have
the meanings assigned to them in the Pooling and Servicing Agreement dated as
of March 1, 2006, among CWHEQ, Inc., as Depositor, Countrywide Home Loans,
Inc., as a Seller, Park Monaco Inc., as a Seller, Park Sienna LLC, as a
Seller, Countrywide Home Loans Servicing LP, as Master Servicer, The Bank of
New York, as Trustee, and The Bank of New York (Delaware), as Co-Trustee.
Very truly yours,
___________________________________
Name of Transferee
By: _______________________________
Authorized Officer
K-2
EXHIBIT L
FORM OF RULE 144A LETTER
Date:
CWHEQ, Inc.,
as Depositor
0000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
The Bank of New York,
as Trustee
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: CWHEQ Home Equity Loan Trust, Series 2006-S2, Class [ ]
--------------------------------------------------------
Ladies and Gentlemen:
In connection with our acquisition of the above-captioned
Certificates we certify that (a) we understand that the Certificates are not
being registered under the Securities Act of 1933, as amended (the "Act"), or
any state securities laws and are being transferred to us in a transaction
that is exempt from the registration requirements of the Act and any such
laws, (b) we have such knowledge and experience in financial and business
matters that we are capable of evaluating the merits and risks of investments
in the Certificates, (c) we have had the opportunity to ask questions of and
receive answers from the Depositor concerning the purchase of the Certificates
and all matters relating thereto or any additional information deemed
necessary to our decision to purchase the Certificates, (d) either (i) we are
not an employee benefit plan that is subject to the Employee Retirement Income
Security Act of 1974, as amended, or a plan or arrangement that is subject to
Section 4975 of the Internal Revenue Code of 1986, as amended, nor are we
acting on behalf of any such plan or arrangement, or using the assets of any
such plan or arrangement to effect such acquisition or (ii) if the
Certificates have been the subject of an ERISA-Qualifying Underwriting, we are
an insurance company which is purchasing such Certificates with funds
contained in an "insurance company general account" (as such term is defined
in Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE
95-60")) and the purchase and holding of such Certificates are covered under
Sections I and III of PTCE 95-60, (e) we have not, nor has anyone acting on
our behalf offered, transferred, pledged, sold or otherwise disposed of the
Certificates, any interest in the Certificates or any other similar security
to, or solicited any offer to buy or accept a transfer, pledge or other
disposition of the Certificates, any interest in the Certificates or any other
similar security from, or otherwise approached or negotiated with respect to
the Certificates, any interest in the Certificates or any other similar
security with, any person in any manner, or made any general solicitation by
means of general advertising or in any other manner, or taken any other
action, that would constitute a distribution of the Certificates under the
Securities Act or that would render the disposition of the Certificates a
violation of Section 5 of the Securities Act or require registration pursuant
thereto,
L-1
nor will act, nor has authorized or will authorize any person to act, in such
manner with respect to the Certificates, (f) we are a "qualified institutional
buyer" as that term is defined in Rule 144A under the Securities Act and have
completed either of the forms of certification to that effect attached hereto
as Annex 1 or Annex 2. We are aware that the sale to us is being made in
reliance on Rule 144A. We are acquiring the Certificates for our own account
or for resale pursuant to Rule 144A and further, understand that such
Certificates may be resold, pledged or transferred only (i) to a person
reasonably believed to be a qualified institutional buyer that purchases for
its own account or for the account of a qualified institutional buyer to whom
notice is given that the resale, pledge or transfer is being made in reliance
on Rule 144A, or (ii) pursuant to another exemption from registration under
the Securities Act.
All capitalized terms used herein but not defined herein shall have
the meanings assigned to them in the Pooling and Servicing Agreement dated as
of March 1, 2006, among CWHEQ, Inc., as Depositor, Countrywide Home Loans,
Inc., as a Seller, Park Monaco Inc., as a Seller, Park Sienna LLC, as a
Seller, Countrywide Home Loans Servicing LP, as Master Servicer, The Bank of
New York, as Trustee, and The Bank of New York (Delaware), as Co-Trustee.
Very truly yours,
___________________________________
Name of Transferee
By: _______________________________
Authorized Officer
L-2
ANNEX 1 TO EXHIBIT L
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:
As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive
officer of the Buyer.
In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule
144A under the Securities Act of 1933, as amended ("Rule 144A")
because (i) the Buyer owned and/or invested on a discretionary
basis either at least $100,000,000 in securities or, if Buyer
is a dealer, Buyer must own and/or invest on a discretionary
basis at least $10,000,000 in securities (except for the
excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being calculated
in accordance with Rule 144A and (ii) the Buyer satisfies the
criteria in the category marked below.
___ Corporation, etc. The Buyer is a corporation (other than a
bank, savings and loan association or similar
institution), Massachusetts or similar business trust,
partnership, or charitable organization described in
Section 501(c)(3) of the Internal Revenue Code of 1986, as
amended.
___ Bank. The Buyer (a) is a national bank or banking
institution organized under the laws of any State,
territory or the District of Columbia, the business of
which is substantially confined to banking and is
supervised by the State or territorial banking commission
or similar official or is a foreign bank or equivalent
institution, and (b) has an audited net worth of at least
$25,000,000 as demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
___ Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association, cooperative
bank, homestead association or similar institution, which
is supervised and examined by a State or Federal authority
having supervision over any such institutions or is a
foreign savings and loan association or equivalent
institution and (b) has an audited net worth of at least
$25,000,000 as demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
___ Broker-dealer. The Buyer is a dealer registered pursuant
to Section 15 of the Securities Exchange Act of 1934.
___ Insurance Company. The Buyer is an insurance company whose
primary and predominant business activity is the writing
of insurance or the reinsuring of
L-3
risks underwritten by insurance companies and which is
subject to supervision by the insurance commissioner or a
similar official or agency of a State, territory or the
District of Columbia.
___ State or Local Plan. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any
agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan within
the meaning of Title I of the Employee Retirement Income
Security Act of 1974.
___ Investment Advisor. The Buyer is an investment advisor
registered under the Investment Advisors Act of 1940.
___ Small Business Investment Company. Buyer is a small
business investment company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the
Small Business Investment Act of 1958.
___ Business Development Company. Buyer is a business
development company as defined in Section 202(a)(22) of
the Investment Advisors Act of 1940.
The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer, (ii)
securities that are part of an unsold allotment to or
subscription by the Buyer, if the Buyer is a dealer, (iii)
securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iv) bank deposit notes and
certificates of deposit, (v) loan participations, (vi)
repurchase agreements, (vii) securities owned but subject to a
repurchase agreement and (viii) currency, interest rate and
commodity swaps.
For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Buyer,
the Buyer used the cost of such securities to the Buyer and did
not include any of the securities referred to in the preceding
paragraph, except (i) where the Buyer reports its securities
holdings in its financial statements on the basis of their
market value, and (ii) no current information with respect to
the cost of those securities has been published. If clause (ii)
in the preceding sentence applies, the securities may be valued
at market. Further, in determining such aggregate amount, the
Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the
Buyer in its financial statements prepared in accordance with
generally accepted accounting principles and if the investments
of such subsidiaries are managed under the Buyer's direction.
However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise
and the Buyer is not itself a reporting company under the
Securities Exchange Act of 1934, as amended.
The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to
the Certificates are relying and will continue to rely on the
statements made herein because one or more sales to the Buyer
may be in reliance on Rule 144A.
L-4
Until the date of purchase of the Rule 144A Securities, the Buyer
will notify each of the parties to which this certification is
made of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of the
Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if
the Buyer is a bank or savings and loan is provided above, the
Buyer agrees that it will furnish to such parties updated
annual financial statements promptly after they become
available.
__________________________________________
Print Name of Buyer
By: ______________________________________
Name:
Title:
Date:_____________________________________
L-5
ANNEX 2 TO EXHIBIT L
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees That are Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because Buyer is part of a
Family of Investment Companies (as defined below), is such an officer of the
Adviser.
In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the
Buyer is an investment company registered under the Investment
Company Act of 1940, as amended and (ii) as marked below, the
Buyer alone, or the Buyer's Family of Investment Companies, owned
at least $100,000,000 in securities (other than the excluded
securities referred to below) as of the end of the Buyer's most
recent fiscal year. For purposes of determining the amount of
securities owned by the Buyer or the Buyer's Family of Investment
Companies, the cost of such securities was used, except (i) where
the Buyer or the Buyer's Family of Investment Companies reports
its securities holdings in its financial statements on the basis
of their market value, and (ii) no current information with
respect to the cost of those securities has been published. If
clause (ii) in the preceding sentence applies, the securities may
be valued at market.
___ The Buyer owned $ in securities (other than the excluded
securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance
with Rule 144A).
___ The Buyer is part of a Family of Investment Companies which
owned in the aggregate $ in securities (other than the excluded
securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance
with Rule 144A).
The term "Family of Investment Companies" as used herein means two or
more registered investment companies (or series thereof) that have
the same investment adviser or investment advisers that are
affiliated (by virtue of being majority owned subsidiaries of the
same parent or because one investment adviser is a majority owned
subsidiary of the other).
The term "securities" as used herein does not include (i) securities
of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) securities issued or
guaranteed by the U.S. or any instrumentality thereof, (iii) bank
deposit notes and certificates of deposit, (iv) loan
participations, (v) repurchase
L-6
agreements, (vi) securities owned but subject to a repurchase
agreement and (vii) currency, interest rate and commodity swaps.
The Buyer is familiar with Rule 144A and under-stands that the parties
listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the
statements made herein because one or more sales to the Buyer will
be in reliance on Rule 144A. In addition, the Buyer will only
purchase for the Buyer's own account.
Until the date of purchase of the Certificates, the undersigned will
notify the parties listed in the Rule 144A Transferee Certificate
to which this certification relates of any changes in the
information and conclusions herein. Until such notice is given,
the Buyer's purchase of the Certificates will constitute a
reaffirmation of this certification by the undersigned as of the
date of such purchase.
__________________________________________
Print Name of Buyer or Adviser
By: ______________________________________
Name:
Title:
IF AN ADVISER:
__________________________________________
Print Name of Buyer
Date:_____________________________________
L-7
EXHIBIT M
FORM OF REQUEST FOR DOCUMENT RELEASE
Loan Information
Name of Mortgagor: ___________________________________
Master Servicer
Loan No.: ___________________________________
Trustee
Name: ___________________________________
Address: ___________________________________
___________________________________
Trustee
Mortgage File No.: ___________________________________
The undersigned Master Servicer hereby acknowledges that it has
received from _______________________________________, as Trustee for the
Holders of Home Equity Loan Asset Backed Certificates, Series 2006-S2, the
documents referred to below (the "Documents"). All capitalized terms not
otherwise defined in this Request for Document Release shall have the meanings
given them in the Pooling and Servicing Agreement dated as of March 1, 2006
(the "Pooling and Servicing Agreement") among CWHEQ, Inc., as Depositor,
Countrywide Home Loans, Inc., as a Seller, Park Monaco Inc., as a Seller, Park
Sienna LLC, as a Seller, Countrywide Home Loans Servicing LP, as Master
Servicer, and The Bank of New York, as Trustee.
( ) Mortgage Note dated ___________, ____, in the original principal sum of
$________, made by __________________, payable to, or endorsed to the
order of, the Trustee.
( ) Mortgage recorded on _________________ as instrument no. ________________
in the County Recorder's Office of the County of ________________, State
of _______________ in book/reel/docket _______________ of official
records at page/image _____________.
( ) Deed of Trust recorded on _________________ as instrument no.
________________ in the County Recorder's Office of the County of
________________, State of _______________ in book/reel/docket
_______________ of official records at page/image _____________.
( ) Assignment of Mortgage or Deed of Trust to the Trustee, recorded on
_________________ as instrument no. __________ in the County Recorder's
Office of
M-1
the County of __________, State of _______________ in book/reel/docket
_______________ of official records at page/image _____________.
( ) Other documents, including any amendments, assignments or other
assumptions of the Mortgage Note or Mortgage.
( ) ________________________________________
( ) ________________________________________
( ) ________________________________________
( ) ________________________________________
The undersigned Master Servicer hereby acknowledges and agrees as
follows:
(1) The Master Servicer shall hold and retain possession of the
Documents in trust for the benefit of the Trust Fund, solely for the
purposes provided in the Pooling and Servicing Agreement.
(2) The Master Servicer shall not cause or knowingly permit the
Documents to become subject to, or encumbered by, any claim, liens,
security interest, charges, writs of attachment or other impositions nor
shall the Master Servicer assert or seek to assert any claims or rights
of setoff to or against the Documents or any proceeds thereof.
(3) The Master Servicer shall return each and every Document
previously requested from the Mortgage File to the Trustee when the need
therefor no longer exists, unless the Mortgage Loan relating to the
Documents has been liquidated and the proceeds thereof have been remitted
to the Certificate Account and except as expressly provided in the
Pooling and Servicing Agreement.
(4) The Documents and any proceeds thereof, including any proceeds
of proceeds, coming into the possession or control of the Master Servicer
shall at all times be earmarked for the account of the Trust Fund, and
the Master Servicer shall keep the Documents and any proceeds separate
and distinct from all other property in the Master Servicer's possession,
custody or control.
[Master Servicer]
By ____________________________________
Its ____________________________________
Date: _________________, ____
M-2
EXHIBIT N
FORM OF REQUEST FOR FILE RELEASE
OFFICER'S CERTIFICATE AND TRUST RECEIPT
HOME EQUITY LOAN ASSET BACKED CERTIFICATES,
Series 2006-S2
__________________________________________ HEREBY CERTIFIES THAT HE/SHE IS AN
OFFICER OF THE MASTER SERVICER, HOLDING THE OFFICE SET FORTH BENEATH HIS/HER
SIGNATURE, AND HEREBY FURTHER CERTIFIES AS FOLLOWS:
WITH RESPECT TO THE MORTGAGE LOANS, AS THE TERM IS DEFINED IN THE POOLING AND
SERVICING AGREEMENT DESCRIBED IN THE ATTACHED SCHEDULE:
[ALL PAYMENTS OF PRINCIPAL AND INTEREST HAVE BEEN MADE.] [THE PURCHASE PRICE
FOR SUCH MORTGAGE LOANS HAS BEEN PAID.] [THE MORTGAGE LOANS HAVE BEEN
LIQUIDATED AND THE RELATED [INSURANCE PROCEEDS] [LIQUIDATION PROCEEDS] HAVE
BEEN DEPOSITED PURSUANT TO SECTION 3.13 OF THE POOLING AND SERVICING
AGREEMENT.] [A REPLACEMENT MORTGAGE LOAN HAS BEEN DELIVERED TO THE TRUSTEE IN
THE MANNER AND OTHERWISE IN ACCORDANCE WITH THE CONDITIONS SET FORTH IN
SECTIONS 2.02 AND 2.03 OF THE POOLING AND SERVICING AGREEMENT.]
LOAN NUMBER:_______________ BORROWER'S NAME:_____________
COUNTY:____________________
[For Substitution or Repurchase Only: The Master Servicer certifies that [an]
[no] opinion is required by Section 2.05 [and is attached hereto].]
I HEREBY CERTIFY THAT ALL AMOUNTS RECEIVED IN CONNECTION WITH SUCH PAYMENTS,
THAT ARE REQUIRED TO BE DEPOSITED IN THE CERTIFICATE ACCOUNT PURSUANT TO
SECTION 3.05 OF THE POOLING AND SERVICING AGREEMENT, HAVE BEEN OR WILL BE
CREDITED.
____________ _____________________
DATED:____________
/ / VICE PRESIDENT
/ / ASSISTANT VICE PRESIDENT
N-1
Exhibit O
Exhibit O is a photocopy
of the Depository Agreement
as delivered.
[See appropriate documents delivered at closing.]
O-1
EXHIBIT P
FORM OF SUBSEQUENT TRANSFER AGREEMENT
SUBSEQUENT TRANSFER AGREEMENT, dated as of ____________, 200[_] (this
"Subsequent Transfer Agreement"), among CWHEQ, INC., a Delaware corporation,
as depositor (the "Depositor"), COUNTRYWIDE HOME LOANS, INC., a New York
corporation, in its capacity as a seller under the Pooling and Servicing
Agreement referred to below ("CHL"), PARK MONACO INC., a Delaware corporation,
in its capacity as a seller under the Pooling and Servicing Agreement ("Park
Monaco"), PARK SIENNA LLC, a Delaware limited liability company, in its
capacity as a seller under the Pooling and Servicing Agreement ("Park Sienna"
and, together with CHL and Park Monaco, the "Sellers") and The Bank of New
York, a New York banking corporation, as trustee (the "Trustee");
WHEREAS, the Depositor, CHL, Park Monaco, Park Sienna, the Trustee,
Countrywide Home Loans Servicing LP, as Master Servicer, and The Bank of New
York (Delaware), as Co-Trustee, have entered in the Pooling and Servicing
Agreement, dated as of March 1, 2006 (the "Pooling and Servicing Agreement"),
relating to the CWHEQ, Inc. Home Equity Loan Asset Backed Certificates, Series
2006-S2 (capitalized terms not otherwise defined herein are used as defined in
the Pooling and Servicing Agreement);
WHEREAS, Section 2.01(b) of the Pooling and Servicing Agreement
provides for the parties hereto to enter into this Subsequent Transfer
Agreement in accordance with the terms and conditions of the Pooling and
Servicing Agreement;
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration the receipt and adequacy of which are hereby
acknowledged the parties hereto agree as follows:
(a) The "Subsequent Transfer Date" with respect to this Subsequent
Transfer Agreement shall be ________ __, 200[_].
(b) The "Subsequent Transfer Date Purchase Amount" with respect to
this Subsequent Transfer Agreement shall be $_______________.
(c) The Subsequent Mortgage Loans conveyed on the Subsequent Transfer
Date shall be subject to the terms and conditions of the Pooling and Servicing
Agreement.
(d) Annex I hereto sets forth a list of the Mortgage Loans which are
Delay Delivery Mortgage Loans.
(e) In case any provision of this Subsequent Transfer Agreement shall
be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions or obligations shall not in any way
be affected or impaired thereby.
(f) In the event of any conflict between the provisions of this
Subsequent Transfer Agreement and the Pooling and Servicing Agreement, the
provisions of the Pooling and Servicing Agreement shall prevail.
P-1
(g) This Subsequent Transfer Agreement shall be governed by, and
shall be construed and enforced in accordance with the laws of the State of
New York.
(h) The Subsequent Transfer Agreement may be executed in one or more
counterparts, each of which so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument.
P-2
IN WITNESS WHEREOF, the parties to this Subsequent Transfer Agreement
have caused their names to be signed hereto by their respective officers
thereunto duly authorized as of the day and year first above written.
CWHEQ, INC.,
as Depositor
By: _______________________________
Name:
Title:
COUNTRYWIDE HOME LOANS, INC.,
as a Seller
By: _______________________________
Name:
Title:
PARK MONACO INC.,
as a Seller
By: _______________________________
Name:
Title:
PARK SIENNA LLC,
as a Seller
By: _______________________________
Name:
Title:
X-0
XXX XXXX XX XXX XXXX,
not in its individual capacity,
but solely as Trustee
By:________________________________
Name:
Title:
P-4
Annex I
Mortgage Loans for which All or a Portion of a Related Mortgage File is not
Delivered to the Trustee on or prior to the Subsequent Transfer Date
P-5
EXHIBIT Q
FORM OF CORRIDOR CONTRACT
[See appropriate documents delivered at closing.]
Q-1
EXHIBIT R
CERTIFICATE INSURANCE POLICY
[See document delivered at closing.]
X-0
XXXXXXX X-0
FORM OF CORRIDOR CONTRACT ASSIGNMENT AGREEMENT
[See documents delivered at closing.]
X-0-0
XXXXXXX X-0
FORM OF CORRIDOR CONTRACT ADMINISTRATION AGREEMENT
[See documents delivered at closing.]
S-2-1
EXHIBIT T
OFFICER'S CERTIFICATE WITH RESPECT TO PREPAYMENTS
HOME EQUITY LOAN ASSET BACKED CERTIFICATES,
Series 2006-S2
[Date]
Via Facsimile
The Bank of New York,
as Trustee
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sir or Madam:
Reference is made to the Pooling and Servicing Agreement, dated as of
March 1, 2006, (the "Pooling and Servicing Agreement") among CWHEQ, Inc., as
Depositor, Countrywide Home Loans, Inc., as a Seller, Park Monaco Inc., as a
Seller, Park Sienna LLC, as a Seller, Countrywide Home Loans Servicing LP, as
Master Servicer, The Bank of New York, as Trustee, and The Bank of New York
(Delaware), as Co-Trustee. Capitalized terms used herein shall have the
meanings ascribed to such terms in the Pooling and Servicing Agreement.
__________________ hereby certifies that he/she is a Servicing
Officer, holding the office set forth beneath his/her name and hereby further
certifies as follows:
With respect to the Distribution Date in _________ 20[ ] and each
Mortgage Loan set forth in the attached schedule:
1. A Principal Prepayment in full or in part was received during the
related Prepayment Period;
2. Any Prepayment Charge due under the terms of the Mortgage Note
with respect to such Principal Prepayment was or was not, as indicated on the
attached schedule using "Yes" or "No", received from the Mortgagor and
deposited in the Certificate Account;
3. As to each Mortgage Loan set forth on the attached schedule for
which all or part of the Prepayment Charge required in connection with the
Principal Prepayment was waived by the Master Servicer, such waiver was, as
indicated on the attached schedule, based upon:
(i) the Master Servicer's determination that such waiver
would maximize recovery of Liquidation Proceeds for such Mortgage
Loan, taking into account the value of such Prepayment Charge, or
T-1
(ii)(A) the enforceability thereof is limited (1) by
bankruptcy, insolvency, moratorium, receivership, or other similar
law relating to creditors' rights generally or (2) due to
acceleration in connection with a foreclosure or other involuntary
payment, or (B) the enforceability is otherwise limited or prohibited
by applicable law; and
4. We certify that all amounts due in connection with the waiver of a
Prepayment Charge inconsistent with clause 3 above which are required to be
deposited by the Master Servicer pursuant to Section 3.20 of the Pooling and
Servicing Agreement, have been or will be so deposited.
COUNTRYWIDE HOME LOANS, INC.,
as Master Servicer
By:________________________________
Name:
Title:
T-2
SCHEDULE OF MORTGAGE LOANS FOR WHICH A PREPAYMENT WAS RECEIVED
DURING THE RELATED PREPAYMENT PERIOD
---------------------------------------- -------------------------------------- --------------------------------------
Loan Number Clause 2: Yes/No Clause 3: (i) or (ii)
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
----------------------------------------------------------------------------------------------------------------------
T-3
EXHIBIT U
[RESERVED]
U-1
EXHIBIT V-1
[RESERVED]
V-1-1
EXHIBIT V-2
[RESERVED]
V-2-1
EXHIBIT V-3
[RESERVED]
V-3-1
EXHIBIT W
MONTHLY STATEMENT
[On file with Trustee]
W-1
EXHIBIT X-1
FORM OF PERFORMANCE CERTIFICATION
(Subservicer)
Re: The Pooling and Servicing Agreement dated as of March 1, 2006 (the
"Pooling and Servicing Agreement") among CWHEQ, Inc., as Depositor,
Countrywide Home Loans, Inc., as a Seller, Park Monaco Inc., as a
Seller, Park Sienna LLC, as a Seller, Countrywide Home Loans
Servicing LP, as Master Servicer, and the undersigned, as Trustee,
The Bank of New York (Delaware), as Co-Trustee and [Subservicing
Agreement] dated as of [ ] (the "Agreement")
I, ________________________________, the _______________________ of [NAME
OF COMPANY] (the "Company"), certify to the Depositor and the Master Servicer,
and their officers, with the knowledge and intent that they will rely upon
this certification, that:
(1) I have reviewed the servicer compliance statement of the Company
provided in accordance with Item 1123 of Regulation AB (the "Compliance
Statement"), the report on assessment of the Company's compliance with
the servicing criteria set forth in Item 1122(d) of Regulation AB (the
"Servicing Criteria"), provided in accordance with Rules 13a-18 and
15d-18 under Securities Exchange Act of 1934, as amended (the "Exchange
Act") and Item 1122 of Regulation AB (the "Servicing Assessment"), the
registered public accounting firm's attestation report provided in
accordance with Rules 13a-18 and 15d-18 under the Exchange Act and
Section 1122(b) of Regulation AB (the "Attestation Report"), all
servicing reports, officer's certificates and other information relating
to the servicing of the Mortgage Loans by the Company during 200[ ] that
were delivered by the Company to the Depositor, the Master Servicer and
the Trustee pursuant to the Agreement (collectively, the "Company
Servicing Information");
(2) Based on my knowledge, the Company Servicing Information, taken
as a whole, does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in
the light of the circumstances under which such statements were made, not
misleading with respect to the period of time covered by the Company
Servicing Information;
(3) Based on my knowledge, all of the Company Servicing Information
required to be provided by the Company under the Agreement has been
provided to the [Depositor] [Master Servicer];
(4) I am responsible for reviewing the activities performed by the
Company as a servicer under the Agreement, and based on my knowledge and
the compliance review conducted in preparing the Compliance Statement and
except as disclosed in the Compliance Statement, the Servicing Assessment
or the Attestation Report, the Company has fulfilled its obligations
under the Agreement; and
X-1-1
(5) The Compliance Statement required to be delivered by the Company
pursuant to the Agreement, and the Servicing Assessment and Attestation
Report required to be provided by the Company and by any Subservicer or
Subcontractor pursuant to the Agreement, have been provided to the Master
Servicer. Any material instances of noncompliance described in such
reports have been disclosed to the Master Servicer. Any material instance
of noncompliance with the Servicing Criteria has been disclosed in such
reports.
Date: _________________________
By: ________________________________
Name:
Title:
X-1-2
EXHIBIT X-2
FORM OF PERFORMANCE CERTIFICATION
(Trustee)
Re: The Pooling and Servicing Agreement dated as of March 1, 2006 (the
"Pooling and Servicing Agreement") among CWHEQ, Inc., as Depositor,
Countrywide Home Loans, Inc., as a Seller, Park Monaco Inc., as a
Seller, Park Sienna LLC, as a Seller, Countrywide Home Loans
Servicing LP, as Master Servicer, the undersigned, as Trustee, and
The Bank of New York (Delaware), as Co-Trustee.
I, ________________________________, the _______________________ of [NAME
OF COMPANY] (the "Company"), certify to the Depositor and the Master Servicer,
and their officers, with the knowledge and intent that they will rely upon
this certification, that:
(1) I have reviewed the report on assessment of the Company's
compliance with the servicing criteria set forth in Item 1122(d) of
Regulation AB (the "Servicing Criteria"), provided in accordance with
Rules 13a-18 and 15d-18 under Securities Exchange Act of 1934, as amended
(the "Exchange Act") and Item 1122 of Regulation AB (the "Servicing
Assessment"), the registered public accounting firm's attestation report
provided in accordance with Rules 13a-18 and 15d-18 under the Exchange
Act and Section 1122(b) of Regulation AB (the "Attestation Report"), [all
reports on Form 10-D containing statements to certificateholders filed in
respect of the period included in the year covered by the annual report
of the Trust Fund] (collectively, the "Distribution Date Statements");
(2) Assuming the accuracy and completeness of the information
delivered to the Company by the Master Servicer as provided in the
Pooling and Servicing Agreement and subject to paragraph (4) below, the
distribution information determined by the Company and set forth in the
Distribution Date Statements contained in all Form 10-D's included in the
year covered by the annual report of such Trust on Form 10-K for the
calendar year 200[ ], is complete and does not contain any material
misstatement of fact as of the last day of the period covered by such
annual report;
(3) Based solely on the information delivered to the Company by the
Master Servicer as provided in the Pooling and Servicing Agreement, (i)
the distribution information required under the Pooling and Servicing
Agreement to be contained in the Trust Fund's Distribution Date
Statements and (ii) the servicing information required to be provided by
the Master Servicer to the trustee for inclusion in the Trust Fund's
Distribution Date Statements, to the extent received by the Trustee from
the Master Servicer in accordance with the Pooling and Servicing
Agreement, is included in such Distribution Date Statements;
(4) The Company is not certifying as to the accuracy, completeness
or correctness of the information which it received from the Master
Servicer and did not
X-2-1
independently verify or confirm the accuracy, completeness or correctness
of the information provided by the Master Servicer;
(5) I am responsible for reviewing the activities performed by the
Company as a person "performing a servicing function" under the Pooling
and Servicing Agreement, and based on my knowledge and the compliance
review conducted in preparing the Servicing Assessment and except as
disclosed in the Servicing Assessment or the Attestation Report, the
Company has fulfilled its obligations under the Pooling and Servicing
Agreement; and
(6) The Servicing Assessment and Attestation Report required to be
provided by the Company and by Subcontractor pursuant to the Pooling and
Servicing Agreement, have been provided to the Master Servicer and the
Depositor. Any material instances of noncompliance described in such
reports have been disclosed to the Master Servicer and the Depositor. Any
material instance of noncompliance with the Servicing Criteria has been
disclosed in such reports.
Date: _________________________
By: ________________________________
Name:
Title:
X-2-2
EXHIBIT Y
FORM OF
SERVICING CRITERIA TO BE ADDRESSED IN
ASSESSMENT OF COMPLIANCE STATEMENT
The assessment of compliance to be delivered by [the Master Servicer]
[Trustee] [Name of Subservicer] shall address, at a minimum, the criteria
identified as below as "Applicable Servicing Criteria":
------------------------------------------------------------------------------- ----------------------
Applicable Servicing
Servicing Criteria Criteria
------------------------------------------------------------------------------- ----------------------
Reference Criteria
-------------------- ---------------------------------------------------------- ----------------------
General Servicing Considerations
-------------------- ----------------------
Policies and procedures are instituted to monitor any
performance or other triggers and events of default in
1122(d)(1)(i) accordance with the transaction agreements.
-------------------- ----------------------
If any material servicing activities are outsourced to
third parties, policies and procedures are instituted to
monitor the third party's performance and compliance with
1122(d)(1)(ii) such servicing activities.
-------------------- ----------------------
Any requirements in the transaction agreements to
maintain a back-up servicer for the mortgage loans are
1122(d)(1)(iii) maintained.
-------------------- ----------------------
A fidelity bond and errors and omissions policy is in
effect on the party participating in the servicing
function throughout the reporting period in the amount of
coverage required by and otherwise in accordance with the
1122(d)(1)(iv) terms of the transaction agreements.
-------------------- ----------------------
Cash Collection and Administration
-------------------- ----------------------
Payments on mortgage loans are deposited into the
appropriate custodial bank accounts and related bank
clearing accounts no more than two business days
following receipt, or such other number of days specified
1122(d)(2)(i) in the transaction agreements.
-------------------- ----------------------
Disbursements made via wire transfer on behalf of an
obligor or to an investor are made only by authorized
1122(d)(2)(ii) personnel.
-------------------- ----------------------
Advances of funds or guarantees regarding collections,
cash flows or distributions, and any interest or other
fees charged for such advances, are made, reviewed and
1122(d)(2)(iii) approved as specified in the transaction agreements.
-------------------- ----------------------
The related accounts for the transaction, such as cash
reserve accounts or accounts established as a form of
overcollateralization, are separately maintained (e.g.,
with respect to commingling of cash) as set forth in the
transaction
1122(d)(2)(iv) agreements.
-------------------- ----------------------
Each custodial account is maintained at a federally
insured depository institution as set forth in the
transaction agreements. For purposes of this criterion,
"federally insured depository institution" with respect
to a foreign financial institution means a foreign
financial institution that meets the requirements of Rule
1122(d)(2)(v) 13k-1(b)(1) of the Securities Exchange Act.
-------------------- ----------------------
Unissued checks are safeguarded so as to prevent
1122(d)(2)(vi) unauthorized access.
-------------------- ----------------------
Y-1
------------------------------------------------------------------------------- ----------------------
Applicable Servicing
Servicing Criteria Criteria
------------------------------------------------------------------------------- ----------------------
Reference Criteria
-------------------- ---------------------------------------------------------- ----------------------
Reconciliations are prepared on a monthly basis for all
Asset Backed securities related bank accounts, including
custodial accounts and related bank clearing accounts.
These reconciliations are (A) mathematically accurate;
(B) prepared within 30 calendar days after the bank
statement cutoff date, or such other number of days
specified in the transaction agreements; (C) reviewed and
approved by someone other than the person who prepared
the reconciliation; and (D) contain explanations for
reconciling items. These reconciling items are resolved
within 90 calendar days of their original identification,
or such other number of days specified in the transaction
1122(d)(2)(vii) agreements.
-------------------- ----------------------
Investor Remittances and Reporting
-------------------- ----------------------
Reports to investors, including those to be filed with
the Commission, are maintained in accordance with the
transaction agreements and applicable Commission
requirements. Specifically, such reports (A) are prepared
in accordance with timeframes and other terms set forth
in the transaction agreements; (B) provide information
calculated in accordance with the terms specified in the
transaction agreements; (C) are filed with the Commission
as required by its rules and regulations; and (D) agree
with investors' or the trustee's records as to the total
unpaid principal balance and number of mortgage loans
1122(d)(3)(i) serviced by the Servicer.
-------------------- ----------------------
Amounts due to investors are allocated and remitted in
accordance with timeframes, distribution priority and
1122(d)(3)(ii) other terms set forth in the transaction agreements.
-------------------- ----------------------
Disbursements made to an investor are posted within two
business days to the Servicer's investor records, or such
other number of days specified in the transaction
1122(d)(3)(iii) agreements.
-------------------- ----------------------
Amounts remitted to investors per the investor reports
agree with cancelled checks, or other form of payment, or
1122(d)(3)(iv) custodial bank statements. ----------------------
--------------------
Pool Asset Administration
-------------------- ----------------------
Collateral or security on mortgage loans is maintained as
required by the transaction agreements or related
1122(d)(4)(i) mortgage loan documents.
-------------------- ----------------------
Mortgage loan and related documents are safeguarded as
1122(d)(4)(ii) required by the transaction agreements
-------------------- ----------------------
Any additions, removals or substitutions to the asset
pool are made, reviewed and approved in accordance with
any conditions or requirements in the transaction
1122(d)(4)(iii) agreements.
-------------------- ----------------------
Payments on mortgage loans, including any payoffs, made
in accordance with the related mortgage loan documents
are posted to the Servicer's obligor records maintained
no more than two business days after receipt, or such
other number of days specified in the transaction
agreements, and allocated to principal, interest or other
items (e.g., escrow) in accordance with the related
1122(d)(4)(iv) mortgage loan documents.
-------------------- ----------------------
The Servicer's records regarding the mortgage loans agree
with the Servicer's records with respect to an obligor's
1122(d)(4)(v) unpaid principal balance.
-------------------- ----------------------
Changes with respect to the terms or status of an
obligor's mortgage loans (e.g., loan modifications or
re-agings) are made, reviewed and approved by authorized
personnel in accordance with the transaction agreements
1122(d)(4)(vi) and related pool asset documents.
-------------------- ----------------------
Loss mitigation or recovery actions (e.g., forbearance
plans, modifications and deeds in lieu of foreclosure,
foreclosures and repossessions, as applicable) are
initiated, conducted and concluded in accordance with the
timeframes or other requirements established by the
1122(d)(4)(vii) transaction agreements.
-------------------- ----------------------
Y-2
------------------------------------------------------------------------------- ----------------------
Applicable Servicing
Servicing Criteria Criteria
------------------------------------------------------------------------------- ----------------------
Reference Criteria
-------------------- ---------------------------------------------------------- ----------------------
Records documenting collection efforts are maintained
during the period a mortgage loan is delinquent in
accordance with the transaction agreements. Such records
are maintained on at least a monthly basis, or such other
period specified in the transaction agreements, and
describe the entity's activities in monitoring delinquent
mortgage loans including, for example, phone calls,
letters and payment rescheduling plans in cases where
delinquency is deemed temporary (e.g., illness or
1122(d)(4)(viii) unemployment).
-------------------- ----------------------
Adjustments to interest rates or rates of return for
mortgage loans with variable rates are computed based on
1122(d)(4)(ix) the related mortgage loan documents.
-------------------- ----------------------
Regarding any funds held in trust for an obligor (such as
escrow accounts): (A) such funds are analyzed, in
accordance with the obligor's mortgage loan documents, on
at least an annual basis, or such other period specified
in the transaction agreements; (B) interest on such funds
is paid, or credited, to obligors in accordance with
applicable mortgage loan documents and state laws; and
(C) such funds are returned to the obligor within 30
calendar days of full repayment of the related mortgage
loans, or such other number of days specified in the
1122(d)(4)(x) transaction agreements.
-------------------- ----------------------
Payments made on behalf of an obligor (such as tax or
insurance payments) are made on or before the related
penalty or expiration dates, as indicated on the
appropriate bills or notices for such payments, provided
that such support has been received by the servicer at
least 30 calendar days prior to these dates, or such
other number of days specified in the transaction
1122(d)(4)(xi) agreements.
-------------------- ----------------------
Any late payment penalties in connection with any payment
to be made on behalf of an obligor are paid from the
servicer's funds and not charged to the obligor, unless
the late payment was due to the obligor's error or
1122(d)(4)(xii) omission.
-------------------- ----------------------
Disbursements made on behalf of an obligor are posted
within two business days to the obligor's records
maintained by the servicer, or such other number of days
specified in the transaction
1122(d)(4)(xiii) agreements.
-------------------- ----------------------
Delinquencies, charge-offs and uncollectible accounts are
recognized and recorded in accordance with the
1122(d)(4)(xiv) transaction agreements.
-------------------- ----------------------
Any external enhancement or other support, identified in
Item 1114(a)(1) through (3) or Item 1115 of Regulation
AB, is maintained as set forth in the transaction
1122(d)(4)(xv) agreements.
-------------------- --------------------------------------------------------- ----------------------
-------------------- --------------------------------------------------------- ----------------------
[NAME OF MASTER SERVICER] [NAME OF
TRUSTEE] [NAME OF SUBSERVICER]
Date: _________________________
By: ________________________________
Name:
Title:
Y-3
EXHIBIT Z
[FORM OF] LIST OF ITEM 1119 PARTIES
ASSET BACKED CERTIFICATES,
Series 200_-__
[Date]
---------------------------------------- -----------------------------------------------------------------------------
Party Contact Information
---------------------------------------- -----------------------------------------------------------------------------
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Z-1
EXHIBIT AA
FORM OF
XXXXXXXX-XXXXX CERTIFICATION
(Replacement Master Servicer)
(On file with Trustee)
AA-1
SCHEDULE I
PREPAYMENT CHARGE SCHEDULE AND PREPAYMENT CHARGE SUMMARY
[Delivered to Trustee at closing and on file with the Trustee.]
S-I-1
SCHEDULE II
COLLATERAL SCHEDULE
----------------------------------------------------------------- ----------------- ----------------
Applicable Mortgage
Characteristic Section Loans
----------------------------------------------------------------- ----------------- ----------------
Single-Family Detached Dwellings 2.03(b)(32) 70.18%
----------------------------------------------------------------- ----------------- ----------------
Two- to Four-Family Dwellings 2.03(b)(32) 2.04%
----------------------------------------------------------------- ----------------- ----------------
Low-Rise Condominium Units 2.03(b)(32) 6.43%
----------------------------------------------------------------- ----------------- ----------------
High-Rise Condominium Units 2.03(b)(32) 0.55%
----------------------------------------------------------------- ----------------- ----------------
Manufactured Housing 2.03(b)(32) 0.00%
----------------------------------------------------------------- ----------------- ----------------
PUDs 2.03(b)(32) 20.81%
----------------------------------------------------------------- ----------------- ----------------
Earliest Origination Date 2.03(b)(33) 6/1/03
----------------------------------------------------------------- ----------------- ----------------
Prepayment Penalty 2.03(b)(35) 38.86%
----------------------------------------------------------------- ----------------- ----------------
Investor Properties 2.03(b)(36) 2.11%
----------------------------------------------------------------- ----------------- ----------------
Primary Residences 2.03(b)(36) 95.77%
----------------------------------------------------------------- ----------------- ----------------
Lowest Current Mortgage Rate 2.03(b)(48) 5.000%
----------------------------------------------------------------- ----------------- ----------------
Highest Current Mortgage Rate 2.03(b)(48) 14.875%
----------------------------------------------------------------- ----------------- ----------------
Weighted Average Current Mortgage Rate 2.03(b)(48) 8.089%
----------------------------------------------------------------- ----------------- ----------------
Date on or before which each Initial Mortgage Loan has a
Due Date 2.03(b)(51) 5/1/06
----------------------------------------------------------------- ----------------- ----------------
S-II-1
