EXECUTION COPY
RESIDENTIAL ASSET SECURITIES CORPORATION,
Depositor,
RESIDENTIAL FUNDING CORPORATION,
Master Servicer,
and
U.S. BANK NATIONAL ASSOCIATION
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of August 1, 2006
Home Equity Mortgage Asset-Backed Pass-Through Certificates
Series 2006-KS7
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.......................................................................6
Section 1.01. Definitions.......................................................6
Section 1.02. Determination of LIBOR...........................................53
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES.................54
Section 2.01. Conveyance of Mortgage Loans.....................................54
Section 2.02. Acceptance by Trustee............................................57
Section 2.03. Representations, Warranties and Covenants of the Master
Servicer and the Depositor.......................................58
Section 2.04. Representations and Warranties of Sellers........................60
Section 2.05. Execution and Authentication of Certificates; Conveyance
of Uncertificated REMIC Regular Interests........................62
Section 2.06. Purposes and Powers of the Trust.................................63
Section 2.07. Agreement Regarding Ability to Disclose..........................63
ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS.................................63
Section 3.01. Master Servicer to Act as Servicer...............................63
Section 3.02. Subservicing Agreements Between Master Servicer and
Subservicers; Enforcement of Subservicers' Obligations..........66
Section 3.03. Successor Subservicers...........................................67
Section 3.04. Liability of the Master Servicer.................................67
Section 3.05. No Contractual Relationship Between Subservicer and Trustee
or Certificateholders............................................67
Section 3.06. Assumption or Termination of Subservicing Agreements by
Trustee..........................................................68
Section 3.07. Collection of Certain Mortgage Loan Payments; Deposits to
Custodial Account................................................68
Section 3.08. Subservicing Accounts; Servicing Accounts........................70
Section 3.09. Access to Certain Documentation and Information Regarding
the Mortgage Loans...............................................71
Section 3.10. Permitted Withdrawals from the Custodial Account.................72
Section 3.11. Maintenance of Primary Insurance Coverage........................73
Section 3.12. Maintenance of Fire Insurance and Omissions and Fidelity
Coverage.........................................................74
Section 3.13. Enforcement of Due-on-Sale Clauses; Assumption and
Modification Agreements; Certain Assignments.....................75
Section 3.14. Realization Upon Defaulted Mortgage Loans........................77
Section 3.15. Trustee to Cooperate; Release of Custodial Files.................79
Section 3.16. Servicing and Other Compensation; Compensating Interest..........80
Section 3.17. Reports to the Trustee and the Depositor.........................81
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Page
Section 3.18. Annual Statement as to Compliance and Servicing Assessment.......81
Section 3.19. Annual Independent Public Accountants' Servicing Report..........81
Section 3.20. Right of the Depositor in Respect of the Master Servicer.........82
Section 3.21. [Reserved].......................................................82
Section 3.22. Advance Facility.................................................82
Section 3.23. Special Servicing................................................85
Section 3.24. Credit Risk Manager..............................................86
Section 3.25. Limitation Upon Liability of the Credit Risk Manager.............87
Section 3.26. Removal of the Credit Risk Manager...............................87
ARTICLE IV PAYMENTS TO CERTIFICATEHOLDERS..................................................87
Section 4.01. Certificate Account..............................................87
Section 4.02. Distributions....................................................88
Section 4.03. Statements to Certificateholders; Statements to Rating
Agencies; Exchange Act Reporting.................................91
Section 4.04. Distribution of Reports to the Trustee and the Depositor;
Advances by the Master Servicer..................................95
Section 4.05. Allocation of Realized Losses....................................96
Section 4.06. Reports of Foreclosures and Abandonment of Mortgaged Property....98
Section 4.07. Optional Purchase of Defaulted Mortgage Loans....................98
Section 4.08. [Reserved].......................................................99
Section 4.09. [Reserved].......................................................99
Section 4.10. Swap Agreement...................................................99
ARTICLE V THE CERTIFICATES................................................................101
Section 5.01. The Certificates................................................101
Section 5.02. Registration of Transfer and Exchange of Certificates...........103
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates...............107
Section 5.04. Persons Deemed Owners...........................................107
Section 5.05. Appointment of Paying Agent.....................................108
ARTICLE VI THE DEPOSITOR AND THE MASTER SERVICER..........................................108
Section 6.01. Respective Liabilities of the Depositor and the Master
Servicer........................................................108
Section 6.02. Merger or Consolidation of the Depositor or the Master
Servicer; Assignment of Rights and Delegation of Duties
by Master Servicer..............................................108
Section 6.03. Limitation on Liability of the Depositor, the Master
Servicer and Others.............................................109
Section 6.04. Depositor and Master Servicer Not to Resign.....................110
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Page
ARTICLE VII DEFAULT.......................................................................110
Section 7.01. Events of Default...............................................110
Section 7.02. Trustee or Depositor to Act; Appointment of Successor...........112
Section 7.03. Notification to Certificateholders..............................113
Section 7.04. Waiver of Events of Default.....................................113
ARTICLE VIII CONCERNING THE TRUSTEE.......................................................113
Section 8.01. Duties of Trustee...............................................113
Section 8.02. Certain Matters Affecting the Trustee...........................115
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans...........116
Section 8.04. Trustee May Own Certificates....................................116
Section 8.05. Master Servicer to Pay Trustee's Fees and Expenses;
Indemnification.................................................116
Section 8.06. Eligibility Requirements for Trustee............................117
Section 8.07. Resignation and Removal of the Trustee..........................117
Section 8.08. Successor Trustee...............................................118
Section 8.09. Merger or Consolidation of Trustee..............................118
Section 8.10. Appointment of Co-Trustee or Separate Trustee...................119
Section 8.11. Appointment of the Custodian....................................120
Section 8.12. Appointment of Office or Agency.................................120
Section 8.13. DTC Letter of Representations...................................120
Section 8.14. Swap Agreements.................................................120
ARTICLE IX TERMINATION....................................................................120
Section 9.01. Termination Upon Purchase or Liquidation of All Mortgage
Loans...........................................................120
Section 9.02. Additional Termination Requirements.............................124
ARTICLE X REMIC PROVISIONS................................................................125
Section 10.01. REMIC Administration............................................125
Section 10.02. Master Servicer, REMIC Administrator and Trustee
Indemnification.................................................128
ARTICLE XI MISCELLANEOUS PROVISIONS.......................................................129
Section 11.01. Amendment.......................................................129
Section 11.02. Recordation of Agreement; Counterparts..........................131
Section 11.03. Limitation on Rights of Certificateholders......................131
Section 11.04. Governing Law...................................................132
Section 11.05. Notices.........................................................132
Section 11.06. Notices to Rating Agencies......................................133
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Page
Section 11.07. Severability of Provisions......................................133
Section 11.08. Supplemental Provisions for Resecuritization....................133
Section 11.09. Third-Party Beneficiary.........................................134
Section 11.10. Tax Treatment...................................................134
ARTICLE XII COMPLIANCE WITH REGULATION AB.................................................134
Section 12.01. Intent of Parties; Reasonableness...............................134
Section 12.02. Additional Representations and Warranties of the Trustee........135
Section 12.03. Information to be Provided by the Trustee.......................135
Section 12.04. Report on Assessment of Compliance and Attestation..............136
Section 12.05. Indemnification; Remedies.......................................136
Exhibit A Form of Class A Certificate................................................A-1
Exhibit B Form of Class M Certificate................................................B-1
Exhibit C Form of Class SB Certificate...............................................C-1
Exhibit D Form of Class R Certificate................................................D-1
Exhibit E Form of Custodial Agreement................................................E-1
Exhibit F Mortgage Loan Schedule.....................................................F-1
Exhibit G Form of Request for Release................................................G-1
Exhibit H-1 Form of Transfer Affidavit and Agreement.................................H-1-1
Exhibit H-2 Form of Transferor Certificate...........................................H-2-1
Exhibit I Form of Investor Representation Letter.....................................I-1
Exhibit J Form of Transferor Representation Letter...................................J-1
Exhibit K Text of Amendment to Pooling and Servicing Agreement Pursuant to
Section 11.01(e) for a Limited Guaranty....................................K-1
Exhibit L Form of Limited Guaranty...................................................L-1
Exhibit M Form of Lender Certification for Assignment of Mortgage Loan...............M-1
Exhibit N Form of Rule 144A Investment Representation Letter.........................N-1
Exhibit O Swap Agreement.............................................................O-1
Exhibit P Form of ERISA Letter.......................................................P-1
Exhibit Q SB-AM Swap Agreement.......................................................Q-1
Exhibit R Assignment Agreement.......................................................R-1
Exhibit S Servicing Criteria.........................................................S-1
Exhibit T-1 Form of 10-K Certification...............................................T-1-1
Exhibit T-2 Form of Back-Up Certification............................................T-2-1
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Exhibit U Information to be Provided by the Master Servicer to the Rating
Agencies Relating to Reportable Modified Mortgage Loans....................U-1
Exhibit V Form of Certificate to be Given by Certificate Owner.......................V-1
Exhibit W Form of Certificate to be Given by Euroclear or Cedel......................W-1
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This Pooling and Servicing Agreement, effective as of August 1, 2006,
among RESIDENTIAL ASSET SECURITIES CORPORATION, as the depositor (together with
its permitted successors and assigns, the "Depositor"), RESIDENTIAL FUNDING
CORPORATION, as master servicer (together with its permitted successors and
assigns, the "Master Servicer"), and U.S. BANK NATIONAL ASSOCIATION, a banking
association organized under the laws of the United States, as trustee and
supplemental interest trust trustee (together with its permitted successors and
assigns, the "Trustee" and the "Supplemental Interest Trust Trustee",
respectively).
PRELIMINARY STATEMENT:
The Depositor intends to sell mortgage asset-backed pass-through
certificates (collectively, the "Certificates"), to be issued hereunder in
sixteen Classes, which in the aggregate will evidence the entire beneficial
ownership interest in the Mortgage Loans (as defined herein) and certain other
related assets.
REMIC I
As provided herein, the REMIC Administrator will make an election to
treat the segregated pool of assets consisting of the Mortgage Loans and certain
other related assets (exclusive of the Supplemental Interest Trust Account and
the Swap Agreement) subject to this Agreement as a real estate mortgage
investment conduit (a "REMIC") for federal income tax purposes, and such
segregated pool of assets will be designated as "REMIC I." Component I of the
Class R Certificates will represent the sole Class of "residual interests" in
REMIC I for purposes of the REMIC Provisions (as defined herein) under federal
income tax law. The following table irrevocably sets forth the designation,
remittance rate (the "Uncertificated REMIC I Pass Through Rate") and initial
Uncertificated Principal Balance for each of the "regular interests" in REMIC I
(the "REMIC I Regular Interests"). The "latest possible maturity date"
(determined solely for purposes of satisfying Treasury regulation Section 1.860G
1(a)(4)(iii)) for each REMIC I Regular Interest shall be the Maturity Date. None
of the REMIC I Regular Interests will be certificated.
UNCERTIFICATED
REMIC I INITIAL UNCERTIFICATED REMIC I LATEST POSSIBLE
DESIGNATION PASS-THROUGH RATE PRINCIPAL BALANCE MATURITY DATE
I-1-A Variable(1) $ 1,880,458.640 September 2036
I-2-A Variable(1) $ 2,797,708.040 September 2036
I-3-A Variable(1) $ 3,725,862.490 September 2036
I-4-A Variable(1) $ 4,656,920.010 September 2036
I-5-A Variable(1) $ 5,582,342.350 September 2036
I-6-A Variable(1) $ 6,493,139.185 September 2036
I-7-A Variable(1) $ 7,379,968.630 September 2036
I-8-A Variable(1) $ 8,225,777.280 September 2036
I-9-A Variable(1) $ 8,995,015.605 September 2036
I-10-A Variable(1) $ 9,576,026.425 September 2036
I-11-A Variable(1) $ 9,936,892.120 September 2036
I-12-A Variable(1) $ 9,473,201.840 September 2036
I-13-A Variable(1) $ 9,031,117.290 September 2036
I-14-A Variable(1) $ 8,609,889.290 September 2036
I-15-A Variable(1) $ 8,208,525.505 September 2036
I-16-A Variable(1) $ 7,826,081.165 September 2036
I-17-A Variable(1) $ 7,461,656.685 September 2036
I-18-A Variable(1) $ 7,114,395.565 September 2036
I-19-A Variable(1) $ 6,789,252.820 September 2036
I-20-A Variable(1) $ 6,518,073.335 September 2036
I-21-A Variable(1) $ 7,055,344.465 September 2036
1
I-22-A Variable(1) $ 11,647,181.715 September 2036
I-23-A Variable(1) $ 10,455,372.000 September 2036
I-24-A Variable(1) $ 9,373,735.265 September 2036
I-25-A Variable(1) $ 8,405,042.910 September 2036
I-26-A Variable(1) $ 7,177,424.940 September 2036
I-27-A Variable(1) $ 4,214,305.485 September 2036
I-28-A Variable(1) $ 3,982,239.345 September 2036
I-29-A Variable(1) $ 3,764,247.600 September 2036
I-30-A Variable(1) $ 3,558,549.650 September 2036
I-31-A Variable(1) $ 3,364,581.160 September 2036
I-32-A Variable(1) $ 172,665.175 September 2036
I-33-A Variable(1) $ 505,160.570 September 2036
I-34-A Variable(1) $ 2,670,995.120 September 2036
I-35-A Variable(1) $ 2,526,671.240 September 2036
I-36-A Variable(1) $ 2,389,591.430 September 2036
I-37-A Variable(1) $ 2,261,123.225 September 2036
I-38-A Variable(1) $ 2,139,849.455 September 2036
I-39-A Variable(1) $ 2,025,355.755 September 2036
I-40-A Variable(1) $ 1,917,252.430 September 2036
I-41-A Variable(1) $ 1,815,167.815 September 2036
I-42-A Variable(1) $ 1,718,741.930 September 2036
I-43-A Variable(1) $ 1,627,692.800 September 2036
I-44-A Variable(1) $ 1,541,688.620 September 2036
I-45-A Variable(1) $ 1,460,440.895 September 2036
I-46-A Variable(1) $ 1,383,677.940 September 2036
I-47-A Variable(1) $ 26,638,579.615 September 2036
I-1-B Variable(1) $ 1,880,458.640 September 2036
I-2-B Variable(1) $ 2,797,708.040 September 2036
I-3-B Variable(1) $ 3,725,862.490 September 2036
I-4-B Variable(1) $ 4,656,920.010 September 2036
I-5-B Variable(1) $ 5,582,342.350 September 2036
I-6-B Variable(1) $ 6,493,139.185 September 2036
I-7-B Variable(1) $ 7,379,968.630 September 2036
I-8-B Variable(1) $ 8,225,777.280 September 2036
I-9-B Variable(1) $ 8,995,015.605 September 2036
I-10-B Variable(1) $ 9,576,026.425 September 2036
I-11-B Variable(1) $ 9,936,892.120 September 2036
I-12-B Variable(1) $ 9,473,201.840 September 2036
I-13-B Variable(1) $ 9,031,117.290 September 2036
I-14-B Variable(1) $ 8,609,889.290 September 2036
I-15-B Variable(1) $ 8,208,525.505 September 2036
I-16-B Variable(1) $ 7,826,081.165 September 2036
I-17-B Variable(1) $ 7,461,656.685 September 2036
I-18-B Variable(1) $ 7,114,395.565 September 2036
I-19-B Variable(1) $ 6,789,252.820 September 2036
I-20-B Variable(1) $ 6,518,073.335 September 2036
I-21-B Variable(1) $ 7,055,344.465 September 2036
I-22-B Variable(1) $ 11,647,181.715 September 2036
I-23-B Variable(1) $ 10,455,372.000 September 2036
I-24-B Variable(1) $ 9,373,735.265 September 2036
I-25-B Variable(1) $ 8,405,042.910 September 2036
I-26-B Variable(1) $ 7,177,424.940 September 2036
2
I-27-B Variable(1) $ 4,214,305.485 September 2036
I-28-B Variable(1) $ 3,982,239.345 September 2036
I-29-B Variable(1) $ 3,764,247.600 September 2036
I-30-B Variable(1) $ 3,558,549.650 September 2036
I-31-B Variable(1) $ 3,364,581.160 September 2036
I-32-B Variable(1) $ 172,665.175 September 2036
I-33-B Variable(1) $ 505,160.570 September 2036
I-34-B Variable(1) $ 2,670,995.120 September 2036
I-35-B Variable(1) $ 2,526,671.240 September 2036
I-36-B Variable(1) $ 2,389,591.430 September 2036
I-37-B Variable(1) $ 2,261,123.225 September 2036
I-38-B Variable(1) $ 2,139,849.455 September 2036
I-39-B Variable(1) $ 2,025,355.755 September 2036
I-40-B Variable(1) $ 1,917,252.430 September 2036
I-41-B Variable(1) $ 1,815,167.815 September 2036
I-42-B Variable(1) $ 1,718,741.930 September 2036
I-43-B Variable(1) $ 1,627,692.800 September 2036
I-44-B Variable(1) $ 1,541,688.620 September 2036
I-45-B Variable(1) $ 1,460,440.895 September 2036
I-46-B Variable(1) $ 1,383,677.940 September 2036
I-47-B Variable(1) $ 26,638,579.615 September 2036
A-I Variable(1) $ 21,611,000.590 September 2036
(1) Calculated as provided in the definition of Uncertificated REMIC I
Pass-Through Rate.
3
REMIC II
As provided herein, the REMIC Administrator will make an election to
treat the segregated pool of assets consisting of the REMIC I Regular Interests
as a REMIC for federal income tax purposes, and such segregated pool of assets
will be designated as "REMIC II." Component II of the Class R Certificates will
represent the sole Class of "residual interests" in REMIC II for purposes of the
REMIC Provisions (as defined herein) under federal income tax law. The following
table irrevocably sets forth the designation, remittance rate (the
"Uncertificated REMIC II Pass-Through Rate") and initial Uncertificated
Principal Balance for each of the "regular interests" in REMIC II (the "REMIC II
Regular Interests"). The "latest possible maturity date" (determined solely for
purposes of satisfying Treasury regulation Section 1.860G 1(a)(4)(iii)) for each
REMIC II Regular Interest shall be the Maturity Date. None of the REMIC II
Regular Interests will be certificated.
UNCERTIFICATED INITIAL UNCERTIFICATED
REMIC II REMIC II LATEST POSSIBLE
DESIGNATION PASS-THROUGH RATE PRINCIPAL BALANCE MATURITY DATE
LT1 Variable(1) $ 549,906,777.53 September 2036
LT2 Variable(1) $ 16,728.59 September 2036
LT3 Variable(1) $ 38,271.41 September 2036
LT4 Variable(1) $ 38,271.41 September 2036
LT-IO Variable(1) [(2)] September 2036
(1) Calculated as provided in the definition of Uncertificated REMIC II
Pass-Through Rate.
(2) REMIC II Regular Interest LT-IO will not have an Uncertificated Principal
Balance but will accrue interest on its uncertificated notional amount
calculated in accordance with the definition of "Uncertificated Notional
Amount" herein.
4
REMIC III
As provided herein, the REMIC Administrator will elect to treat the
segregated pool of assets consisting of the REMIC II Regular Interests as a
REMIC for federal income tax purposes, and such segregated pool of assets will
be designated as REMIC III. Component III of the Class R Certificates will
represent the sole Class of "residual interests" in REMIC III for purposes of
the REMIC Provisions under federal income tax law. The following table
irrevocably sets forth the designation, Pass Through Rate, aggregate Initial
Certificate Principal Balance, certain features, month of Final Scheduled
Distribution Date and initial ratings for each Class of Certificates comprising
the interests representing "regular interests" in REMIC III. The "latest
possible maturity date" (determined solely for purposes of satisfying Treasury
Regulation Section 1.860G 1(a)(4)(iii)) for each of REMIC III Regular Interest
shall be the Maturity Date.
AGGREGATE MONTH OF
INITIAL FINAL
CERTIFICATE SCHEDULED
PASS-THROUGH PRINCIPAL DISTRIBUTION
DESIGNATION TYPE RATE BALANCE FEATURES DATE
S&P Xxxxx'x Fitch
Class A-1 Regular(1) Adjustable(2)(3) $201,200,000.00 Senior/Adjustable Rate April 2028 AAA Aaa AAA
Class A-2 Regular(1) Adjustable(2)(3) $ 90,300,000.00 Senior/Adjustable Rate December 2031 AAA Aaa AAA
Class A-3 Regular(1) Adjustable(2)(3) $ 80,300,000.00 Senior/Adjustable Rate June 2035 AAA Aaa AAA
Class A-4 Regular(1) Adjustable(2)(3) $ 57,200,000.00 Senior/Adjustable Rate September 2036 AAA Aaa AAA
Class M-1 Regular(1) Adjustable(2)(3) $ 21,175,000.00 Mezzanine/Adjustable Rate September 2036 AA+ Aa1 AA+
Class M-2 Regular(1) Adjustable(2)(3) $ 18,700,000.00 Mezzanine/Adjustable Rate September 2036 AA Aa2 AA
Class M-3 Regular(1) Adjustable(2)(3) $ 11,275,000.00 Mezzanine/Adjustable Rate September 0000 XX- Xx0 XX-
Class M-4 Regular(1) Adjustable(2)(3) $ 10,450,000.00 Mezzanine/Adjustable Rate September 2036 A+ A1 A+
Class M-5 Regular(1) Adjustable(2)(3) $ 9,625,000.00 Mezzanine/Adjustable Rate September 2036 A A2 A
Class M-6 Regular(1) Adjustable(2)(3) $ 9,350,000.00 Mezzanine/Adjustable Rate September 2036 A- A3 A-
Class M-7 Regular(1) Adjustable(2)(3) $ 9,075,000.00 Mezzanine/Adjustable Rate September 2036 BBB+ Baa1 BBB+
Class M-8 Regular(1) Adjustable(2)(3) $ 7,700,000.00 Mezzanine/Adjustable Rate September 2036 BBB Baa2 BBB
Class M-9 Regular(1) Adjustable(2)(3) $ 6,325,000.00 Mezzanine/Adjustable Rate September 2036 BBB- Baa3 BBB-
Class SB Regular(4) N/A $ 17,325,048.95 Subordinate N/R N/R N/R
IO Regular(5) (6) (7) Interest Only N/R N/R N/R
(1) This Class of Certificates represents ownership of a REMIC III Regular
Interest together with (i) certain rights to payments to be made from
amounts received under the Swap Agreement which will be deemed made for
federal income tax purposes outside of REMIC III by the holder of the Class
SB Certificates as the owner of the Swap Agreement and (ii) the obligation
to pay the Class IO Distribution Amount. Any amount distributed on this
Class of Certificates on any Distribution Date in excess of the amount
distributable on the related REMIC III Regular Interest on such Distribution
Date shall be treated for federal income tax purposes as having been paid
from the Supplemental Interest Trust Account and any amount distributable on
such REMIC III Regular Interest on such Distribution Date in excess of the
amount distributable on such Class of Certificates on such Distribution Date
shall be treated as having been paid to the Supplemental Interest Trust
Account, all pursuant to and as further provided in Section 4.10 hereof.
(2) The REMIC III Regular Interests ownership of which is represented by the
Class A Certificates and the Class M Certificates, will accrue interest at a
per annum rate equal to LIBOR plus the applicable Margin, each subject to a
payment cap as described in the definition of "Pass-Through Rate" and the
provisions for the payment of Basis Risk Shortfalls herein, which payments
will not be part of the entitlement of the REMIC III Regular Interests
related to such Certificates.
(3) The Class A Certificates and Class M Certificates will also entitle their
holders to certain payments from the Holder of the Class SB Certificates
from amounts to which the related REMIC III Regular Interest is entitled and
from amounts received under the Swap Agreement, which will not be a part of
their ownership of the REMIC III Regular Interests.
(4) The Class SB Certificates will accrue interest as described in the
definition of Accrued Certificate Interest. The Class SB Certificates will
not accrue interest on their Certificate Principal Balance. The Class SB
Certificates will be comprised of two REMIC III regular interests, a
principal only regular interest designated SB-PO and an interest only
regular interest designated SB-IO, which will be entitled to distributions
as set forth herein. The rights of the Holder of the Class SB Certificates
to payments from the Swap Agreement shall be outside and apart from its
rights under the REMIC III Regular Interests SB-IO and SB-PO.
(5) REMIC III Regular Interest IO will be held as an asset of the Supplemental
Interest Trust Account established by the Trustee and will be treated for
federal income tax purposes as owned by the holder of the Class SB
Certificate.
(6) For federal income tax purposes, REMIC III Regular Interest IO will not have
a Pass-Through Rate, but will be entitled to 100% of the amounts distributed
on REMIC II Regular Interest LT-IO.
(7) For federal income tax purposes, REMIC III Regular Interest IO will not have
an Uncertificated Principal Balance, but will have a notional amount equal
to the Uncertificated Notional Amount of REMIC II Regular Interest LT-IO.
5
In consideration of the mutual agreements herein contained, the
Depositor, the Master Servicer and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions.
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the meanings specified in this
Article.
Accredited Investor: The meaning specified in Rule 501(a) of the
Securities Act.
Accrued Certificate Interest: With respect to each Distribution Date and
each Class of Class A Certificates and Class M Certificates, an amount equal to
the interest accrued during the related Interest Accrual Period on the
Certificate Principal Balance thereof immediately prior to such Distribution
Date at the related Pass-Through Rate for that Distribution Date.
The amount of Accrued Certificate Interest on each Class of Certificates
shall be reduced by the amount of Prepayment Interest Shortfalls on the related
Mortgage Loans during the prior calendar month to the extent not covered by
Compensating Interest pursuant to Section 3.16, and Relief Act Shortfalls on the
related Mortgage Loans during the related Due Period. All such reductions with
respect to the Mortgage Loans will be allocated among the Certificates on a
pro-rata basis in proportion to the amount of Accrued Certificate Interest
payable on such Certificates on such Distribution Date absent such reductions.
Accrued Certificate Interest for any Distribution Date shall further be
reduced by the interest portion of Realized Losses allocated to any Class of
Certificates pursuant to Section 4.05.
Accrued Certificate Interest shall accrue on the basis of a 360-day year
and the actual number of days in the related Interest Accrual Period.
With respect to each Distribution Date and the Class SB Certificates,
interest accrued during the preceding Interest Accrual Period at the
Pass-Through Rate on the Uncertificated Notional Amount as specified in the
definition of Pass-Through Rate, immediately prior to such Distribution Date,
reduced by any interest shortfalls with respect to the Mortgage Loans, including
Prepayment Interest Shortfalls to the extent not covered by Compensating
Interest pursuant to Section 3.16 or by Excess Cash Flow pursuant to Section
4.02(c)(v) and (vi). Accrued Certificate Interest on the Class SB Certificates
shall accrue on the basis of a 360-day year and the actual number of days in the
related Interest Accrual Period.
Adjusted Available Distribution Amount: With respect to any Distribution
Date, the Available Distribution Amount increased by the excess, if any, of the
Net Swap Payment owed to the Swap Counterparty over the amount distributable on
such Distribution Date in respect of the REMIC III Regular Interest IO.
Adjusted Mortgage Rate: With respect to any Mortgage Loan and any date
of determination, the Mortgage Rate borne by the related Mortgage Note, less the
rate at which the related Subservicing Fee accrues.
6
Adjustment Date: With respect to each adjustable-rate Mortgage Loan,
each date set forth in the related Mortgage Note on which an adjustment to the
interest rate on such Mortgage Loan becomes effective.
Advance: With respect to any Mortgage Loan, any advance made by the
Master Servicer, pursuant to Section 4.04.
Affected Party: As defined in the Swap Agreement.
Affiliate: With respect to any Person, any other Person controlling,
controlled by or under common control with such first Person. For the purposes
of this definition, "control" means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Agreement: This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
Amount Held for Future Distribution: With respect to any Distribution
Date, the total of the amounts held in the Custodial Account at the close of
business on the preceding Determination Date on account of (i) Liquidation
Proceeds, Subsequent Recoveries, Insurance Proceeds, REO Proceeds, Principal
Prepayments, Mortgage Loan purchases made pursuant to Section 2.02, 2.03, 2.04
or 4.07 and Mortgage Loan substitutions made pursuant to Section 2.03 or 2.04
received or made in the month of such Distribution Date (other than such
Liquidation Proceeds, Subsequent Recoveries, Insurance Proceeds, REO Proceeds
and purchases of Mortgage Loans that the Master Servicer has deemed to have been
received in the preceding month in accordance with Section 3.07(b)) and (ii)
payments which represent early receipt of scheduled payments of principal and
interest due on a date or dates subsequent to the Due Date in the related Due
Period.
Applicable Procedures: The applicable rules, regulations and procedures
utilized or imposed by any Clearance System or the Depository.
Appraised Value: With respect to any Mortgaged Property, the lesser of
(i) the appraised value of such Mortgaged Property based upon the appraisal made
at the time of the origination of the related Mortgage Loan, and (ii) the sales
price of the Mortgaged Property at such time of origination, except in the case
of a Mortgaged Property securing a refinanced or modified Mortgage Loan as to
which it is either the appraised value based upon the appraisal made at the time
of origination of the loan which was refinanced or modified or the appraised
value determined in an appraisal at the time of refinancing or modification, as
the case may be.
Assignment: An assignment of the Mortgage, notice of transfer or
equivalent instrument, in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale of the Mortgage Loan to the Trustee for the benefit of
Certificateholders, which assignment, notice of transfer or equivalent
instrument may be in the form of one or more blanket assignments covering
Mortgages secured by Mortgaged Properties located in the same county, if
permitted by law and accompanied by an Opinion of Counsel to that effect.
Assignment Agreement: The Assignment and Assumption Agreement, dated the
Closing Date, between Residential Funding and the Depositor relating to the
transfer and assignment of the Mortgage Loans, attached hereto as Exhibit R.
7
Available Distribution Amount: With respect to any Distribution Date, an
amount equal to (a) the sum of (i) the amount relating to the Mortgage Loans on
deposit in the Custodial Account as of the close of business on the immediately
preceding Determination Date, including any Subsequent Recoveries, and amounts
deposited in the Custodial Account in connection with the substitution of
Qualified Substitute Mortgage Loans, (ii) the amount of any Advance made on the
immediately preceding Certificate Account Deposit Date with respect to the
Mortgage Loans, (iii) any amount deposited in the Certificate Account on the
related Certificate Account Deposit Date pursuant to the second paragraph of
Section 3.12(a) in respect of the Mortgage Loans, (iv) any amount that the
Master Servicer is not permitted to withdraw from the Custodial Account pursuant
to Section 3.16(e) in respect of the Mortgage Loans, and (v) any amount
deposited in the Certificate Account pursuant to Section 4.07 or 9.01 in respect
of the Mortgage Loans, reduced by (b) the sum as of the close of business on the
immediately preceding Determination Date of (x) the Amount Held for Future
Distribution with respect to the Mortgage Loans, (y) amounts permitted to be
withdrawn by the Master Servicer from the Custodial Account in respect of the
Mortgage Loans pursuant to clauses (ii)-(x), inclusive, of Section 3.10(a) and
(z) any Net Swap Payments required to be made to the Swap Counterparty and Swap
Termination Payments not due to a Swap Counterparty Trigger Event for such
Distribution Date.
Balloon Loan: Each of the Mortgage Loans having an original term to
maturity that is shorter than the related amortization term.
Balloon Payment: With respect to any Balloon Loan, the related Monthly
Payment payable on the stated maturity date of such Balloon Loan.
Bankruptcy Code: The Bankruptcy Code of 1978, as amended.
Basis Risk Shortfalls: With respect to each Class of the Class A
Certificates and Class M Certificates, and any Distribution Date, the sum of (a)
with respect to any Distribution Date on which the Net WAC Cap Rate is used to
determine the Pass-Through Rate of such Class, an amount equal to the excess of
(x) Accrued Certificate Interest for such Class calculated at a per annum rate
equal to LIBOR plus the related Margin for such Distribution Date (which shall
not exceed 14.000% per annum), over (y) Accrued Certificate Interest for such
Class calculated using the Net WAC Cap Rate, (b) any Basis Risk Shortfalls for
such Class calculated pursuant to clause (a) above remaining unpaid from prior
Distribution Dates, and (c) one month's interest on the amount in clause (b)
(based on the number of days in the preceding Interest Accrual Period) at a per
annum rate equal to the Pass-Through Rate for such period.
Book-Entry Certificate: Any Certificate registered in the name of the
Depository or its nominee.
Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a
day on which banking institutions in the State of California, the State of
Minnesota, the State of Texas, the State of New York or the State of Illinois
(and such other state or states in which the Custodial Account or the
Certificate Account are at the time located) are required or authorized by law
or executive order to be closed.
Calendar Quarter: A Calendar Quarter shall consist of one of the
following time periods in any given year: January 1 through March 31, April 1
through June 30, July 1 through September 30, and October 1 through December 31.
Capitalization Reimbursement Amount: With respect to any Distribution
Date, the amount of Advances or Servicing Advances that were added to the Stated
Principal Balance of the Mortgage Loans during the prior calendar month and
reimbursed to the Master Servicer or Subservicer on or prior to such
Distribution Date pursuant to Section 3.10(a)(vii).
8
Cash Liquidation: With respect to any defaulted Mortgage Loan other than
a Mortgage Loan as to which an REO Acquisition occurred, a determination by the
Master Servicer that it has received all Insurance Proceeds, Liquidation
Proceeds and other payments or cash recoveries which the Master Servicer
reasonably and in good faith expects to be finally recoverable with respect to
such Mortgage Loan.
Certificate: Any Class A Certificate, Class M Certificate, Class SB
Certificate or Class R Certificate.
Certificate Account: The account or accounts created and maintained
pursuant to Section 4.01, which shall be entitled "U.S. Bank National
Association, as trustee, in trust for the registered holders of Residential
Asset Securities Corporation, Home Equity Mortgage Asset-Backed Pass-Through
Certificates, Series 2006-KS7" and which account shall be held for the benefit
of the Certificateholders and which must be an Eligible Account.
Certificate Account Deposit Date: With respect to any Distribution Date,
the Business Day prior thereto.
Certificateholder or Holder: The Person in whose name a Certificate is
registered in the Certificate Register, except that neither a Disqualified
Organization nor a Non-United States Person shall be a holder of a Class R
Certificate for any purpose hereof. Solely for the purpose of giving any consent
or direction pursuant to this Agreement, any Certificate, other than a Class R
Certificate, registered in the name of the Depositor, the Master Servicer or any
Subservicer or any Affiliate thereof shall be deemed not to be outstanding and
the Percentage Interest or Voting Rights evidenced thereby shall not be taken
into account in determining whether the requisite amount of Percentage Interests
or Voting Rights necessary to effect any such consent or direction has been
obtained. All references herein to "Holders" or "Certificateholders" shall
reflect the rights of Certificate Owners as they may indirectly exercise such
rights through the Depository and participating members thereof, except as
otherwise specified herein; provided, however, that the Trustee shall be
required to recognize as a "Holder" or "Certificateholder" only the Person in
whose name a Certificate is registered in the Certificate Register. Unless
otherwise indicated in this Agreement, the Custodial Agreement or the Assignment
Agreement, whenever reference is made to the actions taken by the Trustee on
behalf of the Certificateholders.
Certificate Owner: With respect to a Book-Entry Certificate, the Person
who is the beneficial owner of such Certificate, as reflected on the books of an
indirect participating brokerage firm for which a Depository Participant acts as
agent, if any, and otherwise on the books of a Depository Participant, if any,
and otherwise on the books of the Depository.
Certificate Principal Balance: With respect to any Class A Certificate
or Class M Certificate, on any date of determination, an amount equal to (i) the
Initial Certificate Principal Balance of such Certificate as specified on the
face thereof, minus (ii) the sum of (x) the aggregate of all amounts previously
distributed with respect to such Certificate (or any predecessor Certificate)
and applied to reduce the Certificate Principal Balance thereof pursuant to
Section 4.02(c) and (y) the aggregate of all reductions in Certificate Principal
Balance deemed to have occurred in connection with Realized Losses which were
previously allocated to such Certificate (or any predecessor Certificate)
pursuant to Section 4.05; provided, that with respect to any Distribution Date,
the Certificate Principal Balance of any outstanding Class of Class A
Certificates or Class M Certificates (with respect to the Class A Certificates,
on a pro rata basis based on the amount of Realized Loss previously allocated
thereto and remaining unreimbursed) to which a Realized Loss was previously
allocated and remains unreimbursed will be increased, to the extent of Realized
Losses previously allocated thereto and remaining unreimbursed, but only to the
extent of Subsequent Recoveries received during the preceding calendar month.
With respect to any Class SB Certificate, on any date of determination, an
amount equal to the Percentage Interest evidenced by such Certificate,
9
multiplied by an amount equal to (i) the excess, if any, of (A) the then
aggregate Stated Principal Balance of the Mortgage Loans over (B) the then
aggregate Certificate Principal Balance of the Class A Certificates and Class M
Certificates then outstanding, which represents the sum of (i) the Initial
Principal Balance of the REMIC II Regular Interest SB-PO, as reduced by Realized
Losses allocated thereto and payments deemed made thereon, and (ii) accrued and
unpaid interest on the REMIC II Regular Interest SB-IO, as reduced by Realized
Losses allocated thereto. The Class R Certificates will not have a Certificate
Principal Balance.
Certificate Register and Certificate Registrar: The register maintained
and the registrar appointed pursuant to Section 5.02.
Class: Collectively, all of the Certificates or uncertificated interests
bearing the same designation.
Class A Certificates: Collectively, the Class A-1 Certificates, Class
A-2 Certificates, Class A-3 Certificates and Class A-4 Certificates.
Class A Principal Distribution Amount: With respect to any Distribution
Date (a) prior to the Stepdown Date or on or after the Stepdown Date if a
Trigger Event is in effect for that Distribution Date, the Principal
Distribution Amount for that Distribution Date or (b) on or after the Stepdown
Date if a Trigger Event is not in effect for that Distribution Date, the lesser
of:
(i) the Principal Distribution Amount for that Distribution Date;
and
(ii) the excess, if any, of (A) the aggregate Certificate
Principal Balance of the Class A Certificates immediately prior to that
Distribution Date over (B) the lesser of (x) the product of (1) the applicable
Subordination Percentage and (2) the aggregate Stated Principal Balance of the
Mortgage Loans after giving effect to distributions to be made on that
Distribution Date and (y) the excess, if any, of the aggregate Stated Principal
Balance of the Mortgage Loans after giving effect to distributions to be made on
that Distribution Date, over the Overcollateralization Floor.
Class A-1 Certificate: Any one of the Class A-1 Certificates executed by
the Trustee and authenticated by the Certificate Registrar substantially in the
form annexed hereto as Exhibit A, senior to the Class M Certificates, Class SB
Certificates and Class R Certificates with respect to distributions and the
allocation of Realized Losses as set forth in Section 4.05, and evidencing (i)
an interest designated as a "regular interest" in REMIC III for purposes of the
REMIC Provisions, (ii) the right to receive payments under the Swap Agreement
and (iii) the obligation to pay the Class IO Distribution Amount.
Class A-1 Margin: Initially, 0.050% per annum, and on any Distribution
Date on or after the second Distribution Date after the first possible Optional
Termination Date, 0.100% per annum.
Class A-2 Certificate: Any one of the Class A-2 Certificates executed by
the Trustee and authenticated by the Certificate Registrar substantially in the
form annexed hereto as Exhibit A, senior to the Class M Certificates, Class SB
Certificates and Class R Certificates with respect to distributions and the
allocation of Realized Losses as set forth in Section 4.05, and evidencing (i)
an interest designated as a "regular interest" in REMIC III for purposes of the
REMIC Provisions, (ii) the right to receive payments under the Swap Agreement
and (iii) the obligation to pay the Class IO Distribution Amount.
Class A-2 Margin: Initially, 0.100% per annum, and on any Distribution
Date on or after the second Distribution Date after the first possible Optional
Termination Date, 0.200% per annum.
10
Class A-3 Certificate: Any one of the Class A-3 Certificates executed by
the Trustee and authenticated by the Certificate Registrar substantially in the
form annexed hereto as Exhibit A, senior to the Class M Certificates, Class SB
Certificates and Class R Certificates with respect to distributions and the
allocation of Realized Losses as set forth in Section 4.05, and evidencing (i)
an interest designated as a "regular interest" in REMIC III for purposes of the
REMIC Provisions, (ii) the right to receive payments under the Swap Agreement
and (iii) the obligation to pay the Class IO Distribution Amount.
Class A-3 Margin: Initially, 0.150% per annum, and on any Distribution
Date on or after the second Distribution Date after the first possible Optional
Termination Date, 0.300% per annum.
Class A-4 Certificate: Any one of the Class A-4 Certificates executed by
the Trustee and authenticated by the Certificate Registrar substantially in the
form annexed hereto as Exhibit A, senior to the Class M Certificates, Class SB
Certificates and Class R Certificates with respect to distributions and the
allocation of Realized Losses as set forth in Section 4.05, and evidencing (i)
an interest designated as a "regular interest" in REMIC III for purposes of the
REMIC Provisions, (ii) the right to receive payments under the Swap Agreement
and (iii) the obligation to pay the Class IO Distribution Amount.
Class A-4 Margin: Initially, 0.240% per annum, and on any Distribution
Date on or after the second Distribution Date after the first possible Optional
Termination Date, 0.480% per annum.
Class M Certificates: Collectively, the Class M-1 Certificates, Class
M-2 Certificates, Class M-3 Certificates, Class M-4 Certificates, Class M-5
Certificates, Class M-6 Certificates, Class M-7 Certificates, Class M-8
Certificates and Class M-9 Certificates.
Class M Principal Distribution Amount: With respect to any Distribution
Date, the sum of the Class M-1 Principal Distribution Amount, Class M-2
Principal Distribution Amount, Class M-3 Principal Distribution Amount, Class
M-4 Principal Distribution Amount, Class M-5 Principal Distribution Amount,
Class M-6 Principal Distribution Amount, Class M-7 Principal Distribution
Amount, Class M-8 Principal Distribution Amount and Class M-9 Principal
Distribution Amount for that distribution date.
Class M-1 Certificate: Any one of the Class M-1 Certificates executed by
the Trustee and authenticated by the Certificate Registrar substantially in the
form annexed hereto as Exhibit B, senior to the Class M-2 Certificates, Class
M-3 Certificates, Class M-4 Certificates, Class M-5 Certificates, Class M-6
Certificates, Class M-7 Certificates, Class M-8 Certificates, Class M-9
Certificates, Class SB Certificates and Class R Certificates with respect to
distributions and the allocation of Realized Losses as set forth in Section
4.05, and evidencing (i) an interest designated as a "regular interest" in REMIC
III for purposes of the REMIC Provisions, (ii) the right to receive payments
under the Swap Agreement and (iii) the obligation to pay the Class IO
Distribution Amount.
Class M-1 Margin: Initially, 0.280% per annum, and on any Distribution
Date on or after the second Distribution Date after the first possible Optional
Termination Date, 0.420% per annum.
Class M-1 Principal Distribution Amount: With respect to any
Distribution Date (a) prior to the Stepdown Date or on or after the Stepdown
Date if a Trigger Event is in effect for that Distribution Date, the remaining
Principal Distribution Amount for that Distribution Date after distribution of
the Class A Principal Distribution Amount or (b) on or after the Stepdown Date
if a Trigger Event is not in effect for that Distribution Date, the lesser of:
(i) the remaining Principal Distribution Amount for that
Distribution Date after distribution of the Class A Principal Distribution
Amount; and
11
(ii) the excess, if any, of (A) the sum of (1) the aggregate
Certificate Principal Balance of the Class A Certificates (after taking into
account the payment of the Class A Principal Distribution Amount for that
Distribution Date) and (2) the Certificate Principal Balance of the Class M-1
Certificates immediately prior to that Distribution Date over (B) the lesser of
(x) the product of (1) the applicable Subordination Percentage and (2) the
aggregate Stated Principal Balance of the Mortgage Loans after giving effect to
distributions to be made on that Distribution Date and (y) the excess, if any,
of the aggregate Stated Principal Balance of the Mortgage Loans after giving
effect to distributions to be made on that Distribution Date, over the
Overcollateralization Floor.
Class M-2 Certificate: Any one of the Class M-2 Certificates executed by
the Trustee and authenticated by the Certificate Registrar substantially in the
form annexed hereto as Exhibit B, senior to the Class M-3 Certificates, Class
M-4 Certificates, Class M-5 Certificates, Class M-6 Certificates, Class M-7
Certificates, Class M-8 Certificates, Class M-9 Certificates, Class SB
Certificates and Class R Certificates with respect to distributions and the
allocation of Realized Losses as set forth in Section 4.05, and evidencing (i)
an interest designated as a "regular interest" in REMIC III for purposes of the
REMIC Provisions, (ii) the right to receive payments under the Swap Agreement
and (iii) the obligation to pay the Class IO Distribution Amount.
Class M-2 Margin: Initially, 0.300% per annum, and on any Distribution
Date on or after the second Distribution Date after the first possible Optional
Termination Date, 0.450% per annum.
Class M-2 Principal Distribution Amount: With respect to any
Distribution Date (a) prior to the Stepdown Date or on or after the Stepdown
Date if a Trigger Event is in effect for that Distribution Date, the remaining
Principal Distribution Amount for that Distribution Date after distribution of
the Class A Principal Distribution Amount and the Class M-1 Principal
Distribution Amount or (b) on or after the Stepdown Date if a Trigger Event is
not in effect for that Distribution Date, the lesser of:
(i) the remaining Principal Distribution Amount for that
Distribution Date after distribution of the Class A Principal Distribution
Amount and the Class M-1 Principal Distribution Amount; and
(ii) the excess, if any, of (A) the sum of (1) the aggregate
Certificate Principal Balance of the Class A Certificates and Class M-1
Certificates (after taking into account the payment of the Class A Principal
Distribution Amount and the Class M-1 Principal Distribution Amount for that
Distribution Date) and (2) the Certificate Principal Balance of the Class M-2
Certificates immediately prior to that Distribution Date over (B) the lesser of
(x) the product of (1) the applicable Subordination Percentage and (2) the
aggregate Stated Principal Balance of the Mortgage Loans after giving effect to
distributions to be made on that Distribution Date and (y) the excess, if any,
of the aggregate Stated Principal Balance of the Mortgage Loans after giving
effect to distributions to be made on that Distribution Date, over the
Overcollateralization Floor.
Class M-3 Certificate: Any one of the Class M-3 Certificates executed by
the Trustee and authenticated by the Certificate Registrar substantially in the
form annexed hereto as Exhibit B, senior to the Class M-4 Certificates, Class
M-5 Certificates, Class M-6 Certificates, Class M-7 Certificates, Class M-8
Certificates, Class M-9 Certificates, Class SB Certificates and Class R
Certificates with respect to distributions and the allocation of Realized Losses
as set forth in Section 4.05, and evidencing (i) an interest designated as a
"regular interest" in REMIC III for purposes of the REMIC Provisions, (ii) the
right to receive payments under the Swap Agreement and (iii) the obligation to
pay the Class IO Distribution Amount.
Class M-3 Margin: Initially, 0.330% per annum, and on any Distribution
Date on or after the second Distribution Date after the first possible Optional
Termination Date, 0.495% per annum.
12
Class M-3 Principal Distribution Amount: With respect to any
Distribution Date (a) prior to the Stepdown Date or on or after the Stepdown
Date if a Trigger Event is in effect for that Distribution Date, the remaining
Principal Distribution Amount for that Distribution Date after distribution of
the Class A Principal Distribution Amount, the Class M-1 Principal Distribution
Amount and the Class M-2 Principal Distribution Amount or (b) on or after the
Stepdown Date if a Trigger Event is not in effect for that Distribution Date,
the lesser of:
(i) the remaining Principal Distribution Amount for that
Distribution Date after distribution of the Class A Principal Distribution
Amount, the Class M-1 Principal Distribution Amount and the Class M-2 Principal
Distribution Amount; and
(ii) the excess, if any, of (A) the sum of (1) the aggregate
Certificate Principal Balance of the Class A Certificates, Class M-1
Certificates and Class M-2 Certificates (after taking into account the payment
of the Class A Principal Distribution Amount, the Class M-1 Principal
Distribution Amount and the Class M-2 Principal Distribution Amount for that
Distribution Date) and (2) the Certificate Principal Balance of the Class M-3
Certificates immediately prior to that Distribution Date over (B) the lesser of
(x) the product of (1) the applicable Subordination Percentage and (2) the
aggregate Stated Principal Balance of the Mortgage Loans after giving effect to
distributions to be made on that Distribution Date and (y) the excess, if any,
of the aggregate Stated Principal Balance of the Mortgage Loans after giving
effect to distributions to be made on that Distribution Date, over the
Overcollateralization Floor.
Class M-4 Certificate: Any one of the Class M-4 Certificates executed by
the Trustee and authenticated by the Certificate Registrar substantially in the
form annexed hereto as Exhibit B, senior to the Class M-5 Certificates, Class
M-6 Certificates, Class M-7 Certificates, Class M-8 Certificates, Class M-9
Certificates, Class SB Certificates and Class R Certificates with respect to
distributions and the allocation of Realized Losses as set forth in Section
4.05, and evidencing (i) an interest designated as a "regular interest" in REMIC
III for purposes of the REMIC Provisions, (ii) the right to receive payments
under the Swap Agreement and (iii) the obligation to pay the Class IO
Distribution Amount.
Class M-4 Margin: Initially, 0.370% per annum, and on any Distribution
Date on or after the second Distribution Date after the first possible Optional
Termination Date, 0.555% per annum.
Class M-4 Principal Distribution Amount: With respect to any
Distribution Date (a) prior to the Stepdown Date or on or after the Stepdown
Date if a Trigger Event is in effect for that Distribution Date, the remaining
Principal Distribution Amount for that Distribution Date after distribution of
the Class A Principal Distribution Amount, the Class M-1 Principal Distribution
Amount, the Class M-2 Principal Distribution Amount and the Class M-3 Principal
Distribution Amount or (b) on or after the Stepdown Date if a Trigger Event is
not in effect for that Distribution Date, the lesser of:
(i) the remaining Principal Distribution Amount for that
Distribution Date after distribution of the Class A Principal Distribution
Amount, the Class M-1 Principal Distribution Amount, the Class M-2 Principal
Distribution Amount and the Class M-3 Principal Distribution Amount; and
(ii) the excess, if any, of (A) the sum of (1) the aggregate
Certificate Principal Balance of the Class A Certificates, Class M-1
Certificates, Class M-2 Certificates and Class M-3 Certificates (after taking
into account the payment of the Class A Principal Distribution Amount, the Class
M-1 Principal Distribution Amount, the Class M-2 Principal Distribution Amount
and the Class M-3 Principal Distribution Amount for that Distribution Date) and
(2) the Certificate Principal Balance of the Class M-4 Certificates immediately
prior to that Distribution Date over (B) the lesser of (x) the product of (1)
the applicable Subordination Percentage and (2) the aggregate Stated Principal
Balance of the Mortgage Loans after giving effect to distributions to be made on
that Distribution Date and (y) the excess, if any, of the aggregate Stated
Principal Balance of the Mortgage Loans after giving effect to distributions to
be made on that Distribution Date, over the Overcollateralization Floor.
13
Class M-5 Certificate: Any one of the Class M-5 Certificates executed by
the Trustee and authenticated by the Certificate Registrar substantially in the
form annexed hereto as Exhibit B, senior to the Class M-6 Certificates, Class
M-7 Certificates, Class M-8 Certificates, Class M-9 Certificates, Class SB
Certificates and Class R Certificates with respect to distributions and the
allocation of Realized Losses as set forth in Section 4.05, and evidencing (i)
an interest designated as a "regular interest" in REMIC III for purposes of the
REMIC Provisions, (ii) the right to receive payments under the Swap Agreement
and (iii) the obligation to pay the Class IO Distribution Amount.
Class M-5 Margin: Initially, 0.400% per annum, and on any Distribution
Date on or after the second Distribution Date after the first possible Optional
Termination Date, 0.600% per annum.
Class M-5 Principal Distribution Amount: With respect to any
Distribution Date (a) prior to the Stepdown Date or on or after the Stepdown
Date if a Trigger Event is in effect for that Distribution Date, the remaining
Principal Distribution Amount for that Distribution Date after distribution of
the Class A Principal Distribution Amount, the Class M-1 Principal Distribution
Amount, the Class M-2 Principal Distribution Amount, the Class M-3 Principal
Distribution Amount and the Class M-4 Principal Distribution Amount or (b) on or
after the Stepdown Date if a Trigger Event is not in effect for that
Distribution Date, the lesser of:
(i) the remaining Principal Distribution Amount for that
Distribution Date after distribution of the Class A Principal Distribution
Amount, the Class M-1 Principal Distribution Amount, the Class M-2 Principal
Distribution Amount, the Class M-3 Principal Distribution Amount and the Class
M-4 Principal Distribution Amount; and
(ii) the excess, if any, of (A) the sum of (1) the aggregate
Certificate Principal Balance of the Class A Certificates, Class M-1
Certificates, Class M-2 Certificates, Class M-3 Certificates and Class M-4
Certificates (after taking into account the payment of the Class A Principal
Distribution Amount, the Class M-1 Principal Distribution Amount, the Class M-2
Principal Distribution Amount, the Class M-3 Principal Distribution Amount and
the Class M-4 Principal Distribution Amount for that Distribution Date) and (2)
the Certificate Principal Balance of the Class M-5 Certificates immediately
prior to that Distribution Date over (B) the lesser of (x) the product of (1)
the applicable Subordination Percentage and (2) the aggregate Stated Principal
Balance of the Mortgage Loans after giving effect to distributions to be made on
that Distribution Date and (y) the excess, if any, of the aggregate Stated
Principal Balance of the Mortgage Loans after giving effect to distributions to
be made on that Distribution Date, over the Overcollateralization Floor.
Class M-6 Certificate: Any one of the Class M-6 Certificates executed by
the Trustee and authenticated by the Certificate Registrar substantially in the
form annexed hereto as Exhibit B, senior to the Class M-7 Certificates, Class
M-8 Certificates, Class M-9 Certificates, Class SB Certificates and Class R
Certificates with respect to distributions and the allocation of Realized Losses
as set forth in Section 4.05, and evidencing (i) an interest designated as a
"regular interest" in REMIC III for purposes of the REMIC Provisions, (ii) the
right to receive payments under the Swap Agreement and (iii) the obligation to
pay the Class IO Distribution Amount.
Class M-6 Margin: Initially, 0.480% per annum, and on any Distribution
Date on or after the second Distribution Date after the first possible Optional
Termination Date, 0.720% per annum.
14
Class M-6 Principal Distribution Amount: With respect to any
Distribution Date (a) prior to the Stepdown Date or on or after the Stepdown
Date if a Trigger Event is in effect for that Distribution Date, the remaining
Principal Distribution Amount for that Distribution Date after distribution of
the Class A Principal Distribution Amount, the Class M-1 Principal Distribution
Amount, the Class M-2 Principal Distribution Amount, the Class M-3 Principal
Distribution Amount, the Class M-4 Principal Distribution Amount and the Class
M-5 Principal Distribution Amount or (b) on or after the Stepdown Date if a
Trigger Event is not in effect for that Distribution Date, the lesser of:
(i) the remaining Principal Distribution Amount for that
Distribution Date after distribution of the Class A Principal Distribution
Amount, the Class M-1 Principal Distribution Amount, the Class M-2 Principal
Distribution Amount, the Class M-3 Principal Distribution Amount, the Class M-4
Principal Distribution Amount and the Class M-5 Principal Distribution Amount;
and
(ii) the excess, if any, of (A) the sum of (1) the aggregate
Certificate Principal Balance of the Class A Certificates, Class M-1
Certificates, Class M-2 Certificates, Class M-3 Certificates, Class M-4
Certificates and Class M-5 Certificates (after taking into account the payment
of the Class A Principal Distribution Amount, the Class M-1 Principal
Distribution Amount, the Class M-2 Principal Distribution Amount, the Class M-3
Principal Distribution Amount, the Class M-4 Principal Distribution Amount and
the Class M-5 Principal Distribution Amount for that Distribution Date) and (2)
the Certificate Principal Balance of the Class M-6 Certificates immediately
prior to that Distribution Date over (B) the lesser of (x) the product of (1)
the applicable Subordination Percentage and (2) the aggregate Stated Principal
Balance of the Mortgage Loans after giving effect to distributions to be made on
that Distribution Date and (y) the excess, if any, of the aggregate Stated
Principal Balance of the Mortgage Loans after giving effect to distributions to
be made on that Distribution Date, over the Overcollateralization Floor.
Class M-7 Certificate: Any one of the Class M-7 Certificates executed by
the Trustee and authenticated by the Certificate Registrar substantially in the
form annexed hereto as Exhibit B, senior to the Class M-8 Certificates, Class
M-9 Certificates, Class SB Certificates and Class R Certificates with respect to
distributions and the allocation of Realized Losses as set forth in Section
4.05, and evidencing (i) an interest designated as a "regular interest" in REMIC
III for purposes of the REMIC Provisions, (ii) the right to receive payments
under the Swap Agreement and (iii) the obligation to pay the Class IO
Distribution Amount.
Class M-7 Margin: Initially, 0.900% per annum, and on any Distribution
Date on or after the second Distribution Date after the first possible Optional
Termination Date, 1.350% per annum.
Class M-7 Principal Distribution Amount: With respect to any
Distribution Date (a) prior to the Stepdown Date or on or after the Stepdown
Date if a Trigger Event is in effect for that Distribution Date, the remaining
Principal Distribution Amount for that Distribution Date after distribution of
the Class A Principal Distribution Amount, the Class M-1 Principal Distribution
Amount, the Class M-2 Principal Distribution Amount, the Class M-3 Principal
Distribution Amount, the Class M-4 Principal Distribution Amount, the Class M-5
Principal Distribution Amount and the Class M-6 Principal Distribution Amount or
(b) on or after the Stepdown Date if a Trigger Event is not in effect for that
Distribution Date, the lesser of:
(i) the remaining Principal Distribution Amount for that
Distribution Date after distribution of the Class A Principal Distribution
Amount, the Class M-1 Principal Distribution Amount, the Class M-2 Principal
Distribution Amount, the Class M-3 Principal Distribution Amount, the Class M-4
Principal Distribution Amount, the Class M-5 Principal Distribution Amount and
the Class M-6 Principal Distribution Amount; and
15
(ii) the excess, if any, of (A) the sum of (1) the aggregate
Certificate Principal Balance of the Class A Certificates, Class M-1
Certificates, Class M-2 Certificates, Class M-3 Certificates, Class M-4
Certificates, Class M-5 Certificates and Class M-6 Certificates (after taking
into account the payment of the Class A Principal Distribution Amount, the Class
M-1 Principal Distribution Amount, the Class M-2 Principal Distribution Amount,
the Class M-3 Principal Distribution Amount, the Class M-4 Principal
Distribution Amount, the Class M-5 Principal Distribution Amount and the Class
M-6 Principal Distribution Amount for that Distribution Date) and (2) the
Certificate Principal Balance of the Class M-7 Certificates immediately prior to
that Distribution Date over (B) the lesser of (x) the product of (1) the
applicable Subordination Percentage and (2) the aggregate Stated Principal
Balance of the Mortgage Loans after giving effect to distributions to be made on
that Distribution Date and (y) the excess, if any, of the aggregate Stated
Principal Balance of the Mortgage Loans after giving effect to distributions to
be made on that Distribution Date, over the Overcollateralization Floor.
Class M-8 Certificate: Any one of the Class M-8 Certificates executed by
the Trustee and authenticated by the Certificate Registrar substantially in the
form annexed hereto as Exhibit B, senior to the Class M-9 Certificates, Class SB
Certificates and Class R Certificates with respect to distributions and the
allocation of Realized Losses as set forth in Section 4.05, and evidencing (i)
an interest designated as a "regular interest" in REMIC III for purposes of the
REMIC Provisions, (ii) the right to receive payments under the Swap Agreement
and (iii) the obligation to pay the Class IO Distribution Amount.
Class M-8 Margin: Initially, 1.000% per annum, and on any Distribution
Date on or after the second Distribution Date after the first possible Optional
Termination Date, 1.500% per annum.
Class M-8 Principal Distribution Amount: With respect to any
Distribution Date (a) prior to the Stepdown Date or on or after the Stepdown
Date if a Trigger Event is in effect for that Distribution Date, the remaining
Principal Distribution Amount for that Distribution Date after distribution of
the Class A Principal Distribution Amount, the Class M-1 Principal Distribution
Amount, the Class M-2 Principal Distribution Amount, the Class M-3 Principal
Distribution Amount, the Class M-4 Principal Distribution Amount, the Class M-5
Principal Distribution Amount, Class M-6 Principal Distribution Amount and the
Class M-7 Principal Distribution Amount or (b) on or after the Stepdown Date if
a Trigger Event is not in effect for that Distribution Date, the lesser of:
(i) the remaining Principal Distribution Amount for that
Distribution Date after distribution of the Class A Principal Distribution
Amount, the Class M-1 Principal Distribution Amount, the Class M-2 Principal
Distribution Amount, the Class M-3 Principal Distribution Amount, the Class M-4
Principal Distribution Amount, the Class M-5 Principal Distribution Amount,
Class M-6 Principal Distribution Amount and the Class M-7 Principal Distribution
Amount; and
(ii) the excess, if any, of (A) the sum of (1) the aggregate
Certificate Principal Balance of the Class A Certificates, Class M-1
Certificates, Class M-2 Certificates, Class M-3 Certificates, Class M-4
Certificates, Class M-5 Certificates, Class M-6 Certificates and Class M-7
Certificates (after taking into account the payment of the Class A Principal
Distribution Amount, the Class M-1 Principal Distribution Amount, the Class M-2
Principal Distribution Amount, the Class M-3 Principal Distribution Amount, the
Class M-4 Principal Distribution Amount, the Class M-5 Principal Distribution
Amount, Class M-6 Principal Distribution Amount and the Class M-7 Principal
Distribution Amount for that Distribution Date) and (2) the Certificate
Principal Balance of the Class M-8 Certificates immediately prior to that
Distribution Date over (B) the lesser of (x) the product of (1) the applicable
Subordination Percentage and (2) the aggregate Stated Principal Balance of the
Mortgage Loans after giving effect to distributions to be made on that
Distribution Date and (y) the excess, if any, of the aggregate Stated Principal
Balance of the Mortgage Loans after giving effect to distributions to be made on
that Distribution Date, over the Overcollateralization Floor.
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Class M-9 Certificate: Any one of the Class M-9 Certificates executed by
the Trustee and authenticated by the Certificate Registrar substantially in the
form annexed hereto as Exhibit B, senior to the Class SB Certificates and Class
R Certificates with respect to distributions and the allocation of Realized
Losses as set forth in Section 4.05, and evidencing (i) an interest designated
as a "regular interest" in REMIC III for purposes of the REMIC Provisions, (ii)
the right to receive payments under the Swap Agreement and (iii) the obligation
to pay the Class IO Distribution Amount.
Class M-9 Margin: Initially, 1.800% per annum, and on any Distribution
Date on or after the second Distribution Date after the first possible Optional
Termination Date, 2.700% per annum.
Class M-9 Principal Distribution Amount: With respect to any
Distribution Date (a) prior to the Stepdown Date or on or after the Stepdown
Date if a Trigger Event is in effect for that Distribution Date, the remaining
Principal Distribution Amount for that Distribution Date after distribution of
the Class A Principal Distribution Amount, the Class M-1 Principal Distribution
Amount, the Class M-2 Principal Distribution Amount, the Class M-3 Principal
Distribution Amount, the Class M-4 Principal Distribution Amount, the Class M-5
Principal Distribution Amount, Class M-6 Principal Distribution Amount, the
Class M-7 Principal Distribution Amount and the Class M-8 Principal Distribution
Amount or (b) on or after the Stepdown Date if a Trigger Event is not in effect
for that Distribution Date, the lesser of:
(i) the remaining Principal Distribution Amount for that
Distribution Date after distribution of the Class A Principal Distribution
Amount, the Class M-1 Principal Distribution Amount, the Class M-2 Principal
Distribution Amount, the Class M-3 Principal Distribution Amount, the Class M-4
Principal Distribution Amount, the Class M-5 Principal Distribution Amount,
Class M-6 Principal Distribution Amount, Class M-7 Principal Distribution Amount
and the Class M-8 Principal Distribution Amount; and
(ii) the excess, if any, of (A) the sum of (1) the aggregate
Certificate Principal Balance of the Class A Certificates, Class M-1
Certificates, Class M-2 Certificates, Class M-3 Certificates, Class M-4
Certificates, Class M-5 Certificates, Class M-6 Certificates, Class M-7
Certificates and Class M-8 Certificates (after taking into account the payment
of the Class A Principal Distribution Amount, the Class M-1 Principal
Distribution Amount, the Class M-2 Principal Distribution Amount, the Class M-3
Principal Distribution Amount, the Class M-4 Principal Distribution Amount, the
Class M-5 Principal Distribution Amount, Class M-6 Principal Distribution
Amount, Class M-7 Principal Distribution Amount and the Class M-8 Principal
Distribution Amount for that Distribution Date) and (2) the Certificate
Principal Balance of the Class M-9 Certificates immediately prior to that
Distribution Date over (B) the lesser of (x) the product of (1) the applicable
Subordination Percentage and (2) the aggregate Stated Principal Balance of the
Mortgage Loans after giving effect to distributions to be made on that
Distribution Date and (y) the excess, if any, of the aggregate Stated Principal
Balance of the Mortgage Loans after giving effect to distributions to be made on
that Distribution Date, over the Overcollateralization Floor.
Class R Certificate: Any one of the Class R Certificates executed by the
Trustee and authenticated by the Certificate Registrar substantially in the form
annexed hereto as Exhibit D and evidencing an interest designated as a "residual
interest" in the REMICs for purposes of the REMIC Provisions. Component I of the
Class R Certificates is designated as the sole class of "residual interest" in
REMIC I, Component II of the Class R Certificates is designated as the sole
class of "residual interest" in REMIC II and Component III of the Class R
Certificates is designated as the sole class of "residual interest" in REMIC III
..
Class SB Certificate: Any one of the Class SB Certificates executed by
the Trustee and authenticated by the Certificate Registrar substantially in the
form annexed hereto as Exhibit C, subordinate to the Class A Certificates and
the Class M Certificates with respect to distributions and the allocation of
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Realized Losses as set forth in Section 4.05, and evidencing an interest
comprised of "regular interests" in REMIC III together with certain rights to
payments under the Swap Agreements for purposes of the REMIC Provisions.
Clearance System: The Euroclear, Clearstream or both, as applicable.
Clearstream: Clearstream Banking, societe anonyme.
Closing Date: August 28, 2006.
Code: The Internal Revenue Code of 1986.
Commission: The Securities and Exchange Commission.
Compensating Interest: With respect to any Distribution Date, any amount
paid by the Master Servicer in accordance with Section 3.16(f).
Corporate Trust Office: The principal office of the Trustee at which 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
instrument is located at U.S. Bank National Association, EP-MN-WS3D, 00
Xxxxxxxxxx Xxxxxx, Xx. Xxxx, Xxxxxxxxx 00000, Attn: Structured Finance/RASC
2006-KS7.
Credit Repository: Equifax, Transunion and Experian, or their successors
in interest.
Credit Risk Management Agreement: The Credit Risk Management Agreement,
dated August 28, 2006, between the Master Servicer and the Credit Risk Manager.
Credit Risk Manager: Xxxxxxx Fixed Income Services Inc., formerly known
as The Murrayhill Company, a Colorado corporation, its successors and assigns.
Credit Risk Manager Fee: With respect to any Mortgage Loan and
Distribution Date, the premium payable to the Credit Risk Manager at the Credit
Risk Manager Fee Rate multiplied by the Stated Principal Balance of such
Mortgage Loan as of the first day of the related Due Period, divided by 12. With
respect to each Mortgage Loan, the Credit Risk Manager Fee will be paid monthly
from the related Mortgage Rate in accordance with this Agreement.
Credit Risk Manager Fee Rate: With respect to any Distribution Date, a
rate equal to 0.01375% per annum.
Curtailment: Any Principal Prepayment made by a Mortgagor which is not a
Principal Prepayment in Full.
Custodial Account: The custodial account or accounts created and
maintained pursuant to Section 3.07 in the name of a depository institution, as
custodian for the holders of the Certificates, for the holders of certain other
interests in mortgage loans serviced or sold by the Master Servicer and for the
Master Servicer, into which the amounts set forth in Section 3.07 shall be
deposited directly. Any such account or accounts shall be an Eligible Account.
Custodial Agreement: An agreement that may be entered into among the
Depositor, the Master Servicer, the Trustee and the Custodian in substantially
the form of Exhibit E hereto.
Custodial File: Any mortgage loan document in the Mortgage File that is
required to be delivered to the Trustee or the Custodian pursuant to Section
2.01(b) of this Agreement.
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Custodian: Xxxxx Fargo Bank, N.A., or any successor custodian appointed
pursuant to a Custodial Agreement.
Cut-off Date: August 1, 2006.
Cut-off Date Balance: $550,000,048.95.
Cut-off Date Principal Balance: With respect to any Mortgage Loan, the
unpaid principal balance thereof at the Cut-off Date after giving effect to all
installments of principal due on or prior thereto (or due in the month of the
Cut-off Date), whether or not received.
Debt Service Reduction: With respect to any Mortgage Loan, a reduction
in the scheduled Monthly Payment for such Mortgage Loan by a court of competent
jurisdiction in a proceeding under the Bankruptcy Code, except such a reduction
constituting a Deficient Valuation or any reduction that results in a permanent
forgiveness of principal.
Defaulting Party: As defined in the Swap Agreement.
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 the Mortgage Loan, or any reduction in
the amount of principal to be paid in connection with any scheduled Monthly
Payment that constitutes a permanent forgiveness of principal, which valuation
or reduction results from a proceeding under the Bankruptcy Code.
Definitive Certificate: Any definitive, fully registered Certificate.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced with a
Qualified Substitute Mortgage Loan.
Delinquent: As used herein, a Mortgage Loan is considered to be: "30 to
59 days" or "30 or more days" delinquent when a payment due on any scheduled due
date remains unpaid as of the close of business on the next following monthly
scheduled due date; "60 to 89 days" or "60 or more days" delinquent when a
payment due on any scheduled due date remains unpaid as of the close of business
on the second following monthly scheduled due date; and so on. The determination
as to whether a Mortgage Loan falls into these categories is made as of the
close of business on the last business day of each month. For example, a
Mortgage Loan with a payment due on July 1 that remained unpaid as of the close
of business on August 31 would then be considered to be 30 to 59 days
delinquent. Delinquency information as of the Cut-off Date is determined and
prepared as of the close of business on the last business day immediately prior
to the Cut-off Date.
Depositor: As defined in the preamble hereto.
Depository: The Depository Trust Company, or any successor Depository
hereafter named. The nominee of the initial Depository for purposes of
registering those Certificates that are to be Book-Entry Certificates is Cede &
Co. 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 and
a "clearing agency" registered pursuant to the provisions of Section 17A of the
Exchange Act.
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.
19
Destroyed Mortgage Note: A Mortgage Note the original of which was
permanently lost or destroyed and has not been replaced.
Determination Date: With respect to any Distribution Date, the 20th day
(or if such 20th day is not a Business Day, the Business Day immediately
following such 20th day) of the month of the related Distribution Date.
Disqualified Organization: Any organization defined as a "disqualified
organization" under Section 860E(e)(5) of the Code, including, if not otherwise
included, any of the following: (i) the United States, any State or political
subdivision thereof, any possession of the United States, or any agency or
instrumentality of any of the foregoing (other than an instrumentality which is
a corporation if all of its activities are subject to tax and, except for
Xxxxxxx Mac, a majority of its board of directors is not selected by such
governmental unit), (ii) a foreign government, any international organization,
or any agency or instrumentality of any of the foregoing, (iii) any organization
(other than certain farmers' cooperatives described in Section 521 of the Code)
which is exempt from the tax imposed by Chapter 1 of the Code (including the tax
imposed by Section 511 of the Code on unrelated business taxable income) and
(iv) rural electric and telephone cooperatives described in Section
1381(a)(2)(C) of the Code. A Disqualified Organization also includes any
"electing large partnership," as defined in Section 775(a) of the Code and any
other Person so designated by the Trustee based upon an Opinion of Counsel that
the holding of an Ownership Interest in a Class R Certificate by such Person may
cause any REMIC or any Person having an Ownership Interest in any Class of
Certificates (other than such Person) to incur a liability for any federal tax
imposed under the Code that would not otherwise be imposed but for the Transfer
of an Ownership Interest in a Class R Certificate to such Person. The terms
"United States," "State" and "international organization" shall have the
meanings set forth in Section 7701 of the Code or successor provisions.
Distribution Compliance Period. The period ending on the 40th day after
the Closing Date.
Distribution Date: The 25th day of any month beginning in September 2006
or, if such 25th day is not a Business Day, the Business Day immediately
following such 25th day.
DTC Letter: The Letter of Representations, dated August 27, 2006,
between the Trustee, on behalf of the Trust Fund, and the Depository.
Due Date: With respect to any Distribution Date and any Mortgage Loan,
the day during the related Due Period on which the Monthly Payment is due.
Due Period: With respect to any Distribution Date, the calendar month of
such Distribution Date.
Early Termination Date: Shall have the meaning set forth in the Swap
Agreement.
Eligible Account: An account that is any of the following: (i)
maintained with a depository institution the debt obligations of which have been
rated by each Rating Agency in its highest rating available, or (ii) an account
or accounts in a depository institution in which such accounts are fully insured
to the limits established by the FDIC, provided that any deposits not so insured
shall, to the extent acceptable to each Rating Agency, as evidenced in writing,
be maintained such that (as evidenced by an Opinion of Counsel delivered to the
Trustee and each Rating Agency) the registered Holders of Certificates have a
claim with respect to the funds in such account or a perfected first 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 with which such account is
maintained, or (iii) in the case of the Custodial Account, a trust account or
accounts maintained in the corporate trust department of U.S. Bank National
Association, or (iv) in the case of the Certificate Account, a trust account or
20
accounts maintained in the corporate trust division of U.S. Bank National
Association, or (v) an account or accounts of a depository institution
acceptable to each Rating Agency (as evidenced in writing by each Rating Agency
that use of any such account as the Custodial Account or the Certificate Account
will not reduce the rating assigned to any Class of Certificates by such Rating
Agency below the then-current rating assigned to such Certificates by such
Rating Agency).
Eligible Master Servicing Compensation: With respect to any Distribution
Date, the lesser of (a) one-twelfth of 0.125% of the Stated Principal Balance of
the related Mortgage Loans immediately preceding such Distribution Date and (b)
the sum of the Servicing Fee and all income and gain on amounts held in the
Custodial Account and the Certificate Account and payable to the
Certificateholders with respect to such Distribution Date; provided that for
purposes of this definition the amount of the Servicing Fee will not be reduced
pursuant to Section 7.02(a) except as may be required pursuant to the last
sentence of such Section.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
Euroclear: Euroclear Bank S.A./N.V.
Event of Default: As defined in Section 7.01.
Excess Cash Flow: With respect to any Distribution Date, an amount equal
to the sum of (A) the excess of (i) the Available Distribution Amount for that
Distribution Date over (ii) the sum of (a) the Interest Distribution Amount for
that Distribution Date and (b) the lesser of (1) the aggregate Certificate
Principal Balance of Class A Certificates and the Class M Certificates
immediately prior to such Distribution Date and (2) the Principal Remittance
Amount for that Distribution Date to the extent not applied to pay interest on
the Class A Certificates and Class M Certificates on such Distribution Date, (B)
the Overcollateralization Reduction Amount, if any, for that Distribution Date
and (C) any Net Swap Payments received by the Supplemental Interest Trust
Trustee under the Swap Agreement for that Distribution Date and deposited in the
Supplemental Interest Trust Account pursuant to Section 4.10(c).
Excess Overcollateralization Amount: With respect to any Distribution
Date, the excess, if any, of (a) the Overcollateralization Amount on such
Distribution Date over (b) the Required Overcollateralization Amount for such
Distribution Date.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Expense Fee Rate: With respect to any Mortgage Loan as of any date of
determination, the sum of the (i) applicable Servicing Fee Rate, (ii) the per
annum rate at which the applicable Subservicing Fee accrues and (iii) and the
related Credit Risk Manager Fee Rate.
Xxxxxx Xxx: Xxxxxx Xxx, a federally chartered and privately owned
corporation organized and existing under the Federal National Mortgage
Association Charter Act, or any successor thereto.
FDIC: Federal Deposit Insurance Corporation or any successor thereto.
Final Distribution Date: The Distribution Date on which the final
distribution in respect of the Certificates will be made pursuant to Section
9.01, which Final Distribution Date shall in no event be later than the end of
the 90-day liquidation period described in Section 9.02.
Final Scheduled Distribution Date: Solely for purposes of the face of
the Certificates, as follows: with respect to the Class A-1 Certificates, the
Distribution Date occurring in April 2028; with respect to the Class A-2
21
Certificates the Distribution Date occurring in December 2031; with respect to
the Class A-3 Certificates the Distribution Date occurring in June 2035; and
with respect to the Class A-4 Certificates and Class M Certificates, the
Distribution Date occurring in September 2036. No event of default under this
Agreement will arise or become applicable solely by reason of the failure to
retire the entire Certificate Principal Balance of any Class of Class A
Certificates or Class M Certificates on or before its Final Scheduled
Distribution Date.
Fitch: Fitch Ratings, or its successors in interest.
Fixed Swap Payment: With respect to any Distribution Date on or prior to
the distribution date in July 2010, an amount equal to the product of (x) a
fixed rate equal to 5.345% per annum, (y) the Swap Agreement Notional Balance
for that Distribution Date and (z) a fraction, the numerator of which is (a) 27
for the distribution date in September 2006 and (b) 30 for any distribution date
occurring after the distribution date in September 2006, and the denominator of
which is 360.
Floating Swap Payment: With respect to any Distribution Date on or prior
to the Distribution Date in July 2010, an amount equal to the product of (x)
Swap LIBOR, (y) the Swap Agreement Notional Balance for that Distribution Date
and (z) a fraction, the numerator of which is equal to the number of days in the
related calculation period as provided in the Swap Agreement and the denominator
of which is 360.
Foreclosure Profits: With respect to any Distribution Date or related
Determination Date and any Mortgage Loan, the excess, if any, of Liquidation
Proceeds, Insurance Proceeds and REO Proceeds (net of all amounts reimbursable
therefrom pursuant to Section 3.10(a)(ii)) in respect of each Mortgage Loan or
REO Property for which a Cash Liquidation or REO Disposition occurred in the
related Prepayment Period over the sum of the unpaid principal balance of such
Mortgage Loan or REO Property (determined, in the case of an REO Disposition, in
accordance with Section 3.14) plus accrued and unpaid interest at the Mortgage
Rate on such unpaid principal balance from the Due Date to which interest was
last paid by the Mortgagor to the first day of the month following the month in
which such Cash Liquidation or REO Disposition occurred.
Form 10-K Certification: As defined in Section 4.03(e).
Xxxxxxx Mac: Xxxxxxx Mac, 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.
Gross Margin: With respect to each adjustable-rate Mortgage Loan, the
fixed percentage set forth in the related Mortgage Note and indicated on the
Mortgage Loan Schedule as the "NOTE MARGIN," which percentage is added to the
related Index on each Adjustment Date to determine (subject to rounding in
accordance with the related Mortgage Note, the Periodic Cap, the Maximum
Mortgage Rate and the Minimum Mortgage Rate) the interest rate to be borne by
such Mortgage Loan until the next Adjustment Date.
HUD: The United States Department of Housing and Urban Development.
Independent: When used with respect to any specified Person, means such
a Person who (i) is in fact independent of the Depositor, the Master Servicer
and the Trustee, or any Affiliate thereof, (ii) does not have any direct
financial interest or any material indirect financial interest in the Depositor,
the Master Servicer or the Trustee or in an Affiliate thereof, and (iii) is not
connected with the Depositor, the Master Servicer or the Trustee as an officer,
employee, promoter, underwriter, trustee, partner, director or person performing
similar functions.
22
Index: With respect to any adjustable-rate Mortgage Loan and as to any
Adjustment Date therefor, the related index as stated in the related Mortgage
Note.
Initial Certificate Principal Balance: With respect to each Class of
Certificates (other than the Class R Certificates), the Certificate Principal
Balance of such Class of Certificates as of the Closing Date as set forth in the
Preliminary Statement hereto.
Insurance Proceeds: Proceeds paid in respect of the Mortgage Loans
pursuant to any Primary Insurance Policy or any other related insurance policy
covering a Mortgage Loan, to the extent such proceeds are payable to the
mortgagee under the Mortgage, any Subservicer, the Master Servicer or the
Trustee 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.
Interest Accrual Period: With respect to the Distribution Date in
September 2006, the period commencing the Closing Date and ending on the day
preceding the Distribution Date in September 2006, and with respect to any
Distribution Date after the Distribution Date in September 2006, the period
commencing on the Distribution Date in the month immediately preceding the month
in which such Distribution Date occurs and ending on the day preceding such
Distribution Date.
Interest Distribution Amount: For any Distribution Date, the amounts
payable pursuant to Section 4.02(c)(i) and (ii).
Interim Certification: As defined in Section 2.02.
Late Collections: With respect to any Mortgage Loan, all amounts
received during any Due Period, whether as late payments of Monthly Payments or
as Insurance Proceeds, Liquidation Proceeds or otherwise, which represent late
payments or collections of Monthly Payments due but delinquent for a previous
Due Period and not previously recovered.
LIBOR: With respect to any Distribution Date, the arithmetic mean of the
London interbank offered rate quotations for one-month U.S. Dollar deposits,
expressed on a per annum basis, determined in accordance with Section 1.02.
LIBOR Business Day: Any day other than (i) a Saturday or Sunday or (ii)
a day on which banking institutions in London, England are required or
authorized by law to be closed.
LIBOR Certificates: Collectively, the Class A Certificates and Class M
Certificates.
LIBOR Rate Adjustment Date: With respect to each Distribution Date, the
second LIBOR Business Day immediately preceding the commencement of the related
Interest Accrual Period.
Liquidation Proceeds: Amounts (other than Insurance Proceeds) received
by the Master Servicer in connection with the taking of an entire Mortgaged
Property by exercise of the power of eminent domain or condemnation or in
connection with the liquidation of a defaulted Mortgage Loan through trustee's
sale, foreclosure sale or otherwise, other than REO Proceeds and Subsequent
Recoveries.
Loan-to-Value Ratio: As of any date, the fraction, expressed as a
percentage, the numerator of which is the current principal balance of the
related Mortgage Loan at the date of determination and the denominator of which
is the Appraised Value of the related Mortgaged Property.
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Margin: The Class A-1 Margin, Class A-2 Margin, Class A-3 Margin, Class
A-4 Margin, Class M-1 Margin, Class M-2 Margin, Class M-3 Margin, Class M-4
Margin, Class M-5 Margin, Class M-6 Margin, Class M-7 Margin, Class M-8 Margin
or Class M-9 Margin, as applicable.
Marker Rate: With respect to the Class SB Certificates or REMIC III
Regular Interest SB-IO and any Distribution Date, in relation to the REMIC II
Regular Interests LT1, LT2, LT3, and LT4, a per annum rate equal to two (2)
times the weighted average of the Uncertificated REMIC II Pass-Through Rates for
REMIC II Regular Interest LT2 and REMIC II Regular Interest LT3.
Master Servicer: As defined in the preamble hereto.
Maturity Date: With respect to each Class of Certificates representing
ownership of regular interests or Uncertificated Regular Interest issued by each
of REMIC I, REMIC II and REMIC III the latest possible maturity date, solely for
purposes of Section 1.860G-1(a)(4)(iii) of the Treasury Regulations, by which
the Certificate Principal Balance of each such Class of Certificates
representing a regular interest in the Trust Fund would be reduced to zero,
which is, for each such regular interest, September 25, 2036, which is the
Distribution Date occurring in the month following the last scheduled monthly
payment of the Mortgage Loans.
Maximum Mortgage Rate: With respect to any adjustable-rate Mortgage
Loan, the per annum rate indicated on the Mortgage Loan Schedule as the "NOTE
CEILING," which rate is the maximum interest rate that may be applicable to such
Mortgage Loan at any time during the life of such Mortgage Loan.
MERS: Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.
MERS(R) System: The system of recording transfers of Mortgages
electronically maintained by MERS.
MIN: The Mortgage Identification Number for Mortgage Loans registered
with MERS on the MERS(R) System.
Minimum Mortgage Rate: With respect to any adjustable-rate Mortgage
Loan, a per annum rate equal to the greater of (i) the Note Margin and (ii) the
rate indicated on the Mortgage Loan Schedule as the "NOTE FLOOR," which rate may
be applicable to such Mortgage Loan at any time during the life of such Mortgage
Loan.
Modified Mortgage Loan: Any Mortgage Loan that has been the subject of a
Servicing Modification.
Modified Net Mortgage Rate: With respect to any Mortgage Loan that is
the subject of a Servicing Modification, the Net Mortgage Rate minus the rate
per annum by which the Mortgage Rate on such Mortgage Loan was reduced.
MOM Loan: With respect to any Mortgage Loan, MERS acting as the
mortgagee of such Mortgage Loan, solely as nominee for the originator of such
Mortgage Loan and its successors and assigns, at the origination thereof.
Monthly Payment: With respect to any Mortgage Loan (including any REO
Property) and the Due Date in any Due Period, the payment of principal and
interest due thereon in accordance with the amortization schedule at the time
applicable thereto (after adjustment, if any, for Curtailments and for Deficient
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Valuations occurring prior to such Due Date but before any adjustment to such
amortization schedule by reason of any bankruptcy, other than a Deficient
Valuation, or similar proceeding or any moratorium or similar waiver or grace
period and before any Servicing Modification that constitutes a reduction of the
interest rate on such Mortgage Loan).
Moody's: Xxxxx'x Investors Service, Inc., or its successors in interest.
Mortgage: With respect to each Mortgage Note, the mortgage, deed of
trust or other comparable instrument creating a first or junior lien on an
estate in fee simple or leasehold interest in real property securing a Mortgage
Note.
Mortgage File: The mortgage documents listed in Section 2.01 pertaining
to a particular Mortgage Loan and any additional documents required to be added
to the Mortgage File pursuant to this Agreement.
Mortgage Loans: Such of the mortgage loans transferred and assigned to
the Trustee pursuant to Section 2.01 as from time to time are held or deemed to
be held as a part of the Trust Fund, the Mortgage Loans originally so held being
identified in the initial Mortgage Loan Schedule, and Qualified Substitute
Mortgage Loans held or deemed held as part of the Trust Fund including, without
limitation, each related Mortgage Note, Mortgage and Mortgage File and all
rights appertaining thereto.
Mortgage Loan Schedule: The lists of the Mortgage Loans attached hereto
as Exhibit F (as amended from time to time to reflect the addition of Qualified
Substitute Mortgage Loans), which lists shall set forth at a minimum the
following information as to each Mortgage Loan:
(i) the Mortgage Loan identifying number ("RFC LOAN #");
(ii) [reserved];
(iii) the maturity of the Mortgage Note ("MATURITY DATE," or
"MATURITY DT");
(iv) for the adjustable-rate Mortgage Loans, the Mortgage Rate as
of origination ("ORIG RATE");
(v) the Mortgage Rate as of the Cut-off Date ("CURR RATE");
(vi) the Net Mortgage Rate as of the Cut-off Date ("CURR NET");
(vii) the scheduled monthly payment of principal, if any, and
interest as of the Cut-off Date ("ORIGINAL P & I" or "CURRENT P & I");
(viii) the Cut-off Date Principal Balance ("PRINCIPAL BAL");
(ix) the Loan-to-Value Ratio at origination ("LTV");
(x) a code "T," "BT" or "CT" under the column "LN FEATURE,"
indicating that the Mortgage Loan is secured by a second or vacation residence
(the absence of any such code means the Mortgage Loan is secured by a primary
residence);
(xi) a code "N" under the column "OCCP CODE," indicating that the
Mortgage Loan is secured by a non-owner occupied residence (the absence of any
such code means the Mortgage Loan is secured by an owner occupied residence);
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(xii) for the adjustable-rate Mortgage Loans, the Maximum
Mortgage Rate ("NOTE CEILING");
(xiii) for the adjustable-rate Mortgage Loans, the maximum Net
Mortgage Rate ("NET CEILING");
(xiv) for the adjustable-rate Mortgage Loans, the Note Margin
("NOTE MARGIN");
(xv) for the adjustable-rate Mortgage Loans, the first Adjustment
Date after the Cut-off Date ("NXT INT CHG DT");
(xvi) for the adjustable-rate Mortgage Loans, the Periodic Cap
("PERIODIC DECR" or "PERIODIC INCR");
(xvii) [reserved]; and
(xviii)for the adjustable-rate Mortgage Loans, the rounding of
the semi-annual or annual adjustment to the Mortgage Rate ("NOTE METHOD").
Such schedules may consist of multiple reports that collectively set
forth all of the information required.
Mortgage Note: The originally executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan,
together with any modification thereto.
Mortgage Rate: With respect to any Mortgage Loan, the interest rate
borne by the related Mortgage Note, or any modification thereto other than a
Servicing Modification. The Mortgage Rate on the adjustable-rate Mortgage Loans
will adjust on each Adjustment Date to equal the sum (rounded to the nearest
multiple of one-eighth of one percent (0.125%) or up to the nearest one-eighth
of one percent, which are indicated by a "U" on the Mortgage Loan Schedule,
except in the case of the adjustable-rate Mortgage Loans indicated by an "X" on
the Mortgage Loan Schedule under the heading "NOTE METHOD"), of the related
Index plus the Note Margin, in each case subject to the applicable Periodic Cap,
Maximum Mortgage Rate and Minimum Mortgage Rate.
Mortgaged Property: The underlying real property securing a Mortgage
Loan.
Mortgagor: The obligor on a Mortgage Note.
Net Mortgage Rate: With respect to any Mortgage Loan as of any date of
determination, a per annum rate equal to the Mortgage Rate for such Mortgage
Loan as of such date minus the related Expense Fee Rate.
Net Swap Payment: With respect to each Distribution Date, the net
payment required to be made pursuant to the terms of the Swap Agreement by
either the Swap Counterparty or the Supplemental Interest Trust Trustee, on
behalf of the Supplemental Interest Trust, which net payment shall not take into
account any Swap Termination Payment.
Net WAC Cap Rate: With respect to any Distribution Date, a per annum
rate (which will not be less than zero) equal to (i) the product of (a) the
weighted average of the Net Mortgage Rates (or, if applicable, the Modified Net
Mortgage Rates) on the Mortgage Loans using the Net Mortgage Rates in effect for
the Monthly Payments due on such Mortgage Loans during the related Due Period,
weighted on the basis of the respective Stated Principal Balances thereof for
such Distribution Date, and (b) a fraction expressed as percentage, the
numerator of which is 30 and the denominator of which is the actual number of
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days in the related Interest Accrual Period minus (ii) the product of (a) a
fraction expressed as a percentage, the numerator of which is the amount of any
Net Swap Payments or Swap Termination Payment not due to a Swap Counterparty
Trigger Event owed to the Swap Counterparty as of such Distribution Date and the
denominator of which is the aggregate Stated Principal Balance of the Mortgage
Loans for such Distribution Date, and (b) a fraction expressed as percentage,
the numerator of which is 360 and the denominator of which is the actual number
of days in the related Interest Accrual Period.
Non-United States Person: Any Person other than a United States Person.
Nonrecoverable Advance: Any Advance previously made or proposed to be
made by the Master Servicer or Subservicer in respect of a Mortgage Loan (other
than a Deleted Mortgage Loan) which, in the good faith judgment of the Master
Servicer, will not, or, in the case of a proposed Advance, would not, be
ultimately recoverable by the Master Servicer from related Late Collections,
Insurance Proceeds, Liquidation Proceeds or REO Proceeds. To the extent that any
Mortgagor is not obligated under the related Mortgage documents to pay or
reimburse any portion of any Servicing Advances that are outstanding with
respect to the related Mortgage Loan as a result of a modification of such
Mortgage Loan by the Master Servicer, which forgives amounts which the Master
Servicer or Subservicer had previously advanced, and the Master Servicer
determines that no other source of payment or reimbursement for such advances is
available to it, such Servicing Advances shall be deemed to be Nonrecoverable
Advances. The determination by the Master Servicer that it has made a
Nonrecoverable Advance shall be evidenced by a certificate of a Servicing
Officer, Responsible Officer or Vice President or its equivalent or senior
officer of the Master Servicer, delivered to the Depositor, the Trustee, and the
Master Servicer setting forth such determination, which shall include any other
information or reports obtained by the Master Servicer such as property
operating statements, rent rolls, property inspection reports and engineering
reports, which may support such determinations. Notwithstanding the above, the
Trustee shall be entitled to rely upon any determination by the Master Servicer
that any Advance previously made is a Nonrecoverable Advance or that any
proposed Advance, if made, would constitute a Nonrecoverable Advance.
Nonsubserviced Mortgage Loan: Any Mortgage Loan that, at the time of
reference thereto, is not subject to a Subservicing Agreement.
Non-United States Person: A Person who is not a United States Person.
Note Margin: With respect to each adjustable-rate Mortgage Loan, the
fixed percentage set forth in the related Mortgage Note and indicated on the
Mortgage Loan Schedule as the "NOTE MARGIN," which percentage is added to the
Index on each Adjustment Date to determine (subject to rounding in accordance
with the related Mortgage Note, the Periodic Cap, the Maximum Mortgage Rate and
the Minimum Mortgage Rate) the interest rate to be borne by such adjustable-rate
Mortgage Loan until the next Adjustment Date.
Officers' Certificate: A certificate signed by the Chairman of the
Board, the President, a Vice President, Assistant Vice President, Director,
Managing Director, the Treasurer, the Secretary, an Assistant Treasurer or an
Assistant Secretary of the Depositor or the Master Servicer, as the case may be,
and delivered to the Trustee, as required by this Agreement.
Opinion of Counsel: A written opinion of counsel acceptable to the
Trustee and the Master Servicer, who may be counsel for the Depositor or the
Master Servicer, provided that any opinion of counsel (i) referred to in the
definition of "Disqualified Organization" or (ii) relating to the qualification
of any REMIC hereunder as a REMIC or compliance with the REMIC Provisions must,
unless otherwise specified, be an opinion of Independent counsel.
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Optional Termination Date: Any Distribution Date on or after which the
Stated Principal Balance (after giving effect to distributions to be made on
such Distribution Date) of the Mortgage Loans is less than 10.00% of the Cut-off
Date Balance.
Outstanding Mortgage Loan: With respect to the Due Date in any Due
Period, a Mortgage Loan (including an REO Property) that was not the subject of
a Principal Prepayment in Full, Cash Liquidation or REO Disposition and that was
not purchased, deleted or substituted for prior to such Due Date pursuant to
Section 2.02, 2.03, 2.04 or 4.07.
Overcollateralization Amount: With respect to any Distribution Date, the
excess, if any, of (a) the aggregate Stated Principal Balance of the Mortgage
Loans before giving effect to distributions of principal to be made on such
Distribution Date over (b) the aggregate Certificate Principal Balance of the
Class A Certificates and Class M Certificates immediately prior to such date.
Overcollateralization Floor: An amount equal to the product of 0.50% and
the Cut-off Date Balance.
Overcollateralization Increase Amount: With respect to any Distribution
Date, the lesser of (a) Excess Cash Flow for that Distribution Date (to the
extent not used to cover the amounts described in clauses (iv) and (v) of the
definition of Principal Distribution Amount as of such Distribution Date), and
(b) the excess of (1) the Required Overcollateralization Amount for such
Distribution Date over (2) the Overcollateralization Amount for such
Distribution Date.
Overcollateralization Reduction Amount: With respect to any Distribution
Date on which the Excess Overcollateralization Amount is, after taking into
account all other distributions to be made on such Distribution Date, greater
than zero, the Overcollateralization Reduction Amount shall be equal to the
lesser of (i) the Excess Overcollateralization Amount for that Distribution Date
and (ii) the Principal Remittance Amount on such Distribution Date.
Ownership Interest: With respect to any Certificate, any ownership or
security 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, as owner or as pledgee.
Pass-Through Rate: With respect to each Class of Class A Certificates
and Class M Certificates and any Distribution Date, the least of (i) a per annum
rate equal to LIBOR plus the related Margin for such Distribution Date, (ii)
14.000% per annum and (iii) the Net WAC Cap Rate for such Distribution Date.
With respect to the Class SB Certificates or the REMIC III Regular
Interest SB-IO and any Distribution Date, a per annum rate equal to the
percentage equivalent of a fraction, the numerator of which is the sum of the
amounts calculated pursuant to clauses (i) through (iii) below, and the
denominator of which is the aggregate principal balance of the REMIC II Regular
Interests. For purposes of calculating the Pass-Through Rate for the Class SB
Certificates or the REMIC III Regular Interest SB-IO, the numerator is equal to
the sum of the following components:
(i) the Uncertificated Pass-Through Rate for REMIC II Regular
Interest LT1 minus the related Marker Rate, applied to a notional amount equal
to the Uncertificated Principal Balance of REMIC II Regular Interest LT1;
(ii) the Uncertificated Pass-Through Rate for REMIC II Regular
Interest LT2 minus the related Marker Rate, applied to a notional amount equal
to the Uncertificated Principal Balance of REMIC II Regular Interest LT2; and
28
(iii) the Uncertificated Pass-Through Rate for REMIC II Regular
Interest LT4 minus twice the related Marker Rate, applied to a notional amount
equal to the Uncertificated Principal Balance of REMIC II Regular Interest LT4.
Paying Agent: U.S. Bank National Association or any successor Paying
Agent appointed by the Trustee.
Percentage Interest: With respect to any Class A Certificate or Class M
Certificate, the undivided percentage ownership interest in the related Class
evidenced by such Certificate, which percentage ownership interest shall be
equal to the Initial Certificate Principal Balance thereof divided by the
aggregate Initial Certificate Principal Balance of all of the Certificates of
the same Class. The Percentage Interest with respect to a Class SB Certificate
or Class R Certificate shall be stated on the face thereof.
Periodic Cap: With respect to each adjustable-rate Mortgage Loan, the
periodic rate cap that limits the increase or the decrease of the related
Mortgage Rate on any Adjustment Date pursuant to the terms of the related
Mortgage Note.
Permitted Investments: One or more of the following:
(i) obligations of or guaranteed as to principal and interest by
the United States or any agency or instrumentality thereof when such obligations
are backed by the full faith and credit of the United States;
(ii) repurchase agreements on obligations specified in clause (i)
maturing not more than one month from the date of acquisition thereof, provided
that the unsecured obligations of the party agreeing to repurchase such
obligations are at the time rated by each Rating Agency in its highest
short-term rating available;
(iii) federal funds, certificates of deposit, demand deposits,
time deposits and bankers' acceptances (which shall each have an original
maturity of not more than 90 days and, in the case of bankers' acceptances,
shall in no event have an original maturity of more than 365 days or a remaining
maturity of more than 30 days) denominated in United States dollars of any U.S.
depository institution or trust company incorporated under the laws of the
United States or any state thereof or of any domestic branch of a foreign
depository institution or trust company; provided that the debt obligations of
such depository institution or trust company at the date of acquisition thereof
have been rated by each Rating Agency in its highest short-term rating
available; and, provided further that, if the original maturity of such
short-term obligations of a domestic branch of a foreign depository institution
or trust company shall exceed 30 days, the short-term rating of such institution
shall be A-1+ in the case of Standard & Poor's if Standard & Poor's is a Rating
Agency;
(iv) commercial paper and demand notes (having original
maturities of not more than 365 days) of any corporation 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 its highest short term rating available;
provided that such commercial paper and demand notes shall have a remaining
maturity of not more than 30 days;
(v) a money market fund or a qualified investment fund rated by
each Rating Agency in its highest long-term rating available (which may be
managed by the Trustee or one of its Affiliates); and
29
(vi) other obligations or securities that are acceptable to each
Rating Agency as a Permitted Investment hereunder and will not reduce the rating
assigned to any Class of Certificates by such Rating Agency below the
then-current rating assigned to such Certificates by such Rating Agency, as
evidenced in writing;
provided, however, that no instrument shall be a Permitted Investment if it
represents, either (1) the right to receive only interest payments with respect
to the underlying debt instrument or (2) the right to receive both principal and
interest payments derived from obligations underlying such instrument and the
principal and interest payments with respect to such instrument provide a yield
to maturity greater than 120% of the yield to maturity at par of such underlying
obligations. References herein to the highest rating available on unsecured
long-term debt shall mean AAA in the case of Standard & Poor's and Aaa in the
case of Moody's, and for purposes of this Agreement, any references herein to
the highest rating available on unsecured commercial paper and short-term debt
obligations shall mean the following: A-1 in the case of Standard & Poor's and
P-1 in the case of Moody's; provided, however, that any Permitted Investment
that is a short-term debt obligation rated A-1 by Standard & Poor's must satisfy
the following additional conditions: (i) the total amount of debt from A-1
issuers must be limited to the investment of monthly principal and interest
payments (assuming fully amortizing collateral); (ii) the total amount of A-1
investments must not represent more than 20% of the aggregate outstanding
Certificate Principal Balance of the Certificates and each investment must not
mature beyond 30 days; (iii) the terms of the debt must have a predetermined
fixed dollar amount of principal due at maturity that cannot vary; and (iv) if
the investments may be liquidated prior to their maturity or are being relied on
to meet a certain yield, interest must be tied to a single interest rate index
plus a single fixed spread (if any) and must move proportionately with that
index. Any Permitted Investment may be purchased by or through the Trustee or
its Affiliates.
Permitted Transferee: Any Transferee of a Class R Certificate, other
than a Disqualified Organization or Non-United States Person.
Person: Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Prepayment Assumption: With respect to the Class A Certificates and
Class M Certificates, the prepayment assumption to be used for determining the
accrual of original issue discount and premium and market discount on such
Certificates for federal income tax purposes, which (a) with respect to the
fixed-rate Mortgage Loans, assumes a constant prepayment rate of one-tenth of
23% per annum of the then outstanding Stated Principal Balance of the fixed-rate
Mortgage Loans in the first month of the life of such Mortgage Loans and an
additional one-tenth of 23% per annum in each month thereafter until the tenth
month, and beginning in the tenth month and in each month thereafter during the
life of the fixed-rate Mortgage Loans, a constant prepayment rate of 23% per
annum each month ("23% HEP") and (b) with respect to the adjustable-rate
Mortgage Loans assumes a prepayment assumption of 2% of the constant prepayment
rate in month one, increasing by approximately 2.545% from month 2 until month
12, a constant prepayment rate of 30% from month 12 to month 22, a constant
prepayment rate of 50% from month 23 to month 27, and a constant prepayment rate
of 35% thereafter, used for determining the accrual of original issue discount
and premium and market discount on the Class A Certificates and Class M
Certificates for federal income tax purposes. The constant prepayment rate
assumes that the stated percentage of the outstanding Stated Principal Balance
of the adjustable-rate Mortgage Loans is prepaid over the course of a year.
Prepayment Interest Shortfall: With respect to any Distribution Date and
any Mortgage Loan (other than a Mortgage Loan relating to an REO Property) that
was the subject of (a) a Principal Prepayment in Full during the related
Prepayment Period, an amount equal to the excess of one month's interest at the
related Net Mortgage Rate (or Modified Net Mortgage Rate in the case of a
Modified Mortgage Loan) on the Stated Principal Balance of such Mortgage Loan
30
over the amount of interest (adjusted to the related Net Mortgage Rate (or
Modified Net Mortgage Rate in the case of a Modified Mortgage Loan)) paid by the
Mortgagor for such Prepayment Period to the date of such Principal Prepayment in
Full or (b) a Curtailment during the prior calendar month, an amount equal to
one month's interest at the related Net Mortgage Rate (or Modified Net Mortgage
Rate in the case of a Modified Mortgage Loan) on the amount of such Curtailment.
Prepayment Period: With respect to any Distribution Date, the calendar
month preceding the month of distribution.
Primary Insurance Policy: Each primary policy of mortgage guaranty
insurance as indicated by a numeric code on the Mortgage Loan Schedule with the
exception of code "A23," "A34" or "A96" under the column "MI CO CODE."
Principal Distribution Amount: With respect to any Distribution Date,
the lesser of (a) the excess of (x) the sum of (A) the Available Distribution
Amount and (B) with respect to clauses (b)(v) and (vi) below, the amounts
received by the Supplemental Interest Trust Trustee under the Swap Agreement for
the Distribution Date, over (y) the Interest Distribution Amount, and (b) the
sum of:
(i) the principal portion of each Monthly Payment received or
Advanced with respect to the related Due Period on each Outstanding Mortgage
Loan;
(ii) the Stated Principal Balance of any Mortgage Loan
repurchased during the related Prepayment Period (or deemed to have been so
repurchased in accordance with Section 3.07(b)) pursuant to Section 2.02, 2.03,
2.04 or 4.07 and the amount of any shortfall deposited in the Custodial Account
in connection with the substitution of a Deleted Mortgage Loan pursuant to
Section 2.03 or 2.04 during the related Prepayment Period;
(iii) the principal portion of all other unscheduled collections,
other than Subsequent Recoveries, on the Mortgage Loans (including, without
limitation, Principal Prepayments in Full, Curtailments, Insurance Proceeds,
Liquidation Proceeds and REO Proceeds) received during the related Prepayment
Period (or deemed to have been so received) to the extent applied by the Master
Servicer as recoveries of principal of the Mortgage Loans pursuant to Section
3.14;
(iv) the lesser of (1) Subsequent Recoveries for such
Distribution Date and (2) the principal portion of any Realized Losses allocated
to any Class of Certificates on a prior Distribution Date and remaining unpaid;
(v) the lesser of (1) the Excess Cash Flow for such Distribution
Date (to the extent not used pursuant to clause (iv) of this definition on such
Distribution Date) and (2) the principal portion of any Realized Losses incurred
(or deemed to have been incurred) on any Mortgage Loans in the calendar month
preceding such Distribution Date; and
(vi) the lesser of (1) the Excess Cash Flow for that Distribution
Date (to the extent not used pursuant to clauses (iv) and (v) of this definition
on such Distribution Date) and (2) the Overcollateralization Increase Amount for
such Distribution Date;
minus
(vii) (A) the amount of any Overcollateralization Reduction
Amount for such Distribution Date and (B) the amount of any Capitalization
Reimbursement Amount for such Distribution Date.
31
Principal Prepayment: Any payment of principal or other recovery on a
Mortgage Loan, including a recovery that takes the form of Liquidation Proceeds
or Insurance Proceeds, which is received in advance of its scheduled Due Date
and is not accompanied by an amount as to interest representing scheduled
interest on such payment due on any date or dates in any month or months
subsequent to the month of prepayment.
Principal Prepayment in Full: Any Principal Prepayment made by a
Mortgagor of the entire principal balance of a Mortgage Loan.
Principal Remittance Amount: With respect to any Distribution Date, all
amounts described in clauses (b)(i) through (iii) of the definition of Principal
Distribution Amount for that Distribution Date.
Program Guide: The AlterNet Seller Guide as incorporated into the
Residential Funding Seller Guide for mortgage collateral sellers that
participate in Residential Funding's AlterNet Mortgage Program, and Residential
Funding's Servicing Guide and any other subservicing arrangements which
Residential Funding has arranged to accommodate the servicing of the Mortgage
Loans and in each case all supplements and amendments thereto published by
Residential Funding.
Purchase Price: With respect to any Mortgage Loan (or REO Property)
required to be or otherwise purchased on any date pursuant to Section 2.02,
2.03, 2.04 or 4.07, an amount equal to the sum of (i) 100% of the Stated
Principal Balance thereof plus the principal portion of any related unreimbursed
Advances and (ii) unpaid accrued interest at either (a) the Adjusted Mortgage
Rate (or Modified Net Mortgage Rate in the case of a Modified Mortgage Loan)
plus the rate per annum at which the Servicing Fee is calculated, or (b) in the
case of a purchase made by the Master Servicer, at the Net Mortgage Rate (or
Modified Net Mortgage Rate in the case of a Modified Mortgage Loan) plus the
Credit Risk Manager Fee Rate, in each case on the Stated Principal Balance
thereof to the first day of the month following the month of purchase from the
Due Date to which interest was last paid by the Mortgagor. With respect to any
Mortgage Loan (or REO Property) required to be or otherwise purchased on any
date pursuant to Section 4.08, an amount equal to the greater of (i) the sum of
(a) 100% of the Stated Principal Balance thereof plus the principal portion of
any related unreimbursed Advances of such Mortgage Loan (or REO Property) and
(b) unpaid accrued interest at either (1) the Adjusted Mortgage Rate (or
Modified Net Mortgage Rate in the case of a Modified Mortgage Loan) plus the
rate per annum at which the Servicing Fee is calculated, or (2) in the case of a
purchase made by the Master Servicer, at the Net Mortgage Rate (or Modified Net
Mortgage Rate in the case of a Modified Mortgage Loan), in each case on the
Stated Principal Balance thereof to the first day of the month following the
month of purchase from the Due Date to which interest was last paid by the
Mortgagor, and (ii) the fair market value of such Mortgage Loan (or REO
Property).
Qualified Institutional Buyer: The meaning specified in Rule 144A under
the Securities Act.
Qualified Substitute Mortgage Loan: A Mortgage Loan substituted by
Residential Funding or the Depositor for a Deleted Mortgage Loan which must, on
the date of such substitution, as confirmed in an Officers' Certificate
delivered to the Trustee, (i) have an outstanding principal balance, after
deduction of the principal portion of the monthly payment due in the month of
substitution (or in the case of a substitution of more than one Mortgage Loan
for a Deleted Mortgage Loan, an aggregate outstanding principal balance, after
such deduction), not in excess of the Stated Principal Balance of the Deleted
Mortgage Loan (the amount of any shortfall to be deposited by Residential
Funding, in the Custodial Account in the month of substitution); (ii) have a
Mortgage Rate and a Net Mortgage Rate no lower than and not more than 1% per
annum higher than the Mortgage Rate and Net Mortgage Rate, respectively, of the
Deleted Mortgage Loan as of the date of substitution; (iii) have a Loan-to-Value
Ratio at the time of substitution no higher than that of the Deleted Mortgage
Loan at the time of substitution; (iv) have a remaining term to stated maturity
not greater than (and not more than one year less than) that of the Deleted
Mortgage Loan; (v) comply with each representation and warranty set forth in
Sections 2.03 and 2.04 hereof and Section 4 of the Assignment Agreement (other
32
than the representations and warranties set forth therein with respect to the
number of loans (including the related percentage) in excess of zero which meet
or do not meet a specified criteria); (vi) not be 30 days or more Delinquent;
(vii) not be subject to the requirements of HOEPA (as defined in the Assignment
Agreement); (viii) have a policy of title insurance, in the form and amount that
is in material compliance with the Program Guide, that was effective as of the
closing of such Mortgage Loan, is valid and binding, and remains in full force
and effect, unless the Mortgage Property is located in the State of Iowa where
an attorney's certificate has been provided as described in the Program Guide;
(ix) if the Deleted Loan is not a Balloon Loan, not be a Balloon Loan; (x) with
respect to adjustable rate Mortgage Loans, have a Mortgage Rate that adjusts
with the same frequency and based upon the same Index as that of the Deleted
Mortgage Loan; (xi) with respect to adjustable rate Mortgage Loans, have a Note
Margin not less than that of the Deleted Mortgage Loan; (xii) with respect to
adjustable rate Mortgage Loans, have a Periodic Rate Cap that is equal to that
of the Deleted Mortgage Loan; and (xiii) with respect to adjustable rate
Mortgage Loans, have a next Adjustment Date no later than that of the Deleted
Mortgage Loan.
Rating Agency: Each of Standard & Poor's, Xxxxx'x and Fitch. If any
agency or a successor is no longer in existence, "Rating Agency" shall be such
statistical credit rating agency, or other comparable Person, designated by the
Depositor, notice of which designation shall be given to the Trustee and the
Master Servicer.
Realized Loss: With respect to each Mortgage Loan (or REO Property) as
to which a Cash Liquidation or REO Disposition has occurred, an amount (not less
than zero) equal to (i) the Stated Principal Balance of the Mortgage Loan (or
REO Property) as of the date of Cash Liquidation or REO Disposition, plus (ii)
interest (and REO Imputed Interest, if any) at the Net Mortgage Rate from the
Due Date as to which interest was last paid or advanced to Certificateholders up
to the last day of the month in which the Cash Liquidation (or REO Disposition)
occurred on the Stated Principal Balance of such Mortgage Loan (or REO Property)
outstanding during each Due Period that such interest was not paid or advanced,
minus (iii) the proceeds, if any, received during the month in which such Cash
Liquidation (or REO Disposition) occurred, to the extent applied as recoveries
of interest at the Net Mortgage Rate and to principal of the Mortgage Loan, net
of the portion thereof reimbursable to the Master Servicer or any Subservicer
with respect to related Advances, Servicing Advances or other expenses as to
which the Master Servicer or Subservicer is entitled to reimbursement thereunder
but which have not been previously reimbursed. With respect to each Mortgage
Loan which is the subject of a Servicing Modification, (a) (1) the amount by
which the interest portion of a Monthly Payment or the principal balance of such
Mortgage Loan was reduced or (2) the sum of any other amounts owing under the
Mortgage Loan that were forgiven and that constitute Servicing Advances that are
reimbursable to the Master Servicer or a Subservicer, and (b) any such amount
with respect to a Monthly Payment that was or would have been due in the month
immediately following the month in which a Principal Prepayment or the Purchase
Price of such Mortgage Loan is received or is deemed to have been received. With
respect to each Mortgage Loan which has become the subject of a Deficient
Valuation, the difference between the principal balance of the Mortgage Loan
outstanding immediately prior to such Deficient Valuation and the principal
balance of the Mortgage Loan as reduced by the Deficient Valuation. With respect
to each Mortgage Loan which has become the object of a Debt Service Reduction,
the amount of such Debt Service Reduction. Notwithstanding the above, neither a
Deficient Valuation nor a Debt Service Reduction shall be deemed a Realized Loss
hereunder so long as the Master Servicer has notified the Trustee in writing
that the Master Servicer is diligently pursuing any remedies that may exist in
connection with the representations and warranties made regarding the related
Mortgage Loan and either (A) the related Mortgage Loan is not in default with
regard to payments due thereunder or (B) delinquent payments of principal and
interest under the related Mortgage Loan and any premiums on any applicable
primary hazard insurance policy and any related escrow payments in respect of
such Mortgage Loan are being advanced on a current basis by the Master Servicer
or a Subservicer, in either case without giving effect to any Debt Service
Reduction.
33
Realized Losses allocated to the Class SB Certificates shall be
allocated first to the REMIC III Regular Interest SB-IO in reduction of the
accrued but unpaid interest thereon until such accrued and unpaid interest shall
have been reduced to zero and then to the REMIC III Regular Interest SB-PO in
reduction of the Principal Balance thereof.
To the extent the Master Servicer receives Subsequent Recoveries with
respect to any Mortgage Loan, the amount of the Realized Loss with respect to
that Mortgage Loan will be reduced to the extent such recoveries are applied to
reduce the Certificate Principal Balance of any Class of Certificates on any
Distribution Date.
Record Date: With respect to each Distribution Date and the LIBOR
Certificates, the Business Day immediately preceding such Distribution Date.
With respect to each Distribution Date and the Certificates (other than the
LIBOR Certificates), the close of business on the last Business Day of the month
next preceding the month in which the related Distribution Date occurs, except
in the case of the first Record Date which shall be the Closing Date.
Reference Bank Rate: As defined in Section 1.02.
Regular Interest: Any one of the regular interests in the REMICs.
Regulation AB: Subpart 229.1100 - Asset Backed Securities (Regulation
AB), 17 C.F.R. ss.ss.229.1100-229.1123, as such may be amended from time to
time, and subject to such clarification and interpretation as have been provided
by the Commission in the adopting release (Asset-Backed Securities, Securities
Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (January 7, 2005)) or by the
staff of the Commission, or as may be provided by the Commission or its staff
from time to time.
Regulation S: Regulation S promulgated under the Securities Act.
Relief Act: The Servicemembers Civil Relief Act, as amended.
Relief Act Shortfalls: Interest shortfalls on the Mortgage Loans
resulting from the Relief Act or similar legislation or regulations.
REMIC: A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code. As used herein, the term "REMIC" shall mean
REMIC I, REMIC II or REMIC III.
REMIC Administrator: Residential Funding Corporation. If Residential
Funding Corporation is found by a court of competent jurisdiction to no longer
be able to fulfill its obligations as REMIC Administrator under this Agreement
the Master Servicer or Trustee acting as successor Master Servicer shall appoint
a successor REMIC Administrator, subject to assumption of the REMIC
Administrator obligations under this Agreement.
REMIC Interest Amount: For any Distribution Date and each Class of Class
A Certificates and Class M Certificates, the Accrued Certificate Interest for
such Class reduced by the portion thereof attributable to the excess, if any, of
the related Pass-Through Rate for such Distribution Date over the related REMIC
II Net WAC Rate for such Distribution Date.
REMIC I: The segregated pool of assets subject hereto (exclusive of the
Supplemental Interest Trust Account and the Swap Agreement), constituting a
portion of the primary trust created hereby and to be administered hereunder,
with respect to which a separate REMIC election is to be made, consisting of:
(i) the Mortgage Loans and the related Mortgage Files;
34
(ii) all payments on and collections in respect of the Mortgage
Loans due after the Cut-off Date (other than Monthly Payments due in the month
of the Cut-off Date) as shall be on deposit in the Custodial Account or in the
Certificate Account and identified as belonging to the Trust Fund;
(iii) property which secured a Mortgage Loan and which has been
acquired for the benefit of the Certificateholders by foreclosure or deed in
lieu of foreclosure;
(iv) the hazard insurance policies and Primary Insurance Policies
pertaining to the Mortgage Loans, if any; and
(v) all proceeds of clauses (i) through (iv) above.
REMIC I Available Distribution Amount: The Available Distribution Amount
increased by the amount of any Net Swap Payment described in clause (b)(z)
thereof.
REMIC I Distribution Amount: For any Distribution Date, the REMIC I
Available Distribution Amount shall be distributed to REMIC II in respect of the
REMIC I Regular Interests and Component I the Class R in the following amounts
and priority:
(a) to REMIC I Regular Interest A-I and REMIC I Regular Interest
I-1-A through I-47-B, pro rata, in an amount equal to (A) Uncertificated Accrued
Interest for such REMIC I Regular Interests for such Distribution Date, plus (B)
any amounts payable in respect thereof remaining unpaid from previous
Distribution Dates; and
(b) to the extent of amounts remaining after the distributions
made pursuant to clause (a) above, payments of principal shall be allocated as
follows: first, to REMIC I Regular Interests I-1-A through I-47-B starting with
the lowest numerical denomination until the Uncertificated Principal Balance of
each such REMIC I Regular Interest is reduced to zero, provided that, for REMIC
I Regular Interests with the same numerical denomination, such payments of
principal shall be allocated pro rata between such REMIC I Regular Interests and
second, to the extent of any Overcollateralization Reduction Amount to REMIC I
Regular Interest A-I until the Uncertificated Principal Balance of such REMIC I
Regular Interest is reduced to zero.
REMIC I Interests: The REMIC I Regular Interests and Component I of the
Class R Certificates.
REMIC I Realized Losses: All Realized Losses on the Mortgage Loans shall
be allocated first, on each Distribution Date, to REMIC I Regular Interest A-I
until such REMIC I Regular Interest has been reduced to zero. Second, Realized
Losses shall be allocated to REMIC I Regular Interest I-1-A through REMIC I
Regular Interest I-47-B, starting with the lowest numerical denomination until
such REMIC I Regular Interest has been reduced to zero, provided that, for REMIC
I Regular Interests with the same numerical denomination, such Realized Losses
shall be allocated pro rata between such REMIC I Regular Interests.
REMIC I Regular Interest. Any of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
"regular interest" in REMIC I. Each REMIC I Regular Interest shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto. The designations for the respective REMIC I Regular Interests are set
forth in the Preliminary Statement hereto.
35
REMIC I Regular Interest A-I: A regular interest in REMIC I that is held
as an asset of REMIC II, that has an initial principal balance equal to the
related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC I Pass-Through Rate, and that has such other terms as are
described herein.
REMIC II: The segregated pool of assets subject hereto, constituting a
portion of the primary trust created hereby and to be administered hereunder,
with respect to which a separate REMIC election is to be made, consisting of the
REMIC I Regular Interests.
REMIC II Available Distribution Amount: For any Distribution Date, the
amount distributed from REMIC I to REMIC II on such Distribution Date in respect
of the REMIC I Regular Interests.
REMIC II Distribution Amount: For any Distribution Date, the REMIC II
Available Distribution Amount shall be distributed to REMIC III in respect of
the REMIC II Regular Interests and Component II of the Class R Certificates in
the following amounts and priority:
(a) to REMIC II Regular Interest LT-IO, in an amount equal to (i)
Uncertificated Accrued Interest for such REMIC II Regular Interest for such
Distribution Date, plus (ii) any amounts in respect thereof remaining unpaid
from previous Distribution Dates;
(b) to the extent of amounts remaining after the distributions
made pursuant to clause (a) above, to REMIC II Regular Interests LT1, LT2, LT3
and LT4, pro rata, in an amount equal to (i) their Uncertificated Accrued
Interest for such Distribution Date, plus (ii) any amounts in respect thereof
remaining unpaid from previous Distribution Dates; and
(c) to the extent of amounts remaining after the distributions
made pursuant to clauses (a) and (b) above:
(i) to REMIC I Regular Interests LT2, LT3
and LT4, their respective Principal Distribution Amounts;
(ii) to REMIC I Regular Interest LT1 any
remainder until the Uncertificated Principal Balance
thereof is reduced to zero;
(iii) any remainder to REMIC II Regular
Interests LT2, LT3 and LT4, pro rata according to their
respective Uncertificated Principal Balances as reduced by
the distributions deemed made pursuant to (i) above, until
their respective Uncertificated Principal Balances are
reduced to zero; and
(d) to the extent of amounts remaining after the distributions
made pursuant to clauses (a) through (c) above:
(i) first, to each of the REMIC II Regular
Interests, pro rata according to the amount of
unreimbursed Realized Losses allocable to principal
previously allocated to each such REMIC II Regular
Interest, the aggregate amount of any distributions to the
Certificates as reimbursement of such Realized Losses on
such Distribution Date pursuant to clause (ix) in Section
4.02(c); provided, however, that any amounts distributed
pursuant to this paragraph (d)(i) of this definition of
"REMIC II Distribution Amount" shall not cause a reduction
in the Uncertificated Principal Balances of any of the
REMIC II Regular Interests; and
36
(ii) second, to Component III of the Class R
Certificates, any remaining amount.
REMIC II Net WAC Rate: With respect to any Distribution Date, a per
annum rate equal to the weighted average of (x) with respect to REMIC I Regular
Interests ending with the designation "B," the weighted average of the
Uncertificated REMIC I Pass-Through Rates for such REMIC I Regular Interests,
weighted on the basis of the Uncertificated Principal Balance of such REMIC I
Regular Interests for each such Distribution Date, (y) with respect to REMIC I
Regular Interest A-I, the Uncertificated REMIC I Pass-Through Rate for such
REMIC I Regular Interest, and (z) with respect to REMIC I Regular Interests
ending with the designation "A," for each Distribution Date listed below, the
weighted average of the rates listed below for each such REMIC I Regular
Interest listed below, weighted on the basis of the Uncertificated Principal
Balance of each such REMIC I Regular Interest for each such Distribution Date:
DISTRIBUTION
DATE REMIC I REGULAR INTEREST RATE
1 I-1-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
2 I-2-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A Uncertificated REMIC I Pass-Through Rate
3 I-3-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A and I-2-A Uncertificated REMIC I Pass-Through Rate
4 I-4-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-3-A Uncertificated REMIC I Pass-Through Rate
5 I-5-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-4-A Uncertificated REMIC I Pass-Through Rate
6 I-6-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-5-A Uncertificated REMIC I Pass-Through Rate
7 I-7-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-6-A Uncertificated REMIC I Pass-Through Rate
8 I-8-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-7-A Uncertificated REMIC I Pass-Through Rate
9 I-9-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-8-A Uncertificated REMIC I Pass-Through Rate
10 I-10-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-9-A Uncertificated REMIC I Pass-Through Rate
11 I-11-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-10-A Uncertificated REMIC I Pass-Through Rate
12 I-12-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-11-A Uncertificated REMIC I Pass-Through Rate
13 I-13-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-12-A Uncertificated REMIC I Pass-Through Rate
14 I-14-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-13-A Uncertificated REMIC I Pass-Through Rate
15 I-15-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
37
DISTRIBUTION
DATE REMIC I REGULAR INTEREST RATE
I-1-A through I-14-A Uncertificated REMIC I Pass-Through Rate
16 I-16-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-15-A Uncertificated REMIC I Pass-Through Rate
17 I-17-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-16-A Uncertificated REMIC I Pass-Through Rate
18 I-18-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-17-A Uncertificated REMIC I Pass-Through Rate
19 I-19-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-18-A Uncertificated REMIC I Pass-Through Rate
20 I-20-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-19-A Uncertificated REMIC I Pass-Through Rate
21 I-21-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-20-A Uncertificated REMIC I Pass-Through Rate
22 I-22-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-21-A Uncertificated REMIC I Pass-Through Rate
23 I-23-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-22-A Uncertificated REMIC I Pass-Through Rate
24 I-24-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-23-A Uncertificated REMIC I Pass-Through Rate
25 I-25-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-24-A Uncertificated REMIC I Pass-Through Rate
26 I-26-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-25-A Uncertificated REMIC I Pass-Through Rate
27 I-27-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-26-A Uncertificated REMIC I Pass-Through Rate
28 I-28-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-27-A Uncertificated REMIC I Pass-Through Rate
29 I-29-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-28-A Uncertificated REMIC I Pass-Through Rate
30 I-30-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-29-A Uncertificated REMIC I Pass-Through Rate
31 I-31-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-30-A Uncertificated REMIC I Pass-Through Rate
32 I-32-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-31-A Uncertificated REMIC I Pass-Through Rate
33 I-33-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-32-A Uncertificated REMIC I Pass-Through Rate
34 I-34-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-33-A Uncertificated REMIC I Pass-Through Rate
35 I-35-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
38
DISTRIBUTION
DATE REMIC I REGULAR INTEREST RATE
I-1-A through I-34-A Uncertificated REMIC I Pass-Through Rate
36 I-36-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-35-A Uncertificated REMIC I Pass-Through Rate
37 I-37-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-36-A Uncertificated REMIC I Pass-Through Rate
38 I-38-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-37-A Uncertificated REMIC I Pass-Through Rate
39 I-39-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-38-A Uncertificated REMIC I Pass-Through Rate
40 I-40-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-39-A Uncertificated REMIC I Pass-Through Rate
41 I-41-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-40-A Uncertificated REMIC I Pass-Through Rate
42 I-42-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-41-A Uncertificated REMIC I Pass-Through Rate
43 I-43-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-42-A Uncertificated REMIC I Pass-Through Rate
44 I-44-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-43-A Uncertificated REMIC I Pass-Through Rate
45 I-45-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-44-A Uncertificated REMIC I Pass-Through Rate
46 I-46-A through I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-45-A Uncertificated REMIC I Pass-Through Rate
47 I-47-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-46-A Uncertificated REMIC I Pass-Through Rate
Thereafter I-1-A through I-47-A Uncertificated REMIC I Pass-Through Rate
REMIC II Principal Reduction Amounts: For any Distribution Date, the
amounts by which the principal balances of the REMIC II Regular Interests LT1,
LT2, LT3 and LT4, respectively will be reduced on such Distribution Date by the
allocation of Realized Losses and the distribution of principal, determined as
follows:
For purposes of the succeeding formulas the following symbols shall have
the meanings set forth below:
Y1 = the principal balance of the REMIC II Regular Interest LT1
after distributions on the prior Distribution Date.
Y2 = the principal balance of the REMIC II Regular Interest LT2
after distributions on the prior Distribution Date.
Y3 = the principal balance of the REMIC II Regular Interest LT3
after distributions on the prior Distribution Date.
Y4 = the principal balance of the REMIC II Regular Interest LT4
after distributions on the prior Distribution Date (note: Y3 =
Y4).
39
(DELTA)Y1 = the REMIC II Regular Interest LT1 Principal Reduction
Amount.
(DELTA)Y2 = the REMIC II Regular Interest LT2 Principal Reduction
Amount.
(DELTA)Y3 = the REMIC II Regular Interest LT3 Principal Reduction
Amount.
(DELTA)Y4 = the REMIC II Regular Interest LT4 Principal Reduction
Amount.
P0 = the aggregate principal balance of REMIC II Regular Interests
LT1, LT2, LT3 and LT4 after distributions and the allocation of
Realized Losses on the prior Distribution Date.
P1 = the aggregate principal balance of the REMIC II Regular
Interests LT1, LT2, LT3 and LT4 after distributions and the
allocation of Realized Losses to be made on such Distribution
Date.
(DELTA)P = P0 - P1 = the aggregate of the REMIC II Regular Interests
LT1, LT2, LT3 and LT4 Principal Reduction Amounts.
= the aggregate of the principal portions of Realized Losses to be
allocated to, and the principal distributions to be made on, the
Certificates on such Distribution Date (including distributions
of accrued and unpaid interest on the Class SB Certificates for
prior Distribution Dates).
R0 = the REMIC II Net WAC Rate (stated as a monthly rate) after
giving effect to amounts distributed and Realized Losses
allocated on the prior Distribution Date.
R1 = the REMIC II Net WAC Rate (stated as a monthly rate) after
giving effect to amounts to be distributed and Realized Losses to
be allocated on such Distribution Date.
(alpha) = (Y2 + Y3)/P0. The initial value of (alpha) on the Closing Date
for use on the first Distribution Date shall be 0.0001.
(gamma)0 = the lesser of (A) the sum for all Classes of Certificates
other than the Class SB Certificates and Class IO Certificates of
the product for each Class of (i) the monthly interest rate (as
limited by the REMIC II Net WAC Rate, if applicable) for such
Class applicable for distributions to be made on such
Distribution Date and (ii) the aggregate Certificate Principal
Balance for such Class after distributions and the allocation of
Realized Losses on the prior Distribution Date and (B) R0*P0.
(gamma)1 = the lesser of (A) the sum for all Classes of Certificates
other than the Class SB Certificates and Class IO Certificates of
the product for each Class of (i) the monthly interest rate (as
limited by the REMIC II Net WAC Rate, if applicable) for such
Class applicable for distributions to be made on the next
succeeding Distribution Date and (ii) the aggregate Certificate
Principal Balance for such Class after distributions and the
allocation of Realized Losses to be made on such Distribution
Date and (B) R1*P1.
Then, based on the foregoing definitions:
(DELTA)Y1 = (DELTA)P - (DELTA)Y2 - Y3 - Y4;
(DELTA)Y2 = ((alpha)/2){((gamma)0R1 - (gamma)1R0)/R0R1};
40
(DELTA)Y3 = ((alpha)(DELTA)P - (DELTA)Y2; and
(DELTA)Y4 = (DELTA)Y3.
if both (DELTA)Y2 and (DELTA)Y3, as so determined, are non-negative numbers.
Otherwise:
(1) If (DELTA)Y2, as so determined, is negative, then
(DELTA)Y2 = 0
(DELTA)Y3 = (xxxxx){(xxxxx)0X0X0 - (xxxxx)0X0X0}/{(xxxxx)0X0};
(XXXXX)X0 = (DELTA)Y3; and
(DELTA)Y1 = (DELTA)P - (DELTA)Y2 - (DELTA)Y3 - (DELTA)Y4.
(2) If (DELTA)Y3, as so determined, is negative, then
(DELTA)Y3 = 0;
(DELTA)Y2 = (alpha){(gamma)1R0P0 -(gamma)0R1P1}/{2R1R0P1 - (gamma)1R0};
(DELTA)Y4 = (DELTA)Y3; and
(DELTA)Y1 = (DELTA)P - (DELTA)Y2 - (DELTA)Y3 - (DELTA)Y4.
REMIC II Realized Losses: Realized Losses on the Mortgage Loans shall be
allocated to the REMIC II Regular Interests as follows. The interest portion of
Realized Losses on the Mortgage Loans, if any, shall be allocated among REMIC II
Regular Interests LT1, LT2 and LT4, pro rata according to the amount of interest
accrued but unpaid thereon, in reduction thereof. Any interest portion of such
Realized Losses in excess of the amount allocated pursuant to the preceding
sentence shall be treated as a principal portion of Realized Losses not
attributable to any specific Mortgage Loan and allocated pursuant to the
succeeding sentences. The principal portion of Realized Losses with respect to
Mortgage Loans shall be allocated to the REMIC II Regular Interests as follows:
first, to REMIC II Regular Interests LT2, LT3 and LT4, pro-rata according to
their respective REMIC II Principal Reduction Amounts to the extent thereof in
reduction of the Uncertificated Principal Balance of such REMIC II Regular
Interests and, second, the remainder, if any, of such principal portion of such
Realized Losses shall be allocated to REMIC II Regular Interest LT1 in reduction
of the Uncertificated Principal Balance thereof.
REMIC II Regular Interests: REMIC II Regular Interest LT1, REMIC II
Regular Interest LT2, REMIC II Regular Interest LT3, REMIC II Regular Interest
LT4 and REMIC II Regular Interest LT-IO.
REMIC II Regular Interest LT1: A regular interest in REMIC II that is
held as an asset of REMIC III, that has an initial principal balance equal to
the related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC II Pass-Through Rate, and that has such other terms as are
described herein.
REMIC II Regular Interest LT1 Principal Distribution Amount: For any
Distribution Date, the excess, if any, of the REMIC II Regular Interest LT1
Principal Reduction Amount for such Distribution Date over the Realized Losses
allocated to the REMIC II Regular Interest LT1 on such Distribution Date.
REMIC II Regular Interest LT2: A regular interest in REMIC II that is
held as an asset of REMIC III, that has an initial principal balance equal to
the related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC II Pass-Through Rate, and that has such other terms as are
described herein.
41
REMIC II Regular Interest LT2 Principal Distribution Amount: For any
Distribution Date, the excess, if any, of the REMIC II Regular Interest LT2
Principal Reduction Amount for such Distribution Date over the Realized Losses
allocated to the REMIC II Regular Interest LT2 on such Distribution Date.
REMIC II Regular Interest LT3: A regular interest in REMIC II that is
held as an asset of REMIC III, that has an initial principal balance equal to
the related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC II Pass-Through Rate, and that has such other terms as are
described herein.
REMIC II Regular Interest LT3 Principal Distribution Amount: For any
Distribution Date, the excess, if any, of the REMIC II Regular Interest LT3
Principal Reduction Amount for such Distribution Date over the Realized Losses
allocated to the REMIC II Regular Interest LT3 on such Distribution Date.
REMIC II Regular Interest LT4: A regular interest in REMIC II that is
held as an asset of REMIC III, that has an initial principal balance equal to
the related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC II Pass-Through Rate, and that has such other terms as are
described herein.
REMIC II Regular Interest LT4 Principal Distribution Amount: For any
Distribution Date, the excess, if any, of the REMIC II Regular Interest LT4
Principal Reduction Amount for such Distribution Date over the Realized Losses
allocated to the REMIC II Regular Interest LT4 on such Distribution Date.
REMIC II Regular Interest LT-IO: A regular interest in REMIC II that is
held as an asset of REMIC III, that has no initial principal balance, that bears
interest at the related Uncertificated REMIC II Pass-Through Rate on its
Uncertificated Notional Amount, and that has such other terms as are described
herein.
REMIC III: The segregated pool of assets subject hereto, constituting a
portion of the primary trust created hereby and to be administered hereunder,
with respect to which a separate REMIC election is to be made, consisting of the
REMIC II Regular Interests.
REMIC III Available Distribution Amount: For any Distribution Date, the
amount distributed from REMIC II to REMIC III on such Distribution Date in
respect of the REMIC II Regular Interests.
REMIC III Distribution Amount: For any Distribution Date, the REMIC III
Available Distribution Amount shall be deemed distributed to Class A, Class M
and Class SB Certificates in respect of the portion of such Certificates
representing ownership of REMIC III Regular Interests and Component III of the
Class R Certificates in the following amounts and priority:
(i) to the Class SB Certificateholders in respect of the REMIC III
Regular Interest IO, the amount distributable with respect to such REMIC III
Regular Interest as described in the Preliminary Statement, being paid from and
in reduction of the REMIC III Available Distribution Amount for such
Distribution Date;
42
(ii) to the Class A Certificateholders, the Accrued Certificate Interest
payable on the Class A Certificates with respect to such Distribution Date, plus
any related amounts accrued pursuant to this clause (i) but remaining unpaid
from any prior Distribution Date, being paid from and in reduction of the REMIC
III Available Distribution Amount for such Distribution Date;
(iii) to the Class M Certificateholders, from the amount, if any, of the
Available Distribution Amount remaining after the foregoing distributions,
Accrued Certificate Interest payable on the Class M Certificates with respect to
such Distribution Date, plus any related amounts accrued pursuant to this clause
(ii) but remaining unpaid from any prior Distribution Date, sequentially, to the
Class M-1 Certificateholders, Class M-2 Certificateholders, Class M-3
Certificateholders, Class M-4 Certificateholders, Class M-5 Certificateholders,
Class M-6 Certificateholders, Class M-7 Certificateholders, Class M-8
Certificateholders and Class M-9 Certificateholders, in that order, being paid
from and in reduction of the REMIC III Available Distribution Amount for such
Distribution Date;
(iv) the Principal Distribution Amount shall be distributed as follows,
to be applied to reduce the principal balance of the REMIC III Regular Interest
related to the applicable Certificates in each case to the extent of the
remaining Principal Distribution Amount:
(A) first, the Class A Principal Distribution Amount shall be
distributed sequentially to the Class A-1 Certificateholders, Class A-2
Certificateholders, Class A-3 Certificateholders and Class A-4
Certificateholders, in that order, in each case until the Certificate
Principal Balance thereof is reduced to zero;
(B) second, to the Class M-1 Certificateholders, the Class M-1
Principal Distribution Amount, until the Certificate Principal Balance of
the Class M-1 Certificates has been reduced to zero;
(C) third, to the Class M-2 Certificateholders, the Class M-2
Principal Distribution Amount, until the Certificate Principal Balance of
the Class M-2 Certificates has been reduced to zero;
(D) fourth, to the Class M-3 Certificateholders, the Class M-3
Principal Distribution Amount, until the Certificate Principal Balance of
the Class M-3 Certificates has been reduced to zero;
(E) fifth, to the Class M-4 Certificateholders, the Class M-4
Principal Distribution Amount, until the Certificate Principal Balance of
the Class M-4 Certificates has been reduced to zero;
(F) sixth, to the Class M-5 Certificateholders, the Class M-5
Principal Distribution Amount, until the Certificate Principal Balance of
the Class M-5 Certificates has been reduced to zero;
(G) seventh, to the Class M-6 Certificateholders, the Class M-6
Principal Distribution Amount, until the Certificate Principal Balance of
the Class M-6 Certificates has been reduced to zero;
(H) eighth, to the Class M-7 Certificateholders, the Class M-7
Principal Distribution Amount, until the Certificate Principal Balance of
the Class M-7 Certificates has been reduced to zero;
(I) ninth, to the Class M-8 Certificateholders, the Class M-8
Principal Distribution Amount, until the Certificate Principal Balance of
the Class M-8 Certificates has been reduced to zero; and
43
(J) tenth, to the Class M-9 Certificateholders, the Class M-9
Principal Distribution Amount, until the Certificate Principal Balance of
the Class M-9 Certificates has been reduced to zero; and
(v) to the Class A Certificateholders and Class M Certificateholders,
the amount of any Prepayment Interest Shortfalls allocated thereto for such
Distribution Date, on a pro rata basis based on Prepayment Interest Shortfalls
allocated thereto to the extent not offset by Eligible Master Servicing
Compensation on such Distribution Date;
(vi) to the Class A Certificateholders and Class M Certificateholders,
the amount of any Prepayment Interest Shortfalls previously allocated thereto
remaining unpaid from prior Distribution Dates together with interest thereon at
the related Pass Through Rate, on a pro rata basis based on unpaid Prepayment
Interest Shortfalls previously allocated thereto;
(vii) to the Class SB Certificates, (A) from the amount, if any, of the
REMIC III Available Distribution Amount remaining after the foregoing
distributions, the sum of (I) Accrued Certificate Interest thereon, (II) the
amount of any Overcollateralization Reduction Amount for such Distribution Date
and (III) for any Distribution Date after the Certificate Principal Balance of
each Class of Class A Certificates and Class M Certificates has been reduced to
zero, the Overcollateralization Amount and (B) from prepayment charges on
deposit in the Certificate Account, any prepayment charges received on the
Mortgage Loans during the related Prepayment Period; and
(viii) to the Holders of Component III of the Class R Certificates, the
balance, if any, of the REMIC III Available Distribution Amount.
REMIC III Regular Interest SB-PO: A separate non-certificated beneficial
ownership interests in REMIC III issued hereunder and designated as a Regular
Interest in REMIC III. REMIC III Regular Interest SB-PO shall have no
entitlement to interest, and shall be entitled to distributions of principal
subject to the terms and conditions hereof, in aggregate amount equal to the
initial Certificate Principal Balance of the Class SB Certificates as set forth
in the Preliminary Statement hereto.
REMIC III Regular Interest SB-IO: A separate non-certificated beneficial
ownership interests in REMIC III issued hereunder and designated as a Regular
Interest in REMIC III. REMIC III Regular Interest SB-IO shall have no
entitlement to principal, and shall be entitled to distributions of interest
subject to the terms and conditions hereof, in aggregate amount equal to the
interest distributable with respect to the Class SB Certificates pursuant to the
terms and conditions hereof.
REMIC III Regular Interest IO: A separate non-certificated beneficial
ownership interests in REMIC III issued hereunder and designated as a Regular
Interest in REMIC III. REMIC III Regular Interest IO shall have no entitlement
to principal, and shall be entitled to distributions of interest subject to the
terms and conditions hereof, in aggregate amount equal to the interest
distributable with respect to REMIC II Regular Interest LT-IO.
REMIC III Regular Interests: REMIC III Regular Interests SB-IO, SB-PO
and IO, together with the Class A Certificates and Class M Certificates
exclusive of their respective rights to receive the payment of Basis Risk
Shortfalls and other amounts pursuant to the SB-AM Swap Agreement.
REMIC Provisions: Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at Sections 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
temporary and final regulations (or, to the extent not inconsistent with such
temporary or final regulations, proposed regulations) and published rulings,
notices and announcements promulgated thereunder, as the foregoing may be in
effect from time to time.
44
REO Acquisition: The acquisition by the Master Servicer on behalf of the
Trustee for the benefit of the Certificateholders of any REO Property pursuant
to Section 3.14.
REO Disposition: With respect to any REO Property, a determination by
the Master Servicer that it has received substantially all Insurance Proceeds,
Liquidation Proceeds, REO Proceeds and other payments and recoveries (including
proceeds of a final sale) which the Master Servicer expects to be finally
recoverable from the sale or other disposition of the REO Property.
REO Imputed Interest: With respect to any REO Property, for any period,
an amount equivalent to interest (at a rate equal to the Net Mortgage Rate that
would have been applicable to the related Mortgage Loan had it been outstanding)
on the unpaid principal balance of the Mortgage Loan as of the date of
acquisition thereof for such period.
REO Proceeds: Proceeds, net of expenses, received in respect of any REO
Property (including, without limitation, proceeds from the rental of the related
Mortgaged Property) which proceeds are required to be deposited into the
Custodial Account only upon the related REO Disposition.
REO Property: A Mortgaged Property acquired by the Master Servicer on
behalf of the Trust Fund for the benefit of the Certificateholders through
foreclosure or deed in lieu of foreclosure in connection with a defaulted
Mortgage Loan.
Reportable Modified Mortgage Loan: Any Mortgage Loan that (a) has been
subject to an interest rate reduction, (b) has been subject to a term extension
or (c) has had amounts owing on such Mortgage Loan capitalized by adding such
amount to the Stated Principal Balance of such Mortgage Loan; provided, however,
that a Mortgage Loan modified in accordance with (a) above for a temporary
period shall not be a Reportable Modified Mortgage Loan if such Mortgage Loan
has not been delinquent in payments of principal and interest for six months
since the date of such modification if that interest rate reduction is not made
permanent thereafter.
Repurchase Event: As defined in the Assignment Agreement.
Request for Release: A request for release, the form of which is
attached as Exhibit G hereto, or an electronic request in a form acceptable to
the Custodian.
Required Insurance Policy: With respect to any Mortgage Loan, any
insurance policy which is required to be maintained from time to time under this
Agreement, the Program Guide or the related Subservicing Agreement in respect of
such Mortgage Loan.
Required Overcollateralization Amount: With respect to any Distribution
Date, (a) prior to the Stepdown Date, an amount equal to 3.15% of the aggregate
Stated Principal Balance of the Mortgage Loans as of the Cut-off Date, (b) on or
after the Stepdown Date if a Trigger Event is not in effect, the greater of (i)
an amount equal to 6.30% of the aggregate outstanding Stated Principal Balance
of the Mortgage Loans after giving effect to distributions made on that
Distribution Date and (ii) the Overcollateralization Floor and (c) on or after
the Stepdown Date if a Trigger Event is in effect, an amount equal to the
Required Overcollateralization Amount from the immediately preceding
Distribution Date. The Required Overcollateralization Amount may be reduced so
long as written confirmation is obtained from each Rating Agency that such
reduction shall not reduce the ratings assigned to any Class of Certificates by
such Rating Agency below the lower of the then-current rating or the rating
assigned to such Certificates as of the Closing Date by such Rating Agency.
Residential Funding: Residential Funding Corporation, a Delaware
corporation, in its capacity as seller of the Mortgage Loans to the Depositor
and any successor thereto.
45
Responsible Officer: When used with respect to the Trustee, any officer
of the Corporate Trust Department of the Trustee, including any Senior Vice
President, any Vice President, any Assistant Vice President, any Assistant
Secretary, any Trust Officer or Assistant Trust Officer, or any other officer of
the Trustee, in each case with direct responsibility for the administration of
this Agreement.
RFC Exemption: As defined in Section 5.02(e)(ii).
Rule 144A: Rule 144A under the Securities Act.
SB-AM Swap Agreement: The swap between the Class SB Certificateholder
and the Class A and Class M Certificateholders evidenced by the confirmation
attached hereto as Exhibit Q and incorporated herein by reference.
Securities Act: The Securities Act of 1933, as amended.
Securitization Transaction: Any transaction involving a sale or other
transfer of mortgage loans directly or indirectly to an issuing in connection
with an issuance of publicly offered or privately placed, rated or unrated
mortgage-backed securities.
Seller: With respect to any Mortgage Loan, a Person, including any
Subservicer, that executed a Seller's Agreement applicable to such Mortgage
Loan.
Seller's Agreement: An agreement for the origination and sale of
Mortgage Loans generally in the form of the seller contract referred to or
contained in the Program Guide, or in such other form as has been approved by
the Master Servicer and the Depositor.
Senior Enhancement Percentage: For any Distribution Date, the fraction,
expressed as a percentage, the numerator of which is the sum of (i) the
aggregate Certificate Principal Balance of the Class M Certificates and (ii) the
Overcollateralization Amount, in each case prior to the distribution of the
Principal Distribution Amount on such Distribution Date and the denominator of
which is the aggregate Stated Principal Balance of the Mortgage Loans after
giving effect to distributions to be made on that Distribution Date.
Servicing Accounts: The account or accounts created and maintained
pursuant to Section 3.08.
Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses incurred in connection with a default, delinquency or
other unanticipated event by the Master Servicer or a Subservicer in the
performance of its servicing obligations, including, but not limited to, the
cost of (i) the preservation, restoration and protection of a Mortgaged Property
or, with respect to a cooperative loan, the related cooperative apartment, (ii)
any enforcement or judicial proceedings, including foreclosures, including any
expenses incurred in relation to any such proceedings that result from the
Mortgage Loan being registered on the MERS(R) System, (iii) the management and
liquidation of any REO Property, (iv) any mitigation procedures implemented in
accordance with Section 3.07, and (v) compliance with the obligations under
Sections 3.01, 3.08, 3.11, 3.12(a) and 3.14, including, if the Master Servicer
or any Affiliate of the Master Servicer provides services such as appraisals and
brokerage services that are customarily provided by Persons other than servicers
of mortgage loans, reasonable compensation for such services.
Servicing Criteria: The "servicing criteria" set forth in Item 1122(d)
of Regulation AB, as such may be amended from time to time.
46
Servicing Fee: With respect to any Mortgage Loan and Distribution Date,
the fee payable monthly to the Master Servicer in respect of master servicing
compensation that accrues at an annual rate equal to the Servicing Fee Rate
multiplied by the Stated Principal Balance of such Mortgage Loan as of the
related Due Date in the related Due Period, as may be adjusted pursuant to
Section 3.16(e).
Servicing Fee Rate: With respect to any Mortgage Loan, the per annum
rate designated on the Mortgage Loan Schedule as the "MSTR SERV FEE," as may be
adjusted with respect to successor Master Servicers as provided in Section 7.02,
which rate shall never be greater than the Mortgage Rate of such Mortgage Loan.
Servicing Modification: Any reduction of the interest rate on or the
outstanding principal balance of a Mortgage Loan, any extension of the final
maturity date of a Mortgage Loan, and any increase to the Stated Principal
Balance of a Mortgage Loan by adding to the Stated Principal Balance unpaid
principal and interest and other amounts owing under the Mortgage Loan, in each
case pursuant to a modification of a Mortgage Loan that is in default, or for
which, in the judgment of the Master Servicer, default is reasonably foreseeable
in accordance with Section 3.07(a).
Servicing Officer: Any officer of the Master Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished to
the Trustee by the Master Servicer on the Closing Date, as such list may from
time to time be amended.
Sixty-Plus Delinquency Percentage: With respect to any Distribution Date
and the Mortgage Loans, the arithmetic average, for each of the three
Distribution Dates ending with such Distribution Date, of the fraction,
expressed as a percentage, equal to (x) the aggregate Stated Principal Balance
of the Mortgage Loans that are 60 or more days delinquent in payment of
principal and interest for that Distribution Date, including Mortgage Loans in
foreclosure and REO, over (y) the aggregate Stated Principal Balance of all of
the Mortgage Loans immediately preceding that Distribution Date.
Standard & Poor's: Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc. or its successors in interest.
Startup Date: The day designated as such pursuant to Article X hereof.
Stated Principal Balance: With respect to any Mortgage Loan or related
REO Property, as of any date of determination, (i) the sum of (a) the Cut-off
Date Principal Balance of the Mortgage Loan and (b) any amount by which the
Stated Principal Balance of the Mortgage Loan has been increased pursuant to a
Servicing Modification, minus (ii) the sum of (a) the principal portion of the
Monthly Payments due with respect to such Mortgage Loan or REO Property during
each Due Period ending with the Due Period relating to the most recent
Distribution Date which were received or with respect to which an Advance was
made, (b) all Principal Prepayments with respect to such Mortgage Loan or REO
Property, and all Insurance Proceeds, Liquidation Proceeds and REO Proceeds, to
the extent applied by the Master Servicer as recoveries of principal in
accordance with Section 3.14 with respect to such Mortgage Loan or REO Property,
in each case which were distributed pursuant to Section 4.02 on any previous
Distribution Date, and (c) any Realized Loss incurred with respect to such
Mortgage Loan allocated to Certificateholders with respect thereto for any
previous Distribution Date.
Stepdown Date: That Distribution Date which is the earlier to occur of
(a) the Distribution Date immediately succeeding the Distribution Date on which
the aggregate Certificate Principal Balance of the Class A Certificates has been
reduced to zero and (b) the later to occur of (i) the Distribution Date in
September 2009 and (ii) the first Distribution Date on which the Senior
Enhancement Percentage is equal to or greater than 44.00%.
47
Subordination: The provisions described in Section 4.05 relating to the
allocation of Realized Losses.
Subordination Percentage: With respect to the Class A Certificates and
any Class of Class M Certificates the respective percentage set forth below.
SUBORDINATION
CLASS PERCENTAGE
A 56.00%
M-1 63.70%
M-2 70.50%
M-3 74.60%
M-4 78.40%
M-5 81.90%
M-6 85.30%
M-7 88.60%
M-8 91.40%
M-9 93.70%
Subsequent Recoveries: As of any Distribution Date, amounts received by
the Master Servicer (net of any related expenses permitted to be reimbursed
pursuant to Section 3.10) or surplus amounts held by the Master Servicer to
cover estimated expenses (including, but not limited to, recoveries in respect
of the representations and warranties made by the related Seller pursuant to the
applicable Seller's Agreement and assigned to the Trustee pursuant to Section
2.04) specifically related to a Mortgage Loan that was the subject of a Cash
Liquidation or an REO Disposition prior to the related Prepayment Period and
that resulted in a Realized Loss.
Subserviced Mortgage Loan: Any Mortgage Loan that, at the time of
reference thereto, is subject to a Subservicing Agreement.
Subservicer: Any Person with whom the Master Servicer has entered into a
Subservicing Agreement and who generally satisfied the requirements set forth in
the Program Guide in respect of the qualification of a Subservicer as of the
date of its approval as a Subservicer by the Master Servicer.
Subservicer Advance: Any delinquent installment of principal and
interest on a Mortgage Loan which is advanced by the related Subservicer (net of
its Subservicing Fee) pursuant to the Subservicing Agreement.
Subservicing Account: An account established by a Subservicer in
accordance with Section 3.08.
Subservicing Agreement: The written contract between the Master Servicer
and any Subservicer relating to servicing and administration of certain Mortgage
Loans as provided in Section 3.02, generally in the form of the servicer
contract referred to or contained in the Program Guide or in such other form as
has been approved by the Master Servicer and the Depositor.
Subservicing Fee: With respect to any Mortgage Loan, the fee payable
monthly to the related Subservicer (or, in the case of a Nonsubserviced Mortgage
Loan, to the Master Servicer) in respect of subservicing and other compensation
that accrues with respect to each Distribution Date at an annual rate designated
as "SUBSERV FEE" on the Mortgage Loan Schedule.
48
Supplemental Interest Trust Account: The separate trust account created
and maintained by the Supplemental Interest Trust Trustee pursuant to Section
4.10(a).
Supplemental Interest Trust: The separate trust created and maintain by
the Supplemental Interest Trust Trustee pursuant to Section 4.10(a). The primary
activities of the Supplemental Interest Trust created pursuant to this Agreement
shall be:
(i) holding the Swap Agreement;
(ii) receiving collections or making payments with respect to
the Swap Agreement; and
(iii) engaging in other activities that are necessary or
incidental to accomplish these limited purposes, which activities
cannot be contrary to the tatus of the Supplemental Interest
Trust as a qualified special purpose entity under existing
accounting literature.
Supplemental Interest Trust Trustee: As defined in the preamble hereto.
Swap Agreement: The interest rate swap agreement between the Swap
Counterparty and the Supplemental Interest Trust Trustee, on behalf of the
Supplemental Interest Trust, which agreement provides for Net Swap Payments and
Swap Termination Payments to be paid, as provided therein, together with any
schedules, confirmations or other agreements relating thereto, attached hereto
as Exhibit O.
Swap Agreement Notional Balance: As to the Swap Agreement and each
Floating Rate Payer Payment Date and Fixed Rate Payer Payment Date (each as
defined in the Swap Agreement) the amount set forth on Schedule I to the Swap
Agreement for such Floating Rate Payer Payment Date.
Swap Counterparty: The swap counterparty under the Swap Agreement either
(a) entitled to receive payments from the Supplemental Interest Trust Trustee
from amounts payable by the Supplemental Interest Trust under this Agreement or
(b) required to make payments to the Supplemental Interest Trust Trustee for
payment to the Supplemental Interest Trust, in either case pursuant to the terms
of the Swap Agreement, and any successor in interest or assign. Initially, the
Swap Counterparty shall be JPMorgan Chase Bank, National Association.
Swap Counterparty Trigger Event: With respect to any Distribution Date,
(i) an Event of Default under the Swap Agreement with respect to which the Swap
Counterparty is a Defaulting Party, (ii) a Termination Event under the Swap
Agreement with respect to which the Swap Counterparty is the sole Affected
Party, or (iii) an additional termination event under the Swap Agreement with
respect to which the Swap Counterparty is the sole Affected Party.
Swap LIBOR: LIBOR as determined pursuant to the Swap Agreement.
Swap Termination Payment: Upon the occurrence of an Early Termination
Date, the payment to be made by the Supplemental Interest Trust Trustee on
behalf of the Supplemental Interest Trust to the Swap Counterparty from payments
from the Supplemental Interest Trust`, or by the Swap Counterparty to the
Supplemental Interest Trust Trustee for payment to the Supplemental Interest
Trust, as applicable, pursuant to the terms of the Swap Agreement.
Tax Returns: The federal income tax return on Internal Revenue Service
Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax Return,
including Schedule Q thereto, Quarterly Notice to Residual Interest Holders of
REMIC Taxable Income or Net Loss Allocation, or any successor forms, to be filed
49
on behalf of any REMIC hereunder due to its classification as a REMIC under the
REMIC Provisions, together with any and all other information, reports or
returns that may be required to be furnished to the Certificateholders or filed
with the Internal Revenue Service or any other governmental taxing authority
under any applicable provisions of federal, state or local tax laws.
Telerate Screen Page 3750: As defined in Section 1.02.
Transfer: Any direct or indirect transfer, sale, pledge, hypothecation
or other form of assignment of any Ownership Interest in a Certificate.
Transfer Affidavit and Agreement: As defined in Section 5.02(f).
Transferee: Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
Transferor: Any Person who is disposing by Transfer of any Ownership
Interest in a Certificate.
Transferring Servicer: As defined in Section 3.23(c).
Trigger Event: A Trigger Event is in effect with respect to any
Distribution Date on or after the Stepdown Date if either (a) the Sixty-Plus
Delinquency Percentage, as determined on that Distribution Date, equals or
exceeds 36.36% of the Senior Enhancement Percentage for such Distribution Date
or (b) on or after the Distribution Date in September 2008, the aggregate amount
of Realized Losses on the Mortgage Loans as a percentage of the Cut-off Date
Balance exceeds the applicable amount set forth below:
September 2008 to August 2009: 1.60% with respect to September
2008, plus an additional 1/12th of
1.95% for each month thereafter.
September 2009 to August 2010: 3.55% with respect to September
2009, plus an additional 1/12th of
2.05% for each month thereafter.
September 2010 to August 2011: 5.60% with respect to September
2010, plus an additional 1/12th of
1.65% for each month thereafter.
September 2011 to August 2012: 7.25% with respect to September
2011, plus an additional 1/12th of
0.90% for each month thereafter.
September 2012 to August 2013: 8.15% with respect to September
2012, plus an additional 1/12th of
0.05% for each month thereafter.
September 2013 and thereafter: 8.20%.
Trustee: As defined in the preamble hereto.
Trust Fund: Collectively, the assets of each REMIC hereunder and the
assets in the Supplemental Interest Trust.
50
Uncertificated Accrued Interest: With respect to any Uncertificated
Regular Interest for any Distribution Date, one month's interest at the related
Uncertificated Pass-Through Rate for such Distribution Date, accrued on the
Uncertificated Principal Balance or Uncertificated Notional Amount, as
applicable, immediately prior to such Distribution Date. Uncertificated Accrued
Interest for the Uncertificated Regular Interests shall accrue on the basis of a
360-day year consisting of twelve 30-day months. For purposes of calculating the
amount of Uncertificated Accrued Interest for the REMIC I Regular Interests for
any Distribution Date, any Prepayment Interest Shortfalls and Relief Act
Shortfalls (to the extent not covered by Compensating Interest) shall be
allocated among REMIC I Regular Interests, pro rata, based on, and to the extent
of, Uncertificated Accrued Interest, as calculated without application of this
sentence. For purposes of calculating the amount of Uncertificated Accrued
Interest for the REMIC II Regular Interests for any Distribution Date, any
Prepayment Interest Shortfalls and Relief Act Shortfalls (to the extent not
covered by Compensating Interest) shall be allocated among the REMIC II Regular
Interests, pro rata, based on, and to the extent of, Uncertificated Accrued
Interest, as calculated without application of this sentence. Uncertificated
Interest on REMIC III Regular Interest SB-PO shall be zero. Uncertificated
Accrued Interest on the REMIC III Regular Interest SB-IO for each Distribution
Date shall equal Accrued Certificate Interest for the Class SB Certificates.
Uncertificated Notional Amount: With respect to the Class SB
Certificates or the REMIC III Regular Interest SB-IO, immediately prior to any
Distribution Date, the aggregate of the Uncertificated Principal Balances of the
REMIC II Regular Interests.
With respect to REMIC II Regular Interest LT-IO and each Distribution
Date listed below, the aggregate Uncertificated Principal Balance of the REMIC I
Regular Interests ending with the designation "A" listed below:
DISTRIBUTION
DATE REMIC I REGULAR INTERESTS
1 I-1-A through X-00-X
0 X-0-X xxxxxxx X-00-X
0 X-0-X through X-00-X
0 X-0-X xxxxxxx X-00-X
0 X-0-X through X-00-X
0 X-0-X xxxxxxx X-00-X
0 X-0-X through X-00-X
0 X-0-X xxxxxxx X-00-X
0 X-0-X through I-47-A
10 I-10-A through I-47-A
11 I-11-A through I-47-A
12 I-12-A through I-47-A
13 I-13-A through I-47-A
14 I-14-A through I-47-A
15 I-15-A through I-47-A
16 I-16-A through I-47-A
17 I-17-A through I-47-A
18 I-18-A through I-47-A
19 I-19-A through I-47-A
20 I-20-A through I-47-A
21 I-21-A through I-47-A
22 I-22-A through I-47-A
23 I-23-A through I-47-A
24 I-24-A through I-47-A
25 I-25-A through I-47-A
51
DISTRIBUTION
DATE REMIC I REGULAR INTERESTS
26 I-26-A through I-47-A
27 I-27-A through I-47-A
28 I-28-A through I-47-A
29 I-29-A through I-47-A
30 I-30-A through I-47-A
31 I-31-A through I-47-A
32 I-32-A through I-47-A
33 I-33-A through I-47-A
34 I-34-A through I-47-A
35 I-35-A through I-47-A
36 I-36-A through I-47-A
37 I-37-A through I-47-A
38 I-38-A through I-47-A
39 I-39-A through I-47-A
40 I-40-A through I-47-A
41 I-41-A through I-47-A
42 I-42-A through I-47-A
43 I-43-A through I-47-A
44 I-44-A through I-47-A
45 I-45-A through I-47-A
46 I-46-A through I-47-A
47 I-47-A
thereafter $0.00
With respect to REMIC III Regular Interest IO, immediately prior to any
Distribution Date, an amount equal to the Uncertificated Notional Amount of
REMIC II Regular Interest LT-IO.
Uncertificated Pass-Through Rate: The Uncertificated REMIC I
Pass-Through Rate or the Uncertificated REMIC II Pass-Through Rate, as
applicable.
Uncertificated Principal Balance: The principal amount of any
Uncertificated Regular Interest outstanding as of any date of determination. The
Uncertificated Principal Balance of each REMIC Regular Interest shall never be
less than zero. With respect to REMIC III Regular Interest SB-PO the initial
amount set forth with respect thereto in the Preliminary Statement as reduced by
distributions deemed made in respect thereof pursuant to Section 4.02 and
Realized Losses allocated thereto pursuant to Section 4.05.
Uncertificated Regular Interests: The REMIC I Regular Interests and the
REMIC II Regular Interests.
Uncertificated REMIC I Pass-Through Rate With respect to each REMIC I
Regular Interest ending with the designation "A," a per annum rate equal to the
weighted average Net Mortgage Rate of the Mortgage Loans multiplied by two (2),
subject to a maximum rate of double the fixed swap rate. With respect to each
REMIC I Regular Interest ending with the designation "B," the greater of (x) a
per annum rate equal to the excess, if any, of (i) 2 multiplied by the weighted
average Net Mortgage Rate of the Mortgage Loans over (ii) double the fixed swap
rate and (y) 0.00000%. With respect to REMIC I Regular Interest A-I, the
weighted average Net Mortgage Rate of the Mortgage Loans.
52
Uncertificated REMIC II Pass-Through Rate: With respect to any
Distribution Date and (i) REMIC II Regular Interests LT1 and LT2, the REMIC II
Net WAC Rate, (ii) REMIC II Regular Interest LT3, zero (0.00%), (iii) REMIC II
Regular Interest LT4, twice the REMIC II Net WAC Rate, and (iv) REMIC II Regular
Interest LT-IO, the excess of (i) the weighted average of the Uncertificated
REMIC I Pass-Through Rates for REMIC I Regular Interests ending with the
designation "A," over (ii) 2 multiplied by Swap LIBOR.
Uniform Single Attestation Program for Mortgage Bankers: The Uniform
Single Attestation Program for Mortgage Bankers, as published by the Mortgage
Bankers Association of America and effective with respect to fiscal periods
ending on or after December 15, 1995.
Uninsured Cause: Any cause of damage to property subject to a Mortgage
such that the complete restoration of such property is not fully reimbursable by
the hazard insurance policies.
United States Person: Either (i) a citizen or resident of the United
States, a corporation, partnership or other entity (treated as a corporation or
partnership for United States federal income tax purposes) created or organized
in, or under the laws of, the United States, any state thereof, or the District
of Columbia (except in the case of a partnership, to the extent provided in
Treasury regulations) provided that, for purposes solely of the restrictions on
the transfer of Class R Certificates, no partnership or other entity treated as
a partnership for United States federal income tax purposes shall be treated as
a United States Person unless all persons that own an interest in such
partnership either directly or through any entity that is not a corporation for
United States federal income tax purposes are required by the applicable
operative agreement to be United States Persons, or an estate that is described
in Section 7701(a)(30)(D) of the Code, or a trust that is described in Section
7701(a)(30)(E) of the Code, or (ii) as defined in Regulation S, as the context
may require.
Voting Rights: The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. 98.00% of all of the Voting
Rights shall be allocated among Holders of the Class A Certificates and Class M
Certificates, in proportion to the outstanding Certificate Principal Balances of
their respective Certificates; 1.00% of all of the Voting Rights shall be
allocated to the Holders of the Class SB Certificates; and 1.00% of all of the
Voting Rights shall be allocated to the Holders of the Class R Certificates; in
each case to be allocated among the Certificates of such Class in accordance
with their respective Percentage Interests.
Section 1.02. Determination of LIBOR.
LIBOR applicable to the calculation of the Pass-Through Rate on the
LIBOR Certificates for any Interest Accrual Period will be determined as of each
LIBOR Rate Adjustment Date. On each LIBOR Rate Adjustment Date, or if such LIBOR
Rate Adjustment Date is not a Business Day, then on the next succeeding Business
Day, LIBOR shall be established by the Trustee and, as to any Interest Accrual
Period, will equal the rate for one month United States dollar deposits that
appears on the Telerate Screen Page 3750 as of 11:00 a.m., London time, on such
LIBOR Rate Adjustment Date. "Telerate Screen Page 3750" means the display
designated as page 3750 on the Bridge Telerate Service (or such other page as
may replace page 3750 on that service for the purpose of displaying London
interbank offered rates of major banks). 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, LIBOR shall be so established by use of such other
service for displaying LIBOR or comparable rates as may be selected by the
Trustee after consultation with the Master Servicer), the rate will be the
Reference Bank Rate. The "Reference Bank Rate" will be determined on the basis
of the rates at which deposits in U.S. Dollars are offered by the reference
banks (which shall be any three major banks that are engaged in transactions in
the London interbank market, selected by the Trustee after consultation with the
Master Servicer) as of 11:00 a.m., London time, on the LIBOR Rate Adjustment
Date to prime banks in the London interbank market for a period of one month in
amounts approximately equal to the aggregate Certificate Principal Balance of
the LIBOR Certificates then outstanding. The Trustee shall request the principal
53
London office of each of the reference banks to provide a quotation of its rate.
If at least two such quotations are provided, the rate will be the arithmetic
mean of the quotations rounded up to the next multiple of 1/16%. If on such date
fewer than two quotations are provided as requested, the rate will be the
arithmetic mean of the rates quoted by one or more major banks in New York City,
selected by the Trustee after consultation with the Master Servicer, 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 LIBOR Certificates then
outstanding. If no such quotations can be obtained, the rate will be LIBOR for
the prior Distribution Date; provided however, if, under the priorities
described above, LIBOR for a Distribution Date would be based on LIBOR for the
previous Distribution Date for the third consecutive Distribution Date, the
Trustee, after consultation with the Master Servicer, shall select an
alternative comparable index (over which the Trustee has no control), used for
determining one-month Eurodollar lending rates that is calculated and published
(or otherwise made available) by an independent party. The establishment of
LIBOR by the Trustee on any LIBOR Rate Adjustment Date and the Trustee's
subsequent calculation of the Pass-Through Rates applicable to the LIBOR
Certificates for the relevant Interest Accrual Period, in the absence of
manifest error, will be final and binding. Promptly following each LIBOR Rate
Adjustment Date the Trustee shall supply the Master Servicer with the results of
its determination of LIBOR on such date. Furthermore, the Trustee shall supply
to any Certificateholder so requesting by calling 1-800-934-6802, the
Pass-Through Rate on the LIBOR Certificates for the current and the immediately
preceding Interest Accrual Period.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of Mortgage Loans.
(a) The Depositor, concurrently with the execution and delivery hereof,
does hereby assign to the Trustee in respect of the Trust Fund without recourse
all the right, title and interest of the Depositor in and to (i) the Mortgage
Loans, including all interest and principal on or with respect to the Mortgage
Loans due on or after the Cut-off Date (other than Monthly Payments due in the
month of the Cut-off Date); and (ii) all proceeds of the foregoing. The
Depositor, the Master Servicer and the Trustee agree that it is not intended
that any mortgage loan be included in the Trust Fund that is either (i) a
High-Cost Home Loan as defined in the New Jersey Home Ownership Act effective
November 27, 2003, (ii) a High-Cost Home Loan as defined in the New Mexico Home
Loan Protection Act effective January 1, 2004, (ii) a High-Cost Home Loan as
defined in the Massachusetts Predatory Home Loan Practices Act effective
November 7, 2004 or (iv) a High-Cost Home Loan as defined in the Indiana High
Cost Home Loan Law Act effective January 1, 2005.
(b) In connection with such assignment, and contemporaneously with the
delivery of this Agreement, except as set forth in Section 2.01(c) below and
subject to Section 2.01(d) below, the Depositor does hereby (1) with respect to
each Mortgage Loan, deliver to the Master Servicer (or an Affiliate of the
Master Servicer) each of the documents or instruments described in clause (ii)
below (and the Master Servicer shall hold (or cause such Affiliate to hold) such
documents or instruments in trust for the use and benefit of all present and
future Certificateholders), (2) with respect to each MOM Loan, deliver to, and
deposit with, the Trustee, or the Custodian, as the duly appointed agent of the
Trustee for such purpose, the documents or instruments described in clauses (i)
and (v) below, (3) with respect to each Mortgage Loan that is not a MOM Loan but
is registered on the MERS(R) System, deliver to, and deposit with, the Trustee,
or the Custodian, as the duly appointed agent of the Trustee for such purpose,
the documents or instruments described in clauses (i), (iv) and (v) below and
(4) with respect to each Mortgage Loan that is not a MOM Loan and is not
registered on the MERS(R) System, deliver to, and deposit with, the Trustee, or
the Custodian, as the duly appointed agent of the Trustee for such purpose, the
documents or instruments described in clauses (i), (iii), (iv) and (v) below.
54
(i) The original Mortgage Note, endorsed without recourse to the
order of the Trustee and showing an unbroken chain of endorsements from
the originator thereof to the Person endorsing it to the Trustee, or
with respect to any Destroyed Mortgage Note, an original lost note
affidavit from the related Seller or Residential Funding stating that
the original Mortgage Note was lost, misplaced or destroyed, together
with a copy of the related Mortgage Note.
(ii) 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, if the original Mortgage has not yet been returned
from the public recording office, a copy of the original Mortgage with
evidence of recording indicated thereon.
(iii) The assignment (which may be included in one or more
blanket assignments if permitted by applicable law) of the Mortgage to
the Trustee with evidence of recording indicated thereon or a copy of
such assignment with evidence of recording indicated thereon.
(iv) The original recorded assignment or assignments of the
Mortgage showing an unbroken chain of title from the originator to the
Person assigning it to the Trustee (or to MERS, if the Mortgage Loan is
registered on the MERS(R) System and noting the presence of a MIN) with
evidence of recordation noted thereon or attached thereto, or a copy of
such assignment or assignments of the Mortgage with evidence of
recording indicated thereon.
(v) The original of each modification, assumption agreement or
preferred loan agreement, if any, relating to such Mortgage Loan, or a
copy of each modification, assumption agreement or preferred loan
agreement.
The Depositor may, in lieu of delivering the original of the documents
set forth in Section 2.01(b)(iii), (iv) and (v) (or copies thereof) to the
Trustee or the Custodian, deliver such documents to the Master Servicer, and the
Master Servicer shall hold such documents in trust for the use and benefit of
all present and future Certificateholders until such time as is set forth in the
next sentence. Within thirty Business Days following the earlier of (i) the
receipt of the original of all of the documents or instruments set forth in
Section 2.01(b)(iii), (iv) and (v) (or copies thereof) for any Mortgage Loan and
(ii) a written request by the Trustee to deliver those documents with respect to
any or all of the Mortgage Loans then being held by the Master Servicer, the
Master Servicer shall deliver a complete set of such documents to the Trustee or
the Custodian, as duly appointed agent of the Trustee.
(c) Notwithstanding the provisions of Section 2.01(b), in the event that
in connection with any Mortgage Loan, if the Depositor cannot deliver the
original of the Mortgage, any assignment, modification, assumption agreement or
preferred loan agreement (or copy thereof as permitted by Section 2.01(b)) with
evidence of recording thereon concurrently with the execution and delivery of
this Agreement because of (i) a delay caused by the public recording office
where such Mortgage, assignment, modification, assumption agreement or preferred
loan agreement as the case may be, has been delivered for recordation, or (ii) a
delay in the receipt of certain information necessary to prepare the related
assignments, the Depositor shall deliver or cause to be delivered to the Trustee
or the respective Custodian a copy of such Mortgage, assignment, modification,
assumption agreement or preferred loan agreement.
55
The Depositor shall promptly cause to be recorded in the appropriate
public office for real property records the Assignment referred to in clause
(iii) of Section 2.01(b), except (a) in states where, in an Opinion of Counsel
acceptable to the Master Servicer, such recording is not required to protect the
Trustee's interests in the Mortgage Loan or (b) if MERS is identified on the
Mortgage or on a properly recorded assignment of the Mortgage, as applicable, as
the mortgagee of record solely as nominee for Residential Funding and its
successors and assigns. If any Assignment is lost or returned unrecorded to the
Depositor because of any defect therein, the Depositor shall prepare a
substitute Assignment or cure such defect, as the case may be, and cause such
Assignment to be recorded in accordance with this paragraph. The Depositor shall
promptly deliver or cause to be delivered to the applicable person described in
Section 2.01(b), any Assignment or substitute Assignment (or copy thereof)
recorded in connection with this paragraph, with evidence of recording indicated
thereon upon receipt thereof from the public recording office or from the
related Subservicer or Seller.
If the Depositor delivers to the Trustee or Custodian any Mortgage Note
or Assignment of Mortgage in blank, the Depositor shall, or shall cause the
Custodian to, complete the endorsement of the Mortgage Note and the Assignment
of Mortgage in the name of the Trustee in conjunction with the Interim
Certification issued by the Custodian, as contemplated by Section 2.02.
In connection with the assignment of any Mortgage Loan registered on the
MERS(R) System, the Depositor further agrees that it will cause, at the
Depositor's own expense, within 30 Business Days after the Closing Date, the
MERS(R) System to indicate that such Mortgage Loans have been assigned by the
Depositor 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 in the field which identifies the specific Trustee and (b) the code
in the field "Pool Field" which identifies the series of the Certificates issued
in connection with such Mortgage Loans. The Depositor further agrees that it
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.
(d) It is intended that the conveyances by the Depositor to the Trustee
of the Mortgage Loans as provided for in this Section 2.01 and the
Uncertificated Regular Interests be construed as a sale by the Depositor to the
Trustee of the Mortgage Loans and the Uncertificated Regular Interests for the
benefit of the Certificateholders. Further, it is not intended that any such
conveyance be deemed to be a pledge of the Mortgage Loans and the Uncertificated
Regular Interests by the Depositor to the Trustee to secure a debt or other
obligation of the Depositor. Nonetheless, (a) this Agreement is intended to be
and hereby is a security agreement within the meaning of Articles 8 and 9 of the
New York Uniform Commercial Code and the Uniform Commercial Code of any other
applicable jurisdiction; (b) the conveyances provided for in this Section 2.01
shall be deemed to be (1) a grant by the Depositor to the Trustee of a security
interest in all of the Depositor's right (including the power to convey title
thereto), title and interest, whether now owned or hereafter acquired, in and to
(A) the Mortgage Loans, including the related Mortgage Note, the Mortgage, any
insurance policies and all other documents in the related Mortgage File, (B) all
amounts payable pursuant to the Mortgage Loans or the Swap Agreement in
accordance with the terms thereof, (C) any Uncertificated Regular Interests and
any and all general intangibles, payment intangibles, accounts, chattel paper,
instruments, documents, money, deposit accounts, certificates of deposit, goods,
letters of credit, advices of credit and investment property and other property
of whatever kind or description now existing or hereafter acquired consisting
of, arising from or relating to any of the foregoing, and (D) all proceeds of
the conversion, voluntary or involuntary, of the foregoing into cash,
instruments, securities or other property, including without limitation all
amounts from time to time held or invested in the Certificate Account or the
Custodial Account, whether in the form of cash, instruments, securities or other
property and (2) an assignment by the Depositor to the Trustee of any security
interest in any and all of Residential Funding's right (including the power to
convey title thereto), title and interest, whether now owned or hereafter
acquired, in and to the property described in the foregoing clauses (1)(A), (B),
(C) and (D) granted by Residential Funding to the Depositor pursuant to the
56
Assignment Agreement; (c) the possession by the Trustee, the Custodian or any
other agent of the Trustee of Mortgage Notes or such other items of property as
constitute instruments, money, payment intangibles, negotiable documents, goods,
deposit accounts, letters of credit, advices of credit, investment property,
certificated securities or chattel paper shall be deemed to be "possession by
the secured party," or possession by a purchaser or a person designated by such
secured party, for purposes of perfecting the security interest pursuant to the
Minnesota Uniform Commercial Code and the Uniform Commercial Code of any other
applicable jurisdiction as in effect (including, without limitation, Sections
8-106, 9-313 and 9-106 thereof); and (d) notifications to persons holding such
property, and acknowledgments, receipts or confirmations from persons holding
such property, shall be deemed notifications to, or acknowledgments, receipts or
confirmations from, securities intermediaries, bailees or agents of, or persons
holding for, (as applicable) the Trustee for the purpose of perfecting such
security interest under applicable law.
The Depositor and, at the Depositor's direction, Residential Funding and
the Trustee shall, to the extent consistent with this Agreement, take such
reasonable actions as may be necessary to ensure that, if this Agreement were
deemed to create a security interest in the Mortgage Loans and the
Uncertificated Regular Interests and the other property described above, 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 this Agreement. Without limiting the generality of the foregoing, the
Depositor shall prepare and deliver to the Trustee not less than 15 days prior
to any filing date and, the Trustee shall forward for filing, or shall cause to
be forwarded for filing, at the expense of the Depositor, all filings necessary
to maintain the effectiveness of any original filings necessary under the
Uniform Commercial Code as in effect in any jurisdiction to perfect the
Trustee's security interest in or lien on the Mortgage Loans and the
Uncertificated Regular Interests, as evidenced by an Officers' Certificate of
the Depositor, including without limitation (x) continuation statements, and (y)
such other statements as may be occasioned by (1) any change of name of
Residential Funding, the Depositor or the Trustee (such preparation and filing
shall be at the expense of the Trustee, if occasioned by a change in the
Trustee's name), (2) any change of location of the place of business or the
chief executive office of Residential Funding or the Depositor, (3) any transfer
of any interest of Residential Funding or the Depositor in any Mortgage Loan or
(4) any transfer of any interest of Residential Funding or the Depositor in any
Uncertificated Regular Interests.
Section 2.02. Acceptance by Trustee.
The Trustee acknowledges receipt (or, with respect to Mortgage Loans
subject to a Custodial Agreement, and based solely upon a receipt or
certification executed by the Custodian, receipt by the respective Custodian as
the duly appointed agent of the Trustee) of the documents referred to in Section
2.01(b)(i) above (except that for purposes of such acknowledgement only, a
Mortgage Note may be endorsed in blank and an Assignment of Mortgage may be in
blank) and declares that it, or the Custodian as its agent, holds and will hold
such documents and the other documents constituting a part of the Custodial
Files delivered to it, or a Custodian as its agent, in trust for the use and
benefit of all present and future Certificateholders. The Trustee or Custodian
(the Custodian being so obligated under a Custodial Agreement) agrees, for the
benefit of Certificateholders, to review each Custodial File delivered to it
pursuant to Section 2.01(b) within 90 days after the Closing Date to ascertain
that all required documents (specifically as set forth in Section 2.01(b)), have
been executed and received, and that such documents relate to the Mortgage Loans
identified on the Mortgage Loan Schedule, as supplemented, that have been
conveyed to it, and to deliver to the Trustee a certificate (the "Interim
Certification") to the effect that all documents required to be delivered
pursuant to Section 2.01(b) above have been executed and received and that such
documents relate to the Mortgage Loans identified on the Mortgage Loan Schedule,
except for any exceptions listed on Schedule A attached to such Interim
Certification. Upon delivery of the Custodial Files by the Depositor or the
Master Servicer, the Trustee shall acknowledge receipt (or, with respect to
Mortgage Loans subject to a Custodial Agreement, and based solely upon a receipt
or certification executed by the Custodian, receipt by the respective Custodian
as the duly appointed agent of the Trustee) of the documents referred to in
Section 2.01(b) above.
57
If the Custodian, as the Trustee's agent, finds any document or
documents constituting a part of a Custodial File to be missing or defective,
upon receipt of notification from the Custodian as specified in the succeeding
sentence, the Trustee shall promptly so notify or cause the Custodian to notify
the Master Servicer and the Depositor. Pursuant to Section 2.3 of the Custodial
Agreement, the Custodian will notify the Master Servicer, the Depositor and the
Trustee of any such omission or defect found by it in respect of any Custodial
File held by it in respect of the items received by it pursuant to the Custodial
Agreement. If such omission or defect materially and adversely affects the
interests in the related Mortgage Loan of the Certificateholders, the Master
Servicer shall promptly notify the related Subservicer or Seller of such
omission or defect and request that such Subservicer or Seller correct or cure
such omission or defect within 60 days from the date the Master Servicer was
notified of such omission or defect and, if such Subservicer or Seller does not
correct or cure such omission or defect within such period, that such
Subservicer or Seller purchase such Mortgage Loan from the Trust Fund at its
Purchase Price, in either case within 90 days from the date the Master Servicer
was notified of such omission or defect; provided that if the omission or defect
would cause the Mortgage Loan to be other than a "qualified mortgage" as defined
in Section 860G(a)(3) of the Code, any such cure or repurchase must occur within
90 days from the date such breach was discovered. The Purchase Price for any
such Mortgage Loan shall be deposited or caused to be deposited by the Master
Servicer in the Custodial Account maintained by it pursuant to Section 3.07 and,
upon receipt by the Trustee of written notification of such deposit signed by a
Servicing Officer, the Master Servicer, the Trustee or the Custodian, as the
case may be, shall release the contents of any related Mortgage File in its
possession to the owner of such Mortgage Loan (or such owner's designee) and the
Trustee shall execute and deliver such instruments of transfer or assignment
prepared by the Master Servicer, in each case without recourse, as shall be
necessary to vest in the Subservicer or Seller or its designee, as the case may
be, any Mortgage Loan released pursuant hereto and thereafter such Mortgage Loan
shall not be part of the Trust Fund. In furtherance of the foregoing and Section
2.04, if the Subservicer or Seller or Residential Funding that repurchases the
Mortgage Loan is not a member of MERS and the Mortgage is registered on the
MERS(R) System, the Master Servicer, at its own expense and without any right of
reimbursement, shall cause MERS to execute and deliver an assignment of the
Mortgage in recordable form to transfer the Mortgage from MERS to such
Subservicer or Seller or Residential Funding and shall cause such Mortgage to be
removed from registration on the MERS(R) System in accordance with MERS' rules
and regulations. It is understood and agreed that the obligation of the
Subservicer or Seller, to so cure or purchase any Mortgage Loan as to which a
material and adverse defect in or omission of a constituent document exists
shall constitute the sole remedy respecting such defect or omission available to
Certificateholders or the Trustee on behalf of Certificateholders.
Section 2.03. Representations, Warranties and Covenants of the Master
Servicer and the Depositor.
(a) The Master Servicer hereby represents and warrants to the Trustee
for the benefit of the Certificateholders that:
(i) The Master Servicer is a corporation duly organized, validly
existing and in good standing under the laws governing its creation and
existence and is or will be in compliance with the laws of each state in
which any Mortgaged Property is located to the extent necessary to
ensure the enforceability of each Mortgage Loan in accordance with the
terms of this Agreement;
(ii) The execution and delivery of this Agreement by the Master
Servicer and its performance and compliance with the terms of this
Agreement will not violate the Master Servicer's Certificate of
Incorporation or Bylaws or constitute a material default (or an event
which, with notice or lapse of time, or both, would constitute a
material default) under, or result in the material breach of, any
material contract, agreement or other instrument to which the Master
Servicer is a party or which may be applicable to the Master Servicer or
any of its assets;
58
(iii) This Agreement, assuming due authorization, execution and
delivery by the Trustee and the Depositor, constitutes a valid, legal
and binding obligation of the Master Servicer, enforceable against it in
accordance with the terms hereof subject to applicable bankruptcy,
insolvency, reorganization, moratorium and other laws affecting the
enforcement of creditors' rights generally and to general principles of
equity, regardless of whether such enforcement is considered in a
proceeding in equity or at law;
(iv) The Master Servicer is not in default with respect to any
order or decree of any court or any order, regulation or demand of any
federal, state, municipal or governmental agency, which default might
have consequences that would materially and adversely affect the
condition (financial or other) or operations of the Master Servicer or
its properties or might have consequences that would materially
adversely affect its performance hereunder;
(v) No litigation is pending or, to the best of the Master
Servicer's knowledge, threatened against the Master Servicer which would
prohibit its entering into this Agreement or performing its obligations
under this Agreement;
(vi) The Master Servicer shall comply in all material respects
in the performance of this Agreement with all reasonable rules and
requirements of each insurer under each Required Insurance Policy;
(vii) No information, certificate of an officer, statement
furnished in writing or report delivered to the Depositor, any Affiliate
of the Depositor or the Trustee by the Master Servicer will, to the
knowledge of the Master Servicer, contain any untrue statement of a
material fact or omit a material fact necessary to make the information,
certificate, statement or report not misleading;
(viii) The Master Servicer has examined each existing, and will
examine each new, Subservicing Agreement and is or will be familiar with
the terms thereof. The terms of each existing Subservicing Agreement and
each designated Subservicer are acceptable to the Master Servicer and
any new Subservicing Agreements will comply with the provisions of
Section 3.02;
(ix) 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 that are
registered with MERS; and
(x) The Servicing Guide of the Master Servicer requires that the
Subservicer for each Mortgage Loan accurately and fully reports its
borrower credit files to each of the Credit Repositories in a timely
manner.
It is understood and agreed that the representations and warranties set forth in
this Section 2.03(a) shall survive delivery of the respective Custodial Files to
the Trustee or the Custodian. Upon discovery by either the Depositor, the Master
Servicer, the Trustee or the Custodian of a breach of any representation or
warranty set forth in this Section 2.03(a) which materially and adversely
affects the interests of the Certificateholders in any Mortgage Loan, the party
discovering such breach shall give prompt written notice to the other parties
(the Custodian being so obligated under a Custodial Agreement). Within 90 days
of its discovery or its receipt of notice of such breach, the Master Servicer
shall either (i) cure such breach in all material respects or (ii) to the extent
that such breach is with respect to a Mortgage Loan or a related document,
purchase such Mortgage Loan from the Trust Fund at the Purchase Price and in the
manner set forth in Section 2.02; provided that if the breach would cause the
Mortgage Loan to be other than a "qualified mortgage" as defined in Section
860G(a)(3) of the Code, any such cure or repurchase must occur within 90 days
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from the date such breach was discovered. The obligation of the Master Servicer
to cure such breach or to so purchase such Mortgage Loan shall constitute the
sole remedy in respect of a breach of a representation and warranty set forth in
this Section 2.03(a) available to the Certificateholders or the Trustee on
behalf of the Certificateholders.
(b) The Depositor hereby represents and warrants to the Trustee for the
benefit of the Certificateholders that as of the Closing Date (or, if otherwise
specified below, as of the date so specified): (i) immediately prior to the
conveyance of the Mortgage Loans to the Trustee, the Depositor had good title
to, and was the sole owner of, each Mortgage Loan free and clear of any pledge,
lien, encumbrance or security interest (other than rights to servicing and
related compensation) and such conveyance validly transfers ownership of the
Mortgage Loans to the Trustee free and clear of any pledge, lien, encumbrance or
security interest; and (ii) each Mortgage Loan constitutes a "qualified
mortgage" under Section 860G(a)(3)(A) of the Code and Treasury Regulation
Section 1.860G-2(a)(1), (2), (4), (5), (6), (7) and (9), without reliance on the
provisions of Treasury Regulation Section 1.860G-2(a)(3) or Treasury Regulation
Section 1.860G-2(f)(2) or any other provision that would allow a Mortgage Loan
to be treated as a "qualified mortgage" notwithstanding its failure to meet the
requirements of Section 860G(a)(3)(A) of the Code and Treasury Regulation
Section 1.860G-2(a)(1), (2), (4), (5), (6), (7) and (9).
It is understood and agreed that the representations and warranties set
forth in this Section 2.03(b) shall survive delivery of the respective Custodial
Files to the Trustee or the Custodian.
Upon discovery by any of the Depositor, the Master Servicer, the Trustee
or the Custodian of a breach of any of the representations and warranties set
forth in this Section 2.03(b) which materially and adversely affects the
interests of the Certificateholders in any Mortgage Loan, the party discovering
such breach shall give prompt written notice to the other parties (the Custodian
being so obligated under a Custodial Agreement); provided, however, that in the
event of a breach of the representation and warranty set forth in Section
2.03(b)(ii), the party discovering such breach shall give such notice within
five days of discovery. Within 90 days of its discovery or its receipt of notice
of breach, the Depositor shall either (i) cure such breach in all material
respects or (ii) purchase such Mortgage Loan from the Trust Fund at the Purchase
Price and in the manner set forth in Section 2.02; provided that the Depositor
shall have the option to substitute a Qualified Substitute Mortgage Loan or
Loans for such Mortgage Loan if such substitution occurs within two years
following the Closing Date; provided that if the omission or defect would cause
the Mortgage Loan to be other than a "qualified mortgage" as defined in Section
860G(a)(3) of the Code, any such cure, substitution or repurchase must occur
within 90 days from the date such breach was discovered. Any such substitution
shall be effected by the Depositor under the same terms and conditions as
provided in Section 2.04 for substitutions by Residential Funding. It is
understood and agreed that the obligation of the Depositor to cure such breach
or to so purchase or substitute for any Mortgage Loan as to which such a breach
has occurred and is continuing shall constitute the sole remedy respecting such
breach available to the Certificateholders or the Trustee on behalf of the
Certificateholders. Notwithstanding the foregoing, the Depositor shall not be
required to cure breaches or purchase or substitute for Mortgage Loans as
provided in this Section 2.03(b) if the substance of the breach of a
representation set forth above also constitutes fraud in the origination of the
Mortgage Loan.
Section 2.04. Representations and Warranties of Sellers.
The Depositor, as assignee of Residential Funding under the Assignment
Agreement, hereby assigns to the Trustee for the benefit of the
Certificateholders all of its right, title and interest in respect of the
Assignment Agreement and each Seller's Agreement applicable to a Mortgage Loan
as and to the extent set forth in the Assignment Agreement. Insofar as the
Assignment Agreement or such Seller's Agreement relates to the representations
and warranties made by Residential Funding or the related Seller in respect of
such Mortgage Loan and any remedies provided thereunder for any breach of such
representations and warranties, such right, title and interest may be enforced
by the Master Servicer on behalf of the Trustee and the Certificateholders. Upon
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the discovery by the Depositor, the Master Servicer, the Trustee or the
Custodian of a breach of any of the representations and warranties made in a
Seller's Agreement or the Assignment Agreement in respect of any Mortgage Loan
or of any Repurchase Event which materially and adversely affects the interests
of the Certificateholders in such Mortgage Loan, the party discovering such
breach shall give prompt written notice to the other parties (the Custodian
being so obligated under a Custodial Agreement). The Master Servicer shall
promptly notify the related Seller and Residential Funding of such breach or
Repurchase Event and request that such Seller or Residential Funding either (i)
cure such breach or Repurchase Event in all material respects within 90 days
from the date the Master Servicer was notified of such breach or Repurchase
Event or (ii) purchase such Mortgage Loan from the Trust Fund at the Purchase
Price and in the manner set forth in Section 2.02.
Upon the discovery by the Depositor, the Master Servicer, the Trustee or
the Custodian of a breach of any of such representations and warranties set
forth in the Assignment Agreement in respect of any Mortgage Loan which
materially and adversely affects the interests of the Certificateholders in such
Mortgage Loan, the party discovering such breach shall give prompt written
notice to the other parties (the Custodian being so obligated under a Custodial
Agreement) at the same time as notice is given pursuant to the preceding
paragraph of any corresponding breach of representation or warranty made in
Seller's Agreement. The Master Servicer shall promptly notify Residential
Funding of such breach of a representation or warranty set forth in the
Assignment Agreement and request that Residential Funding either (i) cure such
breach in all material respects within 90 days from the date the Master Servicer
was notified of such breach or (ii) purchase such Mortgage Loan from the Trust
Fund within 90 days of the date of such written notice of such breach at the
Purchase Price and in the manner set forth in Section 2.02, but only if the
Mortgage Loan has not been purchased by the Seller due to a breach of
representation and warranty of the related Seller's Agreement as set forth in
the preceding paragraph; provided that Residential Funding shall have the option
to substitute a Qualified Substitute Mortgage Loan or Loans for such Mortgage
Loan if such substitution occurs within two years following the Closing Date;
provided that if the breach would cause the Mortgage Loan to be other than a
"qualified mortgage" as defined in Section 860G(a)(3) of the Code, any such cure
or substitution must occur within 90 days from the date the breach was
discovered. If the breach of representation and warranty that gave rise to the
obligation to repurchase or substitute a Mortgage Loan pursuant to Section 4 of
the Assignment Agreement was the representation and warranty set forth in clause
(xlvii) of Section 4 thereof, then the Master Servicer shall request that
Residential Funding pay to the Trust Fund, concurrently with and in addition to
the remedies provided in the preceding sentence, an amount equal to any
liability, penalty or expense that was actually incurred and paid out of or on
behalf of the Trust Fund, and that directly resulted from such breach, or if
incurred and paid by the Trust Fund thereafter, concurrently with such payment.
In the event that Residential Funding elects to substitute a Qualified
Substitute Mortgage Loan or Loans for a Deleted Mortgage Loan pursuant to this
Section 2.04, Residential Funding shall deliver to the Trustee for the benefit
of the Certificateholders with respect to such Qualified Substitute Mortgage
Loan or Loans, the original Mortgage Note, the Mortgage, an Assignment of the
Mortgage in recordable form, and such other documents and agreements as are
required by Section 2.01, with the Mortgage Note endorsed as required by Section
2.01. No substitution will be made in any calendar month after the Determination
Date for such month. Monthly Payments due with respect to Qualified Substitute
Mortgage Loans in the month of substitution shall not be part of the Trust Fund
and will be retained by the Master Servicer and remitted by the Master Servicer
to Residential Funding on the next succeeding Distribution Date. For the month
of substitution, distributions to the Certificateholders will include the
Monthly Payment due on a Deleted Mortgage Loan for such month and thereafter
Residential Funding shall be entitled to retain all amounts received in respect
of such Deleted Mortgage Loan. The Master Servicer shall amend or cause to be
amended the Mortgage Loan Schedule for the benefit of the Certificateholders to
reflect the removal of such Deleted Mortgage Loan and the substitution of the
Qualified Substitute Mortgage Loan or Loans and the Master Servicer shall
deliver the amended Mortgage Loan Schedule to the Trustee. Upon such
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substitution, the Qualified Substitute Mortgage Loan or Loans shall be subject
to the terms of this Agreement and the related Subservicing Agreement in all
respects, the related Seller shall be deemed to have made the representations
and warranties with respect to the Qualified Substitute Mortgage Loan made in
the related Seller Agreements as of the date of substitution, Residential
Funding shall be deemed to have made the representations and warranties with
respect to the Qualified Substitute Mortgage Loan (other than those of a
statistical nature) contained in the Assignment Agreement as of the date of
substitution, and the covenants, representations and warranties set forth in
this Section 2.04, and in Section 2.03(b) hereof.
In connection with the substitution of one or more Qualified Substitute
Mortgage Loans for one or more Deleted Mortgage Loans, the Master Servicer shall
determine the amount (if any) by which the aggregate principal balance of all
such Qualified Substitute Mortgage Loans as of the date of substitution is less
than the aggregate Stated Principal Balance of all such Deleted Mortgage Loans
(in each case after application of the principal portion of the Monthly Payments
due in the month of substitution that are to be distributed to the
Certificateholders in the month of substitution). Residential Funding shall
deposit or cause the related Seller to deposit the amount of such shortfall into
the Custodial Account on the day of substitution, without any reimbursement
therefor. Residential Funding shall give notice in writing to the Trustee of
such event, which notice shall be accompanied by an Officers' Certificate as to
the calculation of such shortfall and (subject to Section 10.01(f)) by an
Opinion of Counsel to the effect that such substitution will not cause (a) any
federal tax to be imposed on the Trust Fund, including without limitation, any
federal tax imposed on "prohibited transactions" under Section 860F(a)(1) of the
Code or on "contributions after the startup date" under Section 860G(d)(1) of
the Code or (b) any portion of any REMIC created hereunder to fail to qualify as
a REMIC at any time that any Certificate is outstanding.
It is understood and agreed that the obligation of the Seller or
Residential Funding, as the case may be, to cure such breach or purchase (and in
the case of Residential Funding to substitute for) such Mortgage Loan as to
which such a breach has occurred and is continuing and to make any additional
payments required under the Assignment Agreement in connection with a breach of
the representation and warranty in clause (xlvii) of Section 4 thereof shall
constitute the sole remedy respecting such breach available to the
Certificateholders or the Trustee on behalf of the Certificateholders. If the
Master Servicer is Residential Funding, then the Trustee shall also have the
right to give the notification and require the purchase or substitution provided
for in the second preceding paragraph in the event of such a breach of a
representation or warranty made by Residential Funding in the Assignment
Agreement. In connection with the purchase of or substitution for any such
Mortgage Loan by Residential Funding, the Trustee shall assign to Residential
Funding all of the right, title and interest in respect of the Seller's
Agreement and the Assignment Agreement applicable to such Mortgage Loan.
Section 2.05. Execution and Authentication of Certificates; Conveyance
of Uncertificated REMIC Regular Interests.
(a) The Trustee acknowledges the assignment to it of the Mortgage Loans
and the delivery of the Custodial Files to it, or the Custodian on its behalf,
subject to any exceptions noted, together with the assignment to it of all other
assets included in the Trust Fund, receipt of which is hereby acknowledged.
Concurrently with such delivery and in exchange therefor, the Trustee, pursuant
to the written request of the Depositor executed by an officer of the Depositor,
has executed and caused to be authenticated and delivered to or upon the order
of the Depositor the Certificates in authorized denominations which evidence
ownership of the entire Trust Fund.
(b) The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey in trust to the
Trustee without recourse all the right, title and interest of the Depositor in
and to the REMIC I Regular Interests and the REMIC II Regular Interests for the
benefit of the Holders of each Class of Certificates (other than Component I and
Component II of the Class R Certificates). The Trustee acknowledges receipt of
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the REMIC I Regular Interests and REMIC II Regular Interests, and declares that
it holds and will hold the same in trust for the exclusive use and benefit of
the Holders of each Class of Certificates (other than Component I and Component
II of the Class R Certificates). The interests evidenced by Component III of the
Class R Certificates, together with the REMIC III Regular Interests, constitute
the entire beneficial ownership interest in REMIC III.
Section 2.06. Purposes and Powers of the Trust.
The purpose of the trust, as created hereunder, is to engage in the
following activities:
(a) to sell the Certificates to the Depositor in exchange for the
Mortgage Loans;
(b) to enter into and perform its obligations under this Agreement;
(c) to engage in those activities that are necessary, suitable or
convenient to accomplish the foregoing or are incidental thereto or connected
therewith; and
(d) subject to compliance with this Agreement, to engage in such other
activities as may be required in connection with conservation of the Trust Fund
and the making of distributions to the Certificateholders.
The trust is hereby authorized to engage in the foregoing activities.
Notwithstanding the provisions of Section 11.01, the trust shall not engage in
any activity other than in connection with the foregoing or other than as
required or authorized by the terms of this Agreement while any Certificate is
outstanding, and this Section 2.06 may not be amended, without the consent of
the Certificateholders evidencing a majority of the aggregate Voting Rights of
the Certificates.
Section 2.07. Agreement Regarding Ability to Disclose.
The Depositor, the Master Servicer and the Trustee hereby agree that,
notwithstanding any other express or implied agreement to the contrary, any and
all Persons, and any of their respective employees, representatives, and other
agents may disclose, immediately upon commencement of discussions, to any and
all Persons, without limitation of any kind, the tax treatment and tax structure
of the transaction and all materials of any kind (including opinions or other
tax analyses) that are provided to any of them relating to such tax treatment
and tax structure. For purposes of this paragraph, the terms "tax," "tax
treatment," "tax structure," and "tax benefit" are defined under Treasury
Regulation ss. 1.6011-4(c).
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01. Master Servicer to Act as Servicer.
(a) The Master Servicer shall service and administer the Mortgage Loans
in accordance with the terms of this Agreement and the respective Mortgage
Loans, following such procedures as it would employ in its good faith business
judgment and which are normal and usual in its general mortgage servicing
activities, and shall have full power and authority, acting alone or through
Subservicers as provided in Section 3.02, to do any and all things which it may
deem necessary or desirable in connection with such servicing and
administration. Without limiting the generality of the foregoing, the Master
Servicer in its own name or in the name of a Subservicer is hereby authorized
and empowered by the Trustee when the Master Servicer or the Subservicer, as the
case may be, believes it appropriate in its best judgment, to execute and
deliver, on behalf of the Certificateholders and the Trustee or any of them, any
and all instruments of satisfaction or cancellation, or of partial or full
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release or discharge, or of consent to assumption or modification in connection
with a proposed conveyance, or of assignment of any Mortgage and Mortgage Note
in connection with the repurchase of a Mortgage Loan and all other comparable
instruments, or with respect to the modification or re-recording of a Mortgage
for the purpose of correcting the Mortgage, the subordination of the lien of the
Mortgage in favor of a public utility company or government agency or unit with
powers of eminent domain, the taking of a deed in lieu of foreclosure, the
commencement, prosecution or completion of judicial or non-judicial foreclosure,
the conveyance of a Mortgaged Property to the related insurer, the acquisition
of any property acquired by foreclosure or deed in lieu of foreclosure, or the
management, marketing and conveyance of any property acquired by foreclosure or
deed in lieu of foreclosure with respect to the Mortgage Loans and with respect
to the Mortgaged Properties. 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 is 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. Any
expenses incurred in connection with the actions described in the preceding
sentence shall be borne by the Master Servicer in accordance with Section
3.16(c), with no right of reimbursement; provided, that if, as a result of MERS
discontinuing or becoming unable to continue operations in connection with the
MERS(R) System, it becomes necessary to remove any Mortgage Loan from
registration on the MERS(R) System and to arrange for the assignment of the
related Mortgages to the Trustee, then any related expenses shall be
reimbursable to the Master Servicer as set forth in Section 3.10(a)(ii).
Notwithstanding the foregoing, subject to Section 3.07(a), the Master Servicer
shall not permit any modification with respect to any Mortgage Loan that would
both constitute a sale or exchange of such Mortgage Loan within the meaning of
Section 1001 of the Code and any proposed, temporary or final regulations
promulgated thereunder (other than in connection with a proposed conveyance or
assumption of such Mortgage Loan that is treated as a Principal Prepayment in
Full pursuant to Section 3.13(d) hereof) and cause any REMIC created hereunder
to fail to qualify as a REMIC under the Code. The Trustee shall furnish the
Master Servicer with any powers of attorney and other documents necessary or
appropriate to enable the Master Servicer to service and administer the Mortgage
Loans. The Trustee shall not be liable for any action taken by the Master
Servicer or any Subservicer pursuant to such powers of attorney or other
documents. In servicing and administering any Nonsubserviced Mortgage Loan, the
Master Servicer shall, to the extent not inconsistent with this Agreement,
comply with the Program Guide as if it were the originator of such Mortgage Loan
and had retained the servicing rights and obligations in respect thereof.
If the Mortgage relating to a Mortgage Loan did not have a lien senior
to the Mortgage Loan on the related Mortgaged Property as of the Cut-off Date,
then the Master Servicer, in such capacity, may not consent to the placing of a
lien senior to that of the Mortgage on the related Mortgaged Property. If the
Mortgage relating to a Mortgage Loan had a lien senior to the Mortgage Loan on
the related Mortgaged Property as of the Cut-off Date, then the Master Servicer,
in such capacity, may consent to the refinancing of the prior senior lien,
provided that the following requirements are met:
(i) (A) the Mortgagor's debt-to-income ratio resulting from such
refinancing is less than the original debt-to-income ratio as set forth
on the Mortgage Loan Schedule; provided, however, that in no instance
shall the resulting Combined Loan-to-Value Ratio ("Combined
Loan-to-Value Ratio") of such Mortgage Loan be higher than that
permitted by the Program Guide; or
(B) the resulting Combined Loan-to-Value Ratio of such
Mortgage Loan is no higher than the Combined Loan-to-Value Ratio prior to such
refinancing; provided, however, if such refinanced mortgage loan is a "rate and
term" mortgage loan (meaning, the Mortgagor does not receive any cash from the
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refinancing), the Combined Loan-to-Value Ratio may increase to the extent of
either (x) the reasonable closing costs of such refinancing or (y) any decrease
in the value of the related Mortgaged Property, if the Mortgagor is in good
standing as defined by the Program Guide;
(ii) the interest rate, or, in the case of an adjustable rate
existing senior lien, the maximum interest rate, for the loan evidencing
the refinanced senior lien is no more than 2.0% higher than the interest
rate or the maximum interest rate, as the case may be, on the loan
evidencing the existing senior lien immediately prior to the date of
such refinancing; provided, however (A) if the loan evidencing the
existing senior lien prior to the date of refinancing has an adjustable
rate and the loan evidencing the refinanced senior lien has a fixed
rate, then the current interest rate on the loan evidencing the
refinanced senior lien may be up to 2.0% higher than the then-current
loan rate of the loan evidencing the existing senior lien and (B) if the
loan evidencing the existing senior lien prior to the date of
refinancing has a fixed rate and the loan evidencing the refinanced
senior lien has an adjustable rate, then the maximum interest rate on
the loan evidencing the refinanced senior lien shall be less than or
equal to (x) the interest rate on the loan evidencing the existing
senior lien prior to the date of refinancing plus (y) 2.0%; and
(iii) the loan evidencing the refinanced senior lien is not
subject to negative amortization.
(b) The Master Servicer shall, to the extent consistent with the
servicing standards set forth herein, take whatever actions as may be necessary
to file a claim under or enforce or allow the Trustee to file a claim under or
enforce any title insurance policy with respect to any Mortgage Loan including,
without limitation, joining in or causing any Seller or Subservicer (or any
other party in possession of any title insurance policy) to join in any claims
process, negotiations, actions or proceedings necessary to make a claim under or
enforce any title insurance policy. Notwithstanding anything in this Agreement
to the contrary, the Master Servicer shall not (unless the Mortgagor is in
default with respect to the Mortgage Loan or such default is, in the judgment of
the Master Servicer, reasonably foreseeable) make or permit any modification,
waiver, or amendment of any term of any Mortgage Loan that would both (i) effect
an exchange or reissuance of such Mortgage Loan under Section 1001 of the Code
(or final, temporary or proposed Treasury regulations promulgated thereunder)
(other than in connection with a proposed conveyance or assumption of such
Mortgage Loan that is treated as a Principal Prepayment in Full pursuant to
Section 3.13(d) hereof) and (ii) cause any REMIC formed hereunder to fail to
qualify as a REMIC under the Code or the imposition of any tax on "prohibited
transactions" or "contributions" after the startup date under the REMIC
Provisions.
(c) In connection with servicing and administering the Mortgage Loans,
the Master Servicer and any Affiliate of the Master Servicer (i) may perform
services such as appraisals and brokerage services that are customarily provided
by Persons other than servicers of mortgage loans, and shall be entitled to
reasonable compensation therefor in accordance with Section 3.10 and (ii) may,
at its own discretion and on behalf of the Trustee, obtain credit information in
the form of a "credit score" from a Credit Repository.
(d) All costs incurred by the Master Servicer or by Subservicers in
effecting the timely payment of taxes and assessments on the properties subject
to the Mortgage Loans shall not, for the purpose of calculating monthly
distributions to the Certificateholders, be added to the amount owing under the
related Mortgage Loans, notwithstanding that the terms of such Mortgage Loan so
permit, and such costs shall be recoverable to the extent permitted by Section
3.10(a)(ii).
(e) The Master Servicer may enter into one or more agreements in
connection with the offering of pass-through certificates evidencing interests
in one or more of the Certificates providing for the payment by the Master
Servicer of amounts received by the Master Servicer as servicing compensation
hereunder and required to cover certain Prepayment Interest Shortfalls on the
Mortgage Loans, which payment obligation will thereafter be an obligation of the
Master Servicer hereunder.
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(f) The relationship of the Master Servicer (and of any successor to the
Master Servicer) to the Depositor under this Agreement is intended by the
parties to be that of an independent contractor and not that of a joint
venturer, partner or agent.
(g) The Master Servicer shall comply with the terms of Section 9 of the
Assignment Agreement.
Section 3.02. Subservicing Agreements Between Master Servicer and
Subservicers; Enforcement of Subservicers' Obligations.
(a) The Master Servicer may continue in effect Subservicing Agreements
entered into by Residential Funding and Subservicers prior to the execution and
delivery of this Agreement, and may enter into new Subservicing Agreements with
Subservicers, for the servicing and administration of all or some of the
Mortgage Loans. Each Subservicer shall be either (i) an institution the accounts
of which are insured by the FDIC or (ii) another entity that engages in the
business of originating or servicing mortgage loans, and in either case shall be
authorized to transact business in the state or states in which the related
Mortgaged Properties it is to service are situated, if and to the extent
required by applicable law to enable the Subservicer to perform its obligations
hereunder and under the Subservicing Agreement, and in either case shall be a
Xxxxxxx Mac, Xxxxxx Xxx or HUD approved mortgage servicer. Each Subservicer of a
Mortgage Loan shall be entitled to receive and retain, as provided in the
related Subservicing Agreement and in Section 3.07, the related Subservicing Fee
from payments of interest received on such Mortgage Loan after payment of all
amounts required to be remitted to the Master Servicer in respect of such
Mortgage Loan. For any Mortgage Loan that is a Nonsubserviced Mortgage Loan, the
Master Servicer shall be entitled to receive and retain an amount equal to the
Subservicing Fee from payments of interest. Unless the context otherwise
requires, references in this Agreement to actions taken or to be taken by the
Master Servicer in servicing the Mortgage Loans include actions taken or to be
taken by a Subservicer on behalf of the Master Servicer. Each Subservicing
Agreement will be upon such terms and conditions as are generally required by,
permitted by or consistent with the Program Guide and are not inconsistent with
this Agreement and as the Master Servicer and the Subservicer have agreed. With
the approval of the Master Servicer, a Subservicer may delegate its servicing
obligations to third-party servicers, but such Subservicer will remain obligated
under the related Subservicing Agreement. The Master Servicer and a Subservicer
may enter into amendments thereto or a different form of Subservicing Agreement,
and the form referred to or included in the Program Guide is merely provided for
information and shall not be deemed to limit in any respect the discretion of
the Master Servicer to modify or enter into different Subservicing Agreements;
provided, however, that any such amendments or different forms shall be
consistent with and not violate the provisions of either this Agreement or the
Program Guide in a manner which would materially and adversely affect the
interests of the Certificateholders. The Program Guide and any other
Subservicing Agreement entered into between the Master Servicer and any
Subservicer shall require the Subservicer to accurately and fully report its
borrower credit files to each of the Credit Repositories in a timely manner.
(b) As part of its servicing activities hereunder, the Master Servicer,
for the benefit of the Trustee and the Certificateholders, shall use its best
reasonable efforts to enforce the obligations of each Subservicer under the
related Subservicing Agreement and of each Seller under the related Seller's
Agreement, to the extent that the non-performance of any such obligation would
have a material and adverse effect on a Mortgage Loan, including, without
limitation, the obligation to purchase a Mortgage Loan on account of defective
documentation, as described in Section 2.02, or on account of a breach of a
representation or warranty, as described in Section 2.04. Such enforcement,
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including, without limitation, the legal prosecution of claims, termination of
Subservicing Agreements or Seller's Agreements, as appropriate, and the pursuit
of other appropriate remedies, shall be in such form and carried out to such an
extent and at such time as the Master Servicer would employ in its good faith
business judgment and which are normal and usual in its general mortgage
servicing activities. The Master Servicer shall pay the costs of such
enforcement at its own expense, and shall be reimbursed therefor only (i) from a
general recovery resulting from such enforcement to the extent, if any, that
such recovery exceeds all amounts due in respect of the related Mortgage Loan or
(ii) from a specific recovery of costs, expenses or attorneys fees against the
party against whom such enforcement is directed. For purposes of clarification
only, the parties agree that the foregoing is not intended to, and does not,
limit the ability of the Master Servicer to be reimbursed for expenses that are
incurred in connection with the enforcement of a Seller's obligations and are
reimbursable pursuant to Section 3.10(a)(vii).
Section 3.03. Successor Subservicers.
The Master Servicer shall be entitled to terminate any Subservicing
Agreement that may exist in accordance with the terms and conditions of such
Subservicing Agreement and without any limitation by virtue of this Agreement;
provided, however, that in the event of termination of any Subservicing
Agreement by the Master Servicer or the Subservicer, the Master Servicer shall
either act as servicer of the related Mortgage Loan or enter into a Subservicing
Agreement with a successor Subservicer which will be bound by the terms of the
related Subservicing Agreement. If the Master Servicer or any Affiliate of
Residential Funding acts as servicer, it will not assume liability for the
representations and warranties of the Subservicer which it replaces. If the
Master Servicer enters into a Subservicing Agreement with a successor
Subservicer, the Master Servicer shall use reasonable efforts to have the
successor Subservicer assume liability for the representations and warranties
made by the terminated Subservicer in respect of the related Mortgage Loans and,
in the event of any such assumption by the successor Subservicer, the Master
Servicer may, in the exercise of its business judgment, release the terminated
Subservicer from liability for such representations and warranties.
Section 3.04. Liability of the Master Servicer.
Notwithstanding 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 Subservicer or
otherwise, the Master Servicer shall remain obligated and liable to the Trustee,
and Certificateholders for the servicing and administering of the Mortgage Loans
in accordance with the provisions of Section 3.01 without diminution of such
obligation or liability by virtue of such Subservicing Agreements or
arrangements or by virtue of indemnification from the Subservicer or the
Depositor 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.
The Master Servicer shall be entitled to enter into any agreement with a
Subservicer or Seller for indemnification of the Master Servicer and nothing
contained in this Agreement shall be deemed to limit or modify such
indemnification.
Section 3.05. No Contractual Relationship Between S ubservicer and
Trustee or Certificateholders.
Any Subservicing Agreement that may be entered into and any other
transactions or services relating to the Mortgage Loans involving a Subservicer
in its capacity as such and not as an originator shall be deemed to be between
the Subservicer and the Master Servicer alone, and the Trustee and
Certificateholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to the Subservicer in
its capacity as such except as set forth in Section 3.06. The foregoing
provision shall not in any way limit a Subservicer's obligation to cure an
omission or defect or to repurchase a Mortgage Loan as referred to in Section
2.02 hereof.
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Section 3.06. Assumption or Termination of Subservicing Agreements by
Trustee.
(a) In the event the Master Servicer shall for any reason no longer be
the master servicer (including by reason of an Event of Default), the Trustee,
as successor Master Servicer, its designee or its successor shall thereupon
assume all of the rights and obligations of the Master Servicer under each
Subservicing Agreement that may have been entered into. The Trustee, its
designee or the successor servicer for the Trustee shall be deemed to have
assumed all of the Master Servicer's interest therein and to have replaced the
Master Servicer as a party to the Subservicing Agreement to the same extent as
if the Subservicing Agreement had been assigned to the assuming party except
that the Master Servicer shall not thereby be relieved of any liability or
obligations under the Subservicing Agreement.
(b) 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 and an accounting of amounts collected and held by it and
otherwise use its best efforts to effect the orderly and efficient transfer of
each Subservicing Agreement to the assuming party.
Section 3.07. Collection of Certain Mortgage Loan Payments; Deposits to
Custodial Account.
(a) The Master Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans, and
shall, to the extent such procedures shall be consistent with this Agreement and
the terms and provisions of any related Primary Insurance Policy, follow such
collection procedures as it would employ in its good faith business judgment and
which are normal and usual in its general mortgage servicing activities.
Consistent with the foregoing, the Master Servicer may in its discretion
(subject to the terms and conditions of the Assignment Agreement) (i) waive any
late payment charge or any prepayment charge or penalty interest in connection
with the prepayment of a Mortgage Loan and (ii) extend the Due Date for payments
due on a Mortgage Loan in accordance with the Program Guide, provided, however,
that the Master Servicer shall first determine that any such waiver or extension
will not impair the coverage of any related Primary Insurance Policy or
materially adversely affect the lien of the related Mortgage. Notwithstanding
anything in this Section to the contrary, the Master Servicer or any Subservicer
shall not enforce any prepayment charge to the extent that such enforcement
would violate any applicable law. In the event of any such arrangement, the
Master Servicer shall make timely 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 unless
otherwise agreed to by the Holders of the Classes of Certificates affected
thereby; provided, however, that no such extension shall be made if any advance
would be a Nonrecoverable Advance. Consistent with the terms of this Agreement,
the Master Servicer may also waive, modify or vary any term of any Mortgage Loan
or consent to the postponement of strict compliance with any such term or in any
manner grant indulgence to any Mortgagor if in the Master Servicer's
determination such waiver, modification, postponement or indulgence is not
materially adverse to the interests of the Certificateholders (taking into
account any estimated Realized Loss that might result absent such action),
provided, however, that the Master Servicer may not modify materially or permit
any Subservicer to modify any Mortgage Loan, including without limitation any
modification that would change the Mortgage Rate, forgive the payment of any
principal or interest (unless in connection with the liquidation of the related
Mortgage Loan or except in connection with prepayments to the extent that such
reamortization is not inconsistent with the terms of the Mortgage Loan),
capitalize any amounts owing on the Mortgage Loan by adding such amount to the
outstanding principal balance of the Mortgage Loan, or extend the final maturity
date of such Mortgage Loan, unless such Mortgage Loan is in default or, in the
judgment of the Master Servicer, such default is reasonably foreseeable. No such
modification shall reduce the Mortgage Rate on a Mortgage Loan below the greater
of (A) one-half of the Mortgage Rate as in effect on the Cut-off Date and (B)
one-half of the Mortgage Rate as in effect on the date of such modification, but
not less than the sum of the Servicing Fee Rate and the per annum rate at which
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the Subservicing Fee accrues. The final maturity date for any Mortgage Loan
shall not be extended beyond the Maturity Date. Also, the aggregate principal
balance of all Reportable Modified Mortgage Loans subject to Servicing
Modifications (measured at the time of the Servicing Modification and after
giving effect to any Servicing Modification) can be no more than five percent of
the aggregate principal balance of the Mortgage Loans as of the Cut-off Date,
provided, that such limit may be increased from time to time if each Rating
Agency provides written confirmation that an increase in excess of that limit
will not reduce the rating assigned to any Class of Certificates by such Rating
Agency below the lower of the then-current rating or the rating assigned to such
Certificates as of the Closing Date by such Rating Agency. In addition, any
amounts owing on a Mortgage Loan added to the outstanding principal balance of
such Mortgage Loan must be fully amortized over the term of such Mortgage Loan,
and such amounts may be added to the outstanding principal balance of a Mortgage
Loan only once during the life of such Mortgage Loan. Also, the addition of such
amounts described in the preceding sentence shall be implemented in accordance
with the Program Guide and may be implemented only by Subservicers that have
been approved by the Master Servicer for such purposes. In connection with any
Curtailment of a Mortgage Loan, the Master Servicer, to the extent not
inconsistent with the terms of the Mortgage Note and local law and practice, may
permit the Mortgage Loan to be re-amortized such that the Monthly Payment is
recalculated as an amount that will fully amortize the remaining principal
balance thereof by the original maturity date based on the original Mortgage
Rate; provided, that such reamortization shall not be permitted if it would
constitute a reissuance of the Mortgage Loan for federal income tax purposes.
(b) The Master Servicer shall establish and maintain a Custodial Account
in which the Master Servicer shall deposit or cause to be deposited on a daily
basis, except as otherwise specifically provided herein, the following payments
and collections remitted by Subservicers or received by it in respect of the
Mortgage Loans subsequent to the Cut-off Date (other than in respect of Monthly
Payments due before or in the month of the Cut-off Date):
(i) All payments on account of principal, including Principal
Prepayments made by Mortgagors on the Mortgage Loans and the principal
component of any Subservicer Advance or of any REO Proceeds received in
connection with an REO Property for which an REO Disposition has
occurred;
(ii) All payments on account of interest at the Adjusted
Mortgage Rate on the Mortgage Loans, including the interest component of
any Subservicer Advance or of any REO Proceeds received in connection
with an REO Property for which an REO Disposition has occurred;
(iii) Insurance Proceeds, Subsequent Recoveries and Liquidation
Proceeds (net of any related expenses of the Subservicer);
(iv) All proceeds of any Mortgage Loans purchased pursuant to
Section 2.02, 2.03, 2.04 or 4.07 (including amounts received from
Residential Funding pursuant to the last paragraph of Section 4 of the
Assignment Agreement in respect of any liability, penalty or expense
that resulted from a breach of the representation and warranty set forth
in clause (xlvii) of Section 4 of the Assignment Agreement) and all
amounts required to be deposited in connection with the substitution of
a Qualified Substitute Mortgage Loan pursuant to Section 2.03 or 2.04;
and
(v) Any amounts required to be deposited pursuant to Section
3.07(c) and any payments or collections received in the nature of
prepayment charges.
The foregoing requirements for deposit in the Custodial Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments on the Mortgage Loans which are not part of the Trust
Fund (consisting of Monthly Payments due before or in the month of the Cut-off
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Date) and payments or collections consisting of late payment charges or
assumption fees may but need not be deposited by the Master Servicer in the
Custodial Account. In the event any amount not required to be deposited in the
Custodial Account is so deposited, the Master Servicer may at any time withdraw
such amount from the Custodial Account, any provision herein to the contrary
notwithstanding. The Custodial Account may contain funds that belong to one or
more trust funds created for mortgage pass-through certificates of other series
and may contain other funds respecting payments on mortgage loans belonging to
the Master Servicer or serviced or master serviced by it on behalf of others.
Notwithstanding such commingling of funds, the Master Servicer shall keep
records that accurately reflect the funds on deposit in the Custodial Account
that have been identified by it as being attributable to the Mortgage Loans.
With respect to Insurance Proceeds, Liquidation Proceeds, REO Proceeds,
Subsequent Recoveries and the proceeds of the purchase of any Mortgage Loan
pursuant to Sections 2.02, 2.03, 2.04 and 4.07 received in any calendar month,
the Master Servicer may elect to treat such amounts as included in the Available
Distribution Amount for the Distribution Date in the month of receipt, but is
not obligated to do so. If the Master Servicer so elects, such amounts will be
deemed to have been received (and any related Realized Loss shall be deemed to
have occurred) on the last day of the month prior to the receipt thereof.
(c) The Master Servicer shall use its best efforts to cause the
institution maintaining the Custodial Account to invest the funds in the
Custodial Account attributable to the Mortgage Loans in Permitted Investments
which shall mature not later than the Certificate Account Deposit Date next
following the date of such investment (with the exception of the Amount Held for
Future Distribution) and which shall not be sold or disposed of prior to their
maturities. All income and gain realized from any such investment shall be for
the benefit of the Master Servicer as additional servicing compensation and
shall be subject to its withdrawal or order from time to time. The amount of any
losses incurred in respect of any such investments attributable to the
investment of amounts in respect of the Mortgage Loans shall be deposited in the
Custodial Account by the Master Servicer out of its own funds immediately as
realized.
(d) The Master Servicer shall give notice to the Trustee and the
Depositor of any change in the location of the Custodial Account and the
location of the Certificate Account prior to the use thereof.
Section 3.08. Subservicing Accounts; Servicing Accounts.
(a) In those cases where a Subservicer is servicing a Mortgage Loan
pursuant to a Subservicing Agreement, the Master Servicer shall cause the
Subservicer, pursuant to the Subservicing Agreement, to establish and maintain
one or more Subservicing Accounts which shall be an Eligible Account or, if such
account is not an Eligible Account, shall generally satisfy the requirements of
the Program Guide and be otherwise acceptable to the Master Servicer and each
Rating Agency. The Subservicer will be required thereby to deposit into the
Subservicing Account on a daily basis all proceeds of Mortgage Loans received by
the Subservicer, less its Subservicing Fees and unreimbursed advances and
expenses, to the extent permitted by the Subservicing Agreement. If the
Subservicing Account is not an Eligible Account, the Master Servicer shall be
deemed to have received such monies upon receipt thereof by the Subservicer. The
Subservicer shall not be required to deposit in the Subservicing Account
payments or collections in the nature of late charges or assumption fees, or
payments or collections received in the nature of prepayment charges to the
extent that the Subservicer is entitled to retain such amounts pursuant to the
Subservicing Agreement. On or before the date specified in the Program Guide,
but in no event later than the Determination Date, the Master Servicer shall
cause the Subservicer, pursuant to the Subservicing Agreement, to remit to the
Master Servicer for deposit in the Custodial Account all funds held in the
Subservicing Account with respect to each Mortgage Loan serviced by such
Subservicer that are required to be remitted to the Master Servicer. The
Subservicer will also be required, pursuant to the Subservicing Agreement, to
advance on such scheduled date of remittance amounts equal to any scheduled
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monthly installments of principal and interest less its Subservicing Fees on any
Mortgage Loans for which payment was not received by the Subservicer. This
obligation to advance with respect to each Mortgage Loan will continue up to and
including the first of the month following the date on which the related
Mortgaged Property is sold at a foreclosure sale or is acquired by the Trust
Fund by deed in lieu of foreclosure or otherwise. All such advances received by
the Master Servicer shall be deposited promptly by it in the Custodial Account.
(b) The Subservicer may also be required, pursuant to the Subservicing
Agreement, to remit to the Master Servicer for deposit in the Custodial Account
interest at the Adjusted Mortgage Rate (or Modified Net Mortgage Rate plus the
rate per annum at which the Servicing Fee accrues in the case of a Modified
Mortgage Loan) on any Curtailment received by such Subservicer in respect of a
Mortgage Loan from the related Mortgagor during any month that is to be applied
by the Subservicer to reduce the unpaid principal balance of the related
Mortgage Loan as of the first day of such month, from the date of application of
such Curtailment to the first day of the following month. Any amounts paid by a
Subservicer pursuant to the preceding sentence shall be for the benefit of the
Master Servicer as additional servicing compensation and shall be subject to its
withdrawal or order from time to time pursuant to Sections 3.10(a)(iv) and (v).
(c) In addition to the Custodial Account and the Certificate Account,
the Master Servicer shall for any Nonsubserviced Mortgage Loan, and shall cause
the Subservicers for Subserviced Mortgage Loans to, establish and maintain one
or more Servicing Accounts and deposit and retain therein all collections from
the Mortgagors (or advances from Subservicers) for the payment of taxes,
assessments, hazard insurance premiums, Primary Insurance Policy premiums, if
applicable, or comparable items for the account of the Mortgagors. Each
Servicing Account shall satisfy the requirements for a Subservicing Account and,
to the extent permitted by the Program Guide or as is otherwise acceptable to
the Master Servicer, may also function as a Subservicing Account. Withdrawals of
amounts related to the Mortgage Loans from the Servicing Accounts may be made
only to effect timely payment of taxes, assessments, hazard insurance premiums,
Primary Insurance Policy premiums, if applicable, or comparable items, to
reimburse the Master Servicer or Subservicer out of related collections for any
payments made pursuant to Sections 3.11 (with respect to the Primary Insurance
Policy) and 3.12(a) (with respect to hazard insurance), to refund to any
Mortgagors any sums as may be determined to be overages, to pay interest, if
required, to Mortgagors on balances in the Servicing Account or to clear and
terminate the Servicing Account at the termination of this Agreement in
accordance with Section 9.01 or in accordance with the Program Guide. As part of
its servicing duties, the Master Servicer shall, and the Subservicers will,
pursuant to the Subservicing Agreements, be required to pay to the Mortgagors
interest on funds in this account to the extent required by law.
(d) The Master Servicer shall advance the payments referred to in the
preceding subsection that are not timely paid by the Mortgagors or advanced by
the Subservicers on the date when the tax, premium or other cost for which such
payment is intended is due, but the Master Servicer shall be required so to
advance only to the extent that such advances, in the good faith judgment of the
Master Servicer, will be recoverable by the Master Servicer out of Insurance
Proceeds, Liquidation Proceeds or otherwise.
Section 3.09. Access to Certain Documentation and Information Regarding
the Mortgage Loans.
In the event that compliance with this Section 3.09 shall make any Class
of Certificates legal for investment by federally insured savings and loan
associations, the Master Servicer shall provide, or cause the Subservicers to
provide, to the Trustee, the Office of Thrift Supervision or the FDIC and the
supervisory agents and examiners thereof access to the documentation regarding
the Mortgage Loans required by applicable regulations of the Office of Thrift
Supervision, such access being afforded without charge but only upon reasonable
request and during normal business hours at the offices designated by the Master
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Servicer. The Master Servicer shall permit such representatives to photocopy any
such documentation and shall provide equipment for that purpose at a charge
reasonably approximating the cost of such photocopying to the Master Servicer.
Section 3.10. Permitted Withdrawals from the Custodial Account.
(a) The Master Servicer may, from time to time as provided herein, make
withdrawals from the Custodial Account of amounts on deposit therein pursuant to
Section 3.07 that are attributable to the Mortgage Loans for the following
purposes:
(i) to make deposits into the Certificate Account in the amounts
and in the manner provided for in Section 4.01;
(ii) to reimburse itself or the related Subservicer for
previously unreimbursed Advances, Servicing Advances or other expenses
made pursuant to Sections 3.01, 3.07(a), 3.08, 3.11, 3.12(a), 3.14 and
4.04 or otherwise reimbursable pursuant to the terms of this Agreement,
such withdrawal right being limited to amounts received on the related
Mortgage Loans (including, for this purpose, REO Proceeds, Insurance
Proceeds, Liquidation Proceeds and proceeds from the purchase of a
Mortgage Loan pursuant to Section 2.02, 2.03, 2.04 or 4.07) which
represent (A) Late Collections of Monthly Payments for which any such
advance was made in the case of Subservicer Advances or Advances
pursuant to Section 4.04 and (B) recoveries of amounts in respect of
which such advances were made in the case of Servicing Advances;
(iii) to pay to itself or the related Subservicer (if not
previously retained by such Subservicer) out of each payment received by
the Master Servicer on account of interest on a Mortgage Loan as
contemplated by Sections 3.14 and 3.16, an amount equal to that
remaining portion of any such payment as to interest (but not in excess
of the Servicing Fee and the Subservicing Fee, if not previously
retained) which, when deducted, will result in the remaining amount of
such interest being interest at a rate per annum equal to the Net
Mortgage Rate (or Modified Net Mortgage Rate in the case of a Modified
Mortgage Loan) on the amount specified in the amortization schedule of
the related Mortgage Loan as the principal balance thereof at the
beginning of the period respecting which such interest was paid after
giving effect to any previous Curtailments;
(iv) to pay to itself as additional servicing compensation any
interest or investment income earned on funds and other property
deposited in or credited to the Custodial Account that it is entitled to
withdraw pursuant to Section 3.07(c);
(v) to pay to itself as additional servicing compensation any
Foreclosure Profits, and any amounts remitted by Subservicers as
interest in respect of Curtailments pursuant to Section 3.08(b);
(vi) to pay to itself, a Subservicer, a Seller, Residential
Funding, the Depositor or any other appropriate Person, as the case may
be, with respect to each Mortgage Loan or property acquired in respect
thereof that has been purchased or otherwise transferred pursuant to
Section 2.02, 2.03, 2.04, 4.07 or 9.01, all amounts received thereon and
not required to be distributed to Certificateholders as of the date on
which the related Stated Principal Balance or Purchase Price is
determined;
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(vii) to reimburse itself or the related Subservicer for any
Nonrecoverable Advance or Advances in the manner and to the extent
provided in subsection (c) below, and any Advance or Servicing Advance
made in connection with a modified Mortgage Loan that is in default or,
in the judgment of the Master Servicer, default is reasonably
foreseeable pursuant to Section 3.07(a), to the extent the amount of the
Advance or Servicing Advance was added to the Stated Principal Balance
of the Mortgage Loan in a prior calendar month;
(viii) to reimburse itself or the Depositor for expenses
incurred by and reimbursable to it or the Depositor pursuant to Section
3.01(a), 3.11, 3.13, 3.14(c), 6.03, 10.01 or otherwise, or in connection
with enforcing any repurchase, substitution or indemnification
obligation of any Seller (other than the Depositor or an Affiliate of
the Depositor) pursuant to the related Seller's Agreement;
(ix) to reimburse itself for amounts expended by it (a) pursuant
to Section 3.14 in good faith in connection with the restoration of
property damaged by an Uninsured Cause, and (b) in connection with the
liquidation of a Mortgage Loan or disposition of an REO Property to the
extent not otherwise reimbursed pursuant to clause (ii) or (viii) above;
(x) to pay the Credit Risk Manager the Credit Risk Manager Fee;
and
(xi) to withdraw any amount deposited in the Custodial Account
that was not required to be deposited therein pursuant to Section 3.07,
including any payoff fees or penalties or any other additional amounts
payable to the Master Servicer or Subservicer pursuant to the terms of
the Mortgage Note.
(b) Since, in connection with withdrawals pursuant to clauses (ii),
(iii), (v) and (vi), the Master Servicer's entitlement thereto is limited to
collections or other recoveries on the related Mortgage Loan, 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
Custodial Account pursuant to such clauses.
(c) The Master Servicer shall be entitled to reimburse itself or the
related Subservicer for any advance made in respect of a Mortgage Loan that the
Master Servicer determines to be a Nonrecoverable Advance by withdrawal from the
Custodial Account of amounts on deposit therein attributable to the Mortgage
Loans on any Certificate Account Deposit Date succeeding the date of such
determination. Such right of reimbursement in respect of a Nonrecoverable
Advance relating to an Advance made pursuant to Section 4.04 on any such
Certificate Account Deposit Date shall be limited to an amount not exceeding the
portion of such advance previously paid to Certificateholders (and not
theretofore reimbursed to the Master Servicer or the related Subservicer).
Section 3.11. Maintenance of Primary Insurance Coverage.
(a) The Master Servicer shall not take, or permit any Subservicer to
take, any action which would result in noncoverage under any applicable Primary
Insurance Policy of any loss which, but for the actions of the Master Servicer
or Subservicer, would have been covered thereunder. To the extent coverage is
available, the Master Servicer shall keep or cause to be kept in full force and
effect each such Primary Insurance Policy until the principal balance of the
related Mortgage Loan secured by a Mortgaged Property is reduced to 80% or less
of the Appraised Value at origination in the case of such a Mortgage Loan having
a Loan-to-Value Ratio at origination in excess of 80%, provided that such
Primary Insurance Policy was in place as of the Cut-off Date and the Master
Servicer had knowledge of such Primary Insurance Policy. The Master Servicer
shall not cancel or refuse to renew any such Primary Insurance Policy applicable
to a Nonsubserviced Mortgage Loan, or consent to any Subservicer canceling or
refusing to renew any such Primary Insurance Policy applicable to a Mortgage
Loan subserviced by it, that is in effect at the date of the initial issuance of
the Certificates and is required to be kept in force hereunder unless the
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replacement Primary Insurance Policy for such canceled or non-renewed policy is
maintained with an insurer whose claims-paying ability is acceptable to each
Rating Agency for mortgage pass-through certificates having a rating equal to or
better than the lower of the then-current rating or the rating assigned to the
Certificates as of the Closing Date by such Rating Agency.
(b) In connection with its activities as administrator and servicer of
the Mortgage Loans, the Master Servicer agrees to present or to cause the
related Subservicer to present, on behalf of the Master Servicer, the
Subservicer, if any, the Trustee and Certificateholders, claims to the insurer
under any Primary Insurance Policies, in a timely manner in accordance with such
policies, and, in this regard, to take or cause to be taken such reasonable
action as shall be necessary to permit recovery under any Primary Insurance
Policies respecting defaulted Mortgage Loans. Pursuant to Section 3.07, any
Insurance Proceeds collected by or remitted to the Master Servicer under any
Primary Insurance Policies shall be deposited in the Custodial Account, subject
to withdrawal pursuant to Section 3.10.
Section 3.12. Maintenance of Fire Insurance and Omissions and Fidelity
Coverage.
(a) The Master Servicer shall cause to be maintained for each Mortgage
Loan fire insurance with extended coverage in an amount which is equal to the
lesser of the principal balance owing on such Mortgage Loan (together with the
principal balance of any mortgage loan secured by a lien that is senior to the
Mortgage Loan) or 100% of the insurable value of the improvements; provided,
however, that such coverage may not be less than the minimum amount required to
fully compensate for any loss or damage on a replacement cost BASIS. To the
extent it may do so without breaching the related Subservicing Agreement, the
Master Servicer shall replace any Subservicer that does not cause such
insurance, to the extent it is available, to be maintained. The Master Servicer
shall also cause to be maintained on property acquired upon foreclosure, or deed
in lieu of foreclosure, of any Mortgage Loan, fire insurance with extended
coverage in an amount which is at least equal to the amount necessary to avoid
the application of any co-insurance clause contained in the related hazard
insurance policy. Pursuant to Section 3.07, any amounts collected by the Master
Servicer under any such policies (other than 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 Custodial
Account, subject to withdrawal pursuant to Section 3.10. Any cost incurred by
the Master Servicer in maintaining any such insurance shall not, for the purpose
of calculating monthly distributions to Certificateholders, be added to the
amount owing under the Mortgage Loan, notwithstanding that the terms of the
Mortgage Loan so permit. Such costs shall be recoverable by the Master Servicer
out of related late payments by the Mortgagor or out of Insurance Proceeds and
Liquidation Proceeds to the extent permitted by Section 3.10. 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 Loan
other than pursuant to such applicable laws and regulations as shall at any time
be in force and as shall require such additional insurance. Whenever the
improvements securing a Mortgage Loan are located at the time of origination of
such Mortgage Loan in a federally designated special flood hazard area, the
Master Servicer shall cause flood insurance (to the extent available) to be
maintained in respect thereof. Such flood insurance shall be in an amount equal
to the lesser of (i) the amount required to compensate for any loss or damage to
the Mortgaged Property on a replacement cost basis and (ii) the maximum amount
of such insurance available for the related Mortgaged Property under the
national flood insurance program (assuming that the area in which such Mortgaged
Property is located is participating in such program).
In the event that the Master Servicer shall obtain and maintain a
blanket fire insurance policy with extended coverage insuring against hazard
losses on all of the Mortgage Loans, it shall conclusively be deemed to have
satisfied its obligations as set forth in the first sentence of this Section
3.12(a), it being understood and agreed that such policy may contain a
deductible clause, in which case the Master Servicer shall, in the event that
there shall not have been maintained on the related Mortgaged Property a policy
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complying with the first sentence of this Section 3.12(a) and there shall have
been a loss which would have been covered by such policy, deposit in the
Certificate Account the amount not otherwise payable under the blanket policy
because of such deductible clause. Any such deposit by the Master Servicer shall
be made on the Certificate Account Deposit Date next preceding the Distribution
Date which occurs in the month following the month in which payments under any
such policy would have been deposited in the Custodial Account. In connection
with its activities as administrator and servicer of the Mortgage Loans, the
Master Servicer agrees to present, on behalf of itself, the Trustee and
Certificateholders, claims under any such blanket policy.
(b) The Master Servicer shall obtain and maintain at its own expense and
keep in full force and effect throughout the term of this Agreement a blanket
fidelity bond and an errors and omissions insurance policy covering the Master
Servicer's officers and employees and other persons acting on behalf of the
Master Servicer in connection with its activities under this Agreement. The
amount of coverage shall be at least equal to the coverage that would be
required by Xxxxxx Xxx or Xxxxxxx Mac, whichever is greater, with respect to the
Master Servicer if the Master Servicer were servicing and administering the
Mortgage Loans for Xxxxxx Mae or Xxxxxxx Mac. In the event that any such bond or
policy ceases to be in effect, the Master Servicer shall obtain a comparable
replacement bond or policy from an issuer or insurer, as the case may be,
meeting the requirements, if any, of the Program Guide and acceptable to the
Depositor. Coverage of the Master Servicer under a policy or bond obtained by an
Affiliate of the Master Servicer and providing the coverage required by this
Section 3.12(b) shall satisfy the requirements of this Section 3.12(b).
Section 3.13. Enforcement of Due-on-Sale Clauses; Assumption and
Modification Agreements; Certain Assignments.
(a) When any Mortgaged Property is conveyed by the Mortgagor, the Master
Servicer or Subservicer, to the extent it has knowledge of such conveyance,
shall 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: (i)
the Master Servicer shall not be deemed to be in default under this Section
3.13(a) by reason of any transfer or assumption which the Master Servicer is
restricted by law from preventing; and (ii) if the Master Servicer determines
that it is reasonably likely that any Mortgagor will bring, or if any Mortgagor
does bring, legal action to declare invalid or otherwise avoid enforcement of a
due-on-sale clause contained in any Mortgage Note or Mortgage, the Master
Servicer shall not be required to enforce the due-on-sale clause or to contest
such action.
(b) Subject to the Master Servicer's or Subservicer's duty to enforce
any due-on-sale clause to the extent set forth in Section 3.13(a), in any case
in which a Mortgaged Property is to be conveyed to a Person by a Mortgagor, and
such Person is to enter into an assumption or modification agreement or
supplement to the Mortgage Note or Mortgage which 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
is authorized, subject to the requirements of the sentence next following, to
execute and deliver, on behalf of the Trustee, 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; provided, however,
none of such terms and requirements shall both constitute a "significant
modification" effecting an exchange or reissuance of such Mortgage Loan under
the Code (or final, temporary or proposed Treasury regulations promulgated
thereunder) and cause any REMIC created hereunder to fail to qualify as a REMIC
under the Code or the imposition of any tax on "prohibited transactions" or
"contributions" after the Startup Date under the REMIC Provisions. The Master
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Servicer shall execute and deliver such documents only if it reasonably
determines that (i) its execution and delivery thereof will not conflict with or
violate any terms of this Agreement or cause the unpaid balance and interest on
the Mortgage Loan to be uncollectible in whole or in part, (ii) any required
consents of insurers under any Required Insurance Policies have been obtained
and (iii) subsequent to the closing of the transaction involving the assumption
or transfer (A) the Mortgage Loan will continue to be secured by a first
mortgage lien (or, with respect to any junior lien, a junior lien of the same
priority in relation to any senior lien on such Mortgage Loan) pursuant to the
terms of the Mortgage, (B) such transaction will not adversely affect the
coverage under any Required Insurance Policies, (C) the Mortgage Loan will fully
amortize over the remaining term thereof, (D) no material term of the Mortgage
Loan (including the interest rate on the Mortgage Loan) will be altered nor will
the term of the Mortgage Loan be changed and (E) if the seller/transferor of the
Mortgaged Property is to be released from liability on the Mortgage Loan, the
buyer/transferee of the Mortgaged Property would be qualified to assume the
Mortgage Loan based on generally comparable credit quality and such release will
not (based on the Master Servicer's or Subservicer's good faith determination)
adversely affect the collectability of the Mortgage Loan. Upon receipt of
appropriate instructions from the Master Servicer in accordance with the
foregoing, the Trustee shall execute any necessary instruments for such
assumption or substitution of liability as directed by the Master Servicer. Upon
the closing of the transactions contemplated by such documents, the Master
Servicer shall cause the originals or true and correct copies of the assumption
agreement, the release (if any), or the modification or supplement to the
Mortgage Note or Mortgage to be delivered to the Trustee or the Custodian and
deposited with the Mortgage File for such Mortgage Loan. Any fee collected by
the Master Servicer or such related Subservicer for entering into an assumption
or substitution of liability agreement will be retained by the Master Servicer
or such Subservicer as additional servicing compensation.
(c) The Master Servicer or the related Subservicer, as the case may be,
shall be entitled to approve a request from a Mortgagor for a partial release of
the related Mortgaged Property, the granting of an easement thereon in favor of
another Person, any alteration or demolition of the related Mortgaged Property
or other similar matters if it has determined, exercising its good faith
business judgment in the same manner as it would if it were the owner of the
related Mortgage Loan, that the security for, and the timely and full
collectability of, such Mortgage Loan would not be adversely affected thereby
and that any REMIC created hereunder would not fail to continue to qualify as a
REMIC under the Code as a result thereof and (subject to Section 10.01(f)) that
no tax on "prohibited transactions" or "contributions" after the Startup Date
would be imposed on any REMIC created hereunder as a result thereof. Any fee
collected by the Master Servicer or the related Subservicer for processing such
a request will be retained by the Master Servicer or such Subservicer as
additional servicing compensation.
(d) Subject to any other applicable terms and conditions of this
Agreement, the Trustee and Master Servicer shall be entitled to approve an
assignment in lieu of satisfaction with respect to any Mortgage Loan, provided
the obligee with respect to such Mortgage Loan following such proposed
assignment provides the Trustee and Master Servicer with a "Lender Certification
for Assignment of Mortgage Loan" in the form attached hereto as Exhibit M, in
form and substance satisfactory to the Trustee and Master Servicer, providing
the following: (i) that the Mortgage Loan is secured by Mortgaged Property
located in a jurisdiction in which an assignment in lieu of satisfaction is
required to preserve lien priority, minimize or avoid mortgage recording taxes
or otherwise comply with, or facilitate a refinancing under, the laws of such
jurisdiction; (ii) that the substance of the assignment is, and is intended to
be, a refinancing of such Mortgage Loan and that the form of the transaction is
solely to comply with, or facilitate the transaction under, such local laws;
(iii) that the Mortgage Loan following the proposed assignment will have a rate
of interest more than the greater of (A) 3% and (B) 5% of the annual yield of
the unmodified Mortgage Loan, below or above the rate of interest on such
Mortgage Loan prior to such proposed assignment; and (iv) that such assignment
is at the request of the borrower under the related Mortgage Loan. Upon approval
of an assignment in lieu of satisfaction with respect to any Mortgage Loan, the
Master Servicer shall receive cash in an amount equal to the unpaid principal
balance of and accrued interest on such Mortgage Loan, and the Master Servicer
shall treat such amount as a Principal Prepayment in Full with respect to such
Mortgage Loan for all purposes hereof.
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Section 3.14. Realization Upon Defaulted Mortgage Loans.
(a) The Master Servicer shall foreclose upon or otherwise comparably
convert (which may include an REO Acquisition) 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 pursuant to Section 3.07. Alternatively, the Master Servicer may take
other actions in respect of a defaulted Mortgage Loan, which may include (i)
accepting a short sale (a payoff of the Mortgage Loan for an amount less than
the total amount contractually owed in order to facilitate a sale of the
Mortgaged Property by the Mortgagor) or permitting a short refinancing (a payoff
of the Mortgage Loan for an amount less than the total amount contractually owed
in order to facilitate refinancing transactions by the Mortgagor not involving a
sale of the Mortgaged Property), (ii) arranging for a repayment plan or (iii)
agreeing to a modification in accordance with Section 3.07. In connection with
such foreclosure or other conversion or action, the Master Servicer shall,
consistent with Section 3.11, follow such practices and procedures as it shall
deem necessary or advisable, as shall be normal and usual in its general
mortgage servicing activities and as shall be required or permitted by the
Program Guide; provided that the Master Servicer shall not be liable in any
respect hereunder if the Master Servicer is acting in connection with any such
foreclosure or other conversion or action in a manner that is consistent with
the provisions of this Agreement. The Master Servicer, however, shall not be
required to expend its own funds or incur other reimbursable charges in
connection with any foreclosure, or attempted foreclosure which is not
completed, or towards the correction of any default on a related senior mortgage
loan, 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 to Holders of Certificates of one or more
Classes after reimbursement to itself for such expenses or charges and (ii) that
such expenses and charges will be recoverable to it through Liquidation
Proceeds, Insurance Proceeds, or REO Proceeds (respecting which it shall have
priority for purposes of withdrawals from the Custodial Account pursuant to
Section 3.10, whether or not such expenses and charges are actually recoverable
from related Liquidation Proceeds, Insurance Proceeds or REO Proceeds). In the
event of such a determination by the Master Servicer pursuant to this Section
3.14(a), the Master Servicer shall be entitled to reimbursement of its funds so
expended pursuant to Section 3.10. In addition, the Master Servicer may pursue
any remedies that may be available in connection with a breach of a
representation and warranty with respect to any such Mortgage Loan in accordance
with Sections 2.03 and 2.04. However, the Master Servicer is not required to
continue to pursue both foreclosure (or similar remedies) with respect to the
Mortgage Loans and remedies in connection with a breach of a representation and
warranty if the Master Servicer determines in its reasonable discretion that one
such remedy is more likely to result in a greater recovery as to the Mortgage
Loan. Upon the occurrence of a Cash Liquidation or REO Disposition, following
the deposit in the Custodial Account of all Insurance Proceeds, Liquidation
Proceeds and other payments and recoveries referred to in the definition of
"Cash Liquidation" or "REO Disposition," as applicable, upon receipt by the
Trustee of written notification of such deposit signed by a Servicing Officer,
the Trustee or the Custodian, as the case may be, shall release to the Master
Servicer the related Mortgage File and the Trustee shall execute and deliver
such instruments of transfer or assignment prepared by the Master Servicer, in
each case without recourse, as shall be necessary to vest in the Master Servicer
or its designee, as the case may be, the related Mortgage Loan, and thereafter
such Mortgage Loan shall not be part of the Trust FUND. Notwithstanding the
foregoing or any other provision of this Agreement, in the Master Servicer's
sole discretion with respect to any defaulted Mortgage Loan or REO Property as
to either of the following provisions, (i) a Cash Liquidation or REO Disposition
may be deemed to have occurred if substantially all amounts expected by the
Master Servicer to be received in connection with the related defaulted Mortgage
Loan or REO Property have been received, and (ii) for purposes of determining
the amount of any Liquidation Proceeds, Insurance Proceeds, REO Proceeds or
other unscheduled collections or the amount of any Realized Loss, the Master
Servicer may take into account minimal amounts of additional receipts expected
to be received or any estimated additional liquidation expenses expected to be
incurred in connection with the related defaulted Mortgage Loan or REO Property.
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(b) In the event that title to any Mortgaged Property is acquired by the
Trust Fund as an REO Property by foreclosure or by deed in lieu of foreclosure,
the deed or certificate of sale shall be issued to the Trustee or to its nominee
on behalf of Certificateholders. Notwithstanding any such acquisition of title
and cancellation of the related Mortgage Loan, such REO Property shall (except
as otherwise expressly provided herein) be considered to be an Outstanding
Mortgage Loan held in the Trust Fund until such time as the REO Property shall
be sold. Consistent with the foregoing for purposes of all calculations
hereunder so long as such REO Property shall be considered to be an Outstanding
Mortgage Loan it shall be assumed that, notwithstanding that the indebtedness
evidenced by the related Mortgage Note shall have been discharged, such Mortgage
Note and the related amortization schedule in effect at the time of any such
acquisition of title (after giving effect to any previous Curtailments and
before any adjustment thereto by reason of any bankruptcy or similar proceeding
or any moratorium or similar waiver or grace period) remain in effect.
(c) In the event that the Trust Fund acquires any REO Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, the Master Servicer on behalf of the Trust Fund shall dispose of
such REO Property as soon as practicable, giving due consideration to the
interests of the Certificateholders, but in all cases, within three full years
after the taxable year of its acquisition by the Trust Fund for purposes of
Section 860G(a)(8) of the Code (or such shorter period as may be necessary under
applicable state (including any state in which such property is located) law to
maintain the status of each REMIC created hereunder as a REMIC under applicable
state law and avoid taxes resulting from such property failing to be foreclosure
property under applicable state law) or, at the expense of the Trust Fund,
request, more than 60 days before the day on which such grace period would
otherwise expire, an extension of such grace period unless the Master Servicer
(subject to Section 10.01(f)) obtains for the Trustee an Opinion of Counsel,
addressed to the Trustee and the Master Servicer, to the effect that the holding
by the Trust Fund of such REO Property subsequent to such period will not result
in the imposition of taxes on "prohibited transactions" as defined in Section
860F of the Code or cause any REMIC created hereunder to fail to qualify as a
REMIC (for federal (or any applicable State or local) income tax purposes) at
any time that any Certificates are outstanding, in which case the Trust Fund may
continue to hold such REO Property (subject to any conditions contained in such
Opinion of Counsel). The Master Servicer shall be entitled to be reimbursed from
the Custodial Account for any costs incurred in obtaining such Opinion of
Counsel, as provided in Section 3.10. Notwithstanding any other provision of
this Agreement, no REO Property acquired by the Trust Fund shall be rented (or
allowed to continue to be rented) or otherwise used by or on behalf of the Trust
Fund in such a manner or pursuant to any terms that would (i) cause such REO
Property to fail to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code or (ii) subject any REMIC created hereunder to
the imposition of any federal income taxes on the income earned from such REO
Property, including any taxes imposed by reason of Section 860G(c) of the Code,
unless the Master Servicer has agreed to indemnify and hold harmless the Trust
Fund with respect to the imposition of any such taxes.
(d) The proceeds of any Cash Liquidation, REO Disposition or purchase or
repurchase of any Mortgage Loan pursuant to the terms of this Agreement, as well
as any recovery (other than Subsequent Recoveries) resulting from a collection
of Liquidation Proceeds, Insurance Proceeds or REO Proceeds, will be applied in
the following order of priority: first, to reimburse the Master Servicer or the
related Subservicer in accordance with Section 3.10(a)(ii); second, to the
Certificateholders to the extent of accrued and unpaid interest on the Mortgage
Loan, and any related REO Imputed Interest, at the Net Mortgage Rate (or the
Modified Net Mortgage Rate in the case of a Modified Mortgage Loan), to the Due
Date in the related Due Period prior to the Distribution Date on which such
amounts are to be distributed; third, to the Certificateholders as a recovery of
principal on the Mortgage Loan (or REO Property); fourth, to all Servicing Fees
and Subservicing Fees payable therefrom (and the Master Servicer and the
Subservicer shall have no claims for any deficiencies with respect to such fees
which result from the foregoing allocation); and fifth, to Foreclosure Profits.
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(e) In the event of a default on a Mortgage Loan one or more of whose
obligors is not a United States Person, in connection with any foreclosure or
acquisition of a deed in lieu of foreclosure (together, "foreclosure") in
respect of such Mortgage Loan, the Master Servicer shall cause compliance with
the provisions of Treasury Regulation Section 1.1445-2(d)(3) (or any successor
thereto) necessary to assure that no withholding tax obligation arises with
respect to the proceeds of such foreclosure except to the extent, if any, that
proceeds of such foreclosure are required to be remitted to the obligors on such
Mortgage Loan.
Section 3.15. Trustee to Cooperate; Release of Custodial Files.
(a) Upon becoming aware of the payment in full of any Mortgage Loan, or
upon 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
shall immediately notify the Trustee (if it holds the related Mortgage File) or
the Custodian by a certification of a Servicing Officer (which certification
shall include a statement to the effect that all amounts received or to be
received in connection with such payment which are required to be deposited in
the Custodial Account pursuant to Section 3.07 have been or will be so
deposited), substantially in the form attached hereto as Exhibit G, or, in the
case of a Custodian, an electronic request in a form acceptable to the
Custodian, requesting delivery to it of the Mortgage File. Upon receipt of such
certification and request, the Trustee shall promptly release, or cause the
Custodian to release, the related Mortgage File to the Master Servicer. The
Master Servicer is authorized to execute and deliver to the Mortgagor the
request for reconveyance, deed of reconveyance or release or satisfaction of
mortgage or such instrument releasing the lien of the Mortgage, together with
the Mortgage Note with, as appropriate, written evidence of cancellation thereon
and to cause the removal from the registration on the MERS(R) System of such
Mortgage and to execute and deliver, on behalf of the Trustee and the
Certificateholders or any of them, any and all instruments of satisfaction or
cancellation or of partial or full release, including any applicable UCC
termination statements. No expenses incurred in connection with any instrument
of satisfaction or deed of reconveyance shall be chargeable to the Custodial
Account or the Certificate Account.
(b) From time to time as is appropriate for the servicing or foreclosure
of any Mortgage Loan, the Master Servicer shall deliver to the Custodian, with a
copy to the Trustee, a certificate of a Servicing Officer substantially in the
form attached as Exhibit G hereto, or, in the case of a Custodian, an electronic
request in a form acceptable to the Custodian, requesting that possession of
all, or any document constituting part of, the Mortgage File be released to the
Master Servicer and certifying as to the reason for such release and that such
release will not invalidate any insurance coverage provided in respect of the
Mortgage Loan under any Required Insurance Policy. Upon receipt of the
foregoing, the Trustee shall deliver, or cause the Custodian to deliver, the
Mortgage File or any document therein to the Master Servicer. The Master
Servicer shall cause each Mortgage File or any document therein so released to
be returned to the Trustee, or the Custodian as agent for the Trustee when the
need therefor by the Master Servicer no longer exists, unless (i) the Mortgage
Loan has been liquidated and the Liquidation Proceeds relating to the Mortgage
Loan have been deposited in the Custodial Account or (ii) the Mortgage File or
such document has been delivered directly or through a Subservicer to an
attorney, or to a public trustee or other public official as required by law,
for purposes of initiating or pursuing legal action or other proceedings for the
foreclosure of the Mortgaged Property either judicially or non-judicially, and
the Master Servicer has delivered directly or through a Subservicer to the
Trustee a certificate of a Servicing Officer certifying as to the name and
address of the Person to which such Mortgage File or such document was delivered
and the purpose or purposes of such delivery. In the event of the liquidation of
a Mortgage Loan, the Trustee shall deliver the Request for Release with respect
thereto to the Master Servicer upon the Trustee's receipt of notification from
the Master Servicer of the deposit of the related Liquidation Proceeds in the
Custodial Account.
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(c) The Trustee or the Master Servicer on the Trustee's behalf shall
execute and deliver to the Master Servicer, if necessary, any court pleadings,
requests for trustee's sale or other documents necessary to the foreclosure or
trustee's sale in respect of a Mortgaged Property or to any legal action brought
to obtain judgment against any Mortgagor on the Mortgage Note or Mortgage or to
obtain a deficiency judgment, or to enforce any other remedies or rights
provided by the Mortgage Note or Mortgage or otherwise available at law or in
equity. Together with such documents or pleadings (if signed by the Trustee),
the Master Servicer shall deliver to the Trustee a certificate of a Servicing
Officer requesting that such pleadings or documents be executed by the Trustee
and certifying as to the reason such documents or pleadings are required and
that the execution and delivery thereof by the Trustee shall not invalidate any
insurance coverage under any Required Insurance Policy or invalidate or
otherwise affect the lien of the Mortgage, except for the termination of such a
lien upon completion of the foreclosure or trustee's sale.
Section 3.16. Servicing and Other Compensation; Compensating Interest.
(a) The Master Servicer, as compensation for its activities hereunder,
shall be entitled to receive on each Distribution Date the amounts provided for
by clauses (iii), (iv), (v) and (vi) of Section 3.10(a), subject to clause (e)
below. The amount of servicing compensation provided for in such clauses shall
be accounted for on a Mortgage Loan-by-Mortgage Loan basis. In the event that
Liquidation Proceeds, Insurance Proceeds and REO Proceeds (net of amounts
reimbursable therefrom pursuant to Section 3.10(a)(ii)) in respect of a Cash
Liquidation or REO Disposition exceed the unpaid principal balance of such
Mortgage Loan plus unpaid interest accrued thereon (including REO Imputed
Interest) at a per annum rate equal to the related Net Mortgage Rate (or the
Modified Net Mortgage Rate in the case of a Modified Mortgage Loan), the Master
Servicer shall be entitled to retain therefrom and to pay to itself and/or the
related Subservicer, any Foreclosure Profits and any Servicing Fee or
Subservicing Fee considered to be accrued but unpaid.
(b) Additional servicing compensation in the form of assumption fees,
late payment charges, investment income on amounts in the Custodial Account or
the Certificate Account or otherwise shall be retained by the Master Servicer or
the Subservicer to the extent provided herein, subject to clause (e) below.
Prepayment charges shall be deposited into the Certificate Account and shall be
paid on each Distribution Date to the holders of the Class SB Certificates.
(c) The Master Servicer shall be required to pay, or cause to be paid,
all expenses incurred by it in connection with its servicing activities
hereunder (including payment of premiums for the Primary Insurance Policies, if
any, to the extent such premiums are not required to be paid by the related
Mortgagors, and the fees and expenses of the Trustee and the Custodian) and
shall not be entitled to reimbursement therefor except as specifically provided
in Sections 3.10 and 3.14.
(d) The Master Servicer's right to receive servicing compensation may
not be transferred in whole or in part except in connection with the transfer of
all of its responsibilities and obligations of the Master Servicer under this
Agreement.
(e) Notwithstanding clauses (a) and (b) above, the amount of servicing
compensation that the Master Servicer shall be entitled to receive for its
activities hereunder for the period ending on each Distribution Date shall be
reduced (but not below zero) by the amount of Compensating Interest (if any) for
such Distribution Date used to cover Prepayment Interest Shortfalls as provided
in Section 3.16(f) below. Such reduction shall be applied during such period as
follows: first, to any Servicing Fee or Subservicing Fee to which the Master
Servicer is entitled pursuant to Section 3.10(a)(iii); and second, to any income
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or gain realized from any investment of funds held in the Custodial Account or
the Certificate Account to which the Master Servicer is entitled pursuant to
Sections 3.07(c) or 4.01(c), respectively. In making such reduction, the Master
Servicer shall not withdraw from the Custodial Account any such amount
representing all or a portion of the Servicing Fee to which it is entitled
pursuant to Section 3.10(a)(iii) and shall not withdraw from the Custodial
Account or Certificate Account any such amount to which it is entitled pursuant
to Section 3.07(c) or 4.01(c).
(f) With respect to any Distribution Date, Prepayment Interest
Shortfalls on the Mortgage Loans will be covered first, by the Master Servicer,
but only to the extent such Prepayment Interest Shortfalls do not exceed
Eligible Master Servicing Compensation.
Section 3.17. Reports to the Trustee and the Depositor.
Not later than fifteen days after it receives a written request from the
Trustee or the Depositor, the Master Servicer shall forward to the Trustee and
the Depositor a statement, certified by a Servicing Officer, setting forth the
status of the Custodial Account as of the close of business on such Distribution
Date as it relates to the Mortgage Loans and showing, for the period covered by
such statement, the aggregate of deposits in or withdrawals from the Custodial
Account in respect of the Mortgage Loans for each category of deposit specified
in Section 3.07 and each category of withdrawal specified in Section 3.10.
Section 3.18. Annual Statement as to Compliance and Servicing
Assessment.
The Master Servicer shall deliver to the Depositor and the Trustee on or
before the earlier of (a) March 31 of each year or (b) with respect to any
calendar year during which the Depositor's annual report on Form 10-K is
required to be filed in accordance with the Exchange Act and the rules and
regulations of the Commission, the date on which the annual report on Form 10-K
is required to be filed in accordance with the Exchange Act and the rules and
regulations of the Commission, (i) a servicing assessment as described in
Section 4.03(f)(ii) and (ii) a servicer compliance statement, signed by an
authorized officer of the Master Servicer, as described in Items 1122(a),
1122(b) and 1123 of Regulation AB, to the effect that:
(A) A review of the Master Servicer's activities during
the reporting period and of its performance under this Agreement
has been made under such officer's supervision.
(B) To the best of such officer's knowledge, based on
such review, the Master Servicer has fulfilled all of its
obligations under this Agreement in all material respects
throughout the reporting period or, if there has been a failure
to fulfill any such obligation in any material respect,
specifying each such failure known to such officer and the
nature and status thereof.
The Master Servicer shall use commercially reasonable efforts to obtain
from all other parties participating in the servicing function any additional
certifications required under Item 1123 of Regulation AB to the extent required
to be included in a Report on Form 10-K; provided, however, that a failure to
obtain such certifications shall not be a breach of the Master Servicer's duties
hereunder if any such party fails to deliver such a certification.
Section 3.19. Annual Independent Public Accountants' Servicing Report.
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On or before the earlier of (a) March 31 of each year or (b) with
respect to any calendar year during which the Depositor's annual report on Form
10-K is required to be filed in accordance with the Exchange Act and the rules
and regulations of the Commission, the date on which the annual report is
required to be filed in accordance with the Exchange Act and the rules and
regulations of the Commission, the Master Servicer at its expense shall cause a
firm of independent public accountants, which shall be members of the American
Institute of Certified Public Accountants, to furnish to the Depositor and the
Trustee the attestation required under Item 1122(b) of Regulation AB. In
rendering such statement, such firm may rely, as to matters relating to the
direct servicing of mortgage loans by Subservicers, upon comparable statements
for examinations conducted by independent public accountants substantially in
accordance with standards established by the American Institute of Certified
Public Accountants (rendered within one year of such statement) with respect to
such Subservicers.
Section 3.20. Right of the Depositor in Respect of the Master Servicer.
The Master Servicer shall afford the Depositor and the Trustee, upon
reasonable notice, during normal business hours access to all records maintained
by the Master Servicer in respect of its rights and obligations hereunder and
access to officers of the Master Servicer responsible for such obligations. Upon
request, the Master Servicer shall furnish the Depositor with its most recent
financial statements and such other information as the Master Servicer possesses
regarding its business, affairs, property and condition, financial or otherwise.
The Master Servicer shall also cooperate with all reasonable requests for
information including, but not limited to, notices, tapes and copies of files,
regarding itself, the Mortgage Loans or the Certificates from any Person or
Persons identified by the Depositor or Residential Funding. The Depositor may
enforce the obligation of the Master Servicer hereunder and may, but it is not
obligated to, perform or cause a designee to perform, any defaulted obligation
of the Master Servicer hereunder or exercise the rights of the Master Servicer
hereunder; provided that the Master Servicer shall not be relieved of any of its
obligations hereunder by virtue of such performance by the Depositor or its
designee. Neither the Depositor nor the Trustee shall have the responsibility or
liability for any action or failure to act by the Master Servicer and they are
not obligated to supervise the performance of the Master Servicer under this
Agreement or otherwise.
Section 3.21. [Reserved].
Section 3.22. Advance Facility.
(a) The Master Servicer is hereby authorized to enter into a financing
or other facility (any such arrangement, an "Advance Facility") under which (1)
the Master Servicer sells, assigns or pledges to another Person (an "Advancing
Person") the Master Servicer's rights under this Agreement to be reimbursed for
any Advances or Servicing Advances and/or (2) an Advancing Person agrees to fund
some or all Advances and/or Servicing Advances required to be made by the Master
Servicer pursuant to this Agreement. No consent of the Depositor, the Trustee,
the Certificateholders or any other party shall be required before the Master
Servicer may enter into an Advance Facility. Notwithstanding the existence of
any Advance Facility under which an Advancing Person agrees to fund Advances
and/or Servicing Advances on the Master Servicer's behalf, the Master Servicer
shall remain obligated pursuant to this Agreement to make Advances and Servicing
Advances pursuant to and as required by this Agreement. If the Master Servicer
enters into an Advance Facility, and for so long as an Advancing Person remains
entitled to receive reimbursement for any Advances including Nonrecoverable
Advances ("Advance Reimbursement Amounts") and/or Servicing Advances including
Nonrecoverable Advances ("Servicing Advance Reimbursement Amounts" and together
with Advance Reimbursement Amounts, "Reimbursement Amounts") (in each case to
the extent such type of Reimbursement Amount is included in the Advance
Facility), as applicable, pursuant to this Agreement, then the Master Servicer
shall identify such Reimbursement Amounts consistent with the reimbursement
rights set forth in Section 3.10(a)(ii) and (vii) and remit such Reimbursement
Amounts in accordance with this Section 3.22 or otherwise in accordance with the
documentation establishing the Advance Facility to such Advancing Person or to a
trustee, agent or custodian (an "Advance Facility Trustee") designated by such
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Advancing Person in an Advance Facility Notice described below in Section
3.22(b). Notwithstanding the foregoing, if so required pursuant to the terms of
the Advance Facility, the Master Servicer may direct, and if so directed in
writing, the Trustee is hereby authorized to and shall pay to the Advance
Facility Trustee the Reimbursement Amounts identified pursuant to the preceding
sentence. An Advancing Person whose obligations hereunder are limited to the
funding of Advances and/or Servicing Advances shall not be required to meet the
qualifications of a Master Servicer or a Subservicer pursuant to Section 3.02(a)
or 6.02(c) hereof and shall not be deemed to be a Subservicer under this
Agreement. Notwithstanding anything to the contrary herein, in no event shall
Advance Reimbursement Amounts or Servicing Advance Reimbursement Amounts be
included in the Available Distribution Amount or distributed to
Certificateholders.
(b) If the Master Servicer enters into an Advance Facility and makes the
election set forth in Section 3.22(a), the Master Servicer and the related
Advancing Person shall deliver to the Trustee a written notice and payment
instruction (an "Advance Facility Notice"), providing the Trustee with written
payment instructions as to where to remit Advance Reimbursement Amounts and/or
Servicing Advance Reimbursement Amounts (each to the extent such type of
Reimbursement Amount is included within the Advance Facility) on subsequent
Distribution Dates. The payment instruction shall require the applicable
Reimbursement Amounts to be distributed to the Advancing Person or to an Advance
Facility Trustee designated in the Advance Facility Notice. An Advance Facility
Notice may only be terminated by the joint written direction of the Master
Servicer and the related Advancing Person (and any related Advance Facility
Trustee).
(c) Reimbursement Amounts shall consist solely of amounts in respect of
Advances and/or Servicing Advances made with respect to the Mortgage Loans for
which the Master Servicer would be permitted to reimburse itself in accordance
with Section 3.10(a)(ii) and (vii) hereof, assuming the Master Servicer or the
Advancing Person had made the related Advance(s) and/or Servicing Advance(s).
Notwithstanding the foregoing, except with respect to reimbursement of
Nonrecoverable Advances as set forth in Section 3.10(c) of this Agreement, no
Person shall be entitled to reimbursement from funds held in the Certificate
Account for future distribution to Certificateholders pursuant to this
Agreement. Neither the Depositor nor the Trustee shall have any duty or
liability with respect to the calculation of any Reimbursement Amount, nor shall
the Depositor or the Trustee have any responsibility to track or monitor the
administration of the Advance Facility and the Depositor shall not have any
responsibility to track, monitor or verify the payment of Reimbursement Amounts
to the related Advancing Person or Advance Facility Trustee. The Master Servicer
shall maintain and provide to any successor master servicer a detailed
accounting on a loan-by-loan basis as to amounts advanced by, sold, pledged or
assigned to, and reimbursed to any Advancing Person. The successor master
servicer shall be entitled to rely on any such information provided by the
Master Servicer, and the successor master servicer shall not be liable for any
errors in such information.
(d) Upon the direction of and at the expense of the Master Servicer, the
Trustee agrees to execute such acknowledgments, certificates, and other
documents reasonably satisfactory to the Trustee provided by the Master Servicer
and reasonable satisfactory to the Trustee recognizing the interests of any
Advancing Person or Advance Facility Trustee in such Reimbursement Amounts as
the Master Servicer may cause to be made subject to Advance Facilities pursuant
to this Section 3.22, and such other documents in connection with such Advance
Facility as may be reasonably requested from time to time by any Advancing
Person or Advance Facility Trustee and reasonably satisfactory to the Trustee.
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(e) Reimbursement Amounts collected with respect to each Mortgage Loan
shall be allocated to outstanding unreimbursed Advances or Servicing Advances
(as the case may be) made with respect to that Mortgage Loan on a "first-in,
first out" ("FIFO") basis, subject to the qualifications set forth below:
(i) Any successor Master Servicer to Residential Funding (a
"Successor Master Servicer") and the Advancing Person or Advance
Facility Trustee shall be required to apply all amounts available in
accordance with this Section 3.22(e) to the reimbursement of Advances
and Servicing Advances in the manner provided for herein; provided,
however, that after the succession of a Successor Master Servicer, (A)
to the extent that any Advances or Servicing Advances with respect to
any particular Mortgage Loan are reimbursed from payments or recoveries,
if any, from the related Mortgagor, and Liquidation Proceeds or
Insurance Proceeds, if any, with respect to that Mortgage Loan,
reimbursement shall be made, first, to the Advancing Person or Advance
Facility Trustee in respect of Advances and/or Servicing Advances
related to that Mortgage Loan to the extent of the interest of the
Advancing Person or Advance Facility Trustee in such Advances and/or
Servicing Advances, second to the Master Servicer in respect of Advances
and/or Servicing Advances related to that Mortgage Loan in excess of
those in which the Advancing Person or Advance Facility Trustee Person
has an interest, and third, to the Successor Master Servicer in respect
of any other Advances and/or Servicing Advances related to that Mortgage
Loan, from such sources as and when collected, and (B) reimbursements of
Advances and Servicing Advances that are Nonrecoverable Advances shall
be made pro rata to the Advancing Person or Advance Facility Trustee, on
the one hand, and any such Successor Master Servicer, on the other hand,
on the basis of the respective aggregate outstanding unreimbursed
Advances and Servicing Advances that are Nonrecoverable Advances owed to
the Advancing Person, Advance Facility Trustee or Master Servicer
pursuant to this Agreement, on the one hand, and any such Successor
Master Servicer, on the other hand, and without regard to the date on
which any such Advances or Servicing Advances shall have been made. In
the event that, as a result of the FIFO allocation made pursuant to this
Section 3.22(e), some or all of a Reimbursement Amount paid to the
Advancing Person or Advance Facility Trustee relates to Advances or
Servicing Advances that were made by a Person other than Residential
Funding or the Advancing Person or Advance Facility Trustee, then the
Advancing Person or Advance Facility Trustee shall be required to remit
any portion of such Reimbursement Amount to the Person entitled to such
portion of such Reimbursement Amount. Without limiting the generality of
the foregoing, Residential Funding shall remain entitled to be
reimbursed by the Advancing Person or Advance Facility Trustee for all
Advances and Servicing Advances funded by Residential Funding to the
extent the related Reimbursement Amount(s) have not been assigned or
pledged to an Advancing Person or Advance Facility Trustee. The
documentation establishing any Advance Facility shall require
Residential Funding to provide to the related Advancing Person or
Advance Facility Trustee loan by loan information with respect to each
Reimbursement Amount distributed to such Advancing Person or Advance
Facility Trustee on each date of remittance thereof to such Advancing
Person or Advance Facility Trustee, to enable the Advancing Person or
Advance Facility Trustee to make the FIFO allocation of each
Reimbursement Amount with respect to each Mortgage Loan.
(ii) By way of illustration, and not by way of limiting the
generality of the foregoing, if the Master Servicer resigns or is
terminated at a time when the Master Servicer is a party to an Advance
Facility, and is replaced by a Successor Master Servicer, and the
Successor Master Servicer directly funds Advances or Servicing Advances
with respect to a Mortgage Loan and does not assign or pledge the
related Reimbursement Amounts to the related Advancing Person or Advance
Facility Trustee, then all payments and recoveries received from the
related Mortgagor or received in the form of Liquidation Proceeds with
respect to such Mortgage Loan (including Insurance Proceeds collected in
connection with a liquidation of such Mortgage Loan) will be allocated
first to the Advancing Person or Advance Facility Trustee until the
related Reimbursement Amounts attributable to such Mortgage Loan that
are owed to the Master Servicer and the Advancing Person, which were
made prior to any Advances or Servicing Advances made by the Successor
Master Servicer, have been reimbursed in full, at which point the
Successor Master Servicer shall be entitled to retain all related
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Reimbursement Amounts subsequently collected with respect to that
Mortgage Loan pursuant to Section 3.10 of this Agreement. To the extent
that the Advances or Servicing Advances are Nonrecoverable Advances to
be reimbursed on an aggregate basis pursuant to Section 3.10 of this
Agreement, the reimbursement paid in this manner will be made pro rata
to the Advancing Person or Advance Facility Trustee, on the one hand,
and the Successor Master Servicer, on the other hand, as described in
clause (i)(B) above.
(f) The Master Servicer shall remain entitled to be reimbursed for all
Advances and Servicing Advances funded by the Master Servicer to the extent the
related rights to be reimbursed therefor have not been sold, assigned or pledged
to an Advancing Person.
(g) Any amendment to this Section 3.22 or to any other provision of this
Agreement that may be necessary or appropriate to effect the terms of an Advance
Facility as described generally in this Section 3.22, including amendments to
add provisions relating to a successor master servicer, may be entered into by
the Trustee, the Depositor and the Master Servicer without the consent of any
Certificateholder, with written confirmation from each Rating Agency that the
amendment will not result in the reduction of the ratings on any class of the
Certificates below the lesser of the then current or original ratings on such
Certificates and delivery of an Opinion of Counsel as required under Section
11.01(c), notwithstanding anything to the contrary in Section 11.01 of or
elsewhere in this Agreement.
(h) Any rights of set-off that the Trust Fund, the Trustee, the
Depositor, any Successor Master Servicer or any other Person might otherwise
have against the Master Servicer under this Agreement shall not attach to any
rights to be reimbursed for Advances or Servicing Advances that have been sold,
transferred, pledged, conveyed or assigned to any Advancing Person.
(i) At any time when an Advancing Person shall have ceased funding
Advances and/or Servicing Advances (as the case may be) and the Advancing Person
or related Advance Facility Trustee shall have received Reimbursement Amounts
sufficient in the aggregate to reimburse all Advances and/or Servicing Advances
(as the case may be) the right to reimbursement for which were assigned to the
Advancing Person, then upon the delivery of a written notice signed by the
Advancing Person and the Master Servicer or its successor or assign) to the
Trustee terminating the Advance Facility Notice (the "Notice of Facility
Termination"), the Master Servicer or its Successor Master Servicer shall again
be entitled to withdraw and retain the related Reimbursement Amounts from the
Custodial Account pursuant to Section 3.10.
(j) After delivery of any Advance Facility Notice, and until any such
Advance Facility Notice has been terminated by a Notice of Facility Termination,
this Section 3.22 may not be amended or otherwise modified without the prior
written consent of the related Advancing Person.
Section 3.23. Special Servicing.
(a) Subject to the conditions described in Section 3.23(b) below, the
Holder of the Class SB Certificates may (but is not obligated to) appoint a
special servicer (each, a "Special Servicer") to service any Mortgage Loan which
is delinquent in payment by 120 days or more as of the related Special Servicing
Transfer Date; provided, however, that the aggregate Stated Principal Balance of
Mortgage Loans transferred to a Special Servicer pursuant to this Section shall
not equal or exceed 10% of the Cut-off Date Balance. The Holder of the Class SB
Certificates shall give the Trustee and the Master Servicer not less than 40
days prior written notice of the date on which it anticipates the transfer of
servicing with respect to any Mortgage Loan to a Special Servicer to occur (the
"Special Servicing Transfer Date"), specifying (i) the Mortgage Loan(s) that it
intends to transfer and (ii) the related Special Servicer.
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(b) Any Special Servicer appointed pursuant to Section 3.23(a) above
shall (i) be rated in one of the two highest rating categories as a special
servicer by at least two of Standard & Poor's, Xxxxx'x and Xxxxx Ratings, (ii)
satisfy and be subject to all requirements and obligations of a Subservicer
under this Agreement, including but not limited to, servicing in accordance with
the Program Guide and this Agreement, (iii) be approved by the Master Servicer
(which approval shall not be unreasonably withheld), (iv) be capable of full
compliance with Regulation AB and (v) sign an acknowledgement agreeing to be
bound by this Agreement. In addition, no Special Servicer may modify a Mortgage
Loan without the prior written consent of the Master Servicer and such
modification shall be in compliance with Section 3.07(a) hereof.
(c) In connection with the transfer of the servicing of any Mortgage
Loan to a Special Servicer, the Master Servicer or Subservicer of such Mortgage
Loan (the "Transferring Servicer") shall, at such Special Servicer's expense,
deliver to such Special Servicer all documents and records relating to such
Mortgage Loan and an accounting of amounts collected or held by it and otherwise
use its best efforts to effect the orderly and efficient transfer of the
servicing of such Mortgage Loan to such Special Servicer. Such Special Servicer
shall thereupon assume all of the rights and obligations of the Transferring
Servicer hereunder arising from and after the Special Servicing Transfer Date,
including the right to receive the related Subservicing Fee from payments of
interest received on such Mortgage Loan (and shall have no rights or entitlement
to compensation greater than that of the Transferring Servicer with respect to
such Mortgage Loan) and the Transferring Servicer shall have no further rights
or obligations hereunder with respect to such Mortgage Loan (except that the
Master Servicer shall remain obligated to master service such Mortgage Loan
pursuant to this Agreement). In connection with the transfer of the servicing of
any Mortgage Loan to a Special Servicer, the Master Servicer shall amend the
Mortgage Loan Schedule to reflect that such Mortgage Loans are subserviced by
such Special Servicer.
(d) On any Special Servicing Transfer Date, the related Special Servicer
shall reimburse the Transferring Servicer for all unreimbursed Advances,
Servicing Advances and Servicing Fees, as applicable, relating to the Mortgage
Loans for which the servicing is being transferred. The related Special Servicer
shall be entitled to be reimbursed pursuant to Section 3.10 or otherwise
pursuant to this Agreement for all such Advances, Servicing Advances and
Servicing Fees, as applicable, paid to the Transferring Servicer pursuant to
this Section 3.23. In addition, in the event that the Transferring Servicer is a
Subservicer, the Holder of the Class SB Certificates or the related Special
Servicer shall pay any termination fees due to such Transferring Servicer
pursuant to the applicable Subservicing Agreement.
(e) Each Special Servicer agrees to indemnify and hold the Master
Servicer and the Transferring Servicer harmless from and against any and all
losses, claims, expenses, costs or liabilities (including attorneys fees and
court costs) incurred by the Master Servicer or Transferring Servicer, as
applicable, as a result of or in connection with the failure by such Special
Servicer to perform the obligations or responsibilities imposed upon or
undertaken by such Special Servicer under this Agreement from and after the
related Special Servicing Transfer Date. The Master Servicer agrees to indemnify
and hold each Special Servicer harmless from and against any and all losses,
claims, expenses, costs or liabilities (including attorneys fees and court
costs) incurred by such Special Servicer as a result of or in connection with
the failure by the Master Servicer to perform the obligations or
responsibilities imposed upon or undertaken by the Master Servicer under this
Agreement.
Section 3.24. Credit Risk Manager.
For and on behalf of the Trust, the Credit Risk Manager will monitor the
performance of the Master Servicer, and make recommendations to the Master
Servicer regarding certain Delinquent and defaulted Mortgage Loans and will
report on the performance of such Mortgage Loans, pursuant to the Credit Risk
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Management Agreement. Such reports and recommendations will be based upon
information provided to the Credit Risk Manager pursuant to the Credit Risk
Management Agreement, and the Credit Risk Manager shall look solely to the
Master Servicer for all information and data (including loss and delinquency
information and data) relating to the servicing of the Mortgage Loans.
Section 3.25. Limitation Upon Liability of the Credit Risk Manager.
Neither the Credit Risk Manager, nor any of its directors, officers,
employees, or agents shall be under any liability to the Trustee, the
Certificateholders, the Master Servicer and/or the Depositor for any action
taken or for refraining from the taking of any action made in good faith
pursuant to this Agreement, in reliance upon information provided by the Master
Servicer under the Credit Risk Management Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Credit Risk Manager
or any such person against liability that would otherwise be imposed by reason
of willful malfeasance or bad faith in its performance of its duties. The Credit
Risk Manager and any director, officer, employee, or agent of the Credit Risk
Manager may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising hereunder,
and may rely in good faith upon the accuracy of information furnished by the
Master Servicer pursuant to the Credit Risk Management Agreement in the
performance of its duties thereunder and hereunder.
Section 3.26. Removal of the Credit Risk Manager.
The Credit Risk Manager may be removed as Credit Risk Manager by
Certificateholders holding not less than 66 2/3% of the Voting Rights in the
Trust Fund, in the exercise of its or their sole discretion. The
Certificateholders shall provide written notice of the Credit Risk Manager's
removal to the Trustee. Upon receipt of such notice, the Trustee shall provide
written notice to the Credit Risk Manager and the Master Servicer of its
removal, which shall be effective upon receipt of such notice by the Credit Risk
Manager and the Master Servicer. Notwithstanding the foregoing, the termination
of the Credit Risk Manager pursuant to this Section shall not become effective
until the appointment of a successor Credit Risk Manager.
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
Section 4.01. Certificate Account.
(a) The Master Servicer acting as agent of the Trustee shall establish
and maintain a Certificate Account in which the Master Servicer shall cause to
be deposited on behalf of the Trustee on or before 2:00 P.M. New York time on
each Certificate Account Deposit Date by wire transfer of immediately available
funds an amount equal to the sum of (i) any Advance for the immediately
succeeding Distribution Date, (ii) any amount required to be deposited in the
Certificate Account pursuant to Section 3.12(a), (iii) any amount required to be
deposited in the Certificate Account pursuant to Section 3.16(e) or Section
4.07, (iv) any amount required to be paid pursuant to Section 9.01, and (v)
other amounts constituting the Available Distribution Amount for the immediately
succeeding Distribution Date.
(b) On or prior to the Business Day immediately following each
Determination Date, the Master Servicer shall determine any amounts owed by the
Swap Counterparty under the Swap Agreement and inform the Supplemental Interest
Trust Trustee in writing of the amount so calculated. On or prior to each
Distribution Date, the Master Servicer shall withdraw from the Custodial Account
an amount equal to the Credit Risk Manager Fee for such Distribution Date and
shall pay such amount to the Credit Risk Manager.
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(c) The Trustee shall, upon written request from the Master Servicer,
invest or cause the institution maintaining the Certificate Account to invest
the funds in the Certificate Account in Permitted Investments designated in the
name of the Trustee for the benefit of the Certificateholders, which shall
mature not later than the Business Day next preceding the Distribution Date next
following the date of such investment (except that (i) if such Permitted
Investment is an obligation of the institution that maintains such account or
fund for which such institution serves as custodian, then such Permitted
Investment may mature on such Distribution Date and (ii) any other investment
may mature on such Distribution Date if the Trustee shall advance funds on such
Distribution Date to the Certificate Account in the amount payable on such
investment on such Distribution Date, pending receipt thereof to the extent
necessary to make distributions on the Certificates) and shall not be sold or
disposed of prior to maturity. All income and gain realized from any such
investment shall be for the benefit of the Master Servicer and shall be subject
to its withdrawal or order from time to time. The amount of any losses incurred
in respect of any such investments shall be deposited in the Certificate Account
by the Master Servicer out of its own funds immediately as realized.
Section 4.02. Distributions.
(a) On each Distribution Date, the Trustee (or the Paying Agent on
behalf of the Trustee) shall allocate and distribute the Available Distribution
Amount, if any, for such date to the interests issued in respect of REMIC I,
REMIC II and REMIC III as specified in this Section.
(b) (1) On each Distribution Date, the REMIC I Distribution Amount
shall be distributed by REMIC I to REMIC II on account of the REMIC I Regular
Interests in the amounts and with the priorities set forth in the definition
thereof.
(2) On each Distribution Date, the REMIC II Distribution Amount
shall be distributed by REMIC II to REMIC III on account of the REMIC II
Regular Interests in the amounts and with the priorities set forth in the
definition thereof.
(3) On each Distribution Date, the REMIC III Distribution Amount
shall be deemed to have been distributed by REMIC III to the
Certificateholders on account of the REMIC III Regular Interests
represented thereby in the amounts and with the priorities set forth in the
definition thereof.
(4) On each Distribution Date, the amount, if any, deemed
received by the Class SB Certificate in respect of the REMIC III Regular
Interest IO and under the SB-AB Swap Agreement shall be deemed to have been
paid on behalf of the Class SB Certificate by the Supplemental Interest
Trust Trustee pursuant to Section 4.10 in respect of the Net Swap Payment
owed to the Swap Counterparty. On each Distribution Date, the amount, if
any, received by the Supplemental Interest Trust Trustee from the Swap
Counterparty in respect of the Swap Agreement shall be deemed to have been
received by the Supplemental Interest Trust Trustee on behalf of the Class
SB Certificate. On each Distribution Date, amounts paid to the Class A and
Class M Certificates pursuant to Section 4.02(c)(vii) in respect of Basis
Risk Shortfall shall be deemed to have been paid by the Class SB
Certificateholder pursuant to the SB-AM Swap Agreement.
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(c) On each Distribution Date (x) the Master Servicer on behalf of the
Trustee or (y) the Paying Agent appointed by the Trustee and the Supplemental
Interest Trust Trustee, shall distribute to each Certificateholder of record on
the next preceding Record Date (other than as provided in Section 9.01
respecting the final distribution) either in immediately available funds (by
wire transfer or otherwise) to the account of such Certificateholder at a bank
or other entity having appropriate facilities therefor, if such
Certificateholder has so notified the Master Servicer or the Paying Agent, as
the case may be, or, if such Certificateholder has not so notified the Master
Servicer or the Paying Agent by the Record Date, by check mailed to such
Certificateholder at the address of such Holder appearing in the Certificate
Register such Certificateholder's share (which share with respect to each Class
of Certificates, shall be based on the aggregate of the Percentage Interests
represented by Certificates of the applicable Class held by such Holder of the
following amounts), in the following order of priority, in each case to the
extent of the Available Distribution Amount on deposit in the Certificate
Account and the Supplemental Interest Trust Account pursuant to Section 4.10(c)
(or, with respect to clause (xi)(B) below, to the extent of prepayment charges
on deposit in the Certificate Account):
(i) to the Class A Certificateholders, the Accrued Certificate
Interest payable on the Class A Certificates with respect to such
Distribution Date, plus any related amounts accrued pursuant to this
clause (i) but remaining unpaid from any prior Distribution Date, being
paid from and in reduction of the Available Distribution Amount for such
Distribution Date;
(ii) to the Class M Certificateholders, from the amount, if any,
of the Available Distribution Amount remaining after the foregoing
distributions, Accrued Certificate Interest payable on the Class M
Certificates with respect to such Distribution Date, plus any related
amounts accrued pursuant to this clause (ii) but remaining unpaid from
any prior Distribution Date, sequentially, to the Class M-1
Certificateholders, Class M-2 Certificateholders, Class M-3
Certificateholders, Class M-4 Certificateholders, Class M-5
Certificateholders, Class M-6 Certificateholders, Class M-7
Certificateholders, Class M-8 Certificateholders and Class M-9
Certificateholders, in that order, being paid from and in reduction of
the Available Distribution Amount for such Distribution Date;
(iii) [reserved];
(iv) the Principal Distribution Amount shall be distributed as
follows, to be applied to reduce the Certificate Principal Balance of
the applicable Certificates in each case to the extent of the remaining
Principal Distribution Amount:
(A) first, the Class A Principal Distribution Amount
shall be distributed sequentially to the Class A-1
Certificateholders, Class A-2 Certificateholders, Class A-3
Certificateholders and Class A-4 Certificateholders, in that
order, in each case until the Certificate Principal Balance
thereof is reduced to zero;
(B) second, to the Class M-1 Certificateholders, the
Class M-1 Principal Distribution Amount, until the Certificate
Principal Balance of the Class M-1 Certificates has been reduced
to zero;
(C) third, to the Class M-2 Certificateholders, the
Class M-2 Principal Distribution Amount, until the Certificate
Principal Balance of the Class M-2 Certificates has been reduced
to zero;
(D) fourth, to the Class M-3 Certificateholders, the
Class M-3 Principal Distribution Amount, until the Certificate
Principal Balance of the Class M-3 Certificates has been reduced
to zero;
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(E) fifth, to the Class M-4 Certificateholders, the
Class M-4 Principal Distribution Amount, until the Certificate
Principal Balance of the Class M-4 Certificates has been reduced
to zero;
(F) sixth, to the Class M-5 Certificateholders, the
Class M-5 Principal Distribution Amount, until the Certificate
Principal Balance of the Class M-5 Certificates has been reduced
to zero;
(G) seventh, to the Class M-6 Certificateholders, the
Class M-6 Principal Distribution Amount, until the Certificate
Principal Balance of the Class M-6 Certificates has been reduced
to zero;
(H) eighth, to the Class M-7 Certificateholders, the
Class M-7 Principal Distribution Amount, until the Certificate
Principal Balance of the Class M-7 Certificates has been reduced
to zero;
(I) ninth, to the Class M-8 Certificateholders, the
Class M-8 Principal Distribution Amount, until the Certificate
Principal Balance of the Class M-8 Certificates has been reduced
to zero; and
(J) tenth, to the Class M-9 Certificateholders, the
Class M-9 Principal Distribution Amount, until the Certificate
Principal Balance of the Class M-9 Certificates has been reduced
to zero; and
(v) to the Class A Certificateholders and Class M
Certificateholders, the amount of any Prepayment Interest Shortfalls
allocated thereto for such Distribution Date, on a pro rata basis based
on Prepayment Interest Shortfalls allocated thereto to the extent not
offset by Eligible Master Servicing Compensation on such Distribution
Date;
(vi) to the Class A Certificateholders and Class M
Certificateholders, the amount of any Prepayment Interest Shortfalls
previously allocated thereto remaining unpaid from prior Distribution
Dates together with interest thereon at the related Pass-Through Rate,
on a pro rata basis based on unpaid Prepayment Interest Shortfalls
previously allocated thereto;
(vii) to the Class A Certificateholders, the amount of any
unpaid Basis Risk Shortfalls allocated thereto, on a pro rata basis
based on the amount of unpaid Basis Risk Shortfalls allocated thereto,
and then 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 M-9, in that
order, the amount of any unpaid Basis Risk Shortfalls allocated thereto;
(viii) to the Class A Certificateholders and Class M
Certificateholders, Relief Act Shortfalls allocated thereto for such
Distribution Date, on a pro rata basis based on Relief Act Shortfalls
allocated thereto for such Distribution Date,
(ix) first, to the Class A Certificateholders, the principal
portion of any Realized Losses previously allocated to those
Certificates and remaining unreimbursed, on a pro rata basis based on
their respective principal portion of any Realized Losses previously
allocated to those Certificates and remaining unreimbursed, and then,
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 M-9, in that order, the
principal portion of any Realized Losses previously allocated to such
Class and remaining unreimbursed;
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(x) to the Supplemental Interest Trust Account for payment to
the Swap Counterparty, any Swap Termination Payments due to a Swap
Counterparty Trigger Event;
(xi) to the Class SB Certificates, (A) from the amount, if any,
of the Excess Cash Flow remaining after the foregoing distributions, the
sum of (I) Accrued Certificate Interest thereon, (II) the amount of any
Overcollateralization Reduction Amount for such Distribution Date and
(III) for any Distribution Date after the Certificate Principal Balance
of each Class of Class A Certificates and Class M Certificates has been
reduced to zero, the Overcollateralization Amount, (B) from prepayment
charges on deposit in the Certificate Account, any prepayment charges
received on the Mortgage Loans during the related Prepayment Period and
(C) from Net Swap Payments received by the Supplemental Interest Trust
Trustee, if any, the amount of such Net Swap Payments remaining after
the foregoing distributions; and
(xii) to the Holders of Component III of the Class R
Certificates, the balance, if any, of the Excess Cash Flow.
(d) Notwithstanding the foregoing clause (c), upon the reduction of the
Certificate Principal Balance of a Class of Class A Certificates or Class M
Certificates to zero, such Class of Certificates will not be entitled to further
distributions pursuant to Section 4.02.
(e) Each distribution with respect to a Book-Entry Certificate shall be
paid to the Depository, as Holder thereof, and the Depository shall be
responsible for crediting the amount of such distribution to the accounts of its
Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such distribution to
the Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Certificate Owners that it represents. None of the Trustee, the
Certificate Registrar, the Depositor or the Master Servicer shall have any
responsibility therefor except as otherwise provided by this Agreement or
applicable law.
(f) Except as otherwise provided in Section 9.01, if the Master Servicer
anticipates that a final distribution with respect to any Class of Certificates
will be made on a future Distribution Date, the Master Servicer shall, no later
than 40 days prior to such final distribution, notify the Trustee and the
Trustee shall, not earlier than the 15th day and not later than the 25th day of
the month next preceding the month of such final distribution, distribute, or
cause to be distributed, to each Holder of such Class of Certificates a notice
to the effect that: (i) the Trustee anticipates that the final distribution with
respect to such Class of Certificates will be made on such Distribution Date but
only upon presentation and surrender of such Certificates at the office of the
Trustee or as otherwise specified therein, and (ii) no interest shall accrue on
such Certificates from and after the end of the prior calendar month. In the
event that Certificateholders required to surrender their Certificates pursuant
to Section 9.01(c) do not surrender their Certificates for final cancellation,
the Trustee shall cause funds distributable with respect to such Certificates to
be withdrawn from the Certificate Account and credited to a separate escrow
account for the benefit of such Certificateholders as provided in Section
9.01(d).
Section 4.03. Statements to Certificateholders; Statements to R ating
Agencies; Exchange Act Reporting.
(a) Concurrently with each distribution charged to the Certificate
Account and with respect to each Distribution Date the Master Servicer shall
forward to the Trustee and the Credit Risk Manager and the Trustee shall forward
by mail or otherwise make available electronically on its website (which may be
obtained by any Certificateholder by telephoning the Trustee at (000) 000-0000)
to each Holder and the Depositor a statement setting forth the following
information as to each Class of Certificates, in each case to the extent
applicable:
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(i) the applicable Record Date, Determination Date and
Distribution Date, and the date on which the applicable Interest Accrual
Period commenced;
(ii) the aggregate amount of payments received with respect to
the Mortgage Loans, including prepayment amounts;
(iii) the Servicing Fee and Subservicing Fee payable to the
Master Servicer and the Subservicer;
(iv) the amount of any other fees or expenses paid, and the
identity of the party receiving such fees or expenses;
(v) (A) the amount of such distribution to the
Certificateholders of such Class applied to reduce the Certificate
Principal Balance thereof, and (B) the aggregate amount included therein
representing Principal Prepayments;
(vi) the amount of such distribution to Holders of such Class of
Certificates allocable to interest (including amounts payable as a
portion of the Excess Cash Flow);
(vii) if the distribution to the Holders of such Class of
Certificates is less than the full amount that would be distributable to
such Holders if there were sufficient funds available therefor, the
amount of the shortfall;
(viii) the Certificate Principal Balance of each Class of the
Certificates, before and after giving effect to the amounts distributed
on such Distribution Date, separately identifying any reduction thereof
due to Realized Losses other than pursuant to an actual distribution of
principal;
(ix) the Certificate Principal Balance of each Class of Class A
Certificates as of the Closing Date;
(x) the Certificate Principal Balance of each Class of Class M
Certificates as of the Closing Date;
(xi) the number and Stated Principal Balance of the Mortgage
Loans after giving effect to the distribution of principal on such
Distribution Date and the number of Mortgage Loans at the beginning and
end of the related Due Period;
(xii) on the basis of the most recent reports furnished to it by
Subservicers, (A) the number and Stated Principal Balances of Mortgage
Loans that are Delinquent (1) 30-59 days, (2) 60-89 days and (3) 90 or
more days and the number and Stated Principal Balance of Mortgage Loans
that are in foreclosure, (B) the number and Stated Principal Balances of
the Mortgage Loans in the aggregate that are Reportable Modified
Mortgage Loans that are in foreclosure and are REO Property, indicating
in each case capitalized Mortgage Loans, other Servicing Modifications
and totals, and (C) for all Reportable Modified Mortgage Loans, the
number and Stated Principal Balances of the Mortgage Loans in the
aggregate that have been liquidated, the subject of pay-offs and that
have been repurchased by the Master Servicer or Seller;
(xiii) the amount, terms and general purpose of any Advance by
the Master Servicer pursuant to Section 4.04 and the amount of all
Advances that have been reimbursed during the related Due Period;
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(xiv) any material modifications, extensions or waivers to the
terms of the Mortgage Loans during the Due Period or that have
cumulatively become material over time;
(xv) any material breaches of Mortgage Loan representations or
warranties or covenants in the Agreement;
(xvi) the number, aggregate principal balance and Stated
Principal Balance of any REO Properties with respect to the Mortgage
Loans;
(xvii) the aggregate Accrued Certificate Interest remaining
unpaid, if any, for each Class of Certificates, after giving effect to
the distribution made on such Distribution Date;
(xviii) the aggregate amount of Realized Losses with respect to
the Mortgage Loans for such Distribution Date and the aggregate amount
of Realized Losses with respect to the Mortgage Loans incurred since the
Cut-off Date;
(xix) the Pass-Through Rate on each Class of Certificates and
the Net WAC Cap Rate;
(xx) the Basis Risk Shortfalls and Prepayment Interest
Shortfalls;
(xxi) the Overcollateralization Amount and the Required
Overcollateralization Amount following such Distribution Date;
(xxii) the number and Stated Principal Balance of the Mortgage
Loans repurchased under Section 4.07;
(xxiii) the aggregate amount of any recoveries with respect to
the Mortgage Loans on previously foreclosed loans from Residential
Funding;
(xxiv) the weighted average remaining term to maturity of the
Mortgage Loans after giving effect to the amounts distributed on such
Distribution Date;
(xxv) the weighted average Mortgage Rates of the Mortgage Loans
after giving effect to the amounts distributed on such Distribution
Date;
(xxvi) the amount of any Net Swap Payment payable to the
Supplemental Interest Trust Trustee on behalf of the Supplemental
Interest Trust, any Net Swap Payment payable to the Swap Counterparty,
any Swap Termination Payment payable to the Trustee on behalf of the
Supplemental Interest Trust and any Swap Termination Payment payable to
the Swap Counterparty; and
(xxvii) the occurrence of the Stepdown Date.
In the case of information furnished pursuant to clauses (i) and (ii)
above, the amounts shall be expressed as a dollar amount per Certificate with a
$1,000 denomination. In addition to the statement provided to the Trustee as set
forth in this Section 4.03(a), the Master Servicer shall provide to any manager
of a trust fund consisting of some or all of the Certificates, upon reasonable
request, such additional information as is reasonably obtainable by the Master
Servicer at no additional expense to the Master Servicer. Also, at the request
of a Rating Agency, the Master Servicer shall provide the information relating
to the Reportable Modified Mortgage Loans substantially in the form attached
hereto as Exhibit U to such Rating Agency within a reasonable period of time;
provided, however, that the Master Servicer shall not be required to provide
such information more than four times in a calendar year to any Rating Agency.
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(b) Within a reasonable period of time after it receives a written
request from a Holder of a Certificate, other than a Class R Certificate, the
Master Servicer shall prepare, or cause to be prepared, and shall forward, or
cause to be forwarded, to each Person who at any time during the calendar year
was the Holder of a Certificate, other than a Class R Certificate, a statement
containing the information set forth in clauses (iv) and (v) of subsection (a)
above aggregated for such calendar year or applicable portion thereof during
which such Person was a Certificateholder. Such obligation of the Master
Servicer shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Master Servicer pursuant to any
requirements of the Code.
(c) Within a reasonable period of time after the it receives a written
request from any Holder of a Class R Certificate, the Master Servicer shall
prepare, or cause to be prepared, and shall forward, or cause to be forwarded,
to each Person who at any time during the calendar year was the Holder of a
Class R Certificate, a statement containing the applicable distribution
information provided pursuant to this Section 4.03 aggregated for such calendar
year or applicable portion thereof during which such Person was the Holder of a
Class R Certificate. Such obligation of the Master Servicer shall be deemed to
have been satisfied to the extent that substantially comparable information
shall be provided by the Master Servicer pursuant to any requirements of the
Code.
(d) Upon the written request of any Certificateholder, the Master
Servicer, as soon as reasonably practicable, shall provide the requesting
Certificateholder with such information as is necessary and appropriate, in the
Master Servicer's sole discretion, for purposes of satisfying applicable
reporting requirements under Rule 144A.
(e) The Master Servicer shall, on behalf of the Depositor and in respect
of the Trust Fund, sign and cause to be filed with the Commission any periodic
reports required to be filed under the provisions of the Exchange Act, and the
rules and regulations of the Commission thereunder, including without
limitation, reports on Form 10-K, Form 10-D and Form 8-K. In connection with the
preparation and filing of such periodic reports, the Trustee shall timely
provide to the Master Servicer (I) a list of Certificateholders as shown on the
Certificate Register as of the end of each calendar year, (II) copies of all
pleadings, other legal process and any other documents relating to any claims,
charges or complaints involving the Trustee, as trustee hereunder, or the Trust
Fund that are received by a Responsible Officer of the Trustee, (III) notice of
all matters that, to the actual knowledge of a Responsible Officer of the
Trustee, have been submitted to a vote of the Certificateholders, other than
those matters that have been submitted to a vote of the Certificateholders at
the request of the Depositor or the Master Servicer, and (IV) notice of any
failure of the Trustee to make any distribution to the Certificateholders as
required pursuant to this Agreement. Neither the Master Servicer nor the Trustee
shall have any liability with respect to the Master Servicer's failure to
properly prepare or file such periodic reports resulting from or relating to the
Master Servicer's inability or failure to obtain any information not resulting
from the Master Servicer's own negligence or willful misconduct.
(f) Any Form 10-K filed with the Commission in connection with this
Section 4.03 shall include, with respect to the Certificates relating to such
10-K:
(i) A certification, signed by the senior officer in charge of
the servicing functions of the Master Servicer, in the form attached as
Exhibit T-1 hereto or such other form as may be required or permitted by
the Commission (the "Form 10-K Certification"), in compliance with Rules
13a-14 and 15d-14 under the Exchange Act and any additional directives
of the Commission.
(ii) A report regarding its assessment of compliance during the
preceding calendar year with all applicable servicing criteria set forth
in relevant Commission regulations with respect to mortgage-backed
securities transactions taken as a whole involving the Master Servicer
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that are backed by the same types of assets as those backing the
certificates, as well as similar reports on assessment of compliance
received from other parties participating in the servicing function as
required by relevant Commission regulations, as described in Item
1122(a) of Regulation AB. The Master Servicer shall obtain from all
other parties participating in the servicing function any required
assessments.
(iii) With respect to each assessment report described
immediately above, a report by a registered public accounting firm that
attests to, and reports on, the assessment made by the asserting party,
as set forth in relevant Commission regulations, as described in
Regulation 1122(b) of Regulation AB and Section 3.19.
(iv) The servicer compliance certificate required to be
delivered pursuant Section 3.18.
(g) In connection with the Form 10-K Certification, the Trustee shall
provide the Master Servicer with a back-up certification substantially in the
form attached hereto as Exhibit T-2.
(h) This Section 4.03 may be amended in accordance with this Agreement
without the consent of the Certificateholders.
(i) The Trustee shall make available on the Trustee's internet website
each of the reports filed with the Commission by or on behalf of the Depositor
under the Exchange Act, upon delivery of such report to the Trustee.
Section 4.04. Distribution of Reports to the Trustee and the Depositor;
Advances by the Master Servicer.
(a) Prior to the close of business on the Business Day next succeeding
each Determination Date, the Master Servicer shall furnish a written statement
(which may be in a mutually agreeable electronic format) to the Trustee, any
Paying Agent and the Depositor (the information in such statement to be made
available to Certificateholders by the Master Servicer on request) (provided
that the Master Servicer shall use its best efforts to deliver such written
statement not later than 12:00 p.m. New York time on the second Business Day
prior to the Distribution Date) setting forth (i) the Available Distribution
Amount, (ii) the amounts required to be withdrawn from the Custodial Account and
deposited into the Certificate Account on the immediately succeeding Certificate
Account Deposit Date pursuant to clause (iii) of Section 4.01(a), (iii) the
amount of Prepayment Interest Shortfalls and Basis Risk Shortfalls and (iv) the
Swap Payments, if any, for such Distribution Date. The determination by the
Master Servicer of such amounts shall, in the absence of obvious error, be
presumptively deemed to be correct for all purposes hereunder and the Trustee
shall be protected in relying upon the same without any independent check or
verification.
(b) On or before 2:00 P.M. New York time on each Certificate Account
Deposit Date, the Master Servicer shall either (i) remit to the Trustee for
deposit in the Certificate Account from its own funds, or funds received
therefor from the Subservicers, an amount equal to the Advances to be made by
the Master Servicer in respect of the related Distribution Date, which shall be
in an aggregate amount equal to the sum of (A) the aggregate amount of Monthly
Payments other than Balloon Payments (with each interest portion thereof
adjusted to a per annum rate equal to the Net Mortgage Rate), less the amount of
any related Servicing Modifications, Debt Service Reductions or Relief Act
Shortfalls, on the Outstanding Mortgage Loans as of the related Due Date in the
related Due Period, which Monthly Payments were due during the related Due
Period and not received as of the close of business as of the related
Determination Date; provided that no Advance shall be made if it would be a
Nonrecoverable Advance and (B) with respect to each Balloon Loan delinquent in
respect of its Balloon Payment as of the close of business on the related
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Determination Date, an amount equal to the assumed Monthly Payment (with each
interest portion thereof adjusted to a per annum rate equal to the Net Mortgage
Rate) that would have been due on the related Due Date based on the original
amortization schedule for such Balloon Loan until such Balloon Loan is finally
liquidated, over any payments of interest or principal (with each interest
portion thereof adjusted to a per annum rate equal to the Net Mortgage Rate)
received from the related Mortgagor as of the close of business on the related
Determination Date and allocable to the Due Date during the related Due Period
for each month until such Balloon Loan is finally liquidated, (ii) withdraw from
amounts on deposit in the Custodial Account and remit to the Trustee for deposit
in the Certificate Account all or a portion of the Amount Held for Future
Distribution in discharge of any such Advance, or (iii) make advances in the
form of any combination of clauses (i) and (ii) aggregating the amount of such
Advance. Any portion of the Amount Held for Future Distribution so used shall be
replaced by the Master Servicer by deposit in the Certificate Account on or
before 11:00 A.M. New York time on any future Certificate Account Deposit Date
to the extent that funds attributable to the Mortgage Loans that are available
in the Custodial Account for deposit in the Certificate Account on such
Certificate Account Deposit Date shall be less than payments to
Certificateholders required to be made on the following Distribution Date. The
Master Servicer shall be entitled to use any Advance made by a Subservicer as
described in Section 3.07(b) that has been deposited in the Custodial Account on
or before such Distribution Date as part of the Advance made by the Master
Servicer pursuant to this Section 4.04. The determination by the Master Servicer
that it has made a Nonrecoverable Advance or that any proposed Advance, if made,
would constitute a Nonrecoverable Advance, shall be evidenced by a certificate
of a Servicing Officer delivered to the Depositor and the Trustee. In the event
that the Master Servicer determines as of the Business Day preceding any
Certificate Account Deposit Date that it will be unable to deposit in the
Certificate Account an amount equal to the Advance required to be made for the
immediately succeeding Distribution Date, it shall give notice to the Trustee of
its inability to advance (such notice may be given by telecopy), not later than
3:00 P.M., New York time, on such Business Day, specifying the portion of such
amount that it will be unable to deposit. Not later than 3:00 P.M., New York
time, on the Certificate Account Deposit Date the Trustee shall, unless by 12:00
Noon, New York time, on such day the Trustee shall have been notified in writing
(by telecopy) that the Master Servicer shall have directly or indirectly
deposited in the Certificate Account such portion of the amount of the Advance
as to which the Master Servicer shall have given notice pursuant to the
preceding sentence, pursuant to Section 7.01, (a) terminate all of the rights
and obligations of the Master Servicer under this Agreement in accordance with
Section 7.01 and (b) assume the rights and obligations of the Master Servicer
hereunder, including the obligation to deposit in the Certificate Account an
amount equal to the Advance for the immediately succeeding Distribution Date.
The Trustee shall deposit all funds it receives pursuant to this Section 4.04(b)
into the Certificate Account.
Section 4.05. Allocation of Realized Losses.
(a) Prior to each Distribution Date, the Master Servicer shall determine
the total amount of Realized Losses, if any, that resulted from any Cash
Liquidation, Servicing Modifications, Debt Service Reduction, Deficient
Valuation or REO Disposition that occurred during the related Prepayment Period
or, in the case of a Servicing Modification that constitutes a reduction of the
interest rate on a Mortgage Loan, the amount of the reduction in the interest
portion of the Monthly Payment due in the month in which such Distribution Date
occurs. The amount of each Realized Loss shall be evidenced by an Officers'
Certificate.
(b) All Realized Losses on the Mortgage Loans shall be allocated as
follows:
(i) first, to Excess Cash Flow in the amounts and priority as
provided in Section 4.02;
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(ii) second, in reduction of the Overcollateralization Amount,
until such amount has been reduced to zero;
(iii) third, to the Class M-9 Certificates, until the aggregate
Certificate Principal Balance thereof has been reduced to zero;
(iv) fourth, to the Class M-8 Certificates, until the aggregate
Certificate Principal Balance thereof has been reduced to zero;
(v) fifth, to the Class M-7 Certificates, until the aggregate
Certificate Principal Balance thereof has been reduced to zero;
(vi) sixth, to the Class M-6 Certificates, until the aggregate
Certificate Principal Balance thereof has been reduced to zero;
(vii) seventh, to the Class M-5 Certificates, until the
aggregate Certificate Principal Balance thereof has been reduced to
zero;
(viii) eighth, to the Class M-4 Certificates, until the
aggregate Certificate Principal Balance thereof has been reduced to
zero;
(ix) ninth, to the Class M-3 Certificates, until the aggregate
Certificate Principal Balance thereof has been reduced to zero;
(x) tenth, to the Class M-2 Certificates, until the aggregate
Certificate Principal Balance thereof has been reduced to zero;
(xi) eleventh, to the Class M-1 Certificates, until the
aggregate Certificate Principal Balance thereof has been reduced to
zero; and
(xii) twelfth, to the Class A-1, Class A-2, Class A-3 and Class
A-4 Certificates on a pro rata basis, based on their then outstanding
Certificate Principal Balances prior to giving effect to distributions
to be made on such Distribution Date, until the aggregate Certificate
Principal Balance of each such Class has been reduced to zero.
(c) An allocation of a Realized Loss on a "pro rata basis" among two or
more specified Classes of Certificates means an allocation on a pro rata basis,
among the various Classes so specified, to each such Class of Certificates on
the basis of their then outstanding Certificate Principal Balances prior to
giving effect to distributions to be made on such Distribution Date in the case
of the principal portion of a Realized Loss or based on the Accrued Certificate
Interest thereon payable on such Distribution Date in the case of an interest
portion of a Realized Loss. Any allocation of the principal portion of Realized
Losses (other than Debt Service Reductions) to the Class A Certificates or Class
M Certificates shall be made by reducing the Certificate Principal Balance
thereof by the amount so allocated, which allocation shall be deemed to have
occurred on such Distribution Date; provided, that no such reduction shall
reduce the aggregate Certificate Principal Balance of the Certificates below the
aggregate Stated Principal Balance of the Mortgage Loans. Allocations of the
interest portions of Realized Losses (other than any interest rate reduction
resulting from a Servicing Modification) shall be made by operation of the
definition of "Accrued Certificate Interest" for each Class for such
Distribution Date. Allocations of the interest portion of a Realized Loss
resulting from an interest rate reduction in connection with a Servicing
Modification shall be made by operation of the priority of payment provisions of
Section 4.02(c). Allocations of the principal portion of Debt Service Reductions
shall be made by operation of the priority of payment provisions of Section
4.02(c). All Realized Losses and all other losses allocated to a Class of
Certificates hereunder will be allocated among the Certificates of such Class in
proportion to the Percentage Interests evidenced thereby.
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(d) All Realized Losses on the Mortgage Loans shall be allocated on each
Distribution Date to the REMIC I Regular Interests and the REMIC II Regular
Interests as provided in the definition of REMIC I Realized Losses and REMIC II
Realized Losses, respectively.
(e) Realized Losses allocated to the Excess Cash Flow or the
Overcollateralization Amount pursuant to paragraphs (a), (b) or (c) of this
Section, the definition of Accrued Certificate Interest and the operation of
Section 4.02(c) shall be deemed allocated to the Class SB Certificates. Realized
Losses allocated to the Class SB Certificates shall, to the extent such Realized
Losses represent Realized Losses on an interest portion, be allocated to the
REMIC III Regular Interest SB-IO. Realized Losses allocated to the Excess Cash
Flow pursuant to paragraph (b) of this Section shall be deemed to reduce Accrued
Certificate Interest on the REMIC III Regular Interest SB-IO. Realized Losses
allocated to the Overcollateralization Amount pursuant to paragraph (b) of this
Section shall be deemed first to reduce the principal balance of the REMIC III
Regular Interest SB-PO until such principal balance shall have been reduced to
zero and thereafter to reduce accrued and unpaid interest on the REMIC III
Regular Interest SB-IO.
Section 4.06. Reports of Foreclosures and Abandonment of Mortgaged
Property.
The Master Servicer or the Subservicers shall file information returns
with respect to the receipt of mortgage interest received in a trade or
business, the reports of foreclosures and abandonments of any Mortgaged Property
and the informational returns relating to cancellation of indebtedness income
with respect to any Mortgaged Property required by Sections 6050H, 6050J and
6050P of the Code, respectively, and deliver to the Trustee an Officers'
Certificate on or before March 31 of each year, beginning with the first March
31 that occurs at least six months after the Cut-off Date, stating that such
reports have been filed. Such reports shall be in form and substance sufficient
to meet the reporting requirements imposed by such Sections 6050H, 6050J and
6050P of the Code.
Section 4.07. Optional Purchase of Defaulted Mortgage Loans.
(a) With respect to any Mortgage Loan which is delinquent in payment by
90 days or more, (i) the Holder of the Class SB Certificate may, at its option,
upon twenty days prior written notice to the Master Servicer, purchase such
Mortgage Loan from the Trustee at the Purchase Price therefore, except that in
no event shall the Holder of the Class SB Certificate purchase such Mortgage
Loan where the aggregate value of all such Mortgage Loans purchased by the
Holder of the Class SB Certificate would be greater than three percent (3%) of
the Certificate Principal Balance of any Certificate and (ii) if the Holder of
the Class SB Certificate fails to provide notice pursuant to the immediately
preceding sentence, the Master Servicer may, at its option, purchase such
Mortgage Loan from the Trustee at the Purchase Price therefor; provided, that
with respect to the Master Servicer such Mortgage Loan that becomes 90 days or
more delinquent during any given Calendar Quarter shall only be eligible for
purchase pursuant to this Section during the period beginning on the first
Business Day of the following Calendar Quarter, and ending at the close of
business on the second-to-last Business Day of such following Calendar Quarter;
and provided, further, that such Mortgage Loan is 90 days or more delinquent at
the time of repurchase. Such option if not exercised shall not thereafter be
reinstated as to any Mortgage Loan, unless the delinquency is cured and the
Mortgage Loan thereafter again becomes delinquent in payment by 90 days or more
in a subsequent Calendar Quarter.
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(b) If at any time the Master Servicer makes a payment to the
Certificate Account covering the amount of the Purchase Price for such a
Mortgage Loan as provided in clause (a) above, and the Master Servicer provides
to the Trustee a certification signed by a Servicing Officer stating that the
amount of such payment has been deposited in the Certificate Account, then the
Trustee shall execute the assignment of such Mortgage Loan at the request of the
Master Servicer without recourse to the Master Servicer which shall succeed to
all the Trustee's right, title and interest in and to such Mortgage Loan, and
all security and documents relative thereto. Such assignment shall be an
assignment outright and not for security. The Master Servicer will thereupon own
such Mortgage, and all such security and documents, free of any further
obligation to the Trustee or the Certificateholders with respect thereto.
Section 4.08. [Reserved].
Section 4.09. [Reserved].
Section 4.10. Swap Agreement.
(a) On the Closing Date, the Supplemental Interest Trust Trustee shall
(i) establish and maintain in its name, in trust for the benefit of the
Certificateholders, the Supplemental Interest Trust Account and (ii) for the
benefit of the Certificateholders, cause the Supplemental Interest Trust to
enter into the Swap Agreement.
(b) The Supplemental Interest Trust Trustee shall deposit in the
Supplemental Interest Trust Account all payments that are payable to the
Supplemental Interest Trust under the Swap Agreement. Net Swap Payments and Swap
Termination Payments (other than Swap Termination Payments resulting from a Swap
Counterparty Trigger Event) payable by the Supplemental Interest Trust to the
Swap Counterparty pursuant to the Swap Agreement shall be excluded from the
Available Distribution Amount and paid to the Swap Counterparty prior to any
distributions to the Certificateholders. On each Distribution Date, such amounts
will be remitted by the Supplemental Interest Trust Trustee to the Supplemental
Interest Trust Account for payment to the Swap Counterparty, and such amounts
(plus any amounts deposited into the Supplemental Interest Trust Account
pursuant to Section 4.02(c)(x)) shall be paid to the Swap Counterparty in the
following order of priority: first to make any Net Swap Payment owed to the Swap
Counterparty pursuant to the Swap Agreement for such Distribution Date; and
second to make any Swap Termination Payment (not due to a Swap Counterparty
Trigger Event) owed to the Swap Counterparty pursuant to the Swap Agreement for
such Distribution Date. For federal income tax purposes, such amounts paid to
the Supplemental Interest Trust Account on each Distribution Date shall first be
deemed paid to the Supplemental Interest Trust Account in respect of REMIC III
Regular Interest IO to the extent of the amount distributable on such REMIC III
Regular Interest IO on such Distribution Date, and any remaining amount shall be
deemed paid to the Supplemental Interest Trust Account in respect of the SB-AM
Swap Agreement. Any Swap Termination Payment triggered by a Swap Counterparty
Trigger Event owed to the Swap Counterparty pursuant to the Swap Agreement will
be subordinated to distributions to the Holders of the Class A Certificates and
Class M Certificates and shall be paid as set forth under Section 4.02.
(c) Net Swap Payments payable by the Swap Counterparty to the
Supplemental Interest Trust Trustee on behalf of the Supplemental Interest Trust
pursuant to the Swap Agreement shall be deposited by the Supplemental Interest
Trust Trustee into the Supplemental Interest Trust Account and shall be applied
in accordance with Section 4.02.
(d) Subject to Sections 8.01 and 8.02 hereof, the Supplemental Interest
Trust Trustee agrees to comply with the terms of the Swap Agreement and to
enforce the terms and provisions thereof against the Swap Counterparty at the
written direction of the Holders of Certificates entitled to at least 51% of the
Voting Rights, or if the Supplemental Interest Trust Trustee does not receive
such direction from such Certificateholders, then at the written direction of
Residential Funding.
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(e) The Supplemental Interest Trust Account shall be an Eligible
Account. Amounts held in the Supplemental Interest Trust Account from time to
time shall continue to constitute assets of the Supplemental Interest Trust, but
not of the REMICs, until released from the Supplemental Interest Trust Account
pursuant to this Section 4.10. The Supplemental Interest Trust Account
constitutes an "outside reserve fund" within the meaning of Treasury Regulation
Section 1.860G-2(h) and is not an asset of the REMICs. The Class SB
Certificateholders shall be the owners of the Supplemental Interest Trust
Account. The Supplemental Interest Trust Trustee shall keep records that
accurately reflect the funds on deposit in the Supplemental Interest Trust
Account. The Supplemental Interest Trust Trustee shall, at the written direction
of the Master Servicer, invest amounts on deposit in the Supplemental Interest
Trust Account in Permitted Investments. In the absence of written direction to
the Supplemental Interest Trust Trustee from the Master Servicer, all funds in
the Supplemental Interest Trust Account shall remain uninvested.
(f) The Supplemental Interest Trust Trustee shall, on behalf of the
holders of each Class of Certificates (other than the Class SB Certificates and
Class R Certificates) enter into the SB-AM Swap Agreement, with itself, on
behalf of the holders of the Class SB Certificates. Pursuant to the SB-AM Swap
Agreement, all holders of Certificates (other than the Class SB Certificates and
Class R Certificates) shall be treated as having agreed to pay, on each
Distribution Date, to the holder of the Class SB Certificates an aggregate
amount equal to the excess, if any, of (i) the amount payable on such
Distribution Date on the REMIC III Regular Interest corresponding to such Class
of Certificates over (ii) the amount payable on such Class of Certificates on
such Distribution Date (such excess, a "Class IO Distribution Amount"). In
addition, pursuant to the SB-AM Swap Agreement, the holder of the Class SB
Certificates shall be treated as having agreed to pay the related Basis Risk
Shortfalls to the holders of the Certificates (other than the Class SB
Certificates and Class R Certificates) in accordance with the terms of this
Agreement. Any payments to the Certificates from amounts deemed received in
respect of the SB-AM Swap Agreement shall not be payments with respect to a
"regular interest" in a REMIC within the meaning of Code Section 860G(a)(1).
However, any payment from the Certificates (other than the Class SB Certificates
and Class R Certificates) of a Class IO Distribution Amount shall be treated for
tax purposes as having been received by the holders of such Certificates in
respect of the REMIC III Regular Interest corresponding to such Class of
Certificates and as having been paid by such holders to the Supplemental
Interest Trust Account pursuant to the SB-AM Swap Agreement. Thus, each
Certificate (other than the Class R Certificates) shall be treated as
representing not only ownership of regular interests in REMIC III, but also
ownership of an interest in, and obligations with respect to, a notional
principal contract.
(g) Upon the occurrence of an Early Termination Date, the Supplemental
Interest Trust Trustee shall use reasonable efforts to appoint a successor swap
counterparty. To the extent that the Supplemental Interest Trust Trustee
receives a Swap Termination Payment from the Swap Counterparty, the Supplemental
Interest Trust Trustee shall apply such Swap Termination Payment to appoint a
successor swap counterparty. In the event that the Supplemental Interest Trust
receives a Swap Termination Payment from the Swap Counterparty and a replacement
swap agreement or similar agreement cannot be obtained within 30 days after
receipt by the Supplemental Interest Trust Trustee of such Swap Termination
Payment, then the Supplemental Interest Trust Trustee shall deposit such Swap
Termination Payment into a separate, non interest bearing account and will, on
each subsequent Distribution Date, withdraw from the amount then remaining on
deposit in such reserve account an amount equal to the Net Swap Payment, if any,
that would have been paid to the Supplemental Interest Trust Trust by the
original Swap Counterparty calculated in accordance with the terms of the
original Swap Agreement, and deposit such amount into the Supplemental Interest
Trust Account for distribution on such Distribution Date pursuant to Section
4.02(c). To the extent that the Supplemental Interest Trust is required to pay a
Swap Termination Payment to the Swap Counterparty, any upfront payment received
from the counterparty to a replacement swap agreement will be used to pay such
Swap Termination Payment prior to using any portion of the Available
Distribution Amount for such Distribution Date.
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(h) The Supplemental Interest Trust Trustee is hereby directed by the
Depositor, on or before the Closing Date, to sign the Swap Agreement on behalf
of the Supplemental Interest Trust for the benefit of the Certificateholders, in
the form presented to it by the Depositor. The Supplemental Interest Trust
Trustee shall have no responsibility for the contents, adequacy or sufficiency
of the Swap Agreement, including, without limitation, any representations and
warranties contained herein.
ARTICLE V
THE CERTIFICATES
Section 5.01. The Certificates.
(a) The Class A Certificates, Class M Certificates, Class SB
Certificates and Class R Certificates shall be substantially in the forms set
forth in Exhibits A, B, C and D, respectively, and shall, on original issue, be
executed and delivered by the Trustee to the Certificate Registrar for
authentication and delivery to or upon the order of the Depositor upon receipt
by the Trustee or the Custodian of the documents specified in Section 2.01. Each
class of Class A Certificates and Class M Certificates shall be issuable in
minimum dollar denominations of $100,000 and integral multiples of $1 in excess
thereof. The Class SB Certificates shall be issuable in registered, certificated
form in minimum percentage interests of 5.00% and integral multiples of 0.01% in
excess thereof. The Class R Certificates shall be issued in registered,
certificated form in minimum percentage interests of 20.00% and integral
multiples of 0.01% in excess thereof; provided, however, that one Class R
Certificate will be issuable to the REMIC Administrator as "tax matters person"
pursuant to Section 10.01(c) in a minimum denomination representing a Percentage
Interest of not less than 0.01%. The Certificates shall be executed by manual or
facsimile signature on behalf of an authorized officer of the Trustee.
Certificates bearing the manual or facsimile signatures of individuals who were
at any time the proper officers of the Trustee shall bind the Trustee,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificate or did not
hold such offices at the date of such Certificates. 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 provided for herein executed by the Certificate
Registrar by manual signature, and such certificate 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.
(b) (i) The Class A Certificates and Class M Certificates shall
initially be issued as one or more Certificates registered in the name of the
Depository or its nominee and, except as provided below, registration of such
Certificates, may not be transferred by the Trustee except to another Depository
that agrees to hold such Certificates for the respective Certificate Owners with
Ownership Interests therein. The Certificate Owners shall hold their respective
Ownership Interests in and to each Class A Certificate and Class M Certificate
through the book-entry facilities of the Depository and, except as provided
below, shall not be entitled to Definitive Certificates in respect of such
Ownership Interests. All transfers by Certificate Owners of their respective
Ownership Interests in the Book-Entry Certificates shall be made in accordance
with the procedures established by the Depository Participant or brokerage firm
representing such Certificate Owner. Each Depository Participant shall transfer
the Ownership Interests only in the Book-Entry Certificates of Certificate
Owners it represents or of brokerage firms for which it acts as agent in
accordance with the Depository's normal procedures.
(ii) The Trustee, the Master Servicer and the Depositor may for
all purposes (including the making of payments due on the respective
Classes of Book-Entry Certificates) deal with the Depository as the
authorized representative of the Certificate Owners with respect to the
respective Classes of Book-Entry Certificates for purposes of exercising
the rights of Certificateholders hereunder. The rights of Certificate
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Owners with respect to the respective Classes of Book-Entry Certificates
shall be limited to those established by law and agreements between such
Certificate Owners and the Depository Participants and brokerage firms
representing such Certificate Owners. Multiple requests and directions
from, and votes of, the Depository as Holder of any Class of Book-Entry
Certificates with respect to any particular matter shall not be deemed
inconsistent if they are made with respect to different Certificate
Owners. The Trustee may establish a reasonable record date in connection
with solicitations of consents from or voting by Certificateholders and
shall give notice to the Depository of such record date.
(iii) If with respect to any Book-Entry Certificate (i)(A) the
Depositor advises the Trustee in writing that the Depository is no
longer willing or able to properly discharge its responsibilities as
Depository with respect to such Book-Entry Certificate and (B) the
Depositor is unable to locate a qualified successor, or (ii) (A) the
Depositor at its option advises the Trustee in writing that it elects to
terminate the book-entry system for such Book-Entry Certificate through
the Depository and (B) upon receipt of notice from the Depository of the
Depositor's election to terminate the book-entry system for such
Book-Entry Certificate, the Depository Participants holding beneficial
interests in such Book-Entry Certificates agree to initiate such
termination, the Trustee shall notify all Certificate Owners of such
Book-Entry Certificate, through the Depository, of the occurrence of any
such event and of the availability of Definitive Certificates to
Certificate Owners requesting the same. Upon surrender to the Trustee of
the Book-Entry Certificates by the Depository, accompanied by
registration instructions from the Depository for registration of
transfer, the Trustee shall issue the Definitive Certificates.
(iv) In addition, if an Event of Default has occurred and is
continuing, each Certificate Owner materially adversely affected thereby
may at its option request a Definitive Certificate evidencing such
Certificate Owner's Percentage Interest in the related Class of
Certificates. In order to make such request, such Certificate Owner
shall, subject to the rules and procedures of the Depository, provide
the Depository or the related Depository Participant with directions for
the Certificate Registrar to exchange or cause the exchange of the
Certificate Owner's interest in such Class of Certificates for an
equivalent Percentage Interest in fully registered definitive form. Upon
receipt by the Certificate Registrar of instructions from the Depository
directing the Certificate Registrar to effect such exchange (such
instructions to contain information regarding the Class of Certificates
and the Certificate Principal Balance being exchanged, the Depository
Participant account to be debited with the decrease, the registered
holder of and delivery instructions for the Definitive Certificate, and
any other information reasonably required by the Certificate Registrar),
(i) the Certificate Registrar shall instruct the Depository to reduce
the related Depository Participant's account by the aggregate
Certificate Principal Balance of the Definitive Certificate, (ii) the
Trustee shall execute and the Certificate Registrar shall authenticate
and deliver, in accordance with the registration and delivery
instructions provided by the Depository, a Definitive Certificate
evidencing such Certificate Owner's Percentage Interest in such Class of
Certificates and (iii) the Trustee shall execute and the Certificate
Registrar shall authenticate a new Book-Entry Certificate reflecting the
reduction in the aggregate Certificate Principal Balance of such Class
of Certificates by the amount of the Definitive Certificates.
(v) None of the Depositor, the Master Servicer or the Trustee
shall be liable for any actions taken by the Depository or its nominee,
including, without limitation, any delay in delivery of any instructions
required under this Section 5.01 and may conclusively rely on, and shall
be protected in relying on, such instructions. Upon the issuance of
Definitive Certificates, the Trustee and the Master Servicer shall
recognize the Holders of the Definitive Certificates as
Certificateholders hereunder.
(c) Each of the Certificates is intended to be a "security" governed by
Article 8 of the Uniform Commercial Code as in effect in the State of New York
and any other applicable jurisdiction, to the extent that any of such laws may
be applicable.
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Section 5.02. Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall cause to be kept at one of the offices or agencies
to be appointed by the Trustee in accordance with the provisions of Section 8.12
a Certificate Register in which, subject 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. The Trustee
is initially appointed Certificate Registrar for the purpose of registering
Certificates and transfers and exchanges of Certificates as herein provided. The
Certificate Registrar, or the Trustee, shall provide the Master Servicer with a
certified list of Certificateholders as of each Record Date prior to the related
Determination Date.
(b) Upon surrender for registration of transfer of any Certificate at
any office or agency of the Trustee maintained for such purpose pursuant to
Section 8.12 and, in the case of any Class SB Certificate or Class R
Certificate, upon satisfaction of the conditions set forth below, the Trustee
shall execute and the Certificate Registrar shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more new
Certificates of a like Class and aggregate Percentage Interest.
(c) At the option of the Certificateholders, Certificates may be
exchanged for other Certificates of authorized denominations of a like Class and
aggregate Percentage Interest, upon surrender of the Certificates to be
exchanged at any such office or agency. Whenever any Certificates are so
surrendered for exchange the Trustee shall execute and the Certificate Registrar
shall authenticate and deliver the Certificates of such Class which the
Certificateholder making the exchange is entitled to receive. Every Certificate
presented or surrendered for transfer or exchange shall (if so required by the
Trustee or the Certificate Registrar) be duly endorsed by, or be accompanied by
a written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by, the Holder thereof or his attorney duly
authorized in writing.
(d) (i) No transfer, sale, pledge or other disposition of a Class SB
Certificate or Class R Certificate shall be made unless such transfer, sale,
pledge or other disposition is exempt from the registration requirements of the
Securities Act, and any applicable state securities laws or is made in
accordance with said Act and laws.
(ii) Except as otherwise provided in this Section 5.02(d), in
the event that a transfer of a Class SB Certificate or Class R
Certificate is to be made, (i) unless the Depositor directs the Trustee
otherwise, the Trustee shall require a written Opinion of Counsel
acceptable to and in form and substance satisfactory to the Trustee and
the Depositor that such transfer may be made pursuant to an exemption,
describing the applicable exemption and the basis therefor, from said
Act and laws or is being made pursuant to said Act and laws, which
Opinion of Counsel shall not be an expense of the Trustee, the Trust
Fund, the Depositor or the Master Servicer, and (ii) the Trustee shall
require the transferee to execute a representation letter, substantially
in the form of Exhibit I hereto, and the Trustee shall require the
transferor to execute a representation letter, substantially in the form
of Exhibit J hereto, each acceptable to and in form and substance
satisfactory to the Depositor and the Trustee certifying to the
Depositor and the Trustee the facts surrounding such transfer, which
representation letters shall not be an expense of the Trustee, the Trust
Fund, the Depositor or the Master Servicer. In lieu of the requirements
set forth in the preceding sentence, Class SB Certificates or Class R
Certificates may be made in accordance with this Section 5.02(d) if the
prospective transferee of such a Certificate provides the Trustee and
the Master Servicer with an investment letter substantially in the form
of Exhibit N-1 attached hereto, which investment letter shall not be an
expense of the Trustee, the Depositor, or the Master Servicer, and which
investment letter states that, among other things, such transferee (i)
is a Qualified Institutional Buyer, acting for its own account or the
accounts of other Qualified Institutional Buyer, and (ii) is aware that
the proposed transferor intends to rely on the exemption from
registration requirements under the Securities Act provided by Rule
144A.
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(e) (i) In the case of any Class SB or Class R Certificate
presented for registration in the name of any Person, either (A) the Trustee
shall require an Opinion of Counsel acceptable to and in form and substance
satisfactory to the Trustee, the Depositor and the Master Servicer to the effect
that the purchase or holding of such Certificate is permissible under applicable
law, will not constitute or result in any non-exempt prohibited transaction
under Section 406 of ERISA or Section 4975 of the Code (or comparable provisions
of any subsequent enactments), and will not subject the Trustee, the Depositor
or the Master Servicer to any obligation or liability (including obligations or
liabilities under ERISA or Section 4975 of the Code) in addition to those
undertaken in this Agreement, which Opinion of Counsel shall not be an expense
of the Trustee, the Depositor or the Master Servicer, or (B) the prospective
transferee shall be required to provide the Trustee, the Depositor and the
Master Servicer with a certification to the effect set forth in Exhibit P (with
respect to a Class SB Certificate) or in paragraph fifteen of Exhibit H-1 (with
respect to a Class R Certificate), which the Trustee may rely upon without
further inquiry or investigation, or such other certifications as the Trustee
may deem desirable or necessary in order to establish that such transferee or
the Person in whose name such registration is requested is not an employee
benefit plan or other plan or arrangement subject to the prohibited transaction
provisions of ERISA or Section 4975 of the Code, or any Person (including an
insurance company investing its general accounts, an investment manager, a named
fiduciary or a trustee of any such plan) who is using "plan assets" of any such
plan to effect such acquisition (each of the foregoing, a "Plan Investor").
(ii) Any Transferee of a Class M Certificate (or interest
therein) acquired after termination of the Swap Agreement will be deemed
to have represented by virtue of its purchase or holding of such
Certificate that either (a) such Transferee is not a Plan Investor, (b)
it has acquired and is holding such Certificate in reliance on U.S.
Department of Labor Prohibited Transaction Exemption ("PTE") 94-29, as
most recently amended by PTE 2002-41, 67 Fed. Reg. 54487 (Aug. 22, 2002)
(the "RFC Exemption"), and that it understands that there are certain
conditions to the availability of the RFC Exemption, including that such
Certificate must be rated, at the time of purchase, not lower than
"BBB-" (or its equivalent) by Fitch, Standard & Poor's or Moody's or (c)
(x) such Transferee is an insurance company, (y) the source of funds
used to purchase or hold such Certificate (or interest therein) is an
"insurance company general account" (as defined in Prohibited
Transaction Class Exemption ("PTCE") 95-60), and (z) the conditions set
forth in Sections I and III of PTCE 95-60 have been satisfied (each
entity that satisfies this clause (c), a "Complying Insurance Company").
(iii) If any Class M Certificate (or any interest therein) is
acquired or held by any Person that does not satisfy the conditions
described in paragraph (ii) above, then the last preceding Transferee
that either (x) is not a Plan Investor, (y) acquired such Certificate in
compliance with the transfer restrictions described above or (z) is a
Complying Insurance Company shall be restored, to the extent permitted
by law, to all rights and obligations as Certificate Owner thereof
retroactive to the date of such Transfer of such Class M Certificate.
The Trustee shall be under no liability to any Person for making any
payments due on such Certificate to such preceding Transferee.
(iv) Any purported Certificate Owner whose acquisition or
holding of any Certificate (or interest therein) was effected in
violation of the restrictions in this Section 5.02(e) shall indemnify
and hold harmless the Depositor, the Trustee, the Master Servicer, any
Subservicer, any underwriter and the Trust Fund from and against any and
all liabilities, claims, costs or expenses incurred by such parties as a
result of such acquisition or holding.
(v) Each Holder of a Certificate or any interest therein
acquired as of any date prior to the termination of the Swap Agreement
that is a Plan Investor shall be deemed to have represented, by its
acquisition or holding of such Certificate or any interest therein, that
at least one of PTCE 84-14, 90-1, 91-38, 95-60 or 96-23 or other
applicable exemption applies to such Holder's right to receive payments
from the Supplemental Interest Trust.
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(vi) Any Transferee of a Class M Certificate will be deemed to
have represented by virtue of its purchase or holding of such
Certificate or interest therein that such Certificate, at the time of
purchase, is rated not lower than "BBB-" (or its equivalent) by Fitch,
Standard & Poors or Moodys.
(f) (i) Each Person who has or who acquires any Ownership Interest in a
Class 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 to
have irrevocably authorized the Trustee or its designee under clause (iii)(A)
below to deliver payments to a Person other than such Person and to negotiate
the terms of any mandatory sale under clause (iii)(B) below and to execute all
instruments of transfer and to do all other things necessary in connection with
any such sale. The rights of each Person acquiring any Ownership Interest in a
Class R Certificate are expressly subject to the following provisions:
(A) Each Person holding or acquiring any Ownership
Interest in a Class 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.
(B) In connection with any proposed Transfer of any
Ownership Interest in a Class R Certificate, the Trustee shall require delivery
to it, and shall not register the Transfer of any Class R Certificate until its
receipt of,
(I) an affidavit and agreement (a "Transfer
Affidavit and Agreement," in the form attached hereto as Exhibit H-1) from the
proposed Transferee, in form and substance satisfactory to the Master Servicer,
representing and warranting, among other things, that it is a Permitted
Transferee, that it is not acquiring its Ownership Interest in the Class R
Certificate that is the subject of the proposed Transfer as a nominee, trustee
or agent for any Person who is not a Permitted Transferee, that for so long as
it retains its Ownership Interest in a Class R Certificate, it will endeavor to
remain a Permitted Transferee, and that it has reviewed the provisions of this
Section 5.02(f) and agrees to be bound by them, and
(II) a certificate, in the form attached hereto
as Exhibit H-2, from the Holder wishing to transfer the Class R Certificate, in
form and substance satisfactory to the Master Servicer, representing and
warranting, among other things, that no purpose of the proposed Transfer is to
impede the assessment or collection of tax.
(C) Notwithstanding the delivery of a Transfer Affidavit
and Agreement by a proposed Transferee under clause (B) above, if a Responsible
Officer of the Trustee who is assigned to this Agreement has actual knowledge
that the proposed Transferee is not a Permitted Transferee, no Transfer of an
Ownership Interest in a Class R Certificate to such proposed Transferee shall be
effected.
(D) Each Person holding or acquiring any Ownership
Interest in a Class R Certificate shall agree (x) to require a Transfer
Affidavit and Agreement from any other Person to whom such Person attempts to
transfer its Ownership Interest in a Class R Certificate and (y) not to transfer
its Ownership Interest unless it provides a certificate to the Trustee in the
form attached hereto as Exhibit H-2.
(E) Each Person holding or acquiring an Ownership
Interest in a Class R Certificate, by purchasing an Ownership Interest in such
Certificate, agrees to give the Trustee written notice that it is a
"pass-through interest holder" within the meaning of Temporary Treasury
Regulations Section 1.67-3T(a)(2)(i)(A) immediately upon acquiring an Ownership
Interest in a Class R Certificate, if it is, or is holding an Ownership Interest
in a Class R Certificate on behalf of, a "pass-through interest holder."
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(ii) The Trustee shall register the Transfer of any Class R
Certificate only if it shall have received the Transfer Affidavit and
Agreement, a certificate of the Holder requesting such transfer in the
form attached hereto as Exhibit H-2 and all of such other documents as
shall have been reasonably required by the Trustee as a condition to
such registration. Transfers of the Class R Certificates to Non-United
States Persons and Disqualified Organizations (as defined in Section
860E(e)(5) of the Code) are prohibited.
(A) If any Disqualified Organization shall become a
holder of a Class R Certificate, then the last preceding Permitted Transferee
shall be restored, to the extent permitted by law, to all rights and obligations
as Holder thereof retroactive to the date of registration of such Transfer of
such Class R Certificate. If a Non-United States Person shall become a holder of
a Class R Certificate, then the last preceding United States Person shall be
restored, to the extent permitted by law, to all rights and obligations as
Holder thereof retroactive to the date of registration of such Transfer of such
Class R Certificate. If a transfer of a Class R Certificate is disregarded
pursuant to the provisions of Treasury Regulations Section 1.860E-1 or Section
1.860G-3, then the last preceding Permitted Transferee shall be restored, to the
extent permitted by law, to all rights and obligations as Holder thereof
retroactive to the date of registration of such Transfer of such Class R
Certificate. The Trustee shall be under no liability to any Person for any
registration of Transfer of a Class R Certificate that is in fact not permitted
by this Section 5.02(f) or for making any payments due on such Certificate to
the holder thereof or for taking any other action with respect to such holder
under the provisions of this Agreement.
(B) If any purported Transferee shall become a Holder
of a Class R Certificate in violation of the restrictions in this Section
5.02(f) and to the extent that the retroactive restoration of the rights of the
Holder of such Class R Certificate as described in clause (iii)(A) above shall
be invalid, illegal or unenforceable, then the Master Servicer shall have the
right, without notice to the holder or any prior holder of such Class R
Certificate, to sell such Class R Certificate to a purchaser selected by the
Master Servicer on such terms as the Master Servicer may choose. Such purported
Transferee shall promptly endorse and deliver each Class R Certificate in
accordance with the instructions of the Master Servicer. Such purchaser may be
the Master Servicer itself or any Affiliate of the Master Servicer. The proceeds
of such sale, net of the commissions (which may include commissions payable to
the Master Servicer or its Affiliates), expenses and taxes due, if any, will be
remitted by the Master Servicer to such purported Transferee. The terms and
conditions of any sale under this clause (iii)(B) shall be determined in the
sole discretion of the Master Servicer, and the Master Servicer shall not be
liable to any Person having an Ownership Interest in a Class R Certificate as a
result of its exercise of such discretion.
(iii) The Master Servicer, on behalf of the Trustee, shall make
available, upon written request from the Trustee, all information
necessary to compute any tax imposed
(A) as a result of the Transfer of an Ownership
Interest in a Class R Certificate to any Person who is a Disqualified
Organization, including the information regarding "excess inclusions" of such
Class R Certificates required to be provided to the Internal Revenue Service and
certain Persons as described in Treasury Regulations Sections 1.860D-1(b)(5) and
1.860E-2(a)(5), and
(B) as a result of any regulated investment company,
real estate investment trust, common trust fund, partnership, trust, estate or
organization described in Section 1381 of the Code that holds an Ownership
Interest in a Class R Certificate having as among its record holders at any time
any Person who is a Disqualified Organization. Reasonable compensation for
providing such information may be required by the Master Servicer from such
Person.
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(iv) The provisions of this Section 5.02(f) set forth prior to
this clause (iv) may be modified, added to or eliminated, provided that
there shall have been delivered to the Trustee the following:
(A) written notification from each Rating Agency to
the effect that the modification, addition to or elimination of such provisions
will not cause such Rating Agency to downgrade its then-current ratings, if any,
of the Class A Certificates or Class M Certificates below the lower of the
then-current rating or the rating assigned to such Certificates as of the
Closing Date by such Rating Agency; and
(B) a certificate of the Master Servicer stating that
the Master Servicer has received an Opinion of Counsel, in form and substance
satisfactory to the Master Servicer, to the effect that such modification,
addition to or absence of such provisions will not cause any REMIC created
hereunder to cease to qualify as a REMIC and will not cause (x) any REMIC
created hereunder to be subject to an entity-level tax caused by the Transfer of
any Class R Certificate to a Person that is a Disqualified Organization or (y) a
Certificateholder or another Person to be subject to a REMIC-related tax caused
by the Transfer of a Class R Certificate to a Person that is not a Permitted
Transferee.
(g) No service charge shall be made for any transfer or exchange of
Certificates of any Class, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
(h) All Certificates surrendered for transfer and exchange shall be
destroyed by the Certificate Registrar.
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Certificate
Registrar, or the Trustee and the Certificate Registrar receive evidence to
their satisfaction of the destruction, loss or theft of any Certificate, and
(ii) there is delivered to the Trustee and the Certificate Registrar 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 or the Certificate Registrar that
such Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute and the Certificate Registrar shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like tenor, Class and Percentage Interest but
bearing a number not contemporaneously outstanding. Upon the issuance of any new
Certificate under this Section, 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 and the Certificate Registrar) connected therewith. Any duplicate
Certificate issued pursuant to this Section shall constitute complete and
indefeasible evidence of ownership in the Trust Fund, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.
Section 5.04. Persons Deemed Owners.
Prior to due presentation of a Certificate for registration of transfer,
the Depositor, the Master Servicer, the Trustee, the Certificate Registrar and
any agent of the Depositor, the Master Servicer, the Trustee or the Certificate
Registrar may treat the Person in whose name any Certificate is registered as
the owner of such Certificate for the purpose of receiving distributions
pursuant to Section 4.02 and for all other purposes whatsoever, except as and to
the extent provided in the definition of "Certificateholder," and neither the
Depositor, the Master Servicer, the Trustee, the Certificate Registrar nor any
agent of the Depositor, the Master Servicer, the Trustee or the Certificate
Registrar shall be affected by notice to the contrary except as provided in
Section 5.02(f).
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Section 5.05. Appointment of Paying Agent.
The Trustee may appoint a Paying Agent for the purpose of making
distributions to Certificateholders pursuant to Section 4.02. In the event of
any such appointment, on or prior to each Distribution Date the Master Servicer
on behalf of the Trustee shall deposit or cause to be deposited with the Paying
Agent a sum sufficient to make the payments to Certificateholders in the amounts
and in the manner provided for in Section 4.02, such sum to be held in trust for
the benefit of Certificateholders. The Trustee shall cause each Paying Agent to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee that such Paying Agent will hold all sums held by
it for the payment to Certificateholders in trust for the benefit of the
Certificateholders entitled thereto until such sums shall be paid to such
Certificateholders. Any sums so held by such Paying Agent shall be held only in
Eligible Accounts to the extent such sums are not distributed to the
Certificateholders on the date of receipt by such Paying Agent.
ARTICLE VI
THE DEPOSITOR AND THE MASTER SERVICER
Section 6.01. Respective Liabilities of the Depositor and the Master
Servicer.
The Depositor and the Master Servicer shall each be liable in accordance
herewith only to the extent of the obligations specifically and respectively
imposed upon and undertaken by the Depositor and the Master Servicer herein. By
way of illustration and not limitation, the Depositor is not liable for the
servicing and administration of the Mortgage Loans, nor is it obligated by
Section 7.01 or Section 10.01 to assume any obligations of the Master Servicer
or to appoint a designee to assume such obligations, nor is it liable for any
other obligation hereunder that it may, but is not obligated to, assume unless
it elects to assume such obligation in accordance herewith.
Section 6.02. Merger or Consolidation of the Depositor or the Master
Servicer; Assignment of Rights and Delegation of Duties
by Master Servicer.
(a) The Depositor and the Master Servicer shall each keep in full effect
its existence, rights and franchises as a corporation under the laws of the
state of its incorporation, 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, the Certificates or any of the Mortgage Loans
and to perform its respective duties under this Agreement.
(b) Any Person into which the Depositor or the Master Servicer may be
merged or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which the Depositor or
the Master Servicer shall be a party, or any Person succeeding to the business
of the Depositor or the Master Servicer, shall be the successor of the Depositor
or the Master Servicer, as the case may be, hereunder, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything in this Section 6.02(b) to the contrary notwithstanding; provided,
however, that the successor or surviving Person to the Master Servicer shall be
qualified to service mortgage loans on behalf of Xxxxxx Xxx or Xxxxxxx Mac; and
provided further that the Master Servicer (or the Depositor, as applicable)
shall notify each Rating Agency and the Trustee in writing of any such merger,
conversion or consolidation at least 30 days prior to the effective date of such
event.
(c) Notwithstanding anything else in this Section 6.02 and Section 6.04
to the contrary, the Master Servicer may assign its rights and delegate its
duties and obligations under this Agreement; provided that the Person accepting
such assignment or delegation shall be a Person which is qualified to service
mortgage loans on behalf of Xxxxxx Mae or Xxxxxxx Mac, is reasonably
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satisfactory to the Trustee and the Depositor, is willing to service the
Mortgage Loans and executes and delivers to the Depositor and the Trustee an
agreement, in form and substance reasonably satisfactory to the Depositor and
the Trustee, which contains an assumption by such Person of the due and punctual
performance and observance of each covenant and condition to be performed or
observed by the Master Servicer under this Agreement; provided further that each
Rating Agency's rating of the Classes of Certificates that have been rated in
effect immediately prior to such assignment and delegation will not be
qualified, reduced or withdrawn as a result of such assignment and delegation
(as evidenced by a letter to such effect from each Rating Agency). In the case
of any such assignment and delegation, the Master Servicer shall be released
from its obligations under this Agreement, except that the Master Servicer shall
remain liable for all liabilities and obligations incurred by it as Master
Servicer hereunder prior to the satisfaction of the conditions to such
assignment and delegation set forth in the next preceding sentence.
Notwithstanding the foregoing, in the event of a pledge or assignment by the
Master Servicer solely of its rights to purchase all assets of the Trust Fund
under Section 9.01(a) (or, if so specified in Section 9.01(a), its rights to
purchase the Mortgage Loans and property acquired related to such Mortgage Loans
or its rights to purchase the Certificates related thereto), the provisos of the
first sentence of this paragraph will not apply.
(d) Notwithstanding anything else in this Section 6.02 to the contrary,
the conversion of Residential Funding Corporation's or Residential Asset
Securities Corporation's organizational structure from a Delaware corporation to
a limited liability company shall not require the consent of any party or notice
to any party and shall not in any way affect the rights or obligations of
Residential Funding Corporation or Residential Asset Securities Corporation
hereunder.
Section 6.03. Limitation on Liability of the Depositor, the Master
Servicer and Others.
None of the Depositor, the Master Servicer or any of the directors,
officers, employees or agents of the Depositor or the Master Servicer shall be
under any liability to 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, however, that this
provision shall not protect the Depositor, the Master Servicer or any such
Person against any breach of warranties, representations or covenants made
herein or any liability which would otherwise be imposed by reason 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 Master Servicer and any director, officer, employee or agent of the
Depositor 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 Master Servicer and any director,
officer, employee or agent of the Depositor 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 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. Neither the Depositor
nor the Master Servicer shall be under any obligation to appear in, prosecute or
defend any legal or administrative action, proceeding, hearing or examination
that is not incidental to its respective duties under this Agreement and which
in its opinion may involve it in any expense or liability; provided, however,
that the Depositor or the Master Servicer may in its discretion undertake any
such action, proceeding, hearing or examination that it may deem necessary or
desirable in respect to this Agreement and the rights and duties of the parties
hereto and the interests of the Certificateholders hereunder. In such event, the
legal expenses and costs of such action, proceeding, hearing or examination and
any liability resulting therefrom shall be expenses, costs and liabilities of
the Trust Fund, and the Depositor and the Master Servicer shall be entitled to
be reimbursed therefor out of amounts attributable to the Mortgage Loans on
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deposit in the Custodial Account as provided by Section 3.10 and, on the
Distribution Date(s) following such reimbursement, the aggregate of such
expenses and costs shall be allocated in reduction of the Accrued Certificate
Interest on each Class entitled thereto in the same manner as if such expenses
and costs constituted a Prepayment Interest Shortfall.
Section 6.04. Depositor and Master Servicer Not to Resign.
Subject to the provisions of Section 6.02, neither the Depositor nor the
Master Servicer shall resign from its respective obligations and duties hereby
imposed on it except upon determination that its duties hereunder are no longer
permissible under applicable law. Any such determination permitting the
resignation of the Depositor or the Master Servicer shall be evidenced by an
Opinion of Counsel (at the expense of the resigning party) to such effect
delivered to the Trustee. No such resignation by the Master Servicer shall
become effective until the Trustee or a successor servicer shall have assumed
the Master Servicer's responsibilities and obligations in accordance with
Section 7.02.
ARTICLE VII
DEFAULT
Section 7.01. Events of Default.
Event of Default, wherever used herein, means any one of the following
events (whatever reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) the Master Servicer shall fail to distribute or cause to be
distributed to Holders of Certificates of any Class any distribution
required to be made under the terms of the Certificates of such Class
and this Agreement and, in either case, such failure shall continue
unremedied for a period of 5 days after the date upon which written
notice of such failure, requiring such failure to be remedied, shall
have been given to the Master Servicer by the Trustee or the Depositor
or to the Master Servicer, the Depositor and the Trustee by the Holders
of Certificates of such Class evidencing Percentage Interests
aggregating not less than 25%; or
(ii) the Master Servicer shall fail to observe or perform in any
material respect any other of the covenants or agreements on the part of
the Master Servicer contained in the Certificates of any Class or in
this Agreement and such failure shall continue unremedied for a period
of 30 days (except that such number of days shall be 15 in the case of a
failure to pay the premium for any Required Insurance Policy) after the
date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Master Servicer by the Trustee or
the Depositor, or to the Master Servicer, the Depositor and the Trustee
by the Holders of Certificates of any Class evidencing, as to such
Class, Percentage Interests aggregating not less than 25%; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises in an involuntary case
under any present or future federal or state bankruptcy, insolvency or
similar law or appointing a conservator or 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 days; or
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(iv) the Master Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshalling of assets and liabilities, or similar proceedings of,
or relating to, the Master Servicer or of, or relating to, all or
substantially all of the property of the Master Servicer; or
(v) the Master Servicer shall admit in writing its inability to
pay its debts generally as they become due, file a petition to take
advantage of, 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
(vi) the Master Servicer shall notify the Trustee pursuant to
Section 4.04(b) that it is unable to deposit in the Certificate Account
an amount equal to the Advance.
If an Event of Default described in clauses (i)-(v) of this Section
shall occur, then, and in each and every such case, so long as such Event of
Default shall not have been remedied, either the Depositor or the Trustee shall
at the direction of Holders of Certificates entitled to at least 51% of the
Voting Rights by notice in writing to the Master Servicer (and to the Depositor
if given by the Trustee or to the Trustee if given by the Depositor), 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; provided, however, that a successor to the
Master Servicer is appointed pursuant to Section 7.02 and such successor Master
Servicer shall have accepted the duties of Master Servicer effective upon the
resignation of the Master Servicer. If an Event of Default described in clause
(vi) hereof shall occur, the Trustee shall, by notice to the Master Servicer and
the Depositor, immediately terminate all of the rights and obligations of the
Master Servicer under this Agreement and in and to the Mortgage Loans and the
proceeds thereof, other than its rights as a Certificateholder hereunder as
provided in Section 4.04(b). On or after the receipt by the Master Servicer of
such written notice, all authority and power of the Master Servicer under this
Agreement, whether with respect to the Certificates (other than as a Holder
thereof) or the Mortgage Loans or otherwise, shall subject to Section 7.02 pass
to and be vested in the Trustee or the Trustee's designee appointed pursuant to
Section 7.02; and, without limitation, the Trustee is hereby authorized and
empowered to execute and deliver, on behalf of the Master Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement or assignment of the Mortgage Loans and related documents, or
OTHERWISE. The Master Servicer agrees to cooperate with the Trustee (or its
designee) as successor Master Servicer in effecting the termination of the
Master Servicer's responsibilities and rights hereunder, including, without
limitation, the transfer to the Trustee or its designee for administration by it
of all cash amounts which shall at the time be credited to the Custodial Account
or the Certificate Account or thereafter be received with respect to the
Mortgage Loans. No such termination shall release the Master Servicer for any
liability that it would otherwise have hereunder for any act or omission prior
to the effective time of such termination. Notwithstanding any termination of
the activities of Residential Funding in its capacity as Master Servicer
hereunder, Residential Funding shall be entitled to receive, out of any late
collection of a Monthly Payment on a Mortgage Loan which was due prior to the
notice terminating Residential Funding's rights and obligations as Master
Servicer hereunder and received after such notice, that portion to which
Residential Funding would have been entitled pursuant to Sections 3.10(a)(ii),
(vi) and (vii) as well as its Servicing Fee in respect thereof, and any other
amounts payable to Residential Funding hereunder the entitlement to which arose
prior to the termination of its activities hereunder. Upon the termination of
Residential Funding as Master Servicer hereunder the Depositor shall deliver to
the Trustee, as successor Master Servicer, a copy of the Program Guide.
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Section 7.02. Trustee or Depositor to Act; Appointment of Successor.
(a) On and after the time the Master Servicer receives a notice of
termination pursuant to Section 7.01 or resigns in accordance with Section 6.04,
the Trustee or, upon notice to the Depositor and with the Depositor's consent
(which shall not be unreasonably withheld) a designee (which meets the standards
set forth below) of the Trustee, shall be the successor in all respects 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 (except for the responsibilities, duties and liabilities contained in
Sections 2.02 and 2.03(a), excluding the duty to notify related Subservicers as
set forth in such Sections, and its obligations to deposit amounts in respect of
losses incurred prior to such notice or termination on the investment of funds
in the Custodial Account or the Certificate Account pursuant to Sections 3.07(c)
and 4.01(c) by the terms and provisions hereof); provided, however, that any
failure to perform such duties or responsibilities caused by the preceding
Master Servicer's failure to provide information required by Section 4.04 shall
not be considered a default by the Trustee hereunder as successor Master
Servicer. As compensation therefor, the Trustee as successor Master Servicer
shall be entitled to all funds relating to the Mortgage Loans which the Master
Servicer would have been entitled to charge to the Custodial Account or the
Certificate Account if the Master Servicer had continued to act hereunder and,
in addition, shall be entitled to the income from any Permitted Investments made
with amounts attributable to the Mortgage Loans held in the Custodial Account or
the Certificate Account. If the Trustee has become the successor to the Master
Servicer in accordance with Section 6.04 or Section 7.01, then notwithstanding
the above, the Trustee may, if it shall be unwilling to so act, or shall, if it
is unable to so act, appoint, or petition a court of competent jurisdiction to
appoint, any established housing and home finance institution, which is also a
Xxxxxx Xxx or Xxxxxxx Mac-approved mortgage servicing institution, having a net
worth of not less than $10,000,000 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. Pending appointment of a
successor to the Master Servicer hereunder, the Trustee shall become successor
to the Master Servicer and shall act in such capacity as hereinabove provided.
In connection with such appointment and assumption, the Trustee may make such
arrangements for the compensation of such successor out of payments on Mortgage
Loans as it and such successor shall agree; provided, however, that no such
compensation shall be in excess of that permitted the initial Master Servicer
hereunder. The Depositor, the Trustee, the Custodian and such successor shall
take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession. Any successor Master Servicer appointed pursuant
to this Section 7.02 shall not receive a Servicing Fee with respect any Mortgage
Loan not directly serviced by the Master Servicer on which the Subservicing Fee
(i) accrues at a rate of less than 0.50% per annum and (ii) has to be increased
to a rate of 0.50% per annum in order to hire a Subservicer. The Master Servicer
shall pay the reasonable expenses of the Trustee in connection with any
servicing transfer hereunder.
(b) 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, in which case the predecessor Master Servicer shall cooperate with the
successor Master Servicer in causing MERS to revise its records to reflect the
transfer of servicing to the successor Master Servicer as necessary under MERS'
rules and regulations, 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
predecessor Master Servicer shall bear any and all fees of MERS, costs of
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preparing any assignments of Mortgage, and fees and costs of filing any
assignments of Mortgage that may be required under this subsection (b). The
successor Master Servicer shall cause such assignment to be delivered to the
Trustee or the Custodian promptly upon receipt of the original with evidence of
recording thereon or a copy certified by the public recording office in which
such assignment was recorded.
Section 7.03. Notification to Certificateholders.
(a) Upon any such termination or appointment of a successor to the
Master Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders at their respective addresses appearing in the Certificate
Register.
(b) Within 60 days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Holders of Certificates and the Credit
Risk Manager notice of each such Event of Default hereunder known to the
Trustee, unless such Event of Default shall have been cured or waived as
provided in Section 7.04 hereof.
Section 7.04. Waiver of Events of Default.
The Holders representing at least 66% of the Voting Rights of
Certificates affected by a default or Event of Default hereunder may waive any
default or Event of Default; provided, however, that (a) a default or Event of
Default under clause (i) of Section 7.01 may be waived only by all of the
Holders of Certificates affected by such default or Event of Default and (b) no
waiver pursuant to this Section 7.04 shall affect the Holders of Certificates in
the manner set forth in Section 11.01(b)(i), (ii) or (iii). Upon any such waiver
of a default or Event of Default by the Holders representing the requisite
percentage of Voting Rights of Certificates affected by such default or Event of
Default, such default or Event of Default shall cease to exist and shall be
deemed to have been remedied for every purpose hereunder. No such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent thereon except to the extent expressly so waived.
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.01. Duties of Trustee.
(a) The Trustee, prior to the occurrence of an Event of Default and
after the curing of all Events of Default which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement. In case an Event of Default has occurred (which has not been cured or
waived), 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 investor would exercise or use under the circumstances in the
conduct of such investor's own affairs.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which 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. The Trustee shall notify the
Certificateholders of any such documents which do not materially conform to the
requirements of this Agreement in the event that the Trustee, after so
requesting, does not receive satisfactorily corrected documents. The Trustee
shall forward or cause to be forwarded in a timely fashion the notices, reports
and statements required to be forwarded by the Trustee pursuant to Sections
4.03, 7.03, and 10.01. The Trustee shall furnish in a timely fashion to the
Master Servicer such information as the Master Servicer may reasonably request
from time to time for the Master Servicer to fulfill its duties as set forth in
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this Agreement. The Trustee covenants and agrees that it shall perform its
obligations hereunder in a manner so as to maintain the status of each REMIC
created hereunder as a REMIC under the REMIC Provisions and (subject to Section
10.01(f)) to prevent the imposition of any federal, state or local income,
prohibited transaction, contribution or other tax on the Trust Fund to the
extent that maintaining such status and avoiding such taxes are reasonably
within the control of the Trustee and are reasonably within the scope of its
duties under this Agreement.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct; provided, however, that:
(i) Prior to the occurrence of an Event of Default, and after
the curing or waiver of all such Events of Default which 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 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,
in the absence of bad faith on the part of the Trustee, 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 by the Depositor or the Master Servicer and
which on their face, do not contradict the requirements of this
Agreement;
(ii) The Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(iii) The Trustee shall not be personally liable with respect to
any action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Certificateholders holding
Certificates which evidence, Percentage Interests aggregating not less
than 25% of the affected Classes as 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;
(iv) The Trustee shall not be charged with knowledge of any
default (other than a default in payment to the Trustee) specified in
clauses (i) and (ii) of Section 7.01 or an Event of Default under
clauses (iii), (iv) and (v) of Section 7.01 unless a Responsible Officer
of the Trustee assigned to and working in the Corporate Trust Office
obtains actual knowledge of such failure or event or the Trustee
receives written notice of such failure or event at its Corporate Trust
Office from the Master Servicer, the Depositor or any Certificateholder;
and
(v) Except to the extent provided in Section 7.02, no provision
in this Agreement shall require the Trustee to expend or risk its own
funds (including, without limitation, the making of any Advance) or
otherwise incur any personal financial liability in the performance of
any of its duties as Trustee hereunder, or in the exercise of any of its
rights or powers, if the Trustee shall have reasonable grounds for
believing that repayment of funds or adequate indemnity against such
risk or liability is not reasonably assured to it.
(d) The Trustee shall timely pay, from its own funds, the amount of any
and all federal, state and local taxes imposed on the Trust Fund or its assets
or transactions including, without limitation, (A) "prohibited transaction"
penalty taxes as defined in Section 860F of the Code, if, when and as the same
shall be due and payable, (B) any tax on contributions to a REMIC after the
Closing Date imposed by Section 860G(d) of the Code and (C) any tax on "net
income from foreclosure property" as defined in Section 860G(c) of the Code, but
only if such taxes arise out of a breach by the Trustee of its obligations
hereunder, which breach constitutes negligence or willful misconduct of the
Trustee.
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Section 8.02. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
(i) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond or
other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(ii) The Trustee may consult with counsel, and any 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;
(iii) The Trustee shall be under no obligation to exercise any
of the trusts or powers vested in it by this Agreement or to institute,
conduct or defend any litigation hereunder or in relation hereto at the
request, order or direction of any of the Certificateholders pursuant to
the provisions of this Agreement, unless such Certificateholders shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which may be incurred therein or
thereby; nothing contained herein shall, however, relieve the Trustee of
the obligation, upon the occurrence of an Event of Default (which has
not been cured), to exercise such of the rights and powers vested in it
by this Agreement, and to use the same degree of care and skill in their
exercise as a prudent investor would exercise or use under the
circumstances in the conduct of such investor's own affairs;
(iv) The Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Agreement;
(v) Prior to the occurrence of an Event of Default hereunder and
after the curing of all Events of Default which may have occurred, the
Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing so to do by the
Holders of Certificates of any Class evidencing, as to such Class,
Percentage Interests, aggregating not less than 50%; provided, however,
that if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making
of such investigation is, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to it by the terms of
this Agreement, the Trustee may require reasonable indemnity against
such expense or liability as a condition to so proceeding. The
reasonable expense of every such examination shall be paid by the Master
Servicer, if an Event of Default shall have occurred and is continuing,
and otherwise by the Certificateholder requesting the investigation;
(vi) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys provided that the Trustee shall remain
liable for any acts of such agents or attorneys; and
(vii) To the extent authorized under the Code and the
regulations promulgated thereunder, each Holder of a Class R Certificate
hereby irrevocably appoints and authorizes the Trustee to be its
attorney-in-fact for purposes of signing any Tax Returns required to be
filed on behalf of the Trust Fund. The Trustee shall sign on behalf of
the Trust Fund and deliver to the Master Servicer in a timely manner any
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Tax Returns prepared by or on behalf of the Master Servicer that the
Trustee is required to sign as determined by the Master Servicer
pursuant to applicable federal, state or local tax laws, provided that
the Master Servicer shall indemnify the Trustee for signing any such Tax
Returns that contain errors or omissions.
(b) Following the issuance of the Certificates (and except as provided
for in Section 2.04), the Trustee shall not accept any contribution of assets to
the Trust Fund unless (subject to Section 10.01(f)) it shall have obtained or
been furnished with an Opinion of Counsel to the effect that such contribution
will not (i) cause any REMIC created hereunder to fail to qualify as a REMIC at
any time that any Certificates are outstanding or (ii) cause the Trust Fund to
be subject to any federal tax as a result of such contribution (including the
imposition of any federal tax on "prohibited transactions" imposed under Section
860F(a) of the Code).
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than the
execution of the Certificates and relating to the acceptance and receipt of the
Mortgage Loans) 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 the Certificates (except that the
Certificates shall be duly and validly executed and authenticated by it as
Certificate Registrar) or of any Mortgage Loan or related document, or of MERS
or the MERS(R) System. Except as otherwise provided herein, the Trustee shall
not be accountable for the use or application by the Depositor or the Master
Servicer of any of the Certificates or of the proceeds of such Certificates, or
for the use or application of any funds paid to the Depositor or the Master
Servicer in respect of the Mortgage Loans or deposited in or withdrawn from the
Custodial Account or 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 it would have if it were not
Trustee.
Section 8.05. Master Servicer to Pay Trustee's Fees and Expenses;
Indemnification.
(a) The Master Servicer covenants and agrees to pay to the Trustee and
any co-trustee from time to time, and the Trustee and any co-trustee shall be
entitled to, reasonable compensation (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 each of them in the execution of the trusts hereby
created and in the exercise and performance of any of the powers and duties
hereunder of the Trustee and any co-trustee, and the Master Servicer shall pay
or reimburse the Trustee and any co-trustee upon request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee or any
co-trustee in accordance with any of the provisions of this Agreement (including
the reasonable compensation and the expenses and disbursements of its counsel
and of all persons not regularly in its employ, and the expenses incurred by the
Trustee or any co-trustee in connection with the appointment of an office or
agency pursuant to Section 8.12) except any such expense, disbursement or
advance as may arise from its negligence or bad faith.
(b) The Master Servicer agrees to indemnify the Trustee for, and to hold
the Trustee harmless against, any loss, liability or expense incurred without
negligence or willful misconduct on its part, arising out of, or in connection
with, the acceptance and administration of the Trust Fund, including its
obligation to execute the DTC Letter in its individual capacity, and including
the costs and expenses (including reasonable legal fees and expenses) of
defending itself against any claim in connection with the exercise or
performance of any of its powers or duties under this Agreement and the Swap
Agreement, provided that:
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(i) with respect to any such claim, the Trustee shall have given
the Master Servicer written notice thereof promptly after the Trustee
shall have actual knowledge thereof;
(ii) while maintaining control over its own defense, the Trustee
shall cooperate and consult fully with the Master Servicer in preparing
such defense; and
(iii) notwithstanding anything in this Agreement to the
contrary, the Master Servicer shall not be liable for settlement of any
claim by the Trustee entered into without the prior consent of the
Master Servicer which consent shall not be unreasonably withheld. No
termination of this Agreement shall affect the obligations created by
this Section 8.05(b) of the Master Servicer to indemnify the Trustee
under the conditions and to the extent set forth herein. Notwithstanding
the foregoing, the indemnification provided by the Master Servicer in
this Section 8.05(b) shall not pertain to any loss, liability or expense
of the Trustee, including the costs and expenses of defending itself
against any claim, incurred in connection with any actions taken by the
Trustee at the direction of Certificateholders pursuant to the terms of
this Agreement.
Section 8.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a national banking
association or a New York banking corporation having its principal office in a
state and city acceptable to the Depositor and organized and doing business
under the laws of such 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 and subject to supervision or examination by
federal or state authority. If such corporation or national banking association
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for
purposes of this Section the combined capital and surplus of such corporation
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, the
Trustee shall resign immediately in the manner and with the effect specified in
Section 8.07.
Section 8.07. Resignation and Removal of the Trustee.
(a) The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Depositor and the Master
Servicer. Upon receiving such notice of resignation, the Depositor shall
promptly appoint a successor trustee by written instrument, in duplicate, one
copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor trustee. If no successor trustee shall have been so
appointed and have accepted appointment within 30 days after the giving of such
notice of resignation, then the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.06 and shall fail to resign after written
request therefor by the Depositor, or if at any time the Trustee shall become
incapable of acting, or shall be adjudged 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, then the Depositor
may remove the Trustee and appoint a successor trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered to the Trustee so
removed and one copy to the successor trustee. In addition, in the event that
the Depositor determines that the Trustee has failed (i) to distribute or cause
to be distributed to Certificateholders any amount required to be distributed
hereunder, if such amount is held by the Trustee or its Paying Agent (other than
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the Master Servicer or the Depositor) for distribution or (ii) to otherwise
observe or perform in any material respect any of its covenants, agreements or
obligations hereunder, and such failure shall continue unremedied for a period
of 5 days (in respect of clause (i) above) or 30 days (in respect of clause (ii)
above, other than any failure to comply with the provisions of Article XII, in
which case no notice or grace period shall be applicable) after the date on
which written notice of such failure, requiring that the same be remedied, shall
have been given to the Trustee by the Depositor, then the Depositor may remove
the Trustee and appoint a successor trustee by written instrument delivered as
provided in the preceding sentence. In connection with the appointment of a
successor trustee pursuant to the preceding sentence, the Depositor shall, on or
before the date on which any such appointment becomes effective, obtain from
each Rating Agency written confirmation that the appointment of any such
successor trustee will not result in the reduction of the ratings on any Class
of the Certificates below the lesser of the then current or original ratings on
such Certificates.
(c) The Holders of Certificates entitled to at least 51% of the Voting
Rights 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 to the Depositor, one complete set to the Trustee so removed
and one complete set to the successor so appointed.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 8.08.
Section 8.08. Successor Trustee.
(a) Any successor trustee appointed as provided in Section 8.07 shall
execute, acknowledge and deliver to the Depositor and to its predecessor trustee
an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor trustee shall become effective and
such successor trustee 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. The predecessor
trustee shall deliver to the successor trustee all Custodial Files and related
documents and statements held by it hereunder (other than any Custodial Files at
the time held by a Custodian, which shall become the agent of any successor
trustee hereunder), and the Depositor, the Master Servicer and the predecessor
trustee shall execute and deliver such instruments and do such other things as
may reasonably be required for more fully and certainly vesting and confirming
in the successor trustee all such rights, powers, duties and obligations.
(b) No successor trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 8.06.
(c) Upon acceptance of appointment by a successor trustee as provided in
this Section, the Depositor shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates at their addresses as shown in the
Certificate Register. If the Depositor fails to mail such notice within 10 days
after acceptance of appointment by the successor 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.
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Any corporation or national banking association into which the Trustee
may be merged or converted or with which it may be consolidated or any
corporation or national banking association resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation or national banking association succeeding to the business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
corporation or national banking association shall be eligible under the
provisions of Section 8.06, 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. The Trustee shall mail notice of any such merger or
consolidation to the Certificateholders at their address as shown in the
Certificate Register.
Section 8.10. Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions hereof, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Fund or property securing the same may at the time be located, the
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 to act as co-trustee or co-trustees, jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of the Trust Fund, and
to vest in such Person or Persons, in such capacity, such title to the Trust
Fund, or any part thereof, and, subject to the other provisions of this Section
8.10, such powers, duties, obligations, rights and trusts as the Master Servicer
and the Trustee may consider necessary or desirable. If the Master Servicer
shall not have joined in such appointment within 15 days after the receipt by it
of a request so to do, or in case an Event of Default shall have occurred and be
continuing, the Trustee alone shall have the power to make such appointment. No
co-trustee or separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 8.06 hereunder, and no notice
to Holders of Certificates of the appointment of co-trustee(s) or separate
trustee(s) shall be required under Section 8.08 hereof.
(b) In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 8.10, all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee, and such separate trustee or co-trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed (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 by
such separate trustee or co-trustee at the direction of the Trustee.
(c) 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.
(d) 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.
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Section 8.11. Appointment of the Custodian.
The Trustee may, with the consent of the Master Servicer and the
Depositor, or shall, at the direction of the Master Servicer and the Depositor,
appoint custodians who are not Affiliates of the Depositor or the Master
Servicer to hold all or a portion of the Custodial Files as agent for the
Trustee, by entering into a Custodial Agreement. The Trustee is hereby directed
to enter into a Custodial Agreement with Xxxxx Fargo Bank, N.A. Subject to
Article VIII, the Trustee agrees to comply with the terms of each Custodial
Agreement with respect to the Custodial Files and to enforce the terms and
provisions thereof against the related custodian for the benefit of the
Certificateholders. Each custodian shall be a depository institution subject to
supervision by federal or state authority, shall have a combined capital and
surplus of at least $15,000,000 and shall be qualified to do business in the
jurisdiction in which it holds any Custodial File. Each Custodial Agreement,
with respect to the Custodial Files, may be amended only as provided in Section
11.01. The Trustee shall notify the Certificateholders of the appointment of any
custodian (other than the custodian appointed as of the Closing Date) pursuant
to this Section 8.11.
Section 8.12. Appointment of Office or Agency.
The Trustee shall maintain an office or agency in the City of St. Xxxx,
Minnesota where Certificates may be surrendered for registration of transfer or
exchange. The Trustee initially designates its offices located at the Corporate
Trust Office for the purpose of keeping the Certificate Register. The Trustee
shall maintain an office at the address stated in Section 11.05(c) hereof where
notices and demands to or upon the Trustee in respect of this Agreement may be
served.
Section 8.13. DTC Letter of Representations.
The Trustee is hereby authorized and directed to, and agrees that it
shall, enter into the DTC Letter on behalf of the Trust Fund and in its
individual capacity as agent thereunder.
Section 8.14. Swap Agreements.
The Supplemental Interest Trust Trustee is hereby authorized and
directed to, and agrees that it shall (a) enter into the Swap Agreement on
behalf of the Supplemental Interest Trust and (b) enter into the SB-AM Swap
Agreement on behalf of (i) the Class A Certificateholders and Class M
Certificateholders on the one hand, and (ii) the Class SB Certificateholders on
the other hand.
ARTICLE IX
TERMINATION
Section 9.01. Termination Upon Purchase or Liquidation of All Mortgage
Loans.
(a) Subject to Section 9.02, the respective obligations and
responsibilities of the Depositor, the Master Servicer and the Trustee created
hereby in respect of the Certificates (other than the obligation of the Trustee
to make certain payments after the Final Distribution Date to Certificateholders
and the obligation of the Depositor to send certain notices as hereinafter set
forth) shall terminate upon the last action required to be taken by the Trustee
on the Final Distribution Date pursuant to this Article IX following the earlier
of:
(i) the later of the final payment or other liquidation (or any
Advance with respect thereto) of the last Mortgage Loan remaining in the
Trust Fund or the disposition of all property acquired upon foreclosure
or deed in lieu of foreclosure of any Mortgage Loan, or
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(ii) at the option of the Master Servicer or the Holder of the
Class SB Certificates as provided in Section 9.01(f), the purchase of
all Mortgage Loans and all property acquired in respect of any Mortgage
Loan remaining in the Trust Fund, at a price equal to the sum of (A)
100% of the unpaid principal balance of each Mortgage Loan (or, if less
than such unpaid principal balance, the fair market value of the related
underlying property of such Mortgage Loan with respect to Mortgage Loans
as to which title has been acquired if such fair market value is less
than such unpaid principal balance) (and if such purchase is made by the
Master Servicer only, net of any unreimbursed Advances attributable to
principal) on the day of repurchase, plus accrued interest thereon at
the Net Mortgage Rate (or Modified Net Mortgage Rate in the case of any
Modified Mortgage Loan), to, but not including, the first day of the
month in which such repurchase price is distributed, and (B) any unpaid
Swap Termination Payment and any Net Swap Payments payable to the Swap
Counterparty (or any Swap Termination Payment payable to the Swap
Counterparty as a result of the exercise of the option provided for in
this Section 9.01(a)(ii));
provided, however, that in no event shall the trust created hereby continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants of Xxxxxx X. Xxxxxxx, the late ambassador of the United States to
the Court of St. Xxxxx, living on the date hereof; and provided further, that
the purchase price set forth above shall be increased as is necessary, as
determined by the Master Servicer, to avoid disqualification of any REMIC
created hereunder as a REMIC.
The purchase price paid by the Master Servicer or the Holder of the
Class SB Certificates, as applicable, pursuant to Section 9.01(a)(ii) shall also
include any amounts owed by Residential Funding pursuant to the last paragraph
of Section 4 of the Assignment Agreement in respect of any liability, penalty or
expense that resulted from a breach of the representation and warranty set forth
in clause (xlvii) of Section 4 of the Assignment Agreement that remain unpaid on
the date of such purchase.
The right of the Master Servicer or the Holder of the Class SB
Certificates, as applicable, to purchase all of the Mortgage Loans pursuant to
clause (ii) above is conditioned upon the date of such purchase occurring on or
after the Optional Termination Date. If such right is exercised by the Master
Servicer, the Master Servicer shall be deemed to have been reimbursed for the
full amount of any unreimbursed Advances theretofore made by it with respect to
the Mortgage Loans being purchased. In addition, the Master Servicer shall
provide to the Trustee the certification required by Section 3.15, and the
Trustee and the Custodian shall, promptly following payment of the purchase
price, release to the Master Servicer or the Holder of the Class SB
Certificates, as applicable, the Custodial Files pertaining to the Mortgage
Loans being purchased.
In addition to the foregoing, on any Distribution Date on or after the
Optional Termination Date, the Master Servicer or the Holder of the Class SB
Certificates as provided in Section 9.01(f), shall have the right, at its
option, to purchase the Class A Certificates, Class M Certificates and Class SB
Certificates in whole, but not in part, at a price equal to the sum of the
outstanding Certificate Principal Balance of such Certificates plus the sum of
one month's Accrued Certificate Interest thereon, any previously unpaid Accrued
Certificate Interest, and any unpaid Prepayment Interest Shortfalls previously
allocated thereto and, in the case of Prepayment Interest Shortfalls, accrued
interest thereon at the applicable Pass-Through Rate, plus, with respect to any
optional termination by the Holder of the Class SB Certificates, an amount equal
to all accrued and unpaid Servicing Fees and reimbursement for all unreimbursed
Advances and Servicing Advances, in each case through the date of such optional
termination. If the Master Servicer or the Holder of the Class SB Certificates,
as applicable, exercises this right to purchase the outstanding Class A
Certificates, Class M Certificates and Class SB Certificates, the Master
Servicer or the Holder of the Class SB Certificates, as applicable, will
promptly terminate the respective obligations and responsibilities created
hereby in respect of these Certificates pursuant to this Article IX.
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(b) The Master Servicer or the Holder of the Class SB Certificates, as
applicable, shall give the Trustee, the Supplemental Interest Trust Trustee (and
the Master Servicer if the Holder of the Class SB Certificates is exercising its
option) and the Swap Counterparty (so long as the Swap Agreement has not
previously been terminated) not less than 40 days prior notice of the
Distribution Date on which (1) the Master Servicer or the Holder of the Class SB
Certificates, as applicable, anticipates that the final distribution will be
made to Certificateholders as a result of the exercise by the Master Servicer or
the Holder of the Class SB Certificates, as applicable, of its right to purchase
the Mortgage Loans or on which (2) the Master Servicer or the Holder of the
Class SB Certificates, as applicable, anticipates that the Certificates will be
purchased as a result of the exercise by the Master Servicer or the Holder of
the Class SB Certificates, as applicable, to purchase the outstanding
Certificates. Notice of any termination, specifying the anticipated Final
Distribution Date (which shall be a date that would otherwise be a Distribution
Date) upon which the Certificateholders may surrender their Certificates to the
Trustee (if so required by the terms hereof) for payment of the final
distribution and cancellation or notice of any purchase of the outstanding
Certificates, specifying the Distribution Date upon which the Holders may
surrender their Certificates to the Trustee for payment, shall be given promptly
by the Master Servicer (if it is exercising the right to purchase the Mortgage
Loans or to purchase the outstanding Certificates), or by the Trustee (in any
other case) by letter to the Certificateholders (with a copy to the Certificate
Registrar) mailed (or distributed through the Depository with respect to any
Book-Entry Certificates) not earlier than the 15th day and not later than the
25th day of the month next preceding the month of such final distribution
specifying:
(i) the anticipated Final Distribution Date upon which final
payment of the Certificates is anticipated to be made upon presentation
and surrender of Certificates at the office or agency of the Trustee
therein designated where required pursuant to this Agreement or, in the
case of the purchase by the Master Servicer or the Holder of the Class
SB Certificates, as applicable, of the outstanding Certificates, the
Distribution Date on which such purchase is made,
(ii) the amount of any such final payment or, in the case of the
purchase of the outstanding Certificates, the purchase price, in either
case, if known, and
(iii) that the Record Date otherwise applicable to such
Distribution Date is not applicable, and that payment will be made only
upon presentation and surrender of the Certificates at the office or
agency of the Trustee therein specified.
If the Master Servicer or the Trustee is obligated to give notice to
Certificateholders as required above, it shall give such notice to the
Certificate Registrar at the time such notice is given to Certificateholders. In
the event of a purchase of the Mortgage Loans by the Master Servicer or the
Holder of the Class SB Certificates, as applicable, the Master Servicer or the
Holder of the Class SB Certificates, as applicable, shall deposit in the
Certificate Account before the Final Distribution Date in immediately available
funds an amount equal to the purchase price computed as provided above. As a
result of the exercise by the Master Servicer or the Holder of the Class SB
Certificates, as applicable, of its right to purchase the outstanding
Certificates, the Master Servicer or the Holder of the Class SB Certificates, as
applicable, shall deposit in the Certificate Account, before the Distribution
Date on which such purchase is to occur, in immediately available funds, an
amount equal to the purchase price for the Certificates computed as provided
above, and provide notice of such deposit to the Trustee. The Trustee shall
withdraw from such account the amount specified in subsection (c) below and
distribute such amount to the Certificateholders as specified in subsection (c)
below. The Master Servicer or the Holder of the Class SB Certificates, as
applicable, shall provide to the Trustee written notification of any change to
the anticipated Final Distribution Date as soon as practicable. If the Trust
Fund is not terminated on the anticipated Final Distribution Date, for any
reason, the Trustee shall promptly mail notice thereof to each affected
Certificateholder.
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(c) Upon presentation and surrender of the Class A Certificates, Class M
Certificates and Class SB Certificates by the Certificateholders thereof, the
Trustee and the Supplemental Interest Trust Trustee, as applicable shall
distribute to such Certificateholders (i) the amount otherwise distributable on
such Distribution Date, if not in connection with the Master Servicer's or the
Holder's of the Class SB Certificates, as applicable, election to repurchase the
Mortgage Loans or the outstanding Class A Certificates, Class M Certificates and
Class SB Certificates, or (ii) if the Master Servicer or the Holder of the Class
SB Certificates, as applicable, elected to so repurchase the Mortgage Loans or
the outstanding Class A Certificates, Class M Certificates and Class SB
Certificates, an amount equal to the price paid pursuant to Section 9.01(a) as
follows: first, with respect to any optional termination by the Holder of the
Class SB Certificates, payment of any accrued and unpaid Servicing Fees and
reimbursement for all unreimbursed Advances and Servicing Advances, in each case
through the date of such optional termination, to the Master Servicer, second,
with respect to the Class A Certificates, pari passu, the outstanding
Certificate Principal Balance thereof, plus Accrued Certificate Interest thereon
for the related Interest Accrual Period and any previously unpaid Accrued
Certificate Interest, third, with respect to the Class M-1 Certificates, the
outstanding Certificate Principal Balance thereof, plus Accrued Certificate
Interest thereon for the related Interest Accrual Period and any previously
unpaid Accrued Certificate Interest, fourth, with respect to the Class M-2
Certificates, the outstanding Certificate Principal Balance thereof, plus
Accrued Certificate Interest thereon for the related Interest Accrual Period and
any previously unpaid Accrued Certificate Interest, fifth, with respect to the
Class M-3 Certificates, the outstanding Certificate Principal Balance thereof,
plus Accrued Certificate Interest thereon for the related Interest Accrual
Period and any previously unpaid Accrued Certificate Interest, sixth, with
respect to the Class M-4 Certificates, the outstanding Certificate Principal
Balance thereof, plus Accrued Certificate Interest thereon for the related
Interest Accrual Period and any previously unpaid Accrued Certificate Interest,
seventh, with respect to the Class M-5 Certificates, the outstanding Certificate
Principal Balance thereof, plus Accrued Certificate Interest thereon for the
related Interest Accrual Period and any previously unpaid Accrued Certificate
Interest, eighth, with respect to the Class M-6 Certificates, the outstanding
Certificate Principal Balance thereof, plus Accrued Certificate Interest thereon
for the related Interest Accrual Period and any previously unpaid Accrued
Certificate Interest, ninth, with respect to the Class M-7 Certificates, the
outstanding Certificate Principal Balance thereof, plus Accrued Certificate
Interest thereon for the related Interest Accrual Period and any previously
unpaid Accrued Certificate Interest, tenth, with respect to the Class M-8
Certificates, the outstanding Certificate Principal Balance thereof, plus
Accrued Certificate Interest thereon for the related Interest Accrual Period and
any previously unpaid Accrued Certificate Interest, eleventh, with respect to
the Class M-9 Certificates, the outstanding Certificate Principal Balance
thereof, plus Accrued Certificate Interest thereon for the related Interest
Accrual Period and any previously unpaid Accrued Certificate Interest, twelfth,
to the Class A Certificates and Class M Certificates, the amount of any
Prepayment Interest Shortfalls allocated thereto for such Distribution Date or
remaining unpaid from prior Distribution Dates and accrued interest thereon at
the applicable Pass-Through Rate, on a pro rata basis based on Prepayment
Interest Shortfalls allocated thereto for such Distribution Date or remaining
unpaid from prior Distribution Dates, thirteenth, to the Swap Counterparty
(without duplication of amounts payable to the Swap Counterparty on such date in
accordance with Section 4.02) any Swap Termination Payment payable to the Swap
Counterparty then remaining unpaid or which is due to the exercise of any early
termination of the Trust Fund pursuant to this Section 9.01, and fourteenth, to
the Class SB Certificates, all remaining amounts.
(d) In the event that any Certificateholders shall not surrender their
Certificates for final payment and cancellation on or before the Final
Distribution Date, the Master Servicer (if it exercised its right to purchase
the Mortgage Loans) or the Trustee (in any other case), shall give a second
written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within six months after the second notice any Certificate shall not
have been surrendered for cancellation, the Trustee shall take appropriate steps
as directed by the Master Servicer to contact the remaining Certificateholders
concerning surrender of their Certificates. The costs and expenses of
maintaining the Certificate Account and of contacting Certificateholders shall
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be paid out of the assets which remain in the Certificate Account. If within
nine months after the second notice any Certificates shall not have been
surrendered for cancellation, the Trustee shall pay to the Master Servicer all
amounts distributable to the holders thereof and the Master Servicer shall
thereafter hold such amounts until distributed to such Holders. No interest
shall accrue or be payable to any Certificateholder on any amount held in the
Certificate Account or by the Master Servicer as a result of such
Certificateholder's failure to surrender its Certificate(s) for final payment
thereof in accordance with this Section 9.01 and the Certificateholders shall
look only to the Master Servicer for such payment.
(e) If any Certificateholders do not surrender their Certificates on or
before the Distribution Date on which a purchase of the outstanding Certificates
is to be made, the Master Servicer shall give a second written notice to such
Certificateholders to surrender their Certificates for payment of the purchase
price therefor. If within six months after the second notice any Certificate
shall not have been surrendered for cancellation, the Trustee shall take
appropriate steps as directed by the Master Servicer to contact the Holders of
such Certificates concerning surrender of their Certificates. The costs and
expenses of maintaining the Certificate Account and of contacting
Certificateholders shall be paid out of the assets which remain in the
Certificate Account. If within nine months after the second notice any
Certificates shall not have been surrendered for cancellation in accordance with
this Section 9.01, the Trustee shall pay to the Master Servicer all amounts
distributable to the Holders thereof and shall have no further obligation or
liability therefor and the Master Servicer shall thereafter hold such amounts
until distributed to such Holders. No interest shall accrue or be payable to any
Certificateholder on any amount held in the Certificate Account or by the Master
Servicer as a result of such Certificateholder's failure to surrender its
Certificate(s) for payment in accordance with this Section 9.01. Any Certificate
that is not surrendered on the Distribution Date on which a purchase pursuant to
this Section 9.01 occurs as provided above will be deemed to have been purchased
and the Holder as of such date will have no rights with respect thereto except
to receive the purchase price therefor minus any costs and expenses associated
with such Certificate Account and notices allocated thereto. Any Certificates so
purchased or deemed to have been purchased on such Distribution Date shall
remain outstanding hereunder. The Master Servicer shall be for all purposes the
Holder thereof as of such date.
(f) With respect to the first possible Optional Termination Date, the
Master Servicer shall have the sole option to exercise the purchase options
described in Section 9.01(a) and the Holder of the Class SB Certificates shall
have no claim thereto. If, however, the Master Servicer elects not to exercise
one of its options to purchase pursuant to Section 9.01(a) with respect to the
first possible Optional Termination Date, the Holder of the Class SB
Certificates shall have the sole option to exercise the purchase options
described in Section 9.01(a) on the second possible Optional Termination Date
and the Master Servicer shall have no claim thereto. If the Holder of the Class
SB Certificates elects not to exercise one of its options to purchase pursuant
to Section 9.01(a) with respect to the second possible Optional Termination
Date, it shall lose such right and have no claim to exercise any purchase
options pursuant to this Section 9.01 thereafter. Beginning with the third
possible Optional Termination Date and thereafter, the Master Servicer shall
again have the sole option to exercise the purchase options described in Section
9.01(a).
Section 9.02. Additional Termination Requirements.
(a) Any REMIC hereunder, as the case may be, shall be terminated in
accordance with the following additional requirements, unless (subject to
Section 10.01(f)) the Trustee and the Master Servicer have received an Opinion
of Counsel (which Opinion of Counsel shall not be an expense of the Trustee) to
the effect that the failure of any REMIC created hereunder as the case may be,
to comply with the requirements of this Section 9.02 will not (i) result in the
imposition on the Trust Fund of taxes on "prohibited transactions," as described
in Section 860F of the Code, or (ii) cause any REMIC created hereunder to fail
to qualify as a REMIC at any time that any Certificate is outstanding:
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(i) The Master Servicer shall establish a 90-day liquidation
period for REMIC I, REMIC II or REMIC III, as applicable, and any other
related terminating REMICs, and specify the first day of such period in
a statement attached to REMIC I's, REMIC II's or REMIC III's, as
applicable, and any other related terminating REMICs', final Tax Return
pursuant to Treasury Regulations Section 1.860F-1. The Master Servicer
also shall satisfy all of the requirements of a qualified liquidation
for each of REMIC I, REMIC II and REMIC III under Section 860F of the
Code and the regulations thereunder;
(ii) The Master Servicer shall notify the Trustee at the
commencement of such 90-day liquidation period and, at or prior to the
time of making of the final payment on the Certificates, the Trustee
shall sell or otherwise dispose of all of the remaining assets of the
liquidating REMICs in accordance with the terms hereof; and
(iii) If the Master Servicer is exercising its right to purchase
the assets of the Trust Fund, the Master Servicer shall, during the
90-day liquidation period and at or prior to the Final Distribution
Date, purchase all of the assets of the liquidating REMICs for cash.
(b) Each Holder of a Certificate and the Trustee hereby irrevocably
approves and appoints the Master Servicer as its attorney-in-fact to adopt a
plan of complete liquidation for any REMIC hereunder at the expense of the Trust
Fund in accordance with the terms and conditions of this Agreement.
ARTICLE X
REMIC PROVISIONS
Section 10.01. REMIC Administration.
(a) The REMIC Administrator shall make an election to treat all REMICs
created hereunder as a REMIC under the Code and, if necessary, under applicable
state law. Each such election will be made on Form 1066 or other appropriate
federal tax or information return (including Form 8811) or any appropriate state
return for the taxable year ending on the last day of the calendar year in which
the Certificates are issued. The REMIC I Regular Interests shall be designated
as the "regular interests" and Component I of the Class R Certificates shall be
designated as the sole Class of "residual interests" in the REMIC I. The REMIC
II Regular Interests shall be designated as the "regular interests" and
Component II of the Class R Certificates shall be designated as the sole Class
of "residual interests" in the REMIC II. The REMIC III Regular Interests shall
be designated as the "regular interests" and Component III of the Class R
Certificates shall be designated as the sole Class of "residual interests" in
the REMIC III. The REMIC Administrator and the Trustee shall not permit the
creation of any "interests" (within the meaning of Section 860G of the Code) in
REMIC I, REMIC II or REMIC III other than the REMIC I Regular Interests, the
REMIC II Regular Interests, REMIC III Regular Interest IO and the Certificates.
(b) The Closing Date is hereby designated as the "startup day" of each
of REMIC created hereunder within the meaning of Section 860G(a)(9) of the Code
(the "Startup Date").
(c) The REMIC Administrator shall hold a Class R Certificate in each
REMIC representing a 0.01% Percentage Interest of the Class R Certificates in
each REMIC and shall be designated as the "tax matters person" with respect to
each REMIC in the manner provided under Treasury regulations Section 1.860F-4(d)
and Treasury regulations Section 301.6231(a)(7)-1. The REMIC Administrator, as
tax matters person, shall (i) act on behalf of each REMIC in relation to any tax
matter or controversy involving the Trust Fund and (ii) represent the Trust Fund
in any administrative or judicial proceeding relating to an examination or audit
by any governmental taxing authority with respect thereto. The legal expenses,
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including without limitation attorneys' or accountants' fees, and costs of any
such proceeding and any liability resulting therefrom shall be expenses of the
Trust Fund and the REMIC Administrator shall be entitled to reimbursement
therefor out of amounts attributable to the Mortgage Loans on deposit in the
Custodial Account as provided by Section 3.10 unless such legal expenses and
costs are incurred by reason of the REMIC Administrator's willful misfeasance,
bad faith or gross negligence. If the REMIC Administrator is no longer the
Master Servicer hereunder, at its option the REMIC Administrator may continue
its duties as REMIC Administrator and shall be paid reasonable compensation not
to exceed $3,000 per year by any successor Master Servicer hereunder for so
acting as the REMIC Administrator.
(d) The REMIC Administrator shall prepare or cause to be prepared all of
the Tax Returns that it determines are required with respect to the REMICs
created hereunder and deliver such Tax Returns in a timely manner to the Trustee
and the Trustee shall sign and file such Tax Returns in a timely manner. The
expenses of preparing such returns shall be borne by the REMIC Administrator
without any right of reimbursement therefor. The REMIC Administrator agrees to
indemnify and hold harmless the Trustee with respect to any tax or liability
arising from the Trustee's signing of Tax Returns that contain errors or
omissions. The Trustee and Master Servicer shall promptly provide the REMIC
Administrator with such information as the REMIC Administrator may from time to
time request for the purpose of enabling the REMIC Administrator to prepare Tax
Returns.
(e) The REMIC Administrator shall provide (i) to any Transferor of a
Class R Certificate such information as is necessary for the application of any
tax relating to the transfer of a Class R Certificate to any Person who is not a
Permitted Transferee, (ii) to the Trustee and the Trustee shall forward to the
Certificateholders such information or reports as are required by the Code or
the REMIC Provisions including reports relating to interest, original issue
discount, if any, and market discount or premium (using the Prepayment
Assumption) and (iii) to the Internal Revenue Service the name, title, address
and telephone number of the person who will serve as the representative of each
REMIC created hereunder.
(f) The Master Servicer and the REMIC Administrator shall take such
actions and shall cause each REMIC created hereunder to take such actions as are
reasonably within the Master Servicer's or the REMIC Administrator's control and
the scope of its duties more specifically set forth herein as shall be necessary
or desirable to maintain the status thereof as a REMIC under the REMIC
Provisions (and the Trustee shall assist the Master Servicer and the REMIC
Administrator, to the extent reasonably requested by the Master Servicer and the
REMIC Administrator to do so). In performing their duties as more specifically
set forth herein, the Master Servicer and the REMIC Administrator shall not
knowingly or intentionally take any action, cause the Trust Fund to take any
action or fail to take (or fail to cause to be taken) any action reasonably
within their respective control and the scope of duties more specifically set
forth herein, that, under the REMIC Provisions, if taken or not taken, as the
case may be, could (i) endanger the status of any REMIC created hereunder as a
REMIC or (ii) result in the imposition of a tax upon any REMIC created hereunder
(including but not limited to the tax on prohibited transactions as defined in
Section 860F(a)(2) of the Code (except as provided in Section 2.04) and the tax
on contributions to a REMIC set forth in Section 860G(d) of the Code) (either
such event, in the absence of an Opinion of Counsel or the indemnification
referred to in this sentence, an "Adverse REMIC Event") unless the Master
Servicer or the REMIC Administrator, as applicable, has received an Opinion of
Counsel (at the expense of the party seeking to take such action or, if such
party fails to pay such expense, and the Master Servicer or the REMIC
Administrator, as applicable, determines that taking such action is in the best
interest of the Trust Fund and the Certificateholders, at the expense of the
Trust Fund, but in no event at the expense of the Master Servicer, the REMIC
Administrator or the Trustee) to the effect that the contemplated action will
not, with respect to the Trust Fund created hereunder, endanger such status or,
unless the Master Servicer or the REMIC Administrator or both, as applicable,
determine in its or their sole discretion to indemnify the Trust Fund against
the imposition of such a tax, result in the imposition of such a tax. Wherever
in this Agreement a contemplated action may not be taken because the timing of
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such action might result in the imposition of a tax on the Trust Fund, or may
only be taken pursuant to an Opinion of Counsel that such action would not
impose a tax on the Trust Fund, such action may nonetheless be taken provided
that the indemnity given in the preceding sentence with respect to any taxes
that might be imposed on the Trust Fund has been given and that all other
preconditions to the taking of such action have been satisfied. The Trustee
shall not take or fail to take any action (whether or not authorized hereunder)
as to which the Master Servicer or the REMIC Administrator, as applicable, has
advised it in writing that it has received an Opinion of Counsel to the effect
that an Adverse REMIC Event could occur with respect to such action or inaction,
as the case may be. In addition, prior to taking any action with respect to the
Trust Fund or its assets, or causing the Trust Fund to take any action, which is
not expressly permitted under the terms of this Agreement, the Trustee shall
consult with the Master Servicer or the REMIC Administrator, as applicable, or
its designee, in writing, with respect to whether such action could cause an
Adverse REMIC Event to occur with respect to the Trust Fund and the Trustee
shall not take any such action or cause the Trust Fund to take any such action
as to which the Master Servicer or the REMIC Administrator, as applicable, has
advised it in writing that an Adverse REMIC Event could occur. The Master
Servicer or the REMIC Administrator, as applicable, may consult with counsel to
make such written advice, and the cost of same shall be borne by the party
seeking to take the action not expressly permitted by this Agreement, but in no
event at the expense of the Master Servicer or the REMIC Administrator. At all
times as may be required by the Code, the Master Servicer or the REMIC
Administrator, as applicable, will to the extent within its control and the
scope of its duties more specifically set forth herein, maintain substantially
all of the assets of the REMIC as "qualified mortgages" as defined in Section
860G(a)(3) of the Code and "permitted investments" as defined in Section
860G(a)(5) of the Code.
(g) In the event that any tax is imposed on "prohibited transactions" of
any REMIC created hereunder as defined in Section 860F(a)(2) of the Code, on
"net income from foreclosure property" of any REMIC as defined in Section
860G(c) of the Code, on any contributions to any REMIC after the Startup Date
therefor pursuant to Section 860G(d) of the Code, or any other tax imposed by
the Code or any applicable provisions of state or local tax laws, such tax shall
be charged (i) to the Master Servicer, if such tax arises out of or results from
a breach by the Master Servicer in its role as Master Servicer or REMIC
Administrator of any of its obligations under this Agreement or the Master
Servicer has in its sole discretion determined to indemnify the Trust Fund
against such tax, (ii) to the Trustee, if such tax arises out of or results from
a breach by the Trustee of any of its obligations under this Article X, or (iii)
otherwise against amounts on deposit in the Custodial Account as provided by
Section 3.10 and on the Distribution Date(s) following such reimbursement the
aggregate of such taxes shall be allocated in reduction of the Accrued
Certificate Interest on each Class entitled thereto in the same manner as if
such taxes constituted a Prepayment Interest Shortfall.
(h) The Trustee and the Master Servicer shall, for federal income tax
purposes, maintain books and records with respect to each REMIC on a calendar
year and on an accrual basis or as otherwise may be required by the REMIC
Provisions.
(i) Following the Startup Date, neither the Master Servicer nor the
Trustee shall accept any contributions of assets to any REMIC unless (subject to
Section 10.01(f)) the Master Servicer and the Trustee shall have received an
Opinion of Counsel (at the expense of the party seeking to make such
contribution) to the effect that the inclusion of such assets in any REMIC will
not cause any REMIC created hereunder to fail to qualify as a REMIC at any time
that any Certificates are outstanding or subject any such REMIC to any tax under
the REMIC Provisions or other applicable provisions of federal, state and local
law or ordinances.
(j) Neither the Master Servicer nor the Trustee shall (subject to
Section 10.01(f)) enter into any arrangement by which any REMIC created
hereunder will receive a fee or other compensation for services nor permit any
REMIC created hereunder to receive any income from assets other than "qualified
mortgages" as defined in Section 860G(a)(3) of the Code or "permitted
investments" as defined in Section 860G(a)(5) of the Code.
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(k) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
Regulations, the "latest possible maturity date" by which the principal balance
of each regular interest in each REMIC would be reduced to zero is September 25,
2036, which is the Distribution Date in the month following the last scheduled
payment on any Mortgage Loan.
(l) Within 30 days after the Closing Date, the REMIC Administrator shall
prepare and file with the Internal Revenue Service Form 8811, "Information
Return for Real Estate Mortgage Investment Conduits (REMIC) and Issuers of
Collateralized Debt Obligations" for the Trust Fund.
(m) Neither the Trustee nor the Master Servicer shall sell, dispose of
or substitute for any of the Mortgage Loans (except in connection with (i) the
default, imminent default or foreclosure of a Mortgage Loan, including but not
limited to, the acquisition or sale of a Mortgaged Property acquired by deed in
lieu of foreclosure, (ii) the bankruptcy of the Trust Fund, (iii) the
termination of any REMIC pursuant to Article IX of this Agreement or (iv) a
purchase of Mortgage Loans pursuant to Article II or III of this Agreement) or
acquire any assets for any REMIC or sell or dispose of any investments in the
Custodial Account or the Certificate Account for gain, or accept any
contributions to any REMIC after the Closing Date unless it has received an
Opinion of Counsel that such sale, disposition, substitution or acquisition will
not (a) affect adversely the status of any REMIC created hereunder as a REMIC or
(b) unless the Master Servicer has determined in its sole discretion to
indemnify the Trust Fund against such tax, cause any REMIC to be subject to a
tax on "prohibited transactions" or "contributions" pursuant to the REMIC
Provisions.
Section 10.02. Master Servicer, REMIC Administrator and Trustee
Indemnification.
(a) The Trustee agrees to indemnify the Trust Fund, the Depositor, the
REMIC Administrator and the Master Servicer for any taxes and costs including,
without limitation, any reasonable attorneys fees imposed on or incurred by the
Trust Fund, the Depositor or the Master Servicer, as a result of a breach of the
Trustee's covenants set forth in Article VIII or this Article X. In the event
that Residential Funding is no longer the Master Servicer, the Trustee shall
indemnify Residential Funding for any taxes and costs including, without
limitation, any reasonable attorneys fees imposed on or incurred by Residential
Funding as a result of a breach of the Trustee's covenants set forth in Article
VIII or this Article X.
(b) The REMIC Administrator agrees to indemnify the Trust Fund, the
Depositor, the Master Servicer and the Trustee for any taxes and costs
(including, without limitation, any reasonable attorneys' fees) imposed on or
incurred by the Trust Fund, the Depositor, the Master Servicer or the Trustee,
as a result of a breach of the REMIC Administrator's covenants set forth in this
Article X with respect to compliance with the REMIC Provisions, including
without limitation, any penalties arising from the Trustee's execution of Tax
Returns prepared by the REMIC Administrator that contain errors or omissions;
provided, however, that such liability will not be imposed to the extent such
breach is a result of an error or omission in information provided to the REMIC
Administrator by the Master Servicer in which case Section 10.02(c) will apply.
(c) The Master Servicer agrees to indemnify the Trust Fund, the
Depositor, the REMIC Administrator and the Trustee for any taxes and costs
(including, without limitation, any reasonable attorneys' fees) imposed on or
incurred by the Trust Fund, the Depositor, the REMIC Administrator or the
Trustee, as a result of a breach of the Master Servicer's covenants set forth in
this Article X or in Article III with respect to compliance with the REMIC
Provisions, including without limitation, any penalties arising from the
Trustee's execution of Tax Returns prepared by the Master Servicer that contain
errors or omissions.
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ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment.
(a) This Agreement or any Custodial Agreement may be amended from time
to time by the Depositor, the Master Servicer and the Trustee, without the
consent of any of the Certificateholders:
(i) to cure any ambiguity,
(ii) to correct or supplement any provisions herein or therein,
which may be inconsistent with any other provisions herein or therein or
to correct any error,
(iii) to modify, eliminate or add to any of its provisions to
such extent as shall be necessary or desirable to maintain the
qualification of any REMIC created hereunder as a REMIC at all times
that any Certificate is outstanding 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, provided that the Trustee has
received an Opinion of Counsel to the effect that (A) such action is
necessary or desirable to maintain such qualification or to avoid or
minimize the risk of the imposition of any such tax and (B) such action
will not adversely affect in any material respect the interests of any
Certificateholder,
(iv) to change the timing and/or nature of deposits into the
Custodial Account or the Certificate Account or to change the name in
which the Custodial Account is maintained, provided that (A) the
Certificate Account Deposit Date shall in no event be later than the
related Distribution Date, (B) such change shall not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect the
interests of any Certificateholder and (C) such change shall not result
in a reduction of the rating assigned to any Class of Certificates below
the lower of the then-current rating or the rating assigned to such
Certificates as of the Closing Date, as evidenced by a letter from each
Rating Agency to such effect,
(v) to modify, eliminate or add to the provisions of Section
5.02(f) or any other provision hereof restricting transfer of the Class
R Certificates by virtue of their being the "residual interests" in the
Trust Fund provided that (A) such change shall not result in reduction
of the rating assigned to any such Class of Certificates below the lower
of the then-current rating or the rating assigned to such Certificates
as of the Closing Date, as evidenced by a letter from each Rating Agency
to such effect, and (B) such change shall not (subject to Section
10.01(f)), as evidenced by an Opinion of Counsel (at the expense of the
party seeking so to modify, eliminate or add such provisions), cause the
Trust Fund or any of the Certificateholders (other than the transferor)
to be subject to a federal tax caused by a transfer to a Person that is
not a Permitted Transferee, or
(vi) to make any other provisions with respect to matters or
questions arising under this Agreement or such Custodial Agreement which
shall not be materially inconsistent with the provisions of this
Agreement, provided that such action shall not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect the
interests of any Certificateholder and is authorized or permitted under
Section 11.01.
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(b) This Agreement or any Custodial Agreement may also be amended from
time to time by the Depositor, the Master Servicer, the Trustee and the Holders
of Certificates evidencing in the aggregate not less than 66% of the Percentage
Interests of each Class of Certificates with a Certificate Principal Balance
greater than zero affected thereby for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this Agreement
or such Custodial Agreement or of modifying in any manner the rights of the
Holders of Certificates of such Class; provided, however, that no such amendment
shall:
(i) reduce in any manner the amount of, or delay the timing of,
payments which are required to be distributed on any Certificate without
the consent of the Holder of such Certificate,
(ii) adversely affect in any material respect the interest of
the Holders of Certificates of any Class in a manner other than as
described in clause (i) hereof without the consent of Holders of
Certificates of such Class evidencing, as to such Class, Percentage
Interests aggregating not less than 66%, or
(iii) reduce the aforesaid percentage of Certificates of any
Class the Holders of which are required to consent to any such
amendment, in any such case without the consent of the Holders of all
Certificates of such Class then outstanding.
(c) Notwithstanding any contrary provision of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel (at the expense of the party seeking
such amendment) to the effect that such amendment or the exercise of any power
granted to the Master Servicer, the Depositor or the Trustee in accordance with
such amendment will not result in the imposition of a federal tax on the Trust
Fund or cause any REMIC created hereunder to fail to qualify as a REMIC at any
time that any Certificate is outstanding; provided, that if the indemnity
described in Section 10.01(f) with respect to any taxes that might be imposed on
the Trust Fund has been given, the Trustee shall not require the delivery to it
of the Opinion of Counsel described in this Section 11.01(c). The Trustee may
but shall not be obligated to enter into any amendment pursuant to this Section
that affects its rights, duties and immunities and this Agreement or otherwise;
provided, however, such consent shall not be unreasonably withheld.
(d) Promptly after the execution of any such amendment the Trustee shall
furnish written notification of the substance of such amendment to each
Certificateholder. It shall not be necessary for the consent of
Certificateholders under this Section 11.01 to approve the particular form of
any proposed amendment, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable regulations as the Trustee may prescribe.
(e) The Depositor shall have the option, in its sole discretion, to
obtain and deliver to the Trustee any corporate guaranty, payment obligation,
irrevocable letter of credit, surety bond, insurance policy or similar
instrument or a reserve fund, or any combination of the foregoing, for the
purpose of protecting the Holders of the Class SB Certificates against any or
all Realized Losses or other shortfalls. Any such instrument or fund shall be
held by the Trustee for the benefit of the Class SB Certificateholders, but
shall not be and shall not be deemed to be under any circumstances included in
any REMIC. To the extent that any such instrument or fund constitutes a reserve
fund for federal income tax purposes, (i) any reserve fund so established shall
be an outside reserve fund and not an asset of such REMIC, (ii) any such reserve
fund shall be owned by the Depositor, and (iii) amounts transferred by such
REMIC to any such reserve fund shall be treated as amounts distributed by such
REMIC to the Depositor or any successor, all within the meaning of Treasury
regulations Section 1.860G-2(h) in effect as of the Cut-off Date. In connection
with the provision of any such instrument or fund, this Agreement and any
provision hereof may be modified, added to, deleted or otherwise amended in any
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manner that is related or incidental to such instrument or fund or the
establishment or administration thereof, such amendment to be made by written
instrument executed or consented to by the Depositor and such related insurer
but without the consent of any Certificateholder and without the consent of the
Master Servicer or the Trustee being required unless any such amendment would
impose any additional obligation on, or otherwise adversely affect the interests
of the Certificateholders, the Master Servicer or the Trustee, as applicable;
provided that the Depositor obtains an Opinion of Counsel (which need not be an
opinion of Independent counsel) to the effect that any such amendment will not
cause (a) any federal tax to be imposed on the Trust Fund, including without
limitation, any federal tax imposed on "prohibited transactions" under Section
860F(a)(1) of the Code or on "contributions after the startup date" under
Section 860G(d)(1) of the Code and (b) any REMIC created hereunder to fail to
qualify as a REMIC at any time that any Certificate is outstanding. In the event
that the Depositor elects to provide such coverage in the form of a limited
guaranty provided by General Motors Acceptance Corporation, the Depositor may
elect that the text of such amendment to this Agreement shall be substantially
in the form attached hereto as Exhibit K (in which case Residential Funding's
Subordinate Certificate Loss Obligation as described in such exhibit shall be
established by Residential Funding's consent to such amendment) and that the
limited guaranty shall be executed in the form attached hereto as Exhibit L,
with such changes as the Depositor shall deem to be appropriate; it being
understood that the Trustee has reviewed and approved the content of such forms
and that the Trustee's consent or approval to the use thereof is not required.
(f) Notwithstanding anything to the contrary set forth in Sections 11.01
(b), (c), (d), and (e), any amendment of Sections 4.02(c)(i) through (x) and
Section 4.10 of this Agreement shall require the consent of the Swap
Counterparty as a third party beneficiary of Sections 4.02(c)(x) and 4.10 of
this Agreement.
Section 11.02. Recordation of Agreement; Counterparts.
(a) To the extent permitted by applicable law, 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 and at its expense on direction by the Trustee (pursuant to the
request of the Holders of Certificates entitled to at least 25% of the Voting
Rights), but only upon direction accompanied by an Opinion of Counsel to the
effect that such recordation materially and beneficially affects the interests
of the Certificateholders.
(b) For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 11.03. Limitation on Rights of Certificateholders.
(a) The death or incapacity of any Certificateholder shall not operate
to terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of the
Trust Fund, nor otherwise affect the rights, obligations and liabilities of any
of the parties hereto.
(b) No Certificateholder shall have any right to vote (except as
expressly 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 person by reason of any action taken by the parties
to this Agreement pursuant to any provision hereof.
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(c) No Certificateholder shall have any right by virtue of any provision
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 default and of
the continuance thereof, as hereinbefore provided, and unless also the Holders
of Certificates of any Class evidencing in the aggregate not less than 25% of
the related Percentage Interests of such Class, shall have made written request
upon 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
of any Class shall have any right in any manner whatever by virtue of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such Certificates of such Class or any other Class, 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 Certificateholders of such Class
or all Classes, as the case may be. For the protection and enforcement of the
provisions of this Section 11.03, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
Section 11.04. Governing Law.
This agreement and the Certificates shall be governed by and construed
in accordance with the laws of the State of New York, without regard to the
conflict of law principles thereof, other than Sections 5-1401 and 5-1402 of the
New York General Obligations Law, and the obligations, rights and remedies of
the parties hereunder shall be determined in accordance with such laws.
Section 11.05. Notices.
All demands and notices hereunder shall be in writing and shall be
deemed to have been duly given if personally delivered at or mailed by
registered mail, postage prepaid (except for notices to the Trustee which shall
be deemed to have been duly given only when received), to (a) in the case of the
Depositor, 0000 Xxxxxxxxxx Xxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxxxxx, Xxxxxxxxx
00000, Attention: President (RASC), or such other address as may hereafter be
furnished to the Master Servicer and the Trustee in writing by the Depositor;
(b) in the case of the Master Servicer, 0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxxxx 00000-0000, Attention: Bond Administration or such other address as
may be hereafter furnished to the Depositor and the Trustee by the Master
Servicer in writing; (c) in the case of the Trustee, the Corporate Trust Office
or such other address as may hereafter be furnished to the Depositor and the
Master Servicer in writing by the Trustee; (d) in the case of Standard & Poor's,
00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; Attention: Mortgage Surveillance or
such other address as may be hereafter furnished to the Depositor, Trustee and
Master Servicer by Standard & Poor's; (e) in the case of Moody's, 00 Xxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: ABS Monitoring Department, or such
other address as may be hereafter furnished to the Depositor, the Trustee and
the Master Servicer in writing by Moody's, (f) in the case of Fitch, Xxx Xxxxxx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000; or such other address as may be hereafter
furnished to the Depositor, the Trustee and the Master Servicer in writing by
Fitch, (g) in the case of the Credit Risk Manager, 0000 Xxxxxxx Xxxxxx, Xxxxx
0000, Xxxxxx, Xxxxxxxx 00000, Attention: General Counsel or such other address
as may hereafter be furnished to the Depositor and the Master Servicer in
writing by the Trustee, and (h) in the case of the Swap Counterparty, X.X.
Xxxxxx Xxxxx Bank, National Association, 0 Xxx Xxxx Xxxxx, 0xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Worldwide Securities Services/Structured Finance
Services, or such other address as may be hereafter furnished to the Depositor,
the Trustee and the Master Servicer in writing by the Swap COUNTERPARTY. Any
notice required or permitted to be mailed to a Certificateholder shall be given
by first class mail, postage prepaid, at the address of such holder as shown in
the Certificate Register. Any notice so mailed within the time prescribed in
this Agreement shall be conclusively presumed to have been duly given, whether
or not the Certificateholder receives such notice.
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Section 11.06. Notices to Rating Agencies.
The Depositor, the Master Servicer or the Trustee, as applicable, shall
notify each Rating Agency and each Subservicer at such time as it is otherwise
required pursuant to this Agreement to give notice of the occurrence of, any of
the events described in clause (a), (b), (c), (d), (g), (h), (i) or (j) below or
provide a copy to each Rating Agency and each Subservicer at such time as
otherwise required to be delivered pursuant to this Agreement of any of the
statements described in clauses (e) and (f) below:
(a) a material change or amendment to this Agreement,
(b) the occurrence of an Event of Default,
(c) the termination or appointment of a successor Master Servicer or
Trustee or a change in the majority ownership of the Trustee,
(d) the filing of any claim under the Master Servicer's blanket fidelity
bond and the errors and omissions insurance policy required by Section 3.12 or
the cancellation or modification of coverage under any such instrument,
(e) the statement required to be delivered to the Holders of each Class
of Certificates pursuant to Section 4.03,
(f) the statements required to be delivered pursuant to Sections 3.18
and 3.19,
(g) a change in the location of the Custodial Account or the Certificate
Account,
(h) the occurrence of any monthly cash flow shortfall to the Holders of
any Class of Certificates resulting from the failure by the Master Servicer to
make an Advance pursuant to Section 4.04,
(i) the occurrence of the Final Distribution Date, and
(j) the repurchase of or substitution for any Mortgage Loan, provided,
however, that with respect to notice of the occurrence of the events described
in clauses (d), (g) or (h) above, the Master Servicer shall provide prompt
written notice to each Rating Agency and each Subservicer of any such event
known to the Master Servicer.
Section 11.07. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
Section 11.08. Supplemental Provisions for Resecuritization.
This Agreement may be supplemented by means of the addition of a
separate Article hereto (a "Supplemental Article") for the purpose of
resecuritizing any of the Certificates issued hereunder, under the following
circumstances. With respect to any Class or Classes of Certificates issued
hereunder, or any portion of any such Class, as to which the Depositor or any of
133
its Affiliates (or any designee thereof) is the registered Holder (the
"Resecuritized Certificates"), the Depositor may deposit such Resecuritized
Certificates into a new REMIC, grantor trust or custodial arrangement (a
"Restructuring Vehicle") to be held by the Trustee pursuant to a Supplemental
Article. The instrument adopting such Supplemental Article shall be executed by
the Depositor, the Master Servicer and the Trustee; provided, that neither the
Master Servicer nor the Trustee shall withhold their consent thereto if their
respective interests would not be materially adversely affected thereby. To the
extent that the terms of the Supplemental Article do not in any way affect any
provisions of this Agreement as to any of the Certificates initially issued
hereunder, the adoption of the Supplemental Article shall not constitute an
"amendment" of this Agreement. Each Supplemental Article shall set forth all
necessary provisions relating to the holding of the Resecuritized Certificates
by the Trustee, the establishment of the Restructuring Vehicle, the issuing of
various classes of new certificates by the Restructuring Vehicle and the
distributions to be made thereon, and any other provisions necessary to the
purposes thereof. In connection with each Supplemental Article, the Depositor
shall deliver to the Trustee an Opinion of Counsel to the effect that (i) the
Restructuring Vehicle will qualify as a REMIC, grantor trust or other entity not
subject to taxation for federal income tax purposes and (ii) the adoption of the
Supplemental Article will not endanger the status of any REMIC created hereunder
as a REMIC or result in the imposition of a tax upon the Trust Fund (including
but not limited to the tax on prohibited transaction as defined in Section
860F(a)(2) of the Code and the tax on contributions to a REMIC as set forth in
Section 860G(d) of the Code.
Section 11.09. Third-Party Beneficiary.
The Swap Counterparty is an express third-party beneficiary of Sections
4.02(c)(x) and 4.10 of this Agreement, and shall have the right to enforce the
provisions of Sections 4.02(c)(x) and 4.10 of this Agreement as if it were a
party hereto.
Section 11.10. Tax Treatment.
Each party to this Agreement and each holder of a Certificate by it
acceptance of its ownership interest in such Certificate, hereby agrees to treat
the payment made and received hereunder and any payments received with respect
to any Certificate for federal income tax purposes consistently with the REMIC
structure, the Swap Agreement and the SB-AM Swap Agreement as set forth herein
or incorporated herein and with the deemed payments made with respect thereto as
set forth herein.
ARTICLE XII
COMPLIANCE WITH REGULATION AB
Section 12.01. Intent of Parties; Reasonableness.
The Depositor, the Trustee and the Master Servicer acknowledge and agree
that the purpose of this Article XII is to facilitate compliance by the
Depositor with the provisions of Regulation AB and related rules and regulations
of the Commission. The Depositor shall not exercise its right to request
delivery of information or other performance under these provisions other than
in good faith, or for purposes other than compliance with the Securities Act,
the Exchange Act and the rules and regulations of the Commission under the
Securities Act and the Exchange Act. Each of the Master Servicer and the Trustee
acknowledges that interpretations of the requirements of Regulation AB may
change over time, whether due to interpretive guidance provided by the
Commission or its staff, consensus among participants in the mortgage-backed
securities markets, advice of counsel, or otherwise, and agrees to comply with
requests made by the Depositor in good faith for delivery of information under
134
these provisions on the basis of evolving interpretations of Regulation AB. Each
of the Master Servicer and the Trustee shall cooperate reasonably with the
Depositor to deliver to the Depositor (including any of its assignees or
designees), any and all disclosure, statements, reports, certifications, records
and any other information necessary in the reasonable, good faith determination
of the Depositor to permit the Depositor to comply with the provisions of
Regulation AB.
Section 12.02. Additional Representations and Warranties of the Trustee.
(a) The Trustee shall be deemed to represent to the Depositor as of the
date hereof and on each date on which information is provided to the Depositor
under Sections 12.01, 12.02(b) or 12.03 that, except as disclosed in writing to
the Depositor prior to such date: (i) it is not aware and has not received
notice that any default, early amortization or other performance triggering
event has occurred as to any other Securitization Transaction due to any default
of the Trustee; (ii) there are no aspects of its financial condition that could
have a material adverse effect on the performance by it of its trustee
obligations under this Agreement or any other Securitization Transaction as to
which it is the trustee; (iii) there are no material legal or governmental
proceedings pending (or known to be contemplated) against it that would be
material to Certificateholders; (iv) there are no relationships or transactions
relating to the Trustee with respect to the Depositor or any sponsor, issuing
entity, servicer, trustee, originator, significant obligor, enhancement or
support provider or other material transaction party (as such terms are used in
Regulation AB) relating to the Securitization Transaction contemplated by the
Agreement, as identified by the Depositor to the Trustee in writing as of the
Closing Date (each, a "Transaction Party") that are outside the ordinary course
of business or on terms other than would be obtained in an arm's length
transaction with an unrelated third party, apart from the Securitization
Transaction, and that are material to the investors' understanding of the
Certificates; and (v) the Trustee is not an affiliate of any Transaction Party.
The Depositor shall notify the Trustee of any change in the identity of a
Transaction Party after the Closing Date.
(b) If so requested by the Depositor on any date following the Closing
Date, the Trustee shall, within five Business Days following such request,
confirm in writing the accuracy of the representations and warranties set forth
in paragraph (a) of this Section or, if any such representation and warranty is
not accurate as of the date of such confirmation, provide the pertinent facts,
in writing, to the Depositor. Any such request from the Depositor shall not be
given more than once each calendar quarter, unless the Depositor shall have a
reasonable basis for a determination that any of the representations and
warranties may not be accurate.
Section 12.03. Information to be Provided by the Trustee.
For so long as the Certificates are outstanding, for the purpose of
satisfying the Depositor's reporting obligation under the Exchange Act with
respect to any class of Certificates, the Trustee shall provide to the Depositor
a written description of (a) any litigation or governmental proceedings pending
against the Trustee as of the last day of each calendar month that would be
material to Certificateholders, and (b) any affiliations or relationships (as
described in Item 1119 of Regulation AB) that develop following the Closing Date
between the Trustee and any Transaction Party of the type described in Section
12.02(a)(iv) or 12.02(a)(v) as of the last day of each calendar year. Any
descriptions required with respect to legal proceedings, as well as updates to
previously provided descriptions, under this Section 12.03 shall be given no
later than five Business Days prior to the Determination Date following the
month in which the relevant event occurs, and any notices and descriptions
required with respect to affiliations, as well as updates to previously provided
descriptions, under this Section 12.03 shall be given no later than January 31
of the calendar year following the year in which the relevant event occurs. As
of the date the Depositor or Master Servicer files each Report on Form 10-D and
Report on Form 10-K with respect to the Certificates, the Trustee will be deemed
to represent that any information previously provided under this Article XII is
materially correct and does not have any material omissions unless the Trustee
has provided an update to such information. The Depositor will allow the Trustee
to review any disclosure relating to material litigation against the Trustee
prior to filing such disclosure with the Commission to the extent the Depositor
changes the information provided by the Trustee.
135
Section 12.04. Report on Assessment of Compliance and Attestation.
On or before March 15 of each calendar year, the Trustee shall:
(a) deliver to the Depositor a report (in form and substance reasonably
satisfactory to the Depositor) regarding the Trustee's assessment of compliance
with the applicable Servicing Criteria during the immediately preceding calendar
year, as required under Rules 13a-18 and 15d-18 of the Exchange Act and Item
1122 of Regulation AB. Such report shall be addressed to the Depositor and
signed by an authorized officer of the Trustee, and shall address each of the
Servicing Criteria specified on Exhibit S hereto; and
(b) deliver to the Depositor a report of a registered public accounting
firm reasonably acceptable to the Depositor that attests to, and reports on, the
assessment of compliance made by the Trustee and delivered pursuant to the
preceding paragraph. Such attestation shall be in accordance with Rules
1-02(a)(3) and 2-02(g) of Regulation S-X under the Securities Act and the
Exchange Act.
Section 12.05. Indemnification; Remedies.
(a) The Trustee shall indemnify the Depositor, each affiliate of the
Depositor, the Master Servicer and each broker dealer acting as underwriter,
placement agent or initial purchaser of the Certificates or each Person who
controls any of such parties (within the meaning of Section 15 of the Securities
Act and Section 20 of the Exchange Act); and the respective present and former
directors, officers, employees and agents of each of the foregoing, and shall
hold each of them harmless from and against any losses, damages, penalties,
fines, forfeitures, legal fees and expenses and related costs, judgments, and
any other costs, fees and expenses that any of them may sustain arising out of
or based upon:
(i) (A) any untrue statement of a material fact contained or
alleged to be contained in any information, report, certification or
other material provided under this Article XII by or on behalf of the
Trustee (collectively, the "Trustee Information"), or (B) the omission
or alleged omission to state in the Trustee Information a material fact
required to be stated in the Trustee Information or necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, by way of clarification,
that clause (B) of this paragraph shall be construed solely by reference
to the Trustee Information and not to any other information communicated
in connection with a sale or purchase of securities, without regard to
whether the Trustee Information or any portion thereof is presented
together with or separately from such other information; or
(ii) any failure by the Trustee to deliver any information,
report, certification or other material when and as required under this
Article XII, other than a failure by the Trustee to deliver the
accountants' attestation.
(b) In the case of any failure of performance described in clause (ii)
of Section 12.05(a), the Trustee shall (i) promptly reimburse the Depositor for
all costs reasonably incurred by the Depositor in order to obtain the
information, report, certification or other material not delivered as required
by the Trustee and (ii) cooperate with the Depositor to mitigate any damages
that may result from such failure.
136
(c) The Depositor and the Master Servicer shall indemnify the Trustee,
each affiliate of the Trustee or each Person who controls the Trustee (within
the meaning of Section 15 of the Securities Act and Section 20 of the Exchange
Act), and the respective present and former directors, officers, employees and
agents of the Trustee, and shall hold each of them harmless from and against any
losses, damages, penalties, fines, forfeitures, legal fees and expenses and
related costs, judgments, and any other costs, fees and expenses that any of
them may sustain arising out of or based upon (i) any untrue statement of a
material fact contained or alleged to be contained in any information provided
under this Agreement by or on behalf of the Depositor or Master Servicer for
inclusion in any report filed with Commission under the Exchange Act
(collectively, the "RFC Information"), or (ii) the omission or alleged omission
to state in the RFC Information a material fact required to be stated in the RFC
Information or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided, by
way of clarification, that clause (ii) of this paragraph shall be construed
solely by reference to the RFC Information and not to any other information
communicated in connection with a sale or purchase of securities, without regard
to whether the RFC Information or any portion thereof is presented together with
or separately from such other information.
137
IN WITNESS WHEREOF, the Depositor, the Master Servicer and the Trustee
have caused their names to be signed hereto by their respective officers
thereunto duly authorized as of the day and year first above written.
RESIDENTIAL ASSET SECURITIES
CORPORATION
By:_______________________________
Name:
Title:
RESIDENTIAL FUNDING CORPORATION
By:_______________________________
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION
as Trustee
By:_______________________________
Name:
Title:
For purposes of Sections 3.24, 3.25 and 3.26:
XXXXXXX FIXED INCOME SERVICES INC.
By:________________________________
Name:
Title:
STATE OF MINNESOTA )
) ss.:
COUNTY OF HENNEPIN )
On the ____ day of August 2006 before me, a notary public in and for
said State, personally appeared ________________, known to me to be a Vice
President of Residential Asset Securities Corporation, one of the corporations
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said 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 MINNESOTA )
) ss.:
COUNTY OF HENNEPIN )
On the ____ day of August 2006 before me, a notary public in and for
said State, personally appeared _______________, known to me to be an Associate
of Residential Funding Corporation, one of the corporations that executed the
within instrument, and also known to me to be the person who executed it on
behalf of said 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 MINNESOTA )
) ss.:
COUNTY OF HENNEPIN )
On the ____ day of August 2006 before me, a notary public in and for
said State, personally appeared ____________________, known to me to be a Vice
President of U.S. Bank National Association, a banking association organized
under the laws of the United States that executed the within instrument, and
also known to me to be the person who executed it on behalf of said banking
corporation and acknowledged to me that such banking 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]
EXHIBIT A
FORM OF CLASS A-[_] CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 COUPLED WITH THE RIGHT TO RECEIVE PAYMENTS UNDER THE SWAP
AGREEMENT.
THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DECREASED
BY THE PRINCIPAL PAYMENTS HEREON AND REALIZED LOSSES ALLOCABLE HERETO.
ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE CERTIFICATE
PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DIFFERENT FROM THE DENOMINATION
SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CERTIFICATE
PRINCIPAL BALANCE BY INQUIRY OF THE TRUSTEE NAMED HEREIN.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
ANY TRANSFEREE OF THIS CERTIFICATE WILL BE DEEMED TO HAVE REPRESENTED
THAT AS OF ANY DATE PRIOR TO THE TERMINATION OF THE SWAP AGREEMENT, AT LEAST ONE
OF U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTIONS 84-14, 90-1,
91-38, 95-60, 96-23 OR OTHER APPLICABLE EXEMPTION APPLIES TO SUCH HOLDER'S RIGHT
TO RECEIVE PAYMENTS FROM THE SUPPLEMENTAL INTEREST TRUST.
IF THIS CERTIFICATE (OR ANY INTEREST THEREIN) IS ACQUIRED OR HELD BY ANY
PERSON THAT DOES NOT SATISFY THE CONDITIONS DESCRIBED IN THE PRECEDING
PARAGRAPH, THEN THE LAST PRECEDING TRANSFEREE THAT IS NOT A PLAN INVESTOR SHALL
BE RESTORED, TO THE EXTENT PERMITTED BY LAW, TO ALL RIGHTS AND OBLIGATIONS AS
CERTIFICATE OWNER THEREOF RETROACTIVE TO THE DATE OF SUCH TRANSFER OF THIS
CERTIFICATE. THE TRUSTEE SHALL BE UNDER NO LIABILITY TO ANY PERSON FOR MAKING
ANY PAYMENTS DUE ON THIS CERTIFICATE TO SUCH PRECEDING TRANSFEREE.
A-1
ANY PURPORTED CERTIFICATE OWNER WHOSE ACQUISITION OR HOLDING OF THIS
CERTIFICATE (OR INTEREST THEREIN) WAS EFFECTED IN VIOLATION OF THE RESTRICTIONS
IN SECTION 5.02(E) OF THE POOLING AND SERVICING AGREEMENT SHALL INDEMNIFY AND
HOLD HARMLESS THE DEPOSITOR, THE TRUSTEE, THE MASTER SERVICER, ANY SUBSERVICER,
AND THE TRUST FUND FROM AND AGAINST ANY AND ALL LIABILITIES, CLAIMS, COSTS OR
EXPENSES INCURRED BY SUCH PARTIES AS A RESULT OF SUCH ACQUISITION OR HOLDING.
CUSIP: _____________________ Certificate No. A-[__]-__
Date of Pooling and Servicing Agreement [Adjustable Pass-Through Rate]
and Cut-off Date: August 1, 2006
First Distribution Date: September 25, 2006 Aggregate Initial Certificate
Principal Balance of the
Class A-[_] Certificates:
$________________________
Master Servicer: Initial Certificate Principal
Residential Funding Corporation Balance of this Class A-[_]
Certificate:
$________________________
Final Scheduled Distribution Date:
__________ __, 20__
A-2
HOME EQUITY MORTGAGE ASSET-BACKED PASS-THROUGH CERTIFICATES
SERIES 2006-KS7
evidencing a percentage interest in the distributions allocable
to the Class A-[_] Certificates with respect to a Trust Fund
consisting primarily of a pool of [fixed] [adjustable] interest
rate, first [and junior] lien mortgage loans on one- to
four-family residential properties sold by RESIDENTIAL ASSET
SECURITIES CORPORATION
This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in Residential Asset
Securities Corporation, the Master Servicer, the Trustee referred to below or
GMAC Mortgage Group, Inc. or any of their affiliates. Neither this Certificate
nor the underlying mortgage loans are guaranteed or insured by any governmental
agency or instrumentality or by Residential Asset Securities Corporation, the
Master Servicer, the Trustee or GMAC Mortgage Group, Inc. or any of their
affiliates. None of the Depositor, the Master Servicer, GMAC Mortgage Group,
Inc. or any of their affiliates will have any obligation with respect to any
certificate or other obligation secured by or payable from payments on the
Certificates.
This certifies that [Cede & Co.] is the registered owner of the
Percentage Interest evidenced by this Certificate in certain distributions with
respect to the Trust Fund consisting primarily of an interest in a pool of
[fixed] [adjustable] interest rate, first [and junior] lien mortgage loans on
one- to four- family residential properties (the "Mortgage Loans"), sold by
Residential Asset Securities Corporation (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement referred to below).
The Trust Fund was created pursuant to a Pooling and Servicing Agreement dated
as specified above (the "Agreement") among the Depositor, the Master Servicer
and U.S. Bank National Association, as trustee (the "Trustee"), a summary of
certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing as
described in the Agreement, to the Person in whose name this Certificate is
registered at the close of business on the Business Day immediately preceding
that Distribution Date (the "Record Date"), from the related Available
Distribution Amount in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount of interest and principal, if any,
required to be distributed to Holders of Class A-[_] Certificates on such
Distribution Date.
Distributions on this Certificate will be made either by the Master
Servicer acting on behalf of the Trustee or by a Paying Agent appointed by the
Trustee in immediately available funds (by wire transfer or otherwise) for the
account of the Person entitled thereto if such Person shall have so notified the
Master Servicer or such Paying Agent, or by check mailed to the address of the
Person entitled thereto, as such name and address shall appear on the
Certificate Register.
A-3
Each holder of this certificate is deemed to represent that as of any
date prior to the termination of the Swap Agreement, at least one of U.S.
Department of Labor Prohibited Transaction Class Exemptions 84-14, 90-1, 91-38,
95-60, 96-23 or other applicable exemption applies to such holder's right to
receive payments from the Supplemental Interest Trust. Any purported Certificate
owner whose acquisition or holding of this Certificate (or interest therein) was
effected in violation of the restrictions in Section 5.02(e) of the Pooling and
Servicing Agreement shall indemnify and hold harmless the Depositor, the
Trustee, the Master Servicer, any Subservicer, and the Trust Fund from and
against any and all liabilities, claims, costs or expenses incurred by such
parties as a result of such acquisition or holding.
Notwithstanding the above, the final distribution on this Certificate
will be made after due notice of the pendency of such distribution and only upon
presentation and surrender of, this Certificate at the office or agency
appointed by the Trustee for that purpose in St. Xxxx, Minnesota. The Initial
Certificate Principal Balance of this Certificate is set forth above. The
Certificate Principal Balance hereof will be reduced [from time to time pursuant
to the Agreement].
This Certificate is one of a duly authorized issue of Certificates
issued in several Classes designated as Home Equity Mortgage Asset-Backed
Pass-Through Certificates of the Series specified hereon (herein collectively
called the "Certificates").
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set forth
herein and in the Agreement. In the event Master Servicer funds are advanced
with respect to any Mortgage Loan, such advance is reimbursable to the Master
Servicer, to the extent provided in the Agreement, from related recoveries on
such Mortgage Loan or from other cash that would have been distributable to
Certificateholders.
As provided in the Agreement, withdrawals from the Custodial Account
and/or the Certificate Account created for the benefit of Certificateholders may
be made by the Master Servicer from time to time for purposes other than
distributions to Certificateholders, such purposes including without limitation
reimbursement to the Depositor and the Master Servicer of advances made, or
certain expenses incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations of
the Depositor, the Master Servicer and the Trustee and the rights of the
Certificateholders under the Agreement from time to time by the Depositor, the
Master Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66% of the Percentage Interests of
each Class of Certificates affected thereby. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon the Certificate. The Agreement also permits the
amendment thereof in certain circumstances without the consent of the Holders of
any of the Certificates and, in certain additional circumstances, without the
consent of the Holders of certain Classes of Certificates.
A-4
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee in St. Xxxx, Minnesota, duly
endorsed by, or accompanied by an assignment in the form below or other written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and there upon one or more new Certificates of authorized
denominations evidencing the same Class and aggregate Percentage Interest will
be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Trustee, and the Certificate
Registrar and any agent of the Depositor, the Master Servicer, the Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Master Servicer, the Trustee or any such agent shall be affected by notice to
the contrary.
This Certificate shall be governed by and construed in accordance with
the laws of the State of New York.
The obligations created by the Agreement in respect of the Certificates
and the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the maturity or other liquidation of the last Mortgage Loan subject thereto
or the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan, and (ii) the purchase by the Holder of the
Class SB Certificates or the Master Servicer, as described in the Agreement,
from the Trust Fund of all remaining Mortgage Loans and all property acquired in
respect of such Mortgage Loans or the Certificates, in either case thereby
effecting early retirement of the Certificates. The Agreement permits, but does
not require, the Holder of the Class SB Certificates or the Master Servicer, as
described in the Agreement, (i) to purchase, at a price determined as provided
in the Agreement, all remaining Mortgage Loans and all property acquired in
respect of any Mortgage Loan or (ii) to purchase in whole, but not in part, all
of the Certificates from the Holders thereof, provided, that any such option may
only be exercised if the Stated Principal Balance before giving effect to the
distributions to be made on such Distribution Date of the Mortgage Loans, as of
the Distribution Date upon which the proceeds of any such purchase are
distributed is less than ten percent of the Cut-off Date Balance.
A-5
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
A-6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:____________________________
Authorized Signatory
Dated:_____________________
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-[_] Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION,
as Certificate Registrar
By:____________________________
Authorized Signatory
A-7
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto ___________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee) the beneficial interest evidenced by the within Trust Certificate and
hereby authorizes the transfer of registration of such interest to assignee on
the Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
________________________________________________________________________________
Dated:_____________________ _____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available fund to ______________________________________________________________
for the account of _____________________________________________________________
account number _________________________________________________________________
or, if mailed by check, to _____________________________________________________
Applicable statements should be mailed to:______________________________
________________________________________________________________________________
_______________________________________________________________________________.
This information is provided by ____________________________________,
the assignee named above, or ______________________________, as its agent.
A-8
EXHIBIT B
FORM OF CLASS M-[_] CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A AND
CLASS M-[_] CERTIFICATES AS DESCRIBED IN THE AGREEMENT (AS DEFINED HEREIN).
THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DECREASED
BY THE PRINCIPAL PAYMENTS HEREON AND REALIZED LOSSES ALLOCABLE HERETO.
ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE CERTIFICATE
PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DIFFERENT FROM THE DENOMINATION
SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CERTIFICATE
PRINCIPAL BALANCE BY INQUIRY OF THE TRUSTEE NAMED HEREIN.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE") COUPLED WITH THE RIGHT TO RECEIVE PAYMENTS
UNDER THE SWAP AGREEMENT.
ANY TRANSFEREE OF THIS CERTIFICATE WILL BE DEEMED TO HAVE REPRESENTED BY
VIRTUE OF ITS PURCHASE OR HOLDING OF THIS CERTIFICATE (OR INTEREST THEREIN)
AFTER TERMINATION OF THE SWAP AGREEMENT THAT EITHER (A) SUCH TRANSFEREE IS NOT
AN EMPLOYEE BENEFIT PLAN OR OTHER PLAN OR ARRANGEMENT SUBJECT TO THE PROHIBITED
TRANSACTION PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974,
AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE OR A PERSON (INCLUDING AN
INSURANCE COMPANY INVESTING ITS GENERAL ACCOUNT, AN INVESTMENT MANAGER, A NAMED
FIDUCIARY OR A TRUSTEE OF ANY SUCH PLAN) WHO IS USING "PLAN ASSETS" OF ANY SUCH
PLAN TO EFFECT SUCH ACQUISITION (EACH OF THE FOREGOING, A "PLAN INVESTOR"), (B)
B-1
IT HAS ACQUIRED AND IS HOLDING THIS CERTIFICATE IN RELIANCE ON U.S. DEPARTMENT
OF LABOR PROHIBITED TRANSACTION EXEMPTION ("PTE") 94-29, 59 FED. REG. 14674
(MARCH 29, 1994), AS MOST RECENTLY AMENDED BY PTE 2002-41, 67 FED. REG. 54487
(AUGUST 22, 2002) (THE "RFC EXEMPTION"), AND THAT IT UNDERSTANDS THAT THERE ARE
CERTAIN CONDITIONS TO THE AVAILABILITY OF THE RFC EXEMPTION INCLUDING THAT THIS
CERTIFICATE MUST BE RATED, AT THE TIME OF PURCHASE, NOT LOWER THAN "BBB-" (OR
ITS EQUIVALENT) BY STANDARD & POOR'S, FITCH OR MOODY'S OR (C) (I) THE TRANSFEREE
IS AN INSURANCE COMPANY, (II) THE SOURCE OF FUNDS USED TO PURCHASE OR HOLD THIS
CERTIFICATE IS AN "INSURANCE COMPANY GENERAL ACCOUNT" (AS DEFINED IN U.S.
DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE") 95-60), AND
(III) THE CONDITIONS SET FORTH IN SECTIONS I AND III OF PTCE 95-60 HAVE BEEN
SATISFIED (EACH ENTITY THAT SATISFIES THIS CLAUSE (C), A "COMPLYING INSURANCE
COMPANY"). EACH HOLDER OF THIS CERTIFICATE IS DEEMED TO REPRESENT THAT AS OF ANY
DATE PRIOR TO THE TERMINATION OF THE SWAP AGREEMENT, AT LEAST ONE OF U.S.
DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTIONS 84-14, 90-1, 91-38,
95-60, 96-23 OR OTHER APPLICABLE EXEMPTION APPLIES TO SUCH HOLDER'S RIGHT TO
RECEIVE PAYMENTS FROM THE SUPPLEMENTAL INTEREST TRUST.
IF THIS CERTIFICATE (OR ANY INTEREST THEREIN) IS ACQUIRED OR HELD BY ANY
PERSON THAT DOES NOT SATISFY THE CONDITIONS DESCRIBED IN THE PRECEDING
PARAGRAPH, THEN THE LAST PRECEDING TRANSFEREE THAT EITHER (I) IS NOT A PLAN
INVESTOR, (II) ACQUIRED SUCH CERTIFICATE IN COMPLIANCE WITH THE RFC EXEMPTION,
OR (III) IS A COMPLYING INSURANCE COMPANY SHALL BE RESTORED, TO THE EXTENT
PERMITTED BY LAW, TO ALL RIGHTS AND OBLIGATIONS AS CERTIFICATE OWNER THEREOF
RETROACTIVE TO THE DATE OF SUCH TRANSFER OF THIS CERTIFICATE. THE TRUSTEE SHALL
BE UNDER NO LIABILITY TO ANY PERSON FOR MAKING ANY PAYMENTS DUE ON THIS
CERTIFICATE TO SUCH PRECEDING TRANSFEREE.
ANY TRANSFEREE OF A CLASS M CERTIFICATE WILL BE DEEMED TO HAVE
REPRESENTED BY VIRTUE OF ITS PURCHASE OR HOLDING OF SUCH CERTIFICATE OR INTEREST
THEREIN THAT SUCH CERTIFICATE, AT THE TIME OF PURCHASE, IS RATED NOT LOWER THAN
"BBB-" (OR ITS EQUIVALENT) BY FITCH, STANDARD & POOR'S OR MOODY'S.
ANY PURPORTED CERTIFICATE OWNER WHOSE ACQUISITION OR HOLDING OF THIS
CERTIFICATE (OR INTEREST THEREIN) WAS EFFECTED IN VIOLATION OF THE RESTRICTIONS
IN SECTION 5.02(E) OF THE POOLING AND SERVICING AGREEMENT SHALL INDEMNIFY AND
HOLD HARMLESS THE DEPOSITOR, THE TRUSTEE, THE MASTER SERVICER, ANY SUBSERVICER,
AND THE TRUST FUND FROM AND AGAINST ANY AND ALL LIABILITIES, CLAIMS, COSTS OR
EXPENSES INCURRED BY SUCH PARTIES AS A RESULT OF SUCH ACQUISITION OR HOLDING.
B-2
CUSIP: _____________________ Certificate No. M-[__]-__
Date of Pooling and Servicing Agreement [Adjustable Pass-Through Rate]
and Cut-off Date: August 1, 2006 [Fixed Pass-Through Rate]
First Distribution Date: September 25, 2006 Aggregate Initial Certificate
Principal Balance of the Class
M-[_] Certificates:
$_________________________
Master Servicer: Initial Certificate Principal
Residential Funding Corporation Balance of this Class M-[_]
Certificate:
$_________________________
Final Scheduled Distribution Date:
__________ __, 20__
B-3
HOME EQUITY MORTGAGE ASSET-BACKED PASS-THROUGH CERTIFICATES
SERIES 2006-KS7
evidencing a percentage interest in the distributions allocable
to the Class M-[_] Certificates with respect to a Trust Fund
consisting primarily of a pool of [fixed] [adjustable] interest
rate, first [and junior] lien mortgage loans on one- to
four-family residential properties sold by RESIDENTIAL ASSET
SECURITIES CORPORATION
This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in Residential Asset
Securities Corporation, the Master Servicer, the Trustee referred to below or
GMAC Mortgage Group, Inc. or any of their affiliates. Neither this Certificate
nor the underlying mortgage loans are guaranteed or insured by any governmental
agency or instrumentality or by Residential Asset Securities Corporation, the
Master Servicer, the Trustee or GMAC Mortgage Group, Inc. or any of their
affiliates. None of the Depositor, the Master Servicer, GMAC Mortgage Group,
Inc. or any of their affiliates will have any obligation with respect to any
certificate or other obligation secured by or payable from payments on the
Certificates.
This certifies that [Cede & Co.] is the registered owner of the
Percentage Interest evidenced by this Certificate in certain distributions with
respect to the Trust Fund consisting primarily of an interest in a pool of
[fixed] [adjustable] interest rate, first [and junior] lien mortgage loans on
one- to four- family residential properties (the "Mortgage Loans"), sold by
Residential Asset Securities Corporation (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement referred to below).
The Trust Fund was created pursuant to a Pooling and Servicing Agreement dated
as specified above (the "Agreement") among the Depositor, the Master Servicer
and U.S. Bank National Association, as trustee (the "Trustee"), a summary of
certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing as
described in the Agreement, to the Person in whose name this Certificate is
registered at the close of business on the Business Day immediately preceding
that Distribution Date (the "Record Date"), from the related Available
Distribution Amount in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount of interest and principal, if any,
required to be distributed to Holders of Class M-[_] Certificates on such
Distribution Date.
B-4
Distributions on this Certificate will be made either by the Master
Servicer acting on behalf of the Trustee or by a Paying Agent appointed by the
Trustee in immediately available funds (by wire transfer or otherwise) for the
account of the Person entitled thereto if such Person shall have so notified the
Master Servicer or such Paying Agent, or by check mailed to the address of the
Person entitled thereto, as such name and address shall appear on the
Certificate Register.
Any Transferee of this Certificate will be deemed to have represented by
virtue of its purchase or holding of this Certificate (or interest therein)
after termination of the Swap Agreement that either (a) such transferee is not
an employee benefit plan or other plan or arrangement subject to the prohibited
transaction provisions of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), or Section 4975 of the code or a person (including an
insurance company investing its general account, an investment manager, a named
fiduciary or a trustee of any such plan) who is using "plan assets" of any such
plan to effect such acquisition (each of the foregoing, a "Plan Investor"), (b)
it has acquired and is holding this Certificate in reliance on U.S. Department
of Labor Prohibited Transaction Exemption ("PTE") 94-29, 59 Fed. Reg. 14674
(March 29, 1994), as most recently amended by PTE 2002-41, 67 Fed. Reg. 54487
(August 22, 2002) (the "RFC Exemption"), and that it understands that there are
certain conditions to the availability of the RFC Exemption including that this
Certificate must be rated, at the time of purchase, not lower than "BBB-" (or
its equivalent) by Standard & Poor's, Fitch or Moody's or (c) (i) the transferee
is an insurance company, (ii) the source of funds used to purchase or hold this
certificate is an "insurance company general account" (as defined in U.S.
Department of Labor Prohibited Transaction Class Exemption ("PTCE") 95-60), and
(iii) the conditions set forth in sections I and III of PTCE 95-60 have been
satisfied (each entity that satisfies this clause (c), a "Complying Insurance
Company"). Each holder of this Certificate is deemed to represent that as of any
date prior to the termination of the Swap Agreement, at least one of U.S.
Department of Labor Prohibited Transaction Class Exemptions 84-14, 90-1, 91-38,
95-60, 96-23 or other applicable exemption applies to such holder's right to
receive payments from the Supplemental Interest Trust.
If this Certificate (or any interest therein) is acquired or held by any
person that does not satisfy the conditions described in the preceding
paragraph, then the last preceding transferee that either (i) is not a Plan
Investor, (ii) acquired such Certificate in compliance with the transfer
restrictions described above, or (iii) is a Complying Insurance Company shall be
restored, to the extent permitted by law, to all rights and obligations as
Certificate owner thereof retroactive to the date of such transfer of this
Certificate. The Trustee shall be under no liability to any person for making
any payments due on this Certificate to such preceding transferee. Any purported
Certificate owner whose acquisition or holding of this Certificate (or interest
therein) was effected in violation of the restrictions in Section 5.02(e) of the
Pooling and Servicing Agreement shall indemnify and hold harmless the Depositor,
the Trustee, the Master Servicer, any Subservicer, and the Trust Fund from and
against any and all liabilities, claims, costs or expenses incurred by such
parties as a result of such acquisition or holding.
Any Transferee of a Class M Certificate will be deemed to have
represented by virtue of its purchase or holding of such Certificate or interest
therein that such Certificate, at the time of purchase, is rated not lower than
"BBB-" (or its equivalent) by Fitch, Standard & Poors or Moodys.
B-5
Notwithstanding the above, the final distribution on this Certificate
will be made after due notice of the pendency of such distribution and only upon
presentation and surrender of, this Certificate at the office or agency
appointed by the Trustee for that purpose in St. Xxxx, Minnesota. The Initial
Certificate Principal Balance of this Certificate is set forth above. The
Certificate Principal Balance hereof will be reduced to the extent of
distributions allocable to principal and any Realized Losses allocable hereto.
This Certificate is one of a duly authorized issue of Certificates
issued in several Classes designated as Home Equity Mortgage Asset-Backed
Pass-Through Certificates of the Series specified hereon (herein collectively
called the "Certificates").
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set forth
herein and in the Agreement. In the event Master Servicer funds are advanced
with respect to any Mortgage Loan, such advance is reimbursable to the Master
Servicer, to the extent provided in the Agreement, from related recoveries on
such Mortgage Loan or from other cash that would have been distributable to
Certificateholders.
As provided in the Agreement, withdrawals from the Custodial Account
and/or the Certificate Account created for the benefit of Certificateholders may
be made by the Master Servicer from time to time for purposes other than
distributions to Certificateholders, such purposes including without limitation
reimbursement to the Depositor and the Master Servicer of advances made, or
certain expenses incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations of
the Depositor, the Master Servicer and the Trustee and the rights of the
Certificateholders under the Agreement from time to time by the Depositor, the
Master Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66% of the Percentage Interests of
each Class of Certificates affected thereby. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon the Certificate. The Agreement also permits the
amendment thereof in certain circumstances without the consent of the Holders of
any of the Certificates and, in certain additional circumstances, without the
consent of the Holders of certain Classes of Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee in St. Xxxx, Minnesota, duly
endorsed by, or accompanied by an assignment in the form below or other written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and there upon one or more new Certificates of authorized
denominations evidencing the same Class and aggregate Percentage Interest will
be issued to the designated transferee or transferees.
B-6
The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Trustee, and the Certificate
Registrar and any agent of the Depositor, the Master Servicer, the Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Master Servicer, the Trustee or any such agent shall be affected by notice to
the contrary.
This Certificate shall be governed by and construed in accordance with
the laws of the State of New York.
The obligations created by the Agreement in respect of the Certificates
and the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the maturity or other liquidation of the last Mortgage Loan subject thereto
or the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan, and (ii) the purchase by the Holder of the
Class SB Certificates or the Master Servicer, as described in the Agreement,
from the Trust Fund of all remaining Mortgage Loans and all property acquired in
respect of such Mortgage Loans or the Certificates, in either case thereby
effecting early retirement of the Certificates. The Agreement permits, but does
not require, the Holder of the Class SB Certificates or the Master Servicer, as
described in the Agreement, (i) to purchase, at a price determined as provided
in the Agreement, all remaining Mortgage Loans and all property acquired in
respect of any Mortgage Loan or (ii) to purchase in whole, but not in part, all
of the Certificates from the Holders thereof, provided, that any such option may
only be exercised if the Stated Principal Balance before giving effect to the
distributions to be made on such Distribution Date of the Mortgage Loans, as of
the Distribution Date upon which the proceeds of any such purchase are
distributed is less than ten percent of the Cut-off Date Balance.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
B-7
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:____________________________
Authorized Signatory
Dated:_____________________
CERTIFICATE OF AUTHENTICATION
This is one of the Class M-[_] Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION,
as Certificate Registrar
By:____________________________
Authorized Signatory
B-8
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto ___________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee) the beneficial interest evidenced by the within Trust Certificate and
hereby authorizes the transfer of registration of such interest to assignee on
the Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
________________________________________________________________________________
Dated:_____________________ _____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available fund to ______________________________________________________________
for the account of _____________________________________________________________
account number _________________________________________________________________
or, if mailed by check, to _____________________________________________________
Applicable statements should be mailed to:______________________________
________________________________________________________________________________
_______________________________________________________________________________.
This information is provided by ____________________________________,
the assignee named above, or ______________________________, as its agent.
B-9
EXHIBIT C
CLASS SB-[_] CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A AND
CLASS M CERTIFICATES AS DESCRIBED IN THE AGREEMENT (AS DEFINED HEREIN).
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE") COUPLED WITH THE RIGHT TO RECEIVE PAYMENTS
UNDER THE SWAP AGREEMENT.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING
AGREEMENT (THE "AGREEMENT").
NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST THEREIN SHALL BE MADE TO
ANY EMPLOYEE BENEFIT PLAN OR OTHER PLAN OR ARRANGEMENT SUBJECT TO THE PROHIBITED
TRANSACTION PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974,
AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE, OR ANY PERSON (INCLUDING AN
INSURANCE COMPANY INVESTING ITS GENERAL ACCOUNT, AN INVESTMENT MANAGER, A NAMED
FIDUCIARY OR A TRUSTEE OF ANY SUCH PLAN) WHO IS USING "PLAN ASSETS" OF ANY SUCH
PLAN TO EFFECT SUCH ACQUISITION (EACH OF THE FOREGOING, A "PLAN INVESTOR")
UNLESS THE TRUSTEE, THE DEPOSITOR AND THE MASTER SERVICER ARE PROVIDED WITH
EITHER (I) A CERTIFICATION PURSUANT TO SECTION 5.02(E)(I)(B) OF THE AGREEMENT OR
(II) AN OPINION OF COUNSEL ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY
TO THE TRUSTEE, THE DEPOSITOR AND THE MASTER SERVICER TO THE EFFECT THAT THE
PURCHASE OR HOLDING OF THIS CERTIFICATE IS PERMISSIBLE UNDER APPLICABLE LAW,
WILL NOT CONSTITUTE OR RESULT IN ANY NON-EXEMPT PROHIBITED TRANSACTION UNDER
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE (OR COMPARABLE PROVISIONS OF
ANY SUBSEQUENT ENACTMENTS), AND WILL NOT SUBJECT THE TRUSTEE, THE DEPOSITOR OR
THE MASTER SERVICER TO ANY OBLIGATION OR LIABILITY (INCLUDING OBLIGATIONS OR
LIABILITIES UNDER ERISA OR SECTION 4975 OF THE CODE) IN ADDITION TO THOSE
UNDERTAKEN IN THE AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF
THE TRUSTEE, THE DEPOSITOR OR THE MASTER SERVICER.
C-1
ANY PURPORTED CERTIFICATE OWNER WHOSE ACQUISITION OR HOLDING OF THIS
CERTIFICATE (OR INTEREST THEREIN) WAS EFFECTED IN VIOLATION OF THE RESTRICTIONS
IN SECTION 5.02(E) OF THE POOLING AND SERVICING AGREEMENT SHALL INDEMNIFY AND
HOLD HARMLESS THE DEPOSITOR, THE TRUSTEE, THE MASTER SERVICER, ANY SUBSERVICER,
AND THE TRUST FUND FROM AND AGAINST ANY AND ALL LIABILITIES, CLAIMS, COSTS OR
EXPENSES INCURRED BY SUCH PARTIES AS A RESULT OF SUCH ACQUISITION OR HOLDING.
CUSIP: _____________________ Certificate No. SB-[__]-1
Date of Pooling and Servicing Agreement Percentage Interest: [__]%
and Cut-off Date: August 1, 2006
First Distribution Date: September 25, 2006 Aggregate Initial Certificate
Principal Balance of the Class
SB-[_] Certificates:
$______________________
Master Servicer: Initial Certificate Principal
Residential Funding Corporation Balance of this Class SB-[_]
Certificate:
$______________________
Maturity Date:
__________ __, 20__
C-2
HOME EQUITY MORTGAGE ASSET-BACKED PASS-THROUGH CERTIFICATES
SERIES 2006-KS7
evidencing a percentage interest in the distributions allocable
to the Class SB-[_] Certificates with respect to a Trust Fund
consisting primarily of a pool of [fixed] [adjustable] interest
rate, first [and junior] lien mortgage loans on one- to
four-family residential properties sold by RESIDENTIAL ASSET
SECURITIES CORPORATION
This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in Residential Asset
Securities Corporation, the Master Servicer, the Trustee referred to below or
any of their affiliates. Neither this Certificate nor the underlying mortgage
loans are guaranteed or insured by any governmental agency or instrumentality or
by Residential Asset Securities Corporation, the Master Servicer, the Trustee or
any of their affiliates. None of the Depositor, the Master Servicer or any of
their affiliates will have any obligation with respect to any certificate or
other obligation secured by or payable from payments on the Certificates.
This certifies that [X.X. Xxxxxx Securities, Inc.] is the registered
owner of the Percentage Interest evidenced by this Certificate in certain
distributions with respect to the Trust Fund consisting primarily of an interest
in a pool of [fixed] [adjustable] interest rate, first [and junior] lien
mortgage loans on one- to four-family residential properties (the "Mortgage
Loans"), sold by Residential Asset Securities Corporation (hereinafter called
the "Depositor," which term includes any successor entity under the Agreement
referred to below). The Trust Fund was created pursuant to a Pooling and
Servicing Agreement dated as specified above (the "Agreement") among the
Depositor, the Master Servicer and U.S. Bank National Association, as trustee
(the "Trustee"), a summary of certain of the pertinent provisions of which is
set forth hereafter. To the extent not defined herein, the capitalized terms
used herein have the meanings assigned in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof, assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing as
described in the Agreement, to the Person in whose name this Certificate is
registered at the close of business on the last Business Day of the month
immediately preceding the month of such distribution (the "Record Date"), from
the Available Distribution Amount in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount of interest and
principal, if any, required to be distributed to Holders of Class SB-[_]
Certificates on such Distribution Date.
Distributions on this Certificate will be made either by the Master
Servicer acting on behalf of the Trustee or by a Paying Agent appointed by the
Trustee in immediately available funds (by wire transfer or otherwise) for the
account of the Person entitled thereto if such Person shall have so notified the
Master Servicer or such Paying Agent, or by check mailed to the address of the
Person entitled thereto, as such name and address shall appear on the
Certificate Register.
C-3
Notwithstanding the above, the final distribution on this Certificate
will be made after due notice of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose in St. Xxxx, Minnesota. The Notional Amount of
this Class SB-[_] Certificate as of any date of determination will be calculated
as described in the Agreement. This Class SB-[_] Certificate will accrue
interest at the Pass-Through Rate on the Notional Amount as indicated in the
definition of Accrued Certificate Interest in the Agreement. This Class SB-[_]
Certificate will not accrue interest on its Certificate Principal Balance.
No transfer of this Certificate or any interest therein shall be made to
any employee benefit plan or other plan or arrangement subject to the prohibited
transaction provisions of ERISA or Section 4975 of the Code, or any person
(including an insurance company investing its general account, an investment
manager, a named fiduciary or a trustee of any such plan) who is using "plan
assets" of any such plan to effect such acquisition (each of the foregoing, a
"Plan Investor") unless the Trustee, the Depositor and the Master Servicer are
provided with either (i) a certification pursuant to Section 5.02(e)(i)(B) of
the Agreement or (ii) an Opinion of Counsel acceptable to and in form and
substance satisfactory to the Trustee, the Depositor and the Master Servicer to
the effect that the purchase or holding of this Certificate is permissible under
applicable law, will not constitute or result in any non-exempt prohibited
transaction under Section 406 of ERISA or Section 4975 of the Code (or
comparable provisions of any subsequent enactments), and will not subject the
Trustee, the Depositor or the Master Servicer to any obligation or liability
(including obligations or liabilities under ERISA or Section 4975 of the Code)
in addition to those undertaken in the Agreement, which Opinion of Counsel shall
not be an expense of the Trustee, the Depositor or the Master Servicer.
Any purported Certificate owner whose acquisition or holding of this
Certificate (or interest therein) was effected in violation of the restrictions
in Section 5.02(e) of the Pooling and Servicing Agreement shall indemnify and
hold harmless the Depositor, the Trustee, the Master Servicer, any Subservicer,
and the Trust Fund from and against any and all liabilities, claims, costs or
expenses incurred by such parties as a result of such acquisition or holding.
This Certificate is one of a duly authorized issue of Certificates
issued in several Classes designated as Home Equity Mortgage Asset-Backed
Pass-Through Certificates of the Series specified hereon (herein collectively
called the "Certificates").
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set forth
herein and in the Agreement. In the event Master Servicer funds are advanced
with respect to any Mortgage Loan, such advance is reimbursable to the Master
Servicer, to the extent provided in the Agreement, from related recoveries on
such Mortgage Loan or from other cash that would have been distributable to
Certificateholders.
C-4
As provided in the Agreement, withdrawals from the Custodial Account
and/or the Certificate Account created for the benefit of Certificateholders may
be made by the Master Servicer from time to time for purposes other than
distributions to Certificateholders, such purposes including without limitation
reimbursement to the Depositor and the Master Servicer of advances made, or
certain expenses incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations of
the Depositor, the Master Servicer and the Trustee and the rights of the
Certificateholders under the Agreement from time to time by the Depositor, the
Master Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66% of the Percentage Interests of
each Class of Certificates affected thereby. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon the Certificate. The Agreement also permits the
amendment thereof in certain circumstances without the consent of the Holders of
any of the Certificates and, in certain additional circumstances, without the
consent of the Holders of certain Classes of Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee in St. Xxxx, Minnesota, duly
endorsed by, or accompanied by an assignment in the form below or other written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of authorized
denominations evidencing the same Class and aggregate Percentage Interest will
be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Trustee, the Certificate
Registrar and any agent of the Depositor, the Master Servicer, the Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Master Servicer, the Trustee or any such agent shall be affected by notice to
the contrary.
This Certificate shall be governed by and construed in accordance with
the laws of the State of New York.
C-5
The obligations created by the Agreement in respect of the Certificates
and the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the maturity or other liquidation of the last Mortgage Loan subject thereto
or the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan, and (ii) the purchase by the Holder of the
Class SB Certificates or the Master Servicer, as described in the Agreement,
from the Trust Fund of all remaining Mortgage Loans and all property acquired in
respect of such Mortgage Loans or the Certificates, in either case thereby
effecting early retirement of the Certificates. The Agreement permits, but does
not require, the Holder of the Class SB Certificates or the Master Servicer, as
described in the Agreement, (i) to purchase, at a price determined as provided
in the Agreement, all remaining Mortgage Loans and all property acquired in
respect of any Mortgage Loan or (ii) to purchase in whole, but not in part, all
of the Certificates from the Holders thereof, provided, that any such option may
only be exercised if the Stated Principal Balance before giving effect to the
distributions to be made on such Distribution Date of the Mortgage Loans, as of
the Distribution Date upon which the proceeds of any such purchase are
distributed is less than ten percent of the Cut-off Date Balance.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
C-6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:____________________________
Authorized Signatory
Dated:_____________________
CERTIFICATE OF AUTHENTICATION
This is one of the Class M-[_] Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION,
as Certificate Registrar
By:____________________________
Authorized Signatory
C-7
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto ___________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee) the beneficial interest evidenced by the within Trust Certificate and
hereby authorizes the transfer of registration of such interest to assignee on
the Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
________________________________________________________________________________
Dated:_____________________ _____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available fund to ______________________________________________________________
for the account of _____________________________________________________________
account number _________________________________________________________________
or, if mailed by check, to _____________________________________________________
Applicable statements should be mailed to:______________________________
________________________________________________________________________________
_______________________________________________________________________________.
This information is provided by ____________________________________,
the assignee named above, or ______________________________, as its agent.
C-8
EXHIBIT D
FORM OF CLASS R CERTIFICATE
THE CLASS R CERTIFICATE WILL NOT BE ENTITLED TO PAYMENTS CONSTITUTING
THE AVAILABLE DISTRIBUTION AMOUNT UNTIL SUCH TIME AS DESCRIBED IN THE POOLING
AND SERVICING AGREEMENT REFERRED TO HEREIN (THE "AGREEMENT").
THIS CLASS R CERTIFICATE IS SUBORDINATE TO THE CLASS A, CLASS M AND
CLASS SB CERTIFICATES, TO THE EXTENT DESCRIBED HEREIN AND IN THE AGREEMENT.
THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A NON-UNITED
STATES PERSON OR A DISQUALIFIED ORGANIZATION (AS DEFINED BELOW).
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING
AGREEMENT (THE "AGREEMENT").
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING
AGREEMENT (THE "AGREEMENT").
NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST THEREIN SHALL BE MADE TO
ANY EMPLOYEE BENEFIT PLAN OR OTHER PLAN OR ARRANGEMENT SUBJECT TO THE PROHIBITED
TRANSACTION PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974,
AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE, OR ANY PERSON (INCLUDING AN
INSURANCE COMPANY INVESTING ITS GENERAL ACCOUNT, AN INVESTMENT MANAGER, A NAMED
FIDUCIARY OR A TRUSTEE OF ANY SUCH PLAN) WHO IS USING "PLAN ASSETS" OF ANY SUCH
D-1
PLAN TO EFFECT SUCH ACQUISITION (EACH OF THE FOREGOING, A "PLAN INVESTOR")
UNLESS THE TRUSTEE, THE DEPOSITOR AND THE MASTER SERVICER ARE PROVIDED WITH
EITHER (I) A CERTIFICATION PURSUANT TO SECTION 5.02(E)(I)(B) OF THE AGREEMENT OR
(II) AN OPINION OF COUNSEL ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY
TO THE TRUSTEE, THE DEPOSITOR AND THE MASTER SERVICER TO THE EFFECT THAT THE
PURCHASE OR HOLDING OF THIS CERTIFICATE IS PERMISSIBLE UNDER APPLICABLE LAW,
WILL NOT CONSTITUTE OR RESULT IN ANY NON-EXEMPT PROHIBITED TRANSACTION UNDER
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE (OR COMPARABLE PROVISIONS OF
ANY SUBSEQUENT ENACTMENTS), AND WILL NOT SUBJECT THE TRUSTEE, THE DEPOSITOR OR
THE MASTER SERVICER TO ANY OBLIGATION OR LIABILITY (INCLUDING OBLIGATIONS OR
LIABILITIES UNDER ERISA OR SECTION 4975 OF THE CODE) IN ADDITION TO THOSE
UNDERTAKEN IN THE AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF
THE TRUSTEE, THE DEPOSITOR OR THE MASTER SERVICER.
ANY PURPORTED CERTIFICATE OWNER WHOSE ACQUISITION OR HOLDING OF THIS
CERTIFICATE (OR INTEREST THEREIN) WAS EFFECTED IN VIOLATION OF THE RESTRICTIONS
IN SECTION 5.02(E) OF THE POOLING AND SERVICING AGREEMENT SHALL INDEMNIFY AND
HOLD HARMLESS THE DEPOSITOR, THE TRUSTEE, THE MASTER SERVICER, ANY SUBSERVICER,
AND THE TRUST FUND FROM AND AGAINST ANY AND ALL LIABILITIES, CLAIMS, COSTS OR
EXPENSES INCURRED BY SUCH PARTIES AS A RESULT OF SUCH ACQUISITION OR HOLDING.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE
MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE MASTER
SERVICER AND THE TRUSTEE THAT (1) SUCH TRANSFEREE IS NOT (A) THE UNITED STATES,
ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY POSSESSION OF THE UNITED STATES,
OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE FOREGOING (OTHER THAN AN
INSTRUMENTALITY WHICH IS A CORPORATION IF ALL OF ITS ACTIVITIES ARE SUBJECT TO
TAX AND EXCEPT FOR XXXXXXX MAC, A MAJORITY OF ITS BOARD OF DIRECTORS IS NOT
SELECTED BY SUCH GOVERNMENTAL UNIT), (B) A FOREIGN GOVERNMENT, ANY INTERNATIONAL
ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF EITHER OF THE FOREGOING, (C)
ANY ORGANIZATION (OTHER THAN CERTAIN FARMERS' COOPERATIVES DESCRIBED IN SECTION
521 OF THE CODE) WHICH IS EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE
UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE
CODE (INCLUDING THE TAX IMPOSED BY SECTION 511 OF THE CODE ON UNRELATED BUSINESS
TAXABLE INCOME), (D) RURAL ELECTRIC AND TELEPHONE COOPERATIVES DESCRIBED IN
SECTION 1381(A)(2)(C) OF THE CODE, (E) AN ELECTING LARGE PARTNERSHIP UNDER
SECTION 775(A) OF THE CODE (ANY SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES
(A), (B), (C), (D) OR (E) BEING HEREIN REFERRED TO AS A "DISQUALIFIED
D-2
ORGANIZATION"), OR (F) AN AGENT OF A DISQUALIFIED ORGANIZATION, (2) NO PURPOSE
OF SUCH TRANSFER IS TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX AND (3) SUCH
TRANSFEREE SATISFIES CERTAIN ADDITIONAL CONDITIONS RELATING TO THE FINANCIAL
CONDITION OF THE PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE
CERTIFICATE REGISTER OR ANY TRANSFER, SALE OR OTHER DISPOSITION OF THIS
CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR AN AGENT OF A DISQUALIFIED
ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR
EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER
FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF
DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF THIS CERTIFICATE BY ACCEPTANCE
OF THIS CERTIFICATE SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS
PARAGRAPH.
Certificate No. R-1 Percentage Interest: 100.00%
Date of Pooling and Servicing Agreement Master Servicer:
and Cut-off Date: August 1, 2006 Residential Funding Corporation
HOME EQUITY MORTGAGE ASSET-BACKED PASS-THROUGH CERTIFICATES
SERIES 2006-KS7
evidencing a percentage interest in the distributions allocable
to the Class R Certificates with respect to a Trust Fund
consisting primarily of mortgage loans on one- to four-family
residential properties sold by RESIDENTIAL ASSET SECURITIES
CORPORATION
This Certificate is payable solely from the assets of the Trust Fund and
does not represent an obligation of or interest in Residential Asset Securities
Corporation, the Master Servicer, the Trustee referred to below or any of their
affiliates. Neither this Certificate nor the underlying Mortgage Loans are
guaranteed or insured by any governmental agency or instrumentality or by
Residential Asset Securities Corporation, the Master Servicer, the Trustee or
any of their affiliates. None of the Depositor, the Master Servicer or any of
their affiliates will have any obligation with respect to any certificate or
other obligation secured by or payable from payments on the Certificates.
This certifies that [Residential Funding Corporation] is the registered
owner of the Percentage Interest evidenced by this Certificate in certain
distributions with respect to the Trust Fund consisting primarily of a pool of
adjustable rate, first [and junior] lien mortgage loans on one- to four-family
residential properties (the "Mortgage Loans"), sold by Residential Asset
Securities Corporation (hereinafter called the "Depositor," which term includes
D-3
any successor entity under the Agreement referred to below). The Trust Fund was
created pursuant to a Pooling and Servicing Agreement dated as specified above
(the "Agreement) among the Depositor, the Master Servicer and U.S. Bank National
Association, as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing as
described in the Agreement, to the Person in whose name this Certificate is
registered at the close of business on the last Business Day of the month
immediately preceding the month of such distribution (the "Record Date"), from
the related Available Distribution Amount in an amount equal to the product of
the Percentage Interest evidenced by this Certificate and, the amount of
interest and principal, if any, required to be distributed to the Holders of
Class R Certificates on such Distribution Date.
Each Holder of this Certificate will be deemed to have agreed to be
bound by the restrictions set forth in the Agreement to the effect that (i) each
person holding or acquiring any Ownership Interest in this Certificate must be a
United States Person and a Permitted Transferee, (ii) the transfer of any
Ownership Interest in this Certificate will be conditioned upon the delivery to
the Trustee of, among other things, an affidavit to the effect that it is a
United States Person and Permitted Transferee, (ii) any attempted or purported
transfer of any Ownership Interest in this Certificate in violation of such
restrictions will be absolutely null and void and will vest no rights in the
purported transferee, and (iv) if any person other than a United States Person
and a Permitted Transferee acquires any Ownership Interest in this Certificate
in violation of such restrictions, then the Master Servicer will have the right,
in its sole discretion and without notice to the Holder of this Certificate, to
sell this Certificate to a purchaser selected by the Master Servicer, which
purchaser may be the Master Servicer, or any affiliate of the Master Servicer,
on such terms and conditions as the Master Servicer may choose.
Notwithstanding the above, the final distribution on this Certificate
will be made after due notice of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose in St. Xxxx, Minnesota. The Holder of this
Certificate may have additional obligations with respect to this Certificate,
including tax liabilities.
No transfer of this Class R Certificate will be made unless such
transfer is exempt from the registration requirements of the Securities Act of
1933, as amended, and any applicable state securities laws or is made in
accordance with said Act and laws. In the event that such a transfer is to be
made, (i) the Trustee or the Depositor may require an opinion of counsel
acceptable to and in form and substance satisfactory to the Trustee and the
Depositor that such transfer is exempt (describing the applicable exemption and
the basis therefor) from or is being made pursuant to the registration
requirements of the Securities Act of 1933, as amended, and of any applicable
statute of any state and (ii) the transferee shall execute an investment letter
in the form described by the Agreement. The Holder hereof desiring to effect
D-4
such transfer shall, and does hereby agree to, indemnify the Trustee, the
Depositor, the Master Servicer and the Certificate Registrar acting on behalf of
the Trustee 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.
Any Transferee of this Certificate will be deemed to have represented by
virtue of its purchase or holding of this Certificate (or interest therein) that
such transferee is not an employee benefit plan or other plan or arrangement
subject to the prohibited transaction provisions of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or Section 4975 of the Code
or a person (including an insurance company investing its general account, an
investment manager, a named fiduciary or a trustee of any such plan) who is
using "plan assets" of any such plan to effect such acquisition.
This Certificate is one of a duly authorized issue of Certificates
issued in several Classes designated as Home Equity Mortgage Asset-Backed
Pass-Through Certificates of the Series specified hereon (herein collectively
called the "Certificates").
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set forth
herein and in the Agreement. In the event Master Servicer funds are advanced
with respect to any Mortgage Loan, such advance is reimbursable to the Master
Servicer, to the extent provided in the Agreement, from related recoveries on
such Mortgage Loan or from other cash that would have been distributable to
Certificateholders.
As provided in the Agreement, withdrawals from the Custodial Account
and/or the Certificate Account created for the benefit of Certificateholders may
be made by the Master Servicer from time to time for purposes other than
distributions to Certificateholders, such purposes including without limitation
reimbursement to the Depositor and the Master Servicer of advances made, or
certain expenses incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations of
the Depositor, the Master Servicer and the Trustee and the rights of the
Certificateholders under the Agreement from time to time by the Depositor, the
Master Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66% of the Percentage Interests of
each Class of Certificates affected thereby. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon the Certificate. The Agreement also permits the
amendment thereof in certain circumstances without the consent of the Holders of
any of the Certificates and, in certain additional circumstances, without the
consent of the Holders of certain Classes of Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee in St. Xxxx, Minnesota, duly
endorsed by, or accompanied by an assignment in the form below or other written
instrument of transfer in form satisfactory to the Trustee and the Certificate
D-5
Registrar duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of authorized
denominations evidencing the same Class and aggregate Percentage Interest will
be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Trustee, the Certificate
Registrar and any agent of the Depositor, the Master Servicer, the Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Master Servicer, the Trustee or any such agent shall be affected by notice to
the contrary.
This Certificate shall be governed by and construed in accordance with
the laws of the State of New York.
The obligations created by the Agreement in respect of the Certificates
and the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
D-6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:____________________________
Authorized Signatory
Dated:_____________________
CERTIFICATE OF AUTHENTICATION
This is one of the Class M-[_] Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION,
as Certificate Registrar
By:____________________________
Authorized Signatory
D-7
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto ___________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee) the beneficial interest evidenced by the within Trust Certificate and
hereby authorizes the transfer of registration of such interest to assignee on
the Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
________________________________________________________________________________
Dated:_____________________ _____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available fund to ______________________________________________________________
for the account of _____________________________________________________________
account number _________________________________________________________________
or, if mailed by check, to _____________________________________________________
Applicable statements should be mailed to:______________________________
________________________________________________________________________________
_______________________________________________________________________________.
This information is provided by ____________________________________,
the assignee named above, or ______________________________, as its agent.
D-8
EXHIBIT E
FORM OF CUSTODIAL AGREEMENT
THIS CUSTODIAL AGREEMENT (as amended and supplemented from time to time,
the "Agreement"), dated as of August 1, 2006, by and among U.S. BANK NATIONAL
ASSOCIATION, as trustee (including its successors under the Pooling Agreement
defined below, the "Trustee"), RESIDENTIAL ASSET SECURITIES CORPORATION
(together with any successor in interest, the "Company"), RESIDENTIAL FUNDING
CORPORATION, as master servicer (together with any successor in interest or
successor under the Pooling Agreement referred to below, the "Master Servicer")
and XXXXX FARGO BANK, NATIONAL ASSOCIATION (together with any successor in
interest or any successor appointed hereunder, the "Custodian").
W I T N E S S E T H T H A T:
WHEREAS, the Company, the Master Servicer, and the Trustee have entered
into a Pooling and Servicing Agreement, dated as of August 1, 2006, relating to
the issuance of Residential Asset Securities Corporation, Home Equity Mortgage
Asset-Backed Pass-Through Certificates, Series 2006-KS7 (as in effect on the
date of this Agreement, the "Original Pooling Agreement," and as amended and
supplemented from time to time, the "Pooling Agreement"); and
WHEREAS, the Custodian has agreed to act as agent for the Trustee for
the purposes of receiving and holding certain documents and other instruments
delivered by the Company and the Master Servicer under the Pooling Agreement,
all upon the terms and conditions and subject to the limitations hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the Trustee, the Company, the
Master Servicer and the Custodian hereby agree as follows:
ARTICLE I
Definitions
Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned in the Original Pooling Agreement, unless otherwise
required by the context herein.
ARTICLE II
Custody of Mortgage Documents
Section 2.1 Custodian to Act as Agent: Acceptance of Custodial Files.
The Company and the Master Servicer hereby direct the Trustee to appoint Xxxxx
Fargo Bank, National Association as the Custodian hereunder. The Custodian, as
the duly appointed agent of the Trustee for these purposes, acknowledges receipt
of the Custodial Files relating to the Mortgage Loans identified on the schedule
attached hereto (the "Custodial Files") and declares that it holds and will hold
the Custodial Files as agent for the Trustee, in trust, for the use and benefit
of all present and future Certificateholders.
E-1
Section 2.2 Recordation of Assignments. If any Custodial File includes
one or more assignments of the related Mortgages to the Trustee that have not
been recorded, each such assignment shall be delivered by the Custodian to the
Company for the purpose of recording it in the appropriate public office for
real property records, and the Company, at no expense to the Custodian, shall
promptly cause to be recorded in the appropriate public office for real property
records each such assignment and, upon receipt thereof from such public office,
shall return each such assignment to the Custodian.
Section 2.3 Review of Custodial Files.
(a) On or prior to the Closing Date, the Custodian shall
deliver to the Trustee an Initial Certification in the form annexed hereto as
Exhibit One evidencing receipt of a Custodial File for each Mortgage Loan listed
on the Schedule attached hereto (the "Mortgage Loan Schedule"). The parties
hereto acknowledge that certain documents referred to in Subsection 2.01(b)(i)
of the Pooling Agreement may be missing on or prior to the Closing Date and such
missing documents shall be listed as a Schedule to Exhibit One.
(b) Within 45 days after the Closing Date, the Custodian agrees,
for the benefit of Certificateholders, to review each Custodial File and to
deliver to the Trustee an Interim Certification in the form annexed hereto as
Exhibit Two to the effect that all documents required to be delivered pursuant
to Section 2.01 (b) of the Pooling Agreement have been executed and received and
that such documents relate to the Mortgage Loans identified on the Mortgage Loan
Schedule, except for any exceptions listed on Schedule A attached to such
Interim Certification. For purposes of such review, the Custodian shall compare
the following information in each Custodial File to the corresponding
information in the Mortgage Loan Schedule: (i) the loan number, (ii) the
borrower name and (iii) the original principal balance. In the event that any
Mortgage Note or Assignment of Mortgage has been delivered to the Custodian by
the Company in blank, the Custodian, upon the direction of the Company, shall
cause each such Mortgage Note to be endorsed to the Trustee and each such
Assignment of Mortgage to be completed in the name of the Trustee prior to the
date on which such Interim Certification is delivered to the Trustee. Within 45
days of receipt of the documents required to be delivered pursuant to Section
2.01(c) of the Pooling Agreement, the Custodian agrees, for the benefit of the
Certificateholders, to review each such document, and upon the written request
of the Trustee to deliver to the Trustee an updated Schedule A to the Interim
Certification. The Custodian shall be under no duty or obligation to inspect,
review or examine said 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 or that they are
other than what they purport to be on their face, or that the MIN is accurate.
If in performing the review required by this Section 2.3 the Custodian finds any
document or documents constituting a part of a Custodial File to be missing or
defective in respect of the items reviewed as described in this Section 2.3(b),
the Custodian shall promptly so notify the Company, the Master Servicer and the
Trustee.
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(c) Upon receipt of all documents required to be in the
Custodial Files the Custodian shall deliver to the Trustee a Final Certification
in the form annexed hereto as Exhibit Three evidencing the completeness of the
Custodial Files.
Upon receipt of written request from the Trustee, the Company or the
Master Servicer, the Custodian shall as soon as practicable supply the Trustee
with a list of all of the documents relating to the Mortgage Loans required to
be delivered pursuant to Section 2.01(b) of the Pooling Agreement not then
contained in the Custodial Files.
Section 2.4 Notification of Breaches of Representations and Warranties.
If the Custodian discovers, in the course of performing its custodial functions,
a breach of a representation or warranty made by the Master Servicer or the
Company as set forth in the Pooling Agreement with respect to a Mortgage Loan
relating to a Custodial File, the Custodian shall give prompt written notice to
the Company, the Master Servicer and the Trustee.
Section 2.5 Custodian to Cooperate: Release of Custodial Files. Upon the
repurchase or substitution of any Mortgage Loan pursuant to Article II of the
Pooling Agreement or 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 shall immediately notify
the Custodian by delivering to the Custodian a Request for Release (in the form
of Exhibit Four attached hereto or a mutually acceptable electronic form) and
shall request delivery to it of the Custodial File. The Custodian agrees, upon
receipt of such Request for Release, promptly to release to the Master Servicer
the related Custodial File. Upon receipt of a Request for Release from the
Master Servicer, signed by a Servicing Officer, that (i) the Master Servicer or
a Subservicer, as the case may be, has made a deposit into the Certificate
Account in payment for the purchase of the related Mortgage Loan in an amount
equal to the Purchase Price for such Mortgage Loan or (ii) the Company has
chosen to substitute a Qualified Substitute Mortgage Loan for such Mortgage
Loan, the Custodian shall release to the Master Servicer the related Custodial
File. Upon written notification of a substitution, the Master Servicer shall
deliver to the Custodian and the Custodian agrees to accept the Mortgage Note
and other documents constituting the Custodial File with respect to any
Qualified Substitute Mortgage Loan, upon receiving written notification from the
Master Servicer of such substitution.
From time to time as is appropriate for the servicing or foreclosures of
any Mortgage Loan, including, for this purpose, collection under any Primary
Insurance Policy or any Mortgage Pool Insurance Policy, the Master Servicer
shall deliver to the Custodian a Request for Release certifying as to the reason
for such release. Upon receipt of the foregoing, the Custodian shall deliver the
Custodial File or such document to the Master Servicer. All Custodial Files so
released to the Master Servicer shall be held by it in trust for the Trustee for
the use and benefit of all present and future Certificateholders. The Master
Servicer shall cause each Custodial File or any document therein so released to
be returned to the Custodian when the need therefor by the Master Servicer no
longer exists, unless (i) the Mortgage Loan has been liquidated and the
Liquidation Proceeds relating to the Mortgage Loan have been deposited in the
Custodial Account or (ii) the Custodial File or such document has been delivered
to an attorney, or to a public trustee or other public official as required by
law, for purposes of initiating or pursuing legal action or other proceedings
for the foreclosure of the Mortgaged Property either judicially or
non-judicially, and the Master Servicer has delivered to the Custodian an
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updated Request for Release signed by a Servicing Officer certifying as to the
name and address of the Person to which such Custodial File or such document was
delivered and the purpose or purposes of such delivery. Immediately upon receipt
of any Custodial File returned to the Custodian by the Master Servicer, the
Custodian shall deliver a signed acknowledgement to the Master Servicer,
confirming receipt of such Custodial File.
Upon the written request of the Master Servicer, the Custodian will send
to the Master Servicer copies of any documents contained in the Custodial File.
Section 2.6 Assumption Agreements. In the event that any assumption
agreement or substitution of liability agreement is entered into with respect to
any Mortgage Loan subject to this Agreement in accordance with the terms and
provisions of the Pooling Agreement, the Master Servicer shall notify the
Custodian that such assumption or substitution agreement has been completed by
forwarding to the Custodian the original of such assumption or substitution
agreement, which shall be added to the related Custodial File and, for all
purposes, shall be considered a part of such Custodial File to the same extent
as all other documents and instruments constituting parts thereof.
ARTICLE III
Concerning the Custodian
Section 3.1 Custodian a Bailee and Agent of the Trustee. With respect to
each Mortgage Note, Mortgage and other documents constituting each Custodial
File which are delivered to the Custodian, the Custodian is exclusively the
bailee and agent of the Trustee and has no instructions to hold any Mortgage
Note or Mortgage for the benefit of any person other than the Trustee, holds
such documents for the benefit of Certificateholders and undertakes to perform
such duties and only such duties as are specifically set forth in this
Agreement. Except upon compliance with the provisions of Section 2.5 of this
Agreement, no Mortgage Note, Mortgage or other document constituting a part of a
Custodial File shall be delivered by the Custodian to the Company or the Master
Servicer or otherwise released from the possession of the Custodian.
The Master Servicer shall promptly notify the Custodian in writing if it
shall no longer be a member of MERS, or if it otherwise shall no longer be
capable of registering and recording Mortgage Loans using MERS. In addition, the
Master Servicer shall (i) promptly notify the Custodian in writing when a MERS
Mortgage Loan is no longer registered with and recorded under MERS and (ii)
concurrently with any such deregistration of a MERS Mortgage Loan, prepare,
execute and record an original assignment from MERS to the Trustee and deliver
such assignment to the Custodian.
Section 3.2. Indemnification. The Company hereby agrees to indemnify and
hold the Custodian harmless from and against all claims, liabilities, losses,
actions, suits or proceedings at law or in equity, or any other expenses, fees
or charges of any character or nature, which the Custodian may incur or with
which the Custodian may be threatened by reason of its acting as custodian under
this Agreement, including indemnification of the Custodian against any and all
expenses, including attorney's fees if counsel for the Custodian has been
approved by the Company, and the cost of defending any action, suit or
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proceedings or resisting any claim. Notwithstanding the foregoing, it is
specifically understood and agreed that in the event any such claim, liability,
loss, action, suit or proceeding or other expense, fee or charge shall have been
caused by reason of any negligent act, negligent failure to act or willful
misconduct on the part of the Custodian, or which shall constitute a willful
breach of its duties hereunder, the indemnification provisions of this Agreement
shall not apply.
Section 3.3 Custodian May Own Certificates. The Custodian in its
individual or any other capacity may become the owner or pledgee of Certificates
with the same rights it would have if it were not Custodian.
Section 3.4 Master Servicer to Pay Custodian's Fees and Expenses. The
Master Servicer covenants and agrees to pay to the Custodian from time to time,
and the Custodian shall be entitled to, reasonable compensation for all services
rendered by it in the exercise and performance of any of the powers and duties
hereunder of the Custodian, and the Master Servicer shall pay or reimburse the
Custodian upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Custodian in accordance with any of the
provisions of this Agreement (including the reasonable compensation and the
expenses and disbursements of its counsel and of all persons not regularly in
its employ), except any such expense, disbursement or advance as may arise from
its negligence or bad faith.
Section 3.5 Custodian May Resign; Trustee May Remove Custodian. The
Custodian may resign from the obligations and duties hereby imposed upon it as
such obligations and duties relate to its acting as Custodian of the Mortgage
Loans. Upon receiving such notice of resignation, the Trustee shall either take
custody of the Custodial Files itself and give prompt notice thereof to the
Company, the Master Servicer and the Custodian, or promptly appoint a successor
Custodian by written instrument, in duplicate, one copy of which instrument
shall be delivered to the resigning Custodian and one copy to the successor
Custodian. If the Trustee shall not have taken custody of the Custodial Files
and no successor Custodian shall have been so appointed and have accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning Custodian may petition any court of competent jurisdiction for the
appointment of a successor Custodian.
The Trustee, at the direction of the Master Servicer and the Company,
may remove the Custodian at any time. In such event, the Trustee shall appoint,
or petition a court of competent jurisdiction to appoint, a successor Custodian
hereunder. Any successor Custodian shall be a depository institution subject to
supervision or examination by federal or state authority and shall be able to
satisfy the other requirements contained in Section 3.7 and shall be
unaffiliated with the Master Servicer or the Company.
Any resignation or removal of the Custodian and appointment of a
successor Custodian pursuant to any of the provisions of this Section 3.5 shall
become effective upon acceptance of appointment by the successor Custodian. The
Trustee shall give prompt notice to the Company and the Master Servicer of the
appointment of any successor Custodian. No successor Custodian shall be
appointed by the Trustee without the prior approval of the Company and the
Master Servicer.
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Section 3.6 Merger or Consolidation of Custodian. Any Person into which
the Custodian may be merged or converted or with which it may be consolidated,
or any Person resulting from any merger, conversion or consolidation to which
the Custodian shall be a party, or any Person succeeding to the business of the
Custodian, shall be the successor of the Custodian 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
such successor is a depository institution subject to supervision or examination
by federal or state authority and is able to satisfy the other requirements
contained in Section 3.7 and is unaffiliated with the Master Servicer or the
Company.
Section 3.7 Representations of the Custodian. The Custodian hereby
represents that it is a depository institution subject to supervision or
examination by a federal or state authority, has a combined capital and surplus
of at least $15,000,000 and is qualified to do business in the jurisdictions in
which it will hold any Custodial File.
ARTICLE IV
Compliance with Regulation AB
Section 4.1 Intent of the Parties; Reasonableness. The parties hereto
acknowledge and agree that the purpose of this Article IV is to facilitate
compliance by the Company with the provisions of Regulation AB and related rules
and regulations of the Commission. The Company shall not exercise its right to
request delivery of information or other performance under these provisions
other than in good faith, or for purposes other than compliance with the
Securities Act, the Exchange Act and the rules and regulations of the Commission
under the Securities Act and the Exchange Act. Each of the parties hereto
acknowledges that interpretations of the requirements of Regulation AB may
change over time, whether due to interpretive guidance provided by the
Commission or its staff, consensus among participants in the mortgage-backed
securities markets, advice of counsel, or otherwise, and agrees to comply with
requests made by the Company in good faith for delivery of information under
these provisions on the basis of evolving interpretations of Regulation AB. The
Custodian shall cooperate reasonably with the Company to deliver to the Company
(including any of its assignees or designees), any and all disclosure,
statements, reports, certifications, records and any other information necessary
in the reasonable, good faith determination of the Company to permit the Company
to comply with the provisions of Regulation AB.
ection 4.2....Additional Representations and Warranties of the Custodian.
(a) The Custodian hereby represents and warrants that the information
set forth under the caption "Pooling and Servicing Agreement--Custodial
Arrangements" (the "Custodian Disclosure") in the preliminary prospectus
supplement relating to the Certificates and the final prospectus supplement
relating to the Certificates does not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
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(b) The Custodian shall be deemed to represent to the Company as of the
date hereof and on each date on which information is provided to the Company
under Section 4.3 that, except as disclosed in writing to the Company prior to
such date: (i) there are no aspects of its financial condition that could have a
material adverse effect on the performance by it of its Custodian obligations
under this Agreement or any other Securitization Transaction as to which it is
the custodian; (ii) there are no material legal or governmental proceedings
pending (or known to be contemplated) against it; and (iii) there are no
affiliations, relationships or transactions relating to the Custodian with
respect to the Company or any sponsor, issuing entity, servicer, trustee,
originator, significant obligor, enhancement or support provider or other
material transaction party (as such terms are used in Regulation AB) relating to
the Securitization Transaction contemplated by the Agreement, as identified by
the Company to the Custodian in writing as of the Closing Date (each, a
"Transaction Party").
(c) If so requested by the Company on any date following the Closing
Date, the Custodian shall, within five Business Days following such request,
confirm in writing the accuracy of the representations and warranties set forth
in paragraph (a) of this Section or, if any such representation and warranty is
not accurate as of the date of such confirmation, provide reasonably adequate
disclosure of the pertinent facts, in writing, to the requesting party. Any such
request from the Company shall not be given more than once each calendar
quarter, unless the Company shall have a reasonable basis for a determination
that any of the representations and warranties may not be accurate.
Section 4.3 Additional Information to Be Provided by the Custodian. For
so long as the Certificates are outstanding, for the purpose of satisfying the
Company's reporting obligation under the Exchange Act with respect to any class
of Certificates, the Custodian shall (a) notify the Company in writing of any
material litigation or governmental proceedings pending against the Custodian
that would be material to Certificateholders, and (b) provide to the Company a
written description of such proceedings. Any notices and descriptions required
under this Section 4.3 shall be given no later than five Business Days prior to
the Determination Date following the month in which the Custodian has knowledge
of the occurrence of the relevant event. As of the date the Company or Master
Servicer files each Report on Form 10-D or Form 10-K with respect to the
Certificates, the Custodian will be deemed to represent that any information
previously provided under this Section 4.3, if any, is materially correct and
does not have any material omissions unless the Custodian has provided an update
to such information. For purposes of this Section 4.3, "Determination Date"
shall mean, with respect to any Distribution Date, the 20th day (or if such 20th
day is not a Business Day, the Business Day immediately following such 20th day)
of the month of the related Distribution Date and "Distribution Date" shall
mean, the 25th day of any month beginning in March 2006 or, if such 25th day is
not a Business Day, the Business Day immediately following such 25th day.
Section 4.4 Report on Assessment of Compliance and Attestation. On or
before March 15 of each calendar year, the Custodian shall:
(a) deliver to the Company a report (in form and substance reasonably
satisfactory to the Company) regarding the Custodian's assessment of compliance
with the Servicing Criteria during the immediately preceding calendar year, as
required under Rules 13a-18 and 15d-18 of the Exchange Act and Item 1122 of
Regulation AB. Such report shall be addressed to the Company and signed by an
authorized officer of the Custodian, and shall address each of the Servicing
Criteria specified on a certification substantially in the form of Exhibit Five
hereto; and
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(b) deliver to the Company a report of a registered public accounting
firm reasonably acceptable to the Company that attests to, and reports on, the
assessment of compliance made by the Custodian and delivered pursuant to the
preceding paragraph. Such attestation shall be in accordance with Rules
1-02(a)(3) and 2-02(g) of Regulation S-X under the Securities Act and the
Exchange Act.
Section 4.5 Indemnification; Remedies.
(a) The Custodian shall indemnify the Company, each affiliate of the
Company, the Master Servicer and each broker dealer acting as underwriter,
placement agent or initial purchaser of the Certificates or each Person who
controls any of such parties (within the meaning of Section 15 of the Securities
Act and Section 20 of the Exchange Act); and the respective present and former
directors, officers, employees and agents of each of the foregoing, and shall
hold each of them harmless from and against any losses, damages, penalties,
fines, forfeitures, legal fees and expenses and related costs, judgments, and
any other costs, fees and expenses that any of them may sustain arising out of
or based upon:
(i) (A) any untrue statement of a material fact contained or
alleged to be contained in the Custodian Disclosure and any information, report,
certification, accountants' attestation or other material provided under this
Article IV by or on behalf of the Custodian (collectively, the "Custodian
Information"), or (B) the omission or alleged omission to state in the Custodian
Information a material fact required to be stated in the Custodian Information
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; or
(ii) any failure by the Custodian to deliver any information,
report, certification, accountants' attestation or other material when and as
required under this Article IV.
(b) In the case of any failure of performance described in clause (ii)
of Section 4.5(a), the Custodian shall promptly reimburse the Company for all
costs reasonably incurred by the Company in order to obtain the information,
report, certification, accountants' letter or other material not delivered as
required by the Custodian.
ARTICLE V
Miscellaneous Provisions
Section 5.1 Notices. All notices, requests, consents and demands and
other communications required under this Agreement or pursuant to any other
instrument or document delivered hereunder shall be in writing and, unless
otherwise specifically provided, may be delivered personally, by telegram or
telex, or by registered or certified mail, postage prepaid, return receipt
requested, at the addresses specified on the signature page hereof (unless
changed by the particular party whose address is stated herein by similar notice
in writing); in each case the notice will be deemed delivered when received.
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Section 5.2 Amendments. No modification or amendment of or supplement to
this Agreement shall be valid or effective unless the same is in writing and
signed by all parties hereto, and none of the Company, the Master Servicer or
the Trustee shall enter into any amendment of or supplement to this Agreement
except as permitted by the Pooling Agreement. The Trustee shall give prompt
notice to the Custodian of any amendment or supplement to the Pooling Agreement
and furnish the Custodian with written copies thereof.
Section 5.3 GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE CONFLICT OF LAW PRINCIPLES THEREOF, OTHER THAN SECTIONS 5-1401 AND 5-1402
OF THE NEW YORK GENERAL OBLIGATIONS LAW.
Section 5.4 Recordation of Agreement. To the extent permitted by
applicable law, 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 and at its expense on
direction by the Trustee (pursuant to the request of holders of Certificates
evidencing undivided interests in the aggregate of not less than 25% of the
Trust Fund), but only upon direction accompanied by an Opinion of Counsel
reasonably satisfactory to the Master Servicer to the effect that the failure to
effect such recordation is likely to materially and adversely affect the
interests of the Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 5.5 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.
[Signatures begin on following page]
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IN WITNESS WHEREOF, this Agreement is executed as of the date
first above written.
Address: U.S. BANK NATIONAL ASSOCIATION,
as Trustee
00 Xxxxxxxxxx Xxxxxx
XX-XX-XX0X
Xx. Xxxx, XX 00000
By:____________________________
Attention: Structured Finance / Name:
RASC Series2006-KS7 Title:
Address: RESIDENTIAL ASSET SECURITIES
CORPORATION
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000 By:____________________________
Name: Xxxxxxxxxxx Xxxxxxxx
Title: Vice President
Address: RESIDENTIAL FUNDING CORPORATION,
as Master Servicer
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
By:_____________________________
Name: Xxxxxx Xxxxxx
Title: Associate
Address: XXXXX FARGO BANK, NATIONAL
ASSOCIATION, as Custodian
Mortgage Document Custody
One Meridian Crossings - LL
Xxxxxxxxx, Xxxxxxxxx 00000
By:_____________________________
Name:
Title: Assistant Vice President
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STATE OF MINNESOTA )
)ss.:
COUNTY OF XXXXXX )
On the ____ day of August 2006, before me, a notary public in and
for said State, personally appeared _____________, known to me to be a _________
of U.S. BANK NATIONAL ASSOCIATION, a national banking association that executed
the within instrument, and also known to me to be the person who executed it on
behalf of said national banking association and acknowledged to me that such
national banking association 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]
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STATE OF MINNESOTA )
)ss.:
COUNTY OF HENNEPIN )
On the ____ day of August 2006, before me, a notary public in and
for said State, personally appeared ___________________, known to me to be a
______________ of Residential Asset Securities Corporation., one of the
corporations that executed the within instrument, and also known to me to be the
person who executed it on behalf of said 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]
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STATE OF MINNESOTA )
)ss.:
COUNTY OF HENNEPIN )
On the ____ day of August 2006, before me, a notary public in and
for said State, personally appeared ___________________, known to me to be a
______________ of Residential Funding Corporation, one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said 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]
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STATE OF )
)ss.:
COUNTY OF )
On the ____ day of August 2006, before me, a notary public in and
for said State, personally appeared ______________________, known to me to be a
______________________________ Xxxxx Fargo Bank, National Association, one of
the entities that executed the within instrument, and also known to me to be the
person who executed it on behalf of said national banking association, and
acknowledged to me that such national banking association 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]
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EXHIBIT ONE
FORM OF CUSTODIAN
INITIAL CERTIFICATION
August ___, 2006
U.S. Bank National Association
EP-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Attn: Structured Finance/RASC Series 2006-KS7
Re: Custodial Agreement, dated as of August 1, 2006, by and
among U.S. Bank National Association, Residential Asset
Securities Corporation, Residential Funding Corporation
and Xxxxx Fargo Bank, National Association, relating to
Home Equity Mortgage Asset-Backed Pass-Through
Certificates Series 2006-KS7
Ladies and Gentlemen:
In accordance with Section 2.3 of the above-captioned Custodial
Agreement, and subject to Section 2.02 of the Pooling Agreement, the
undersigned, as Custodian, hereby certifies that it has received a Custodial
File (which contains an original Mortgage Note or an original Lost Note
Affidavit with a copy of the related Mortgage Note) to the extent required in
Section 2.01(b) of the Pooling Agreement with respect to each Mortgage Loan
listed in the Mortgage Loan Schedule, with any exceptions listed on Schedule A
attached hereto.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Custodial Agreement.
XXXXX FARGO BANK,
NATIONAL ASSOCIATION
By:__________________________________
Name:________________________________
Title:_______________________________
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EXHIBIT TWO
FORM OF CUSTODIAN INTERIM CERTIFICATION
August ___, 2006
U.S. Bank National Association
EP-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Attn: Structured Finance, RASC Series 2006-KS7
Re: Custodial Agreement, dated as of August 1, 2006, by and
among U.S. Bank National Association, Residential Asset
Securities Corporation, Residential Funding Corporation
and Xxxxx Fargo Bank, National Association, relating to
Home Equity Mortgage Asset-Backed Pass-Through
Certificates Series 2006-KS7
Ladies and Gentlemen:
In accordance with Section 2.3 of the above-captioned Custodial
Agreement, the undersigned, as Custodian, hereby certifies that it has received
a Custodial File to the extent required pursuant to Section 2.01(b) of the
Pooling Agreement with respect to each Mortgage Loan listed in the Mortgage Loan
Schedule, and it has reviewed the Custodial File and the Mortgage Loan Schedule
and has determined that: all required documents have been executed and received
and that such documents relate to the Mortgage Loans identified on the Mortgage
Loan Schedule, with any exceptions listed on Schedule A attached hereto.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Custodial Agreement.
XXXXX FARGO BANK,
NATIONAL ASSOCIATION
By:__________________________________
Name:________________________________
Title:_______________________________
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EXHIBIT THREE
FORM OF CUSTODIAN FINAL CERTIFICATION
August ___, 2006
U.S. Bank National Association
EP-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Attn: Structured Finance, RASC Series 2006-KS7
Re: Custodial Agreement, dated as of August 1, 2006, by and
among U.S. Bank National Association, Residential Asset
Securities Corporation, Residential Funding Corporation
and Xxxxx Fargo Bank, National Association, relating to
Mortgage Asset-Backed Pass-Through Certificates, Series
2006-KS7
Ladies and Gentlemen:
In accordance with Section 2.3 of the above-captioned Custodial
Agreement, the undersigned, as Custodian, hereby certifies that it has received
a Custodial File with respect to each Mortgage Loan listed in the Mortgage Loan
Schedule and it has reviewed the Custodial File and the Mortgage Loan Schedule
and has determined that: all required documents referred to in Section 2.01(b)
of the Pooling Agreement have been executed and received and that such documents
relate to the Mortgage Loans identified on the Mortgage Loan Schedule.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Custodial Agreement.
XXXXX FARGO BANK,
NATIONAL ASSOCIATION
By:__________________________________
Name:________________________________
Title:_______________________________
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EXHIBIT FOUR
FORM OF REQUEST FOR RELEASE
DATE:
TO:
RE: REQUEST FOR RELEASE OF DOCUMENTS
In connection with the administration of the pool of Mortgage Loans held by you
for the referenced pool, we request the release of the Mortgage Loan File
described below.
Pooling and Servicing Agreement, Dated:
Series#:
Account#:
Pool#:
Loan#:
MIN#:
Borrower Name(s):
Reason for Document Request: (circle one) Mortgage Loan Prepaid in Full
Mortgage Loan Repurchased
"We hereby certify that all amounts received or to be received in connection
with such payments which are required to be deposited have been or will be so
deposited as provided in the Pooling and Servicing Agreement."
_______________________________
Residential Funding Corporation
Authorized Signature
****************************************************************
TO CUSTODIAN/TRUSTEE: Please acknowledge this request, and check off documents
being enclosed with a copy of this form. You should retain this form for your
files in accordance with the terms of the Pooling and Servicing Agreement.
Enclosed Documents: [ ] Promissory Note
[ ] Primary Insurance Policy
[ ] Mortgage or Deed of Trust
[ ] Assignment(s) of Mortgage or Deed of Trust
[ ] Title Insurance Policy
[ ] Other: ________________________
___________________________
Name
___________________________
Title
___________________________
Date
E-18
EXHIBIT FIVE
SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
The assessment of compliance to be delivered by the Custodian shall
address, at a minimum, the criteria identified as below as "Applicable Servicing
Criteria":
----------------------------------------------------------------------------------- ---------------------
APPLICABLE
SERVICING CRITERIA SERVICING CRITERIA
----------------------------------------------------------------------------------- ---------------------
REFERENCE CRITERIA
-------------------------- -------------------------------------------------------- ---------------------
GENERAL SERVICING CONSIDERATIONS
-------------------------- -------------------------------------------------------- ---------------------
Policies and procedures are instituted to monitor any
performance or other triggers and events of default
1122(d)(1)(i) in accordance with the transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
If any material servicing activities are outsourced
to third parties, policies and procedures are
instituted to monitor the third party's performance
1122(d)(1)(ii) and compliance with such servicing activities.
-------------------------- -------------------------------------------------------- ---------------------
Any requirements in the transaction agreements to
maintain a back-up servicer for the pool assets are
1122(d)(1)(iii) maintained.
-------------------------- -------------------------------------------------------- ---------------------
A fidelity bond and errors and omissions policy is in
effect on the party participating in the servicing
function throughout the reporting period in the
amount of coverage required by and otherwise in
1122(d)(1)(iv) accordance with the terms of the transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
CASH COLLECTION AND ADMINISTRATION
-------------------------- -------------------------------------------------------- ---------------------
Payments on pool assets are deposited into the
appropriate custodial bank accounts and related bank
clearing accounts no more than two business days
following receipt, or such other number of days
1122(d)(2)(i) specified in the transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
Disbursements made via wire transfer on behalf of an
obligor or to an investor are made only by authorized
1122(d)(2)(ii) personnel.
-------------------------- -------------------------------------------------------- ---------------------
Advances of funds or guarantees regarding
collections, cash flows or distributions, and any
interest or other fees charged for such advances, are
made, reviewed and approved as specified in the
1122(d)(2)(iii) transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
The related accounts for the transaction, such as
cash reserve accounts or accounts established as a
form of overcollateralization, are separately
maintained (e.g., with respect to commingling of
1122(d)(2)(iv) cash) as set forth in the transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
E-19
----------------------------------------------------------------------------------- ---------------------
APPLICABLE
SERVICING CRITERIA SERVICING CRITERIA
----------------------------------------------------------------------------------- ---------------------
REFERENCE CRITERIA
-------------------------- -------------------------------------------------------- ---------------------
Each custodial account is maintained at a federally
insured depository institution as set forth in the
transaction agreements. For purposes of this
criterion, "federally insured depository institution"
with respect to a foreign financial institution means
a foreign financial institution that meets the
requirements of Rule 13k-1(b)(1) of the Securities
1122(d)(2)(v) Exchange Act.
-------------------------- -------------------------------------------------------- ---------------------
Unissued checks are safeguarded so as to prevent
1122(d)(2)(vi) unauthorized access.
-------------------------- -------------------------------------------------------- ---------------------
Reconciliations are prepared on a monthly basis for
all asset-backed securities related bank accounts,
including custodial accounts and related bank
clearing accounts. These reconciliations are (A)
mathematically accurate; (B) prepared within 30
calendar days after the bank statement cutoff date,
or such other number of days specified in the
transaction agreements; (C) reviewed and approved by
someone other than the person who prepared the
reconciliation; and (D) contain explanations for
reconciling items. These reconciling items are
resolved within 90 calendar days of their original
identification, or such other number of days
1122(d)(2)(vii) specified in the transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
INVESTOR REMITTANCES AND REPORTING
-------------------------- -------------------------------------------------------- ---------------------
Reports to investors, including those to be filed
with the Commission, are maintained in accordance
with the transaction agreements and applicable
Commission requirements. Specifically, such reports
(A) are prepared in accordance with timeframes and
other terms set forth in the transaction agreements;
(B) provide information calculated in accordance with
the terms specified in the transaction agreements;
(C) are filed with the Commission as required by its
rules and regulations; and (D) agree with investors'
or the trustee's records as to the total unpaid
principal balance and number of pool assets serviced
1122(d)(3)(i) by the servicer.
-------------------------- -------------------------------------------------------- ---------------------
Amounts due to investors are allocated and remitted in
accordance with timeframes, distribution priority and
1122(d)(3)(ii) other terms set forth in the transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
Disbursements made to an investor are posted within
two business days to the servicer's investor records,
or such other number of days specified in the
1122(d)(3)(iii) transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
E-20
----------------------------------------------------------------------------------- ---------------------
APPLICABLE
SERVICING CRITERIA SERVICING CRITERIA
----------------------------------------------------------------------------------- ---------------------
REFERENCE CRITERIA
-------------------------- -------------------------------------------------------- ---------------------
Amounts remitted to investors per the investor
reports agree with cancelled checks, or other form of
1122(d)(3)(iv) payment, or custodial bank statements.
-------------------------- -------------------------------------------------------- ---------------------
POOL ASSET ADMINISTRATION
-------------------------- -------------------------------------------------------- ---------------------
Collateral or security on pool assets is maintained as [X]
required by the transaction agreements or related
1122(d)(4)(i) asset pool documents.
-------------------------- -------------------------------------------------------- ---------------------
Pool assets and related documents are safeguarded as [X]
1122(d)(4)(ii) required by the transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
Any additions, removals or substitutions to the asset
pool are made, reviewed and approved in accordance
with any conditions or requirements in the
1122(d)(4)(iii) transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
Payments on pool assets, including any payoffs, made
in accordance with the related pool asset documents
are posted to the servicer's obligor records
maintained no more than two business days after
receipt, or such other number of days specified in
the transaction agreements, and allocated to
principal, interest or other items (e.g., escrow) in
1122(d)(4)(iv) accordance with the related pool asset documents.
-------------------------- -------------------------------------------------------- ---------------------
The servicer's records regarding the pool assets
agree with the servicer's records with respect to an
1122(d)(4)(v) obligor's unpaid principal balance.
-------------------------- -------------------------------------------------------- ---------------------
Changes with respect to the terms or status of an
obligor's pool asset (e.g., loan modifications or
re-agings) are made, reviewed and approved by
authorized personnel in accordance with the
transaction agreements and related pool asset
1122(d)(4)(vi) documents.
-------------------------- -------------------------------------------------------- ---------------------
Loss mitigation or recovery actions (e.g.,
forbearance plans, modifications and deeds in lieu of
foreclosure, foreclosures and repossessions, as
applicable) are initiated, conducted and concluded in
accordance with the timeframes or other requirements
1122(d)(4)(vii) established by the transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
Records documenting collection efforts are maintained
during the period a pool asset is delinquent in
accordance with the transaction agreements. Such
records are maintained on at least a monthly basis,
or such other period specified in the transaction
agreements, and describe the entity's activities in
monitoring delinquent pool assets including, for
example, phone calls, letters and payment
rescheduling plans in cases where delinquency is
1122(d)(4)(viii) deemed temporary (e.g., illness or unemployment).
-------------------------- -------------------------------------------------------- ---------------------
E-21
----------------------------------------------------------------------------------- ---------------------
APPLICABLE
SERVICING CRITERIA SERVICING CRITERIA
----------------------------------------------------------------------------------- ---------------------
REFERENCE CRITERIA
-------------------------- -------------------------------------------------------- ---------------------
Adjustments to interest rates or rates of return for
pool assets with variable rates are computed based on
1122(d)(4)(ix) the related pool asset documents.
-------------------------- -------------------------------------------------------- ---------------------
Regarding any funds held in trust for an obligor
(such as escrow accounts): (A) such funds are
analyzed, in accordance with the obligor's pool asset
documents, on at least an annual basis, or such other
period specified in the transaction agreements; (B)
interest on such funds is paid, or credited, to
obligors in accordance with applicable pool asset
documents and state laws; and (C) such funds are
returned to the obligor within 30 calendar days of
full repayment of the related pool asset, or such
other number of days specified in the transaction
1122(d)(4)(x) agreements.
-------------------------- -------------------------------------------------------- ---------------------
Payments made on behalf of an obligor (such as tax or
insurance payments) are made on or before the related
penalty or expiration dates, as indicated on the
appropriate bills or notices for such payments,
provided that such support has been received by the
servicer at least 30 calendar days prior to these
dates, or such other number of days specified in the
1122(d)(4)(xi) transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
Any late payment penalties in connection with any
payment to be made on behalf of an obligor are paid
from the servicer's funds and not charged to the
obligor, unless the late payment was due to the
1122(d)(4)(xii) obligor's error or omission.
-------------------------- -------------------------------------------------------- ---------------------
Disbursements made on behalf of an obligor are posted
within two business days to the obligor's records
maintained by the servicer, or such other number of
1122(d)(4)(xiii) days specified in the transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
Delinquencies, charge-offs and uncollectible accounts
are recognized and recorded in accordance with the
1122(d)(4)(xiv) transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
Any external enhancement or other support, identified
in Item 1114(a)(1) through (3) or Item 1115 of
Regulation AB, is maintained as set forth in the
1122(d)(4)(xv) transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
E-22
EXHIBIT F
MORTGAGE LOAN SCHEDULE
[FILED HEREWITH AS EXHIBIT 99.1]
F-1
EXHIBIT G
FORM OF REQUEST FOR RELEASE
DATE:
TO:
RE: REQUEST FOR RELEASE OF DOCUMENTS
In connection with the administration of the pool of Mortgage Loans held by you
for the referenced pool, we request the release of the Mortgage Loan File
described below.
Pooling and Servicing Agreement, Dated:
Series#:
Account#:
Pool#:
Loan#:
MIN#:
Borrower Name(s):
Reason for Document Request: (circle one) Mortgage Loan Prepaid in Full
Mortgage Loan Repurchased
"We hereby certify that all amounts received or to be received in connection
with such payments which are required to be deposited have been or will be so
deposited as provided in the Pooling and Servicing Agreement."
_______________________________
Residential Funding Corporation
Authorized Signature
****************************************************************
TO CUSTODIAN/TRUSTEE: Please acknowledge this request, and check off documents
being enclosed with a copy of this form. You should retain this form for your
files in accordance with the terms of the Pooling and Servicing Agreement.
Enclosed Documents: [ ] Promissory Note
[ ] Primary Insurance Policy
[ ] Mortgage or Deed of Trust
[ ] Assignment(s) of Mortgage or Deed of Trust
[ ] Title Insurance Policy
[ ] Other: ________________________
___________________________
Name
___________________________
Title
___________________________
Date
G-1
EXHIBIT H-1
FORM OF TRANSFER AFFIDAVIT AND AGREEMENT
STATE OF )
)ss.:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Owner] (record or
beneficial owner of the Home Equity Mortgage Asset-Backed Pass-Through
Certificates, Series 2006-KS7, Class R (the "Owner")), a [savings institution]
[corporation] duly organized and existing under the laws of [the State of
________________] [the United States], on behalf of which he makes this
affidavit and agreement.
2. That the Owner (i) is not and will not be a "disqualified
organization" or an electing large partnership as of [date of transfer] within
the meaning of Section 860E(e)(5) and 775, respectively, of the Internal Revenue
Code of 1986, as amended (the "Code") or an electing large partnership under
Section 775(a) of the Code, (ii) will endeavor to remain other than a
disqualified organization for so long as it retains its ownership interest in
the Class R Certificates, and (iii) is acquiring the Class R Certificates for
its own account or for the account of another Owner from which it has received
an affidavit and agreement in substantially the same form as this affidavit and
agreement. (For this purpose, a "disqualified organization" means an electing
large partnership under Section 775 of the Code, the United States, any state or
political subdivision thereof, any agency or instrumentality of any of the
foregoing (other than an instrumentality all of the activities of which are
subject to tax and, except for the Federal Home Loan Mortgage Corporation, a
majority of whose board of directors is not selected by any such governmental
entity) or any foreign government, international organization or any agency or
instrumentality of such foreign government or organization, any rural electric
or telephone cooperative, or any organization (other than certain farmers'
cooperatives) that is generally exempt from federal income tax unless such
organization is subject to the tax on unrelated business taxable income).
3. That the Owner is aware (i) of the tax that would be imposed on
transfers of Class R Certificates to disqualified organizations or an electing
large partnership under the Code, that applies to all transfers of Class R
Certificates after March 31, 1988; (ii) that such tax would be on the transferor
(or, with respect to transfers to electing large partnerships, on each such
partnership), or, if such transfer is through an agent (which person includes a
broker, nominee or middleman) for a disqualified organization, on the agent;
(iii) that the person (other than with respect to transfers to electing large
partnerships) otherwise liable for the tax shall be relieved of liability for
the tax if the transferee furnishes to such person an affidavit that the
transferee is not a disqualified organization and, at the time of transfer, such
person does not have actual knowledge that the affidavit is false; and (iv) that
the Class R Certificates may be "noneconomic residual interests" within the
meaning of 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.
H-1-1
4. That the Owner is aware of the tax imposed on a "pass-through entity"
holding Class R Certificates if either the pass-through entity is an electing
large partnership under Section 775 of the Code or if at any time during the
taxable year of the pass-through entity a disqualified organization is the
record holder of an interest in such entity. (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.)
5. That the Owner is aware that the Trustee will not register the
transfer of any Class R Certificates unless the transferee, or the transferee's
agent, delivers to it an affidavit and agreement, among other things, in
substantially the same form as this affidavit and agreement. The Owner expressly
agrees that it will not consummate any such transfer if it knows or believes
that any of the representations contained in such affidavit and agreement are
false.
6. That the Owner has reviewed the restrictions set forth on the face of
the Class R -__ Certificates and the provisions of Section 5.02(f) of the
Pooling and Servicing Agreement under which the Class R Certificates were issued
(in particular, clause (iii)(A) and (iii)(B) of Section 5.02(f) which authorize
the Trustee to deliver payments to a person other than the Owner and negotiate a
mandatory sale by the Trustee in the event the Owner holds such Certificates in
violation of Section 5.02(f)). The Owner expressly agrees to be bound by and to
comply with such restrictions and provisions.
7. That the Owner consents to any additional restrictions or
arrangements that shall be deemed necessary upon advice of counsel to constitute
a reasonable arrangement to ensure that the Class R Certificates will only be
owned, directly or indirectly, by an Owner that is not a disqualified
organization.
8. The Owner's Taxpayer Identification Number is ____________________.
9. This affidavit and agreement relates only to the Class R Certificates
held by the Owner and not to any other holder of the Class R Certificates. The
Owner understands that the liabilities described herein relate only to the Class
R Certificates.
10. That no purpose of the Owner relating to the transfer of any of the
Class R Certificates by the Owner is or will be to impede the assessment or
collection of any tax; in making this representation, the Owner warrants that
the Owner is familiar with (i) Treasury Regulation 1.860E-1(c) and recent
amendments thereto, effective as of July 19, 2002, and (ii) the preamble
describing the adoption of the amendments to such regulation, which is attached
hereto as Annex I.
11. That the Owner has no present knowledge or expectation that it will
be unable to pay any United States taxes owed by it so long as any of the
Certificates remain outstanding. In this regard, the Owner hereby represents to
and for the benefit of the person from whom it acquired the Class R Certificate
that the Owner intends to pay taxes associated with holding such Class R
Certificate as they become due, fully understanding that it may incur tax
liabilities in excess of any cash flows generated by the Class R Certificate.
H-1-2
12. That the Owner has no present knowledge or expectation that it will
become insolvent or subject to a bankruptcy proceeding for so long as any of the
Class R Certificates remain outstanding.
13. The Owner is either (i) a citizen or resident of the United States,
(ii) a corporation, partnership or other entity treated as a corporation or a
partnership for U.S. federal income tax purposes and created or organized in, or
under the laws of, the United States, any state thereof or the District of
Columbia (other than a partnership that is not treated as a United States person
under any applicable Treasury regulations), (iii) an estate that is described in
Section 7701(a)(30)(D) of the Code, or (iv) a trust that is described in Section
7701(a)(30)(E) of the Code.
14. The Owner hereby agrees that it will not cause income from the Class
R Certificates to be attributable to a foreign permanent establishment or fixed
base (within the meaning of an applicable income tax treaty) of the Owner or
another United States taxpayer.
15. The Owner hereby certifies, represents and warrants to, and
covenants with the Depositor, the Trustee and the Master Servicer that the
following statements in (a) or (b) are accurate:
(a) The Certificates are not being acquired by, and will not be
transferred to, any employee benefit plan or other plan or arrangement
subject to the prohibited transaction provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or Section
4975 of the Internal Revenue Code of 1986, as amended (the "Code"), or
any person (including an insurance company investing its general
account, an investment manager, a named fiduciary or a trustee of any
such plan) who is using "plan assets" of any such plan to effect such
acquisition (each of the foregoing, a "Plan Investor"); or
(b) The Owner has provided the Trustee, the Depositor and the Master
Servicer with an Opinion of Counsel acceptable to and in form and
substance satisfactory to the Trustee, the Depositor and the Master
Servicer to the effect that the purchase or holding of Certificates is
permissible under applicable law, will not constitute or result in any
nonexempt prohibited transaction under Section 406 of ERISA or Section
4975 of the Code (or comparable provisions of any subsequent
enactments), and will not subject the Trustee, the Depositor, or the
Master Servicer to any obligation or liability (including obligations or
liabilities under ERISA or Section 4975 of the Code) in addition to
those undertaken in the Pooling and Servicing Agreement, which Opinion
of Counsel shall not be at the expense of the Trustee, the Depositor or
the Master Servicer.
In addition, the Owner hereby certifies, represents and warrants to, and
covenants with, the Depositor, the Trustee and the Master Servicer that the
Owner will not transfer such Certificates to any Plan Investor or person unless
either such Plan Investor or person meets the requirements set forth in either
(a) or (b) above.
Capitalized terms used but not defined herein shall have the meanings
assigned in the Pooling and Servicing Agreement.
H-1-3
IN WITNESS WHEREOF, the Owner has caused this instrument to be executed
on its behalf, pursuant to the authority of its Board of Directors, by its
[Title of Officer] and its corporate seal to be hereunto attached, attested by
its [Assistant] Secretary, this ____ day of ______________ 200__.
[NAME OF OWNER]
By: ________________________________
[Name of Officer]
[Title of Officer]
[Corporate Seal]
ATTEST:
________________________________
[Assistant] Secretary
Personally appeared before me the above-named [Name of Officer],
known or proved to me to be the same person who executed the foregoing
instrument and to be the [Title of Officer] of the Owner, and acknowledged to me
that he executed the same as his free act and deed and the free act and deed of
the Owner.
Subscribed and sworn before me this day of , 200_.
____________________________________
NOTARY PUBLIC
COUNTY OF __________________________
STATE OF ___________________________
My Commission expires the ___ day of
__________, 20__
H-1-4
ANNEX I TO EXHIBIT H-1
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 1 and 602
[TD 9004]
RIN 1545-AW98
Real Estate Mortgage Investment Conduits
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations.
-----------------------------------------------------
SUMMARY: This document contains final regulations relating to safe harbor
transfers of noneconomic residual interests in real estate mortgage investment
conduits (REMICs). The final regulations provide additional limitations on the
circumstances under which transferors may claim safe harbor treatment.
DATES: Effective Date: These regulations are effective July 19, 2002.
Applicability Date: For dates of applicability, see Sec. 1.860E-(1)(c)(10).
FOR FURTHER INFORMATION CONTACT: Xxxxxxxx Xxxxxxxxxx at (000) 000-0000 (not a
toll-free number).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information in this final rule has been reviewed and,
pending receipt and evaluation of public comments, approved by the Office of
Management and Budget (OMB) under 44 U.S.C. 3507 and assigned control number
1545-1675.
The collection of information in this regulation is in Sec.
1.860E-1(c)(5)(ii). This information is required to enable the IRS to verify
that a taxpayer is complying with the conditions of this regulation. The
collection of information is mandatory and is required. Otherwise, the taxpayer
will not receive the benefit of safe harbor treatment as provided in the
regulation. The likely respondents are businesses and other for-profit
institutions.
H-I-1
Comments on the collection of information should be sent to the Office
of Management and Budget, Attn: Desk Officer for the Department of the Treasury,
Office of Information and Regulatory Affairs, Xxxxxxxxxx, XX, 00000, with copies
to the Internal Revenue Service, Attn: IRS Reports Clearance Officer,
W:CAR:MP:FP:S, Xxxxxxxxxx, XX 00000. Comments on the collection of information
should be received by September 17, 2002. Comments are specifically requested
concerning:
o Whether the collection of information is necessary for the
proper performance of the functions of the Internal Revenue
Service, including whether the information will have practical
utility;
o The accuracy of the estimated burden associated with the
collection of information (see below);
o How the quality, utility, and clarity of the information to be
collected may be enhanced;
o How the burden of complying with the collection of information
may be minimized, including through the application of automated
collection techniques or other forms of information technology;
and
o Estimates of capital or start-up costs and costs of operation,
maintenance, and purchase of service to provide information.
An agency may not conduct or sponsor, and a person is not required to
respond to, a collection of information unless it displays a valid control
number assigned by the Office of Management and Budget.
The estimated total annual reporting burden is 470 hours, based on an
estimated number of respondents of 470 and an estimated average annual burden
hours per respondent of one hour.
Books or records relating to a collection of information must be
retained as long as their contents may become material in the administration of
any internal revenue law. Generally, tax returns and tax return information are
confidential, as required by 26 U.S.C. 6103.
Background
This document contains final regulations regarding the proposed
amendments to 26 CFR part 1 under section 860E of the Internal Revenue Code
(Code). The regulations provide the circumstances under which a transferor of a
noneconomic REMIC residual interest meeting the investigation and representation
requirements may avail itself of the safe harbor by satisfying either the
formula test or the asset test.
Final regulations governing REMICs, issued in 1992, contain rules
governing the transfer of noneconomic REMIC residual interests. In general, a
transfer of a noneconomic residual interest is disregarded for all tax purposes
if a significant purpose of the transfer is to enable the transferor to impede
the assessment or collection of tax. A purpose to impede the assessment or
collection of tax (a wrongful purpose) exists if the transferor, at the time of
the transfer, either knew or should have known that the transferee would be
unwilling or unable to pay taxes due on its share of the REMIC's taxable income.
Under a safe harbor, the transferor of a REMIC noneconomic residual interest is
H-I-2
presumed not to have a wrongful purpose if two requirements are satisfied: (1)
the transferor conducts a reasonable investigation of the transferee's financial
condition (the investigation requirement); and (2) the transferor secures a
representation from the transferee to the effect that the transferee understands
the tax obligations associated with holding a residual interest and intends to
pay those taxes (the representation requirement).
The IRS and Treasury have been concerned that some transferors of
noneconomic residual interests claim they satisfy the safe harbor even in
situations where the economics of the transfer clearly indicate the transferee
is unwilling or unable to pay the tax associated with holding the interest. For
this reason, on February 7, 2000, the IRS published in the Federal Register (65
FR 5807) a notice of proposed rulemaking (REG-100276-97; REG-122450-98) designed
to clarify the safe harbor by adding the "formula test," an economic test. The
proposed regulation provides that the safe harbor is unavailable unless the
present value of the anticipated tax liabilities associated with holding the
residual interest does not exceed the sum of: (1) The present value of any
consideration given to the transferee to acquire the interest; (2) the present
value of the expected future distributions on the interest; and (3) the present
value of the anticipated tax savings associated with holding the interest as the
REMIC generates losses.
The notice of proposed rulemaking also contained rules for FASITs.
Section 1.860H-6(g) of the proposed regulations provides requirements for
transfers of FASIT ownership interests and adopts a safe harbor by reference to
the safe harbor provisions of the REMIC regulations. In February 2001, the IRS
published Rev. Proc. 2001-12 (2001-3 I.R.B. 335) to set forth an alternative
safe harbor that taxpayers could use while the IRS and the Treasury considered
comments on the proposed regulations. Under the alternative safe harbor, if a
transferor meets the investigation requirement and the representation
requirement but the transfer fails to meet the formula test, the transferor may
invoke the safe harbor if the transferee meets a two-prong test (the asset
test). A transferee generally meets the first prong of this test if, at the time
of the transfer, and in each of the two years preceding the year of transfer,
the transferee's gross assets exceed $100 million and its net assets exceed $10
million. A transferee generally meets the second prong of this test if it is a
domestic, taxable corporation and agrees in writing not to transfer the interest
to any person other than another domestic, taxable corporation that also
satisfies the requirements of the asset test. A transferor cannot rely on the
asset test if the transferor knows, or has reason to know, that the transferee
will not comply with its written agreement to limit the restrictions on
subsequent transfers of the residual interest.
Rev. Proc. 2001-12 provides that the asset test fails to be satisfied in
the case of a transfer or assignment of a noneconomic residual interest to a
foreign branch of an otherwise eligible transferee. If such a transfer or
assignment were permitted, a corporate taxpayer might seek to claim that the
provisions of an applicable income tax treaty would resource excess inclusion
income as foreign source income, and that, as a consequence, any U.S. tax
liability attributable to the excess inclusion income could be offset by foreign
tax credits. Such a claim would impede the assessment or collection of U.S. tax
on excess inclusion income, contrary to the congressional purpose of assuring
that such income will be taxable in all events. See, e.g., sections 860E(a)(1),
(b), (e) and 860G(b) of the Code.
H-I-3
The Treasury and the IRS have learned that certain taxpayers
transferring noneconomic residual interests to foreign branches have attempted
to rely on the formula test to obtain safe harbor treatment in an effort to
impede the assessment or collection of U.S. tax on excess inclusion income.
Accordingly, the final regulations provide that if a noneconomic residual
interest is transferred to a foreign permanent establishment or fixed base of a
U.S. taxpayer, the transfer is not eligible for safe harbor treatment under
either the asset test or the formula test. The final regulations also require a
transferee to represent that it will not cause income from the noneconomic
residual interest to be attributable to a foreign permanent establishment or
fixed base.
Section 1.860E-1(c)(8) provides computational rules that a taxpayer may
use to qualify for safe harbor status under the formula test. Section
1.860E-1(c)(8)(i) provides that the transferee is presumed to pay tax at a rate
equal to the highest rate of tax specified in section 11(b). Some commentators
were concerned that this presumed rate of taxation was too high because it does
not take into consideration taxpayers subject to the alternative minimum tax
rate. In light of the comments received, this provision has been amended in the
final regulations to allow certain transferees that compute their taxable income
using the alternative minimum tax rate to use the alternative minimum tax rate
applicable to corporations.
Additionally, Sec. 1.860E-1(c)(8)(iii) provides that the present values
in the formula test are to be computed using a discount rate equal to the
applicable Federal short-term rate prescribed by section 1274(d). This is a
change from the proposed regulation and Rev. Proc. 2001-12. In those
publications the provision stated that "present values are computed using a
discount rate equal to the applicable Federal rate prescribed in section 1274(d)
compounded semiannually" and that "[a] lower discount rate may be used if the
transferee can demonstrate that it regularly borrows, in the course of its trade
or business, substantial funds at such lower rate from an unrelated third
party." The IRS and the Treasury Department have learned that, based on this
provision, certain taxpayers have been attempting to use unrealistically low or
zero interest rates to satisfy the formula test, frustrating the intent of the
test. Furthermore, the Treasury Department and the IRS believe that a rule
allowing for a rate other than a rate based on an objective index would add
unnecessary complexity to the safe harbor. As a result, the rule in the proposed
regulations that permits a transferee to use a lower discount rate, if the
transferee can demonstrate that it regularly borrows substantial funds at such
lower rate, is not included in the final regulations; and the Federal short-term
rate has been substituted for the applicable Federal rate. To simplify
taxpayers' computations, the final regulations allow use of any of the published
short-term rates, provided that the present values are computed with a
corresponding period of compounding. With the exception of the provisions
relating to transfers to foreign branches, these changes generally have the
proposed applicability date of February 4, 2000, but taxpayers may choose to
apply the interest rate formula set forth in the proposed regulation and Rev.
Proc. 2001-12 for transfers occurring before November 19, 2002.
It is anticipated that when final regulations are adopted with respect
to FASITs, Sec. 1.860H-6(g) of the proposed regulations will be adopted in
substantially its present form, with the result that the final regulations
contained in this document will also govern transfers of FASIT ownership
interests with substantially the same applicability date as is contained in this
document.
H-I-4
Effect on Other Documents
Rev. Proc. 2001-12 (2001-3 I.R.B. 335) is obsolete for transfers of
noneconomic residual interests in REMICs occurring on or after November 19,
2002.
Special Analyses
It is hereby certified that these regulations will not have a
significant economic impact on a substantial number of small entities. This
certification is based on the fact that it is unlikely that a substantial number
of small entities will hold REMIC residual interests. Therefore, a Regulatory
Flexibility Analysis under the Regulatory Flexibility Act (5 U.S.C. chapter 6)
is not required. It has been determined that this Treasury decision is not a
significant regulatory action as defined in Executive Order 12866. Therefore, a
regulatory assessment is not required. It also has been determined that sections
553(b) and 553(d) of the Administrative Procedure Act (5 U.S.C. chapter 5) do
not apply to these regulations.
Drafting Information
The principal author of these regulations is Xxxxxxxx Xxxxxxxxxx.
However, other personnel from the IRS and Treasury Department participated in
their development.
List of Subjects
26 CFR Part 1
Income taxes, Reporting and record keeping requirements.
26 CFR Part 602
Reporting and record keeping requirements.
Adoption of Amendments to the Regulations
Accordingly, 26 CFR parts 1 and 602 are amended as follows:
PART 1--INCOME TAXES
Paragraph 1. The authority citation for part 1 continues to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *
H-I-5
EXHIBIT H-2
FORM OF TRANSFEROR CERTIFICATE
______________, 20__
U.S. Bank National Association
EP-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Attention: Structured Finance/RASC Series 2006-KS7
Re: Mortgage Asset-Backed Pass-Through Certificates,
Series 2006-KS7
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by
________________________ (the "Seller") to ______________________ (the
"Purchaser") of $___________ Initial Certificate Principal Balance of Mortgage
Asset-Backed Pass-Through Certificates, Series 2006-KS7, Class R (the
"Certificates"), pursuant to Section 5.02 of the Pooling and Servicing Agreement
(the "Pooling and Servicing Agreement"), dated as of August 1, 2006 among
Residential Asset Securities Corporation, as depositor (the "Depositor"),
Residential Funding Corporation, as master servicer, and U.S. Bank National
Association, as trustee (the "Trustee"). All terms used herein and not otherwise
defined shall have the meanings set forth in the Pooling and Servicing
Agreement. The Seller hereby certifies, represents and warrants to, and
covenants with, the Depositor and the Trustee that:
1. No purpose of the Seller relating to the transfer of the Certificate
by the Seller to the Purchaser is or will be to impede the assessment or
collection of any tax.
2. The Seller understands that the Purchaser has delivered to the
Trustee and the Master Servicer a transfer affidavit and agreement in the form
attached to the Pooling and Servicing Agreement as Exhibit H-1. The Seller does
not know or believe that any representation contained therein is false.
3. The Seller has at the time of the transfer conducted a reasonable
investigation of the financial condition of the Purchaser as contemplated by
Treasury Regulations Section 1.860E-1(c)(4)(i) and, as a result of that
investigation, the Seller has determined that the Purchaser has historically
paid its debts as they become due and has found no significant evidence to
indicate that the Purchaser will not continue to pay its debts as they become
due in the future. The Seller understands that the transfer of a Class R
Certificate may not be respected for United States income tax purposes (and the
Seller may continue to be liable for United States income taxes associated
therewith) unless the Seller has conducted such an investigation.
H-2-1
4. The Seller has no actual knowledge that the proposed Transferee is
not both a United States Person and a Permitted Transferee.
Very truly yours,
____________________________________
(Seller)
By: ________________________________
Name: ______________________________
Title: _____________________________
H-2-2
EXHIBIT I
FORM OF INVESTOR REPRESENTATION LETTER
______________, 20__
Residential Asset Securities Corporation
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, XX 00000
U.S. Bank National Association
EP-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Attention: Structured Finance/RASC Series 0000-XX0
Xxxxxxxxxxx Funding Corporation
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, XX 00000
Attention: Residential Funding Corporation Series 2006-KS7
Re: Home Equity Mortgage Asset-Backed Pass-Through Certificates,
Series 2006-KS7, Class [SB] [R]
Ladies and Gentlemen:
_________________________ (the "Purchaser") intends to purchase from
___________________________ (the "Seller") $_____________ Initial Certificate
Principal Balance of Home Equity Mortgage Asset-Backed Pass-Through
Certificates, Series 2006-KS7, Class [SB] [R] (the "Certificates"), issued
pursuant to the Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of August 1, 2006 among Residential Asset Securities
Corporation, as depositor (the "Depositor"), Residential Funding Corporation, as
master servicer (the "Master Servicer"), and U.S. Bank National Association, as
trustee (the "Trustee"). All terms used herein and not otherwise defined shall
have the meanings set forth in the Pooling and Servicing Agreement. The
Purchaser hereby certifies, represents and warrants to, and covenants with, the
Depositor, the Trustee and the Master Servicer that:
1. The Purchaser understands that (a) the Certificates have not
been and will not be registered or qualified under the Securities Act of
1933, as amended (the "Act") or any state securities law, (b) the
Depositor is not required to so register or qualify the Certificates,
(c) the Certificates may be resold only if registered and qualified
I-1
pursuant to the provisions of the Act or any state securities law, or if
an exemption from such registration and qualification is available, (d)
the Pooling and Servicing Agreement contains restrictions regarding the
transfer of the Certificates and (e) the Certificates will bear a legend
to the foregoing effect.
2. The Purchaser is acquiring the Certificates for its own
account for investment only and not with a view to or for sale in
connection with any distribution thereof in any manner that would
violate the Act or any applicable state securities laws.
3. The Purchaser is (a) a substantial, sophisticated
institutional investor having such knowledge and experience in financial
and business matters, and, in particular, in such matters related to
securities similar to the Certificates, such that it is capable of
evaluating the merits and risks of investment in the Certificates, (b)
able to bear the economic risks of such an investment and (c) an
"accredited investor" within the meaning of Rule 501(a) promulgated
pursuant to the Act.
4. The Purchaser has been furnished with, and has had an
opportunity to review (a) [a copy of the Private Placement Memorandum,
dated ___________________, 20__, relating to the Certificates (b)] a
copy of the Pooling and Servicing Agreement and [b] [c] such other
information concerning the Certificates, the Mortgage Loans and the
Depositor as has been requested by the Purchaser from the Depositor or
the Seller and is relevant to the Purchaser's decision to purchase the
Certificates. The Purchaser has had any questions arising from such
review answered by the Depositor or the Seller to the satisfaction of
the Purchaser. [If the Purchaser did not purchase the Certificates from
the Seller in connection with the initial distribution of the
Certificates and was provided with a copy of the Private Placement
Memorandum (the "Memorandum") relating to the original sale (the
"Original Sale") of the Certificates by the Depositor, the Purchaser
acknowledges that such Memorandum was provided to it by the Seller, that
the Memorandum was prepared by the Depositor solely for use in
connection with the Original Sale and the Depositor did not participate
in or facilitate in any way the purchase of the Certificates by the
Purchaser from the Seller, and the Purchaser agrees that it will look
solely to the Seller and not to the Depositor with respect to any
damage, liability, claim or expense arising out of, resulting from or in
connection with (a) error or omission, or alleged error or omission,
contained in the Memorandum, or (b) any information, development or
event arising after the date of the Memorandum.]
5. The Purchaser has not and will not nor has it authorized or
will it authorize any person to (a) offer, pledge, sell, dispose of or
otherwise transfer any Certificate, any interest in any Certificate or
any other similar security to any person in any manner, (b) solicit any
offer to buy or to accept a pledge, disposition of other transfer of any
Certificate, any interest in any Certificate or any other similar
security from any person in any manner, (c) otherwise approach or
negotiate with respect to any Certificate, any interest in any
I-2
Certificate or any other similar security with any person in any manner,
(d) make any general solicitation by means of general advertising or in
any other manner or (e) take any other action, that (as to any of (a)
through (e) above) would constitute a distribution of any Certificate
under the Act, that would render the disposition of any Certificate a
violation of Section 5 of the Act or any state securities law, or that
would require registration or qualification pursuant thereto. The
Purchaser will not sell or otherwise transfer any of the Certificates,
except in compliance with the provisions of the Pooling and Servicing
Agreement.
6. The Purchaser hereby certifies, represents and warrants to,
and covenants with the Depositor, the Trustee and the Master Servicer
that the following statements in (a) or (b) are correct:
(a) The Purchaser is not an employee benefit plan or
other plan or arrangement subject to the prohibited
transaction provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or Section
4975 of the Internal Revenue Code of 1986, as amended
(the "Code"), or any person (including an insurance
company investing its general account, an investment
manager, a named fiduciary or a trustee of any such
plan) who is using "plan assets" of any such plan to
effect such acquisition (each of the foregoing, a "Plan
Investor"); or
(b) the Purchaser has provided the Trustee, the
Depositor and the Master Servicer with an Opinion of
Counsel acceptable to and in form and substance
satisfactory to the Trustee, the Depositor and the
Master Servicer to the effect that the purchase or
holding of Certificates is permissible under applicable
law, will not constitute or result in any nonexempt
prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code (or comparable provisions of
any subsequent enactments), and will not subject the
Trustee, the Depositor or the Master Servicer to any
obligation or liability (including obligations or
liabilities under ERISA or Section 4975 of the Code) in
addition to those undertaken in the Pooling and
Servicing Agreement, which Opinion of Counsel shall not
be an expense of the Trustee, the Depositor or the
Master Servicer.
I-3
In addition, the Purchaser hereby certifies, represents and warrants to,
and covenants with, the Depositor, the Trustee and the Master Servicer that the
Purchaser will not transfer such Certificates to any Plan Investor or person
unless either such Plan Investor or person meets the requirements set forth in
either (a) or (b) above.
Very truly yours,
____________________________________
(Purchaser)
By:_________________________________
Name:_______________________________
Title:______________________________
I-4
EXHIBIT J
FORM OF TRANSFEROR REPRESENTATION LETTER
______________, 20__
Residential Asset Securities Corporation
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
U.S. Bank National Association
EP-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Attention: Structured Finance/RASC Series 2006-KS7
Re: Home Equity Mortgage Asset-Backed Pass-Through Certificates,
Series 2006-KS7, Class [SB] [R]
Ladies and Gentlemen:
In connection with the sale by __________ (the "Seller") to
__________ (the "Purchaser") of $__________ Initial Certificate Principal
Balance of Home Equity Mortgage Asset- Backed Pass-Through Certificates, Series
2006-KS7, Class [SB] [R] (the "Certificates"), issued pursuant to the Pooling
and Servicing Agreement (the "Pooling and Servicing Agreement"), dated as of
August 1, 2006 among Residential Asset Securities Corporation, as depositor (the
"Depositor"), Residential Funding Corporation, as master servicer, and U.S. Bank
National Association, as trustee (the "Trustee"). The Seller hereby certifies,
represents and warrants to, and covenants with, the Depositor and the Trustee
that:
Neither the Seller nor anyone acting on its behalf has (a)
offered, pledged, sold, disposed of or otherwise transferred any Certificate,
any interest in any Certificate or any other similar security to any person in
any manner, (b) has solicited any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c) has
otherwise approached or negotiated with respect to any Certificate, any interest
in any Certificate or any other similar security with any person in any manner,
(d) has made any general solicitation by means of general advertising or in any
other manner, or (e) has taken any other action, that (as to any of (a) through
(e) above) would constitute a distribution of the Certificates under the
Securities Act of 1933 (the "Act"), that would render the disposition of any
Certificate a violation of Section 5 of the Act or any state securities law, or
that would require registration or qualification pursuant thereto. The Seller
will not act, in any manner set forth in the foregoing sentence with respect to
any Certificate. The Seller has not and will not sell or otherwise transfer any
of the Certificates, except in compliance with the provisions of the Pooling and
Servicing Agreement.
J-1
Very truly yours,
____________________________________
(Purchaser)
By:_________________________________
Name:_______________________________
Title:______________________________
J-2
EXHIBIT K
TEXT OF AMENDMENT TO POOLING AND SERVICING
AGREEMENT PURSUANT TO SECTION 11.01(e) FOR A
LIMITED GUARANTY
ARTICLE XIII
Subordinate Certificate Loss Coverage; Limited Guaranty
Section 13.01. Subordinate Certificate Loss Coverage; Limited Guaranty.
(a) Subject to subsection (c) below, prior to the later of the third Business
Day prior to each Distribution Date or the related Determination Date, the
Master Servicer shall determine whether it or any Subservicer will be entitled
to any reimbursement pursuant to Section 3.10 on such Distribution Date for
Advances or Subservicer Advances previously made, (which will not be Advances or
Subservicer Advances that were made with respect to delinquencies which were
subsequently determined to be Excess Special Hazard Losses, Excess Fraud Losses,
Excess Bankruptcy Losses or Extraordinary Losses) and, if so, the Master
Servicer shall demand payment from Residential Funding of an amount equal to the
amount of any Advances or Subservicer Advances reimbursed pursuant to Section
3.10, to the extent such Advances or Subservicer Advances have not been included
in the amount of the Realized Loss in the related Mortgage Loan, and shall
distribute the same to the Class SB Certificateholders in the same manner as if
such amount were to be distributed pursuant to Section 4.02.
(b) Subject to subsection (c) below, prior to the later of the
third Business Day prior to each Distribution Date or the related Determination
Date, the Master Servicer shall determine whether any Realized Losses (other
than Excess Special Hazard Losses, Excess Bankruptcy Losses, Excess Fraud Losses
and Extraordinary Losses) will be allocated to the Class SB Certificates on such
Distribution Date pursuant to Section 4.05, and, if so, the Master Servicer
shall demand payment from Residential Funding of the amount of such Realized
Loss and shall distribute the same to the Class SB Certificateholders in the
same manner as if such amount were to be distributed pursuant to Section 4.02;
provided, however, that the amount of such demand in respect of any Distribution
Date shall in no event be greater than the sum of (i) the additional amount of
Accrued Certificate Interest that would have been paid for the Class SB
Certificateholders on such Distribution Date had such Realized Loss or Losses
not occurred plus (ii) the amount of the reduction in the Certificate Principal
Balances of the Class SB Certificates on such Distribution Date due to such
Realized Loss or Losses. Notwithstanding such payment, such Realized Losses
shall be deemed to have been borne by the Certificateholders for purposes of
Section 4.05. Excess Special Hazard Losses, Excess Fraud Losses, Excess
Bankruptcy Losses and Extraordinary Losses allocated to the Class SB
Certificates will not be covered by the Subordinate Certificate Loss Obligation.
K-1
(c) Demands for payments pursuant to this Section shall be made
prior to the later of the third Business Day prior to each Distribution Date or
the related Determination Date by the Master Servicer with written notice
thereof to the Trustee. The maximum amount that Residential Funding shall be
required to pay pursuant to this Section on any Distribution Date (the "Amount
Available") shall be equal to the lesser of (X) ________ minus the sum of (i)
all previous payments made under subsections (a) and (b) hereof and (ii) all
draws under the Limited Guaranty made in lieu of such payments as described
below in subsection (d) and (Y) the then outstanding Certificate Principal
Balances of the Class SB Certificates, or such lower amount as may be
established pursuant to Section 13.02. Residential Funding's obligations as
described in this Section are referred to herein as the "Subordinate Certificate
Loss Obligation."
(d) The Trustee will promptly notify General Motors Acceptance
Corporation of any failure of Residential Funding to make any payments hereunder
and shall demand payment pursuant to the limited guaranty (the "Limited
Guaranty"), executed by General Motors Acceptance Corporation, of Residential
Funding's obligation to make payments pursuant to this Section, in an amount
equal to the lesser of (i) the Amount Available and (ii) such required payments,
by delivering to General Motors Acceptance Corporation a written demand for
payment by wire transfer, not later than the second Business Day prior to the
Distribution Date for such month, with a copy to the Master Servicer.
(e) All payments made by Residential Funding pursuant to this
Section or amounts paid under the Limited Guaranty shall be deposited directly
in the Certificate Account, for distribution on the Distribution Date for such
month to the Class SB Certificateholders.
(f) The Depositor shall have the option, in its sole discretion,
to substitute for either or both of the Limited Guaranty or the Subordinate
Certificate Loss Obligation another instrument in the form of a corporate
guaranty, an irrevocable letter of credit, a surety bond, insurance policy or
similar instrument or a reserve fund; provided that (i) the Depositor obtains
(subject to the provisions of Section 10.01(f) as if the Depositor was
substituted for the Master Servicer solely for the purposes of such provision)
an Opinion of Counsel (which need not be an opinion of independent counsel) to
the effect that obtaining such substitute corporate guaranty, irrevocable letter
of credit, surety bond, insurance policy or similar instrument or reserve fund
will not cause either (a) any federal tax to be imposed on the Trust Fund,
including without limitation, any federal tax imposed on "prohibited
transactions" under Section 860(F)(a)(1) of the Code or on "contributions after
the startup date" under Section 860(G)(d)(1) of the Code or (b) the Trust Fund
to fail to qualify as a REMIC at any time that any Certificate is outstanding,
and (ii) no such substitution shall be made unless (A) the substitute Limited
Guaranty or Subordinate Certificate Loss Obligation is for an initial amount not
less than the then current Amount Available and contains provisions that are in
all material respects equivalent to the original Limited Guaranty or Subordinate
Certificate Loss Obligation (including that no portion of the fees,
reimbursements or other obligations under any such instrument will be borne by
the Trust Fund), (B) the long term debt obligations of any obligor of any
substitute Limited Guaranty or Subordinate Certificate Loss Obligation (if not
supported by the Limited Guaranty) shall be rated at least the lesser of (a) the
rating of the long term debt obligations of General Motors Acceptance
Corporation as of the date of issuance of the Limited Guaranty and (b) the
rating of the long term debt obligations of General Motors Acceptance
Corporation at the date of such substitution and (C) if the Class SB
Certificates have been rated, the Depositor obtains written confirmation from
each Rating Agency that rated the Class SB Certificates at the request of the
Depositor that such substitution shall not lower the rating on the Class SB
K-2
Certificates below the lesser of (a) the then-current rating assigned to the
Class SB Certificates by such Rating Agency and (b) the original rating assigned
to the Class SB Certificates by such Rating Agency. Any replacement of the
Limited Guaranty or Subordinate Certificate Loss Obligation pursuant to this
Section shall be accompanied by a written Opinion of Counsel to the substitute
guarantor or obligor, addressed to the Master Servicer and the Trustee, that
such substitute instrument constitutes a legal, valid and binding obligation of
the substitute guarantor or obligor, enforceable in accordance with its terms,
and concerning such other matters as the Master Servicer and the Trustee shall
reasonably request. Neither the Depositor, the Master Servicer nor the Trustee
shall be obligated to substitute for or replace the Limited Guaranty or
Subordinate Certificate Loss Obligation under any circumstance.
Section 13.02. Amendments Relating to the Limited Guaranty.
Notwithstanding Sections 11.01 or 13.01: (i) the provisions of this Article XIII
may be amended, superseded or deleted, (ii) the Limited Guaranty or Subordinate
Certificate Loss Obligation may be amended, reduced or canceled, and (iii) any
other provision of this Agreement which is related or incidental to the matters
described in this Article XIII may be amended in any manner; in each case by
written instrument executed or consented to by the Depositor and Residential
Funding but without the consent of any Certificateholder and without the consent
of the Master Servicer or the Trustee being required unless any such amendment
would impose any additional obligation on, or otherwise adversely affect the
interests of, the Master Servicer or the Trustee, as applicable; provided that
the Depositor shall also obtain a letter from each Rating Agency that rated the
Class SB Certificates at the request of the Depositor to the effect that such
amendment, reduction, deletion or cancellation will not lower the rating on the
Class SB Certificates below the lesser of (a) the then-current rating assigned
to the Class SB Certificates by such Rating Agency and (b) the original rating
assigned to the Class SB Certificates by such Rating Agency, unless (A) the
Holder of 100% of the Class SB Certificates is Residential Funding or an
Affiliate of Residential Funding, or (B) such amendment, reduction, deletion or
cancellation is made in accordance with Section 11.01(e) and, provided further
that the Depositor obtains (subject to the provisions of Section 10.01(f) as if
the Depositor was substituted for the Master Servicer solely for the purposes of
such provision), in the case of a material amendment or supersession (but not a
reduction, cancellation or deletion of the Limited Guaranty or the Subordinate
Certificate Loss Obligation), an Opinion of Counsel (which need not be an
opinion of independent counsel) to the effect that any such amendment or
supersession will not cause either (a) any federal tax to be imposed on the
Trust Fund, including without limitation, any federal tax imposed on "prohibited
transactions" under Section 860F(a)(1) of the Code or on "contributions after
the startup date" under Section 860G(d)(1) of the Code or (b) the Trust Fund to
fail to qualify as a REMIC at any time that any Certificate is outstanding. A
copy of any such instrument shall be provided to the Trustee and the Master
Servicer together with an Opinion of Counsel that such amendment complies with
this Section 13.02.
K-3
EXHIBIT L
FORM OF LIMITED GUARANTY
RESIDENTIAL ASSET SECURITIES CORPORATION
Home Equity Mortgage Asset-Backed Pass-Through Certificates
Series 2006-KS7
__________, 20__
U.S. Bank National Association
EP-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Attention: Structured Finance/RASC Series 2006-KS7
Ladies and Gentlemen:
WHEREAS, Residential Funding Corporation, a Delaware corporation
("Residential Funding"), an indirect wholly-owned subsidiary of General Motors
Acceptance Corporation, a New York corporation ("GMAC"), plans to incur certain
obligations as described under Section 12.01 of the Pooling and Servicing
Agreement dated as of August 1, 2006 (the "Servicing Agreement"), among
Residential Asset Securities Corporation (the "Depositor"), Residential Funding
and U.S. Bank National Association (the "Trustee") as amended by Amendment No.
___ thereto, dated as of ________, with respect to the Home Equity Mortgage
Asset-Backed Pass-Through Certificates, Series 2006-KS7 (the "Certificates");
and
WHEREAS, pursuant to Section 12.01 of the Servicing Agreement,
Residential Funding agrees to make payments to the Holders of the Class SB
Certificates with respect to certain losses on the Mortgage Loans as described
in the Servicing Agreement; and
WHEREAS, GMAC desires to provide certain assurances with respect
to the ability of Residential Funding to secure sufficient funds and faithfully
to perform its Subordinate Certificate Loss Obligation;
NOW THEREFORE, in consideration of the premises herein contained
and certain other good and valuable consideration, the receipt of which is
hereby acknowledged, GMAC agrees as follows:
2. Provision of Funds. (a) GMAC agrees to contribute and deposit
in the Certificate Account on behalf of Residential Funding (or otherwise
provide to Residential Funding, or to cause to be made available to Residential
Funding), either directly or through a subsidiary, in any case prior to the
L-1
related Distribution Date, such moneys as may be required by Residential Funding
to perform its Subordinate Certificate Loss Obligation when and as the same
arises from time to time upon the demand of the Trustee in accordance with
Section 12.01 of the Servicing Agreement.
(b) The agreement set forth in the preceding clause (a) shall be
absolute, irrevocable and unconditional and shall not be affected by the
transfer by GMAC or any other person of all or any part of its or their interest
in Residential Funding, by any insolvency, bankruptcy, dissolution or other
proceeding affecting Residential Funding or any other person, by any defense or
right of counterclaim, set-off or recoupment that GMAC may have against
Residential Funding or any other person or by any other fact or circumstance.
Notwithstanding the foregoing, GMAC's obligations under clause (a) shall
terminate upon the earlier of (x) substitution for this Limited Guaranty
pursuant to Section 12.01(f) of the Servicing Agreement, or (y) the termination
of the Trust Fund pursuant to the Servicing Agreement.
3. Waiver. GMAC hereby waives any failure or delay on the part of
Residential Funding, the Trustee or any other person in asserting or enforcing
any rights or in making any claims or demands hereunder. Any defective or
partial exercise of any such rights shall not preclude any other or further
exercise of that or any other such right. GMAC further waives demand,
presentment, notice of default, protest, notice of acceptance and any other
notices with respect to this Limited Guaranty, including, without limitation,
those of action or non-action on the part of Residential Funding or the Trustee.
4. Modification, Amendment and Termination. This Limited Guaranty
may be modified, amended or terminated only by the written agreement of GMAC and
the Trustee and only if such modification, amendment or termination is permitted
under Section 12.02 of the Servicing Agreement. The obligations of GMAC under
this Limited Guaranty shall continue and remain in effect so long as the
Servicing Agreement is not modified or amended in any way that might affect the
obligations of GMAC under this Limited Guaranty without the prior written
consent of GMAC.
5. Successor. Except as otherwise expressly provided herein, the
guarantee herein set forth shall be binding upon GMAC and its respective
successors.
6. Governing Law. This Limited Guaranty shall be governed by the
laws of the State of New York.
7. Authorization and Reliance. GMAC understands that a copy of
this Limited Guaranty shall be delivered to the Trustee in connection with the
execution of Amendment No. __ to the Servicing Agreement and GMAC hereby
authorizes the Depositor and the Trustee to rely on the covenants and agreements
set forth herein.
8. Definitions. Capitalized terms used but not otherwise defined
herein shall have the meaning given them in the Servicing Agreement.
9. Counterparts. This Limited Guaranty may be executed in any
number of counterparts, each of which shall be deemed to be an original and such
counterparts shall constitute but one and the same instrument.
L-2
IN WITNESS WHEREOF, GMAC has caused this Limited Guaranty to be
executed and delivered by its respective officers thereunto duly authorized as
of the day and year first above written.
GENERAL MOTORS ACCEPTANCE
CORPORATION
By:__________________________________
Name:________________________________
Title:_______________________________
Acknowledged by:
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:__________________________________
Name:________________________________
Title:_______________________________
RESIDENTIAL ASSET SECURITIES
CORPORATION
By:__________________________________
Name:________________________________
Title:_______________________________
L-3
EXHIBIT M
FORM OF LENDER CERTIFICATION FOR ASSIGNMENT OF MORTGAGE LOAN
__________, 20__
Residential Asset Securities Corporation
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
U.S. Bank National Association
EP-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Attention: Structured Finance/RASC Series 2006-KS7
Re: Home Equity Mortgage Asset-Backed Pass-Through Certificates,
Series 2006-KS7 Assignment of Mortgage Loan
Ladies and Gentlemen:
This letter is delivered to you in connection with the assignment by U.S
Bank National Association (the "Trustee") to _______________________ (the
"Lender") of _______________ (the "Mortgage Loan") pursuant to Section 3.13(d)
of the Pooling and Servicing Agreement (the "Pooling and Servicing Agreement"),
dated as of August 1, 2006 among Residential Asset Securities Corporation, as
depositor (the "Depositor"), Residential Funding Corporation, as master
servicer, and the Trustee. All terms used herein and not otherwise defined shall
have the meanings set forth in the Pooling and Servicing Agreement. The Lender
hereby certifies, represents and warrants to, and covenants with, the Master
Servicer and the Trustee that:
(ii) the Mortgage Loan is secured by Mortgaged Property located
in a jurisdiction in which an assignment in lieu of satisfaction is required to
preserve lien priority, minimize or avoid mortgage recording taxes or otherwise
comply with, or facilitate a refinancing under, the laws of such jurisdiction;
(iii) the substance of the assignment is, and is intended to be,
a refinancing of such Mortgage Loan and the form of the transaction is solely to
comply with, or facilitate the transaction under, such local laws;
(iv) the Mortgage Loan following the proposed assignment will be
modified to have a rate of interest at least 0.25 percent below or above the
rate of interest on such Mortgage Loan prior to such proposed assignment; and
M-1
(v) such assignment is at the request of the borrower under the
related Mortgage Loan.
Very truly yours,
_____________________________________
(Lender)
By:__________________________________
Name:________________________________
Title:_______________________________
M-2
EXHIBIT N
FORM OF RULE 144A INVESTMENT REPRESENTATION [to be updated by tax counsel]
Description of Rule 144A Securities, including numbers:
__________________________________________________________
__________________________________________________________
__________________________________________________________
The undersigned seller, as registered holder (the "Seller"),
intends to transfer the Rule 144A Securities described above to the undersigned
buyer (the "Buyer").
1. In connection with such transfer and in accordance with the
agreements pursuant to which the Rule 144A Securities were issued, the Seller
hereby certifies the following facts: Neither the Seller nor anyone acting on
its behalf has offered, transferred, pledged, sold or otherwise disposed of the
Rule 144A Securities, any interest in the Rule 144A Securities or any other
similar security to, or solicited any offer to buy or accept a transfer, pledge
or other disposition of the Rule 144A Securities, any interest in the Rule 144A
Securities or any other similar security from, or otherwise approached or
negotiated with respect to the Rule 144A Securities, any interest in the Rule
144A Securities 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
Rule 144A Securities under the Securities Act of 1933, as amended (the "1933
Act"), or that would render the disposition of the Rule 144A Securities a
violation of Section 5 of the 1933 Act or require registration pursuant thereto,
and that the Seller has not offered the Rule 144A Securities to any person other
than the Buyer or another "qualified institutional buyer" as defined in Rule
144A under the 0000 Xxx.
2. The Buyer, pursuant to Section 5.02 of the Pooling and
Servicing Agreement (the "Agreement"), dated as of August 1, 2006 among
Residential Funding Corporation, as master servicer (the "Master Servicer"),
Residential Asset Securities Corporation, as depositor (the "Depositor"), and
U.S. Bank National Association, as trustee (the "Trustee") warrants and
represents to, and covenants with, the Seller, the Trustee and the Master
Servicer as follows:
a. The Buyer understands that the Rule 144A
Securities have not been registered under the 1933 Act or the
securities laws of any state.
b. The Buyer considers itself a substantial,
sophisticated institutional investor having such knowledge and
experience in financial and business matters that it is capable
of evaluating the merits and risks of investment in the Rule 144A
Securities.
c. The Buyer has been furnished with all
information regarding the Rule 144A Securities that it has
requested from the Seller, the Trustee or the Servicer.
N-1
d. Neither the Buyer nor anyone acting on its
behalf has offered, transferred, pledged, sold or otherwise
disposed of the Rule 144A Securities, any interest in the Rule
144A Securities or any other similar security to, or solicited
any offer to buy or accept a transfer, pledge or other
disposition of the Rule 144A Securities, any interest in the Rule
144A Securities or any other similar security from, or otherwise
approached or negotiated with respect to the Rule 144A
Securities, any interest in the Rule 144A Securities 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 Rule 144A Securities under the 1933 Act or
that would render the disposition of the Rule 144A Securities a
violation of Section 5 of the 1933 Act or require registration
pursuant thereto, nor will it act, nor has it authorized or will
it authorize any person to act, in such manner with respect to
the Rule 144A Securities.
e. The Buyer is a "qualified institutional buyer"
as that term is defined in Rule 144A under the 1933 Act and has
completed either of the forms of certification to that effect
attached hereto as Annex I or Annex II. The Buyer is aware that
the sale to it is being made in reliance on Rule 144A. The Buyer
is acquiring the Rule 144A Securities for its own account or the
accounts of other qualified institutional buyers, understands
that such Rule 144A Securities 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 1933 Act.
3. The Buyer of Class SB Certificates or Class R Certificates:
a. is not an employee benefit plan or other plan
or arrangement subject to the prohibited transaction provisions
of ERISA or Section 4975 of the Code, or any person (including an
insurance company investing its general account, an investment
manager, a named fiduciary or a trustee of any such plan) who is
using "plan assets" of any such plan to effect such acquisition;
or
b. has provided the Trustee, the Depositor and the
Master Servicer with the Opinion of Counsel described in Section
5.02(e)(i) of the Agreement, which shall be acceptable to and in
form and substance satisfactory to the Trustee, the Depositor,
and the Master Servicer to the effect that the purchase or
holding of this Certificate is permissible under applicable law,
will not constitute or result in any nonexempt prohibited
transaction under Section 406 of ERISA or Section 4975 of the
Code (or comparable provisions of any subsequent enactments), and
will not subject the Trustee, the Depositor, or the Master
Servicer to any obligation or liability (including obligations or
liabilities under ERISA or Section 4975 of the Code) in addition
to those undertaken in the Agreement, which Opinion of Counsel
shall not be an expense of the Trustee, the Depositor or the
Master Servicer.
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4. This document may be executed in one or more counterparts and
by the different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same document.
N-3
IN WITNESS WHEREOF, each of the parties has executed this document as of
the date set forth below.
_______________________________ ______________________________
Print Name of Seller Print Name of Purchaser
By:_________________________________ By:_________________________________
Name: Name:
Title: Title:
Taxpayer Identification: Taxpayer Identification:
No__________________________________ No__________________________________
Date:_______________________________ Date:_______________________________
N-4
ANNEX I TO EXHIBIT N
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers Other Than Registered Investment Companies]
The undersigned hereby certifies as follows in connection with the Rule
144A Investment Representation to which this Certification is attached:
1 As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
2. 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 ("Rule 144A") because (i) the Buyer owned and/or invested
on a discretionary basis $______________________ 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.
___ 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.
___ 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 risks underwritten by insurance
companies and which is subject to supervision by the insurance
commissioner or a similar official or agency of a State or
territory or the District of Columbia.
N-5
___ 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, as amended ("ERISA").
___ Investment Adviser. The Buyer is an investment adviser registered
under the Investment Advisers Act of 1940.
___ SBIC. The 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. The Buyer is a business development
company as defined in Section 202(a)(22) of the Investment
Advisers Act of 1940.
___ Trust Fund. The Buyer is a trust fund whose trustee is a bank or
trust company and whose participants are exclusively (a) plans
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, or
(b) employee benefit plans within the meaning of Title I of the
Employee Retirement Income Security Act of 1974, but is not a
trust fund that includes as participants individual retirement
accounts or H.R. 10 plans.
3. 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) bank deposit notes and certificates of deposit, (iv) loan
participations, (v) repurchase agreements, (vi) securities owned but subject to
a repurchase agreement and (vii) currency, interest rate and commodity swaps.
4. 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. 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.
N-6
5. 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.
____ ____ Will the Buyer be purchasing the Rule 144A
Yes No Securities for the Buyer's own account?
6. If the answer to the foregoing question is "no", the Buyer
agrees that, in connection with any purchase of securities sold to the Buyer for
the account of a third party (including any separate account) in reliance on
Rule 144A, the Buyer will only purchase for the account of a third party that at
the time is a "qualified institutional buyer" within the meaning of Rule 144A.
In addition, the Buyer agrees that the Buyer will not purchase securities for a
third party unless the Buyer has obtained a current representation letter from
such third party or taken other appropriate steps contemplated by Rule 144A to
conclude that such third party independently meets the definition of "qualified
institutional buyer" set forth in Rule 144A.
7. 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 Rule 144A Securities will
constitute a reaffirmation of this certification as of the date of such
purchase.
____________________________________
Print Name of Buyer
By:_________________________________
Name:
Title:
Date:_______________________________
N-7
ANNEX II TO EXHIBIT N
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers That Are Registered Investment Companies]
The undersigned hereby certifies as follows in connection with the Rule
144A Investment Representation to which this Certification is attached:
8. 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 ("Rule 144A") because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of the Adviser.
9. 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, 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.
____ 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).
10. 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).
11. 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) bank deposit notes and certificates
of deposit, (iii) loan participations, (iv) repurchase agreements, (v)
securities owned but subject to a repurchase agreement and (vi) currency,
interest rate and commodity swaps.
12. The Buyer is familiar with Rule 144A and understands that
each of the parties to which this certification is made 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.
N-8
13. The undersigned will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice, the Buyer's purchase of Rule 144A Securities will constitute
a reaffirmation of this certification by the undersigned as of the date of such
purchase.
____________________________________
Print Name of Buyer
By:_________________________________
Name:
Title:
IF AN ADVISER:
____________________________________
Print Name of Buyer
Date:_______________________________
N-9
EXHIBIT O
SWAP AGREEMENT
[SEE ATTACHMENT]
O-1
EXHIBIT P
FORM OF ERISA REPRESENTATION LETTER [TO BE UPDATED BY TAX COUNSEL]
__________, 20__
Residential Asset Securities Corporation
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
U.S. Bank National Association
EP-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Attention: Structured Finance/RASC Series 0000-XX0
Xxxxxxxxxxx Funding Corporation
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Residential Asset Securities Corporation Series 2006-KS7
Re: Home Equity Mortgage Asset-Backed Pass-Through Certificates,
Series 2006-KS7, Class [__]
Ladies and Gentlemen:
[____________________________________] (the "Purchaser") intends to
purchase from [______________________________] (the "Seller") $[____________]
Initial Certificate Principal Balance of Home Equity Mortgage Asset-Backed
Pass-Through Certificates, Series 2006-KS7, Class ____ (the "Certificates"),
issued pursuant to the Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"), dated as of August 1, 2006 among Residential Asset
Securities Corporation, as the depositor (the "Depositor"), Residential Funding
Corporation, as master servicer (the "Master Servicer") and U.S. Bank National
Association, as trustee (the "Trustee"). All terms used herein and not otherwise
defined shall have the meanings set forth in the Pooling and Servicing
Agreement. The Purchaser hereby certifies, represents and warrants to, and
covenants with, the Depositor, the Trustee and the Master Servicer that:
(a) The Purchaser is not an employee benefit plan or other plan
or arrangement subject to the prohibited transaction provisions
of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or Section 4975 of the Internal Revenue Code
of 1986, as amended (the "Code"), or any person (including an
insurance company investing its general account, an investment
manager, a named fiduciary or a trustee of any such plan) who is
using "plan assets" of any such plan to effect such acquisition
(each of the foregoing, a "Plan Investor"); or
P-1
(b) The Purchaser has provided the Trustee, the Depositor and the
Master Servicer with the Opinion of Counsel described in Section
5.02(e)(i) of the Agreement, which shall be acceptable to and in
form and substance satisfactory to the Trustee, the Depositor and
the Master Servicer to the effect that the purchase or holding of
Certificates is permissible under applicable law, will not
constitute or result in any non-exempt prohibited transaction
under Section 406 of ERISA or Section 4975 of the Code (or
comparable provisions of any subsequent enactments), and will not
subject the Trustee, the Depositor or the Master Servicer to any
obligation or liability (including obligations or liabilities
under ERISA or Section 4975 of the Code) in addition to those
undertaken in the Pooling and Servicing Agreement, which Opinion
of Counsel shall not be at the expense of the Trustee, the
Depositor or the Master Servicer.
In addition, the Purchaser hereby certifies, represents and
warrants to, and covenants with, the Depositor, the Trustee and the Master
Servicer that the Purchaser will not transfer such Certificates to any Plan
Investor or person unless such Plan Investor or person meets the requirements
set forth in either (a) or (b) above.
Very truly yours,
____________________________________
(Purchaser)
By: ________________________________
Name: ______________________________
Title: _____________________________
P-2
EXHIBIT Q
FORM OF SB-AM SWAP AGREEMENT
DATE: August 28, 2006
TO: U.S. Bank National Association, not in its
individual capacity but solely as trustee for the
benefit of RASC Series 2006-KS7 Trust, acting on
behalf of the Class A Certificateholders and Class
M Certificateholders under the Pooling and
Servicing Agreement identified below ("PARTY A")
ATTENTION: RASC Series 2006-KS7
FROM: U.S. Bank National Association, not in its
individual capacity but solely as trustee for the
benefit of RASC Series 2006-KS7 Trust, acting on
behalf of the Class SB Certificateholders under
the Pooling and Servicing Agreement identified
below ("PARTY B")
SUBJECT: Payment Swap Confirmation and Agreement
REFERENCE NUMBER
The purpose of this letter agreement (the "Agreement") is to confirm the terms
and conditions of the Transaction entered into on the Trade Date specified below
(the "Transaction") between Party A and Party B. This Agreement, which evidences
a complete and binding agreement between you and us to enter into the
Transaction on the terms set forth below, constitutes a "Confirmation" as
referred to in the ISDA Form Master Agreement (as defined below), as well as a
"Schedule" as referred to in the ISDA Form Master Agreement.
o This Agreement is subject to and incorporates the 2000 ISDA Definitions
(the "Definitions"), as published by the International Swaps and Derivatives
Association, Inc. ("ISDA"). You and we have agreed to enter into this Agreement
in lieu of negotiating a Schedule to the 1992 ISDA Master Agreement
(Multicurrency-Cross Border) form (the "ISDA Form Master Agreement") but,
rather, an ISDA Form Master Agreement shall be deemed to have been executed by
you and us on the date we entered into the Transaction. In the event of any
Q-1
inconsistency between the provisions of this Agreement and the Definitions or
the ISDA Form Master Agreement, this Agreement shall prevail for purposes of the
Transaction. Terms used and not otherwise defined herein, in the ISDA Form
Master Agreement or the Definitions shall have the meanings assigned to them in
the Pooling and Servicing Agreement, dated as of August 1, 2006, among
Residential Asset Securities Corporation, as depositor, Residential Funding
Corporation, as master servicer, and U.S. Bank National Association, as trustee
(the "Pooling and Servicing Agreement"). Each reference to a "Section" or to a
"Section" "of this Agreement" will be construed as a reference to a Section of
the 1992 ISDA Form Master Agreement. Each capitalized term used herein that is
not defined herein or in the 1992 ISDA Form Master Agreement shall have the
meaning defined in the Pooling and Servicing Agreement. Notwithstanding anything
herein to the contrary, should any provision of this Agreement conflict with any
provision of the Pooling and Servicing Agreement, the provision of the Pooling
and Servicing Agreement shall apply.
o The terms of the particular Transaction to which this Confirmation
relates are as follows:
Trade Date:
Effective Date:
Termination Date: [August 25, 2036] subject to adjustment
in accordance with the Business Day
Convention.
Business Days: California, Minnesota, Texas, New York,
Illinois.
Business Day Convention: Following.
PARTY A PAYMENTS:
Party A Payment Dates: Each Distribution Date under the Pooling
and Servicing Agreement.
Party A Payment Amounts: On each Party A Payment Date, the
amount, if any, equal to the aggregate
amount of Net Swap Payments and Swap
Termination Payments owed to the Swap
Counterparty remaining unpaid after
application of the sum of (A) from the
Adjusted Available Distribution Amount
that would have remained had the
Adjusted Available Distribution Amount
been applied on such Distribution Date
to make the distributions for such
Distribution Date under Section 4.02(c)
clauses (i) through (x) of the Pooling
and Servicing Agreement, of (I) Accrued
Certificate Interest on the Class SB
Certificates, (II) the amount of any
Overcollateralization Reduction Amount
and (III) for each Distribution Date
after the Certificate Principal Balance
of each Class of Class A Certificates
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and Class M Certificates has been
reduced to zero, the
Overcollateralization Amount, (B) from
prepayment charges on deposit in the
Certificate Amount, any prepayment
charges received on the Mortgage Loans
during the related Prepayment Period and
(C) from the amount distributable with
respect to the REMIC III Regular
Interest IO.
PARTY B PAYMENTS:
Party B Payment Dates: Each Distribution Date under the Pooling
and Servicing Agreement
Party B Payment Amounts: On each Party B Payment Date, an amount
equal to the lesser of (a) the Available
Distribution Amount remaining on such
Distribution Date after the
distributions on such Distribution Date
under Section 4.02(c) clauses (i)
through (vi) of the Pooling and
Servicing Agreement and (b) the
aggregate unpaid Basis Risk Shortfalls
allocated to the Class A
Certificateholders and the Class M
Certificateholders for such Distribution
Date.
o Additional Provisions: Each party hereto is hereby dvised and
acknowledges that the other party has engaged in (or refrained from engaging in)
substantial financial transactions and has taken (or refrained from taking)
other material actions in reliance upon the entry by the parties into the
Transaction being entered into on the terms and conditions set forth herein and
in the ISDA Form Master Agreement relating to such Transaction, as applicable.
o Provisions Deemed Incorporated in a Schedule to the ISDA Form Master
Agreement:
- Termination Provisions. For purposes of the ISDA Form Master
Agreement:
o "Specified Entity" is not applicable to Party A or Party
B for any purpose.
o "Specified Transaction" is not applicable to Party A or
Party B for any purpose, and, accordingly, Section 5(a)(v) shall not
apply to Party A or Party B.
o The "Cross Default" provisions of Section 5(a)(vi)
shall not apply to Party A or Party B.
o The "Credit Event Upon Merger" provisions of Section
5(b)(iv)will not apply to Party A or Party B.
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o With respect to Party A and Party B, the "Bankruptcy"
provision of Section 5(a)(vii)(2) of the ISDA Form Master Agreement
will be deleted in its entirety.
o The "Automatic Early Termination" provision of Section
6(a) will not apply to Party A or to Party B.
o Payments on Early Termination. For the purpose of
Section 6(e) of the ISDA Form Master Agreement:
- Market Quotation will apply.
- The Second Method will apply.
o "Termination Currency" means United States Dollars.
o The provisions of Sections 5(a)(ii), 5(a)(iii) and 5(a)
(iv) shall not apply to Party A or Party B.
o Tax Event. The provisions of Section 2(d)(i)(4) and
2(d)(ii) of the ISDA Form Master Agreement shall not apply to Party
A and Party A shall not be required to pay any additional amounts
referred to therein.
- Tax Representations.
o Payer Representations. For the purpose of Section 3(e)
of the ISDA Form Master Agreement, each of Party A and Party B will make
the following representations:
It is not required by any applicable law, as modified by
the practice of any relevant governmental revenue
authority, of any Relevant Jurisdiction to make any
deduction or withholding for or on account of any Tax
from any payment (other than interest under Section
2(e), 6(d)(ii) or 6(e) of the ISDA Form Master
Agreement) to be made by it to the other party under
this Agreement. In making this representation, it may
rely on:
- the accuracy of any representations made by the
other party pursuant to Section 3(f) of the ISDA Form Master
Agreement;
- the satisfaction of the agreement contained in
Sections 4(a)(i) or 4(a)(iii) of the ISDA Form Master Agreement
and the accuracy and effectiveness of any document provided by
the other party pursuant to Sections 4(a)(i) or 4(a)(iii) of the
ISDA Form Master Agreement; and
Q-4
- the satisfaction of the agreement of the other
party contained in Section 4(d) of the ISDA Form Master
Agreement, provided that it shall not be a breach of this
representation where reliance is placed on clause (ii) and the
other party does not deliver a form or document under Section
4(a)(iii) by reason of material prejudice to its legal or
commercial position.
o Payee Representations. For the purpose of Section
3(f) of the ISDA Form Master Agreement, Party A and Party B make the
following representations: None
- Documents to be Delivered. For the purpose of Section 4(a) (i)
and 4(a) (iii):
- Tax forms, documents, or certificates to be
delivered are:
PARTY REQUIRED TO FORM/DOCUMENT/ DATE BY WHICH TO
DELIVER DOCUMENT CERTIFICATE BE DELIVERED
Party A and Party B Any documents required Promptly after the earlier
or reasonably requested of (i) reasonable demand by
to allow the other party either partyor (ii) learning
to make payments under that such form or document
this Agreement without is required
any deduction or
withholding for or on
the account of any Tax
or with such deduction
or withholding at a
reduced rate
- Other documents to be delivered are:
PARTY REQUIRED FORM/DOCUMENT/ DATE BY WHICH TO COVERED BY
TO DELIVER CERTIFICATE BE DELIVERED SECTION 3(D)
DOCUMENT REPRESENTATION
Party A and Party B Any documents required by Upon execution Yes
the receiving party to and delivery of
evidence the authority of this Agreement
the delivering party for it and such
to execute and deliver this Confirmation
Agreement, any Confirmation
to which it is a party, and
to evidence the authority of
the delivering party to
perform its obligations
under this Agreement and
such Confirmation.
Q-5
PARTY REQUIRED FORM/DOCUMENT/ DATE BY WHICH TO COVERED BY
TO DELIVER CERTIFICATE BE DELIVERED SECTION 3(D)
DOCUMENT REPRESENTATION
Party A and Party B A certificate of an Upon the Yes
authorized officer of the execution and
party, as to the incumbency delivery of this
and authority of the Agreement and
respective officers of the such Confirmation
party signing this
Agreement
o Miscellaneous. Miscellaneous
- Address for Notices: For the purposes of Section
12(a) of this Agreement:
Address for notices or communications to Party A:
Address: RASC Series 2006-KS7 Trust
c/o U.S. Bank National Association
00 Xxxxxxxxxx Xxxxxx
XX-XX-XX0X
Xx. Xxxx, XX 00000
with a copy to: Residential Funding Corporation
0000 Xxxxxxxxxx Xxxx Xxxx., Xxxxx 000
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxxx
Facsimile: (000) 000-0000
(For all purposes)
Address for notices or communications to Party B:
Address: RASC Series 2006-KS7 Trust
c/o U.S. Bank National Association
00 Xxxxxxxxxx Xxxxxx
XX-XX-XX0X
Xx. Xxxx, XX 00000
with a copy to: Residential Funding Corporation
0000 Xxxxxxxxxx Xxxx Xxxx., Xxxxx 000
Xxxxxxxxxxx, XX 00000
Q-6
Attention: Xxxxxx Xxxxxxxxxx
Facsimile No.: (000) 000-0000
(For all purposes)
- Process Agent. For the purpose of Section 13(c):
Party A: Not Applicable
Party B: Not Applicable
- Offices. The provisions of Section 10(a) will not
apply to this Agreement; neither Party A nor Party B have any
Offices other than as set forth in the Notices Section.
- Multibranch Party. For the purpose of Section
10(c) of the ISDA Form Master Agreement, neither Party A nor
Party B is a Multibranch. Party.
- Calculation Agent. The Calculation Agent is
Residential Funding Corporation.
- Credit Support Document.
Not Applicable
- Credit Support Provider.
Not Applicable
- Governing Law. The parties to this ISDA Agreement
hereby agree that the law of the State of New York shall govern
their rights and duties in whole, without regard to the conflict
of law provision thereof, other than New York General
Obligations Law Sections 5-1401 and 5-1402.
- Non-Petition. Party A and Party B each hereby
irrevocably and unconditionally agrees that it will not
institute against, or join any other person in instituting
against or cause any other person to institute against RASC
Series 2006-KS7 Trust, Mortgage Asset-Backed Pass-Through
Certificates, Series 2006-KS7, or the other party any
bankruptcy, reorganization, arrangement, insolvency, or similar
proceeding under the laws of the United States, or any other
jurisdiction for the non-payment of any amount due hereunder or
any other reason until the payment in full of the Certificates
and the expiration of a period of one year plus ten days (or, if
longer, the applicable preference period) following such
payment.
Q-7
- Severability. If any term, provision, covenant,
or condition of this Agreement, or the application thereof to
any party or circumstance, shall be held to be invalid or
unenforceable (in whole or in part) for any reason, the
remaining terms, provisions, covenants, and conditions hereof
shall continue in full force and effect as if this Agreement had
been executed with the invalid or unenforceable portion
eliminated, so long as this Agreement as so modified continues
to express, without material change, the original intentions of
the parties as to the subject matter of this Agreement and the
deletion of such portion of this Agreement will not
substantially impair the respective benefits or expectations of
the parties.
The parties shall endeavor to engage in good faith
negotiations to replace any invalid or unenforceable term,
provision, covenant or condition with a valid or enforceable
term, provision, covenant or condition, the economic effect of
which comes as close as possible to that of the invalid or
unenforceable term, provision, covenant or condition.
- [Intentionally Omitted].
- Waiver of Jury Trial. Each party to this Agreement
respectively waives any right it may have to a trial by jury in
respect of any Proceedings relating to this Agreement or any
Credit Support Document.
- Set-Off. Notwithstanding any provision of this
Agreement or any other existing or future agreement, each party
irrevocably waives any and all rights it may have to set off,
net, recoup or otherwise withhold or suspend or condition
payment or performance of any obligation between it and the
other party hereunder against any obligation between it and the
other party under any other agreements. The provisions for
Set-off set forth in Section 6(e) of the ISDA Form Master
Agreement shall not apply for purposes of this Transaction.
- This Agreement may be executed in several counterparts,
each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
- Trustee Liability Limitations. It is expressly understood
and agreed by the parties hereto that (a) this Agreement is
executed and delivered by U.S. Bank National Association, not
individually or personally but solely as Trustee of Party A and
Party B, in the exercise of the powers and authority conferred
and vested in it and that U.S. Bank National Association shall
perform its duties and obligations hereunder in accordance with
the standard of care set forth in Article VIII of the Pooling
and Servicing Agreement, (b) each of the representations,
undertakings and agreements herein made on the part of Party A
and Party B is made and intended not as personal
representations, undertakings and agreements by U.S. Bank
National Association but is made and intended for the purpose of
binding only Party A and Party B, (c) nothing herein contained
shall be construed as creating any liability on U.S. Bank
National Association, individually or personally, to perform any
Q-8
covenant either expressed or implied contained herein, all such
liability, if any, being expressly waived by the parties hereto
and by any Person claiming by, through or under the parties
hereto; provided that nothing in this paragraph shall relieve
U.S. Bank National Association from performing its duties and
obligations hereunder and under the Pooling and Servicing
Agreement in accordance with the standard of care set forth
therein, and (d) under no circumstances shall U.S. Bank National
Association be personally liable for the payment of any
indebtedness or expenses of Party A or Party B or be liable for
the breach or failure of any obligation, representation,
warranty or covenant made or undertaken by Party A or Party B
under this Agreement or any other related documents; provided,
that nothing in this paragraph shall relieve U.S. Bank National
Association from performing its duties and obligations hereunder
and under the Pooling and Servicing Agreement in accordance with
the standard of care set forth herein and therein.
o "Affiliate". Party A and Party B shall be deemed
to not have any Affiliates for purposes of this Agreement, including for
purposes of Section 6(b)(ii).
o Section 3 of the ISDA Form Master Agreement is hereby
amended by adding at the end thereof the following subsection (g):
"(g) Relationship Between Parties.
Each party represents to the other party on each date when it enters
into a Transaction that:--
o Nonreliance. (i) It is not relying on any
statement or representation of the other party regarding the Transaction
(whether written or oral), other than the representations expressly made in this
Agreement or the Confirmation in respect of that Transaction and (ii) it has
consulted with its own legal, regulatory, tax, business, investment, financial
and accounting advisors to the extent it has deemed necessary, and it has made
its own investment, hedging and trading decisions based upon its own judgment
and upon any advice from such advisors as it has deemed necessary and not upon
any view expressed by the other party.
o Evaluation and Understanding.
- It has the capacity to
evaluate (internally or through independent professional advice) the Transaction
and has made its own decision to enter into the Transaction and has been
directed by the Pooling and Servicing Agreement to enter into this Transaction;
and
- It understands the terms,
conditions and risks of the Transaction and is willing and able to accept those
terms and conditions and to assume those risks, financially and otherwise.
Q-9
o Purpose. It is entering into the
Transaction for the purposes of managing its borrowings or investments, hedging
its underlying assets or liabilities or in connection with a line of business.
o Status of Parties. The other party is
not acting as agent, fiduciary or advisor for it in respect of the Transaction.
o Eligible Contract Participant. It is
an "eligible swap participant" as such term is defined in Section 35.1(b)(2) of
the regulations (17 C.F.R 35) promulgated under, and it constitutes an "eligible
contract participant" as such term is defined in Section 1(a)12 of the Commodity
Exchange Act, as amended."
- Account Details and Settlement Information:
PAYMENTS TO PARTY A:
Payments to Party A shall be made in the same manner as
provided for in the Pooling and Servicing Agreement with
respect to the Class A Certificateholders, Class M
Certificateholders and Class B Certificateholders.
PAYMENTS TO PARTY B:
payments to Party B shall be made in the same manner as
provided for in the Pooling and Servicing Agreement with
respect to the Class SB Certificateholders.
Q-10
Please sign and return to us a copy of this Agreement.
Very truly yours,
U.S. BANK NATIONAL ASSOCIATION, not in
its individual capacity but solely as
trustee for the benefit of RASC Series
2006-KS7 Trust, acting on behalf of the
Class SB Certificateholders
By:____________________________________
Name:
Title:
AGREED AND ACCEPTED AS OF THE
TRADE DATE
U.S. BANK NATIONAL ASSOCIATION, not in
its individual capacity but solely as
trustee for the benefit of RASC Series
2006-KS7 Trust, acting on behalf of the
Class A Certificateholders and Class M
Certificateholders
By:____________________________________
Name:
Title:
Q-11
EXHIBIT R
ASSIGNMENT AGREEMENT
[FILED HEREWITH AS EXHIBIT 10.2]
R-1
EXHIBIT S
SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
The assessment of compliance to be delivered by the Trustee shall
address, at a minimum, the criteria identified as below as "Applicable Servicing
Criteria":
----------------------------------------------------------------------------------- ---------------------
APPLICABLE
SERVICING CRITERIA SERVICING CRITERIA
----------------------------------------------------------------------------------- ---------------------
REFERENCE CRITERIA
-------------------------- -------------------------------------------------------- ---------------------
GENERAL SERVICING CONSIDERATIONS
-------------------------- -------------------------------------------------------- ---------------------
Policies and procedures are instituted to monitor any
performance or other triggers and events of default
1122(d)(1)(i) in accordance with the transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
If any material servicing activities are outsourced
to third parties, policies and procedures are
instituted to monitor the third party's performance
1122(d)(1)(ii) and compliance with such servicing activities.
-------------------------- -------------------------------------------------------- ---------------------
Any requirements in the transaction agreements to
maintain a back-up servicer for the pool assets are
1122(d)(1)(iii) maintained.
-------------------------- -------------------------------------------------------- ---------------------
A fidelity bond and errors and omissions policy is in
effect on the party participating in the servicing
function throughout the reporting period in the
amount of coverage required by and otherwise in
accordance with the terms of the transaction
1122(d)(1)(iv) agreements.
-------------------------- -------------------------------------------------------- ---------------------
CASH COLLECTION AND ADMINISTRATION
-------------------------- -------------------------------------------------------- ---------------------
Payments on pool assets are deposited into the
appropriate custodial bank accounts and related bank
clearing accounts no more than two business days |X| (as to accounts
following receipt, or such other number of days held by Trustee)
1122(d)(2)(i) specified in the transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
Disbursements made via wire transfer on behalf of an
obligor or to an investor are made only by authorized |X| (as to
1122(d)(2)(ii) personnel. investors only)
-------------------------- -------------------------------------------------------- ---------------------
Advances of funds or guarantees regarding
collections, cash flows or distributions, and any
interest or other fees charged for such advances, are
made, reviewed and approved as specified in the
1122(d)(2)(iii) transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
The related accounts for the transaction, such as cash
reserve accounts or accounts established as a form of
overcollateralization, are separately maintained |X| (as to accounts
(e.g., with respect to commingling of cash) as set held by Trustee)
1122(d)(2)(iv) forth in the transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
S-1
----------------------------------------------------------------------------------- ---------------------
APPLICABLE
SERVICING CRITERIA SERVICING CRITERIA
----------------------------------------------------------------------------------- ---------------------
REFERENCE CRITERIA
-------------------------- -------------------------------------------------------- ---------------------
Each custodial account is maintained at a federally
insured depository institution as set forth in the
transaction agreements. For purposes of this
criterion, "federally insured depository institution"
with respect to a foreign financial institution means
a foreign financial institution that meets the
requirements of Rule 13k-1(b)(1) of the Securities
1122(d)(2)(v) Exchange Act.
-------------------------- -------------------------------------------------------- ---------------------
Unissued checks are safeguarded so as to prevent
1122(d)(2)(vi) unauthorized access.
-------------------------- -------------------------------------------------------- ---------------------
Reconciliations are prepared on a monthly basis for
all asset-backed securities related bank accounts,
including custodial accounts and related bank
clearing accounts. These reconciliations are (A)
mathematically accurate; (B) prepared within 30
calendar days after the bank statement cutoff date,
or such other number of days specified in the
transaction agreements; (C) reviewed and approved by
someone other than the person who prepared the
reconciliation; and (D) contain explanations for
reconciling items. These reconciling items are
resolved within 90 calendar days of their original
identification, or such other number of days
1122(d)(2)(vii) specified in the transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
INVESTOR REMITTANCES AND REPORTING
-------------------------- -------------------------------------------------------- ---------------------
Reports to investors, including those to be filed
with the Commission, are maintained in accordance
with the transaction agreements and applicable
Commission requirements. Specifically, such reports
(A) are prepared in accordance with timeframes and
other terms set forth in the transaction agreements;
(B) provide information calculated in accordance with
the terms specified in the transaction agreements;
(C) are filed with the Commission as required by its
rules and regulations; and (D) agree with investors'
or the trustee's records as to the total unpaid
principal balance and number of pool assets serviced
1122(d)(3)(i) by the servicer.
-------------------------- -------------------------------------------------------- ---------------------
Amounts due to investors are allocated and remitted in
accordance with timeframes, distribution priority and [X]
1122(d)(3)(ii) other terms set forth in the transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
Disbursements made to an investor are posted within
two business days to the servicer's investor records, [X]
or such other number of days specified in the
1122(d)(3)(iii) transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
S-2
----------------------------------------------------------------------------------- ---------------------
APPLICABLE
SERVICING CRITERIA SERVICING CRITERIA
----------------------------------------------------------------------------------- ---------------------
REFERENCE CRITERIA
-------------------------- -------------------------------------------------------- ---------------------
Amounts remitted to investors per the investor
reports agree with cancelled checks, or other form of [X]
1122(d)(3)(iv) payment, or custodial bank statements.
-------------------------- -------------------------------------------------------- ---------------------
POOL ASSET ADMINISTRATION
-------------------------- -------------------------------------------------------- ---------------------
Collateral or security on pool assets is maintained as
required by the transaction agreements or related
1122(d)(4)(i) asset pool documents.
-------------------------- -------------------------------------------------------- ---------------------
Pool assets and related documents are safeguarded as
1122(d)(4)(ii) required by the transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
Any additions, removals or substitutions to the asset
pool are made, reviewed and approved in accordance
with any conditions or requirements in the
1122(d)(4)(iii) transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
Payments on pool assets, including any payoffs, made
in accordance with the related pool asset documents
are posted to the servicer's obligor records
maintained no more than two business days after
receipt, or such other number of days specified in
the transaction agreements, and allocated to
principal, interest or other items (e.g., escrow) in
1122(d)(4)(iv) accordance with the related pool asset documents.
-------------------------- -------------------------------------------------------- ---------------------
The servicer's records regarding the pool assets
agree with the servicer's records with respect to an
1122(d)(4)(v) obligor's unpaid principal balance.
-------------------------- -------------------------------------------------------- ---------------------
Changes with respect to the terms or status of an
obligor's pool asset (e.g., loan modifications or
re-agings) are made, reviewed and approved by
authorized personnel in accordance with the
transaction agreements and related pool asset
1122(d)(4)(vi) documents.
-------------------------- -------------------------------------------------------- ---------------------
Loss mitigation or recovery actions (e.g.,
forbearance plans, modifications and deeds in lieu of
foreclosure, foreclosures and repossessions, as
applicable) are initiated, conducted and concluded in
accordance with the timeframes or other requirements
1122(d)(4)(vii) established by the transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
Records documenting collection efforts are maintained
during the period a pool asset is delinquent in
accordance with the transaction agreements. Such
records are maintained on at least a monthly basis,
or such other period specified in the transaction
agreements, and describe the entity's activities in
monitoring delinquent pool assets including, for
example, phone calls, letters and payment
rescheduling plans in cases where delinquency is
1122(d)(4)(viii) deemed temporary (e.g., illness or unemployment).
-------------------------- -------------------------------------------------------- ---------------------
S-3
----------------------------------------------------------------------------------- ---------------------
APPLICABLE
SERVICING CRITERIA SERVICING CRITERIA
----------------------------------------------------------------------------------- ---------------------
REFERENCE CRITERIA
-------------------------- -------------------------------------------------------- ---------------------
Adjustments to interest rates or rates of return for
pool assets with variable rates are computed based on
1122(d)(4)(ix) the related pool asset documents.
-------------------------- -------------------------------------------------------- ---------------------
Regarding any funds held in trust for an obligor
(such as escrow accounts): (A) such funds are
analyzed, in accordance with the obligor's pool asset
documents, on at least an annual basis, or such other
period specified in the transaction agreements; (B)
interest on such funds is paid, or credited, to
obligors in accordance with applicable pool asset
documents and state laws; and (C) such funds are
returned to the obligor within 30 calendar days of
full repayment of the related pool asset, or such
other number of days specified in the transaction
1122(d)(4)(x) agreements.
-------------------------- -------------------------------------------------------- ---------------------
Payments made on behalf of an obligor (such as tax or
insurance payments) are made on or before the related
penalty or expiration dates, as indicated on the
appropriate bills or notices for such payments,
provided that such support has been received by the
servicer at least 30 calendar days prior to these
dates, or such other number of days specified in the
1122(d)(4)(xi) transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
Any late payment penalties in connection with any
payment to be made on behalf of an obligor are paid
from the servicer's funds and not charged to the
obligor, unless the late payment was due to the
1122(d)(4)(xii) obligor's error or omission.
-------------------------- -------------------------------------------------------- ---------------------
Disbursements made on behalf of an obligor are posted
within two business days to the obligor's records
maintained by the servicer, or such other number of
1122(d)(4)(xiii) days specified in the transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
Delinquencies, charge-offs and uncollectible accounts
are recognized and recorded in accordance with the
1122(d)(4)(xiv) transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
Any external enhancement or other support, identified
in Item 1114(a)(1) through (3) or Item 1115 of [X]
Regulation AB, is maintained as set forth in the
1122(d)(4)(xv) transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
S-4
EXHIBIT T-1
FORM OF FORM 10-K CERTIFICATION
I, [identify the certifying individual], certify that:
1. I have reviewed the annual report on Form 10-K for the fiscal year
[____], and all reports on Form 8-K containing distribution or servicing reports
filed in respect of periods included in the year covered by that annual report,
of the trust (the "Trust") created pursuant to the Pooling and Servicing
Agreement dated as of August 1, 2006 (the "P&S Agreement") among Residential
Asset Securities Corporation (the "Depositor"), Residential Funding Corporation
(the "Master Servicer") and U.S. Bank National Association (the "Trustee");
2. Based on my knowledge, the information in these reports, taken as a
whole, does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading as of the
last day of the period covered by this annual report;
3. Based on my knowledge, the servicing information required to be
provided to the Trustee by the Master Servicer under the P&S Agreement for
inclusion in these reports is included in these reports;
4. I am responsible for reviewing the activities performed by the Master
Servicer under the P&S Agreement and based upon my knowledge and the annual
compliance review required under the P&S Agreement, and, except as disclosed in
the reports, the Master Servicer has fulfilled its obligations under the P&S
Agreement; and
5. The reports disclose all significant deficiencies relating to the
Master Servicer's compliance with the minimum servicing standards based upon the
report provided by an independent public accountant, after conducting a review
in compliance with the Uniform Single Attestation Program for Mortgage Bankers
as set forth in the P&S Agreement, that is included in these reports.
In giving the certifications above, I have reasonably relied on the
information provided to me by the following unaffiliated parties: [the Trustee].
IN WITNESS WHEREOF, I have duly executed this certificate as of
_________, 20__.
________________________________
Name:
Title:
* to be signed by the senior officer in charge of the servicing functions of the
Master Servicer
T-1-1
EXHIBIT T-2
FORM OF BACK-UP CERTIFICATE TO FORM 10-K CERTIFICATION
The undersigned, a Responsible Officer of [______________] (the
"Trustee") certifies that:
1. The Trustee has performed all of the duties specifically
required to be performed by it pursuant to the provisions of the
Pooling and Servicing Agreement dated as of August 1, 2006 (the
"Agreement") by and among Residential Asset Securities
Corporation, as depositor, Residential Funding Corporation, as
master servicer, and the Trustee in accordance with the
standards set forth therein.
2. Based on my knowledge, the list of Certificateholders as shown
on the Certificate Register as of the end of each calendar year
that is provided by the Trustee pursuant to Section 4.03(e)(I)
of the Agreement is accurate as of the last day of the 20[ ]
calendar year.
Capitalized terms used and not defined herein shall have the meanings
given such terms in the Agreement.
IN WITNESS WHEREOF, I have duly executed this certificate as of
_________, 20__.
________________________________
Name:
Title:
T-2-1
EXHIBIT U
INFORMATION TO BE PROVIDED BY THE MASTER SERVICER TO THE RATING AGENCIES
RELATING TO REPORTABLE MODIFIED MORTGAGE LOANS
Account number
Transaction Identifier
Unpaid Principal Balance prior to Modification
Next Due Date
Monthly Principal and Interest Payment
Total Servicing Advances
Current Interest Rate
Original Maturity Date
Original Term to Maturity (Months)
Remaining Term to Maturity (Months)
Trial Modification Indicator
Mortgagor Equity Contribution
Total Servicer Advances
Trial Modification Term (Months)
Trial Modification Start Date
Trial Modification End Date
Trial Modification Period Principal and Interest Payment
Trial Modification Interest Rate
Trial Modification Term
Rate Reduction Indicator
Interest Rate Post Modification
Rate Reduction Start Date
Rate Reduction End Date
Rate Reduction Term
Term Modified Indicator
Modified Amortization Period
Modified Final Maturity Date
Total Advances Written Off
Unpaid Principal Balance Written Off
Other Past Due Amounts Written Off
Write Off Date
Unpaid Principal Balance Post Write Off
Capitalization Indicator
Mortgagor Contribution
Total Capitalized Amount
Modification Close Date
Unpaid Principal Balance Post Capitalization Modification
Next Payment Due Date per Modification Plan
Principal and Interest Payment Post Modification
Interest Rate Post Modification
Payment Made Post Capitalization
Delinquency Status to Modification Plan
U-1
EXHIBIT V
FORM OF CERTIFICATE TO BE GIVEN BY CERTIFICATE OWNER
Euroclear Cedel, societe anonyme
000 Xxxxxxxxx Xxxxxxxx 00 Xxxxxxxxx Xxxxx-Xxxxxxxx Xxxxxxxxx
X-0000 Xxxxxxxx, Xxxxxxx X-0000 Xxxxxxxxxx
Re: Residential Asset Securities Corporation, Home Equity Mortgage
Asset-Backed Pass-Through Certificates, Series 2006-KS7, Class
SB, issued pursuant to the Pooling and Servicing Agreement dated
as of August 1, 2006 among Residential Asset Securities
Corporation, Residential Funding Corporation, and U.S. Bank
National Association, as Trustee (the "Certificates").
This is to certify that as of the date hereof and except as set forth
below, the beneficial interest in the Certificates held by you for our account
is owned by persons that are not U.S. persons (as defined in Rule 901 under the
Securities Act of 1933, as amended).
The undersigned undertakes to advise you promptly by tested telex on or
prior to the date on which you intend to submit your certification relating to
the Certificates held by you in which the undersigned has acquired, or intends
to acquire, a beneficial interest in accordance with your operating procedures
if any applicable statement herein is not correct on such date. In the absence
of any such notification, it may be assumed that this certification applies as
of such date.
[This certification excepts beneficial interests in and does not relate
to U.S. $_________ principal amount of the Certificates appearing in your books
as being held for our account but that we have sold or as to which we are not
yet able to certify.]
We understand that this certification is required in connection with
certain securities laws in the United States of America. If administrative or
legal proceedings are commenced or threatened in connection with which this
certification is or would be relevant, we irrevocably authorize you to produce
this certification or a copy thereof to any interested party in such
proceedings.
Dated:________________, By:_______________________________,*-/
Account Holder
______________________________
* Certification must be dated on or after the 15th day before the date of
the Euroclear or Cedel certificate to which this certification releases.
V-1
EXHIBIT W
FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR OR CEDEL
U.S. Bank National Association
Re: Residential Asset Securities Corporation, Home Equity Mortgage
Asset-Backed Pass-Through Certificates, Series 2006-KS7, Class
SB, issued pursuant to the Pooling and Servicing Agreement dated
as of August 1, 2006 among Residential Asset Securities
Corporation, Residential Funding Corporation, and U.S. Bank
National Association, as Trustee (the "Certificates").
This is to certify that, based solely on certifications we have received
in writing, by tested telex or by electronic transmission from member
organizations appearing in our records as persons being entitled to a portion of
the principal amount set forth below (our "Member Organizations") as of the date
hereof, $____________ principal amount of the Certificates is owned by persons
(a) that are not U.S. persons (as defined in Rule 901 under the Securities Act
of 1933. as amended (the "Securities Act")) or (b) who purchased their
Certificates (or interests therein) in a transaction or transactions that did
not require registration under the Securities Act.
We further certify (a) that we are not making available herewith for
exchange any portion of the related Temporary Regulation S Global Class SB
Certificate excepted in such certifications and (b) that as of the date hereof
we have not received any notification from any of our Member Organizations to
the effect that the statements made by them with respect to any portion of the
part submitted herewith for exchange are no longer true and cannot be relied
upon as of the date hereof
We understand that this certification is required in connection with
certain securities laws of the United States of America. If administrative or
legal proceedings are commenced or threatened in connection with which this
certification is or would be relevant, we irrevocably authorize you to produce
this certification or a copy hereof to any interested party in such proceedings.
Date:_________________* Yours faithfully,
* To be dated no earlier By:_________________________________
than the Effective Date. Xxxxxx Guaranty Trust Company of New York,
Brussels Office, as Operator of the Euroclear
Clearance System Cedel, Societe anonyme
W-1
