EXHIBIT 4.1
EXECUTION COPY
================================================================================
CWABS, 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 TRUST COMPANY, N.A.,
Co-Trustee
---------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of September 1, 2005
---------------------------------
ASSET-BACKED CERTIFICATES, SERIES 2005-AB3
Table of Contents
-----------------
Page
ARTICLE I.
DEFINITIONS
Section 1.01 Defined Terms..................................................................................10
Section 1.02 Certain Interpretive Provisions................................................................49
ARTICLE II.
CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES
Section 2.01 Conveyance of Mortgage Loans...................................................................50
Section 2.02 Acceptance by Trustee of the Mortgage Loans....................................................57
Section 2.03 Representations, Warranties and Covenants of the Master Servicer and the Sellers...............62
Section 2.04 Representations and Warranties of the Depositor................................................81
Section 2.05 Delivery of Opinion of Counsel in Connection with Substitutions and Repurchases................82
Section 2.06 Authentication and Delivery of Certificates....................................................83
Section 2.07 Covenants of the Master Servicer...............................................................83
ARTICLE III.
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01 Master Servicer to Service Mortgage Loans......................................................83
Section 3.02 Subservicing; Enforcement of the Obligations of Master Servicer................................85
Section 3.03 Rights of the Depositor, the Sellers, the Certificateholders, the NIM Insurer and the
Trustee in Respect of the Master Servicer......................................................86
Section 3.04 Trustee to Act as Master Servicer..............................................................87
Section 3.05 Collection of Mortgage Loan Payments; Certificate Account; Distribution Account;
Pre-Funding Account; Seller Shortfall Interest Requirement.....................................88
Section 3.06 Collection of Taxes, Assessments and Similar Items; Escrow Accounts............................91
Section 3.07 Access to Certain Documentation and Information Regarding the Mortgage Loans...................91
Section 3.08 Permitted Withdrawals from the Certificate Account, Distribution Account, Carryover
Reserve Fund and the Principal Reserve Fund....................................................92
Section 3.09 [Reserved].....................................................................................95
Section 3.10 Maintenance of Hazard Insurance................................................................95
Section 3.11 Enforcement of Due-On-Sale Clauses; Assumption Agreements......................................96
Section 3.12 Realization Upon Defaulted Mortgage Loans; Determination of Excess Proceeds and
Realized Losses; Repurchase of Certain Mortgage Loans..........................................97
Section 3.13 Co-Trustee to Cooperate; Release of Mortgage Files............................................100
Section 3.14 Documents, Records and Funds in Possession of Master Servicer to be Held for the
Trustee.......................................................................................102
i
Section 3.15 Servicing Compensation........................................................................102
Section 3.16 Access to Certain Documentation...............................................................102
Section 3.17 Annual Statement as to Compliance.............................................................103
Section 3.18 Annual Independent Public Accountants' Servicing Statement; Financial Statements..............103
Section 3.19 The Corridor Contracts........................................................................104
Section 3.20 Prepayment Charges............................................................................104
ARTICLE IV.
DISTRIBUTIONS AND ADVANCES BY THE MASTER SERVICER
Section 4.01 Advances; Remittance Reports..................................................................105
Section 4.02 Reduction of Servicing Compensation in Connection with Prepayment Interest Shortfalls.........107
Section 4.03 [Reserved]....................................................................................107
Section 4.04 Distributions.................................................................................107
Section 4.05 Monthly Statements to Certificateholders......................................................113
Section 4.06 [Reserved]....................................................................................116
Section 4.07 Carryover Reserve Fund........................................................................116
Section 4.08 Termination of the Mortgage Insurance Policy..................................................117
ARTICLE V.
THE CERTIFICATES
Section 5.01 The Certificates..............................................................................117
Section 5.02 Certificate Register; Registration of Transfer and Exchange of Certificates...................118
Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates.............................................122
Section 5.04 Persons Deemed Owners.........................................................................123
Section 5.05 Access to List of Certificateholders' Names and Addresses.....................................123
Section 5.06 Book-Entry Certificates.......................................................................123
Section 5.07 Notices to Depository.........................................................................124
Section 5.08 Definitive Certificates.......................................................................124
Section 5.09 Maintenance of Office or Agency...............................................................125
ARTICLE VI.
THE DEPOSITOR, THE MASTER SERVICER AND THE SELLERS
Section 6.01 Respective Liabilities of the Depositor, the Master Servicer and the Sellers..................125
Section 6.02 Merger or Consolidation of the Depositor, the Master Servicer or the Sellers..................125
Section 6.03 Limitation on Liability of the Depositor, the Sellers, the Master Servicer, the NIM
Insurer and Others............................................................................126
Section 6.04 Limitation on Resignation of Master Servicer..................................................127
Section 6.05 Errors and Omissions Insurance; Fidelity Bonds................................................127
ii
ARTICLE VII.
DEFAULT; TERMINATION OF MASTER SERVICER
Section 7.01 Events of Default.............................................................................127
Section 7.02 Trustee to Act; Appointment of Successor......................................................129
Section 7.03 Notification to Certificateholders............................................................131
ARTICLE VIII.
CONCERNING THE TRUSTEE AND THE CO-TRUSTEE
Section 8.01 Duties of Trustee.............................................................................131
Section 8.02 Certain Matters Affecting the Trustee.........................................................132
Section 8.03 Trustee Not Liable for Mortgage Loans.........................................................133
Section 8.04 Trustee May Own Certificates..................................................................134
Section 8.05 Master Servicer to Pay Trustee's Fees and Expenses............................................134
Section 8.06 Eligibility Requirements for Trustee..........................................................134
Section 8.07 Resignation and Removal of Trustee............................................................135
Section 8.08 Successor Trustee.............................................................................136
Section 8.09 Merger or Consolidation of Trustee............................................................136
Section 8.10 Appointment of Co-Trustee or Separate Trustee.................................................136
Section 8.11 Tax Matters...................................................................................138
Section 8.12 Co-Trustee....................................................................................140
Section 8.13 Access to Records of the Trustee..............................................................143
Section 8.14 Suits for Enforcement.........................................................................143
ARTICLE IX.
TERMINATION
Section 9.01 Termination upon Liquidation or Repurchase of all Mortgage Loans..............................144
Section 9.02 Final Distribution on the Certificates........................................................144
Section 9.03 Additional Termination Requirements...........................................................146
ARTICLE X.
MISCELLANEOUS PROVISIONS
Section 10.01 Amendment.....................................................................................147
Section 10.02 Recordation of Agreement; Counterparts........................................................148
Section 10.03 Governing Law.................................................................................149
Section 10.04 Intention of Parties..........................................................................149
Section 10.05 Notices.......................................................................................149
Section 10.06 Severability of Provisions....................................................................151
Section 10.07 Assignment....................................................................................151
Section 10.08 Limitation on Rights of Certificateholders....................................................151
Section 10.09 Inspection and Audit Rights...................................................................152
Section 10.10 Certificates Nonassessable and Fully Paid.....................................................152
Section 10.11 Rights of NIM Insurer.........................................................................152
iii
Exhibits
--------
EXHIBIT A Forms of Certificates
EXHIBIT A-1 Form of Class 1-A-1 Certificate
EXHIBIT A-2 Form of Class 2-A-1 Certificate
EXHIBIT A-3 Form of Class 2-A-2A Certificate
EXHIBIT A-4 Form of Class 2-A-2B Certificate
EXHIBIT A-5 Form of Class 2-A-3 Certificate
EXHIBIT A-6 Form of Class M-1 Certificate
EXHIBIT A-7 Form of Class M-2 Certificate
EXHIBIT A-8 Form of Class M-3 Certificate
EXHIBIT A-9 Form of Class M-4 Certificate
EXHIBIT A-10 Form of Class M-5 Certificate
EXHIBIT A-11 Form of Class M-6 Certificate
EXHIBIT A-12 Form of Class M-7 Certificate
EXHIBIT A-13 Form of Class M-8 Certificate
EXHIBIT A-14 Form of Class B 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 Corridor Contracts
EXHIBIT Q-1 Form of Class 1-A-1 Corridor Contract
EXHIBIT Q-2 Form of Class 2-A Corridor Contract
EXHIBIT Q-3 Form of Subordinate Corridor Contract
iv
EXHIBIT R [Reserved]
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
SCHEDULE I Prepayment Charge Schedule and Prepayment Charge Summary
SCHEDULE II Collateral Schedule
v
POOLING AND SERVICING AGREEMENT, dated as of September 1, 2005, by
and among CWABS, 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 TRUST COMPANY, N.A., a national banking association, 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. 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
Contracts) for federal income tax purposes will consist of four REMICs ("REMIC
1," "REMIC 2," "REMIC 3" and the "Master REMIC"). Each Certificate, other than
the Class A-R Certificate, will represent ownership of one or more regular
interests in the Master REMIC for purposes of the REMIC Provisions. The Class
A-R Certificate represents ownership of the sole class of residual interest in
REMIC 1, REMIC 2, REMIC 3 and the Master REMIC. The Master REMIC will hold as
assets the several classes of uncertificated REMIC 3 Interests (other than the
R-3-R Interest). Each REMIC 3 Interest (other than the R-3-R Interest) is
hereby designated as a regular interest in REMIC 3. REMIC 3 will hold as
assets the several classes of REMIC 2 Interests (other than the R-2-R
Interest). Each REMIC 2 Interest (other than the R-2-R Interest) is hereby
designated as a regular interest in REMIC 2. REMIC 2 will hold as assets the
several classes of REMIC 1 Interests (other than the R-1-R Interest). Each
REMIC 1 Interest (other than the R-1-R Interest) is hereby designated as a
regular interest in REMIC 1. REMIC 1 will hold as assets all property of 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 Contracts). The latest possible maturity date of
all REMIC regular interests created in this Agreement shall be the Latest
Possible Maturity Date.
REMIC 1:
The REMIC 1 Interests will have the principal balances, pass-through
rates and Corresponding Loan Groups as set forth below.
Initial Corresponding Loan
REMIC 1 Interests Balance Pass-Through Rate Group(s)
R-1-1-I..................................... (1) (5) 1
R-1-1-S..................................... (2) (6) 1
R-1-2-I..................................... (1) (5) 2
R-1-2-S..................................... (2) (6) 2
R-1-X....................................... (3) (7) 1 and 2
R-1-P $100.00 (8) N/A
R-1-R....................................... (4) (4) N/A
---------
(1) The principal balance of each REMIC 1 Interest having an "I" designation
is the principal balance of all the Initial Mortgage Loans in the
Corresponding Loan Group.
(2) The principal balance of each REMIC 1 Interest having an "S" designation
is the principal balance of all the Subsequent Mortgage Loans in the
Corresponding Loan Group.
(3) This REMIC 1 Interest pays no principal.
(4) The R-1-R Interest is the sole class of residual interest in REMIC 1. It
has no principal balance and pays no principal or interest.
(5) The interest rate for this REMIC 1 Interest with respect to any
Distribution Date (and the related Accrual Period) through the
Distribution Date in December 2005 is a per annum rate equal to the
weighted average of the Adjusted Net Mortgage Rates of the Initial
Mortgage Loans in the Corresponding Loan Group. For any Distribution
Date (and the related Accrual Period) following the Distribution Date in
December 2005, the interest rate for this REMIC 1 Interest is a per
annum rate equal to the weighted average of the Adjusted Net Mortgage
Rates of all the Mortgage Loans in the Corresponding Loan Group.
(6) The interest rate for this REMIC 1 Interest with respect to any
Distribution Date (and the related Accrual Period) through the
Distribution Date in December 2005 is a per annum rate equal to 0.00%.
For any Distribution Date (and the related Accrual Period) following the
Distribution Date in December 2005, the interest rate for this REMIC 1
Interest is a per annum rate equal to the weighted average of the
Adjusted Net Mortgage Rates of all the Mortgage Loans in the
Corresponding Loan Group.
(7) For any Distribution Date (and the related Accrual Period) through the
Distribution Date in December 2005, this REMIC 1 Interest is entitled to
all the interest payable with respect to the Subsequent Mortgage Loans
in the Corresponding Loan Group (or Groups). For any Distribution Date
(and the related Accrual Period) following the Distribution Date in
December 2005, the interest rate for this REMIC 1 Interest is a per
annum rate equal to 0.00%.
(8) The R-1-P Interest is entitled to all Prepayment Charges collected with
respect to the Mortgage Loans. It pays no interest.
On each Distribution Date, the Interest Funds and the Principal
Distribution Amount of the Corresponding Loan Groups shall be distributed with
respect to the REMIC 1 Interests in the following manner:
(1) Interest. Interest is to be distributed with respect to each
REMIC 1 Interest at the rate, or according to the formulas, described above.
2
(2) Principal. For any Distribution Date (and the related Accrual
Period) through the Distribution Date in December 2005, the Principal
Distribution Amount with respect to the Initial Mortgage Loans in a Loan Group
shall be allocated to its corresponding "I" REMIC 1 Interests, and the
Principal Distribution Amount with respect to the Subsequent Mortgage Loans in
a Loan Group shall be allocated to its corresponding "S" REMIC 1 Interests.
For any Distribution Date (and the related Accrual Period) after the
Distribution Date in December 2005, the Principal Distribution Amount with
respect to all Mortgage Loans in a Loan Group shall be allocated in proportion
to its corresponding REMIC 1 Interests.
REMIC 2:
The REMIC 2 Interests will have the principal balances, pass-through
rates and Corresponding Loan Groups as set forth below. For the purpose of the
descriptions that follow, Loan Group 1 and Loan Group 2 and the REMIC 2
Interests corresponding to Loan Group 1 and Loan Group 2 are referrred to,
from time to time, as the "Variable Loan Groups" and the "Variable Interests,"
respectively.
Corresponding Loan
REMIC 2 Interests Initial Balance Pass-Through Rate Group
R-2-A-1 (0.9% of SCB Group 1)............... (1) (2) 1
R-2-B-1 (0.1% of SCB Group 1)............... (1) (2) 1
R-2-C-1 (0.9% of ASCB Group 1).............. (1) (2) 1
R-2-D-1 (0.1% of ASCB Group 1).............. (1) (2) 1
R-2-E-1 (Excess of Group 1)................. (1) (2) 1
R-2-A-2 (0.9% of SCB Group 2)............... (1) (3) 2
R-2-B-2 (0.1% of SCB Group 2)............... (1) (3) 2
R-2-C-2 (0.9% of ASCB Group 2).............. (1) (3) 2
R-2-D-2 (0.1% of ASCB Group 2).............. (1) (3) 2
R-2-E-2 (Excess of Group 2)................. (1) (3) 2
R-2-P....................................... $100 (4) N/A
R-2-R....................................... (5) (5) N/A
R-2-X....................................... (6) (7) N/A
---------
(1) Each REMIC 2 Interest having an "R-2-A-" designation (each, an "R-2-A
Interest") will have a principal balance initially equal to 0.9% of the
Subordinate Component Balance ("SCB") of its Corresponding Loan Group.
Each REMIC 2 Interest having an "R-2-B-" designation (each, an "R-2-B
Interest") will have a principal balance initially equal to 0.1% of the
SCB of its Corresponding Loan Group. Each REMIC 2 Interest having an
"R-2-C-" designation (each, an "R-2-C Interest") will have a principal
balance initially equal to 0.9% of the Adjusted Subordinate Component
Balance ("ASCB") of its Corresponding Loan Group. Each REMIC 2 Interest
having an "R-2-D-" designation (each, an "R-2-D Interest") will have a
principal balance initially equal to 0.1% of the ASCB of its
Corresponding Loan Group. The initial principal balance of each REMIC 2
Interest having an "R-2-E-" designation (each, an "R-2-E Interest") will
equal the excess
3
of its Corresponding Loan Group over the initial aggregate principal
balances of the X-0-X, X-0-X, X-0-X and R-2-D Interests corresponding to
such Loan Group.
(2) A rate equal to the weighted average of the pass-through rates of the
R-1-1-I and R-1-1-S Interests (the "Loan Group 1 Net Rate Cap").
(3) A rate equal to the weighted average of the pass-through rates of the
R-1-2-I and R-1-2-S Interests (the "Loan Group 2 Net Rate Cap").
(4) The R-2-P Interest is entitled to all amounts payable with respect to
the R-1-P Interest. It pays no interest.
(5) The R-2-R Interest is the sole class of residual interest in REMIC 2. It
has no principal balance and pays no principal or interest.
(6) This REMIC 2 Interest pays no principal.
(7) This REMIC 2 Interest is entitled to all amounts payable with respect to
the R-1-X Interest.
On each Distribution Date, the Interest Funds and the Principal
Distribution Amounts payable with respect to the REMIC 1 Interests shall be
payable with respect to the REMIC 2 Interests in the following manner:
(1) Interest. Interest is to be distributed with respect to each
REMIC 2 Interest at the rate, or according to the formulas, described above.
(2) Principal if no Cross-Over Situation Exists. If no Cross-Over
Situation exists with respect to any REMIC 2 Interest, then the Principal
Distribution Amounts payable with respect to each Loan Group will be payable:
first to cause the Loan Group's corresponding X-0-X, X-0-X, X-0-X and R-2-D
Interests to equal, respectively, 0.9% of the SCB, 0.1% of the SCB, 0.9% of
the ASCB and 0.1% of the ASCB, of the Corresponding Loan Group, and then to
the corresponding R-2-E Interest.
(3) Principal if a Cross-Over Situation Exists. If a Cross-Over
Situation exists with respect to the R-2-A and R-2-B Interests then:
(a) if the Calculation Rate in respect of the outstanding R-2-A and
R-2-B Interests is less than the Subordinate Net Rate Cap, Principal
Relocation Payments will be made proportionately to the outstanding R-2-A
Interests prior to any other principal distributions from each such Loan
Group; and
(b) if the Calculation Rate in respect of the outstanding R-2-A and
R-2-B Interests is greater than the Subordinate Net Rate Cap, Principal
Relocation Payments will be made proportionately to the outstanding R-2-B
Interests prior to any other principal distributions from each such Loan
Group.
4
In each case, Principal Relocation Payments will be made so as to
cause the Calculation Rate in respect of the outstanding R-2-A and R-2-B
Interests to equal the Subordinate Net Rate Cap. With respect to each Loan
Group, if (and to the extent that) the sum of (a) the principal payments
comprising the Principal Distribution Amount payable for the related
Distribution Date and (b) the Realized Losses, are insufficient to make the
necessary reductions of principal on the R-2-A and R-2-B Interests, then
interest will be added to the Loan Group's R-2-E Interest.
(c) The outstanding aggregate R-2-A and R-2-B Interests for both
Loan Groups will not be reduced below 1 percent of the excess of (i) the
aggregate outstanding Stated Principal Balances of all Loan Groups as of the
end of any Due Period over (ii) the Senior Certificates related to the Loan
Groups as of the related Distribution Date (after taking into account
distributions of principal on such Distribution Date).
If (and to the extent that) the limitation in paragraph (c) prevents
the distribution of principal to the R-2-A and R-2-B Interests of a Loan
Group, and if the Loan Group's corresponding R-2-E Interest has already been
reduced to zero, then the excess principal from that Loan Group will be paid
to the R-2-E Interest of the other Loan Group, the aggregate R-2-A and R-2-B
Interests of which are less than one percent of the Subordinate Component
Balance. If the Loan Group of the corresponding R-2-E Interest that receives
such payment has a Group Net Rate Cap below the Group Net Rate Cap of the Loan
Group making the payment, then the payment will be treated by REMIC 2 as a
Realized Loss. Conversely, if the Loan Group of the R-2-E Interest that
receives such payment has a Group Net Rate Cap above the Group Net Rate Cap of
the Loan Group making the payment, then the payment will be treated by REMIC 2
as a reimbursement for prior Realized Losses.
If a Cross-Over Situation exists with respect to the R-2-C and R-2-D
Interests then:
(d) if the Calculation Rate in respect of the outstanding R-2-C and
R-2-D Interests is less than the Adjusted Subordinate Net Rate Cap, Principal
Relocation Payments will be made proportionately to the R-2-C Interests prior
to any other principal distributions from each such Loan Group; and
(e) if the Calculation Rate in respect of the outstanding R-2-C and
R-2-D Interests is greater than the Adjusted Subordinate Net Rate Cap,
Principal Relocation Payments will be made proportionately to the outstanding
R-2-D Interests prior to any other principal distributions from each such Loan
Group.
In each case, Principal Relocation Payments will be made so as to cause the
Calculation Rate in respect of the outstanding R-2-C and R-2-D Interests to
equal the Adjusted Subordinate Net Rate Cap. With respect to each Loan Group,
if (and to the extent that) the sum of (a) the principal payments comprising
the Principal Distribution Amount payable for the related Distribution Date
and (b) the Realized Losses, are insufficient to make the necessary reductions
of principal on the R-2-C and R-2-D Interests, then interest will be added to
the Loan Group's R-2-E Interest.
(f) The outstanding aggregate R-2-C and R-2-D Interests for all Loan
Groups will not be reduced below 1 percent of the excess of (i) the aggregate
outstanding Stated Principal Balances of all Loan Groups as of the end of any
Due Period over (ii) the Senior Certificates related to the
5
Loan Groups as of the related Distribution Date (after taking into account
distributions of principal on such Distribution Date).
If (and to the extent that) the limitation in paragraph (f) prevents the
distribution of principal to the R-2-C and R-2-D Interests of a Loan Group,
and if the Loan Group's R-2-E Interest has already been reduced to zero, then
the excess principal from that Loan Group will be paid to the R-2-E Interests
of the other Loan Group, the aggregate R-2-C and R-2-D Interests of which are
less than one percent of the Adjusted Subordinate Component Balance. If the
Loan Group of the R-2-E Interest that receives such payment has a Group Net
Rate Cap below the Group Net Rate Cap of the Loan Group making the payment,
then the payment will be treated by REMIC 2 as a Realized Loss. Conversely, if
the Loan Group of the R-2-E Interest that receives such payment has a Group
Net Rate Cap above the Group Net Rate Cap of the Loan Group making the
payment, then the payment will be treated by REMIC 2 as a reimbursement for
prior Realized Losses.
REMIC 3:
The REMIC 3 Regular Interests will have the principal balances, pass-through
rates and Corresponding Classes of Certificates as set forth in the following
table:
------------------------------- ---------------------------- ---------------------------- ----------------------------
Pass-Through Corresponding Class of
REMIC 3 Interests Initial Principal Balance Rate Certificates
------------------------------- ---------------------------- ---------------------------- ----------------------------
R-3-1-A-1..................... (1) (2) 1-A-1
------------------------------- ---------------------------- ---------------------------- ----------------------------
R-3-2-A-1..................... (1) (2) 2-A-1
------------------------------- ---------------------------- ---------------------------- ----------------------------
R-3-2-A-2A.................... (1) (2) 2-A-2A
------------------------------- ---------------------------- ---------------------------- ----------------------------
R-3-2-A-2B.................... (1) (2) 2-A-2B
------------------------------- ---------------------------- ---------------------------- ----------------------------
R-3-2-A-3..................... (1) (2) 2-A-3
------------------------------- ---------------------------- ---------------------------- ----------------------------
R-3-M-1....................... (1) (2) M-1
------------------------------- ---------------------------- ---------------------------- ----------------------------
R-3-M-2....................... (1) (2) M-2
------------------------------- ---------------------------- ---------------------------- ----------------------------
R-3-M-3....................... (1) (2) M-3
------------------------------- ---------------------------- ---------------------------- ----------------------------
R-3-M-4....................... (1) (2) M-4
------------------------------- ---------------------------- ---------------------------- ----------------------------
R-3-M-5....................... (1) (2) M-5
------------------------------- ---------------------------- ---------------------------- ----------------------------
R-3-M-6....................... (1) (2) M-6
------------------------------- ---------------------------- ---------------------------- ----------------------------
R-3-M-7....................... (1) (2) M-7
------------------------------- ---------------------------- ---------------------------- ----------------------------
R-3-M-8....................... (1) (2) M-8
------------------------------- ---------------------------- ---------------------------- ----------------------------
R-3-B......................... (1) (2) B
------------------------------- ---------------------------- ---------------------------- ----------------------------
R-3-$100...................... $100 (3) A-R
------------------------------- ---------------------------- ---------------------------- ----------------------------
R-3-Accrual................... (1) (2) N/A
------------------------------- ---------------------------- ---------------------------- ----------------------------
R-3-P......................... $100 (4) P
------------------------------- ---------------------------- ---------------------------- ----------------------------
R-3-R......................... (5) (5) N/A
------------------------------- ---------------------------- ---------------------------- ----------------------------
R-3-X......................... (6) (7) N/A
------------------------------- ---------------------------- ---------------------------- ----------------------------
(1) This REMIC 3 Interest has a principal balance that is initially equal to
50% of its Corresponding Certificate Class issued by the Master REMIC.
Principal payments, both scheduled and prepaid, Realized Losses, Subsequent
Recoveries and interest accruing on the R-3-Accrual Interest will be allocated
to this class to maintain its size relative to its Corresponding
6
Certificate Class (that is, 50%) with any excess payments of principal,
Realized Losses and Subsequent Recoveries being allocated to the R-3-Accrual
Interest in such manner as to cause the principal balance of the R-3-Accrual
Interest to have a principal balance equal to (a) 50% of the Loan Group 1 and
Loan Group 2 principal balances plus (b) 50% of the Overcollateralized Amount
for such Distribution Date.
(2) The pass-through rate with respect to any Distribution Date (and the
related Accrual Period) for this REMIC 3 Interest is a per annum rate equal to
the weighted average of the Loan Group 1 Net Rate Cap and the Loan Group 2
Net Rate Cap (the "Pool Net Rate Cap").
(3) This REMIC 3 Interest pays no interest.
(4) The R-3-P Interest is entitled to all amounts payable with respect to the
R-2-P Interest. It pays no interest.
(5) The R-3-R Interest is the sole class of residual interest in REMIC 3. It
has no principal balance and pays no principal or interest.
(6) This REMIC 3 Interest pays no principal.
(7) This REMIC 3 Interest is entitled to all amounts payable with respect to
the R-2-X Interest.
On each Distribution Date, the Interest Funds and the Principal
Distribution Amount payable with respect to the REMIC 2 Interests shall be
payable with respect to the REMIC 3 Interests in the following manner:
(1) Interest. Interest is to be distributed with respect to each
REMIC 3 Interest at the rate, or according to the formulas, described above.
(2) Principal. Principal Distribution Amounts shall be allocated
among the REMIC 3 Interests in the manner described above.
7
The following table specifies the class designation, interest rate,
and principal amount for each class of Master REMIC Interest:
Class Original Certificate Principal Pass-Through Rate
Balance
Class 1-A-1..................................... $324,864,000 (1)
Class 2-A-1..................................... $102,674,000 (1)
Class 2-A-2A.................................... $93,527,000 (1)
Class 2-A-2B.................................... $10,392,000 (1)
Class 2-A-3..................................... $30,143,000 (1)
Class M-1....................................... $16,250,000 (1)
Class M-2....................................... $14,625,000 (1)
Class M-3....................................... $9,425,000 (1)
Class M-4....................................... $7,800,000 (1)
Class M-5....................................... $7,150,000 (1)
Class M-6....................................... $5,850,000 (1)
Class M-7....................................... $4,550,000 (1)
Class M-8....................................... $4,225,000 (1)
Class B......................................... $6,500,000 (1)
Class C......................................... (2) (3)
Class P......................................... $100 (4)
Class A-R....................................... $100 (5)
(1) The Certificates will accrue interest at the related Pass-Through Rates
identified in this Agreement. For federal income tax purposes, the
pass-through rate in respect of (i) the Class 1-A-1 Certificates will be
subject to a cap equal to the Loan Group 1 Net Rate Cap, (ii) the Class
2-A Certificates will be subject to a cap equal to the Loan Group 2 Net
Rate Cap, and (iii) the Subordinate Certificates will be subject to a
cap equal to the lesser of the Subordinate Net Rate Cap and the Adjusted
Subordinate Net Rate Cap.
(2) For federal income tax purposes, the Class C Certificates will be
treated as having a Certificate Principal Balance equal to the
Overcollateralized Amount.
(3) For each I nterest 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 R-3-X Interest and (b) a specified
portion of the interest on the REMIC 3 Regular Interests (other than the
R-3-$100, R-3-P and R-3-X Interests) equal to the excess of the Pool Net
Rate Cap over the product of two and the weighted average interest rate
of the REMIC 3 Regular Interests (other than the R-3-$100, R-3-P and
R-3-X Interests) with each such Class other than the R-3-Accrual Interest
subject to a cap and a floor equal to the Pass-Through Rate of the
Corresponding Master REMIC Class and the R-3-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 REMIC 1
Group 1 and Group 2 "I" and "S" Interests 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 and any related OC Release Amount for that Distribution
Date.
(4) For each Distribution Date the Class P Certificates are entitled to all
Prepayment Charges distributed with respect to the R-3-P Interest.
(5) 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.
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
REMIC regular interests, without creating any shortfall--actual or potential
(other than for credit losses)-- to any REMIC
8
regular interest. It is not intended that the Class A-R be entitled to any
cash flows pursuant to this agreement except as provided in Section 3.08(a)
hereunder.
9
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:
Accrual Period: With respect to any Distribution Date and each Class
of Interest-Bearing 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 the Class C
Certificates, the calendar month preceding the month in which such
Distribution Date occurs. All calculations of interest on the Interest-Bearing
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 the Class C Certificates will be made on the basis of a 360-day year
consisting of twelve 30-day months.
Adjusted Net Mortgage Rate: As to each Mortgage Loan, the Mortgage
Rate less the related Expense Fee Rate.
Adjusted Subordinate Component Balance: With respect to any
Distribution Date and for each Loan Group, (i) the principal balance of the
Mortgage Loans in such Loan Group as of the first day of the related Due
Period (after giving effect to Principal Prepayments received in the
Prepayment Period ending during such Due Period) less (ii) the product of (a)
the Overcollateralized Amount immediately prior to that Distribution Date and
(b)(I) the principal balance of such Loan Group, divided by (II) the sum of
the principal balance of the Mortgage Loans, in each case as of the first day
of the related Due Period, less (iii) the aggregate Certificate Principal
Balance of the related Classes of Senior Certificates immediately prior to
such Distribution Date.
Adjusted Subordinate Net Rate Cap: For each Distribution Date, the
weighted average of the Group 1 Net Rate Cap and Group 2 Net Rate Cap weighted
on the basis of the respective Adjusted Subordinate Component Balances of
their corresponding Loan Groups. For federal income tax purposes, the Adjusted
Subordinate Net Rate Cap will be the Calculation Rate in respect of the Class
C and Class D Interests in REMIC 2.
Adjustment Date: As to each Mortgage Loan, each date on which the
related Mortgage Rate is subject to adjustment, as provided in the related
Mortgage Note.
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
10
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 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: A Subordinate Applied Realized Loss
Amount or a Class 2-A-2B Applied Realized Loss Amount, as the case may be.
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 banking institutions in the State of New York or California or
the cities in which the Corporate Trust Office of the Trustee is located are
authorized or obligated by law or executive order to be closed.
Calculation Rate: For each Distribution Date, in the case of the
R-2-A and R-2-B Interests, the product of (i) 10 and (ii) the weighted average
rate of the outstanding R-2-A and R-2-B Interests, treating each R-2-A
Interest as capped at zero or reduced by a fixed percentage of 100% of the
interest accruing on such Class. For each Distribution Date, in the case of
the R-2-C and R-2-D Interests, the product of (i) 10 and (ii) the weighted
average rate of the outstanding R-2-C and R-2-D Interests, treating each R-2-C
Interest as capped at zero or reduced by a fixed percentage of 100% of the
interest accruing on such Class.
11
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 CWABS, Inc., Asset-Backed
Certificates, Series 2005-AB3". 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 X-00, Xxxxxxx X, Xxxxxxx X, Xxxxxxx X and Exhibit E.
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 designated "Countrywide
Home Loans Servicing LP in trust for registered Holders of CWABS, Inc.,
Asset-Backed Certificates, Series 2005-AB3". Funds in the Certificate Account
shall be held in trust for the Certificateholders for the uses and purposes
set forth in this Agreement.
Certificate Owner: With respect to a Book-Entry Certificate, the
person that is the beneficial owner of such Book-Entry Certificate.
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) and (ii) with respect to any Class 2-A-2B or Subordinate Certificate,
any Applied Realized Loss Amounts allocated to such Certificate on previous
Distribution Dates pursuant to Section 4.04(g), and (B) increased by, with
respect to any Class 2-A-2B or Subordinate Certificate, 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.
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
12
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.
CHL: Countrywide Home Loans, Inc., a New York corporation, and its
successors and assigns.
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 1-A-1 Certificate: Any Certificate designated as a "Class
1-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 1-A-1 Corridor Contract: The transaction evidenced by the
related 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-1.
Class 1-A-1 Corridor Contract Termination Date: With respect to the
Class 1-A-1 Corridor Contract, the Distribution Date in February 2010.
Class 1-A-1 Net Rate Cap: For any Distribution Date, the weighted
average Adjusted Net Mortgage Rate of the Mortgage Loans in Loan Group 1 for
such Distribution Date, adjusted 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.
Class 1-A-1 Principal Distribution Amount: With respect to any
Distribution Date, the product of (x) the Class A Principal Distribution
Target Amount and (y) a fraction, the numerator of which is the Class 1-A-1
Principal Distribution Target Amount and the denominator of which is the sum
of the Class 1-A-1 Principal Distribution Target Amount and Class 2-A
Principal Distribution Target Amount.
Class 1-A-1 Principal Distribution Target Amount: With respect to
any Distribution Date, the excess of (1) the Certificate Principal Balance of
the Class 1-A-1 Certificates immediately prior to such Distribution Date, over
(2) the lesser of (x) 72.80% of the aggregate Stated Principal Balance of the
Mortgage Loans in Loan Group 1 for such Distribution Date and (y) the
aggregate Stated Principal Balance of the Mortgage Loans in Loan Group 1 for
such Distribution Date minus 0.50% of the sum of the aggregate Stated
Principal Balance of the Mortgage Loans in Loan Group 1 as of the Cut-off Date
and the original Group 1 Pre-Funded Amount.
13
Class 2-A-1 Certificate: Any Certificate designated as a "Class
2-A-1 Certificate" on the face thereof, in the form of Exhibit A-2 hereto,
representing the right to distributions as set forth herein.
Class 2-A-2A Certificate: Any Certificate designated as a "Class
2-A-2A Certificate" on the face thereof, in the form of Exhibit A-3 hereto,
representing the right to distributions as set forth herein.
Class 2-A-2B Applied Realized Loss Amount: With respect to the Class
2-A-2B Certificates and any Distribution Date, the product of (x) a fraction,
the numerator of which is the aggregate Certificate Principal Balance of the
Class 2-A-2A Certificates and Class 2-A-2B Certificates immediately prior to
such Distribution Date (calculated without giving any effect to any Class
2-A-2B Applied Realized Loss Amounts previously allocated to reduce the
Certificate Principal Balance of the Class 2-A-2B Certificates on any prior
Distribution Date), and the denominator of which is the aggregate Certificate
Principal Balance of the Class 2-A Certificates immediately prior to such
Distribution Date (calculated without giving effect to any Class 2-A-2B
Applied Realized Loss Amounts previously allocated to reduce the Certificate
Principal Balance of the Class 2-A-2B Certificates on any prior Distribution
Date) and (y) the excess of (i) any Class 2-A Principal Loss Amount for such
Distribution Date over (ii) the Class 2-A Principal Loss Amount for the
preceding Distribution Date not applied as a Class 2-A-2B Applied Realized
Loss Amount.
Class 2-A-2B Certificate: Any Certificate designated as a "Class
2-A-2B Certificate" on the face thereof, in the form of Exhibit A-4 hereto,
representing the right to distributions as set forth herein.
Class 2-A-3 Certificate: Any Certificate designated as a "Class
2-A-3 Certificate" on the face thereof, in the form of Exhibit A-5 hereto,
representing the right to distributions as set forth herein.
Class 2-A Certificate: Any Class 2-A-1, Class 2-A-2A, Class 2-A-2B
or Class 2-A-3 Certificate.
Class 2-A Corridor Contract: The transaction evidenced by the
related 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-2.
Class 2-A Corridor Contract Termination Date: With respect to the
Class 2-A Corridor Contract, the Distribution Date in February 2010.
Class 2-A Net Rate Cap: For any Distribution Date, the weighted
average Adjusted Net Mortgage Rate of the Mortgage Loans in Loan Group 2 for
such Distribution Date, adjusted 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.
Class 2-A Principal Distribution Amount: With respect to any
Distribution Date, the product of (x) the Class A Principal Distribution
Target Amount and (y) a fraction, the numerator of which is the Class 2-A
Principal Distribution Target Amount and the denominator
14
of which is the sum of the Class 1-A-1 Principal Distribution Target Amount
and the Class 2-A Principal Distribution Target Amount.
Class 2-A Principal Distribution Target Amount: With respect to any
Distribution Date, the excess of (1) the aggregate Certificate Principal
Balance of the Class 2-A Certificates immediately prior to such Distribution
Date, over (2) the lesser of (x) 72.80% of the aggregate Stated Principal
Balance of the Mortgage Loans in Loan Group 2 for such Distribution Date and
(y) the aggregate Stated Principal Balance of the Mortgage Loans in Loan Group
2 for such Distribution Date minus 0.50% of the sum of the aggregate Stated
Principal Balance of the Mortgage Loans in Loan Group 2 as of the Cut-off Date
and the original Group 2 Pre-Funded Amount.
Class 2-A Principal Loss Amount: With respect to any Distribution
Date and the Class 2-A Certificates, the amount, if any, by which, the
aggregate Certificate Principal Balance of the Class 2-A Certificates (after
all distributions of principal on such Distribution Date) exceeds the sum of
the aggregate Stated Principal Balance of the Mortgage Loans in Loan Group 2
for such Distribution Date and the amount on deposit in the Pre-Funding
Account in respect of Loan Group 2.
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 A Certificate: Any Class 1-A-1 or Class 2-A Certificate.
Class A Principal Distribution Allocation Amount: With respect to
any Distribution Date, (a) in the case of the Class 1-A-1 Certificates, the
Class 1-A-1 Principal Distribution Amount and (b) in the case of the Class 2-A
Certificates, the Class 2-A Principal Distribution Amount.
Class B Certificate: Any Certificate designated as a "Class B
Certificate" on the face thereof, in the form of Exhibit A-14 hereto,
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 M-1 Certificate: Any Certificate designated as a "Class M-1
Certificate" on the face thereof, in the form of Exhibit A-6 hereto,
representing the right to distributions as set forth herein.
Class M-2 Certificate: Any Certificate designated as a "Class M-2
Certificate" on the face thereof, in the form of Exhibit A-7 hereto,
representing the right to distributions as set forth herein.
15
Class M-3 Certificate: Any Certificate designated as a "Class M-3
Certificate" on the face thereof, in the form of Exhibit A-8 hereto,
representing the right to distributions as set forth herein.
Class M-4 Certificate: Any Certificate designated as a "Class M-4
Certificate" on the face thereof, in the form of Exhibit A-9 hereto,
representing the right to distributions as set forth herein.
Class M-5 Certificate: Any Certificate designated as a "Class M-5
Certificate" on the face thereof, in the form of Exhibit A-10 hereto,
representing the right to distributions as set forth herein.
Class M-6 Certificate: Any Certificate designated as a "Class M-6
Certificate" on the face thereof, in the form of Exhibit A-11 hereto,
representing the right to distributions as set forth herein.
Class M-7 Certificate: Any Certificate designated as a "Class M-7
Certificate" on the face thereof, in the form of Exhibit A-12 hereto,
representing the right to distributions as set forth herein.
Class M-8 Certificate: Any Certificate designated as a "Class M-8
Certificate" on the face thereof, in the form of Exhibit A-13 hereto,
representing the right to distributions as set forth herein.
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: September 27, 2005.
Code: The Internal Revenue Code of 1986, including any successor or
amendatory provisions.
Collateral Schedule: Schedule II hereto.
Compensating Interest: With respect to the Mortgage Loans in each
Loan Group and any Distribution Date, an amount equal to the lesser of (x)
one-half of the Servicing Fee for such Mortgage Loans for the related Due
Period and (y) the aggregate Prepayment Interest Shortfalls for such Mortgage
Loans for such Distribution Date.
Confirmation: Any of the Confirmations dated September 12, 2005
evidencing a transaction between the Corridor Contract Counterparty and CHL
relating to the Corridor Contracts.
16
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: The Class 1-A-1 Corridor Contract, Class 2-A
Corridor Contract or Subordinate Corridor Contract, as applicable.
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: Barclays Bank PLC and its
successors.
Corridor Contract Termination Date: The Class 1-A-1 Corridor
Contract Termination Date and Class 2-A Corridor Contract Termination Date and
Subordinate Corridor Contract Termination Date, as applicable.
Covered Mortgage Loan: A Mortgage Loan listed on the Mortgage Loan
Schedule as being covered by the Mortgage Insurance Policy.
Credit Bureau Risk Score: A statistical credit score obtained by CHL
in connection with the origination of a Mortgage Loan.
Co-Trustee: The Bank of New York Trust Company, N.A., a national
banking association, 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.
Cross-Over Situation: For any Distribution Date and for each Loan
Group (after taking into account principal distributions on such Distribution
Date) with respect to (1) the Class A and Class B REMIC 2 Interests, a
situation in which the Class A and Class B Interests corresponding to any Loan
Group are in the aggregate less than 1% of the Subordinate Component Balance
of the Loan Group to which they correspond and (2) the Class C and Class D
REMIC 2 Interests, a situation in which the Class C and Class D Interests
corresponding to any Loan Group are in the aggregate less than 1% of the
Adjusted Subordinate Component Balance of the Loan Group to which they
correspond.
17
Cumulative Loss Trigger Event: With respect to a Distribution Date
on or after the Stepdown Date, a Cumulative Loss Trigger Event will be in
effect if (x) the aggregate amount of Realized Losses on the Mortgage Loans
from the Cut-off Date for each such Mortgage Loan to (and including) the last
day of the related Due Period (reduced by the aggregate amount of any
Subsequent Recoveries received through the last day of that Due Period)
exceeds (y) the applicable percentage, for such Distribution Date, of the sum
of the aggregate Cut-off Date Principal Balance of the Initial Mortgage Loans
and the Pre-Funded Amount, as set forth below:
Distribution Date Percentage
----------------- ----------
October 2007 -- September 2008......... 0.75% with respect to October 2007, plus
an additional 1/12th of 0.75% for each
month thereafter through September 2008
October 2008 -- September 2009......... 1.50% with respect to October 2008, plus
an additional 1/12th of 0.75% for each
month thereafter through September 2009
October 2009 -- September 2010......... 2.25% with respect to October 2009, plus
an additional 1/12th of 0.50% for each
month thereafter through September 2010
October 2010 -- September 2011......... 2.75% with respect to October 2010, plus
an additional 1/12th of 0.25% for each
month thereafter through September 2011
October 2011 and thereafter............ 3.00%
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 of such Class immediately prior to such
Distribution Date, plus any amount previously distributed with respect to
interest for such Class that is recovered as a voidable preference by a
trustee in bankruptcy.
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
18
resulting from a Deficient Valuation or any other reduction that results in a
permanent forgiveness of principal.
Deficient Valuation: With respect to any Mortgage Loan, a valuation
by a court of competent jurisdiction of the Mortgaged Property in an amount
less than the then outstanding indebtedness under such Mortgage Loan, or any
reduction in the amount of principal to be paid in connection with any
Scheduled Payment that results in a permanent forgiveness of principal, which
valuation or reduction results from an order of such court that is final and
non-appealable in a proceeding under the Bankruptcy Code.
Definitive Certificates: As defined in Section 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 Co-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 Co-Trustee
on or prior to the related Subsequent Transfer Date. The Depositor shall
deliver (or cause delivery of) the Mortgage Files to the Co-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 to of such Mortgage File to the
Co-Trustee as provided in Section 2.01, Countrywide Home Loans, Inc. shall
hold such files as agent and in trust for the Co-Trustee.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by
a Replacement Mortgage Loan.
Delinquency Trigger Event: With respect to any Distribution Date on
or after the Stepdown Date, a Delinquency Trigger Event will be in effect if
the Rolling Sixty-Day Delinquency Rate for Outstanding Mortgage Loans equals
or exceeds the product of (x) the Senior Enhancement Percentage for such
Distribution Date and (y) the applicable percentage listed below for the most
senior Class of Interest-Bearing Certificates:
Class Percentage
Class A......................... 40.00%
Class M-1....................... 49.00%
Class M-2....................... 61.50%
Class M-3....................... 73.50%
Class M-4....................... 87.75%
19
Class M-5....................... 106.75%
Class M-6....................... 129.50%
Class M-7....................... 155.50%
Class M-8....................... 191.00%
Class B......................... 294.00%
Delinquent: A Mortgage Loan is "delinquent" if any payment due
thereon is not made pursuant to the terms of such Mortgage Loan by the close
of business on the day such payment is scheduled to be due. A Mortgage Loan is
"30 days delinquent" if such payment has not been received by the close of
business on the corresponding day of the month immediately succeeding the
month in which such payment was due, or, if there is no such corresponding day
(e.g., as when a 30-day month follows a 31-day month in which a payment was
due on the 31st day of such month), then on the last day of such immediately
succeeding month. Similarly for "60 days delinquent," "90 days delinquent" and
so on.
Denomination: With respect to each Certificate, the amount set forth
on the face thereof as the "Initial Certificate Balance of this Certificate"
or, if not the foregoing, the Percentage Interest appearing on the face
thereof, as applicable.
Depositor: CWABS, 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 15th
day of the month of such Distribution Date or, if such 15th day is not a
Business Day, the immediately preceding Business Day.
Distribution Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3.05(c) 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 CWABS, Inc., Asset-Backed
Certificates, Series 2005-AB3". Funds in the Distribution Account
20
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 October
2005.
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.
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.
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 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.
21
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.
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)(iii)(b), (ii) the amount remaining after the distribution of principal
to Certificateholders for such Distribution Date, pursuant to Section
4.04(b)(1)(B)(ii) or 4.04(b)(2)(C) 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.
Expense Fee Rate: With respect to any Mortgage Loan, the sum of (i)
the Servicing Fee Rate, (ii) the Trustee Fee Rate, (iii) with respect to a
Covered Mortgage Loan, the applicable Mortgage Insurance Premium Rate and (iv)
with respect to any Mortgage Loan covered by a lender paid mortgage insurance
policy (other than the Mortgage Insurance Policy), the related mortgage
insurance premium rate.
Extra Principal Distribution Amount: With respect to any
Distribution Date and each of Loan Group 1 and Loan Group 2, the lesser of (1)
the Overcollateralization Deficiency Amount and (2) the Excess Cashflow
available for payment thereof, to be allocated between Loan Group 1 and Loan
Group 2, pro rata, based on the Principal Remittance Amount for each such Loan
Group 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.
22
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 $175,000 and (y) November 11, 2005.
Gross Margin: The percentage set forth in the related Mortgage Note
to be added to the Index for use in determining the Mortgage Rate for each
Adjustable Rate Mortgage Loan on each of its Adjustment Dates.
Group 1 Mortgage Loans: The group of Mortgage Loans identified in
the related Mortgage Loan Schedule as "Group 1 Mortgage Loans", including in
each case any Mortgage Loans delivered in replacement thereof.
Group 1 Overcollateralization Reduction Amount: With respect to any
Distribution Date, the Overcollateralization Reduction Amount for such
Distribution Date multiplied by a fraction, the numerator of which is (x) the
Principal Remittance Amount for Loan Group 1 for such Distribution Date, and
the denominator of which is (y) the aggregate Principal Remittance Amount for
Loan Group 1 and Loan Group 2 for such Distribution Date.
Group 1 Pre-Funded Amount: The portion of the Pre-Funded Amount
allocable for purchase of Subsequent Mortgage Loans as Group 1 Mortgage Loans
on the Closing Date, which shall equal $84,136,550.27.
Group 2 Mortgage Loans: The group of Mortgage Loans identified in
the related Mortgage Loan Schedule as "Group 2 Mortgage Loans", including in
each case any Mortgage Loans delivered in replacement thereof.
Group 2 Overcollateralization Reduction Amount: With respect to any
Distribution Date, the Overcollateralization Reduction Amount for such
Distribution Date multiplied by a fraction, the numerator of which is the
Principal Remittance Amount for Loan Group 2 for such Distribution Date, and
the denominator of which is the aggregate Principal Remittance Amount for Loan
Group 1 and Loan Group 2 for such Distribution Date.
Group 2 Pre-Funded Amount: The portion of the Pre-Funded Amount
allocable for purchase of Subsequent Mortgage Loans as Group 2 Mortgage Loans
on the Closing Date, which shall equal $63,877,986.27.
Group Net Rate Cap. With respect to Loan Group 1, the Class 1-A-1
Net Rate Cap, and with respect to Loan Group 2, the Class 2-A Net Rate Cap.
Index: As to any Mortgage Loan on any Adjustment Date related
thereto, the index for the adjustment of the Mortgage Rate set forth as such
in the related Mortgage Note, such index in general being the average of the
London interbank offered rates for six-month U.S. dollar deposits in the
London market, as set forth in The Wall Street Journal, as most recently
announced as of a date 45 days prior to such Adjustment Date or, if the Index
ceases to be
23
published in The Wall Street Journal or becomes unavailable for any reason,
then the Index shall be a new index selected by the Master Servicer, based on
comparable information.
Initial Adjustment Date: As to any Mortgage Loan, the first
Adjustment Date following the origination of such Mortgage Loan.
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) September 1, 2005 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.
Initial Mortgage Rate: As to each Mortgage Loan, the Mortgage Rate
in effect prior to the Initial Adjustment Date.
Initial Periodic Rate Cap: With respect to each Mortgage Loan, the
percentage specified in the related Mortgage Note that limits the permissible
increase or decrease in the Mortgage Rate on its initial Adjustment Date.
Insurance Policy: With respect to any Mortgage Loan included in the
Trust Fund, any insurance policy, including the Mortgage 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.
Insurance Proceeds: Proceeds paid in respect of the Mortgage Loans
pursuant to any Insurance Policy or any other insurance policy covering a
Mortgage Loan, to the extent such proceeds are payable to the mortgagee under
the Mortgage, the 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 prior to such Mortgage Loan becoming a
Liquidated Mortgage Loan.
Insured Expenses: Expenses covered by an Insurance Policy or any
other insurance policy with respect to the Mortgage Loans.
24
Interest-Bearing Certificates: The Class A Certificates and the
Subordinate 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 first Accrual
Period for the Interest-Bearing Certificates, September 23, 2005. With respect
to any Accrual Period for the Interest-Bearing Certificates thereafter, the
second LIBOR Business Day preceding the commencement of such Accrual Period.
Interest Funds: With respect to any Distribution Date and Loan
Group, the Interest Remittance Amount for such Loan Group and Distribution
Date, less the portion of the Trustee Fee for such Distribution Date allocable
to such Loan Group and the Mortgage Insurance Premium for such Distribution
Date allocable to such Loan Group.
Interest Remittance Amount: With respect to the Mortgage Loans in
each Loan Group and any Distribution Date, (x) the sum, without duplication,
of (i) all scheduled interest collected during the related Due Period with
respect to the related Mortgage Loans less the related Servicing Fee, (ii) all
interest on prepayments received during the related Prepayment Period with
respect to such Mortgage Loans, other than Prepayment Interest Excess, (iii)
all related Advances relating to interest with respect to such Mortgage Loans,
(iv) all related Compensating Interest with respect to such Mortgage Loans,
(v) Liquidation Proceeds with respect to such Mortgage Loans collected during
the related Due Period (to the extent such Liquidation Proceeds relate to
interest) and (vi) the related Seller Shortfall Interest Requirement, less (y)
all reimbursements to the Master Servicer during the related Due Period for
Advances of interest previously made allocable to such Loan Group.
Investment Letter: As defined in Section 5.02(b).
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.
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.
25
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 Group: Either of Loan Group 1 or Loan Group 2.
Loan Group 1: The Group 1 Mortgage Loans.
Loan Group 1 Net Rate Cap: As defined in the Preliminary Statement.
Loan Group 2: The Group 2 Mortgage Loans.
Loan Group 2 Net Rate Cap: As defined in the Preliminary Statement.
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 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.
Loan-to-Value Ratio: The fraction, expressed as a percentage, the
numerator of which is the original principal balance of the related Mortgage
Loan and the denominator of which is the Appraised Value of the related
Mortgaged Property.
Majority Holder: The Holders of Certificates evidencing at least 51%
of the Voting Rights allocated to such Class of Certificates.
Margin: With respect to any Accrual Period and Class of
Interest-Bearing Certificates, the per annum rate indicated in the following
table:
------------------------------ --------------- -----------------
Class Margin (1) Margin (2)
------------------------------ --------------- -----------------
Class 1-A-1................... 0.250% 0.500%
------------------------------ --------------- -----------------
Class 2-A-1................... 0.120% 0.240%
------------------------------ --------------- -----------------
Class 2-A-2A.................. 0.260% 0.520%
------------------------------ --------------- -----------------
Class 2-A-2B.................. 0.370% 0.740%
------------------------------ --------------- -----------------
Class 2-A-3................... 0.360% 0.720%
------------------------------ --------------- -----------------
Class M-1..................... 0.460% 0.690%
------------------------------ --------------- -----------------
Class M-2..................... 0.470% 0.705%
------------------------------ --------------- -----------------
Class M-3..................... 0.490% 0.735%
------------------------------ --------------- -----------------
26
------------------------------ --------------- -----------------
Class Margin (1) Margin (2)
------------------------------ --------------- -----------------
Class M-4..................... 0.590% 0.885%
------------------------------ --------------- -----------------
Class M-5..................... 0.630% 0.945%
------------------------------ --------------- -----------------
Class M-6..................... 0.690% 1.035%
------------------------------ --------------- -----------------
Class M-7..................... 1.150% 1.725%
------------------------------ --------------- -----------------
Class M-8..................... 1.300% 1.950%
------------------------------ --------------- -----------------
Class B....................... 1.750% 2.625%
------------------------------ --------------- -----------------
(1) For any Accrual Period relating to any Distribution Date occurring on or
prior to the Optional Termination Date.
(2) For any Accrual Period relating to any Distribution Date occurring after
the Optional Termination Date.
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).
Maximum Mortgage Rate: With respect to each Mortgage Loan, the
maximum rate of interest set forth as such in the related Mortgage Note.
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.
Minimum Mortgage Rate: With respect to each Mortgage Loan, the
minimum rate of interest set forth as such in the related Mortgage Note.
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.
27
Moody's: Xxxxx'x Investors Service, Inc. and its successors.
Mortgage: The mortgage, deed of trust or other instrument creating a
first lien on or first priority ownership interest in an estate in fee simple
in real property securing a Mortgage Note.
Mortgage File: The mortgage documents listed in Section 2.01 hereof
pertaining to a particular Mortgage Loan and any additional documents
delivered to the Co-Trustee to be added to the Mortgage File pursuant to this
Agreement.
Mortgage Insurance Policy: The Mortgage Insurance Policy issued by
Mortgage Guaranty Insurance Corporation with respect to certain Mortgage Loans
identified in the Mortgage Loan Schedule.
Mortgage Insurance Premium: The premium payable on the Mortgage
Insurance Policy on each Distribution Date.
Mortgage Insurance Premium Rate: With respect to a Covered Mortgage
Loan and any Distribution Date, the per annum rate equal to a fraction
(expressed as a percentage), the numerator of which is equal to the portion of
the Mortgage Insurance Premium payable with respect to such Distribution Date
attributable to such Covered Mortgage Loan multiplied by twelve and the
denominator of which is equal to the Stated Principal Balance of such Covered
Mortgage Loan.
Mortgage Insurer: Mortgage Guaranty Insurance Corporation or any
replacement Mortgage Insurer, as applicable.
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) the Loan Group;
(iii) the Appraised Value;
(iv) the Initial Mortgage Rate;
(v) the maturity date;
(vi) the original principal balance;
(vii) the Cut-off Date Principal Balance;
28
(viii) the first payment date of the Mortgage Loan;
(ix) the Scheduled Payment in effect as of the Cut-off Date;
(x) the 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;
(xiv) the frequency of each Adjustment Date;
(xv) the next Adjustment Date;
(xvi) the Maximum Mortgage Rate;
(xvii) the Minimum Mortgage Rate;
(xviii) the Mortgage Rate as of the Cut-off Date;
(xix) the related Initial Periodic Rate Cap and Subsequent Periodic
Rate Cap;
(xx) the Gross Margin;
(xxi) a code indicating if such Mortgage Loan is a Covered Mortgage
Loan and the rate for the Mortgage Insurance Premium, if applicable;
(xxii) a code indicating whether the Mortgage Loan is a CHL Mortgage
Loan, a Park Monaco Mortgage Loan or a Park Sienna Mortgage Loan; and
(xxiii) the premium rate for any lender-paid mortgage insurance, if
applicable.
Such schedule shall also set forth the total of the amounts described under
(vii) above for all of the Mortgage Loans and for each Loan Group. 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.
29
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
from time to time.
Mortgaged Property: The underlying property securing a Mortgage
Loan.
Mortgagor: The obligors on a Mortgage Note.
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: With respect to any Distribution Date and (i) the
Class 1-A-1 Certificates, the Class 1-A-1 Net Rate Cap, (ii) each Class of
Class 2-A Certificates, the Class 2-A Net Rate Cap and (iii) each Class of
Subordinate Certificates, the Subordinate Net Rate Cap.
Net Rate Carryover: With respect to any Class of Interest-Bearing
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 applicable 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 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.
30
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.
OC Floor: With respect to any Distribution Date, 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.
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 or (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.
One-Month LIBOR: With respect to any Accrual Period for the
Interest-Bearing 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 that appears on Telerate Screen Page 3750 as of 11:00
a.m. (London time) on such Interest Determination Date; provided that the
parties hereto acknowledge that One-Month LIBOR calculated for the first
Accrual Period for the Interest-Bearing Certificates shall equal 3.83% per
annum. If such rate does not appear on such page (or such other page as may
replace that page on that service, or if such service is no longer offered,
such other service for displaying One-Month LIBOR or comparable rates as may
be reasonably selected by the Trustee), One-Month LIBOR for the applicable
Accrual Period for the Interest-Bearing 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 Interest-Bearing
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.
31
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 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 aggregate
Principal Remittance Amount for Loan Group 1 and Loan Group 2 for such
Distribution Date.
Overcollateralization Target Amount: With respect to any
Distribution Date (a) prior to the Stepdown Date, an amount equal to 1.85% of
the sum of the aggregate Cut-off Date Principal Balance of the Initial
Mortgage Loans and the Pre-Funded Amount and (b) on or after the Stepdown
Date, the greater of (i) an amount equal to 3.70% of the aggregate Stated
Principal Balance of the Mortgage Loans for the current Distribution Date and
(ii) the OC Floor; provided, however, that if a Trigger Event is in effect on
any Distribution Date, the
32
Overcollateralization Target Amount will be the Overcollateralization Target
Amount as in effect for the prior Distribution Date.
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 Interest-Bearing Certificates as of such Distribution
Date (after giving effect to distribution of the Principal Remittance Amounts
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 lesser of (x) One-Month LIBOR for such
Accrual Period plus the Margin for such Class and Accrual Period and (y) the
applicable Net Rate Cap for such Class and the related Distribution Date.
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.
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
33
confirmed in writing is sufficient for the ratings originally
assigned to the Certificates by such Rating Agency;
(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;
(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;
(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;
(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;
(viii) short term investment funds sponsored by any trust
company or national banking association incorporated under the laws
of the United States or 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; and
34
(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, 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;
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 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
35
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.
Pool Net Rate Cap: As defined in the Preliminary Statement.
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 $148,014,536.54.
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 designated "The Bank of New
York, in trust for registered holders of CWABS, Inc., Asset-Backed
Certificates, Series 2005-AB3." 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.
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;
36
(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 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 and a Loan Group, the sum of (i) the Principal Remittance Amount for such
Loan Group for such
37
Distribution Date, (ii) the Extra Principal Distribution Amount for such Loan
Group 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) allocable to such Loan Group, minus (iv) (a)
the amount of any Group 1 Overcollateralization Reduction Amount, in the case
of Loan Group 1 and (b) the amount of any Group 2 Overcollateralization
Reduction Amount, in the case of Loan Group 2.
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 Relocation Payment: In the case of the Variable Loan
Groups and Variable Interests only, a payment from any Loan Group to a REMIC 2
Interest other than a Regular Interest corresponding to that Loan Group as
provided in the Preliminary Statement. Principal Relocation Payments shall be
made of principal allocations comprising the Principal Remittance Amount from
a Loan Group and shall include a proportionate allocation of Realized Losses
from the Mortgage Loans of such Loan Group.
Principal Remittance Amount: With respect to the Mortgage Loans in
each Loan Group and 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) 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 and (v) 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, in each case with respect to such Loan Group.
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 CWABS, Inc., Asset-Backed
Certificates, Series 2005-AB3". 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 B, Class C and Class P Certificates.
38
Prospectus: The prospectus dated June 10, 2005, relating to
asset-backed securities to be sold by the Depositor.
Prospectus Supplement: The prospectus supplement dated September 21,
2005, 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.
Rating Agency: Each of Xxxxx'x 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
39
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
Interest-Bearing 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 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
Interest-Bearing 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
Interest-Bearing 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 London,
England, (ii) 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.
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.
40
Remittance Report: A report prepared by the Master Servicer and
delivered to the Trustee 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) (a) have a Maximum
Mortgage Rate no more than 1% per annum higher or lower than the Maximum
Mortgage Rate of the Deleted Mortgage Loan; (b) have a Minimum Mortgage Rate
no more than 1% per annum higher or lower than the Minimum Mortgage Rate of
the Deleted Mortgage Loan; (c) have the same Index and intervals between
Adjustment Dates as that of the Deleted Mortgage Loan; (d) have a Gross Margin
not more than 1% per annum higher or lower than that of the Deleted Mortgage
Loan; and (e) have an Initial Periodic Rate Cap and a Subsequent Periodic Rate
Cap each not more than 1% lower than that of the Deleted Mortgage Loan; (iii)
have the same or higher credit quality characteristics than that of the
Deleted Mortgage Loan; (iv) be accruing interest at a rate not more than 1%
per annum higher or lower than that of the Deleted Mortgage Loan; (v) have a
Loan-to-Value Ratio no higher than that of the Deleted Mortgage Loan; (vi)
have a remaining term to maturity not greater than (and not more than one year
less than) that of the Deleted Mortgage Loan; (vii) not permit conversion of
the Mortgage Rate from a variable rate to a fixed rate; (viii) provide for a
Prepayment Charge on terms substantially similar to those of the Prepayment
Charge, if any, of the Deleted Mortgage Loan; (ix) have the same occupancy
type and lien priority as the Deleted Mortgage Loan; (x) be covered by the
Mortgage Insurance Policy if the Deleted Mortgage Loan was covered by the
Mortgage Insurance Policy; and (xi) 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 (xi) of this definition would cause a proposed Replacement
Mortgage Loan to fail to comply with one or more of clauses (i), (ii), (iv),
(viii) and/or (ix) of this definition, then such proposed Replacement Mortgage
Loan must comply with clause (xi) and need not comply with one or more of
clauses (i), (ii), (iv), (viii) and/or (ix), to the extent, and only to the
extent, necessary to assure that the Replacement Mortgage Loan otherwise
complies with clause (xi).
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 Co-Trustee, substantially in the form
of Exhibit M.
Request for File Release: A Request for File Release submitted by
the Master Servicer to the Co-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) $10,000 over (ii) the
amount of funds on deposit in the Carryover Reserve Fund.
41
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
Mortgage 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 on or after the Stepdown Date and any Loan Group or Loan Groups, the
average of the Sixty-Day Delinquency Rates for such Loan Group or Loan Groups
and 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.
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 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.
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.
Seller Shortfall Interest Requirement: With respect to the
Distribution Date in each of October 2005, November 2005 and December 2005, is
the sum of:
(a) the product of: (1) the excess of the aggregate Stated
Principal Balances for such 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 such Distribution Date of such Mortgage Loans (including
such Subsequent Mortgage Loans, if any) that have a scheduled
42
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
such Distribution Date) and the denominator of which is 12; and
(b) the lesser of:
(i) 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) 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; and
(ii) the excess of (x) the amount of Current Interest and
Interest Carry Forward Amount due and payable on the Interest-Bearing
Certificates for such Distribution Date, over (y) Interest Funds otherwise
available to pay Current Interest and the Interest Carry Forward Amount on the
Interest-Bearing Certificates and for such Distribution Date (after giving
effect to the addition of any amounts in clause (a) of this definition of
Seller Shortfall Interest Requirement to Interest Funds for such Distribution
Date).
Senior Certificates: The Class A and Class A-R Certificates.
Senior Enhancement Percentage: With respect to a Distribution Date
on or after the Stepdown Date, the fraction (expressed as a percentage) (1)
the numerator of which is the excess of (a) the aggregate Stated Principal
Balance of the Mortgage Loans for the preceding Distribution Date over (b) (i)
before the Certificate Principal Balances of the Senior Certificates have been
reduced to zero, the sum of the Certificate Principal Balances of the Senior
Certificates, or (ii) after the Certificate Principal Balances of the Senior
Certificates have been reduced to zero, the Certificate Principal Balance of
the most senior Class of Subordinate Certificates outstanding, as of the
related Master Servicer Advance Date, and (2) the denominator of which is the
aggregate Stated Principal Balance of the Mortgage Loans for the preceding
Distribution Date.
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 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.
43
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 on
or after the related Stepdown Date and any Loan Group or Loan Groups, a
fraction, expressed as a percentage, the numerator of which is the aggregate
Stated Principal Balance for such Distribution Date of all Mortgage Loans in
such Loan Group or Loan Groups 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 in such Loan Group or Loan
Groups.
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, and
references herein to the Stated Principal Balance of a Loan Group at any time
shall mean the aggregate Stated Principal Balance of all Mortgage Loans in
such Loan Group at such time.
Stepdown Date: The earlier to occur of (a) the Distribution Date on
which the aggregate Certificate Principal Balance of the Senior Certificates
is reduced to zero, and (b) the later to occur of (x) the Distribution Date in
October 2008 and (y) the first Distribution Date on which the aggregate
Certificate Principal Balance of the Senior Certificates (after calculating
anticipated distributions on such Distribution Date) is less than or equal to
72.80% of the aggregate Stated Principal Balance of the Mortgage Loans for
such Distribution Date.
44
Stepdown Target Subordination Percentage: For each Class of
Subordinate Certificates, the respective percentage indicated in the following
table:
Stepdown Target Subordination
Percentage
Class M-1................................. 22.20%
Class M-2................................. 17.70%
Class M-3................................. 14.80%
Class M-4................................. 12.40%
Class M-5................................. 10.20%
Class M-6................................. 8.40%
Class M-7................................. 7.00%
Class M-8................................. 5.70%
Class B................................... 3.70%
Subordinate Applied Realized Loss Amount: With respect to any
Distribution Date and the Subordinate Certificates, the amount, if any, by
which, the aggregate Certificate Principal Balance of the Interest-Bearing
Certificates (after all distributions of principal on such Distribution Date)
exceeds the sum of the aggregate Stated Principal Balance of the Mortgage
Loans for such Distribution Date and the amount on deposit in the Pre-Funding
Account.
Subordinate Certificates: The Class M-1, Class M-2, Class M-3, Class
M-4, Class M-5, Class M-6, Class M-7, Class M-8 and Class B Certificates.
Subordinate Class Principal Distribution Amount: With respect to any
Distribution Date and any Class of Subordinate Certificates, the excess of (1)
the sum of (a) the aggregate Certificate Principal Balance of the Class A
Certificates (after taking into account distribution of the Class A Principal
Distribution Amount for such Distribution Date), (b) the aggregate Certificate
Principal Balance of any Class(es) of Subordinate Certificates that are senior
to the subject Class (in each case, after taking into account distribution of
the Subordinate Class Principal Distribution Amount(s) for such senior
Class(es) of Certificates for such Distribution Date), and (c) the Certificate
Principal Balance of the subject Class of Subordinate Certificates immediately
prior to such Distribution Date over (2) the lesser of (a) the product of (x)
100% minus the Stepdown Target Subordination Percentage for the subject Class
of Certificates and (y) the aggregate Stated Principal Balance of the Mortgage
Loans for such Distribution Date and (b) the aggregate Stated Principal
Balance of the Mortgage Loans for such Distribution Date minus the OC Floor;
provided, however, that if such Class of Subordinate Certificates is the only
Class of Subordinate Certificates outstanding on such Distribution Date, that
Class will be entitled to receive the entire remaining Principal Distribution
Amount for Loan Group 1 and Loan Group 2 until the Certificate Principal
Balance thereof is reduced to zero.
Subordinate Component Balance: With respect to any Distribution Date
and for each of Loan Group 1 and Loan Group 2, the excess of the principal
balance of the Mortgage Loans in such Loan Group as of the first day of the
related Due Period (after giving effect to Principal Prepayments received in
the Prepayment Period ending during such Due Period) over
45
the Certificate Principal Balance of the Class 1-A-1 Certificates in the case
of Loan Group 1 and the Class 2-A Certificates in the case of Loan Group 2, in
each case immediately prior to that Distribution Date.
Subordinate Corridor Contract: The transaction evidenced by the
related 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-3.
Subordinate Corridor Contract Termination Date: With respect to the
Subordinate Corridor Contract, the Distribution Date in February 2010.
Subordinate Net Rate Cap: With respect to any Distribution Date and
each Class of Subordinate Certificates, the weighted average of (a) the
weighted average Adjusted Net Mortgage Rate of the Mortgage Loans in Loan
Group 1 on such Distribution Date (weighted by an amount equal to the positive
difference (if any) of the sum of the aggregate Stated Principal Balance of
the Mortgage Loans in Loan Group 1 and the amount on deposit in the
Pre-Funding Account in respect of Loan Group 1 over the outstanding
Certificate Principal Balance of the Class 1-A-1 Certificates) and (b) the
weighted average Adjusted Net Mortgage Rate of the Mortgage Loans in Loan
Group 2 on such Distribution Date (weighted by an amount equal to the positive
difference (if any) of the sum of the aggregate Stated Principal Balance of
the Mortgage Loans in Loan Group 2 and the amount on deposit in the
Pre-Funding Account in respect of Loan Group 2 over the outstanding aggregate
Certificate Principal Balance of the Class 2-A Certificates), adjusted 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.
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 Periodic Rate Cap: With respect to each Mortgage Loan,
the percentage specified in the related Mortgage Note that limits permissible
increases and decreases in the Mortgage Rate on any Adjustment Date (other
than the initial Adjustment Date).
46
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.
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: With respect to the Master REMIC,
REMIC 1 and REMIC 2, the Class A-R Certificate with a Denomination of $0.05
and in the form of Exhibit E hereto.
47
Terminator: As defined in Section 9.01.
Three-Year Hybrid Mortgage Loan: A Mortgage Loan having a Mortgage
Rate that is fixed for 36 months after origination thereof before such
Mortgage Rate becomes subject to adjustment.
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).
Trigger Event: With respect to any Distribution Date on or after the
Stepdown Date, either a Delinquency Trigger Event with respect to that
Distribution Date or a Cumulative Loss Trigger Event with respect to that
Distribution Date.
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 and all amounts
deposited therein pursuant to the applicable provisions of this Agreement;
(iii) the rights to receive certain proceeds of the Corridor Contracts 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; and (vi) all proceeds of the
conversion, voluntary or involuntary, of any of the foregoing into cash or
other liquid property.
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.
48
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.
Two-Year Hybrid Mortgage Loan: A Mortgage Loan having a Mortgage
Rate that is fixed for 24 months after origination thereof before such
Mortgage Rate becomes subject to adjustment.
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, Barclays Capital
Inc. and Banc of America Securities LLC.
Unpaid Realized Loss Amount: For the Class 2-A-2B Certificates and
any Class of Subordinate Certificates and any Distribution Date, (x) the
portion of the aggregate Applied Realized Loss Amount previously allocated to
that Class remaining unpaid from prior Distribution Dates minus (y) 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).
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.
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
49
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 sells, transfers,
assigns, sets over and otherwise conveys to the Trustee for benefit of the
Certificateholders, without recourse, all right title and interest in the
Initial Mortgage Loans.
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.
50
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, 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 and the Underwriters 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 (such opinions being substantially similar to the opinions
delivered on the Closing Date to the Rating Agencies 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;
(3) the Depositor shall deliver to the Trustee 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 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;
51
(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 each Loan
Group will not vary by more than the amount specified below (other than
the percentage of Mortgage Loans secured by Mortgaged Properties located
in the State of California, which will not exceed 50% of the Mortgage
Pool and the percentage of mortgage loans in the Credit Grade Categories
of "C" or below, which will not exceed 10% of the Mortgage Loans in each
Loan Group) 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;
Loan Group 1
Permitted Variance
Characteristic Value or Range
---------------------------------------------------------------- ---------- ------------------
Average Stated Principal Balance................................ $204,467 10%
Weighted Average Mortgage Rate.................................. 6.830% 0.10%
Weighted Average Original Loan-to-Value Ratio................... 87.49% 3%
Weighted Average Remaining Term to Maturity..................... 359 months 3 months
Weighted Average Credit Bureau Risk Score....................... 679 points 5 points
Loan Group 2
Permitted Variance
Characteristic Value or Range
---------------------------------------------------------------- ---------- ------------------
Average Stated Principal Balance................................ $385,014 10%
Weighted Average Mortgage Rate.................................. 6.560% 0.10%
Weighted Average Original Loan-to-Value Ratio................... 86.73% 3%
Weighted Average Remaining Term to Maturity..................... 358 months 3 months
Weighted Average Credit Bureau Risk Score....................... 682 points 5 points
(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 and the Underwriters 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).
52
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 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 and the Loan Group into which each Subsequent
Mortgage Loan was conveyed, (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 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 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 Co-
Trustee (or, in the case of the Delay Delivery Mortgage Loans, will deliver to,
and deposit with, the Co-Trustee within the time periods specified in the
definition of Delay Delivery Mortgage Loans) (except as provided in clause (vi)
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;
(ii) in the case of each Mortgage Loan that is not a MERS
Mortgage Loan, the original recorded Mortgage, and in the case of
each MERS Mortgage
53
Loan, the original Mortgage, 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
"Asset-Backed Certificates, Series 2005-AB3, CWABS, Inc., by The
Bank of New York, a New York banking corporation, as trustee under
the Pooling and Servicing Agreement dated as of September 1, 2005,
without recourse" (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 together with all interim recorded assignments of such
Mortgage (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 printout of the electronic equivalent and all riders thereto
or, in the event such original title policy has not been received
from the insurer, 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
54
Co-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 Co-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 Co-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 Co-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 Co-Trustee (x) from time to
time additional 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 Co-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 Co-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 Co-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 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
55
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 Co-Trustee shall complete the
assignment in the manner specified in clause (iii) of the second paragraph of
this Section 2.01(g) 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) of the second
paragraph of this Section 2.01(g).
So long as the Co-Trustee or its agent maintains an office in the
State of California, the Co-Trustee or its agent shall maintain possession of
and not remove or attempt to remove from the State of California any of the
Mortgage Files as to which the related Mortgaged Property is located in such
State. 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 above 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 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 Co-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
56
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.
Section 2.02 Acceptance by Trustee of the Mortgage Loans.
(a) The Co-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 and CHL (on behalf of each Seller) 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 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 Co-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 and CHL (on behalf of each Seller) 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 Co-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), (ix) and (xiv) through (xx) 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 and CHL (on behalf of each
Seller) 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 Co-Trustee or the Trustee, as
applicable, 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.
57
Not later than 180 days after the Closing Date, the Trustee shall
deliver to the Depositor, the Master Servicer and CHL (on behalf of each
Seller), and to 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 Co-Trustee, at the Trustee's direction, 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;
(ii) in the case of each Initial Mortgage Loan that is not a
MERS Mortgage Loan, the original recorded Mortgage, and in the case
of each Initial Mortgage Loan that is a MERS Mortgage Loan, the
original Mortgage, 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 in
the form permitted by Section 2.01;
(iv) the original recorded assignment or assignments of the
Mortgage together with all interim recorded assignments of such
Mortgage (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 printout of the electronic equivalent and all riders thereto.
If, in the course of such review, the Co-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
58
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 Co-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 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 Co-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 Co-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 Co-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 Co-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 Co-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 and CHL (on behalf of each
Seller) an Initial
59
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 and CHL (on
behalf of each Seller) 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 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), (ix) and (xiv) through (xx) 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 and CHL (on behalf of each Seller) 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) 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 Co-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
60
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;
(ii) in the case of each Subsequent Mortgage Loan that is
not a MERS Mortgage Loan, the original recorded Mortgage, and in the case
of each Subsequent Mortgage Loan that is a MERS Mortgage Loan, the
original Mortgage, 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;
(iii) in the case of each Subsequent Mortgage Loan that is
not a MERS Mortgage Loan, a duly executed assignment of the Mortgage in
the form permitted by Section 2.01;
(iv) the original recorded assignment or assignments of the
Mortgage together with all interim recorded assignments of such Mortgage
(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 printout of the electronic equivalent and all riders thereto.
If, in the course of such review, the Co-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
61
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 shall cause such
Mortgage to be removed from registration on the MERS(R) System in accordance
with MERS' rules and regulations.
The Co-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 Co-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 Co-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 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
62
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
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 Xxx 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.
63
(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.
(8) The Master Servicer has fully furnished and will fully
furnish, in accordance with the Fair Credit Reporting Act and its
implementing regulations, accurate and complete information (i.e.,
favorable and unfavorable) on its borrower credit files to Equifax,
Experian, and Trans Union Credit Information Company (three of the credit
repositories), on a monthly basis for the Mortgage Loans in Loan Group 1.
(b) CHL hereby represents and warrants to the Depositor 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 Mortgage Loans (unless otherwise indicated or the context
otherwise requires, percentages with respect to the Initial Mortgage Loans in
the Trust Fund or in a Loan Group or Loan Groups are measured by the Cut-off
Date Principal Balance of the Initial Mortgage Loans in the Trust Fund or of
the Initial Mortgage Loans in the related Loan Group or Loan Groups, as
applicable):
(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
64
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.
(4) CHL is an approved seller of conventional mortgage
loans for Xxxxxx Xxx 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) None of the Mortgage Loans is delinquent in payment of
principal and interest.
(10) No Mortgage Loan had a Loan-to-Value Ratio at
origination in excess of 100.00%.
65
(11) Each Mortgage Loan is secured by a valid and
enforceable first 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 and (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.
(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.
(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
66
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 first 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.
(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
67
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) Each Mortgage Note and each Mortgage is acceptable in
form to Xxxxxx Mae and Xxxxxxx Mac.
(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 in Loan Group 1 and
Loan Group 2 are secured by single family detached dwellings. No more
than approximately the percentage specified in the Collateral Schedule of
the Initial Mortgage Loans in Loan Group 1 and Loan Group 2 are secured
by two- to four-family dwellings. No more than approximately the
percentage specified in the Collateral Schedule of the Initial Mortgage
Loans in Loan Group 1 and Loan Group 2 are secured by low-rise
condominium units. No more than approximately the percentage specified in
the Collateral Schedule of the Initial Mortgage Loans in Loan Group 1 and
Loan Group 2 are secured by high-rise condominium units. No more than
approximately the percentage specified in the Collateral Schedule of the
Initial Mortgage Loans in Loan Group 1 and Loan Group 2 are
68
secured by manufactured housing. No more than approximately the
percentage specified in the Collateral Schedule of the Initial Mortgage
Loans in Loan Group 1 and Loan Group 2 are secured by PUDs.
(33) Each Initial Mortgage Loan in Loan Group 1 and Loan
Group 2 was originated on or after the date specified in the Collateral
Schedule.
(34) Each Initial Mortgage Loan, other than a Two-Year
Hybrid Mortgage Loan or a Three-Year Hybrid Mortgage Loan, had an initial
Adjustment Date no later than the applicable date specified on the
Collateral Schedule; each Initial Mortgage Loan that is a Two-Year Hybrid
Mortgage Loan had an initial Adjustment Date no later than the applicable
date specified on the Collateral Schedule; and each Initial Mortgage Loan
that is a Three-Year Hybrid Mortgage Loan had an initial Adjustment Date
no later than the applicable date specified on the Collateral Schedule.
(35) Approximately the percentage specified in the
Collateral Schedule of the Initial Mortgage Loans in Loan Group 1 and
Loan Group 2 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 in
Loan Group 1 and Loan Group 2, respectively, are secured by investor
properties, and no less than approximately the percentage specified in
the Collateral Schedule of the Initial Mortgage Loans in Loan Group 1 and
Loan Group 2 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 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.
69
(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 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.
70
(45) The Mortgage Loans originated by CHL were underwritten
in all material respects in accordance with CHL's underwriting guidelines
for credit blemished quality 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 credit blemished quality 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
in Loan Group 1 and Loan Group 2 as of the Cut-off Date ranged between
the approximate per annum percentages specified on the Collateral
Schedule and the weighted average Mortgage Rate 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
made in a manner that would adversely affect the interests of
Certificateholders.
(50) The Gross Margins on the Initial Mortgage Loans in Loan
Group 1 and Loan Group 2 range between the approximate percentages
specified on the Collateral Schedule, and the weighted average Gross
Margin was approximately the percentage specified in the Collateral
Schedule.
(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.
71
(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.
(58) The methodology used in underwriting the extension of
credit for the Mortgage Loan employs objective mathematical principles
which relate the borrower's income, assets and liabilities to the
proposed payment and such underwriting methodology does not rely on the
extent of the borrower's equity in the collateral as the principal
determining factor in approving such credit extension. Such underwriting
methodology confirmed that at the time of origination
(application/approval) the borrower had a reasonable ability to make
timely payments on the Mortgage Loan.
(59) No borrower was required to purchase any credit life,
disability, accident or health insurance product as a condition of
obtaining the extension of credit. No borrower obtained a prepaid
single-premium credit life, disability, accident or health insurance
policy in connection with the origination of the Mortgage Loan.
(60) If the Mortgage Loan provides that the interest rate on
the principal balance of the related Mortgage Loan may be adjusted, all
of the terms of the related Mortgage pertaining to interest rate
adjustments, payment adjustments and adjustments of the outstanding
principal balance have been made in accordance with the terms of the
72
related Mortgage Note and applicable law and are enforceable and such
adjustments will not affect the priority of the Mortgage lien.
(61) 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.
(62) 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.
(63) 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.
(64) Each Mortgage Loan has a fully assignable life of loan
tax service contract which may be assigned without the payment of any
fee.
(65) 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.
(66) Each Mortgage Loan was originated by a savings and loan
association, savings bank, commercial bank, credit union, insurance
company, or mortgage banking company which is supervised and examined by
a federal or state authority, or by a mortgagee approved by the Secretary
of Housing and Urban Development pursuant to Sections 2.03 and 2.11 of
the National Housing Act.
(67) 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 the
applicable Seller in accordance with the applicable Seller's underwriting
guidelines in effect at the time the loan was underwritten or
reunderwritten, as applicable.
(68) 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.
73
(69) None of the Mortgage Loans is a "high cost" mortgage
loan as defined by applicable federal, state and local predatory and
abusive lending laws.
(70) Each Prepayment Charge is enforceable and was
originated in compliance with all applicable federal, state and local
laws.
(71) 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).
(72) 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.
(73) 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 Revised, 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.
(74) 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.
(75) 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).
(76) 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.
(77) Representations and Warranties relating to the Mortgage
Loans in Loan Group 1:
(i) No Mortgage Loan in Loan Group 1 is covered by the Home
Ownership and Equity Protection Act of 1994 ("HOEPA");
(ii) No borrower was required to purchase any single premium
credit insurance policy (e.g., life, disability, accident,
unemployment, or health
74
insurance product) or debt cancellation agreement as a condition of
obtaining the extension of credit. No borrower obtained a prepaid
single-premium credit insurance policy (e.g., life, disability,
accident, unemployment, mortgage, or health insurance) in connection
with the origination of the Mortgage Loan; No proceeds from any
Mortgage Loan in Loan Group 1 were used to purchase single premium
credit insurance policies or debt cancellation agreements as part of
the origination of, or as a condition to closing, such Mortgage
Loan;
(iii) No Mortgage Loan in Loan Group 1 originated on or
after October 1, 2002 will impose a prepayment premium for a term in
excess of three years. Any Mortgage Loan in Loan Group 1 originated
prior to such date will not impose prepayment penalties in excess of
five years;
(iv) With respect to (a) any Mortgage Loan in Loan Group 1
originated by CHL from August 1, 2004 through April 30, 2005 and (b)
any Mortgage Loan in Loan Group 1 originated by any other entity
through April 30, 2005, if the related Mortgage or the related
Mortgage Note, or any document relating to the loan transaction,
contains a mandatory arbitration clause (that is, a clause that
requires the borrower to submit to arbitration to resolve any
dispute arising out of or relating in any way to the mortgage loan
transaction), CHL will (i) notify the related borrower in writing
within 60 days after the issuance of the Certificates that none of
the related seller, the related servicer or any subsequent party
that acquires an interest in the loan or services such Mortgage Loan
will enforce such arbitration clause against the borrower, but that
the borrower will continue to have the right to submit a dispute to
arbitration and (ii) place a copy of such notice in the Mortgage
File; and with respect to any Mortgage Loan in Loan Group 1 and
originated on or after May 1, 2005, neither the related mortgage nor
the related mortgage note requires the borrower to submit to
arbitration to resolve any dispute arising out of or relating in any
way to the mortgage loan transaction; and
(v) Each Mortgage Loan in Loan Group 1 had an original
principal balance that conforms to Xxxxxxx Mac guidelines concerning
original principal balance limits at the time of the origination of
such mortgage loan.
(78) The representations in Section 2.03(c)(1)-(6) and
2.03(d)(1)-(6) are true and correct.
(c) Park Monaco hereby represents and warrants to the Depositor
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
75
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 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.
76
(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 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
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.
77
(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, 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 in
any Mortgage Loan, the party discovering such breach shall give prompt notice
thereof to the other parties and the NIM 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
78
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 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, (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 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. Any breach of a representation set
forth in Section 2.03(a)(8), (b)(72), (b)(75), (b)(76) or (b)(77) shall be
deemed to materially and adversely affect the Certificateholders.
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 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
79
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
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 Co-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 Co-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 Co-Trustee
for the benefit of the Certificateholders with respect to each Mortgage Loan.
80
Section 2.04 Representations and Warranties of the Depositor.
The Depositor hereby represents and warrants to the Master Servicer
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.
81
(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 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 Co-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 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 an Opinion of Counsel (which such
Representing Party shall use reasonable efforts to obtain), addressed to the
Trustee to the effect that such repurchase or substitution would not (i)
result in the imposition of the tax on "prohibited transactions" of 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 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.
82
(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 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 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; and
(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.
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 Mortgage
Insurance Policy on behalf of the Co-Trustee, other than the payment of the
Mortgage Insurance Premium and
83
obtaining the approval of the Mortgage 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 Mortgage 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 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
84
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 Mortgage
Insurance Policy on behalf of itself, the Sellers, the Depositor, and the
Trustee for the benefit of the Certificateholders, when it is necessary to
make claims and receive payments under the Mortgage 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 Mortgage Insurance Policy and to
service the Covered Mortgage Loans in the manner required by the Mortgage
Insurance Policy. The Master Servicer shall prepare and submit all claims
eligible for submission under the Mortgage Insurance Policy and shall perform
all of the obligations of the insured under the Mortgage Insurance Policy. If
the Mortgage Insurance Policy is terminated for any reason other than the
exhaustion of its coverage, or if the financial strength rating of the
Mortgage Insurer is reduced to below investment grade, the Master Servicer
will use its best efforts to obtain a comparable policy from an insurer that
is acceptable to the Rating Agencies. The replacement policy shall provide
coverage equal to the then remaining coverage of the applicable Mortgage
Insurance Policy, if available. However, if the premium cost of a replacement
policy exceeds the premium cost of the Mortgage Insurance Policy, the coverage
amount of the replacement policy will be reduced so that its premium cost will
not exceed the premium cost of the Mortgage 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 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
85
"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, as evidenced by a letter to that effect delivered
by each Rating Agency to the Depositor and the NIM Insurer and (iii) the NIM
Insurer shall have consented to such subservicing agreements (which consent
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 NIM Insurer (which consent 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 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 and the Trustee in
Respect of the Master Servicer.
None of the Trustee, the Sellers, the Certificateholders, the NIM
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 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 and the Trustee its (and any such
Subservicer's) most recent
86
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 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 or the Trust Fund, and in either case, the Depositor,
the NIM 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),
the Trustee or 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 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), 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.
87
Section 3.05 Collection of Mortgage Loan Payments; Certificate
Account; Distribution Account; Pre-Funding Account;
Seller Shortfall Interest Requirement.
(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 or 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 waivers or 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.
(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;
(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;
88
(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
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 October 2005, November 2005 and
December 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, 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); and
(2) any amount required to be deposited by the Master
Servicer pursuant to Section 3.05(e) in connection with any losses on
Permitted Investments.
89
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, 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 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 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 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 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
and (ii) the Pre-Funding Account, all income and gain net of any losses
realized from any such investment shall be for the benefit of CHL and shall be
remitted to CHL as provided herein. 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 CHL to the Trustee for deposit into the
Pre-Funding Account out of CHL's own funds immediately as realized. The
90
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 or the Pre-Funding 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, 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, each Rating Agency and the Depositor of any proposed
change of the location of the Distribution Account, the Pre-Funding 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 8.02(a)(4), at the request of the Holders of
Certificates representing more than 50% of the Voting Rights or the NIM
Insurer, shall take any action appropriate to enforce payment or performance,
including the institution and prosecution of appropriate proceedings.
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 and
the Trustee 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 and the NIM Insurer its most recent publicly available
financial statements
91
and any other information relating to its capacity to perform its obligations
under this Agreement reasonably requested by the NIM 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
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) 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 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
92
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 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;
(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
and Principal Remittance Amount for each Loan Group, 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.
93
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) and (ix) 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 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 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 Mortgage
Insurer as provided below, the Mortgage Insurance Premium; and
(vii) to clear and terminate the Distribution Account upon
termination of the Agreement pursuant to Section 9.01 hereof.
The Co-Trustee shall pay the applicable Mortgage Insurance Premium
to the Mortgage Insurer in accordance with the following wiring instructions:
Mortgage Guaranty Insurance Corporation, Account #112663706, US
Bank, 000 X. Xxxxxxxxx Xxx., Xxxxxxxxx, XX, 00000, ABA #000000000, Txt:
Attention: Premium Pay - ID # 3147644212 deal # 1845.
94
(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:
(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
95
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 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 Co-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,
96
the Mortgage Rate, the amount of the Scheduled Payment, the Maximum Mortgage
Rate, the Minimum Mortgage Rate, the Gross Margin, the Initial Periodic Rate
Cap, the Subsequent Periodic Rate Cap, the Adjustment Date 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 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) the modification is in
lieu of a refinancing and (ii) the Mortgage Rate on the Modified Mortgage Loan
is approximately a prevailing market rate for newly-originated mortgage loans
having similar terms and (iii) the Master Servicer purchases the Modified
Mortgage Loan from the Trust Fund as described below. 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 the Master
Servicer 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 the Master Servicer. 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. The Master Servicer shall deposit the Purchase Price
for any Modified Mortgage Loan in 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 the Master Servicer 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 the Master Servicer any Modified Mortgage Loan previously
transferred and assigned pursuant hereto. The Master Servicer 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 the Master Servicer (but such obligation shall not prevent
the Master Servicer or any other appropriate Person from in good faith
contesting any such tax in appropriate proceedings and shall not prevent the
Master Servicer from withholding payment of such tax, if permitted by law,
pending the outcome of such proceedings). The Master Servicer shall have no
right of reimbursement for any amount paid pursuant to the foregoing
97
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 the Master Servicer. 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, the Master Servicer will 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.
(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
98
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 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
shall have been supplied with an Opinion of Counsel (such opinion not to be an
expense of the Trustee) 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.
99
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 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) 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 Co-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 Co-Trustee by delivering a Request for File Release. Upon receipt of such
request, the Co-Trustee shall promptly release the related
100
Mortgage File to the Master Servicer, and the Co-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, 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 Co-Trustee shall, upon delivery to the
Co-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 Co-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 Co-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 Co-Trustee to be
returned to the Co-Trustee within 21 calendar days after possession thereof
shall have been released by the Co-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 Co-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.
101
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 Co-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 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
102
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.
The Master Servicer shall deliver to the Depositor and the Trustee
on or before the 80th day after the end of the Master Servicer's fiscal year,
commencing with its 2005 fiscal year, an Officer's Certificate stating, as to
the signer thereof, that (i) a review of the activities of the Master Servicer
during the preceding calendar year 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
throughout such year, or, if there has been a default in the fulfillment of
any such obligation, specifying each such default 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 throughout such year, or, if there has been a default
in the fulfillment of any such obligation specifying each such default known
to such officer and the nature and status thereof. 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 Annual Independent Public Accountants' Servicing
Statement; Financial Statements.
On or before the later of (i) the 80th day after the end of the
Master Servicer's fiscal year, commencing with its 2005 fiscal year or (ii)
within 30 days of the issuance of the annual audited financial statements
beginning with the audit for the period ending in 2005, the Master Servicer at
its expense shall cause a nationally recognized firm of independent public
accountants (who may also render other services to the Master Servicer, CHL or
any affiliate thereof) that is a member of the American Institute of Certified
Public Accountants to furnish a report to the Trustee, the Depositor and CHL
in compliance with the Uniform Single Attestation Program for Mortgage
Bankers. Copies of such report shall be provided by the Trustee to any
Certificateholder or Certificate Owner upon request at the Master Servicer's
expense, provided such report is delivered by the Master Servicer to the
Trustee. Upon written request, the Master Servicer shall provide to the
Certificateholders or Certificate Owners its publicly available annual
financial statements (or the Master Servicer's parent company's publicly
available annual financial statements, as applicable), if any, promptly after
they become available.
103
Section 3.19 The Corridor Contracts.
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 transactions evidenced by the
Corridor Contracts to, and shall cause all of its obligations in respect of
such transactions 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
Contracts 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
any 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 any 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 aggregate Certificate Principal Balance of the Class(es) of
Certificates related to each Corridor Contract after all distributions on such
Distribution Date.
The Trustee shall direct the Corridor Contract Administrator to
terminate a 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 applicable Classes of
Certificates as provided in Section 4.04(d) on the Distribution Dates
following such termination to and including the applicable Corridor Contract
Termination Date, but shall not be available for distribution to the Class C
Certificates pursuant to Section 4.08(c) until such Corridor Contract
Termination Date. On each Corridor Contract Termination Date, after all other
distributions on such date, if any such amounts in respect of early
termination of the related Corridor Contract remain in the Carryover Reserve
Fund, such amounts shall be distributed by the Trustee to the Class C
Certificates.
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
104
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.
(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. 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.
105
(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.
(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
106
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. 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) Distributions of Interest Funds. 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) concurrently:
(a) from Interest Funds for Loan Group 1, to the
Class 1-A-1 Certificates, the Current Interest and Interest
Carry Forward Amount for such Class and such Distribution
Date,
(b) from Interest Funds for Loan Group 2,
concurrently to each Class of Class 2-A Certificates, the
Current Interest and Interest Carry Forward Amount for each
such Class and such Distribution Date, pro rata, based on
their respective entitlements,
107
(ii) from the remaining Interest Funds for Loan Group 1 and
Loan Group 2, to each Class of Class A Certificates, any remaining
Current Interest and Interest Carry Forward Amount not paid pursuant
to Section 4.04(b)(i), pro rata, based on the Certificate Principal
Balances thereof, to the extent needed to pay any Current Interest
and Interest Carry Forward Amount for each such Class; provided that
Interest Funds remaining after such allocation to pay any Current
Interest and Interest Carry Forward Amount based on the Certificate
Principal Balances of the Certificates will be distributed to each
Class of Class A Certificates with respect to which there remains
any unpaid Current Interest and Interest Carry Forward Amount (after
the distribution based on Certificate Principal Balances), pro rata,
based on the amount of such remaining unpaid Current Interest and
Interest Carry Forward Amount,
(iii) from the remaining Interest Funds for Loan Group 1 and
Loan Group 2, sequentially:
(a) sequentially, to the Class X-0, Xxxxx X-0, Class
M-3, Class M-4, Class M-5, Class M-6, Class M-7, Class M-8
and Class B Certificates, in that order, the Current
Interest for each such Class, and
(b) any remainder as part of the Excess Cashflow.
(b) On each Distribution Date, the Principal Distribution Amount
for such Distribution Date with respect to Loan Group 1 and Loan Group 2 shall
be distributed by the Trustee from the Distribution Account in the following
order of priority:
(1) with respect to any Distribution Date prior to the
Stepdown Date or on which a Trigger Event is in effect, sequentially:
(A) concurrently:
(i) from the Principal Distribution Amount for Loan Group
1, sequentially:
(a) to the Class 1-A-1 Certificates, until the
Certificate Principal Balance thereof is reduced to zero;
and
(b) to the Classes of Class 2-A Certificates (after
the distribution of the Principal Distribution Amount from
Loan Group 2 as provided in Section 4.04(b)(1)(A)(ii)(a)
below), in the order and priorities set forth in Section
4.04(b)(3) below, until the Certificate Principal Balances
thereof are reduced to zero;
108
(ii) from the Principal Distribution Amount for Loan Group
2, sequentially:
(a) to the Classes of Class 2-A Certificates, in the
order and priorities set forth in Section 4.04(b)(3) below,
until the Certificate Principal Balances thereof are reduced
to zero; and
(b) to the Class 1-A-1 Certificates (after the
distribution of the Principal Distribution Amount from Loan
Group 1 as provided in Section 4.04(b)(1)(A)(i)(a) above),
until the Certificate Principal Balance thereof is reduced
to zero;
(B) from the remaining Principal Distribution Amounts for
Loan Group 1 and Loan Group 2, sequentially:
(i) sequentially, to the Class X-0, Xxxxx X-0, Class M-3,
Class M-4, Class M-5, Class M-6, Class M-7, Class M-8 and Class B
Certificates, in that order, in each case until the Certificate Principal
Balance thereof is reduced to zero,
(ii) any remainder as part of the Excess Cashflow.
(2) with respect to any Distribution Date on or after the
Stepdown Date and so long as a Trigger Event is not in effect, from the
Principal Distribution Amounts for Loan Group 1 and Loan Group 2,
sequentially:
(A) in an amount up to the Class A Principal Distribution
Target Amount, pro rata based on the related Class A Principal
Distribution Allocation Amount for the Class 1-A-1 Certificates and
the Class 2-A Certificates, respectively, concurrently, to (I) the
Class 1-A-1 Certificates, in an amount up to the Class 1-A-1
Principal Distribution Amount, until the Certificate Principal
Balance thereof is reduced to zero and (II) the Classes of Class 2-A
Certificates, in an amount up to the Class 2-A Principal
Distribution Amount in the order and priorities set forth in clause
(3) below, until the Certificate Principal Balances thereof are
reduced to zero; provided, however, that if the Certificate
Principal Balance of the Class 1-A-1 Certificates is reduced to zero
then any remaining unpaid Class A Principal Distribution Target
Amount will be distributed to the Class 2-A Certificates in the
order and priorities set forth in clause (3) below; provided
further, however, that if the aggregate Certificate Principal
Balance of the Class 2-A Certificates is reduced to zero then any
remaining unpaid Class A Principal Distribution Target Amount will
be distributed to the Class 1-A-1 Certificates,
(B) sequentially, to the Class X-0, Xxxxx X-0, Class M-3,
Class M-4, Class M-5, Class M-6, Class M-7, Class M-8 and Class B
Certificates, in that order, the Subordinate Class Distribution
Amount for each such Class, in each case until the Certificate
Principal Balance thereof is reduced to zero, and
109
(C) any remainder as part of the Excess Cashflow.
(3) On each Distribution Date on which any principal
amounts are to be distributed to the Class 2-A Certificates, such amounts
shall be distributed sequentially:
(A) to the Class 2-A-1 Certificates, until the Certificate
Principal Balance thereof is reduced to zero;
(B) concurrently, to the Class 2-A-2A and Class 2-A-2B
Certificates, pro rata, based on the Certificate Principal Balances
thereof, in each case until the Certificate Principal Balance
thereof is reduced to zero; and
(C) to the Class 2-A-3 Certificates, until the Certificate
Principal Balance thereof is reduced to zero.
Notwithstanding the foregoing order of priority, on any Distribution Date on
which (x) the aggregate Certificate Principal Balance of the Class A
Certificates is greater than the sum of the aggregate Stated Principal Balance
of the Mortgage Loans and any remaining portion of the Pre-Funded Amount and
(y) the aggregate Certificate Principal Balance of the Class 2-A Certificates
is greater than the sum of the aggregate Stated Principal Balance of the Group
2 Mortgage Loans and any remaining portion of the Group 2 Pre-Funded Amount,
any principal amounts to be distributed to the Class 2-A Certificates will be
distributed pro rata, based on the Certificate Principal Balances thereof, in
each case until the Certificate Principal Balance thereof is reduced to zero.
(c) With respect to any Distribution Date, any Excess Cashflow
shall be distributed to the Classes of Certificates in the following order of
priority, in each case to the extent of remaining Excess Cashflow:
(1) to the Holders of the Class or Classes of Class A
Certificates and Subordinate Certificates then entitled to receive
distributions in respect of principal, in an aggregate amount equal to
the Extra Principal Distribution Amount for each Loan Group, payable to
such Holders of each such Class as part of the Principal Distribution
Amount for Loan Group 1 and Loan Group 2 pursuant to Section 4.04(b)
above;
(2) to the Holders of the Class 2-A-2B Certificates, in an
amount equal to the Unpaid Realized Loss Amount for such Class;
(3) sequentially, to the Holders of the Class M-1, Class
M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7, Class M-8 and
Class B Certificates, in that order, in each case first in an amount
equal to any Interest Carry Forward Amount for such Class and then in an
amount equal to the Unpaid Realized Loss Amount for such Class;
(4) to the Carryover Reserve Fund and from the Carryover
Reserve Fund to each Class of Interest-Bearing Certificates (in each case
after application of amounts received under the applicable Corridor
Contract to cover Net Rate Carryover),
110
pro rata based on the Certificate Principal Balances thereof, to the
extent needed to pay any Net Rate Carryover for each such Class remaining
after application of amounts under the applicable Corridor Contract;
provided that any Excess Cashflow remaining after such allocation to pay
Net Rate Carryover based on the Certificate Principal Balances of the
Certificates shall be distributed to each Class of Interest-Bearing
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;
(5) 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 any
Corridor Contract not required to cover Net Rate Carryover on the related
Class(es) of Certificates on such Distribution Date));
(6) to the Class C Certificateholders, the Class C
Distributable Amount for such Distribution Date; and
(7) to the Class A-R Certificates, any remaining amount.
(d) On each Distribution Date on or prior to each Corridor
Contract Termination Date, amounts received by the Trustee in respect of each
Corridor Contract for such Distribution Date shall be withdrawn from the
Carryover Reserve Fund and distributed:
(1) in the case of any such amounts received on the Class
1-A-1 Corridor Contract, to the Class 1-A-1 Certificates, to the extent
needed to pay any Net Rate Carryover for such Class;
(2) in the case of any such amounts received on the Class
2-A Corridor Contract, concurrently to each Class of Class 2-A
Certificates, pro rata, based on the Certificate Principal Balances
thereof, to the extent needed to pay any Net Rate Carryover for each such
Class; and then, any amounts remaining after such allocation to pay Net
Rate Carryover based on the Certificate Principal Balances of the Class
2-A Certificates shall be distributed to each Class of Class 2-A
Certificates to the extent needed to pay any remaining unpaid Net Rate
Carryover, pro rata, based on the amount of such remaining unpaid Net
Rate Carryover;
(3) in the case of any such amounts received on the
Subordinate Corridor Contract, concurrently to each Class of Subordinate
Certificates, pro rata, based on the Certificate Principal Balances
thereof, to the extent needed to pay any Net Rate Carryover for each such
Class; and then, any amounts remaining after such allocation to pay Net
Rate Carryover based on the Certificate Principal Balances of the
Subordinate Certificates shall be distributed to each Class of
Subordinate Certificates to the extent needed to pay any remaining unpaid
Net Rate Carryover, pro rata, based on the amount of such remaining
unpaid Net Rate Carryover; and
(4) any remaining amounts to the Holders of the Class C
Certificates as provided in Section 4.07(c).
111
(e) To the extent that a Class of Interest-Bearing Certificates
receives interest in excess of the applicable Net Rate Cap, such interest
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 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
Subordinate Applied Realized Loss Amount to reduce the Certificate Principal
Balances of the Class B, Class M-8, Class M-7, Class M-6, Class M-5, Class
M-4, Class M-3, Class M-2 and Class M-1 Certificates, in that order, in each
case until the Certificate Principal Balance thereof is reduced to zero. On
each Distribution Date after the Certificate Principal Balances of the
Subordinate Certificates have been reduced to zero, the Trustee shall allocate
any Class 2-A-2B Applied Realized Loss Amount to reduce the Certificate
Principal Balance of the Class 2-A-2B Certificates, until the Certificate
Principal Balance thereof is reduced to zero.
(h) On each Distribution Date, the Trustee shall allocate the
amount of any Subsequent Recoveries to increase the Certificate Principal
Balance of any Class of Certificates to which Applied Realized Loss Amounts
have been previously allocated, sequentially, to the Class 2-A-2B, Class X-0,
Xxxxx X-0, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7, Class M-8
and Class B Certificates, in that order, in each case by not more than the
amount of the Unpaid Realized Loss Amount of such Class.
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.
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 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.
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
112
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
to Certificateholders 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) Not later than each Distribution Date, the Trustee shall
prepare and cause to be forwarded by first class mail to each Holder of a
Class of Certificates of the Trust Fund, the Master Servicer, each Seller and
the Depositor a statement setting forth for the Certificates:
(1) the amount of the related distribution to Holders of
each Class allocable to principal, separately identifying (A) the
aggregate amount of any Principal Prepayments included therein and (B)
the aggregate of all scheduled payments of principal included therein;
(2) the amount of such distribution to Holders of each
Class allocable to interest;
(3) any Interest Carry Forward Amount for each Class;
(4) the Certificate Principal Balance of each Class after
giving effect (i) to all distributions allocable to principal on such
Distribution Date, (ii) the allocation of any Applied Realized Loss
Amounts for such Distribution Date and (iii) the allocation of any
Subsequent Recoveries for such Distribution Date;
(5) the aggregate Stated Principal Balance of the Mortgage
Loans for the Mortgage Pool and each Loan Group;
(6) the related amount of the Servicing Fees paid to or
retained by the Master Servicer for the related Due Period;
(7) the Pass-Through Rate for each Class of Certificates
with respect to the current Accrual Period;
(8) the Net Rate Carryover paid on any Class of
Certificates on such Distribution Date and any Net Rate Carryover remaining
on any Class of Certificates on such Distribution Date;
(9) the amount of Advances for each Loan Group included in
the distribution on such Distribution Date;
(10) the number and aggregate principal amounts of Mortgage
Loans in each Loan Group: (A) Delinquent (exclusive of Mortgage Loans in
foreclosure) (1) 30 to
113
59 days, (2) 60 to 89 days and (3) 90 or more days, and (B) in
foreclosure and Delinquent (1) 30 to 59 days, (2) 60 to 89 days and (3)
90 or more days, in each case as of the close of business on the last day
of the calendar month preceding such Distribution Date;
(11) with respect to any Mortgage Loan that became an REO
Property during the preceding calendar month in each Loan Group, the loan
number and Stated Principal Balance of such Mortgage Loan and the date of
acquisition thereof;
(12) the total number and Stated Principal Balance of any
Mortgage Loans converted to REO Properties in each Loan Group as of the
close of business on the Determination Date preceding such Distribution
Date;
(13) the aggregate Stated Principal Balance of all
Liquidated Mortgage Loans;
(14) with respect to any Liquidated Mortgage Loan in each
Loan Group, the loan number and Stated Principal Balance relating
thereto;
(15) whether a Trigger Event is in effect;
(16) the amount of the distribution made to the Holders of
the Class P Certificates;
(17) prior to the end of the Funding Period, (A) the amount
on deposit in the Pre-Funding Account (if any) on the related
Determination Date (net of investment income) and (B) the aggregate
Stated Principal Balances of the Subsequent Mortgage Loans for Subsequent
Transfer Dates occurring during the related Due Period; and on the
Distribution Date immediately following the end of the Funding Period,
any unused Pre-Funded Amount (if any) included in the Principal
Distribution Amount for such Distribution Date;
(18) the amount, if any, of Realized Losses and Subsequent
Recoveries allocated to the Class 2-A-2B Certificates and the Subordinate
Certificates for such Distribution Date;
(19) the amount, if any, due to the Trustee on behalf of the
Trust, and the amount, if any, received by the Trustee on behalf of the
Trust, in respect of each Corridor Contract for such Distribution Date;
(20) all payments made by the Master Servicer in respect of
Compensating Interest for such Distribution Date;
(21) the information set forth in the Prepayment Charge
Schedule;
(22) with respect to any Mortgage Loan repurchased by a
Seller or purchased by the Depositor or the Master Servicer, the loan
number and Stated Principal Balance relating thereto; and
114
(23) the amount of any claims made, and any claims rejected,
under the Mortgage Insurance Policy during the related Due Period.
(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.
The Trustee shall send a copy of each statement provided pursuant to this
Section 4.05 to each Rating Agency and the NIM Insurer. The Trustee may make
the above information available to Certificateholders via the Trustee's
website at xxxx://xxx.xxxxxxxxxxxxxxxxxxxx.xxx.
(c) Within a reasonable period of time after the end of each
calendar year, the Trustee shall cause to be furnished to each Person who at
any time during the calendar year was a Certificateholder, a statement
containing the information set forth in clauses (a)(1), (a)(2) and (a)(6) of
this Section 4.05 aggregated for such calendar year or applicable portion
thereof during which such Person was a Certificateholder. Such obligation of
the Trustee shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Trustee pursuant
to any requirements of the Code as from time to time in effect.
(d) Upon filing with the Internal Revenue Service, the Trustee
shall furnish to the Holders of the 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;
115
(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 [Reserved].
Section 4.07 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 $10,000 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 Contracts 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 Class 1-A-1 Corridor
Contract, Class 2-A Corridor Contract and Subordinate 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 Class 1-A-1 Corridor Contract, Class 2-A
Corridor Contract or Subordinate Corridor Contract is subject to early
termination, early termination payments received in respect of such 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 applicable
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 applicable Corridor Contract Termination Date.
(d) Funds in the Carryover Reserve Fund in respect of amounts
received under the Class 1-A-1 Corridor Contract, Class 2-A Corridor Contract
and Subordinate 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
116
Certificateholders. In the absence of such written direction, all funds in the
Carryover Reserve Fund in respect of amounts received under the Class 1-A-1
Corridor Contract, Class 2-A Corridor Contract and Subordinate 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.
(e) 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 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.
Section 4.08 Termination of the Mortgage Insurance Policy.
If on any given date the rating of Mortgage Guaranty Insurance
Corporation's claims-paying ability is downgraded below and remains below
"AA-" from S&P or "Aa3" from Xxxxx'x, the Master Servicer may direct the
Co-Trustee to terminate the Mortgage Insurance Policy and the Co-Trustee shall
act in accordance with such direction. The Master Servicer hereby covenants
and agrees that it will not direct the Co-Trustee to exercise its right to
terminate the Mortgage Insurance Policy unless the Co-Trustee obtains a
mortgage insurance policy that meets the following conditions: (i) such
mortgage insurance policy must be issued by a mortgage insurer that has a
rating with respect to its claims-paying ability at or above "AA-" from S&P or
"Aa3" from Xxxxx'x and (ii) such mortgage insurance policy must cover the
Covered Mortgage Loans outstanding as of such date.
ARTICLE V.
THE CERTIFICATES
Section 5.01 The Certificates.
The Certificates shall be substantially in the forms attached hereto
as Exhibits A-1 through X-00, Xxxxxxx X, Xxxxxxx X, Xxxxxxx X 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:
Integral Multiples in Original Certificate
Class Minimum Denomination Excess of Minimum Principal Balance
-----------------------------------------------------------------------------------------------------
1-A-1 $20,000 $1,000 $324,864,000
2-A-1 $20,000 $1,000 $102,674,000
2-A-2A $20,000 $1,000 $93,527,000
2-A-2B $20,000 $1,000 $10,392,000
2-A-3 $20,000 $1,000 $30,143,000
M-1 $20,000 $1,000 $16,250,000
M-2 $20,000 $1,000 $14,625,000
117
Integral Multiples in Original Certificate
Class Minimum Denomination Excess of Minimum Principal Balance
-----------------------------------------------------------------------------------------------------
M-3 $20,000 $1,000 $9,425,000
M-4 $20,000 $1,000 $7,800,000
M-5 $20,000 $1,000 $7,150,000
M-6 $20,000 $1,000 $5,850,000
M-7 $20,000 $1,000 $4,550,000
M-8 $20,000 $1,000 $4,225,000
B $100,000 $1,000 $6,500,000
A-R $99.95(1) N/A $100
C X/X X/X X/X
X X/X X/X $100
---------
(1) The Tax Matters Person Certificate may be issued in a denomination of
$0.05.
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.
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
118
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 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, the Co-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 Co-Trustee, the Depositor, the Trust
Fund, each Seller, the Master Servicer 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.
119
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 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 or using the assets
of any such plan or arrangement, 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 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
120
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 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
121
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.
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 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
122
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 and any agent of
the Master Servicer, the Trustee or the NIM 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 or any agent of the Master Servicer, the Trustee or the NIM
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.
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;
123
(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.
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
124
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 of any change in such location of any such office or
agency.
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
125
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.
Section 6.03 Limitation on Liability of the Depositor, the Sellers,
the Master Servicer, the NIM Insurer and Others.
None of the Depositor, the Sellers, the NIM Insurer or the Master
Servicer or any of the directors, officers, employees or agents of the
Depositor, the Sellers, the NIM Insurer or the Master Servicer shall be under
any 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 Master Servicer and any director, officer, employee or agent of the
Depositor, the Sellers, the NIM 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.
126
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 reasonably acceptable to the Trustee and the NIM
Insurer and the written confirmation from each Rating Agency (which
confirmation shall be furnished to the Depositor, the Trustee and the NIM
Insurer) that such resignation will not cause such Rating Agency to reduce the
then-current rating of the Certificates. Any such determination pursuant to
clause (i) of the preceding sentence permitting the resignation of the Master
Servicer shall be evidenced by an Opinion of Counsel to such effect delivered
to the Trustee. No resignation of the Master Servicer shall become effective
until the Trustee shall have assumed the Master Servicer's responsibilities,
duties, liabilities (other than those liabilities arising prior to the
appointment of such successor) and obligations under this Agreement.
Section 6.05 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 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 or the Depositor, or to
127
the Trustee, the NIM 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 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 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 nor 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 NIM Insurer or the
Holders of Certificates evidencing not less than 25% of the Voting Rights, by
notice in writing to the Master Servicer (with a copy to each Rating Agency),
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. 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
128
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 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.
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 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 reasonably acceptable to the
NIM Insurer (as evidenced by the prior written consent of the NIM Insurer), or
(ii) if it is unable for 60 days to appoint a successor servicer reasonably
acceptable to the NIM 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
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 Mae and Xxxxxxx Mac approved seller/servicer in good standing, that has
been approved by the Mortgage Insurer if required, 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
129
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. No appointment of a successor to the Master Servicer hereunder
shall be effective until the Trustee shall have consented thereto, and written
notice of such proposed appointment shall have been provided by the Trustee to
each Certificateholder. 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
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 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
Co-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.
130
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 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.
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 grossly negligent action, its own gross
negligent failure to act or its own misconduct, its grossly 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;
131
(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
grossly 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.
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 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
132
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 NIM Insurer or such
Certificateholders, the Trustee may require reasonable indemnity against
such expense, or liability from 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);
(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 NIM Insurer or any of the Certificateholders,
pursuant to the provisions of this Agreement, unless 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
133
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 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, but only for representation of the Trustee acting in its
capacity as Trustee hereunder and (B) to the extent that the 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 disbursements of such persons, except any such
expense, disbursement or advance as may arise from its negligence, bad faith
or willful misconduct). The Trustee and any director, officer, employee or
agent of the 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 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 duties hereunder or by reason of reckless disregard of the 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 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 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
134
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
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 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 resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor trustee.
If at any time (i) the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.06 hereof and shall fail to resign
after written request thereto by 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, or (iii)(A) a tax is imposed with respect to the Trust Fund by
any state in which the Trustee or the Trust Fund is located, (B) the
imposition of such tax would be avoided by the appointment of a different
trustee and (C) the Trustee fails to indemnify the Trust Fund against such
tax, then the Depositor, the NIM Insurer or the Master Servicer may remove the
Trustee and appoint a successor trustee, reasonably acceptable to the NIM
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 and one complete set to
the successor so appointed. 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.
135
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 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 any 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 NIM Insurer and its appointment shall not adversely affect
the then-current ratings of the Certificates.
Upon acceptance of appointment by a successor trustee as provided in
this Section 8.08, the Depositor shall mail notice of the succession of such
trustee hereunder to 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.
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 to appoint one or more
Persons approved by the Trustee and reasonably acceptable to 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
136
NIM 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.
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.
137
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 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
138
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 that occurred ratably within each Loan Group. 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 all other Certificates in the
priority specified in the preceding sentence), funds otherwise distributable
to such Holders in an amount sufficient to pay such tax. The Trustee 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) that is
owned by the Holders of the Class C
139
Certificates, and that is not an asset of any REMIC created hereunder. The
Trustee shall treat the rights of the Holders of each Class of Certificates
(other than the Class P and Class A-R Certificates) to receive payments from
the Carryover Reserve Fund as rights in an interest rate corridor contract
written by: (i) the Corridor Contract Counterparty in respect of any Net Rate
Carryover funded by any Corridor Contract and in respect of any residual
payments from such Corridor Contract received by the Class C Certificates, as
the case may be, and (ii) the Holders of the Class C Certificates in respect
of (a) any monies distributed pursuant to Section 4.04(c)(3) herein, in favor
of the other Certificateholders. Thus, the Interest-Bearing Certificates shall
be treated as representing ownership of not only an Master REMIC regular
interest, but also ownership of an interest in an interest rate corridor
contract. For purposes of determining the issue price of the Master REMIC
regular interests, the Trustee shall assume that the Class 1-A-1 Corridor
Contract, the Class 2-A Corridor Contract and the Subordinate Corridor
Contract have values of $320,000, $270,000 and $260,000, respectively. The
Trustee shall treat the rights of the Holders of each Class of
Interest-Bearing Certificates to receive distributions of interest at a per
annum rate in excess of the applicable net rate cap specified in footnote 1 to
the table specifying the class designation, interest rate, and principal
amount for each class of Master REMIC Interest in the Preliminary Statement
but not in excess of the applicable Net Rate Cap as rights in an interest rate
corridor contract written by the Class C Certificates. In addition, the
Trustee shall treat any amount payable to a Class C Certificate with respect
to the R-3-X Interest as deposited into the Carryover Reserve Fund.
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 Mortgage 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 Mortgage
Insurance Policy, other than the payment of the Mortgage Insurance Premium and
obtaining the approval of the Mortgage 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 grossly negligent action, its own
gross negligent failure to act or its own misconduct, its grossly 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 Co-Trustee may conclusively rely, as to
the truth of the statements and the correctness of
140
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 Trustee, unless the Co-Trustee was
grossly 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
141
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) The Master Servicer covenants and agrees (i) to pay to the
Co-Trustee from time to time, and the Co-Trustee shall be entitled to, such
compensation as shall be agreed in writing by the Master Servicer and the
Co-Trustee (which shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust) for all services rendered
by it in the execution of the trusts hereby created and in the exercise and
performance of any of the powers and duties hereunder of the Co-Trustee and
(ii) to pay or reimburse the Co-Trustee, upon its request, for all reasonable
expenses, disbursements and advances incurred or made by 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, but only for representation of
the Co-Trustee acting in its capacity as Co-Trustee hereunder and (B) to the
extent that 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 disbursements of such
persons, except any such expense, disbursement or advance as may arise from
its negligence, bad faith or willful misconduct). The Co-Trustee and any
director, officer, employee or agent of 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
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 Co-Trustee's duties hereunder or by reason of
reckless disregard of the Co-Trustee's obligations and duties hereunder and
(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 Co-Trustee hereunder.
(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
142
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 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 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.
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 and each Certificate Owner
upon reasonable notice during normal business hours access to all records
maintained by the Trustee or Co-Trustee in respect of its duties under this
Agreement and access to officers of the Trustee responsible for performing its
duties. Upon request, the Trustee or Co-Trustee shall furnish the Depositor,
the Master Servicer, the NIM 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 and the
Certificate Owner for review and copying any books, documents, or records
requested with respect to the Trustee's and Co-Trustee's respective duties
under this Agreement. The Sellers, the Depositor, the Master Servicer 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 NIM Insurer, the Trustee shall proceed to protect and
enforce its rights and the rights of the Certificateholders 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 and the Certificateholders.
143
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 Trustee and the Co-Trustee created hereby shall terminate upon
the earlier of (a) the purchase by the Master Servicer 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 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.
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.
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.
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
144
notice promptly to each related Certificateholder or (ii) the Trustee
determines that a Class of Certificates shall be retired after a final
distribution on such Class, the Trustee shall notify the related
Certificateholders within five (5) Business Days after such Determination Date
that the final distribution in retirement of such Class of Certificates is
scheduled to be made on the immediately following Distribution Date. Any final
distribution made pursuant to the immediately preceding sentence will be made
only upon presentation and surrender of the related Certificates at the
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 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 Co-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 the
amounts allocable to such Certificates held in the Distribution Account (and,
if applicable, the Carryover Reserve Fund) in the order and priority set forth
in Section 4.04 hereof 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
145
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 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.
(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
146
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 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, 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.
The Trustee, the Co-Trustee, the Depositor, the Master Servicer and
the Sellers with the consent of 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.
147
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 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 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 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 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 each Certificateholder (if the consent of Certificateholders is required)
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.
Nothing in this Agreement shall require the Trustee to enter into an
amendment without receiving an Opinion of Counsel, reasonably satisfactory to
the Trustee 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.
148
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one
and the same instrument.
Section 10.03 Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED IN THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HERETO AND THE CERTIFICATEHOLDERS SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS.
Section 10.04 Intention of Parties.
It is the express intent of the parties hereto that the conveyance
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, of a security interest in all of
the assets that constitute the Trust Fund, whether now owned or hereafter
acquired.
The Depositor for the benefit of the Certificateholders 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.
Section 10.05 Notices.
(a) The Trustee shall use its best efforts to promptly provide
notice to each Rating Agency with respect to each of the following of which it
has actual knowledge:
(1) Any material change or amendment to this Agreement;
149
(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 3.18.
(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, CWABS, 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 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 (000) 000-0000,
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, CWABS,
Series 2005-AB3, 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
Trust Company, N.A., 0000 Xxxxxxx Xxx, Xxxxxxx, Xxxxxxxxxx 00000, Attention:
MBS Support Services, or such other address as the Co-Trustee may be hereafter
furnished to the Depositor, the Master Servicer and the Trustee; and (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
150
Surveillance Group, 00 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000.
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.
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
151
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 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 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 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.
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:
152
(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.
(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).
153
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.
CWABS, INC.,
as Depositor
By:
-----------------------------------------
Name: Xxxx Xxxxxxx, Xx.
Title: Vice President
COUNTRYWIDE HOME LOANS, INC.,
as a Seller
By:
------------------------------------------
Name: Xxxx Xxxxxxx, Xx.
Title: Senior Vice President
PARK MONACO INC.,
as a Seller
By:
-----------------------------------------
Name: Xxxx Xxxxxxx, Xx.
Title: Vice President
PARK SIENNA LLC,
as a Seller
By:
------------------------------------------
Name: Xxxx Xxxxxxx, Xx.
Title: Vice President
COUNTRYWIDE HOME LOANS SERVICING LP,
as Master Servicer
By: COUNTRYWIDE GP, INC.
By:
------------------------------------------
Name: Xxxx Xxxxxxx, Xx.
Title: Vice President
THE BANK OF NEW YORK,
as Trustee
By:
------------------------------------------
Name:
Title:
THE BANK OF NEW YORK TRUST COMPANY, N.A.,
as Co-Trustee
By:
------------------------------------------
Name:
Title:
THE BANK OF NEW YORK
(solely with respect to its obligations under
Section 4.01(d))
By:
------------------------------------------
Name:
Title:
STATE OF CALIFORNIA )
) ss.:
COUNTY OF LOS ANGELES )
On this ____ day of September, 2005, before me, a notary public in
and for said State, appeared Xxxx Xxxxxxx, Xx., personally known to me on the
basis of satisfactory evidence to be a Senior Vice President of Countrywide
Home Loans, Inc., one of the corporations that executed the within instrument,
and also known to me to be the person who executed it on behalf of such
corporation and acknowledged to me that such corporation executed the within
instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
--------------------------------------------
Notary Public
[Notarial Seal]
STATE OF CALIFORNIA )
) ss.:
COUNTY OF LOS ANGELES )
On this ____ day of September, 2005, before me, a notary public in
and for said State, appeared Xxxx Xxxxxxx, Xx., personally known to me on the
basis of satisfactory evidence to be a Vice President of Countrywide GP, Inc.,
the parent company of Countrywide Home Loans Servicing LP, one of the
organizations that executed the within instrument, and also known to me to be
the person who executed it on behalf of such limited partnership and
acknowledged to me that such limited partnership executed the within
instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
--------------------------------------------
Notary Public
[Notarial Seal]
STATE OF CALIFORNIA )
) ss.:
COUNTY OF LOS ANGELES )
On this ____ day of September, 2005, before me, a notary public in
and for said State, appeared Xxxx Xxxxxxx, Xx., personally known to me on the
basis of satisfactory evidence to be a Vice President of CWABS, Inc., one of
the corporations that executed the within instrument, and also known to me to
be the person who executed it on behalf of such corporation and acknowledged
to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
--------------------------------------------
Notary Public
[Notarial Seal]
STATE OF CALIFORNIA )
) ss.:
COUNTY OF LOS ANGELES )
On this ____ day of September, 2005, before me, a notary public in
and for said State, appeared Xxxx Xxxxxxx, Xx., personally known to me on the
basis of satisfactory evidence to be a Vice President of Park Monaco Inc., one
of the corporations that executed the within instrument, and also known to me
to be the person who executed it on behalf of such corporation and
acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
--------------------------------------------
Notary Public
[Notarial Seal]
STATE OF CALIFORNIA )
) ss.:
COUNTY OF LOS ANGELES )
On this ____ day of September, 2005, before me, a notary public in
and for said State, appeared Xxxx Xxxxxxx, Xx., personally known to me on the
basis of satisfactory evidence to be a Vice President of Park Sienna LLC, one
of the entities that executed the within instrument, and also known to me to
be the person who executed it on behalf of such entity and acknowledged to me
that such entity executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
--------------------------------------------
Notary Public
[Notarial Seal]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of September, 2005 before me, a notary public in
and for said State, appeared _________________, personally known to me on the
basis of satisfactory evidence to be a ____________ of The Bank of New York, a
New York banking corporation that executed the within instrument, and also
known to me to be the person who executed it on behalf of such corporation,
and acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
--------------------------------------------
Notary Public
[Notarial Seal]
STATE OF CALIFORNIA )
) ss.:
COUNTY OF LOS ANGELES )
On this ____ day of September, 2005 before me, a notary public in
and for said State, appeared __________________, personally known to me on the
basis of satisfactory evidence to be a ____________ of The Bank of New York
Trust Company, N.A., one of the corporations that executed the within
instrument, and also known to me to be the person who executed it on behalf of
such corporation and acknowledged to me that such corporation executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
--------------------------------------------
Notary Public
[Notarial Seal]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of September, 2005 before me, a notary public in
and for said State, appeared ______________, personally known to me on the
basis of satisfactory evidence to be a _____________ of The Bank of New York,
a New York banking corporation that executed the within instrument, and also
known to me to be the person who executed it on behalf of such corporation,
and acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
--------------------------------------------
Notary Public
[Notarial Seal]
Exhibits A-1
through A-14
[Exhibits A-1 through A-14 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]
Re: CWABS Asset-Backed Certificates, Series 2005-AB3
------------------------------------------------
Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing
Agreement dated as of September 1, 2005 (the "Pooling and Servicing
Agreement") among CWABS, 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 Trust Company, N.A., 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 Co-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 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 the Mortgage Loans
identified on the Mortgage Loan Schedule or (ii) the collectibility,
insurability, effectiveness or suitability of any such Mortgage Loan.
G-1-1
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-1-2
EXHIBIT G-2
FORM OF INTERIM CERTIFICATION OF TRUSTEE
[Date]
[Depositor]
[Sellers]
[Master Servicer]
Re: CWABS Asset-Backed Certificates, Series 2005-AB3
------------------------------------------------
Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing
Agreement dated as of September 1, 2005 (the "Pooling and Servicing
Agreement") among CWABS, 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 Trust Company, N.A., 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 __________, 2005 (the "Subsequent Transfer Agreement")
among CWABS, 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 Co-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;
(ii) the case of each [Initial Mortgage Loan][Subsequent Mortgage
Loan] that is not a MERS Mortgage Loan, the original recorded Mortgage, and in
the case of each [Initial Mortgage Loan][Subsequent Mortgage Loan] that is a
MERS Mortgage Loan, the original Mortgage, 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
G-2-1
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 "Asset-Backed Certificates, Series 2005-AB3, CWABS, Inc., by The
Bank of New York, a New York banking corporation, as trustee under the Pooling
and Servicing Agreement dated as of September 1, 2005, without recourse", 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) original recorded assignment or assignments of the Mortgage
together with all interim recorded assignments of such Mortgage (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, with evidence of recording
thereon if recordation thereof is permissible under applicable law; and
(vi) the original or duplicate original 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 Co-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), (viii), (ix) and (xiv) through (xx)
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
G-2-2
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]
Re: CWABS Asset-Backed Certificates, Series 2005-AB3
------------------------------------------------
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 September 1, 2005 (the "Pooling and Servicing Agreement") among CWABS,
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 Trust Company, N.A., 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 __________, 2005 (the
"Subsequent Transfer Agreement") among CWABS, 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) it 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;
(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 "Asset-Backed Certificates, Series 2005-AB3, CWABS, Inc., by The
Bank of New York, a New York banking corporation, as trustee under the Pooling
and Servicing Agreement dated as of September 1, 2005, without recourse", or,
in the case of each [Initial Mortgage
G-3-1
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]
Re: CWABS Asset-Backed Certificates, Series 2005-AB3
------------------------------------------------
Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing
Agreement dated as of September 1, 2005 (the "Pooling and Servicing
Agreement") among CWABS, 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 Trust Company, N.A., 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 Co-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
(2) a duly executed assignment of the Mortgage 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-4-1
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]
Re: CWABS Asset-Backed Certificates, Series 2005-AB3
------------------------------------------------
Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing
Agreement dated as of September 1, 2005 (the "Pooling and Servicing
Agreement") among CWABS, 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 Trust Company, N.A., 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 __________, 2005 (the "Subsequent Transfer Agreement")
among CWABS, 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) it 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;
(ii) in the case of each [Initial Mortgage Loan][Subsequent Mortgage
Loan] that is not a MERS Mortgage Loan, the original recorded Mortgage, and in
the case of each [Initial Mortgage Loan][Subsequent Mortgage Loan] that is a
MERS Mortgage Loan, the original Mortgage, 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
H-1
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 "Asset-Backed Certificates, Series 2005-AB3, CWABS, Inc., by
The Bank of New York, a New York banking corporation, as trustee under the
Pooling and Servicing Agreement dated as of September 1, 2005, without
recourse", 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
together with all interim recorded assignments of such Mortgage (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, with evidence of recording
thereon if recordation thereof is permissible under applicable law; and
(vi) the original or duplicate original 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), (ix) and (xiv) through (xx) 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 [Initial Mortgage Loan][Subsequent Mortgage Loan].
H-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:
H-3
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 September 1, 2005 (the "Agreement"), by and among CWABS, 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 Trust Company, N.A., as
Co-Trustee and The Bank of New York, as Trustee. Capitalized terms used, but
not defined herein or in Exhibit 1 hereto, shall have the meanings ascribed to
such terms in the Agreement. The Transferee has authorized the undersigned to
make this affidavit on behalf of the Transferee.
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-1-1
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-1-2
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-1-3
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-1-4
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-1-5
(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-1-6
EXHIBIT J-1
FORM OF TRANSFEROR CERTIFICATE FOR CLASS A-R CERTIFICATES
Date:
CWABS, 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: CWABS, Inc. Asset Backed
Certificates, Series 2005-AB3
-----------------------------
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 September 1, 2005, among CWABS, 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 Trust Company, N.A., as Co-Trustee, and The Bank of New York, as
Trustee.
Very truly yours,
_____________________________________
Name of Transferor
By: _________________________________
Name:
Title:
X-0-0
XXXXXXX X-0
FORM OF TRANSFEROR CERTIFICATE FOR
PRIVATE CERTIFICATES
Date:
CWABS, 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: CWABS, Inc. Asset-Backed Certificates,
Series 2005-AB3, 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 September 1, 2005, among CWABS, 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 Trust Company, N.A., as Co-Trustee and
The Bank of New York, as Trustee.
Very truly yours,
_____________________________________
Name of Transferor
By: _________________________________
Name:
Title:
J-2-1
EXHIBIT K
FORM OF INVESTMENT LETTER (NON-RULE 144A)
Date:
CWABS, 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: CWABS, Inc. Asset-Backed Certificates,
Series 2005-AB3, 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
K-1
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 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 September 1, 2005, among CWABS, 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 Trust Company, N.A., as Co-Trustee, and The Bank of New York, as
Trustee.
Very truly yours,
___________________________________
Name of Transferee
By: _______________________________
Authorized Officer
K-2
EXHIBIT L
FORM OF RULE 144A LETTER
Date:
CWABS, 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: CWABS, Inc. Asset-Backed Certificates,
Series 2005-AB3, 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
L-1
Certificates a violation of Section 5 of the Securities Act or require
registration pursuant thereto, nor will act, nor has authorized or will
authorize any person to act, in such manner with respect to the Certificates,
(f) 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 September 1, 2005, among CWABS, 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 Trust Company, N.A., as Co-Trustee, and The Bank of New York, as
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.: ________________________________________
Co-Trustee
Name: ________________________________________
Address: ________________________________________
Co-Trustee
Mortgage File No.: ________________________________________
The undersigned Master Servicer hereby acknowledges that it has
received from _______________________________________, as Co-Trustee for the
Holders of Asset-Backed Certificates, Series 2005-AB3, 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 September 1, 2005 (the "Pooling
and Servicing Agreement") among CWABS, 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 Trust Company, N.A., as
Co-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 Co-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
ASSET-BACKED CERTIFICATES,
Series 2005-AB3
__________________________________________ 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 CWABS, 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 Trust Company N.A., as Co-Trustee, have entered in the Pooling and
Servicing Agreement, dated as of September 1, 2005 (the "Pooling and Servicing
Agreement"), relating to the CWABS, Inc. Asset-Backed Certificates, Series
2005-AB3 (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.
CWABS, 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-1
FORM OF CLASS 1-A-1 CORRIDOR CONTRACT
[See appropriate documents delivered at closing.]
Q-1-1
EXHIBIT Q-2
FORM OF CLASS 2-A CORRIDOR CONTRACT
[See appropriate documents delivered at closing.]
Q-2-1
EXHIBIT Q-3
FORM OF SUBORDINATE CORRIDOR CONTRACT
[See appropriate documents delivered at closing.]
Q-3-1
EXHIBIT R
[RESERVED]
R-1
EXHIBIT S-1
FORM OF CORRIDOR CONTRACT ASSIGNMENT AGREEMENT
[See document delivered at closing.]
X-0-0
XXXXXXX X-0
FORM OF CORRIDOR CONTRACT ADMINISTRATION AGREEMENT
[See document delivered at closing.]
S-2-1
EXHIBIT T
OFFICER'S CERTIFICATE WITH RESPECT TO PREPAYMENTS
ASSET-BACKED CERTIFICATES,
Series 2005-AB3
[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 September 1, 2005, (the "Pooling and Servicing Agreement") among CWABS,
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 Trust Company, N.A., as
Co-Trustee and The Bank of New York, as 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
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
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
Characteristic Section Loan Group 1 Loan Group 2
--------------------------------------------------------------------------------------------------------------
Single-Family Detached Dwellings 2.03(b)(32) 69.46% 73.62%
--------------------------------------------------------------------------------------------------------------
Two- to Four-Family Dwellings 2.03(b)(32) 4.16% 1.35%
--------------------------------------------------------------------------------------------------------------
Low-Rise Condominium Units 2.03(b)(32) 10.74% 6.92%
--------------------------------------------------------------------------------------------------------------
High-Rise Condominium Units 2.03(b)(32) 0.79% 0.15%
--------------------------------------------------------------------------------------------------------------
Manufactured Housing 2.03(b)(32) 0.00% 0.00%
--------------------------------------------------------------------------------------------------------------
PUDs 2.03(b)(32) 14.85% 17.96%
--------------------------------------------------------------------------------------------------------------
Earliest Origination Date 2.03(b)(33) 12/7/2000 4/30/1999
--------------------------------------------------------------------------------------------------------------
Prepayment Penalty 2.03(b)(35) 80.90% 86.13%
--------------------------------------------------------------------------------------------------------------
Investor Properties 2.03(b)(36) 6.37% 1.30%
--------------------------------------------------------------------------------------------------------------
Primary Residences 2.03(b)(36) 92.25% 98.38%
--------------------------------------------------------------------------------------------------------------
Lowest Current Mortgage Rate 2.03(b)(48) 4.90% 4.70%
--------------------------------------------------------------------------------------------------------------
Highest Current Mortgage Rate 2.03(b)(48) 11.25% 10.70%
--------------------------------------------------------------------------------------------------------------
Weighted Average Current Mortgage Rate 2.03(b)(48) 6.846% 6.590%
--------------------------------------------------------------------------------------------------------------
Lowest Gross Margin 2.03(b)(51) 4.00% 4.00%
--------------------------------------------------------------------------------------------------------------
Highest Gross Margin 2.03(b)(51) 9.95% 10.70%
--------------------------------------------------------------------------------------------------------------
Weighted Average Gross Margin 2.03(b)(51) 6.716% 6.507%
--------------------------------------------------------------------------------------------------------------
Date on or before which each Initial Mortgage Loan has a
Due Date 2.03(b)(52) 10/1/2005 10/1/2005
--------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Mortgage Loans (other Two-Year Three-Year
than Two-Year and Hybrid Hybrid
Adjustment Applicable Three-Year Hybrid Mortgage Mortgage
Date Section Mortgage Loans) Loans Loans
---------------------------------------------------------------------------------------------
Latest Next
Adjustment Date 2.03(b)(34) 2/1/2006 9/1/2007 9/1/2008
---------------------------------------------------------------------------------------------
S-II-1
