EXECUTION COPY
CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP.,
Depositor
DLJ MORTGAGE CAPITAL, INC.,
Seller
WILSHIRE CREDIT CORPORATION,
Servicer
and
JPMORGAN CHASE BANK,
Trustee
--------------------------------------------------------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of May 1, 2003
--------------------------------------------------------------------------------
HOME EQUITY MORTGAGE TRUST SERIES 2003-3
HOME EQUITY MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2003-3
Table of Contents
PAGE
----
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions...........................................................6
SECTION 1.02 Interest Calculations................................................42
SECTION 1.03 Allocation of Certain Interest Shortfalls............................42
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
SECTION 2.01 Conveyance of Mortgage Loans.........................................43
SECTION 2.02 Acceptance by the Trustee............................................49
SECTION 2.03 Representations and Warranties of the Seller and
Servicer.............................................................52
SECTION 2.04 Representations and Warranties of the Depositor as to
the Mortgage Loans...................................................54
SECTION 2.05 Delivery of Opinion of Counsel in Connection with
Substitutions........................................................54
SECTION 2.06 Execution and Delivery of Certificates...............................54
SECTION 2.07 REMIC Matters........................................................55
SECTION 2.08 Covenants of the Servicer............................................55
SECTION 2.09 Conveyance of REMIC Regular Interests and
Acceptance of REMIC 1 and REMIC 2 by the
Trustee; Issuance of Certificates....................................55
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
SECTION 3.01 Servicer to Service Mortgage Loans...................................57
SECTION 3.02 Subservicing; Enforcement of the Obligations of
Subservicers.........................................................59
SECTION 3.03 [Reserved]...........................................................60
SECTION 3.04 Trustee to Act as Servicer...........................................60
SECTION 3.05 Collection of Mortgage Loans; Collection Accounts;
Certificate Account; Pre-Funding Account;
Capitalized Interest Account.........................................61
SECTION 3.06 Establishment of and Deposits to Escrow Accounts;
Permitted Withdrawals from Escrow Accounts;
i
Payments of Taxes, Insurance and Other Charges
....................................................................64
SECTION 3.07 Access to Certain Documentation and Information
Regarding the Mortgage Loans; Inspections............................66
SECTION 3.08 Permitted Withdrawals from the Collection Accounts
and Certificate Account..............................................67
SECTION 3.09 Maintenance of Hazard Insurance and Mortgage
Impairment Insurance; Claims; Restoration of
Mortgaged Property...................................................68
SECTION 3.10 Enforcement of Due-on-Sale Clauses; Assumption
Agreements...........................................................70
SECTION 3.11 Realization Upon Defaulted Mortgage Loans;
Repurchase of Certain Mortgage Loans.................................71
SECTION 3.12 Trustee to Cooperate; Release of Mortgage Files
....................................................................77
SECTION 3.13 Documents, Records and Funds in Possession of the
Servicer to be Held for the Trustee..................................78
SECTION 3.14 Servicing Fee........................................................78
SECTION 3.15 Access to Certain Documentation......................................78
SECTION 3.16 Annual Statement as to Compliance....................................79
SECTION 3.17 Annual Independent Public Accountants' Servicing
Statement; Financial Statements......................................79
SECTION 3.18 Maintenance of Fidelity Bond and Errors and
Omissions Insurance..................................................80
SECTION 3.19 Duties of the Credit Risk Manager....................................80
SECTION 3.20 Limitation Upon Liability of the Credit Risk Manager
....................................................................81
SECTION 3.21 Advance Facility.....................................................81
ARTICLE IV
DISTRIBUTIONS AND
ADVANCES BY THE SERVICER
SECTION 4.01 Advances by the Servicer.............................................84
SECTION 4.02 Priorities of Distribution...........................................85
SECTION 4.03 [Reserved]...........................................................88
SECTION 4.04 [Reserved]...........................................................88
SECTION 4.05 Allocation of Realized Losses........................................88
SECTION 4.06 Monthly Statements to Certificateholders.............................89
SECTION 4.07 Distributions on the REMIC 1 Regular Interests and
REMIC 2 Regular Interests............................................89
SECTION 4.08 [Reserved]...........................................................92
SECTION 4.09 Prepayment Penalties.................................................92
SECTION 4.10 Servicer to Cooperate................................................92
SECTION 4.11 The Interest Rate Cap Agreement......................................92
ii
ARTICLE V
THE CERTIFICATES
SECTION 5.01 The Certificates.....................................................94
SECTION 5.02 Certificate Register; Registration of Transfer and
Exchange of Certificates.............................................95
SECTION 5.03 Mutilated, Destroyed, Lost or Stolen Certificates
....................................................................99
SECTION 5.04 Persons Deemed Owners...............................................100
SECTION 5.05 Access to List of Certificateholders' Names and
Addresses...........................................................100
SECTION 5.06 Maintenance of Office or Agency.....................................100
ARTICLE VI
THE DEPOSITOR, THE SELLER AND THE SERVICER
SECTION 6.01 Respective Liabilities of the Depositor, the Sellers and
the Servicer........................................................101
SECTION 6.02 Merger or Consolidation of the Depositor, the Seller
or a Servicer.......................................................101
SECTION 6.03 Limitation on Liability of the Depositor, the Seller,
the Servicer and Others.............................................101
SECTION 6.04 Limitation on Resignation of the Servicer...........................102
ARTICLE VII
DEFAULT
SECTION 7.01 Events of Default...................................................103
SECTION 7.02 Trustee to Act; Appointment of Successor............................105
SECTION 7.03 Notification to Certificateholders..................................106
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01 Duties of the Trustee...............................................107
SECTION 8.02 Certain Matters Affecting the Trustee...............................108
SECTION 8.03 Trustee Not Liable for Certificates or Mortgage Loans
...................................................................109
SECTION 8.04 Trustee May Own Certificates........................................109
SECTION 8.05 Trustee's Fees and Expenses.........................................109
SECTION 8.06 Eligibility Requirements for the Trustee and
Custodian...........................................................110
SECTION 8.07 Resignation and Removal of the Trustee..............................110
SECTION 8.08 Successor Trustee...................................................111
SECTION 8.09 Merger or Consolidation of the Trustee..............................111
iii
SECTION 8.10 Appointment of Co-Trustee or Separate Trustee
...................................................................112
SECTION 8.11 Tax Matters.........................................................113
SECTION 8.12 Commission Reporting................................................115
ARTICLE IX
TERMINATION
SECTION 9.01 Termination upon Liquidation or Purchase of the
Mortgage Loans......................................................118
SECTION 9.02 Final Distribution on the Certificates..............................118
SECTION 9.03 Additional Termination Requirements.................................119
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01 Amendment...........................................................121
SECTION 10.02 Recordation of Agreement; Counterparts..............................122
SECTION 10.03 Governing Law.......................................................122
SECTION 10.04 [Reserved]..........................................................123
SECTION 10.05 Notices.............................................................123
SECTION 10.06 Severability of Provisions..........................................124
SECTION 10.07 Assignment..........................................................124
SECTION 10.08 Limitation on Rights of Certificateholders..........................124
SECTION 10.09 Certificates Nonassessable and Fully Paid...........................125
EXHIBITS
EXHIBIT A. Form of Class A Certificates..............................................................A-1
EXHIBIT B. Form of Subordinate Certificate...........................................................B-1
EXHIBIT C. Form of Residual Certificate..............................................................C-1
EXHIBIT D. [Reserved]................................................................................D-1
EXHIBIT E. Form of Class P Certificate...............................................................E-1
EXHIBIT F. Form of Reverse Certificates..............................................................F-1
EXHIBIT G. Form of Initial Certification of Custodian................................................G-1
EXHIBIT H. Form of Final Certification of Custodian..................................................H-1
EXHIBIT I. Transfer Affidavit........................................................................I-1
EXHIBIT J. Form of Transferor Certificate............................................................J-1
EXHIBIT K. Form of Investment Letter (Non-Rule 144A).................................................K-1
EXHIBIT L. Form of Rule 144A Letter..................................................................L-1
EXHIBIT M. Request for Release.......................................................................M-1
EXHIBIT N. Form of Subsequent Transfer Agreement.....................................................N-1
EXHIBIT O-1. Form of Collection Account Certification................................................O-1-1
EXHIBIT O-2. Form of Collection Account Letter Agreement.............................................O-2-1
EXHIBIT P-1. Form of Escrow Account Certification ...................................................P-1-1
iv
EXHIBIT P-2. Form of Escrow Account Letter Agreement.................................................P-2-1
EXHIBIT Q. Form of Monthly Remittance Advice.........................................................Q-1
EXHIBIT R. Form of Custodial Agreement...............................................................R-1
EXHIBIT S. [Reserved]................................................................................S-1
EXHIBIT T. [Reserved]................................................................................T-1
EXHIBIT U. Charged Off Loan Data Report..............................................................U-1
EXHIBIT V. Form of Monthly Statement to Certificateholders...........................................V-1
EXHIBIT W. Form of Depositor Certification...........................................................W-1
EXHIBIT X. Form of Trustee Certification.............................................................X-1
EXHIBIT Y. Form of Servicer Certification............................................................Y-1
EXHIBIT Z. Information to be Provided by Servicer to Trustee.........................................Z-1
EXHIBIT AA. Form of Interest Rate Cap Agreement......................................................AA-1
SCHEDULE I Mortgage Loan Schedule....................................................................I-1
SCHEDULE II Seller's Representations and Warranties..................................................II-1
SCHEDULE III Wilshire Representations and Warranties.................................................III-1
SCHEDULE IV Representations and Warranties for the Mortgage Loans....................................IV-1
v
THIS POOLING AND SERVICING AGREEMENT, dated as of May 1, 2003, among
CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP., a Delaware corporation, as
depositor (the "Depositor"), DLJ MORTGAGE CAPITAL, INC., a Delaware corporation,
as Seller (the "Seller"), WILSHIRE CREDIT CORPORATION, a Nevada corporation, as
servicer (the "Servicer") and JPMORGAN CHASE BANK, a New York banking
corporation, as trustee (the "Trustee").
WITNESSETH THAT
In consideration of the mutual agreements herein contained, the
parties hereto agree as follows:
PRELIMINARY STATEMENT
The Depositor intends to sell pass-through certificates (collectively,
the "Certificates"), to be issued hereunder in multiple classes, which in the
aggregate will evidence the entire beneficial ownership interest in the Trust
Fund created hereunder. The Certificates will consist of nine classes of
certificates, designated as (i) the Class A-1 Certificates, (ii) the Class A-2
Certificates, (iii) the Class M-1 Certificates, (iv) the Class M-2 Certificates,
(v) the Class B Certificates, (vi) the Class P Certificates, (vii) the Class X-1
Certificates, (viii) the Class X-2 Certificates and (ix) the Class A-R
Certificates.
REMIC 1
-------
As provided herein, the Trustee will make an election to treat the
segregated pool of assets consisting of the Mortgage Loans and certain other
related assets subject to this Agreement (exclusive of the Pre-Funding Account,
the Capitalized Interest Account, the Interest Rate Cap Account, the Interest
Rate Cap Agreement and the Subsequent Mortgage Loan Interest) 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 1." The Class R-1
Interest will represent the sole class of "residual interests" in REMIC 1 for
purposes of the REMIC Provisions (as defined herein) under federal income tax
law (the "Class R-1 Interest"). The following table irrevocably sets forth the
designation, the Uncertificated REMIC 1 Pass-Through Rate, the initial
Uncertificated Principal Balance, and solely for purposes of satisfying Treasury
regulation Section 1.860G-1(a)(4)(iii), the "latest possible maturity date" for
each of the REMIC 1 Regular Interests. None of the REMIC 1 Regular Interests
will be certificated. The latest possible maturity date (determined solely for
purposes of satisfying Treasury regulation Section 1.860G-1(a)(4)(iii)) of each
of the REMIC 1 Regular Interests will be the Latest Possible Maturity Date as
defined herein.
1
Uncertificated REMIC 1 Initial Uncertificated
Designation Pass-Through Rate Balance
----------- ----------------- -------
LTI-1 Variable(1) $ 267,293,403.22
LTI-1PF Variable(1) $ 12,706,596.78
LTI-P Variable(1) $ 100.00
LTI-R Variable(1) $ 100.00
___________________
(1) Calculated as provided in the definition of Uncertificated REMIC 1
Pass-Through Rate.
REMIC 2
-------
As provided herein, an election will be made to treat the segregated
pool of assets consisting of the Uncertificated REMIC 1 Regular Interests as a
REMIC for federal income tax purposes, and such segregated pool of assets will
be designated as REMIC 2. The Class R-2 Interest will represent the sole class
of "residual interests" in REMIC 2 for purposes of the REMIC Provisions under
federal income tax law. The following table irrevocably sets forth the
designation, REMIC 2 Pass-Through Rate and initial Principal Balance for each of
the "regular interests" in REMIC 2 (the "REMIC 2 Regular Interests"). None of
the REMIC 2 Regular Interests will be certificated. The latest possible maturity
date (determined solely for purposes of satisfying Treasury regulation Section
1.860G-1(a)(4)(iii)) of each of the REMIC 2 Regular Interests will be the Latest
Possible Maturity Date as defined herein.
Uncertificated REMIC Initial Uncertificated
Designation 2 Pass-Through Rate Principal Balance
----------- ------------------- -----------------
MT-AA Variable(1) $ 274,400,000.00
MT-A1 Variable(1) $ 1,490,000.00
MT-A2 Variable(1) $ 750,000.00
MT-M1 Variable(1) $ 252,000.00
MT-M2 Variable(1) $ 154,000.00
MT-B Variable(1) $ 154,000.00
MT-ZZ Variable(1) $ 2,800,000.00
MT-P Variable(1) $ 100.00
MT-R Variable(1) $ 100.00
___________________
2
(1) Calculated as provided in the definition of Uncertificated REMIC 2
Pass-Through Rate.
REMIC 3
-------
As provided herein, an election will be made to treat the segregated
pool of assets consisting of the Uncertificated REMIC 2 Regular Interests as a
REMIC for federal income tax purposes, and such segregated pool of assets will
be designated as REMIC 3. The Class R-3 Interest will represent the sole class
of "residual interests" in REMIC 3 for purposes of the REMIC Provisions under
federal income tax law (the "Class R-3 Interest"). The following table
irrevocably sets forth the designation, Pass-Through Rate, aggregate Initial
Certificate Principal Balance, certain features, Maturity Date and initial
ratings for each Class of Certificates comprising the interests representing
"regular interests" in REMIC 3, and the Class A-R Certificates and Class X-2
Certificates which are not "regular interests" in REMIC 3. The latest possible
maturity date (determined solely for purposes of satisfying Treasury regulation
Section 1.860G-1(a)(4)(iii)) of each of the Regular Certificates will be the
Latest Possible Maturity Date as defined herein.
Integral Multiples
Class Certificate Pass-Through Minimum in Excess of
Balance Rate Denomination Minimum
------- ---- ------------ -------
Class A-1 $49,000,000.00 Adjustable(1) $ 25,000 $ 1
Class A-2 $75,000,000.00 3.75%(2) $ 25,000 $ 1
Class P $ 100.00 Variable(3) $ 100 N/A
Class A-R $ 100.00 Variable(3) $ 100 N/A
Class M-1 $25,200,000.00 Adjustable(1) $ 25,000 $ 1
Class M-2 $15,400,000.00 Adjustable(1) $ 25,000 $ 1
Class B $15,400,000.00 Adjustable(1) $ 25,000 $ 1
Class X-1 $ 0 Variable(4)(5) $ 25,000 $ 1
Class X-2 $ 0 0.00% N/A N/A
______________
(1) The Class A-1, Class M-1, Class M-2 and Class B Certificates are adjustable
rate and will receive interest pursuant to formulas based on LIBOR, subject
to the Net Funds Cap.
(2) The Class A-2 Certificates have a fixed rate subject to the Net Funds Cap.
(3) The initial pass-through rates on the Class P and Class A-R Certificates
will be approximately 10.41% per annum and will vary after the first
Distribution Date.
(4) The Class X-1 Certificates will have an initial principal balance of $0.00
and will accrue interest on its notional amount. For any Distribution Date,
the notional amount of the Class X-1 Certificates will be equal to the
Aggregate Collateral Balance minus the aggregate Class Certificate Balance
of the Class A-R Certificates and Class P Certificates immediately prior to
such Distribution Date. The initial notional amount of the Class X-1
Certificates is $280,000,000.
3
(5) The Class X-1 Certificates are variable rate and will accrue interest on a
notional amount.
Set forth below are designations of Classes of Certificates to the
categories used herein:
Book-Entry Certificates.......................... All Classes of Certificates other than the Physical
Certificates.
ERISA-Restricted Certificates.................... Class A-R, Class P and Class X Certificates.
LIBOR Certificates............................... Class A-1, Class M-1, Class M-2 and Class B
Certificates.
Notional Amount Certificates..................... Class X-1 Certificates.
Class A Certificates............................. Class A-1, Class A-2 and Class A-R Certificates.
Class B Certificates............................. Class B Certificates.
Class M Certificates............................. Class M-1 Certificates and Class M-2 Certificates.
Offered Certificates............................. All Classes of Certificates (other than the Class P and
Class X Certificates).
Physical Certificates............................ Class A-R, Class P and Class X Certificates.
Private Certificates............................. Class P and Class X Certificates.
Rating Agencies.................................. S&P and Xxxxx'x.
Regular Certificates............................. All Classes of Certificates other than the Class A-R
Certificates and Class X-2 Certificates.
Residual Certificates............................ Class A-R Certificates.
Senior Certificates.............................. Class A-1, Class A-2, Class P and Class A-R
Certificates.
Subordinate Certificates......................... Class M-1, Class M-2, Class B and Class X-1
Certificates.
Minimum Denominations............................ Class X-0, Xxxxx X-0, Class M-1, Class M-2 and
Class
B Certificates: $25,000 and multiples of $1 in excess
thereof.
Class A-R and Class P Certificates: $100.
4
The Class X-1 Certificates
will be issued as a single
Certificate with a
Certificate Principal Balance
of $0.00.
The Class X-2 Certificates
will be issued as a single
Certificate and will not have
a principal balance.
5
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 following meanings:
Accepted Servicing Practices: With respect to any Mortgage Loan, those
mortgage servicing practices of prudent mortgage lending institutions which
service mortgage loans of the same type as such Mortgage Loan in the
jurisdiction where the related Mortgaged Property is located.
Advance: The payment required to be made by the Servicer with respect
to any Distribution Date pursuant to Section 4.01.
Aggregate Collateral Balance: As of any date of determination will be
equal to the Aggregate Loan Balance plus the amount, if any, then on deposit in
the Pre-Funding Account.
Aggregate Loan Balance: As of any Distribution Date will be equal to
the aggregate of the Stated Principal Balances of the Mortgage Loans determined
as of the last day of the related Collection Period.
Aggregate Subsequent Transfer Amount: With respect to any Subsequent
Transfer Date, the aggregate Stated Principal Balances as of the applicable
Cut-off Date of the Subsequent Mortgage Loans conveyed on such Subsequent
Transfer Date, as listed on the revised Mortgage Loan Schedule delivered
pursuant to Section 2.01(b); PROVIDED, HOWEVER, that such amount shall not
exceed the amount on deposit in the Pre-Funding Account.
Agreement: This Pooling and Servicing Agreement and all amendments or
supplements hereto.
Ancillary Income: All income derived from the Mortgage Loans, other
than Servicing Fees and Prepayment Penalties, including but not limited to, late
charges, fees received with respect to checks or bank drafts returned by the
related bank for non-sufficient funds, assumption fees, optional insurance
administrative fees and all other incidental fees and charges.
Applied Loss Amount: As to any Distribution Date, an amount equal to
the excess, if any of (i) the aggregate Class Principal Balance of the
Certificates after giving effect to all Realized Losses incurred with respect to
the Mortgage Loans during the Due Period for such Distribution Date and payments
of principal on such Distribution Date over (ii) the Aggregate Loan Balance for
such Distribution Date.
Appraised Value: The amount set forth in an appraisal made in
connection with the origination of the related Mortgage Loan as the value of the
Mortgaged Property.
6
Assignment Agreement: An assignment agreement between DLJ Mortgage
Capital, Inc. as Seller and the Depositor, whereby the Mortgage Loans are
transferred and limited representations and warranties relating to the Mortgage
Loans are made.
Assignment of Mortgage: 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
the transfer of the Mortgage to the Trustee for the benefit of the
Certificateholders.
Available Funds: With respect to any Distribution Date the sum of (i)
all Scheduled Payments (net of the related Expense Fees) due on the Due Date in
the month in which such Distribution Date occurs and received prior to the
related Determination Date, together with any Advances in respect thereof; (ii)
all Insurance Proceeds, Liquidation Proceeds and Net Recoveries received during
the month preceding the month of such Distribution Date; (iii) all Curtailments
and Payoffs received during the Prepayment Period applicable to such
Distribution Date (excluding Prepayment Penalties); (iv) amounts received with
respect to such Distribution Date as the Substitution Adjustment Amount or
Repurchase Price; (v) Compensating Interest Payments for such Distribution
Date;(vi) with respect to the Distribution Date in August 2003, the amount
remaining in the Pre-Funding Account at the end of the Pre-Funding Period; and
(vii) amounts withdrawn from the Interest Rate Cap Account and added to the
Principal Remittance Amount for such Distribution Date; as to clauses (i)
through (iv) above, reduced by amounts in reimbursement for Advances previously
made and other amounts as to which the Servicer is entitled to be reimbursed
pursuant to Section 3.08.
Bankruptcy Code: The United States Bankruptcy Reform Act of 1978, as
amended.
Book-Entry Certificates: As specified in the Preliminary Statement.
Business Day: Any day other than (i) a Saturday or a Sunday, or (ii) a
day on which banking institutions in the City of New York, New York, or the city
in which the Corporate Trust Office of the Trustee, or savings and loan
institutions in the States of Illinois, California, Texas, New Jersey or Florida
is located are authorized or obligated by law or executive order to be closed.
Capitalized Interest Account: The separate Eligible Account designated
as such and created and maintained by the Trustee pursuant to Section 3.05(g)
hereof. The Capitalized Interest Account shall be treated as an "outside reserve
fund" under applicable Treasury regulations and shall not be part of any REMIC.
Except as provided in Section 3.05(g) hereof, any investment earnings on the
Capitalized Interest Account shall be treated as owned by the Depositor and will
be taxable to the Depositor.
Capitalized Interest Deposit: $102,237.
Capitalized Interest Requirement: With respect to the June 2003
Distribution Date, an amount equal to interest accruing during the related
Interest Accrual Period for the LIBOR Certificates at a per annum rate equal to
(x) the weighted average Pass-Through Rate of the Offered Certificates
multiplied by (y) the Pre-Funded Amount outstanding at the end of the related
Due
7
Period. With respect to the July 2003 Distribution Date, an amount equal to
interest accruing during the related Interest Accrual Period for the LIBOR
Certificates at a per annum rate equal to (x) the weighted average Pass-Through
Rate of the Offered Certificates for such Distribution Date multiplied by (y)
the sum of (c) the Pre-Funded Amount at the end of the related Due Period and
(d) the aggregate Stated Principal Balance of the Subsequent Mortgage Loans that
do not have a first Due Date prior to July 1, 2003, transferred to the Trust
during the related Due Period. With respect to the August 2003 Distribution
Date, an amount equal to interest accruing during the related Interest Accrual
Period for the LIBOR Certificates at a per annum rate equal to (x) the weighted
average Pass-Through Rate of the Offered Certificates for such Distribution Date
multiplied by (y) the sum of (c) the Pre-Funded Amount at the end of the related
Due Period and (d) the aggregate Stated Principal Balance of the related
Subsequent Mortgage Loans that do not have a first Due Date prior to August 1,
2003, transferred to the Trust during the related Due Period.
Carryforward Interest: For any Class of Certificates and any
Distribution Date, the sum of (1) the amount, if any, by which (x) the sum of
(A) Current Interest for such Class for the immediately preceding Distribution
Date and (B) any unpaid Carryforward Interest from previous Distribution Dates
exceeds (y) the amount paid in respect of interest on such Class on such
immediately preceding Distribution Date, and (2) interest on such amount for the
related Interest Accrual Period at the applicable Pass-Through Rate.
Certificate: Any one of the Certificates executed by the Trustee in
substantially the forms attached hereto as exhibits.
Certificates: As specified in the Preliminary Statement.
Certificate Account: The separate Eligible Account created and
maintained with the Trustee, or any other bank or trust company acceptable to
the Rating Agencies which is incorporated under the laws of the United States or
any state thereof pursuant to Section 3.05, which account shall bear a
designation clearly indicating that the funds deposited therein are held in
trust for the benefit of the Trustee on behalf of the Certificateholders or any
other account serving a similar function acceptable to the Rating Agencies.
Funds in the Certificate Account may (i) be held uninvested without liability
for interest or compensation thereon or (ii) be invested at the direction of the
Trustee in Eligible Investments and reinvestment earnings thereon (net of
investment losses) shall be paid to the Trustee. Funds deposited in the
Certificate Account (exclusive of the Trustee Fee and other amounts permitted to
be withdrawn pursuant to Section 3.08) shall be held in trust for the
Certificateholders.
Certificate Balance: With respect to any Certificate at any date, the
maximum dollar amount of principal to which the Holder thereof is then entitled
hereunder, such amount being equal to the Denomination thereof minus the sum of
(i) all distributions of principal previously made with respect thereto and (ii)
all Realized Losses allocated thereto and, in the case of any Subordinate
Certificates, all other reductions in Certificate Balance previously allocated
thereto pursuant to Section 4.05.
Certificate Margin: As to each Class of LIBOR Certificates, the
applicable amount set forth below:
8
CLASS CERTIFICATE MARGIN
----- ------------------
(1) (2)
A-1 0.40% 0.80%
M-1 1.05% 1.55%
M-2 2.10% 2.60%
B 3.79% 4.29%
_________________
(1) On or prior to the Optional Termination Date.
(2) After the Optional Termination Date.
Certificate Owner: With respect to a Book-Entry Certificate, the
Person who is the beneficial owner of such Book-Entry Certificate.
Certificate Register: The register maintained pursuant to Section
5.02.
Certificateholder or Holder: The person in whose name a Certificate is
registered in the Certificate Register, except that, solely for the purpose of
giving any consent pursuant to this Agreement, any Certificate registered in the
name of the Depositor or any affiliate of the Depositor shall be deemed not to
be Outstanding and the Percentage Interest evidenced thereby shall not be taken
into account in determining whether the requisite amount of Percentage Interests
necessary to effect such consent has been obtained; provided, however, that if
any such Person (including the Depositor) owns 100% of the Percentage Interests
evidenced by a Class of Certificates, such Certificates shall be deemed to be
Outstanding for purposes of any provision hereof that requires the consent of
the Holders of Certificates of a particular Class as a condition to the taking
of any action hereunder. The Trustee is entitled to rely conclusively on a
certification of the Depositor or any affiliate of the Depositor in determining
which Certificates are registered in the name of an affiliate of the Depositor.
Charged Off Loan: With respect to any Distribution Date, a defaulted
Mortgage Loan that has not yet been liquidated, giving rise to a Realized Loss,
on the date on which such Mortgage Loan becomes 180 days delinquent, due to a
determination by the Servicer, pursuant to the procedures set forth in Section
3.11, that there will be (i) no Significant Net Recoveries with respect to such
Mortgage Loan or (ii) the potential Net Recoveries are anticipated to be an
amount, determined by the related Servicer in its good faith judgment and in
light of other mitigating circumstances, that is insufficient to warrant
proceeding through foreclosure or other liquidation of the related Mortgaged
Property.
Class: All Certificates bearing the same class designation as set
forth in the Preliminary Statement.
Class A-1 Pass-Through Rate: With respect to any Interest Accrual
Period, will be a per annum rate equal to the lesser of (i) the sum of LIBOR
plus the related Certificate Margin and (ii) the Net Funds Cap.
9
Class A-2 Pass-Through Rate: With respect to any Interest Accrual
Period (a) on or prior to the Optional Termination Date, the lesser of (i) 3.75%
per annum and (ii) the Net Funds Cap, and (b) after the Optional Termination
Date, the lesser of (i) 4.25% per annum and (ii) the Net Funds Cap.
Class A-R Pass-Through Rate: With respect to any Distribution Date, a
per annum rate equal to the Net Funds Cap.
Class B Pass-Through Rate: With respect to any Interest Accrual
Period, will be a per annum rate equal to the lesser of (i) the sum of LIBOR
plus the related Certificate Margin and (ii) the Net Funds Cap.
Class B Principal Payment Amount: With respect to the Class B
Certificates and for any Distribution Date on or after the Stepdown Date and as
long as a Trigger Event is not in effect with respect to such Distribution Date,
will be the amount, if any, by which (x) the sum of (i) the aggregate Class
Principal Balance of the Class A-1, Class A-2, Class P, Class A-R, Class M-1 and
Class M-2 Certificates, in each case, after giving effect to payments on such
Distribution Date and (ii) the Class Principal Balance of the Class B
Certificates immediately prior to such Distribution Date exceeds (y) the lesser
of (A) the product of (i) 89.50% and (ii) the Aggregate Collateral Balance for
such Distribution Date and (B) the amount, if any, by which (i) the Aggregate
Collateral Balance for such Distribution Date exceeds (ii) 0.50% of the
Aggregate Collateral Balance as of the Cut Date.
Class M-1 Pass-Through Rate: With respect to any Interest Accrual
Period, will be a per annum rate equal to the lesser of (i) the sum of LIBOR
plus the related Certificate Margin and (ii) the Net Funds Cap.
Class M-1 Principal Payment Amount: For any Distribution Date on or
after the Stepdown Date and as long as a Trigger Event is not in effect with
respect to such Distribution Date, will be the amount, if any, by which (x) the
sum of (i) the aggregate Class Principal Balance of the Class A-1, Class A-2,
Class P and Class A-R Certificates after giving effect to payments on such
Distribution Date and (ii) the Class Principal Balance of the Class M-1
Certificates immediately prior to such Distribution Date exceeds (y) the lesser
of (A) the product of (i) 67.50% and (ii) the Aggregate Collateral Balance for
such Distribution Date and (B) the amount, if any, by which (i) the Aggregate
Collateral Balance for such Distribution Date exceeds (ii) 0.50% of the
Aggregate Collateral Balance as of the Cut-off Date.
Class M-2 Pass-Through Rate: With respect to any Interest Accrual
Period, will be a per annum rate equal to the lesser of (i) the sum of LIBOR
plus the related Certificate Margin and (ii) the Net Funds Cap.
Class M-2 Principal Payment Amount: For any Distribution Date on or
after the Stepdown Date and as long as a Trigger Event has not occurred with
respect to such Distribution Date, will be the amount, if any, by which (x) the
sum of (i) the aggregate Class Principal Balance of the Class A-1, Class A-2,
Class P, Class A-R and Class M-1 Certificates, in each case, after giving effect
to payments on such Distribution Date and (ii) the Class Principal Balance of
the Class M-2
10
Certificates immediately prior to such Distribution Date exceeds (y) the lesser
of (A) the product of (i) 78.50% and (ii) the Aggregate Collateral Balance for
such Distribution Date and (B) the amount, if any, by which (i) the Aggregate
Collateral Balance for such Distribution Date exceeds (ii) 0.50% of the
Aggregate Collateral Balance as of the Cut-off Date.
Class X-1 Distributable Amount: With respect to any Distribution Date,
the amount of interest accrued during the related Interest Accrual Period at the
related Pass-Through Rate on the Class X-1 Notional Amount for such Distribution
Date.
Class X-1 Notional Amount: Immediately prior to any Distribution Date,
with respect to the Class X-1 Certificates, an amount equal to the aggregate of
the Uncertificated Principal Balances of the REMIC 2 Regular Interests (other
than REMIC 2 Regular Interests MT-P and MT- R).
Class P Pass-Through Rate: With respect to any Distribution Date and
the Class P Certificates, a per annum rate equal to the Net Funds Cap. For
federal income tax purposes, however, with respect to any Distribution Date, the
Class P Certificates will be entitled to 100% of the interest accrued on REMIC 2
Regular Interest MT-P.
Class Principal Balance: With respect to any Class and as to any date
of determination, the aggregate of the Certificate Balances of all Certificates
of such Class as of such date.
Closing Date: May 29, 2003.
Code: The Internal Revenue Code of 1986, as the same may be amended
from time to time (or any successor statute thereto).
Collection Accounts: The accounts established and maintained by the
Servicer in accordance with Section 3.05.
Collection Period: With respect to any Distribution Date, the period
from the second day of the month immediately preceding such Distribution Date to
and including the first day of the month of such Distribution Date.
Combined Loan-to-Value Ratio: With respect to any Mortgage Loan and as
to any date of determination, the fraction (expressed as a percentage) the
numerator of which is the sum of (i) principal balance of the related Mortgage
Loan at such date of determination and (ii) the principal balance of the related
First Mortgage Loan as of the date of origination of that Mortgage Loan and the
denominator of which is the Appraised Value of the related Mortgaged Property.
Compensating Interest Payment: For any Distribution Date, an amount to
be paid by the Servicer for such Distribution Date, equal to the lesser of (i)
an amount equal to one half of the monthly Servicing Fee Rate on the Mortgage
Loans otherwise payable to the Servicer on such Distribution Date (prior to
giving effect to any Scheduled Payments due on the Mortgage Loans on
11
such Due Date) and (ii) the aggregate Prepayment Interest Shortfall for the
Mortgage Loans relating to Principal Prepayments received during the related
Prepayment Period.
Confirmation: The Confirmation dated May 29,2003, evidencing a
transaction between the Interest Rate Cap Agreement Counterparty and the
Trustee.
Corporate Trust Office: The designated office of the Trustee in the
State of New York 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 Agreement is located at 0 Xxx Xxxx Xxxxx, 0xx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000-0000, Attention: Institutional Trust
Services/Structured Finance: Home Equity Mortgage Trust-2003-3.
Corresponding Certificate: With respect to (i) REMIC 2 Regular
Interest MT-P, (ii) REMIC 2 Regular Interest MT-R, (iii) REMIC 2 Regular
Xxxxxxxx XX-X0, (iv) REMIC 2 Regular Xxxxxxxx XX-X0, (v) REMIC 2 Regular
Interest MT-M1, (vi) REMIC 2 Regular Interest MT-M2 and (vii) REMIC 2 Regular
Interest MT-B, the (i) Class P Certificates, (ii) Class A-R Certificates, (iii)
Class A-1 Certificates, (iv) Class A-2 Certificates, (v) Class M-1 Certificates,
(vi) Class M-2 Certificates and (vii) Class B Certificates, respectively.
Corresponding Uncertificated Interest: With respect to (i) REMIC 1
Regular Interest LTI-P and (ii) REMIC 1 Regular Interest LTI-R, (i) REMIC 2
Regular Interest MT-P and (ii) REMIC 2 Regular Interest MT-R, respectively.
Credit Risk Manager: The Murrayhill Company, a Colorado corporation.
Credit Risk Management Agreement: The agreement between Wilshire and
the Credit Risk Manager dated as of May 29, 2003.
Credit Risk Manager Fee: As to each Mortgage Loan and any Distribution
Date, an amount equal to one month's interest at the Credit Risk Manager Fee
Rate on the Stated Principal Balance of such Mortgage Loan as of the Due Date in
the month of such Distribution Date (prior to giving effect to any Scheduled
Payments due on such Mortgage Loan on such Due Date).
Credit Risk Manager Fee Rate: 0.0175% per annum.
CSFB: Credit Suisse First Boston LLC, a Delaware limited liability
company, and its successors and assigns.
Cumulative Loss Event: For any Distribution Date, a Cumulative Loss
Event is occurring if Cumulative Net Realized Losses on the Mortgage Loans equal
or exceed the percentage of the Aggregate Collateral Balance as of the Cut-off
Date for that Distribution Date as specified below:
PERCENTAGE OF AGGREGATE
DISTRIBUTION DATE COLLATERAL-BALANCE
----------------- ------------------
June 2003 - May 2006................. N.A.
12
June 2006 - May 2007................. 6.75%
June 2007 - May 2008................. 7.50%
June 2008 - May 2009................. 8.25%
June 2009 - May 2010................. 8.50%
June 2010 and thereafter............. 9.00%
Cumulative Net Realized Losses: As to any date of determination the
aggregate amount of Realized Losses as reduced by any Net Recoveries received on
Charged Off Loans.
Current Interest: For any Class of Certificates and Distribution Date,
the amount of interest accruing at the applicable Pass-Through Rate on the
related Class Principal Balance, or Notional Amount, as applicable, of such
Class during the related Interest Accrual Period; provided, that if and to the
extent that on any Distribution Date the Interest Remittance Amount is less than
the aggregate distributions required pursuant to Section 4.02(b)(i)A-D without
regard to this proviso, then the Current Interest on each such Class will be
reduced, on a pro rata basis in proportion to the amount of Current Interest for
each Class without regard to this proviso, by the lesser of (i) the amount of
the deficiency described above in this proviso and (ii) the related Interest
Shortfall for such Distribution Date.
Curtailment: Any payment of principal on a Mortgage Loan, made by or
on behalf of the related Mortgagor, other than a Scheduled Payment, a prepaid
Scheduled Payment or a Payoff, which is applied to reduce the outstanding Stated
Principal Balance of the Mortgage Loan.
Custodial Agreement: The agreement, among the Trustee, the Custodian
and the Depositor providing for the safekeeping of any documents or instruments
referred to in Section 2.01 on behalf of the Certificateholders, attached hereto
as Exhibit R.
Custodian: LaSalle Bank National Association, a national banking
association, or any successor custodian appointed pursuant to the terms of the
Custodial Agreement. Each Custodian so appointed shall act as agent on behalf of
the Trustee, and shall be compensated by the Depositor. The Trustee shall remain
at all times responsible under the terms of this Agreement, notwithstanding the
fact that certain duties have been assigned to a Custodian.
Cut-off Date: For any Mortgage Loan, other than a Subsequent Mortgage
Loan, May 1, 2003. For any Subsequent Mortgage Loan, the applicable Subsequent
Transfer Date.
Cut-off Date Principal Balance: As to any Mortgage Loan, the Stated
Principal Balance thereof as of the close of business on the Cut-off Date.
Defective Mortgage Loan: Any Mortgage Loan which is required to be
repurchased pursuant to Section 2.02 or 2.03.
Deferred Amount: For any Class of Class M or Class B Certificates and
any Distribution Date, will equal the amount by which (x) the aggregate of the
Applied Loss Amounts
13
previously applied in reduction of the Class Principal Balance thereof exceeds
(y) the aggregate of amounts previously paid in reimbursement thereof.
Definitive Certificates: Any Certificate issued in lieu of a
Book-Entry Certificate pursuant to Section 5.02(e).
Deleted Mortgage Loan: As defined in Section 2.03.
Delinquency Rate: For any month, a fraction, expressed as a
percentage, the numerator of which is the aggregate outstanding principal
balance of all Mortgage Loans 60 or more days delinquent (including all
foreclosures and REO Properties) as of the close of business on the last day of
such month, and the denominator of which is the Aggregate Collateral Balance as
of the close of business on the last day of such month.
Denomination: With respect to each Certificate, the amount set forth
on the face thereof as the "Initial Certificate Balance of this Certificate" or
the "Initial Notional Amount of this Certificate" or, if neither of the
foregoing, the Percentage Interest appearing on the face thereof.
Depositor: Credit Suisse First Boston Mortgage Securities Corp., a
Delaware corporation, or its successor in interest.
Depository: The initial Depository shall be The Depository Trust
Company, the nominee of which is CEDE & Co., as the registered Holder of the
Book-Entry Certificates. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(3) of the Uniform Commercial Code of
the State of New York.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: As to any Distribution Date and any Mortgage Loan,
the second Business Day immediately following the 15th day of the month of such
Distribution Date.
Distribution Date: The 25th day of each month or if such day is not a
Business Day, the first Business Day thereafter, commencing in June 2003.
DLJMC: DLJ Mortgage Capital, Inc., a Delaware corporation, and its
successors and assigns.
Due Date: With respect to any Distribution Date, the first day of the
month in which the related Distribution Date occurs.
Due Period: With respect to each Distribution Date, the period
commencing on the second day of the month preceding the month of the
Distribution Date and ending on the first day of the month of the Distribution
Date.
14
Eligible Account: Either (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company acceptable to
the Rating Agencies or (ii) an account or accounts the deposits in which are
insured by the FDIC to the limits established by such corporation, provided that
any such deposits not so insured shall be maintained in an account at a
depository institution or trust company whose commercial paper or other short
term debt obligations (or, in the case of a depository institution or trust
company which is the principal subsidiary of a holding company, the commercial
paper or other short term debt obligations of such holding company) have been
rated by Xxxxx'x in its highest short-term rating category and by S&P at least
"A-1+", or (iii) a segregated trust account or accounts (which shall be a
"special deposit a maintained with the Trustee or any other federal or state
chartered depository institution or trust company, acting in its fiduciary
capacity, in a manner acceptable to the Trustee and the Rating Agencies.
Eligible Accounts may bear interest.
Eligible Investments: Any one or more of the obligations and
securities listed below which investment provides for a date of maturity not
later than the Determination Date in each month:
(i) direct obligations of, and obligations fully guaranteed by, the
United States of America, or any agency or instrumentality of the United
States of America the obligations of which are backed by the full faith and
credit of the United States of America; or obligations fully guaranteed by,
the United States of America; Xxxxxxx Mac, Xxxxxx Xxx, the Federal Home
Loan Banks or any agency or instrumentality of the United States of America
rated AA or higher by the Rating Agencies;
(ii) federal funds, demand and time deposits in, certificates of
deposits of, or bankers' acceptances issued by, any depository institution
or trust company incorporated or organized under the laws of the United
States of America or any state thereof and subject to supervision and
examination by federal and/or state banking authorities, so long as at the
time of such investment or contractual commitment providing for such
investment the commercial paper or other short-term debt obligations of
such depository institution or trust company (or, in the case of a
depository institution or trust company which is the principal subsidiary
of a holding company, the commercial paper or other short-term debt
obligations of such holding company) are rated in one of two of the highest
ratings by each of the Rating Agencies, and the long-term debt obligations
of such depository institution or trust company (or, in the case of a
depository institution or trust company which is the principal subsidiary
of a holding company, the long-term debt obligations of such holding
company) are rated in one of two of the highest ratings, by each of the
Rating Agencies;
(iii) repurchase obligations with a term not to exceed 30 days
with respect to any security described in clause (i) above and entered
into with a depository institution or trust company (acting as a
principal) rated "A" or higher by Xxxxx'x and "A-1" or higher by S&P;
provided, however, that collateral transferred pursuant to such
repurchase obligation must be of the type described in clause (i) above
and must (A) be valued daily at current market price plus accrued
interest, (B) pursuant to such valuation, be equal, at all times, to
105% of the cash transferred by the Trustee in exchange for such
collateral, and (C) be delivered to the Trustee or, if the Trustee is
supplying the collateral, an agent for the Trustee,
15
in such a manner as to accomplish perfection of a security interest in the
collateral by possession of certificated securities;
(iv) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States of America or
any state thereof which has a long-term unsecured debt rating in the
highest available rating category of each of the Rating Agencies at the
time of such investment;
(v) commercial paper having an original maturity of less than 365 days
and issued by an institution having a short-term unsecured debt rating in
the highest available rating category of Xxxxx'x and rated "A-1+" by S&P at
the time of such investment;
(vi) a guaranteed investment contract approved by each of the Rating
Agencies and issued by an insurance company or other corporation having a
long-term unsecured debt rating in the highest available rating category of
each of the Rating Agencies at the time of such investment;
(vii) which may be 12b-1 funds as contemplated under the rules
promulgated by the Securities and Exchange Commission under the Investment
Company Act of 1940) having ratings in the highest available rating
category of Xxxxx'x and or "AAAm" or "AAAm-G" by S&P at the time of such
investment (any such money market funds which provide for demand
withdrawals being conclusively deemed to satisfy any maturity requirements
for Eligible Investments set forth herein) including money market funds of
the Servicer or the Trustee and any such funds that are managed by the
Servicer or the Trustee or their respective Affiliates or for the Servicer
or the Trustee or any Affiliate of either acts as advisor, as long as such
money market funds satisfy the criteria of this subparagraph (vii); and
(viii) such other investments the investment in which will not, as
evidenced by a letter from each of the Rating Agencies, result in the
downgrading or withdrawal of the Ratings of the Certificates.
provided, however, that no such instrument shall be an Eligible Investment if
such instrument evidences either (i) a right to receive only interest payments
with respect to the obligations underlying such instrument, or (ii) 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 of greater than 120% of the yield to
maturity at par of such underlying obligations.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
ERISA-Restricted Certificates: As specified in the Preliminary
Statement.
Escrow Account: The separate account or accounts created and
maintained by the Servicer pursuant to Section 3.06.
16
Escrow Payments: With respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, mortgage insurance premiums, fire and hazard
insurance premiums, and any other payments required to be escrowed by the
Mortgagor with the mortgagee pursuant to the Mortgage, applicable law or any
other related document.
Event of Default: As defined in Section 7.01.
Expense Fees: As to each Mortgage Loan, the sum of the related
Servicing Fee, the Credit Risk Manager Fee and the Trustee Fee.
Expense Fee Rate: As to each Mortgage Loan, the sum of the related
Servicing Fee Rate, the Credit Risk Manager Fee Rate and the Trustee Fee Rate.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
FIRREA: The Financial Institutions Reform, Recovery and Enforcement
Act of 1989.
First Mortgage Loan: A Mortgage Loan that is secured by a first lien
on the Mortgaged Property securing the related Mortgage Note.
Fitch: Fitch, Inc., or any successor thereto, located at Xxx Xxxxx
Xxxxxx Xxxxx 00xx Xxxxx, Xxx Xxxx, XX 00000.
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.
Xxxxxx Mae Guides: The Xxxxxx Xxx Xxxxxxx' Guide and the Xxxxxx Mae S
Guide and all amendments or additions thereto.
Foreclosure Restricted Loan: Any Mortgage Loan that is 60 or more days
delinquent as of the Closing Date, unless such Mortgage Loan has become current
for three consecutive Scheduled Payments after the Closing Date.
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.
Indirect Participant: A broker, dealer, bank or other financial
institution or other Person that clears through or maintains a custodial
relationship with a Depository Participant.
Initial Mortgage Loan: A Mortgage Loan conveyed to the Trust on the
Closing Date pursuant to this Agreement as identified on the Mortgage Loan
Schedule delivered to the Trustee on the Closing Date.
17
Initial Mortgage Loan Net WAC Rate: A per annum rate equal to the
weighted average of the Net Mortgage Rates of the Initial Mortgage Loans.
Insurance Proceeds: Proceeds paid under any Insurance Policy covering
a Mortgage Loan to the extent the proceeds are not applied to the restoration of
the related Mortgaged Property or released to the Mortgagor in accordance with
the procedures that the Servicer would follow in servicing mortgage loans held
for its own account.
Interest Accrual Period: With respect to each Distribution Date, (i)
with respect to the Class A-2, Class P, Class A-R and Class X-1 Certificates,
the calendar month prior to the month of such Distribution Date, (ii) with
respect to the Class A-1, Class M-1, Class M-2 and Class B Certificates, the
one-month period commencing on the immediately preceding Distribution Date (or
the Closing Date, in the case of the first Distribution Date) and ending on the
day immediately preceding the related Distribution Date.
Interest Rate Cap Account: The separate Eligible Account created and
initially maintained by the Trustee pursuant to Section 4.11 in the name of the
Trustee for the benefit of the Certificateholders and designated "JPMorgan Chase
Bank in trust for registered holders of Credit Suisse First Boston Mortgage
Securities Corp., Home Equity Mortgage Pass-Through Certificates, Series
2003-3." Funds in the Interest Rate Cap Account shall be held in trust for the
Certificateholders for the uses and purposes set forth in this Agreement. The
Interest Rate Cap Account will not be an asset of any REMIC. Ownership of the
Interest Rate Cap Account is evidenced by the Class X-1 Certificates.
Interest Rate Cap Agreement: Collectively, the ISDA Master Agreement
(including the Schedule thereto and the transaction evidenced by the
Confirmation by and between the Trustee and the Interest Rate Cap Agreement
Counterparty), forms of which are attached hereto as Exhibit AA.
Interest Rate Cap Agreement Counterparty: Swiss Re Financial Products
Corporation.
Interest Rate Cap Agreement Termination Date: The Distribution Date in
May 2005, after any required payment is made.
Interest Remittance Amount: For any Distribution Date, an amount equal
to the sum of (1) all interest collected (other than Payaheads and Simple
Interest Excess, if applicable) or advanced in respect of Scheduled Payments on
the Mortgage Loans during the related Due Period, the interest portion of
Payaheads previously received and intended for application in the related Due
Period and the interest portion of all Payoffs and Curtailments received on the
Mortgage Loans during the related Prepayment Period, less (x) the Expense Fee
with respect to such Mortgage Loans and (y) unreimbursed Advances and other
amounts due to the Servicer or the Trustee with respect to such Mortgage Loans,
to the extent allocable to interest, (2) all Compensating Interest Payments paid
by the Servicer with respect to the Mortgage Loans it is servicing and such
Distribution Date, (3) the portion of any Substitution Adjustment Amount or
Repurchase Price paid with respect to such Mortgage Loans during the calendar
month immediately preceding the Distribution Date allocable to interest, (4) all
Liquidation Proceeds, Net Recoveries and any Insurance Proceeds and
18
other recoveries (net of unreimbursed Advances, Servicing Advances and expenses,
to the extent allocable to interest, and unpaid Servicing Fees) collected with
respect to the Mortgage Loans during the prior calendar month, to the extent
allocable to interest and (5) any amounts withdrawn from the Simple Interest
Excess Sub-Account and the Capitalized Interest Account to pay interest on the
Certificates with respect to such Distribution Date. If on any Determination
Date the amount deposited into the Collection Account with respect to
Compensating Interest is the amount calculated in clause (ii) of the definition
of Compensating Interest Payment for such Distribution Date, any remaining
Servicing Fee shall be available to cover any Net Simple Interest Shortfalls on
the Mortgage Loans remaining on such Distribution Date, after giving effect to
the withdrawal from the Simple Interest Excess Sub-Account pursuant to Section
3.06(f) on such Distribution Date.
Interest Shortfall: For any Distribution Date, the aggregate
shortfall, if any, in collections of interest for the previous month (adjusted
to the related Net Mortgage Rate) on Mortgage Loans resulting from (a) Principal
Prepayments received during the related Prepayment Period to the extent not
covered by Compensating Interest and (b) Relief Act Reductions.
ISDA: International Swaps and Derivatives Association, Inc.
ISDA Master Agreement: The Master Agreement dated as of the Closing
Date between the Trustee and the Interest Rate Cap Agreement Counterparty,
including the Schedule thereto.
Last Scheduled Distribution Date: With respect to each Class of
Certificates, the Distribution Date in September 2033.
Latest Possible Maturity Date: Solely for purposes of satisfying
Treasury regulation Section 1.860G-1(a)(4)(iii), the "latest possible maturity
date" of all interests created in REMIC 1, REMIC 2 and REMIC 3 shall be
September 25, 2033.
LIBOR: For any Interest Accrual Period other than the first Interest
Accrual Period, the rate for United States dollar deposits for one month which
appears on the Dow Xxxxx Telerate Screen Page 3750 as of 11:00 A.M., London,
England time, on the second LIBOR Business Day prior to the first day of such
Interest Accrual Period. With respect to the first Interest Accrual Period, the
rate for United States dollar deposits for one month which appears on the Dow
Xxxxx Telerate Screen Page 3750 as of 11:00 A.M., London, England time, two
LIBOR Business Days prior to the Closing Date. If such rate does not appear on
such page (or such other page as may replace that page on that service, or if
such service is no longer offered, such other service for displaying LIBOR or
comparable rates as may be reasonably selected by the Trustee), the rate will be
the Reference Bank Rate. If no such quotations can be obtained and no Reference
Bank Rate is available, LIBOR will be the LIBOR applicable to the Interest
Accrual Period preceding the next applicable Distribution Date.
LIBOR Business Day: Any day other than (i) a Saturday or a Sunday or
(ii) a day on which banking institutions in the State of New York or in the city
of London, England are required or authorized by law to be closed.
19
Liquidated Mortgage Loan: With respect to any Distribution Date, a
defaulted Mortgage Loan (including any REO Property) which was liquidated or for
which payments under the related private mortgage insurance policy, hazard
insurance policy or any condemnation proceeds were received, in the calendar
month preceding the month of such Distribution Date and as to which the Servicer
has determined (in accordance with this Agreement) that it has received all
amounts it expects to receive in connection with the liquidation of such
Mortgage Loan, including the final disposition of the related REO Property.
Liquidation Proceeds: Amounts, including Insurance Proceeds, received
in connection with the partial or complete liquidation of defaulted Mortgage
Loans, whether through trustee's sale, foreclosure sale or similar disposition
or amounts received in connection with any condemnation or partial release of a
Mortgaged Property and any other proceeds received in connection with an REO
Property, less the sum of related unreimbursed Expense Fees, Servicing Advances,
Advances and reasonable out-of-pocket expenses.
Majority in Interest: As to any Class of Regular Certificates or the
Class X-2 Certificates, the Holders of Certificates of such Class evidencing, in
the aggregate, at least 51% of the Percentage Interests evidenced by all
Certificates of such Class.
Marker Rate: Marker Rate: With respect to the Class X-1 Certificates
and any Distribution Date, a per annum rate equal to two (2) times the weighted
average of the Uncertificated REMIC 2 Pass-Through Rates for REMIC 2 Regular
Interests MT-A1, MT-A2, MT-M1, MT- MT-B, and MT-ZZ, with the rate on REMIC 2
Regular Interest MT-A2 subject to a cap equal to the lesser of (A) with respect
to any Interest Accrual Period, (a) on or prior to the Optional Termination
Date, 3.75% per annum and (b) after the Optional Termination Date, 4.25% per
annum, and (B) the REMIC 2 Net WAC Rate for the purpose of this calculation, for
the purpose of this calculation, and with the rates on REMIC 2 Regular Xxxxxxxxx
XX-X0, MT-M1, MT-M2 and MT-B subject to a cap equal to the lesser of (A) LIBOR
plus the Certificate Margin for the Corresponding Certificate and (B) the REMIC
2 Net WAC Rate for the purpose of this calculation, and with the rate on REMIC 2
Regular Interest MT-ZZ subject to a cap of zero for the purpose of this
calculation.
Maximum Interest Rate: An annual rate equal to the weighted average of
the Net Mortgage Rates of the Mortgage Loans multiplied by 30 divided by the
actual number of days in the immediately preceding Interest Accrual Period.
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.
20
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 Excess Cashflow: For any Distribution Date, an amount equal to
the sum of the Monthly Excess Interest and Overcollateralization Release Amount,
if any, for such date.
Monthly Excess Interest: As to any Distribution Date, the sum of (A)
the Interest Remittance Amount remaining after the application of payments
pursuant to clauses A. through D. of Section 4.02(b)(i) plus (B) the Principal
Payment Amount remaining after the application of payments pursuant to clauses
A. through E. of Section 4.02(b)(ii) or (iii).
Monthly Statement: The statement delivered to the Certificateholders
pursuant to Section 4.06.
Moody's: Xxxxx'x Investors Service, Inc., or any successor thereto.
For purposes of Section 10.05(b) the address for notices to Moody's shall be
Xxxxx'x Investors Service, Inc., 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Residential Pass-Through Monitoring, or such other address as Moody's
may hereafter furnish to the Depositor, the Servicer and the Trustee.
Mortgage: The mortgage, deed of trust or other instrument creating a
first or second 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(b) hereof
pertaining to a particular Initial Mortgage Loan or Subsequent Mortgage Loan and
any additional documents delivered to the Trustee 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 the provisions hereof as from time to time are held as a
part of the Trust Fund (including any REO Property), the mortgage loans so held
being identified in the Mortgage Loan Schedule, notwithstanding foreclosure or
other acquisition of title of the related Mortgaged Property.
Mortgage Loan Schedule: The Mortgage Loan Schedule which will list the
Mortgage Loans (as from time to time amended by the Seller to reflect the
addition of Qualified Substitute Mortgage Loans and the purchase of Mortgage
Loans pursuant to Section 2.02 or 2.03) transferred to the Trustee as part of
the Trust Fund and from time to time subject to this Agreement, attached hereto
as Schedule I, setting forth the following information with respect to each
Mortgage Loan:
(i) the Mortgage Loan identifying number;
(ii) the Mortgagor's name;
(iii) the street address of the Mortgaged Property including the state
and zip code;
(iv) a code indicating the type of Mortgaged Property and the
occupancy status.
21
(v) the original months to maturity or the remaining months to
maturity from the Cut-off Date, in any case based on the original
amortization schedule and, if different, the maturity expressed in the same
manner but based on the actual amortization schedule;
(vi) the Combined Loan-to-Value Ratio at origination;
(vii) the Mortgage Rate as of the Cut-off Date;
(viii) the stated maturity date;
(ix) the amount of the Scheduled Payment as of the Cut-off Date;
(x) the original principal amount of the Mortgage Loan;
(xi) the principal balance of the Mortgage Loan as of the close of
business on the Cut-off Date, after deduction of payments of principal due
on or before the Cut-off Date whether or not collected;
(xii) a code indicating the purpose of the Mortgage Loan (i.e.,
purchase, rate and term refinance, equity take-out refinance);
(xiii) the Net Mortgage Rate as of the Cut-off Date;
(xiv) the Originator of the related Mortgage Loan;
(xv) the Servicing Fee Rate;
(xvi) the related sub-servicer;
(xvii) a code indicating whether a Mortgage Loan is subject to a
Prepayment Penalty;
(xviii) the amount of the Prepayment Penalty with respect to each
Mortgage Loan and a code identifying whether such Prepayment Penalty is
related to a Curtailment or Payoff;
(xix) whether such Mortgage Loan is a Balloon Loan; and
(xx) whether such Mortgage Loan is a Simple Interest Mortgage Loan.
With respect to the Mortgage Loans in the aggregate, each, the
Mortgage Loan Schedule shall set forth the following information, as of the
Cut-off Date:
(i) the number of Mortgage Loans; and
22
(ii) the current aggregate principal balance of the Mortgage Loans as
of the close of business on the Cut-off Date, after deduction of payments
of principal due on or before the Cut-off Date whether or not collected.
Mortgage Note: The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan.
Mortgage Rate: The annual fixed rate of interest borne by a Mortgage
Note.
Mortgaged Property: The underlying real property securing a Mortgage
Loan.
Mortgagor: The obligor(s) on a Mortgage Note.
Net Excess Spread: With respect to any Distribution Date and Loan, a
fraction, expressed as a percentage, the numerator of which is equal to the
excess of (x) the aggregate Stated Principal Balance for such Distribution Date
of the Mortgage Loans, multiplied by the weighted average Net Mortgage Rate of
such Mortgage Loans over (y) the Interest Remittance Amount for such
Distribution Date, and the denominator of which is an amount equal to the
aggregate Stated Principal Balance for such Distribution Date of the Mortgage
Loans, multiplied by the actual number of days elapsed in the related Interest
Accrual Period divided by 360.
Net Funds Cap: As to any Distribution Date, will be a per annum rate
equal to (a) a fraction, expressed as a percentage, (a) the numerator of which
is (1) the amount of interest accrued on the Mortgage Loans for such date, minus
(2) the Expense Fee, and (b) the denominator of which is the product of (i) the
Aggregate Collateral Balance immediately preceding such Distribution Date (or as
of the Cut-off Date in the case of the first Distribution Date), multiplied by
(ii)(x) in the case of the Class A-2, Class A-R and Class P Certificates, 1/12
and (y) in the case of the Class A-1, Class M-1, Class M-2 and Class B
Certificates, the actual number of days in the related Interest Accrual Period
divided by 360. For federal income tax purposes, however, as to any Distribution
Date will be the equivalent of the foregoing, expressed as a per annum rate
equal to the weighted average of the Uncertificated Pass-Through Rates on the
REMIC 2 Regular Interests multiplied by (x) in the case of the Class A-2, Class
A-R and Class P Certificates, 1/12 and (y) in the case of the Class A- Class
M-1, Class M-2 and Class B Certificates, the actual number of days in the
related Interest Accrual Period divided by 360.
Net Mortgage Rate: As to each Mortgage Loan, and at any time, the per
annum rate equal to the Mortgage Rate less the related Expense Fee Rate.
Net Prepayment Interest Shortfalls: As to any Distribution Date, the
amount, if any, by which the aggregate of Prepayment Interest Shortfalls during
the Prepayment Period exceeds the Compensating Interest Payment for such
Distribution Date.
Net Recovery: Any proceeds received by the Servicer on a delinquent or
Charged Off Loan (including any Liquidation Proceeds received on a Charged Off
Loan), net of any Servicing Fee and related expenses.
23
Net Simple Interest Excess: As of any Distribution Date, an amount
equal to the excess, if any, of the aggregate amount of Simple Interest Excess
with respect to the Mortgage Loans over the amount of Simple Interest Shortfall
with respect to the Mortgage Loans.
Net Simple Interest Shortfall: As of any Distribution Date, an amount
equal to the excess, if any, of the aggregate amount of Simple Interest
Shortfall with respect to the Mortgage Loans over the amount of Simple Interest
Excess with respect to the Mortgage Loans.
Nonrecoverable Advance: Any portion of an Advance or Servicing Advance
previously made or proposed to be made by the Servicer that, in the good faith
judgment of the Servicer, will not be ultimately recoverable by the Servicer
from the related Mortgagor, related Liquidation Proceeds or otherwise.
Notional Amount: The Class X-1 Notional Amount.
Notional Amount Certificates: As specified in the Preliminary
Statement.
Offered Certificates: As specified in the Preliminary Statement.
Officer's Certificate: A certificate signed by the Chairman of the
Board or the Vice Chairman of the Board or the President or a Vice President or
an Assistant Vice President or the Treasurer or the Secretary or one of the
Assistant Treasurers or Assistant Secretaries of the Servicer or the Depositor,
and delivered to the Depositor or the Trustee, as the case may be, as required
by this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be counsel
for the Depositor or the Servicer, including in-house counsel, reasonably
acceptable to the Trustee; provided, however, that with respect to the
interpretation or application of the REMIC Provisions, such counsel must (i) in
fact be independent of the Depositor and the Servicer, (ii) not have any
material direct financial interest in the Depositor or the Servicer or in any
affiliate of either, and (iii) not be connected with the Depositor or the
Servicer as an officer, employee, promoter, underwriter, trustee, partner,
director or person performing similar functions.
Optional Termination: The termination of the trust created hereunder
in connection with the purchase of the Mortgage Loans pursuant to Section 9.01.
Optional Termination Date: The first date on which the Optional
Termination may be exercised.
Optional Termination Holder: The Person who may terminate the trust
pursuant to Section 9.01, which shall be the Majority in Interest Class X-1
Certificateholder; provided however that if the Majority in Interest Class X-1
Certificateholder is the Seller or Credit Suisse First Boston LLC, or an
Affiliate of the Seller or Credit Suisse First Boston LLC, then the Optional
Termination Holder shall not terminate the trust pursuant to Section 9.01.
OTS: The Office of Thrift Supervision.
24
Outsourcer: As defined in Section 3.02.
Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and authenticated under
this Agreement except: (i) Certificates theretofore canceled by the Trustee or
delivered to the Trustee for cancellation; and (ii) Certificates in exchange for
which or in lieu of which other Certificates have been executed and delivered by
the Trustee pursuant to this Agreement.
Outstanding Mortgage Loan: As of any Due Date, a Mortgage Loan with a
Stated Principal Balance greater than zero which was not the subject of a Payoff
prior to such Due Date and which did not become a Liquidated Mortgage Loan or
Charged Off Loan prior to such Due Date.
Overcollateralization Amount: For any Distribution Date, an amount
equal to the amount, if any, by which (x) the Aggregate Loan Balance for such
Distribution Date exceeds (y) the aggregate Class Principal Balance of the
Certificates after giving effect to payments on such Distribution Date.
Overcollateralization Release Amount: For any Distribution Date, an
amount equal to the lesser of (x) the Principal Remittance Amount for such
Distribution Date and (y) the amount, if any, by which (1) the
Overcollateralization Amount for such date, calculated for this purpose on the
basis of the assumption that 100% of the aggregate of the Principal Remittance
Amount for such date is applied on such date in reduction of the aggregate of
the Class Principal Balances of the Certificates (to an amount not less than
zero), exceeds (2) the Targeted Overcollateralization Amount for such date.
Overfunded Interest Amount: With respect to any Subsequent Transfer
Date and the Subsequent Mortgage Loans, the excess of (A) the amount on deposit
in the Capitalized Interest Account on such date over (B) the excess of (i) the
amount of interest accruing at (x) the assumed weighted average Pass-Through
Rates of the Senior Certificates multiplied by (y) the Pre-Fun Amount
outstanding at the end of the related Due Period for the total number of days
remaining through the end of the Interest Accrual Periods ending (a) June 25,
2003, (b) July 25, 2003 and (c) August 25, 2003 over (ii) one month of
investment earnings on the amount on deposit in the Capitalized Interest Account
on such date at an annual rate of 0.75%. The assumed weighted average
Pass-Through Rate of the Senior Certificates will be calculated assuming LIBOR
is 1.32% for any Subsequent Transfer Date for the Subsequent Mortgage Loans
prior to the June 2003 Distribution Date, 1.57% for any Subsequent Transfer Date
for the Subsequent Mortgage Loans prior to the July 2003 Distribution Date and
1.82% for any Subsequent Transfer Date for the Subsequent Mortgage Loans prior
to the August 2003 Distribution Date.
Ownership Interest: As to any Residual 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.
Pass-Through Rate: With respect to the Class A-1, Class A-2, Class
A-R, Class P, Class M-1, Class M-2 and Class B Certificates, the Class A-1
Pass-Through Rate, Class A-2 Pass-
25
Through Rate, Class A-R Pass-Through Rate, Class P Pass-Through Rate, Class M-1
Pass-Th Rate, Class M-2 Pass-Through Rate and Class B Pass-Through Rate.
With respect to the Class X-1 Certificates 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 (A) through (G)
below, and the denominator of which is the aggregate of the Uncertificated
Principal Balances of REMIC 2 Regular Interest MT-AA, REMIC 2 Regular Interest
MT-A1, REMIC 2 Regular Interest MT-A2, REMIC 2 Regular Interest MT-M1, REMIC 2
Regular Interest MT-M2, REMIC 2 Regular Interest MT-B and REMIC 2 Regular
Interest MT-ZZ. For purposes of calculating the Pass-Through Rate for the Class
X-1 Certificates, the numerator is equal to the sum of the following components:
(A) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2 Regular
Interest MT-AA minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 2 Regular Interest MT-AA;
(B) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2 Regular
Interest MT-A1 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 2 Regular Interest MT-A1;
(C) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2 Regular
Interest MT-A2 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 2 Regular Interest MT-A2;
(D) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2 Regular
Interest MT-M1 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 2 Regular Interest MT-M1;
(E) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2 Regular
Interest MT-M2 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 2 Regular Interest MT-M2;
(F) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2 Regular
Interest MT-B minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 2 Regular Interest MT-B; and
(G) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2 Regular
Interest MT-ZZ minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 2 Regular Interest MT-ZZ.
Payahead: Any Scheduled Payment intended by the related Mortgagor to
be applied in a Due Period subsequent to the Due Period in which such payment
was received.
Payoff: Any payment of principal on a Mortgage Loan equal to the
entire outstanding Stated Principal Balance of such Mortgage Loan, if received
in advance of the last scheduled Due
26
Date for such Mortgage Loan and accompanied by an amount of interest equal to
accrued unpaid interest on the Mortgage Loan to the date of such
payment-in-full.
Percentage Interest: As to any Certificate, the percentage interest
evidenced thereby in distributions required to be made on the related Class,
such percentage interest being set forth on the face thereof or equal to the
percentage obtained by dividing the Denomination of such Certificate by the
aggregate of the Denominations of all Certificates of the same Class.
Permitted Transferee: Any person other than (i) the United States, any
State or political subdivision thereof, or any agency or instrumentality of any
of the foregoing, (ii) a foreign government, International Organization or any
agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in section 521 of the Code)
which is exempt from tax imposed by Chapter 1 of the Code (including the tax
imposed by section 511 of the Code on unrelated business taxable income) on any
excess inclusions (as defined in section 860E(c)(1) of the Code) with respect to
any Residual Certificate, (iv) rural electric and telephone cooperatives
described in section 1381(a)(2)(C) of the Code, (v) a Person that is not a
United States Person, and (vi) a Person designated as a non-Permitted Transferee
by the Depositor based upon an Opinion of Counsel that the Transfer of an
Ownership Interest in a Residual Certificate to such Person may cause any REMIC
created hereunder to fail to qualify as a REMIC at any time that the
Certificates are outstanding. The terms "United States," "State" and
"International Organization" shall have the meanings set forth in section 7701
of the Code or successor provisions. A corporation will not be treated as an
instrumentality of the United States or of any State or political subdivision
thereof for these purposes if all of its activities are subject to tax and, with
the exception of Xxxxxxx Mac, a majority of its board of directors is not
selected by such government unit.
Person: Any individual, corporation, partnership, joint venture,
association, limited liability company, joint-stock company, trust,
unincorporated organization or government, or any agency or political
subdivision thereof.
Physical Certificates: As specified in the Preliminary Statement.
Pre-Funding Account: The separate Eligible Account created and
maintained by the Trustee with respect to the Mortgage Loans pursuant to Section
3.05(f) in the name of the Trustee for the benefit of the Certificateholders and
designated "JPMorgan Chase Bank, in trust for registered holders of Home Equity
Mortgage Pass-Through Certificates, Series 2003-3." Funds in the Pre-Funding
Account shall be held in trust for the Certificateholders for the uses and
purposes set forth in this Agreement and shall not be a part of any REMIC
created hereunder; provided, however, that any investment income earned from
Eligible Investments made with funds in the Pre- Funding Account shall be for
the account of the Depositor.
Pre-Funding Amount: The amount deposited in the Pre-Funding Account on
the Closing Date, which shall equal $12,706,596.
27
Pre-Funding Period: the period from the Closing Date until the
earliest of (i) the date on which the amount on deposit in the Pre-Funding
Account is reduced to zero, (ii) the date on which an Event of Default occurs or
(iii) August 24, 2003.
Prepayment Interest Shortfall: As to any Mortgage Loan, Distribution
Date and Principal Prepayment, other than Principal Prepayments in full that
occur during the portion of the Prepayment Period that is in the same calendar
month as the Distribution Date, the difference between (i) one full month's
interest at the applicable Mortgage Rate (giving effect to any applicable Relief
Act Reduction), as reduced by the Expense Fee Rate, on the outstanding principal
balance of such Mortgage Loan immediately prior to such prepayment and (ii) the
amount of interest actually received that accrued during the month immediately
preceding such Distribution Date with respect to such Mortgage Loan in
connection with such Principal Prepayment.
Prepayment Penalty: With respect to any Mortgage Loan, any penalty
required to be paid if the Mortgagor prepays such Mortgage Loan as provided in
the related Mortgage Note or Mortgage.
Prepayment Period: With respect to each Distribution Date and each
Payoff, the related "Prepayment Period" will be the 15th of the month preceding
the month in which the related Distribution Date occurs through the 14th of the
month in which the related Distribution Date occurs. With respect to each
Distribution Date and each Curtailment, the related "Prepayment Period" will be
the calendar month preceding the month in which the related Distribution Date
occurs.
Principal Payment Amount: For any Distribution Date, an amount equal
to the Principal Remittance Amount plus any Excess Cashflow Loss Payment for
such date, minus the Overcollateralization Release Amount, if any, for such
date.
Principal Remittance Amount: For any Distribution Date, an amount
equal to the sum of (1) all principal collected (other than Payaheads) or
advanced in respect of Scheduled Payments on the Mortgage Loans during the
related Due Period (less unreimbursed Advances, Servicing Advances and other
amounts due to the Servicer and the Trustee with respect to the Mortgage Loans,
to the extent allocable to principal) and the principal portion of Payaheads
previously received and intended for application in the related Due Period, (2)
all Principal Prepayments on the Mortgage Loans received during the related
Prepayment Period, (3) the outstanding principal balance of each Mortgage Loan
that was repurchased by the Seller, the Optional Termination Holder or the
Majority in Interest Class X-2 Certificateholder during the calendar month
immediately preceding such Distribution Date, (4) the portion of any
Substitution Adjustment Amount paid with respect to any Deleted Mortgage Loans
during the calendar month immediately preceding such Distribution Date allocable
to principal, (5) all Liquidation Proceeds, Net Recoveries and any Insurance
Proceeds and other recoveries (net of unreimbursed Advances, Servicing Advances
and other expenses, to the extent allocable to principal) collected with respect
to the Mortgage Loans during the prior calendar month, to the extent allocable
to principal and (6) amounts withdrawn from the Interest Rate Cap Account to
cover Realized Losses on the Mortgage Loans incurred during the related
Collection Period and (7) with respect to the Distribution Date in August 2003,
the amount remaining in the Pre-Funding Account at the end of the Pre-Funding
Period.
28
Principal Prepayment: Any payment of principal on a Mortgage Loan
which constitutes a Payoff or Curtailment.
Prospectus Supplement: The Prospectus Supplement dated May 28, 2003
relating to the Offered Certificates.
PUD: Planned Unit Development.
Qualified Insurer: A mortgage guaranty insurance company duly
qualified as such under the laws of the state of its principal place of business
and each state having jurisdiction over such insurer in connection with the
insurance policy issued by such insurer, duly authorized and licensed in such
states to transact a mortgage guaranty insurance business in such states and to
write the insurance provided by the insurance policy issued by it, approved as a
Xxxxxx Xxx- or Xxxxxxx Mac-approved mortgage insurer or having a claims paying
ability rating of at least "AA" or equivalent rating by at least two nationally
recognized statistical rating organizations. Any replacement insurer with
respect to a Mortgage Loan must have at least as high a claims paying ability
rating as the insurer it replaces had on the Closing Date.
Qualified Substitute Mortgage Loan: A Mortgage Loan substituted by the
Seller for a Deleted Mortgage Loan which must, on the date of such substitution,
as confirmed in a Request for Release, substantially in the form of Exhibit M
(i) have a Stated Principal Balance, after deduction of the principal portion of
the Scheduled 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 principal balance), not in excess of, and not more than 10% less than
the Stated Principal Balance of the Deleted Mortgage Loan; (ii) be accruing
interest at a rate no lower than and not more than 1% per annum higher than,
that of the Deleted Mortgage Loan; (iii) have a Combined Lo- Value Ratio no
higher than that of the Deleted Mortgage Loan; (iv) have a remaining term to
maturity no greater than (and not more than one year less than that of) the
Deleted Mortgage Loan; and (v) comply with each representation and warranty set
forth in Section 2.03(e).
Rating Agency: S&P and Xxxxx'x. If either such organization or a
successor is no longer in existence, "Rating Agency" shall be such nationally
recognized statistical rating organization, or other comparable Person, as is
designated by the Depositor, notice of which designation shall be given to the
Trustee and the Servicer. References herein to a given rating or rating category
of a Rating Agency shall mean such rating category without giving effect to any
modifiers.
Ratings: As of any date of determination, the ratings, if any, of the
Certificates as assigned by the Rating Agencies.
Realized Loss: With respect to each Liquidated Mortgage Loan, an
amount (not less than zero or greater than the Stated Principal Balance of the
Mortgage Loan) as of the date of such liquidation, equal to (i) the Stated
Principal Balance of the Liquidated Mortgage Loan as of the date of such
liquidation, plus (ii) interest at the Net Mortgage Rate from the related Due
Date as to which interest was last paid or advanced (and not reimbursed) to the
related Certificateholders up to the related Due Date in the month in which
Liquidation Proceeds are required to be distributed on the
29
Stated Principal Balance of such Liquidated Mortgage Loan from time to time,
minus (iii) the Liquidation Proceeds, if any, received during the month in which
such liquidation occurred, to the extent applied as recoveries of interest at
the Net Mortgage Rate and to principal of the Liquidated Mortgage Loan. Any
Charged Off Loan will give rise to a Realized Loss at the time it is charged
off, as described in Section 3.11(a)(iii) hereof.
Record Date: With respect to the Certificates (other than the Class
A-1, Class M- Class M-2 and Class B Certificates) and any Distribution Date, the
close of business on the last Business Day of the month preceding the month in
which such applicable Distribution Date occurs. With respect to the Class A-1,
Class M-1, Class M-2 and Class B Certificates which are Book- Certificates and
any Distribution Date, the close of business on the Business Day preceding such
Distribution Date.
Reference Bank Rate: With respect to any Interest Accrual Period, as
follows: the arithmetic mean (rounded upwards, if necessary, to the nearest one
sixteenth of a percent) of the offered rates for United States dollar deposits
for one month which are offered by the Reference Banks as of 11:00 A.M., London,
England time, on the second LIBOR Business Day prior to the first day of such
Interest Accrual Period to prime banks in the London interbank market for a
period of one month in amounts approximately equal to the aggregate Class
Principal Balance of the LIBOR Certificates; provided that at least two such
Reference Banks provide such rate. If fewer than two offered rates appear, the
Reference Bank Rate will be the arithmetic mean of the rates quoted by one or
more major banks in New York City, selected by the Trustee, as of 11:00 a.m.,
New York 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 Class
Principal Balance of the LIBOR Certificates. If no such quotations can be
obtained, the Reference Bank Rate shall be LIBOR applicable to the preceding
Distribution Date; provided however, that if, under the priorities indicated
above, LIBOR for a Distribution Date would be based on LIBOR for the previous
Payment Date for the third consecutive Distribution Date, the Trustee 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.
Reference Banks: Barclays Bank PLC, National Westminster Bank and
Abbey National PLC.
Regular Certificates: As specified in the Preliminary Statement.
Released Loan: Any Charged Off Loan that is released by Wilshire to
the Class X Certificateholders pursuant to Section 3.11(a), generally on the
date that is six months after the date on which Wilshire begins using Wilshire
Special Servicing on such Charged Off Loans. Any Released Loan will no longer be
an asset of any REMIC or the Trust Fund.
Relief Act: The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended or any similar state law or regulation.
Relief Act Reductions: With respect to any Distribution Date and any
Mortgage Loan as to which there has been a reduction in the amount of interest
or principal collectible thereon for
30
the most recently ended calendar month as a result of the application of the
Relief Act or similar state law or regulation, the amount, if any, by which (i)
interest and/or principal collectible on such Mortgage Loan for the most
recently ended calendar month is less than (ii) interest and/or principal
accrued thereon for such month pursuant to the Mortgage Note.
REMIC: A "real estate mortgage investment conduit" within the meaning
of section 860D of the Code.
REMIC 1: The segregated pool of assets subject hereto, constituting
the primary trust created hereby and to be administered hereunder, with respect
to which a REMIC election is to be made consisting of: (i) such Mortgage Loans
as from time to time are subject to this Agreement (other than any Prepayment
Premiums), together with the Mortgage Files relating thereto, and together with
all collections thereon and proceeds thereof, (ii) any REO Property, together
with all collections thereon and proceeds thereof, (iii) the Trustee's rights
with respect to the Mortgage Loans under all insurance policies, including the
Primary Insurance Policy, required to be maintained pursuant to this Agreement
and any proceeds thereof and, (iv) the Collection Account and the Certificate
Account (subject to the last sentence of this definition) and such assets that
are deposited therein from time to time and any investments thereof.
Notwithstanding the foregoing, however, a REMIC election will not be made with
respect to the Interest Rate Cap Account, the Pre-Funding Account or the
Capitalized Interest Account.
REMIC 1 Regular Interest LTI-1: One of the separate non-certificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
Regular Interest in REMIC 1. REMIC 1 Regular Interest LTI-1 shall accrue
interest at the related Uncertificated REMIC 1 Pass- Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC 1 Regular Interest LTI-1PF: One of the separate non-certificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
Regular Interest in REMIC 1. REMIC 1 Regular Interest LTI-1PF shall accrue
interest at the related Uncertificated REMIC 1 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC 1 Regular Interest LTI-P: One of the separate non-certificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
Regular Interest in REMIC 1. REMIC 1 Regular Interest LTI-P shall accrue
interest at the related Uncertificated REMIC 1 Pass- Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC 1 Regular Interest LTI-R: One of the separate non-certificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
Regular Interest in REMIC 1. REMIC 1 Regular Interest LTI-R shall accrue
interest at the related Uncertificated REMIC 1 Pass- Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject
31
to the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC 1 Regular Interests: REMIC 1 Regular Interest LTI-1, LTI-1PF,
LTI-P and LTI-R.
REMIC 2: The segregated pool of assets consisting of all of the REMIC
1 Regular Interests conveyed in the trust to the Trustee, for the benefit of the
Holders of the Regular Certificates and the Class A-R Certificates (in respect
of the Class R-2 Interest), pursuant to Article II hereunder, and all amounts
deposited therein, with respect to which a separate REMIC election is to be
made.
REMIC 2 Interest Loss Allocation Amount: With respect to any
Distribution Date, an amount equal to (a) the product of (i) the aggregate
Stated Principal Balance of the Mortgage Loans and related REO Properties then
outstanding and (ii) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2
Regular Interest MT-AA minus the Marker Rate, divided by (b) 12.
REMIC 2 Net WAC Rate: With respect to any Distribution Date, a per
annum rate equal to the weighted average of the Uncertificated REMIC 1
Pass-Through Rates on the REMIC 1 Regular Interests, weighted on the basis of
the respective Uncertificated Principal Balances thereof immediately preceding
such Distribution Date.
REMIC 2 Overcollateralization Amount: With respect to any date of
determination, (i) 1% of the aggregate Uncertificated Principal Balances of the
REMIC 2 Regular Interests minus (ii) the aggregate Uncertificated Principal
Balances of REMIC 2 Regular Xxxxxxxxx XX-X0, MT- MT-M1, MT-M2, MT-B, MT-R and
MT-P, in each case as of such date of determination.
REMIC 2 Principal Loss Allocation Amount: With respect to any
Distribution Date, an amount equal to the product of (i) the aggregate Stated
Principal Balance of the Mortgage Loans and related REO Properties then
outstanding and (ii) 1 minus a fraction, the numerator of which is two times the
aggregate Uncertificated Principal Balance of REMIC 2 Regular Xxxxxxxxx XX-X0,
MT-A2, MT-M1, MT-M2 and MT-B, and the denominator of which is the aggregate
Uncertificated Principal Balance of REMIC 2 Regular Interests MT-A1, MT-A2,
MT-M1, MT-M2, MT-B and MT- ZZ.
REMIC 2 Regular Interest MT-AA: One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest MT-AA shall accrue
interest at the related Uncertificated REMIC 2 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC 2 Regular Interest MT-A1: One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest MT-A1 shall accrue
interest at the related Uncertificated REMIC 2 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal,
32
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.
REMIC 2 Regular Interest MT-A2: One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest MT-A2 shall accrue
interest at the related Uncertificated REMIC 2 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC 2 Regular Interest MT-M1: One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest MT-M1 shall accrue
interest at the related Uncertificated REMIC 2 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC 2 Regular Interest MT-M2: One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest MT-M2 shall accrue
interest at the related Uncertificated REMIC 2 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC 2 Regular Interest MT-B: One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest MT-B shall accrue interest
at the related Uncertificated REMIC 2 Pass- Through Rate in effect from time to
time, and shall be entitled to distributions of principal, subject to the terms
and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC 2 Regular Interest MT-P: One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest MT-P shall accrue interest
at the related Uncertificated REMIC 2 Pass- Through Rate in effect from time to
time, and shall be entitled to distributions of principal, subject to the terms
and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC 2 Regular Interest MT-R: One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest MT-R shall accrue interest
at the related Uncertificated REMIC 2 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.
33
REMIC 2 Regular Interest MT-ZZ: One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest MT-ZZ shall accrue
interest at the related Uncertificated REMIC 2 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC 2 Regular Interest MT-ZZ Maximum Interest Deferral Amount: With
respect to any Distribution Date, the excess of (i) REMIC 2 Uncertificated
Accrued Interest calculated with the Uncertificated Pass-Through Rate for REMIC
2 Regular Interest MT-ZZ and an Uncertificated Principal Balance equal to the
excess of (x) the Uncertificated Principal Balance of REMIC 2 Regular Interest
MT-ZZ over (y) the REMIC 2 Overcollateralization Amount, in each case for such
Distribution Date, over (ii) the sum of REMIC 2 Uncertificated Accrued Interest
on REMIC 2 Regular Xxxxxxxxx XX-X0, MT-A2, MT-M1, MT-M2 and MT-B, with the rate
on REMIC 2 Regular Interest MT-A2 subject to a cap equal to the lesser of (A)
with respect to any Interest Accrual Period, (a) on or prior to the Optional
Termination Date, 3.75% per annum and (b) after the Optional Termination Date,
4.25% per annum, and (B) the REMIC 2 Net WAC Rate for the purpose of this
calculation, and with the rates on REMIC 2 Regular Xxxxxxxxx XX-X0, MT-M1, MT-M2
and M subject to a cap equal to the lesser of (A) LIBOR plus the Certificate
Margin relating to the Corresponding Certificate and (B) the REMIC 2 Net WAC
Rate for the purpose of this calculation for such Distribution Date.
REMIC 2 Regular Interests: REMIC 2 Regular Interest MT-AA, REMIC 2
Regular Interest MT-A1, REMIC 2 Regular Interest MT-A2, REMIC 2 Regular Interest
MT-M1, REMIC 2 Regular Interest MT-M2, REMIC 2 Regular Interest MT-B, REMIC 2
Regular Interest MT-ZZ, REMIC 2 Regular Interest MT-P and REMIC 2 Regular
Interest MT-R.
REMIC 2 Targeted Overcollateralization Amount: 1% of the Targeted
Overcollateralization Amount.
REMIC 3: The segregated pool of assets consisting of all of the REMIC
2 Regular Interests conveyed in trust to the Trustee, for the benefit of the
Holders of the Regular Certificates and the Class A-R Certificates (in respect
of the Class R-3 Interest), pursuant to Article II hereunder, and all amounts
deposited therein, with respect to which a separate REMIC election is to be
made.
REMIC 3 Regular Interests: The Regular Certificates.
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
regulations promulgated thereunder, as the foregoing may be in effect from time
to time.
REMIC Regular Interests: The REMIC 1 Regular Interests, REMIC 2
Regular Interests and Regular Certificates.
34
REO Property: A Mortgaged Property acquired by the Trust Fund through
foreclosure or deed-in-lieu of foreclosure in connection with a defaulted
Mortgage Loan.
Repurchase Price: With respect to any Mortgage Loan required to be
purchased by the Seller pursuant to this Agreement or purchased at the option of
the Optional Termination Holder or the Majority in Interest Holder of the Class
X-2 Certificates pursuant to this Agreement, an amount equal to the sum of (i)
100% of the unpaid principal balance of the Mortgage Loan on the date of such
purchase, (ii) accrued unpaid interest thereon at the applicable Mortgage Rate
from the date through which interest was last paid by the Mortgagor to the Due
Date in the month in which the Repurchase Price is to be distributed to
Certificateholders, (iii) any unreimbursed Servicing Advances and (iv) any costs
and damages actually incurred and paid by or on behalf of the Trust in
connection with any violation by such Mortgage Loan of the representation and
warranty set forth in clause (xx) of Schedule IV hereto.
Request for Release: The Request for Release submitted by the Servicer
to the Trustee, substantially in the form of Exhibit M.
Required Insurance Policy: With respect to any Mortgage Loan, any
insurance policy that is required to be maintained from time to time under this
Agreement.
Residual Certificates: As specified in the Preliminary Statement.
Responsible Officer: When used with respect to the Trustee, any Vice
President, any Assistant Vice President, any Assistant Secretary, any Trust
Officer or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and also to
whom, with respect to a particular matter, such matter is referred because of
such officer's knowledge of and familiarity with the particular subject and who
shall have direct responsibility for the administration of this Agreement.
Rolling Three Month Delinquency Rate: For any Distribution Date will
be the fraction, expressed as a percentage, equal to the average of the
Delinquency Rates for each of the three (or one and two, in the case of the
first and second Distribution Dates, respectively) immediately preceding months.
SAIF: The Savings Association Insurance Fund, or any successor
thereto.
S&P: Standard & Poor's, a division of The XxXxxx-Xxxx Companies, Inc.
For purposes of Section 10.05(b) the address for notices to S&P shall be
Standard & Poor's, 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Mortgage Surveillance Monitoring, or such other address as S&P may hereafter
furnish to the Depositor, the Servicer and the Trustee.
Scheduled Payment: The scheduled monthly payment on a Mortgage Loan
due on any Due Date allocable to principal and/or interest on such Mortgage Loan
pursuant to the terms of the related Mortgage Note, as reduced by any Relief Act
Reductions.
35
Second Mortgage Loan: A Mortgage Loan that is secured by a second lien
on the Mortgaged Property securing the related Mortgage Note.
Securities Act: The Securities Act of 1933, as amended.
Seller: DLJ Mortgage Capital, Inc.
Senior Certificates: As specified in the Preliminary Statement.
Senior Enhancement Percentage: For any Distribution Date, the
fraction, expressed as a percentage, the numerator of which is the sum of the
aggregate Class Principal Balance of the Class M-1, Class M-2 and Class B
Certificates and the Overcollateralization Amount (which, for purposes of this
definition only, shall not be less than zero), in each case after giving effect
to payments on such Distribution Date (assuming no Trigger Event is in effect),
and the denominator of which is the Aggregate Loan Balance for such Distribution
Date.
Senior Principal Payment Amount: For any Distribution Date on or after
the Stepdown Date and as long as a Trigger Event is not in effect with respect
to such Distribution Date, will be the amount, if any, by which (x) the
aggregate Class Principal Balance of the Class A-1, Class A-2, Class P and Class
A-R Certificates immediately prior to such Distribution Date exceeds (y) the
lesser of (A) the product of (i) 49.50% and (ii) the Aggregate Collateral
Balance for such Distribution Date and (B) the amount, if any, by which (i) the
Aggregate Collateral Balance for such Distribution Date exceeds (ii) 0.50% of
the Aggregate Collateral Balance as of the Cut-off Date.
Servicer: Wilshire, or its successors in interest, or any successor
servicer appointed as provided herein.
Servicer Employee: As defined in Section 3.18.
Servicer Cash Remittance Date: With respect to each Distribution Date,
the Business Day immediately preceding such Distribution Date.
Servicer Data Remittance Date: With respect to each Distribution Date,
the second Business Day immediately following the 15th day of the month of such
Distribution Date.
Servicing Advance: All customary, reasonable and necessary "out of
pocket" costs and expenses incurred in the performance by the Servicer of its
servicing obligations, including, but not limited to, the cost (including
reasonable attorneys' fees and disbursements) of (i) the preservation,
restoration and protection of a Mortgaged Property, (ii) any expenses
reimbursable to the Servicer pursuant to Section 3.11 and any enforcement or
judicial proceedings, including foreclosures, and including any expenses
incurred in relation to any such proceedings that result from the Mortgage Loan
being registered on the MERS System; (iii) the management and liquidation of any
REO Property (including default management and similar services, appraisal
services and real estate broker services); (iv) any expenses incurred by the
Servicer in connection with obtaining an environmental inspection or review
pursuant to Section 3.11(a)(v) and (vi); (v) compliance with the obligations
under Section 3.09 and 3.11(b); (vi) the cost of obtaining any broker's price
opinion in
36
accordance with Section 3.11 hereof; (vii) the costs of obtaining an Opinion of
Counsel pursuant to Section 3.11(c) hereof; (viii) expenses incurred in
connection with any instrument of satisfaction or deed of reconveyance as
described in Section 3.12 hereof; and (ix) expenses incurred in connection with
the recordation of Assignments of Mortgage.
Servicing Fee: As to each Mortgage Loan and any Distribution Date, an
amount equal to one month's interest at the Servicing Fee Rate on the Stated
Principal Balance of such Mortgage Loan as of the Due Date in the month of such
Distribution Date (prior to giving effect to any Scheduled Payments due on such
Mortgage Loan on such Due Date), subject to reduction as provided in Section
3.05(b)(vi).
Servicing Fee Rate: As to each Mortgage Loan, 0.50% per annum.
Servicing Officer: Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the related Mortgage Loans
whose name and specimen signature appear on a list of servicing officers
furnished to the Trustee by the Servicer on the Closing Date pursuant to this
Agreement, as such list may from time to time be amended.
Significant Net Recoveries: With respect to a defaulted Mortgage Loan,
a determination by the Servicer that either (A) the potential Net Recoveries are
anticipated to be greater than or equal to the sum of (i) the Stated Principal
Balance of the senior lien on the related Mortgaged Property and (ii) $10,000 or
(B) the related Mortgagor has shown a willingness and ability to pay over the
previous six months.
Simple Interest Excess: As of any Determination Date for each Simple
Interest Qualifying Loan, the excess, if any, of (i) the portion of the monthly
payment received from the Mortgagor for such Mortgage Loan allocable to interest
with respect to the related Due Period, over (ii) 30 days' interest on the
Stated Principal Balance of such Mortgage Loan at the Mortgage Rate.
Simple Interest Excess Sub-Account: The sub-account of the Collection
Account established by the Servicer pursuant to Section 3.06(d). The Simple
Interest Excess Sub-Account shall be an Eligible Account.
Simple Interest Mortgage Loan: Any Mortgage Loan for which the
interest due thereon is calculated based on the actual number of days elapsed
between the date on which interest was last paid through the date on which the
most current payment is received.
Simple Interest Qualifying Loan: As of any Determination Date, any
Simple Interest Mortgage Loan that was neither prepaid in full during the
related Due Period, nor delinquent with respect to a payment that became due
during the related Due Period as of the close of business on the Determination
Date following such Due Period.
Simple Interest Shortfall: As of any Determination Date for each
Simple Interest Qualifying Loan, the excess, if any, of (i) 30 days' interest on
the Stated Principal Balance of all such Mortgage Loans at the Mortgage Rate,
over (ii) the portion of the monthly payment received
37
from the Mortgagor for such Mortgage Loan allocable to interest with respect to
the related Due Period.
Startup Day: May 29, 2003.
Stated Principal Balance: As to any Mortgage Loan and Due Date, the
unpaid principal balance of such Mortgage Loan as of such Due Date as specified
in the amortization schedule at the time relating thereto (before any adjustment
to such amortization schedule by reason of any moratorium or similar waiver or
grace period) after giving effect to any previous Curtailments and Liquidation
Proceeds allocable to principal (other than with respect to any Liquidated
Mortgage Loan) and to the payment of principal due on such Due Date and
irrespective of any delinquency in payment by the related Mortgagor; provided,
however, for purposes of calculating the Servicing Fee and the Trustee Fee, the
Stated Principal Balance of any REO will be the unpaid principal balance
immediately prior to foreclosure.
Stepdown Date: The date occurring on the later of (x) the Distribution
Date in June 2006 and (y) the first Distribution Date on which the Senior
Enhancement Percentage (calculated for this purpose after giving effect to
payments or other recoveries in respect of the Mortgage Loans during the related
Due Period but before giving effect to payments on the Certificates on such
Distribution Date) is greater than or equal to 50.50%.
Subordinate Certificates: As specified in the Preliminary Statement.
Subsequent Mortgage Loan: Any Mortgage Loan other than an Initial
Mortgage Loan conveyed to the Trust Fund pursuant to Section 2.01 hereof and to
a Subsequent Transfer Agreement, which Mortgage Loan shall be listed on the
revised Mortgage Loan Schedule delivered pursuant to this Agreement and on
Schedule A to such Subsequent Transfer Agreement. When used with respect to a
single Subsequent Transfer Date, Subsequent Mortgage Loan shall mean a
Subsequent Mortgage Loan conveyed to the Trust on that Subsequent Transfer Date.
Subsequent Mortgage Loan Interest: Any amount constituting an Interest
Remittance Amount (other than an amount withdrawn from the related Capitalized
Interest Account pursuant to clause (5) of the definition of "Interest
Remittance Amount") received or advanced with respect to a Subsequent Mortgage
Loan during the Due Periods relating to the June 2003, July 2003 or August 2003
Distribution Dates, but only to the extent of the excess of such amount over the
amount of interest accruing on such Subsequent Mortgage Loan during the related
period at a per annum rate equal to 10.414%, 10.415% and 10.415%, respectively.
The Subsequent Mortgage Loan Interest shall not be an asset of any REMIC.
Subsequent Transfer Agreement: A Subsequent Transfer Agreement
substantially in the form of Exhibit N hereto, executed and delivered by the
related Servicer, the Depositor, the Seller and the Trustee as provided in
Section 2.01 hereof.
Subsequent Transfer Date: For any Subsequent Transfer Agreement, the
date the related Subsequent Mortgage Loans are transferred to the Trust Fund
pursuant to the related Subsequent Transfer Agreement.
38
Subservicer: Any Subservicer which is subservicing the Mortgage Loans
pursuant to a Subservicing Agreement. Any subservicer shall meet the
qualifications set forth in Section 3.02.
Subservicing Agreement: An agreement between the Servicer and a
Subservicer for the servicing of the Mortgage Loans.
Substitution Adjustment Amount: As defined in Section 2.03.
Target Amount: As defined in Section 4.11(h).
Targeted Overcollateralization Amount: For any Distribution Date prior
to the Stepdown Date, 5.25% of the Aggregate Collateral Balance as of the
Cut-off Date; with respect to any Distribution Date on or after the Stepdown
Date and with respect to which a Trigger Event is not in effect, the greater of
(a) 10.50% of the Aggregate Collateral Balance for such Distribution Date, or
(b) 0.50% of the Aggregate Collateral Balance as of the Cut-off Date; with
respect to any Distribution Date on or after the Stepdown Date with respect to
which a Trigger Event is in effect and is continuing, the Targeted
Overcollateralization Amount for the Distribution Date immediately preceding
such Distribution Date. Upon (x) written direction by the Majority in Interest
Holder of the Class X-1 Certificates and (y) the issuance by an affiliate of the
Depositor of a credit enhancement contract in favor of REMIC 1 which is
satisfactory to the Rating Agencies and (z) receipt by the Trustee of an Opinion
of Counsel, which opinion shall not be an expense of the Trustee or the Trust
Fund, but shall be at the expense of the Majority in Interest Holder of the
Class X-1 Certificates, to the effect that such credit enhancement contract will
not cause the imposition of any federal tax on the Trust Fund or the
Certificateholders or cause REMIC 1, REMIC 2 or REMIC 3 to fail to qualify as a
REMIC at any time that any Certificates are outstanding, the Targeted
Overcollateralization Amount shall be reduced to the level approved by the
Rating Agencies as a result of such credit enhancement contract. Any credit
enhancement contract referred to in the previous sentence shall be
collateralized by cash or mortgage loans, provided that (i) the aggregate Stated
Principal Balance of the mortgage loans collateralizing any such credit
enhancement contract shall not be less than the excess, if any, of (x) the
initial Targeted Overcollateralization Amount over (y) the then-current
Overcollateralization Amount and (ii) the issuance of any credit enhancement
contract supported by mortgage loans shall not result in a downgrading of the
ratings assigned by the Rating Agencies.
Tax Matters Person: The person designated as "tax matters person" in
the manner provided under Treasury regulation ss. 1.860F-4(d) and temporary
Treasury regulation ss. 301.6231(a)(7)-1T.
Transfer: Any direct or indirect transfer or sale of any Ownership
Interest in a Residual Certificate.
Trigger Event: A Trigger Event will be in effect for any Distribution
Date on or after the Stepdown Date if (a) the Rolling Three Month Delinquency
Rate as of the last day of the related Due Period equals or exceeds 18.00% of
the Senior Enhancement Percentage for such Distribution
39
Date or (ii) a Cumulative Loss Event is occurring. The Trigger Event may be
amended by the parties hereto in the future with the consent of the Rating
Agencies.
Trust Fund: Collectively, the assets of REMIC 1, REMIC 2, REMIC 3, the
Pre- Funding Account, the Capitalized Interest Account, the Interest Rate Cap
Agreement, the Interest Rate Cap Account and the Subsequent Mortgage Loan
Interest.
Trustee: JPMorgan Chase Bank and its successors and, if a successor
trustee is appointed hereunder, such successor.
Trustee Fee: As to each Mortgage Loan and any Distribution Date, an
amount equal to one month's interest at the Trustee Fee Rate on the Stated
Principal Balance of such Mortgage Loan as of the Due Date in the month of such
Distribution Date (prior to giving effect to any Scheduled Payments due on such
Mortgage Loan on such Due Date).
Trustee Fee Rate: With respect to any Distribution Date, 0.0140% per
annum.
Uncertificated Accrued Interest: With respect to each REMIC Regular
Interest on each Distribution Date, an amount equal to one month's interest at
the related Uncertificated P Through Rate on the Uncertificated Principal
Balance of such REMIC Regular Interest. In each case, Uncertificated Accrued
Interest will be reduced by any Net Prepayment Interest Shortfalls and Relief
Act Reductions (allocated to such REMIC Regular Interests based on the
priorities set forth in Section 1.03).
Uncertificated Pass-Through Rate: The Uncertificated REMIC 1
Pass-Through Rate or the Uncertificated REMIC 2 Pass-Through Rate.
Uncertificated Principal Balance: With respect to each REMIC Regular
Interest, the amount of such REMIC Regular Interest outstanding as of any date
of determination. As of the Closing Date, the Uncertificated Principal Balance
of each REMIC Regular Interest shall equal the amount set forth in the
Preliminary Statement hereto as its initial Uncertificated Principal Balance. On
each Distribution Date, the Uncertificated Principal Balance of each REMIC
Regular Interest shall be reduced by all distributions of principal made on such
REMIC Regular Interest on such Distribution Date pursuant to Section 4.07 and,
if and to the extent necessary and appropriate, shall be further reduced on such
Distribution Date by Realized Losses as provided in Section 4.05(b), and the
Uncertificated Principal Balance of REMIC 1 Regular Interest LTI-1PF shall be
increased by interest deferrals as provided in Section 4.07 and the
Uncertificated Principal Balance of REMIC 2 Regular Interest MT-ZZ shall be
increased by interest deferrals as provided in Section 4.07. The Uncertificated
Principal Balance of each REMIC Regular Interest that has an Uncertificated
Principal Balance shall never be less than zero.
Uncertificated REMIC 1 Pass-Through Rate: With respect to each REMIC 1
Regular Interest (other than REMIC 1 Regular Interest LT-1PF) and the Interest
Accrual Periods in June 2003, July 2003 and August 2003, a per annum rate equal
to the Initial Mortgage Loan Net WAC Rate; with respect to REMIC 1 Regular
Interest LT-1PF and the Interest Accrual Periods in (a) June 2003, (b) July 2003
and (c) August 2003, a per annum rate equal to (a) 10.414%, (b) 10.415% and
40
(c) 10.415%, respectively; and with respect to each REMIC 1 Regular Interest and
each Interest Accrual Period thereafter, the weighted average of the Net
Mortgage Rates on the Mortgage Loans.
Uncertificated REMIC 2 Pass-Through Rate: For any Distribution Date,
with respect to REMIC 2 Regular Interest MT-AA, REMIC 2 Regular Interest MT-A1,
REMIC 2 Regular Interest MT-A2, REMIC 2 Regular Interest MT-M1, REMIC 2 Regular
Interest MT-M2, REMIC 2 Regular Interest MT-B, REMIC 2 Regular Interest MT-ZZ,
REMIC 2 Regular Interest MT-P and REMIC 2 Regular Interest MT-R, the REMIC 2 Net
WAC Rate for such Distribution Date.
United States Person: A citizen or resident of the United States, a
corporation or a partnership (including an 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 or any State thereof or the District
of Columbia (except, in the case of a partnership, to the extent provided in
regulations) provided that, for purposes solely of the restrictions on the
transfer of Class A-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 to be United States Persons or
an estate whose income is subject to United States federal income tax regardless
of its source, or a trust if a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more such United States Persons have the authority to control all substantial
decisions of the trust. To the extent prescribed in regulations by the Secretary
of the Treasury, which have not yet been issued, a trust which was in existence
on August 20, 1996 (other than a trust treated as owned by the grantor under
subpart E of part I of subchapter J of chapter 1 of the Code), and which was
treated as a United States person on August 20, 1996 may elect to continue to be
treated as a United States Person notwithstanding the previous sentence.
Voting Rights: The portion of the voting rights of all the
Certificates that is allocated to any Certificate for purposes of the voting
provisions of this Agreement. At all times during the term of this Agreement,
98% of all Voting Rights shall be allocated among the Class X-0, Xxxxx X-0,
Class M-1, Class M-2 and Class B Certificates. The portion of such 98% Voting
Rights allocated to the Class X-0, Xxxxx X-0, Class M-1, Class M-2 and Class B
Certificates shall be based on the fraction, expressed as a percentage, the
numerator of which is the aggregate Class Principal Balance then outstanding and
the denominator of which is the Class Principal Balance of all such Classes then
outstanding. The Class P and Class X-1 Certificates shall each be allocated 1%
of the Voting Rights. Voting Rights shall be allocated among the Certificates
within each such Class (other than the Class P Certificates and Class X-1
Certificates, which each have only one certificate) in accordance with their
respective Percentage Interests. The Class X-2 and Class A-R Certificates shall
have no Voting Rights.
Wilshire: Wilshire Credit Corporation.
Wilshire Special Servicing: With regard to any Charged Off Loans, the
servicing of such Charged Off Loans using specialized collection procedures
(including foreclosure, if appropriate) to maximize recoveries.
41
SECTION 1.02 Interest Calculations.
The calculation of the Trustee Fee, the Servicing Fee, the Credit Risk
Manager Fee and interest on the Class A-2, Class P, Class A-R and Class X-1
Certificates and on the related Uncertificated Interests shall be made on the
basis of a 360-day year consisting of twelve 30-day months. The calculation of
interest on the Class A-1, Class M-1, Class M-2 and Class B Certificates and the
related Uncertificated Interests shall be made on the basis of a 360-day year
and the actual number of days elapsed in the related Interest Accrual Period.
All dollar amounts calculated hereunder shall be rounded to the nearest xxxxx
with one-half of one xxxxx being rounded down.
SECTION 1.03 Allocation of Certain Interest Shortfalls.
For purposes of calculating the amount of Uncertificated Accrued
Interest for the REMIC 1 Regular Interests for any Distribution Date, the
aggregate amount of any Prepayment Interest Shortfalls (net of any Compensating
Interest Payment) and any Relief Act Reductions incurred in respect of the
Mortgage Loans for any Distribution Date shall be allocated first to REMIC 1
Regular Interests LTI-1 and LTI-1PF and then to REMIC 1 Regular Interests LTI-P
and LTI-R, in each case to the extent of one month's interest at the then
applicable respective Uncertificated REMIC 1 Pass-Through Rate on the respective
Uncertificated Principal Balance of each such Uncertificated REMIC 1 Regular
Interest; provided, however, that with respect to the first three Distribution
Dates, such amounts relating to the Initial Mortgage Loans shall be allocated to
REMIC 1 Regular Interest LTI-1 and such amounts relating to the Subsequent
Mortgage Loans shall be allocated to REMIC 1 Regular Interest LT-1PF.
For purposes of calculating the amount of Uncertificated Accrued
Interest for the REMIC 2 Regular Interests for any Distribution Date, any
Prepayment Interest Shortfalls (to the extent not covered by Compensating
Interest) relating to the Mortgage Loans for any Distribution Date shall be
allocated first to Uncertificated Accrued Interest payable to REMIC 2 Regular
Interest MT-AA and REMIC 2 Regular Interest MT-ZZ up to an aggregate amount
equal to the REMIC 2 Interest Loss Allocation Amount, 98% and 2%, respectively,
and thereafter any remaining Prepayment Interest Shortfalls (to the extent not
covered by Compensating Interest) relating to the Mortgage Loans for any
Distribution Date shall be allocated among REMIC 2 Regular Interests MT- AA,
MT-A1, MT-A2, MT-M1, MT-M2, MT-B, MT-ZZ, MT-R and MT-P, pro rata based on, and
to the extent of, Uncertificated Accrued Interest, as calculated without
application of this sentence.
42
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
SECTION 2.01 Conveyance of Mortgage Loans.
(a) The Depositor, concurrently with the execution and delivery
hereof, hereby sells, transfers, assigns, sets over and otherwise conveys to the
Trustee in trust for the benefit of the Certificateholders, without recourse,
all (i) the right, title and interest of the Depositor (which does not include
servicing rights) in and to each Initial Mortgage Loan, including all interest
and principal received or receivable on or with respect to such Initial Mortgage
Loans after the Cut-off Date and all interest and principal payments on the
Initial Mortgage Loans received prior to the Cut-off Date in respect of
installments of interest and principal due thereafter, but not including
payments of principal and interest due and payable on the Mortgage Loans on or
before the Cut-off Date (other than the rights of the Servicer to service the
Initial Mortgage Loans in accordance with this Agreement), (ii) the Depositor's
rights under the Assignment Agreement, (iii) any such amounts as may be
deposited into and held by the Trustee in the Pre-Funding Account and the
Capitalized Interest Account and (iv) all proceeds of any of the foregoing. In
addition, on or prior to the Closing Date, the Depositor shall cause the
Interest Rate Cap Agreement Counterparty to enter into the Interest Rate Cap
Agreement with the Trustee.
(b) In connection with the transfer and assignment set forth in clause
(a) above, the Depositor has delivered or caused to be delivered to the Trustee
or its designated agent, the Custodian, for the benefit of the
Certificateholders, the documents and instruments with respect to each Mortgage
Loan as assigned:
(i) the original Mortgage Note of the Mortgagor in the name of the
Trustee or endorsed "Pay to the order of ________________ without recourse"
and signed in the name of the last named endorsee by an authorized officer,
together with all intervening endorsements showing a complete chain of
endorsements from the originator of the related Mortgage Loan to the last
endorsee or with respect to any Lost Mortgage Note (as such term is defined
in the Pooling and Servicing Agreement), a lost note affidavit stating that
the original Mortgage Note was lost or destroyed, together with a copy of
such Mortgage Note;
(ii) the original Mortgage bearing evidence that such instruments have
been recorded in the appropriate jurisdiction where the Mortgaged Property
is located as determined by DLJMC (or, in lieu of the original of the
Mortgage or the assignment thereof, a duplicate or conformed copy of the
Mortgage or the instrument of assignment, if any, together with a
certificate of receipt from the Seller or the settlement agent who handled
the closing of the Mortgage Loan, certifying that such copy or copies
represent true and correct copy(ies) of the original(s) and that such
original(s) have been or are currently submitted to be recorded in the
appropriate governmental recording office of the jurisdiction where the
Mortgaged Property is located) or a certification or receipt of the
recording authority evidencing the same;
43
(iii) the original Assignment of Mortgage, in blank, which assignment
appears to be in form and substance acceptable for recording and, in the
event that the related Seller acquired the Mortgage Loan in a merger, the
assignment must be by "[Seller], successor by merger to [name of
predecessor]", and in the event that the Mortgage Loan was acquired or
originated by the related Seller while doing business under another name,
the assignment must be by "[Seller], formerly known as [previous name]";
(iv) the originals of all intervening Assignments of Mortgage not
included in (iii) above showing a complete chain of assignment from the
originator of such Mortgage Loan to the Person assigning the Mortgage to
the Trustee, including any warehousing assignment, with evidence of
recording on each such Assignment of Mortgage (or, in lieu of the original
of any such intervening assignment, a duplicate or conformed copy of such
intervening assignment together with a certificate of receipt from the
related Seller or the settlement agent who handled the closing of the
Mortgage Loan, certifying that such copy or copies represent true and
correct copy(ies) of the original(s) and that such original(s) have been or
are currently submitted to be recorded in the appropriate governmental
recording office of the jurisdiction where the Mortgaged Property is
located) or a certification or receipt of the recording authority
evidencing the same;
(v) an original of any related security agreement (if such item is a
document separate from the Mortgage) and the originals of any intervening
assignments thereof showing a complete chain of assignment from the
originator of the related Mortgage Loan to the last assignee;
(vi) an original assignment of any related security agreement (if such
item is a document separate from the Mortgage) executed by the last
assignee in blank;
(vii) the originals of any assumption, modification, extension or
guaranty agreement with evidence of recording thereon, if applicable (or,
in lieu of the original of any such agreement, a duplicate or conformed
copy of such agreement together with a certificate of receipt from the
related Seller or the settlement agent who handled the closing of the
Mortgage Loan, certifying that such copy(ies) represent true and correct
copy(ies) of the original(s) and that such original(s) have been or are
currently submitted to be recorded in the appropriate governmental
recording office of the jurisdiction where the Mortgaged Property is
located), or a certification or receipt of the recording authority
evidencing the same;
(viii) if the Mortgage Note or Mortgage or any other document or
instrument relating to the Mortgage Loan has been signed by a person on
behalf of the Mortgagor, the original power of attorney or other instrument
that authorized and empowered such person to sign bearing evidence that
such instrument has been recorded, if so required, in the appropriate
jurisdiction where the Mortgaged Property is located as determined by DLJMC
(or, in lieu thereof, a duplicate or conformed copy of such instrument,
together with a certificate of receipt from the related Seller or the
settlement agent who handled the closing of the Mortgage Loan, certifying
that such copy(ies) represent true and complete copy(ies)of the original(s)
and that such original(s) have been or are currently submitted to be
recorded
44
in the appropriate governmental recording office of the jurisdiction where
the Mortgaged Property is located) or a certification or receipt of the
recording authority evidencing the same; and
(ix) in the case of the First Mortgage Loans, the original mortgage
title insurance policy, or if such mortgage title insurance policy has not
yet been issued, an original or copy of a marked-up written commitment or a
pro forma title insurance policy marked as binding and countersigned by the
title insurance company or its authorized agent either on its face or by an
acknowledged closing instruction or escrow letter.
In the event the Seller delivers to the Trustee certified copies of
any document or instrument set forth in 2.01(b) because of a delay caused by the
public recording office in returning any recorded document, the Seller shall
deliver to the Trustee, within 60 days of the Closing Date, an Officer's
Certificate which shall (i) identify the recorded document, (ii) state that the
recorded document has not been delivered to the Trustee due solely to a delay
caused by the public recording office, and (iii) state the amount of time
generally required by the applicable recording office to record and return a
document submitted for recordation.
In the event that in connection with any Mortgage Loan the Depositor
cannot deliver (a) the original recorded Mortgage, (b) all interim recorded
assignments or (c) the lender's title policy (together with all riders thereto)
satisfying the requirements set forth above, concurrently with the execution and
delivery hereof because such document or documents have not been returned from
the applicable public recording office in the case of clause (a) or (b) above,
or because the title policy has not been delivered to the Seller or the
Depositor by the applicable title insurer in the case of clause (c) above, the
Depositor shall promptly deliver to the Trustee, in the case of clause (a) or
(b) above, such original Mortgage or such interim assignment, as the case may
be, with evidence of recording indicated thereon upon receipt thereof from the
public recording office, or a copy thereof, certified, if appropriate, by the
relevant recording office and in the case of clause (c) above, if such lender's
title policy is received by the Depositor, upon receipt thereof.
As promptly as practicable subsequent to such transfer and assignment,
and in any event, within thirty (30) days thereafter, the Trustee shall (at the
Seller's expense) (i) affix the Trustee's name to each Assignment of Mortgage,
as the assignee thereof, (ii) cause such assignment to be in proper form for
recording in the appropriate public office for real property records within
thirty (30) days after receipt thereof and (iii) cause to be delivered for
recording in the appropriate public office for real property records the
assignments of the Mortgages to the Trustee, except that, with respect to any
assignment of a Mortgage as to which the Trustee has not received the
information required to prepare such assignment in recordable form, the
Trustee's obligation to do so and to deliver the same for such recording shall
be as soon as practicable after receipt of such information and in any event
within thirty (30) days after the receipt thereof, and the Trustee need not
cause to be recorded (a) any assignment referred to in clause (iii) above which
relates to a Mortgage Loan in any jurisdiction under the laws of which, as
evidenced by an Opinion of Counsel delivered to the Trustee (at the Depositor's
expense, provided such expense has been previously approved by the Depositor in
writing) within 180 days of the Closing Date, acceptable to the Rating Agencies,
the recordation of such assignment is not necessary to protect the Trustee's and
the Certificateholders' interest in the related Mortgage Loan or (b) if MERS is
identified on the
45
Mortgage or on a properly recorded assignment of the Mortgage as the mortgagee
of record solely as nominee for the Seller and its successors and assigns.
In connection with the assignment of any Mortgage Loan registered on
the M System, the Depositor further agrees that it will cause, at the
Depositor's own expense, on or prior to 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 "[IDENTIFY TRUSTEE SPECIFIC CODE]" in the field "[IDENTIFY THE
FIELD NAME FOR TRUSTEE]" which identifies the Trustee and (b) the code
"[IDENTIFY SERIES SPECIFIC CODE NUMBER]" in the field "Pool Field" which
identifies the series of the Certificates issued in connection with such
Mortgage Loans. The Depositor further agrees that it will not, and will not
permit the Servicer to, and the 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.
(c) The Trustee is authorized to appoint any bank or trust company
approved by the Depositor as Custodian of the documents or instruments referred
to in this Section 2.01, and to enter into a Custodial Agreement for such
purpose and any documents delivered thereunder shall be delivered to the
Custodian and any Officer's Certificates delivered with respect thereto shall be
delivered to the Trustee and the Custodian.
(d) It is the express intent of the parties to this Agreement that the
conveyance of the Mortgage Loans by the Depositor to the Trustee as provided in
this Section 2.01 be, and be construed as, a sale of the Mortgage Loans by the
Depositor to the Trustee. It is, further, not the intention of the parties to
this Agreement that such conveyance be deemed a pledge of the Mortgage Loans by
the Depositor to the Trustee to secure a debt or other obligation of the
Depositor. However, in the event that, notwithstanding the intent of the parties
to this Agreement, the Mortgage Loans are held to be the property of the
Depositor, or if for any other reason this Agreement is held or deemed to create
a security interest in the Mortgage Loans then (a) this Agreement shall also be
deemed to be a security agreement within the meaning of Articles 8 and 9 of the
New York Uniform Commercial Code; (b) the conveyance provided for in this
Section 2.01 shall be deemed to be a grant by the Depositor to the Trustee for
the benefit of the Certificateholders of a security interest in all of the
Depositor's right, title and interest in and to the Mortgage Loans and all
amounts payable to the holders of the Mortgage Loans in accordance with the
terms thereof and all proceeds of the conversion, voluntary or involuntary, of
the foregoing into cash, instruments, securities or other property, including
without limitation all amounts, other than investment earnings, from time to
time held or invested in the Certificate Account, whether in the form of cash,
instruments, securities or other property; (c) the possession by the Trustee or
any Custodian of such items of property and such other items of property as
constitute instruments, money, negotiable documents or chattel paper shall be
deemed to be "in possession by the secured party" for purposes of perfecting the
security interest pursuant to Section 9-305 of the New York Uniform Commercial
Code; 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, financial intermediaries, bailees or agents (as applicable) of the Trustee
for the
46
benefit of the Certificateholders for the purpose of perfecting such security
interest under applicable law (except that nothing in this clause (e) shall
cause any person to be deemed to be an agent of the Trustee for any purpose
other than for perfection of such security interests unless, and then only to
the extent, expressly appointed and authorized by the Trustee in writing). The
Depositor and the Trustee, upon directions from the Depositor, shall, to the
extent consistent with this Agreement, take such actions as may be necessary to
ensure that, if this Agreement were deemed to create a security interest in the
Mortgage Loans, 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.
(e) The Depositor hereby sells, transfers, assigns, sets over and
otherwise conveys to the Trustee in trust for the benefit of the
Certificateholders, without recourse, all right, title and interest in such
Subsequent Mortgage Loans (which does not include servicing rights), including
all interest and principal due on or with respect to such Subsequent Mortgage
Loans on or after the related Subsequent Transfer Date and all interest and
principal payments on such Subsequent Mortgage Loans received prior to the
Subsequent Transfer Date in respect of installments of interest and principal
due thereafter, but not including principal and interest due on such Subsequent
Mortgage Loans prior to the related Subsequent Transfer Date, any insurance
policies in respect of such Subsequent Mortgage Loans and all proceeds of any of
the foregoing.
(f) Upon one Business Day's prior written notice to the Trustee, the
Servicer and the Rating Agencies, on any Business Day during the Pre-Funding
Period designated by the Depositor, the Depositor, DLJMC, the Servicer and the
Trustee shall complete, execute and deliver a Subsequent Transfer Agreement so
long as no Rating Agency has provided notice that the execution and delivery of
such Subsequent Transfer Agreement will result in a reduction or withdrawal of
the ratings assigned to the Certificates.
The transfer of Subsequent Mortgage Loans and the other property and
rights relating to them on a Subsequent Transfer Date is subject to the
satisfaction of each of the following conditions:
(i) each Subsequent Mortgage Loan conveyed on such Subsequent Transfer
Date satisfies the representations and warranties applicable to it under
this Agreement as of the applicable Subsequent Transfer Date; provided,
however, that with respect to a breach of a representation and warranty
with respect to a Subsequent Mortgage Loan, the obligation under Section
2.03(f) of this Agreement of the Seller to cure, repurchase or replace such
Subsequent Mortgage Loan shall constitute the sole remedy against the
Seller respecting such breach available to Certificateholders, the
Depositor or the Trustee;
(ii) the Trustee and the Rating Agencies are provided with an Opinion
of Counsel or Opinions of Counsel, at the expense of the Depositor, stating
that each REMIC in the Trust Fund is and shall continue to qualify as a
REMIC following the transfer of the Subsequent Mortgage Loans, to be
delivered as provided pursuant to Section 2.01(g);
(iii) the Rating Agencies and the Trustee are provided with an Opinion
of Counsel or Opinions of Counsel, at the expense of the Depositor,
confirming that the transfer of the
47
Subsequent Mortgage Loans conveyed on such Subsequent Transfer Date is a
true sale, to be delivered as provided pursuant to Section 2.01(g);
(iv) the execution and delivery of such Subsequent Transfer Agreement
or conveyance of the related Subsequent Mortgage Loans does not result in a
reduction or withdrawal of any ratings assigned to the Certificates by the
Rating Agencies;
(v) no Subsequent Mortgage Loan conveyed on such Subsequent Transfer
Date is 30 or more days contractually delinquent as of such date;
(vi) the remaining term to stated maturity of such Subsequent Mortgage
Loan does not exceed 30 years for fully amortizing loans or 15 years for
balloon loans;
(vii) such Subsequent Mortgage Loan does not have a Net Mortgage Rate
less than 5.47% per annum;
(viii) the Depositor shall have deposited in the Collection Account
all principal and interest collected with respect to the related Subsequent
Mortgage Loans on or after the related Subsequent Transfer Date;
(ix) such Subsequent Mortgage Loan does not have a Combined
Loan-to-Value Ratio greater than 100.00%;
(x) such Subsequent Mortgage Loan has a principal balance not greater
than $429,083;
(xi) no Subsequent Mortgage Loan shall have a final maturity date
after August 1, 2033;
(xii) such Subsequent Mortgage Loan is secured by a first or second
lien;
(xiii) such Subsequent Mortgage Loan is otherwise acceptable to the
Rating Agencies;
(xiv) [reserved];
(xv) following the conveyance of such Subsequent Mortgage Loans on
such Subsequent Transfer Date the characteristics of the Mortgage Loans
(based on the Initial Mortgage Loans as of the Cut-off Date and the
Subsequent Mortgage Loans as of their related Subsequent Transfer Date)
will be as follows:
A. a weighted average Mortgage Rate of at least 10.91% per annum;
B. a weighted average remaining term to stated maturity of less than
208 months;
48
C. a weighted average Combined Loan-to-Value Ratio of not more than
94.60%;
D. a weighted average credit score of at least 684;
E. no more than 60.00% of the Mortgage Loans by aggregate Cut-off Date
Principal Balance are balloon loans;
F. no more than 48.20% of the Mortgage Loans by aggregate Cut-off Date
Principal Balance are concentrated in one state; and
G. no more than 12.20% of the Mortgage Loans by aggregate Cut-off Date
Principal Balance relate to non-owner occupied properties;
(xvi) neither the Seller nor the Depositor shall be insolvent or shall
be rendered insolvent as a result of such transfer;
(xvii) no Event of Default has occurred hereunder; and
(xviii) the Depositor shall have delivered to the Trustee an Officer's
Certificate confirming the satisfaction of each of these conditions
precedent.
(g) Upon (1) delivery to the Trustee by the Depositor of the Opinions
of Counsel referred to in Sections 2.01(f)(ii) and (iii), (2) delivery to the
Trustee by the Depositor of a revised Mortgage Loan Schedule reflecting the
Subsequent Mortgage Loans conveyed on such Subsequent Transfer Date and the
related Subsequent Mortgage Loans and (3) delivery to the Trustee by the
Depositor of an Officer's Certificate confirming the satisfaction of each of the
conditions precedent set forth in Section 2.01(f), the Trustee shall remit to
the Depositor the Aggregate Subsequent Transfer Amount related to the Subsequent
Mortgage Loans transferred by the Depositor on such Subsequent Transfer Date
from funds in the Pre-Funding Account.
The Trustee shall not be required to investigate or otherwise verify
compliance with the conditions set forth in the preceding paragraph, except for
its own receipt of documents specified above, and shall be entitled to rely on
the required Officer's Certificate.
SECTION 2.02 Acceptance by the Trustee.
The Trustee acknowledges receipt by the Custodian of the documents
identified in the Initial Certification in the form annexed hereto as Exhibit G
and declares that the Custodian on its behalf hold and will hold the documents
delivered to the Custodian constituting the Mortgage Files, and that it or the
Custodian holds or will hold such other assets as are included in the Trust
Fund, in trust for the exclusive use and benefit of all present and future
Certificateholders. The Trustee acknowledges that it will maintain possession
through the Custodian of the Mortgage Notes in the State of Texas or the State
of Illinois, as directed by the Seller, unless otherwise permitted by the Rating
Agencies.
49
The Custodian agrees to execute and deliver on the Closing Date to the
Depositor, the Seller, the Trustee and the Servicer an Initial Certification in
the form annexed hereto as Exhibit G. Based on its review and examination, and
only as to the documents identified in such Initial Certification, the Custodian
will acknowledge that such documents appear regular on their face and relate to
such Mortgage Loan. Neither the Trustee nor the Custodian shall be under any
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 in the real estate records or that they are other than what they
purport to be on their face.
Not later than 90 days after the Closing Date, the Custodian is
required to deliver to the Depositor, the Seller, the Trustee and the Servicer a
Final Certification in the form annexed hereto as Exhibit H, with any applicable
exceptions noted thereon.
If, in the course of such review, the Custodian finds any document
constituting a part of a Mortgage File which does not meet the requirements of
Section 2.01, the Custodian will list such as an exception in the Final
Certification; provided, however, that neither the Trustee nor the Custodian
shall make any determination as to whether (i) any endorsement is sufficient to
transfer all right, title and interest of the party so endorsing, as noteholder
or assignee thereof, in and to that Mortgage Note or (ii) any assignment is in
recordable form or is sufficient to effect the assignment of and transfer to the
assignee thereof under the mortgage to which the assignment relates.
The Seller shall promptly correct or cure such defect within 120 days
from the date it was so notified of such defect and, if the Seller does not
correct or cure such defect within such period, the Seller shall either (a)
substitute for the related Mortgage Loan a Qualified Substitute Mortgage Loan,
which substitution shall be accomplished in the manner and subject to the
conditions set forth in Section 2.03, or (b) purchase such Mortgage Loan from
the Trustee within 120 days from the date the Seller was notified of such defect
in writing at the Repurchase Price of such Mortgage Loan; provided, however,
that in no event shall such substitution or repurchase occur more than 540 days
from the Closing Date, except that if the substitution or repurchase of a
Mortgage Loan pursuant to this provision is required by reason of a delay in
delivery of any documents by the appropriate recording office, then such
substitution or repurchase shall occur within 720 days from the Closing Date;
and further provided, that the Seller shall have no liability for recording any
Assignment of Mortgage in favor of the Trustee or for the Trustee's failure to
record such Assignment of Mortgage, and the Seller shall not be obligated to
repurchase or cure any Mortgage Loan solely as a result of the Trustee's failure
to record such Assignment of Mortgage. The Trustee shall deliver written notice
to each Rating Agency within 360 days from the Closing Date indicating each
Mortgage Loan (a) the Assignment of Mortgage which has not been returned by the
appropriate recording office or (b) as to which there is a dispute as to
location or status of such Mortgage Loan. Such notice shall be delivered every
90 days thereafter until the Assignment of Mortgage for the related Mortgage
Loan is returned to the Trustee or the dispute as to location or status has been
resolved. Any such substitution pursuant to (a) above shall not be effected
prior to the delivery to the Trustee of the Opinion of Counsel required by
Section 2.05 hereof, if any, and any substitution pursuant to (a) above shall
not be effected prior to the additional delivery to the Trustee of a Request for
Release substantially in the form of Exhibit M. No substitution is permitted to
be made in any calendar month after the Determination Date for such month. The
Repurchase Price for any such
50
Mortgage Loan shall be deposited by the Seller in the Certificate Account on or
prior to the Business Day immediately preceding such Distribution Date in the
month following the month of repurchase and, upon receipt of such deposit and
certification with respect thereto in the form of Exhibit M hereto, the Trustee
shall release the related Mortgage File to the Seller and shall execute and
deliver at such entity's request such instruments of transfer or assignment
prepared by such entity, in each case without recourse, as shall be necessary to
vest in such entity, or a designee, the Trustee's interest in any Mortgage Loan
released pursuant hereto. In furtherance of the foregoing, if the Seller is not
a member of MERS and repurchases a Mortgage Loan which is registered on the
MERS(R) System, the Seller, 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 the Seller and
shall cause such Mortgage to be removed from registration on the MERS(R) System
in accordance with MERS' rules and regulations.
Pursuant to the Custodial Agreement, the Custodian is required to
execute and deliver on the Subsequent Transfer Date to the Depositor, the
Seller, the Trustee and the Servicer an Initial Certification in the form
annexed hereto as Exhibit G. Based on its review and examination, and only as to
the documents identified in such Initial Certification, the Custodian shall
acknowledge that such documents appear regular on their face and relate to such
Subsequent Mortgage Loan. Neither the Trustee nor the Custodian shall be under a
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 in the real estate records or that they are other than what they
purport to be on their face.
Pursuant to the Custodial Agreement, not later than 90 days after the
end of the Pre- Funding Period, the Custodian is required to deliver to the
Depositor, the Seller, the Trustee and the related Servicer a Final
Certification with respect to the Subsequent Mortgage Loans in the form annexed
hereto as Exhibit H with any applicable exceptions noted thereon.
If, in the course of such review of the Mortgage Files relating to the
Subsequent Mortgage Loans, the Custodian finds any document constituting a part
of a Mortgage File which does not meet the requirements of Section 2.01,
pursuant to the Custodial Agreement, the Custodian will be required to list such
as an exception in the Final Certification; provided, however that neither the
Trustee nor the Custodian shall make any determination as to whether (i) any
endorsement is sufficient to transfer all right, title and interest of the party
so endorsing, as noteholder or assignee thereof, in and to that Mortgage Note or
(ii) any assignment is in recordable form or is sufficient to effect the
assignment of and transfer to the assignee thereof under the mortgage to which
the assignment relates. The Seller shall cure any such defect or repurchase or
substitute for any such Mortgage Loan in accordance with Section 2.02(a).
It is understood and agreed that the obligation of the Seller to cure,
substitute for or to repurchase any Mortgage Loan which does not meet the
requirements of Section 2.01 shall constitute the sole remedy respecting such
defect available to the Trustee, the Depositor and any Certificateholder against
the Seller.
The Trustee shall pay to the Custodian from time to time reasonable
compensation for all services rendered by it hereunder or under the Custodial
Agreement, and the Trustee shall pay
51
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 or the Custodial Agreement, except any
such expense, disbursement or advance as may arise from its negligence or bad
faith.
SECTION 2.03 Representations and Warranties of the Seller and
Servicer.
(a) The Seller hereby makes the representations and warranties
applicable to it set forth in Schedule II hereto, and by this reference
incorporated herein, to the Depositor and the Trustee, as of the Closing Date,
or if so specified therein, as of the Cut-off Date or such other date as may be
specified.
(b) Wilshire, in its capacity as Servicer, hereby makes the
representations and warranties applicable to it set forth in Schedule III
hereto, and by this reference incorporated herein, to the Depositor and the
Trustee, as of the Closing Date, or if so specified therein, as of the Cut Date
or such other date as may be specified.
(c) Wilshire, in its capacity as Servicer, will use its reasonable
efforts to become 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.
(d) The Seller hereby makes the representations and warranties set
forth in Schedule IV as applicable hereto, and by this reference incorporated
herein, to the Trustee, as of the Closing Date, or the Subsequent Transfer Date,
as applicable, or if so specified therein, as of the Cut- off Date or such other
date as may be specified.
(e) Upon discovery by any of the parties hereto of a breach of a
representation or warranty made pursuant to Section 2.03(d) that materially and
adversely affects the interests of the Certificateholders in any Mortgage Loan,
the party discovering such breach shall give prompt notice thereof to the other
parties. The Seller hereby covenants that within 120 days of the earlier of its
discovery or its receipt of written notice from any party of a breach of any
representation or warranty made by it pursuant to Section 2.03(d) which
materially and adversely affects the interests of the Certificateholders in any
Mortgage Loan sold by the Seller to the Depositor, it shall cure such breach in
all material respects, and if such breach is not so cured, shall, (i) if such
120-day period expires prior to the second anniversary of the Closing Date,
remove such Mortgage Loan (a "Deleted Mortgage Loan") from the Trust Fund and
substitute in its place a Qualified Substitute Mortgage Loan, in the manner and
subject to the conditions set forth in this Section; or (ii) repurchase the
affected Mortgage Loan from the Trustee at the Repurchase Price in the manner
set forth below; provided, however, that any such substitution pursuant to (i)
above shall not be effected prior to the delivery to the Trustee of the Opinion
of Counsel required by Section 2.05 hereof, if any, and any such substitution
pursuant to (i) above shall not be effected prior to the additional delivery to
the Trustee of a Request for Release substantially in the form of Exhibit M and
the Mortgage File for any such Qualified Substitute Mortgage Loan. The Seller
shall promptly reimburse the Trustee for any actual out-of-pocket expenses
reasonably incurred by the Trustee in respect of enforcing the remedies for such
breach. With respect to any representation and warranties described in this
Section
52
which are made to the best of a Seller's knowledge if it is discovered by the
Depositor, the Seller or the Trustee that the substance of such representation
and warranty is inaccurate and such inaccuracy materially and adversely affects
the value of the related Mortgage Loan or the interests of the
Certificateholders therein, notwithstanding the Seller's lack of knowledge with
respect to the substance of such representation or warranty, such inaccuracy
shall be deemed a breach of the applicable representation or warranty.
With respect to any Qualified Substitute Mortgage Loan or Loans, the
Seller shall deliver to the Trustee for the benefit of the Certificateholders
the Mortgage Note, the Mortgage, the related assignment of the Mortgage, and
such other documents and agreements as are required by Section 2.01(b), with the
Mortgage Note endorsed and the Mortgage assigned as required by Section 2.01. No
substitution is permitted to be made in any calendar month after the
Determination Date for such month. Scheduled 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 Seller on the next succeeding
Distribution Date. For the month of substitution, distributions to
Certificateholders will include the monthly payment due on any Deleted Mortgage
Loan for such month and thereafter the Seller shall be entitled to retain all
amounts received in respect of such Deleted Mortgage Loan. The Seller shall
amend the Mortgage Loan Schedule for the benefit of the Certificateholders to
reflect the removal of such Deleted Mortgage Loan and the substitution of the
Qualified Substitute Mortgage Loan or Loans and the Seller shall deliver the
amended Mortgage Loan Schedule to the Trustee. Upon such substitution, the
Qualified Substitute Mortgage Loan or Loans shall be subject to the terms of
this Agreement in all respects, and the Seller shall be deemed to have made with
respect to such Qualified Substitute Mortgage Loan or Loans, as of the date of
substitution, the representations and warranties made pursuant to Section
2.03(d) with respect to such Mortgage Loan. Upon any such substitution and the
deposit to the Certificate Account of the amount required to be deposited
therein in connection with such substitution as described in the following
paragraph, the Trustee shall release the Mortgage File held for the benefit of
the Certificateholders relating to such Deleted Mortgage Loan to the Seller and
shall execute and deliver at the Seller's direction such instruments of transfer
or assignment prepared by the Seller, in each case without recourse, as shall be
necessary to vest title in the Seller, or its designee, the Trustee's interest
in any Deleted Mortgage Loan substituted for pursuant to this Section 2.03.
For any month in which the Seller substitutes one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Trustee
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 (after application of the scheduled principal portion of the monthly
payments due in the month of substitution). The amount of such shortage (the
"Substitution Adjustment Amount") plus an amount equal to the aggregate of any
unreimbursed Advances with respect to such Deleted Mortgage Loans shall be
deposited in the Certificate Account by the Seller on or before the Business Day
immediately preceding the Distribution Date in the month succeeding the calendar
month during which the related Mortgage Loan became required to be repurchased
or replaced hereunder.
In the event that the Seller shall have repurchased a Mortgage Loan,
the Repurchase Price therefor shall be deposited in the Certificate Account on
or before the Business Day immediately preceding the Distribution Date in the
month following the month during which the
53
Seller became obligated hereunder to repurchase or replace such Mortgage Loan
and upon such deposit of the Repurchase Price, the delivery of the Opinion of
Counsel if required by Section 2.05 and receipt of a Request for Release in the
form of Exhibit M hereto, the Trustee shall release the related Mortgage File
held for the benefit of the Certificateholders to such Person, and the Trustee
shall execute and deliver at such Person's direction such instruments of
transfer or assignment prepared by such Person, in each case without recourse,
as shall be necessary to transfer title from the Trustee. It is understood and
agreed that the obligation under this Agreement of any Person to cure,
repurchase or substitute any Mortgage Loan as to which a breach has occurred and
is continuing shall constitute the sole remedy against such Persons respecting
such breach available to Certificateholders, the Depositor or the Trustee on
their behalf.
The representations and warranties made pursuant to this Section 2.03
shall survive delivery of the respective Mortgage Files to the Trustee for the
benefit of the Certificateholders.
SECTION 2.04 Representations and Warranties of the Depositor as to the
Mortgage Loans.
The Depositor hereby represents and warrants to the Trustee with
respect to the Mortgage Loans that, as of the Closing Date, assuming good title
has been conveyed to the Depositor, the Depositor had good title to the Mortgage
Loans and Mortgage Notes, and did not encumber the Mortgage Loans during its
period of ownership thereof, other than as contemplated by the Agreement.
It is understood and agreed that the representations and warranties
set forth in this Section 2.04 shall survive delivery of the Mortgage Files to
the Trustee.
SECTION 2.05 Delivery of Opinion of Counsel in Connection with
Substitutions.
Notwithstanding any contrary provision of this Agreement, no
substitution pursuant to Section 2.02 shall be made more than 120 days after the
Closing Date unless the Seller delivers to the Trustee an Opinion of Counsel,
which Opinion of Counsel shall not be at the expense of either the Trustee or
the Trust Fund, addressed to the Trustee, to the effect that such substitution
will not (i) result in the imposition of the tax on "prohibited transactions" on
the Trust Fund or contributions after the Startup Date, as defined in Sections
860F(a)(2) and 860G(d) of the Code, respectively, or (ii) cause any REMIC
created hereunder to fail to qualify as a REMIC at any time that any
Certificates are outstanding.
SECTION 2.06 Execution and Delivery of Certificates.
The Trustee (or the Custodian) acknowledges receipt of the items
described in Section 2.02 of this Agreement and the documents identified in the
Initial Certification in the form annexed hereto as Exhibit G and, concurrently
with such receipt, has executed and delivered to or upon the order of the
Depositor, the Certificates in authorized denominations evidencing directly or
indirectly the entire ownership of the Trust Fund. The Trustee agrees to hold
the Trust Fund and exercise the rights referred to above for the benefit of all
present and future Holders of the Certificates and to
54
perform the duties set forth in this Agreement to the best of its ability, to
the end that the interests of the Holders of the Certificates may be adequately
and effectively protected.
SECTION 2.07 REMIC Matters.
The Preliminary Statement sets forth the designations and "latest
possible maturity date" for federal income tax purposes of all interests created
hereby. The "Startup Day" for purposes of the REMIC Provisions shall be the
Closing Date. The REMIC 1 Regular Interests shall be designated as the "regular
interests" in REMIC 1. The REMIC 2 Regular Interests shall be designated as the
"regular interests" in REMIC 2. The Class A-1, Class A-2, Class M-1, Class M2,
Class B, Class P and Class X-1 Certificates shall be designated as the "regular
interests" in REMIC 3. The Class A-R Certificates will represent beneficial
ownership of three residual interests, each of which will constitute the sole
class of residual interests in each of REMIC 1, REMIC 2 and REMIC 3. The Trustee
shall not permit the creation of any "interests" (within the meaning of Section
860G of the Code) in REMIC 1, REMIC 2 or REMIC 3 other than the Certificates or
the Uncertificated REMIC Regular Interests. The "tax matters person" with
respect to each of REMIC 1, REMIC 2 and REMIC 3 shall be the Holder of the Class
A-R Certificate at any time holding the largest Percentage Interest thereof in
the manner provided under Treasury regulations section 1.860F-4(d) and Treasury
regulations section 301.6231(a)(7)-1. The fiscal year for each REMIC shall be
the calendar year.
SECTION 2.08 Covenants of the Servicer.
The Servicer hereby covenants to the Depositor and the Trustee that no
written information, certificate of an officer, statement furnished in writing
or written report prepared by the Servicer and delivered to the Depositor, any
affiliate of the Depositor or the Trustee and prepared by the Servicer pursuant
to this Agreement will contain any untrue statement of a material fact.
SECTION 2.09 Conveyance of REMIC Regular Interests and Acceptance of
REMIC 1 and REMIC 2 by the Trustee; Issuance of
Certificates.
(a) 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 1 Regular Interests for the benefit of the Holder of the
REMIC 2 Regular Interests and the Holders of the Class R-2 Interest. The Trustee
acknowledges receipt of the REMIC 1 Regular Interests (each of which is
uncertificated) and declares that it holds and will hold the same in trust for
the exclusive use and benefit of the Holders of the REMIC 2 Regular Interests
and Holder of the Class R-2 Interest. The interests evidenced by the Class R-2
Interest, together with the REMIC 2 Regular Interests, constitute the entire
beneficial ownership interest in REMIC 2.
(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 2 Regular Interests for the benefit of the holders of the
Regular Certificates and the Class R-3 Interest. The Trustee acknowledges
receipt of the REMIC 2 Regular Interests (each of which is uncertificated) and
declares that it holds and will
55
hold the same in trust for the exclusive use and benefit of the holders of the
Regular Certificates and the Class R-3 Interest. The interests evidenced by the
Class R-3 Interest, together with the Regular Certificates, constitute the
entire beneficial ownership interest in REMIC 3.
(c) In exchange for the REMIC 2 Regular Interests and, concurrently
with the assignment to the Trustee thereof, pursuant to the written request of
the Depositor executed by an officer of the Depositor, the Trustee has executed,
authenticated and delivered to or upon the order of the Depositor, the Regular
Certificates in authorized denominations evidencing (together with the Class R-3
Interest) the entire beneficial ownership interest in REMIC 3.
(d) Concurrently with (i) the assignment and delivery to the Trustee
of REMIC 1 (including the Residual Interest therein represented by the Class R-1
Interest) and the acceptance by the Trustee thereof, pursuant to Section 2.01,
Section 2.02 and Section 2.09(a); (ii) the assignment and delivery to the
Trustee of REMIC 2 (including the Residual Interest therein represented by the
Class R-2 Interest) and the acceptance by the Trustee thereof, pursuant to
Section 2.09(b) and (iii) the assignment and delivery to the Trustee of REMIC 3
(including the Residual Interest therein represented by the Class R-3 Interest)
and the acceptance by the Trustee thereof, pursuant to Section 2.09(c) the
Trustee, pursuant to the written request of the Depositor executed by an officer
of the Depositor, has executed, authenticated and delivered to or upon the order
of the Depositor, the Class A-R Certificates in authorized denominations
evidencing the Class R-1 Interest, the Class R-2 Interest and the Class R-3
Interest.
56
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
SECTION 3.01 Servicer to Service Mortgage Loans.
For and on behalf of the Certificateholders, the Servicer shall
service and administer the Mortgage Loans in accordance with the terms of this
Agreement and with Accepted Servicing Practices. Notwithstanding anything in
this Agreement, any Servicing Agreement or the Credit Risk Management Agreement
to the contrary, the Servicer shall have no duty or obligation to enforce the
Credit Risk Management Agreement or to supervise, monitor or oversee the
activities of the Credit Risk Manager under the Credit Risk Management Agreement
with respect to any action taken or not taken by the Servicer, pursuant to a
recommendation of the Credit Risk Manager. In connection with such servicing and
administration, the Servicer shall have full power and authority, acting alone
and/or through Subservicers as provided in Section 3.02 hereof, to do or cause
to be done any and all things that it may deem necessary or desirable in
connection with such servicing and administration, including but not limited to,
the power and authority, subject to the terms hereof (i) to execute and deliver,
on behalf of the Certificateholders and the Trustee, customary consents or
waivers and other instruments and documents, (ii) to consent to transfers of any
Mortgaged Property and assumptions of the Mortgage Notes and related Mortgages
(but only in the manner provided in this Agreement), (iii) to collect any
Insurance Proceeds and other Liquidation Proceeds, and (iv) to effectuate
foreclosure or other conversion of the ownership of the Mortgaged Property
securing any Mortgage Loan; provided that the Servicer shall not take any action
that is materially inconsistent with or materially prejudices the interests of
the Trust Fund or the Certificateholders in any Mortgage Loan or the rights and
interests of the Depositor, the Trustee or the Certificateholders under this
Agreement unless such action is specifically called for by the terms hereof. The
Trustee will provide a limited power of attorney to the Servicer, prepared by
the Servicer and reasonably acceptable to the Trustee, to permit the Servicer to
act on behalf of the Trustee under this Agreement. The Servicer hereby
indemnifies the Trustee for all costs and expenses incurred by the Trustee in
connection with the negligent or willful misuse of such power of attorney. The
Servicer shall represent and protect the interests of the Trust Fund in the same
manner as it protects its own interests in mortgage loans in its own portfolio
in any claim, proceeding or litigation regarding a Mortgage Loan. The Servicer
further is hereby authorized and empowered in its own name or in the name of the
Subservicer, when the 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 reasonable expenses incurred in connection with the
actions described in the preceding sentence or as a result of MERS discontinuing
or becoming unable to continue operations in connection with the MERS(R) System,
shall be reimbursable by the Trust Fund to the Servicer. Notwithstanding the
foregoing, subject to Section 3.05(a), the Servicer shall not make or permit any
modification, waiver or amendment of 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
57
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 3.10 hereof) which would cause any of
REMIC 1, REMIC 2 or REMIC 3 to fail to qualify as a REMIC. Without limiting the
generality of the foregoing, the Servicer, in its own name or in the name of the
Depositor and the Trustee, is hereby authorized and empowered by the Depositor
and the Trustee, when the Servicer believes it appropriate in its reasonable
judgment, to execute and deliver, on behalf of the Trustee, the Depositor, the
Certificateholders or any of them, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge and all other
comparable instruments, with respect to the Mortgage Loans, and with respect to
the Mortgaged Properties held for the benefit of the Certificateholders. The
Servicer shall prepare and deliver to the Depositor and/or the Trustee such
documents requiring execution and delivery by either or both of them as are
necessary or appropriate to enable the Servicer to service and administer the
Mortgage Loans to the extent that the Servicer is not permitted to execute and
deliver such documents pursuant to the preceding sentence. Upon receipt of such
documents and a written request signed by an authorized officer, the Depositor
and/or the Trustee shall execute such documents and deliver them to the
Servicer.
In accordance with the standards of the preceding paragraph, the
Servicer shall advance or cause to be advanced funds as necessary for the
purpose of effecting the payment of taxes and assessments on any Mortgaged
Property (to the extent the Servicer has been notified that such taxes or
assessments have not paid by the related Mortgagor or the owner or the servicer
of the related First Mortgage Loan), which advances shall be reimbursable in the
first instance from related collections from the Mortgagors pursuant to Section
3.06, and further as provided in Section 3.08; provided, however, that the
Servicer shall be required to advance only to the extent that such advances, in
the good faith judgment of the Servicer, will be recoverable by the Servicer out
of Insurance Proceeds, Liquidation Proceeds, or otherwise out of the proceeds of
the related Mortgage Loan; and provided, further, that such payments shall be
advanced when the tax, premium or other cost for which payment is intended is
due to the extent the Servicer has been notified that such payment has not been
made at least five (5) Business Days prior to the due date. The costs incurred
by the Servicer, if any, in effecting the timely payments of taxes and
assessments on the Mortgaged Properties and related insurance premiums shall
not, for the purpose of calculating monthly distributions to the
Certificateholders, be added to the Stated Principal Balances of the related
Mortgage Loans, notwithstanding that the terms of such Mortgage Loans so permit.
Subject to Section 3.16, the Trustee shall execute, at the written
request of the Servicer, and furnish to the Servicer and any Subservicer such
documents as are necessary or appropriate to enable the Servicer or any
Subservicer to carry out their servicing and administrative duties hereunder,
and the Trustee hereby grants to the Servicer a power of attorney to carry out
such duties. The Trustee shall not be liable for the actions of the Servicer or
any Subservicers under such powers of attorney.
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
Servicer, in such capacity, may consent to the refinancing of the prior senior
lien, provided that the following requirements are met:
58
(i) 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; and
(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;
and
(iii) the loan evidencing the refinanced senior lien is not subject to
negative amortization.
SECTION 3.02 Subservicing; Enforcement of the Obligations of
Subservicers.
(a) The Mortgage Loans may be subserviced by a Subservicer on behalf
of the Servicer in accordance with the servicing provisions of this Agreement,
provided that the Subservicer is an approved Xxxxxx Xxx or Xxxxxxx Mac
seller/servicer in good standing. The Servicer may perform any of its servicing
responsibilities hereunder or may cause the Subservicer to perform any such
servicing responsibilities on its behalf, but the use by the Servicer of the
Subservicer shall not release the Servicer from any of its obligations hereunder
and the Servicer shall remain responsible hereunder for all acts and omissions
of the Subservicer as fully as if such acts and omissions were those of the
Servicer. The Servicer shall pay all fees and expenses of any Subservicer
engaged by the Servicer from its own funds.
Notwithstanding the foregoing, the Servicer shall be entitled to
outsource one or more separate servicing functions to a Person (each, an
"Outsourcer") that does not meet the eligibility requirements for a Subservicer,
so long as such outsourcing does not constitute the delegation of the Servicer's
obligation to perform all or substantially all of the servicing of the related
Mortgage Loans to such Outsourcer. In such event, the use by the Servicer of any
such Outsourcer shall not release the Servicer from any of its obligations
hereunder and the Servicer shall remain responsible hereunder for all acts and
omissions of such Outsourcer as fully as if such acts and omissions were those
of the Servicer, and the Servicer shall pay all fees and expenses of the
Outsourcer from the Servicer's own funds.
(b) At the cost and expense of the Servicer, without any right of
reimbursement from the Depositor, Trustee, the Trust Fund, or the Collection
Account, the Servicer shall be entitled to terminate the rights and
responsibilities of its Subservicer and arrange for any servicing
responsibilities to be performed by a successor Subservicer meeting the
requirements set forth in Section 3.02(a), provided, however, that nothing
contained herein shall be deemed to prevent or prohibit the Servicer, at the
Servicer's option, from electing to service the related Mortgage Loans itself.
In the event that the Servicer's responsibilities and duties under this
Agreement are terminated pursuant to Section 7.01, and if requested to do so by
the Trustee, the Servicer shall at its own cost and expense terminate the rights
and responsibilities of its Subservicer as soon as is reasonably possible. The
Servicer shall pay all fees, expenses or penalties necessary in order to
terminate the
59
rights and responsibilities of its Subservicer from the Servicer's own funds
without any right of reimbursement from the Depositor, Trustee, the Trust Fund,
or the Collection Account.
(c) Notwithstanding any of the provisions of this Agreement relating
to agreements or arrangements between the Servicer and its Subservicer, the
Servicer and its Outsourcer, or any reference herein to actions taken through
the Subservicer, the Outsourcer, or otherwise, the Servicer shall not be
relieved of its obligations to the Depositor, Trustee or Certificateholders and
shall be obligated to the same extent and under the same terms and conditions as
if it alone were servicing and administering the related Mortgage Loans. The
Servicer shall be entitled to enter into an agreement with its Subservicer and
Outsourcer for indemnification of the Servicer or Outsourcer, as applicable, by
such Subservicer and nothing contained in this Agreement shall be deemed to
limit or modify such indemnification.
For purposes of this Agreement, the Servicer shall be deemed to have
received any collections, recoveries or payments with respect to the related
Mortgage Loans that are received by a related Subservicer or Outsourcer, as
applicable, regardless of whether such payments are remitted by the Subservicer
or Outsourcer, as applicable, to the Servicer.
Any Subservicing Agreement and any other transactions or services
relating to the Mortgage Loans involving a Subservicer or an Outsourcer shall be
deemed to be between the Subservicer or an Outsourcer, and the Servicer alone,
and the Depositor and the Trustee shall have no obligations, duties or
liabilities with respect to a Subservicer including no obligation, duty or
liability of the Depositor and Trustee or the Trust Fund to pay a Subservicer's
fees and expenses.
SECTION 3.03 [Reserved].
SECTION 3.04 Trustee to Act as Servicer.
(a) In the event that the Servicer shall for any reason no longer be
the Servicer hereunder (including by reason of an Event of Default), the Trustee
or its successor shall thereupon assume all of the rights and obligations of the
Servicer hereunder arising thereafter (except that the Trustee shall not be (i)
liable for losses of the Servicer pursuant to Section 3.09 hereof or any acts or
omissions of the related predecessor Servicer hereunder, (ii) obligated to make
Advances if it is prohibited from doing so by applicable law or (iii) deemed to
have made any representations and warranties of the Servicer hereunder). Any
such assumption shall be subject to Section 7.02 hereof.
The Servicer shall, upon request of the Trustee, but at the expense of
the Servicer, deliver to the assuming party all documents and records relating
to each Subservicing Agreement or substitute Subservicing Agreement and the
Mortgage Loans then being serviced thereunder and hereunder by the Servicer 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 substitute
Subservicing Agreement to the assuming party.
(b) [reserved]
60
SECTION 3.05 Collection of Mortgage Loans; Collection Accounts;
Certificate Account; Pre-Funding Account; Capitalized
Interest Account.
(a) Continuously from the date hereof until the principal and interest
on all Mortgage Loans have been paid in full or such Mortgage Loans have become
Liquidated Mortgage Loans, the Servicer shall proceed in accordance with the
customary and usual standards of practice of prudent mortgage loan servicers to
collect all payments due under each of the related Mortgage Loans when the same
shall become due and payable to the extent consistent with this Agreement and,
consistent with such standard, with respect to Mortgage Loans for which the
Servicer collects escrow payments, shall ascertain and estimate Escrow Payments
and all other charges that will become due and payable with respect to the
Mortgage Loans and the Mortgaged Properties, to the end that the installments
payable by the Mortgagors will be sufficient to pay such charges as and when
they become due and payable. Consistent with the terms of this Agreement, the
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 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
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), or extend the final maturity
date of such Mortgage Loan, unless such Mortgage Loan is in default or, in the
judgment of the Servicer, such default is reasonably foreseeable; and that no
such modification shall reduce the interest rate on a Mortgage Loan below the
rate at which the Servicing Fee with respect to such Mortgage Loan accrues. In
the event of any such arrangement, the Servicer shall make Advances on the
related Mortgage Loan in accordance with the provisions of Section 4.01 during
the scheduled period in accordance with the amortization schedule of such
Mortgage Loan without modification thereof by reason of such arrangements. The
Servicer shall not be required to institute or join in litigation with respect
to collection of any payment (whether under a Mortgage, Mortgage Note or
otherwise or against any public or governmental authority with respect to a
taking or condemnation) if it reasonably believes that enforcing the provision
of the Mortgage or other instrument pursuant to which such payment is required
is prohibited by applicable law.
(b) The Servicer shall segregate and hold all funds collected and
received pursuant to a Mortgage Loan separate and apart from any of its own
funds and general assets and shall establish and maintain one or more Collection
Accounts, in the form of time deposit or demand accounts, titled "[Servicer's
name], in trust for the Holders of Credit Suisse First Boston Mortgage
Securities Corp., Home Equity Mortgage Pass-Through Certificates, Series 2003-3"
or, if established and maintained by a Subservicer on behalf of the related
Servicer, "[Subservicer's name], in trust for [Servicer's name]" or
"[Subservicer's name], as agent, trustee and/or bailee of principal and interest
custodial account for [Servicer's name], its successors and assigns, for various
owners of interest in [Servicer's name] mortgage-backed pools". Each Collection
Account shall be an Eligible Account. Any funds deposited in a Collection
Account shall at all times be either invested in Eligible
61
Investments or shall be fully insured to the full extent permitted under
applicable law. Funds deposited in a Collection Account may be drawn on by the
Servicer in accordance with Section 3.08.
The Servicer shall deposit in the Collection Account on a daily basis
and retain therein, the following collections remitted by Subservicers or
payments received by the Servicer and payments made by the Servicer subsequent
to the Cut-off Date, other than payments of principal and interest due on or
before the Cut-off Date:
(i) all payments on account of principal on the Mortgage Loans,
including all Principal Prepayments;
(ii) all payments on account of interest on the Mortgage Loans
adjusted to the per annum rate equal to the Mortgage Rate reduced by the
related Servicing Fee Rate;
(iii) all Liquidation Proceeds on the Mortgage Loans;
(iv) all Insurance Proceeds on the Mortgage Loans including amounts
required to be deposited pursuant to Section 3.09 (other than proceeds to
be held in the Escrow Account and applied to the restoration or repair of
the Mortgaged Property or released to the Mortgagor in accordance with
Section 3.09);
(v) all Advances made by the Servicer pursuant to Section 4.01;
(vi) with respect to each Principal Prepayment on the Mortgage Loans,
the Prepayment Interest Shortfall, if any, for the Prepayment Period. The
aggregate of such deposits shall be made from the Servicer's own funds,
without reimbursement therefor, up to a maximum amount per month equal to
the Compensating Interest Payment, if any, for the Mortgage Loans and that
Distribution Date;
(vii) any amounts required to be deposited by the Servicer in respect
of net monthly income from REO Property pursuant to Section 3.11; and
(viii) any other amounts required to be deposited hereunder including
all collected Prepayment Penalties.
The foregoing requirements for deposit into each Collection Account
shall be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, Ancillary Income need not be deposited by the
Servicer into such Collection Account. In addition, notwithstanding the
provisions of this Section 3.05, the Servicer may deduct from amounts received
by it, prior to deposit to the applicable Collection Account, any portion of any
Scheduled Payment representing the applicable Servicing Fee. In the event that
the Servicer shall remit any amount not required to be remitted, it may at any
time withdraw or direct the institution maintaining the related Collection
Account to withdraw such amount from such Collection Account, any provision
herein to the contrary notwithstanding. Such withdrawal or direction may be
accomplished by delivering written notice thereof to the Trustee or such other
institution maintaining such Collection Account which describes the amounts
deposited in error in such Collection Account. The Servicer shall
62
maintain adequate records with respect to all withdrawals made by it pursuant to
this Section. All funds deposited in a Collection Account shall be held in trust
for the Certificateholders until withdrawn in accordance with Section 3.08.
(c) On or prior to the Closing Date, the Trustee shall establish and
maintain, on behalf of the Certificateholders, the Certificate Account. The
Trustee shall, promptly upon receipt, deposit in the Certificate Account and
retain therein the following:
(i) the aggregate amount remitted by the Servicer to the Trustee
pursuant to Section 3.08(viii);
(ii) any amount deposited by the Trustee pursuant to Section 3.05(e)
in connection with any losses on Eligible Investments; and
(iii) any other amounts deposited hereunder which are required to be
deposited in the Certificate Account.
In the event that the Servicer shall remit to the Trustee any amount
not required to be remitted, it may at any time direct the Trustee to withdraw
such amount from the Certificate Account, any provision herein to the contrary
notwithstanding. Such direction may be accomplished by delivering an Officer's
Certificate to the Trustee which describes the amounts deposited in error in the
Certificate Account. All funds deposited in the Certificate Account shall be
held by the Trustee in trust for the Certificateholders until disbursed in
accordance with this Agreement or withdrawn in accordance with Section 3.08. In
no event shall the Trustee incur liability for withdrawals from the Certificate
Account at the direction of the Servicer.
(d) Each institution at which a Collection Account, the Certificate
Account or the Pre-Funding Account is maintained shall either hold such funds on
deposit uninvested or shall invest the funds therein as directed in writing by
the Servicer (in the case of a Collection Account), the Trustee (in the case of
the Certificate Account) or the Depositor (in the case of the Pre-Funding
Account), in Eligible Investments, which shall mature not later than (i) in the
case of a Collection Account, the second Business Day immediately preceding the
related Distribution Date and (ii) in the case of the Certificate Account and
the Pre-Funding Account, the Business Day immediately preceding the Distribution
Date and, in each case, shall not be sold or disposed of prior to its maturity.
All income and gain net of any losses realized from any such balances or
investment of funds on deposit in a Collection Account shall be for the benefit
of the Servicer as servicing compensation and shall be remitted to it monthly as
provided herein. The amount of any realized losses in a Collection Account
incurred in any such account in respect of any such investments shall promptly
be deposited by the Servicer in the Collection Account. The Trustee in its
fiduciary capacity shall not be liable for the amount of any loss incurred in
respect of any investment or lack of investment of funds held in a Collection
Account or the Pre-Funding Account. All income and gain net of any losses
realized from any such investment of funds on deposit in the Certificate Account
shall be for the benefit of the Trustee as compensation and shall be remitted to
it monthly as provided herein. The amount of any realized losses in the
Certificate Account incurred in any such account in respect of any such
investments shall promptly be deposited by the Trustee in the Certificate
Account. All income and gain net of any losses realized from any such balances
or
63
investment of funds on deposit in the Pre-Funding Account shall be for the
benefit of the Depositor and shall be remitted to it monthly.
(e) The Servicer shall give notice to the Trustee, the Seller, each
Rating Agency and the Depositor of any proposed change of the location of the
related Collection Account prior to any change thereof. The Trustee shall give
notice to the Servicer, the Seller, each Rating Agency and the Depositor of any
proposed change of the location of the Certificate Account prior to any change
thereof.
(f) The Trustee shall establish and maintain, on behalf of the
Certificateholders, the Pre-Funding Account. On the Closing Date, the Depositor
shall remit the Pre-Funding Amount to the Trustee for deposit in the Pre-Funding
Account. On each Subsequent Transfer Date, upon satisfaction of the conditions
for such Subsequent Transfer Date set forth in Section 2.01(f), with respect to
the related Subsequent Transfer Agreement, the Trustee shall remit to the
Depositor the applicable Aggregate Subsequent Transfer Amount as payment of the
purchase price for the related Subsequent Mortgage Loans.
If any funds remain in the Pre-Funding Account on August 24, 2003, to
the extent they represent interest earnings on the amounts originally deposited
into the Pre-Funding Account, the Trustee shall distribute them to the order of
the Depositor. The remaining funds in the Pre- Funding Account shall be
transferred to the Certificate Account to be included as part of principal
distributions to the Class A-1 Certificates and Class A-2 Certificates in the
manner and priority set forth herein on the August 2003 Distribution Date.
(g) The Trustee shall establish and maintain, on behalf of the
Certificateholders, the Capitalized Interest Account. On the Closing Date, the
Depositor shall remit the Capitalized Interest Deposit to the Trustee for
deposit in the Capitalized Interest Account. On the Business Day prior to each
of the June 2003, July 2003 and August 2003 Distribution Dates, the Trustee
shall transfer from each Capitalized Interest Account to the Certificate Account
an amount equal to the Capitalized Interest Requirement for such Distribution
Date. On each of the June 2003 and July 2003 Distribution Dates, the Overfunded
Interest Amount shall be withdrawn from the Capitalized Interest Account and
paid to the Depositor. Any funds remaining in the Capitalized Interest Account
immediately after the April 2003 Distribution Date shall be paid to the
Depositor.
SECTION 3.06 Establishment of and Deposits to Escrow Accounts;
Permitted Withdrawals from Escrow Accounts; Payments of
Taxes, Insurance and Other Charges.
(a) To the extent required by the related Mortgage Note and not
violative of current law, the Servicer shall segregate and hold all funds
collected and received pursuant to a Mortgage Loan constituting Escrow Payments
separate and apart from any of its own funds and general assets and shall
establish and maintain one or more Escrow Accounts, in the form of time deposit
or demand accounts, titled, "Credit Suisse First Boston Mortgage Securities
Corp., Home Equity Mortgage Pass-Through Certificates, Series 2003-3" or, if
established and maintained by a Subservicer on behalf of the related Servicer,
"[Subservicer's name], in trust for [Servicer's name]" or "[Subservicer's name],
as agent, trustee and/or bailee of taxes and insurance custodial account for
64
[Servicer's name], its successors and assigns, for various owners of interest in
[Servicer's name] mortgage-backed pools". The Escrow Accounts shall be Eligible
Accounts. Funds deposited in the Escrow Account may be drawn on by the Servicer
in accordance with Section 3.06(b). The creation of any Escrow Account shall be
evidenced by a certification in the form of Exhibit P-1 hereto, in the case of
an account established with the Servicer, or by a letter agreement in the form
of Exhibit P2 hereto, in the case of an account held by a depository other than
the Servicer. A copy of such certification shall be furnished to the Depositor
and Trustee.
(b) The Servicer shall deposit in its Escrow Account or Accounts on a
daily basis within one Business Day of receipt and retain therein:
(i) all Escrow Payments collected on account of the related Mortgage
Loans, for the purpose of effecting timely payment of any such items as
required under the terms of this Agreement; and
(ii) all amounts representing Insurance Proceeds which are to be
applied to the restoration or repair of any Mortgaged Property.
The Servicer shall make withdrawals from the Escrow Account only to
effect such payments as are required under this Agreement, as set forth in
Section 3.06(c). The Servicer shall be entitled to retain any interest paid on
funds deposited in the related Escrow Account by the depository institution,
other than interest on escrowed funds required by law to be paid to the
Mortgagor. To the extent required by law, the Servicer shall pay interest on
escrowed funds to the Mortgagor notwithstanding that the Escrow Account may be
non-interest bearing or that interest paid thereon is insufficient for such
purposes.
(c) Withdrawals from the Escrow Account or Accounts may be made by the
Servicer only:
(i) to effect timely payments of ground rents, taxes, assessments,
water rates, mortgage insurance premiums, condominium charges, fire and
hazard insurance premiums or other items constituting Escrow Payments for
the related Mortgage;
(ii) to reimburse the Servicer for any Servicing Advances made by the
Servicer pursuant to this Agreement with respect to a related Mortgage
Loan, but only from amounts received on the related Mortgage Loan which
represent late collections of Escrow Payments thereunder;
(iii) to refund to any Mortgagor any funds found to be in excess of
the amounts required under the terms of the related Mortgage Loan;
(iv) for transfer to the related Collection Account to reduce the
principal balance of the related Mortgage Loan in accordance with the terms
of the related Mortgage and Mortgage Note;
65
(v) for application to restore or repair of the related Mortgaged
Property in accordance with the procedures outlined in Section 3.09;
(vi) to pay to the Servicer, or any Mortgagor to the extent required
by law, any interest paid on the funds deposited in such Escrow Account;
and
(vii) to clear and terminate such Escrow Account on the termination of
this Agreement.
(d) No later than the Closing Date, the Servicer shall establish and
maintain a sub- account of the Collection Account titled "[Servicer's name],
Simple Interest Excess Sub-Account in trust for the Holders of Credit Suisse
First Boston Mortgage Securities Corp., Home Equity Mortgage Pass-Through
Certificates, Series 2003-3 ". The Servicer shall, on each Determination Date
transfer from the Collection Account to the Simple Interest Excess Sub-Account
all Net Simple Interest Excess, if any, pursuant to Section 3.08(ix), and shall
maintain a record of all such deposits.
(e) The Servicer shall withdraw amounts on deposit in the Simple
Interest Excess Sub-Account on each Determination Date for deposit to the
Certificate Account in an amount equal to the lesser of (i) the amount on
deposit therein, and (ii) the Net Simple Interest Shortfall for such
Distribution Date.
(f) The Servicer shall remit to the Trustee which shall thereupon
distribute to the Class X-1 Certificateholder 90% of the balance in the Simple
Interest Excess Sub-Account on the Distribution Date each year occurring in
December, commencing in December 2003. Such distributions shall be deemed to be
made on a first-in, first-out basis. In addition, the Servicer shall clear and
terminate the Simple Interest Excess Sub-Account upon the termination of this
Agreement and retain any funds remaining therein.
(g) Amounts on deposit in the Simple Interest Excess Sub-Accounts may
be invested in Eligible Investments. All income and gain net of any losses
realized from any such balances or investment of funds on deposit in the Simple
Interest Excess Sub-Account shall be for the benefit of the Servicer as
servicing compensation and shall be remitted to it monthly. The amount of any
net investment losses in the Simple Interest Excess Sub-Account shall promptly
be deposited by the Servicer in such Simple Interest Excess Sub-Account.
SECTION 3.07 Access to Certain Documentation and Information Regarding
the Mortgage Loans; Inspections.
(a) The Servicer shall afford the Depositor and the Trustee reasonable
access to all records and documentation regarding the Mortgage Loans and all
accounts, insurance information and other matters relating to this Agreement,
such access being afforded without charge, but only upon reasonable request and
during normal business hours at the office designated by the Servicer.
(b) The Servicer shall inspect the Mortgaged Properties as often as
deemed necessary by the Servicer in the Servicer's sole discretion, to assure
itself that the value of such Mortgaged Property is being preserved. In
addition, if any Mortgage Loan is more than 60 days
66
delinquent, the Servicer shall conduct subsequent inspections in accordance with
Accepted Servicing Practices or as may be required by the primary mortgage
guaranty insurer. The Servicer shall keep a written or electronic report of each
such inspection.
SECTION 3.08 Permitted Withdrawals from the Collection Accounts and
Certificate Account.
The Servicer may (and in the case of clause (viii) below, shall) from
time to time make withdrawals from the related Collection Account for the
following purposes:
(i) to pay to the Servicer (to the extent not previously retained by
the Servicer) the servicing compensation to which it is entitled pursuant
to Section 3.14, and to pay to the Servicer, as additional servicing
compensation, earnings on or investment income with respect to funds in or
credited to such Collection Account;
(ii) to reimburse the Servicer for unreimbursed Advances made by it,
such right of reimbursement pursuant to this subclause (ii) being limited
to amounts received on the Mortgage Loan(s) in respect of which any such
Advance was made (including without limitation, late recoveries of
payments, Liquidation Proceeds, Insurance Proceeds, amounts representing
proceeds of other insurance policies, if any, covering the related
Mortgaged Property, rental and other income from REO Property and proceeds
of any purchase or repurchase of the related Mortgage Loan, to the extent
received by the Servicer);
(iii) to reimburse the Servicer for any Nonrecoverable Advance
previously made from collections or proceeds of any of the Mortgage Loans;
(iv) to reimburse the Servicer for (A) unreimbursed Servicing
Advances, the Servicer's right to reimbursement pursuant to this clause (A)
with respect to any Mortgage Loan being limited to amounts received on such
Mortgage Loan which represent late payments of principal and/or interest
(including, without limitation, Liquidation Proceeds, Insurance Proceeds,
amounts representing proceeds of other insurance policies, if any, covering
the related Mortgaged Property, rental and other income from REO Property
and proceeds of any purchase or repurchase of the related Mortgage Loan
with respect to such Mortgage Loan) respecting which any such advance was
made and (B) for unpaid Servicing Fees as provided in Section 3.11;
(v) to pay to the purchaser, with respect to each Mortgage Loan or
property acquired in respect thereof that has been purchased pursuant to
Section 2.02, 2.03 or 3.11, all amounts received thereon after the date of
such purchase;
(vi) to reimburse the Servicer or the Depositor for expenses incurred
by any of them and reimbursable pursuant to Section 6.03 hereof;
(vii) to withdraw any amount deposited in such Collection Account and
not required to be deposited therein;
67
(viii) on or prior to the Servicer Cash Remittance Date, to withdraw
an amount equal to the Available Funds plus any related Expense Fees (other
than the Servicing Fee) for such Distribution Date and any Prepayment
Penalties received in respect of the Mortgage Loans, subject to the
collection of funds included in the definition of "Available Funds" and
remit such amount to the Trustee for deposit in the Certificate Account;
and
(ix) to deposit to the Simple Interest Excess Sub-Account any amount
required to be deposited therein pursuant to Section 3.06(d); and
(x) to clear and terminate such Collection Account upon termination of
this Agreement pursuant to Section 9.01 hereof.
The Servicer shall keep and maintain separate accounting, on a
Mortgage Loan basis for the purpose of justifying any withdrawal from the
Collection Account pursuant to such subclauses (i), (ii), (iv) and (v). Prior to
making any withdrawal from a Collection Account pursuant to subclause (iii), the
Servicer shall deliver to the Trustee a certificate of a Servicing Officer
indicating the amount of any previous Advance determined by the Servicer to be a
Nonrecoverable Advance and identifying the related Mortgage Loans(s), and their
respective portions of such Nonrecoverable Advance.
The Trustee shall withdraw funds from the Certificate Account for
distributions to the Certificateholders and the Credit Risk Manager, if
applicable, in the manner specified in this Agreement (and to withhold from the
amounts so withdrawn, the amount of any taxes that it is authorized to withhold
pursuant to the last paragraph of Section 8.11). In addition, the Trustee may
from time to time make withdrawals from the Certificate Account for the
following purposes:
(i) to pay to itself the Trustee Fee and any investment income earned
for the related Distribution Date;
(ii) to withdraw and return to the Servicer for deposit to the
Collection Account any amount deposited in the Certificate Account and not
required to be deposited therein; and
(iii) to clear and terminate the Certificate Account upon termination
of this Agreement pursuant to Section 9.01 hereof.
SECTION 3.09 Maintenance of Hazard Insurance and Mortgage Impairment
Insurance; Claims; Restoration of Mortgaged Property.
The Servicer shall obtain and maintain a blanket policy insuring
against losses arising from fire and hazards covered under extended coverage on
all of the related Mortgage Loans, which policy shall provide coverage in an
amount equal to the amount at least equal to the lesser of (i) the maximum
insurable value of the improvements securing such Mortgage Loan and (ii) the
greater of (A) the outstanding principal balance of the Mortgage Loan and (B) an
amount such that the proceeds of such policy shall be sufficient to prevent the
Mortgagor and/or the mortgagee from becoming co-insurer. Any amounts collected
by the Servicer under any such policy relating to a
68
Mortgage Loan shall be deposited in the Collection Account subject to withdrawal
pursuant to Section 3.08. Such policy may contain a deductible clause, in which
case, in the event that there shall not have been maintained on the related
Mortgaged Property a standard hazard insurance policy, and there shall have been
a loss which would have been covered by such policy, the Servicer shall deposit
in the related Collection Account at the time of such loss the amount not
otherwise payable under the blanket policy because of such deductible clause,
such amount to be deposited from the Servicer's funds, without reimbursement
therefor. Upon request of the Trustee, the Servicer shall cause to be delivered
to the Trustee a certified true copy of such policy and a statement from the
insurer thereunder that such policy shall in no event be terminated or
materially modified without 30 days' prior written notice to the Trustee. In
connection with its activities as Servicer of the Mortgage Loans, the Servicer
agrees to present, on behalf of itself, the Depositor, and the Trustee for the
benefit of the Certificateholders, claims under any such blanket policy.
Pursuant to Section 3.05, any amounts collected by the Servicer under
any such policies (other than amounts to be deposited in the related Escrow
Account and applied to the restoration or repair of the related Mortgaged
Property, or property acquired in liquidation of the Mortgage Loan, or to be
released to the Mortgagor, in accordance with the Servicer's normal servicing
procedures) shall be deposited in the related Collection Account (subject to
withdrawal pursuant to Section 3.08). Any costs incurred by the Servicer in
maintaining such insurance shall be recoverable by the Servicer as a Servicing
Advance out of payments by the related Mortgagor or out of Insurance Proceeds or
Liquidation Proceeds. Notwithstanding anything to the contrary in this
paragraph, the Servicer shall be required to pay the costs of maintaining any
insurance contemplated by this Section 3.09 only to the extent that such
advances, in the good faith judgment of the Servicer, will be recoverable.
The Servicer need not obtain the approval of the Trustee prior to
releasing any Insurance Proceeds to the Mortgagor to be applied to the
restoration or repair of the Mortgaged Property if such release is in accordance
with Accepted Servicing Practices. At a minimum, the Servicer shall comply with
the following conditions in connection with any such release of Insurance
Proceeds:
(i) the Servicer shall receive satisfactory independent verification
of completion of repairs and issuance of any required approvals with
respect thereto;
(ii) the Servicer shall take all steps necessary to preserve the
priority of the lien of the Mortgage, including, but not limited to
requiring waivers with respect to m and materialmen's liens; and
(iii) pending repairs or restoration, the Servicer shall place the
Insurance Proceeds in the related Escrow Account.
If the Trustee is named as an additional loss payee, the Servicer is
hereby empowered to endorse any loss draft issued in respect of such a claim in
the name of the Trustee.
69
SECTION 3.10 Enforcement of Due-on-Sale Clauses; Assumption
Agreements.
The Servicer shall use its best efforts to enforce any "due-on-sale"
provision contained in any related Mortgage or Mortgage Note and to deny
assumption by the person to whom the Mortgaged Property has been or is about to
be sold whether by absolute conveyance or by contract of sale, and whether or
not the Mortgagor remains liable on the Mortgage and the Mortgage Note. When the
Mortgaged Property has been conveyed by the Mortgagor, the Servicer shall, to
the extent it has knowledge of such conveyance, exercise its rights to
accelerate the maturity of such Mortgage Loan under the "due-on-sale" clause
applicable thereto, provided, however, that the Servicer shall not exercise such
rights if prohibited by law from doing so or if the exercise of such rights
would impair or threaten to impair any recovery under the related Primary
Insurance Policy, if any.
If the Servicer reasonably believes it is unable under applicable law
to enforce such "due-on-sale" clause, the Servicer shall enter into (i) an
assumption and modification agreement with the person to whom such property has
been conveyed, pursuant to which such person becomes liable under the Mortgage
Note and the original Mortgagor remains liable thereon or (ii) in the event the
Servicer is unable under applicable law to require that the original Mortgagor
remain liable under the Mortgage Note and the Servicer has the prior consent of
the primary mortgage guaranty insurer, a substitution of liability agreement
with the purchaser of the Mortgaged Property pursuant to which the original
Mortgagor is released from liability and the purchaser of the Mortgaged Property
is substituted as Mortgagor and becomes liable under the Mortgage Note.
Notwithstanding the foregoing, the Servicer shall not be deemed to be in default
under this Section by reason of any transfer or assumption which the Servicer
reasonably believes it is restricted by law from preventing, for any reason
whatsoever. In connection with any such assumption, no material term of the
Mortgage Note, including without limitation, the Mortgage Rate borne by the
related Mortgage Note, the term of the Mortgage Loan or the outstanding
principal amount of the Mortgage Loan shall be changed.
Subject to the Servicer's duty to enforce any due-on-sale clause to
the extent set forth in this Section 3.10, in any case in which a Mortgaged
Property has been conveyed to a Person by a Mortgagor, and such Person is to
enter into an assumption agreement or modification agreement or supplement to
the Mortgage Note or Mortgage that requires the signature of the Trustee, or if
an instrument of release signed by the Trustee is required releasing the
Mortgagor from liability on the Mortgage Loan, the Servicer shall prepare and
deliver or cause to be prepared and delivered to the Trustee for signature and
shall direct, in writing, the Trustee to execute the assumption agreement with
the Person to whom the Mortgaged Property is to be conveyed and such
modification agreement or supplement to the Mortgage Note or Mortgage or other
instruments as are reasonable or necessary to carry out the terms of the
Mortgage Note or Mortgage or otherwise to comply with any applicable laws
regarding assumptions or the transfer of the Mortgaged Property to such Person.
In connection with any such assumption, no material term of the Mortgage Note
may be changed. Together with each such substitution, assumption or other
agreement or instrument delivered to the Trustee for execution by it, the
Servicer shall deliver an Officer's Certificate signed by a Servicing Officer
stating that the requirements of this Section 3.10 have been met in connection
therewith. The Servicer shall notify the Trustee that any such substitution or
assumption agreement has been
70
completed by forwarding to the Trustee the original of such substitution or
assumption agreement, which in the case of the original shall be added to the
related Mortgage File and shall, for all purposes, be considered a part of such
Mortgage File to the same extent as all other documents and instruments
constituting a part thereof. Any fee collected by the Servicer for entering into
an assumption or substitution of liability agreement will be retained by the
Servicer as additional servicing compensation.
SECTION 3.11 Realization Upon Defaulted Mortgage Loans; Repurchase of
Certain Mortgage Loans.
(a) (i) The Servicer shall use reasonable efforts to foreclose upon or
otherwise comparably convert the ownership of properties securing such of the
related Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments.
With respect to such of the Mortgage Loans as come into and continue in default,
the Servicer will decide whether to (i) foreclose upon the Mortgaged Properties
securing such Mortgage Loans, (ii) write off the unpaid principal balance of the
Mortgage Loans as bad debt, (iii) take a deed in lieu of foreclosure, (iv)
accept 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 permit 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), (v) arrange for a repayment plan, or (vi) agree
to a modification in accordance with this Agreement. In connection with such
decision, the Servicer shall take such action as (i) the Servicer would take
under similar circumstances with respect to a similar mortgage loan held for its
own account for investment, (ii) shall be consistent with Accepted Servicing
Practices, (iii) the Servicer shall determine consistently with Accepted
Servicing Practices to be in the best interest of the Trustee and
Certificateholders, and (iv) is consistent with the requirements of the insurer
under any Required Insurance Policy; provided, however, that the Servicer shall
not be required to expend its own funds in connection with any foreclosure or
towards the restoration of any property unless it shall determine in its sole
discretion (i) that such restoration and/or foreclosure will increase the
proceeds of liquidation of the related Mortgage Loan after reimbursement to
itself of such expenses and (ii) that such expenses will be recoverable to it
through Liquidation Proceeds (respecting which it shall have priority for
purposes of withdrawals from the Collection Account). The Servicer shall be
responsible for all other costs and expenses incurred by it in any such
proceedings; provided, however, that it shall be entitled to reimbursement
thereof from the liquidation proceeds with respect to the related Mortgaged
Property, as provided in the definition of Liquidation Proceeds and as provided
in Section 3.08(iv)(A).
(ii) Notwithstanding anything to the contrary contained in this
Agreement, with respect to any Mortgage Loan that is one hundred twenty (120)
days delinquent, the Servicer shall obtain a broker's price opinion with respect
to the related Mortgaged Property, the cost of obtaining any such broker's price
opinion to be reimbursable to the Servicer as a Servicing Advance pursuant to
Section 3.08(iii) or (iv). After obtaining the related broker's price opinion,
the Servicer will determine whether any Significant Net Recovery is possible
through foreclosure proceedings or other liquidation of the related Mortgaged
Property. If the Servicer determines that (x) no Significant Net Recovery is
possible or (y) the potential Net Recoveries are anticipated to be an amount,
determined by the Servicer in its good faith judgment and in light of other
mitigating
71
circumstances, that is insufficient to warrant proceeding through foreclosure or
other liquidation of the related Mortgaged Property, it may, at its discretion,
charge off such delinquent Mortgage Loan in accordance with subsections (a)(iii)
and (a)(iv) below.
(iii) If the Servicer determines based on the broker's price opinion
obtained under paragraph (a)(ii) above and other relevant considerations that
(x) no Significant Net Recovery is possible through foreclosure proceedings or
other liquidation of the related Mortgaged Property or (y) the potential Net
Recoveries are anticipated to be an amount, determined by the Servicer in its
good faith judgment and in light of other mitigating circumstances, that is
insufficient to warrant proceeding through foreclosure or other liquidation of
the related Mortgaged Property, it will be obligated to charge off the related
Mortgage Loan at the time such Mortgage Loan becomes 180 days delinquent. Once a
Mortgage Loan has been charged off, the Servicer will discontinue making
Advances, the Servicer will not be entitled to any additional servicing
compensation (except as described in paragraphs(a)(ii) or (a) (iv) of this
Section 3.11), the Charged Off Loan will give rise to a Realized Loss, and the
Servicer will follow the procedures described in paragraph (a)(iv) below. If the
Servicer determines that (x) a Significant Net Recovery is possible through
foreclosure proceedings or other liquidation of the Mortgaged Property and (y)
the potential Net Recoveries are anticipated to be an amount, determined by the
Servicer in its good faith judgment and in light of other mitigating
circumstances, that is sufficient to warrant proceeding through foreclosure or
other liquidation of the related Mortgaged Property, the Servicer may continue
to make Advances or Servicing Advances on the related Mortgage Loan that has
become 180 days delinquent and will notify the Credit Risk Manager of that
decision.
(iv) Any Mortgage Loan that becomes a Charged Off Loan may continue to
be serviced by Wilshire for the Certificateholders using Wilshire Special
Servicing. Wilshire will accrue, but not be entitled to any Servicing Fees and
reimbursement of expenses in connection with such Charged Off Loans, except to
the extent of funds available from the aggregate amount of recoveries on all
Charged Off Loans. Such aggregate recovery amounts on Charged Off Loans shall be
paid to Wilshire first, as reimbursement of any outstanding and unpaid expenses,
and second, as any accrued and unpaid Servicing Fees. Wilshire will only be
entitled to previously accrued Servicing Fees and expenses on any such Charged
Off Loans. Wilshire will not be entitled to receive any future unaccrued
Servicing Fees or expenses from collections on such Charged Off Loans. Any
Charged Off Loan serviced by Wilshire using Wilshire Special Servicing shall be
so serviced until the Release Date described below. Any Net Recoveries on such
Charged Off Loans received prior to the Release Date will be treated as
Liquidation Proceeds and included in Available Funds.
On the date (the "Release Date") which is no more than six months
after the date on which Wilshire begins servicing any Charged Off Loans using
Wilshire Special Servicing, unless specific Net Recoveries are anticipated by
Wilshire on a particular Charged Off Loan (in which case the Release Date will
be delayed until all such specific anticipated Net Recoveries are received),
such Charged Off Loan will be released from the Trust Fund, will no longer be an
asset of any REMIC, and will be transferred to the Class X-2 Certificateholders,
without recourse, and thereafter (i) those Holders will be entitled to any
amounts subsequently received in respect of any such Released Loans, (ii) the
Majority in Interest Class X-2 Certificateholder may designate any servicer to
service any such Released Loan and (iii) the Majority in Interest Class X-2
Certificateholder may
72
sell any such Released Loan to a third party. Notwithstanding the previous
sentence, if at any time after a Mortgage Loan has been Charged Off and prior to
six months after the date on which Wilshire begins servicing such Charged Off
Loan using Wilshire Special Servicing, Wilshire determines that there will not
be any Net Recoveries on such Charged Off Loan under any circumstances, Wilshire
may release such Charged Off Loan to the Majority in Interest Class X-2
Certificateholder in accordance with the provisions set forth in the previous
sentence.
Notwithstanding the foregoing, the procedures described above in this
subsection 3.11(a)(iv) relating to the treatment of Charged Off Loans may be
modified at any time at the discretion of the Majority in Interest Class X-1
Certificateholder, with the consent of Wilshire, which consent shall not be
unreasonably withheld,; provided, however, that in no event shall the Majority
in Interest Class X-1 Certificateholder change the fee structure relating to
Charged Off Loans in a manner that would cause fees to be paid to Wilshire other
than from recoveries on Charged Off Loans.
The Trustee shall track collections received by Wilshire on any
Charged Off Loans based upon loan level data provided to the Trustee by Wilshire
on each Servicer Data Remittance Date in a report in the form of Exhibit U
hereto, identifying the Charged Off Loans as of the related Due Period that
Wilshire will continue to service until the related Release Date using Wilshire
Special Servicing. On each Distribution Date, the Trustee shall verify, based on
the recovery and expense information provided by Wilshire on the related
Servicer Data Remittance Date, (i) the aggregate amount of accrued and unpaid
Servicing Fees to be paid to Wilshire and expenses to be reimbursed to Wilshire
on such Charged Off Loans as of the related Due Period and (ii) the amount of
Net Recoveries on such Charged Off Loans for such Distribution Date. The Trustee
shall be entitled to rely, without independent verification, on the loan level
data provided by Wilshire that identifies the recovery amounts and the
outstanding and unpaid expenses on any Charged Off Loan in order to verify the
amount in clause (ii) of the previous sentence. The Trustee will be responsible
for independently verifying the aggregate amount of accrued and unpaid Servicing
Fees described in clause (i) of the second preceding sentence to be paid to
Wilshire.
(v) Notwithstanding anything to the contrary contained in this
Agreement, in connection with a foreclosure or acceptance of a deed in lieu of
foreclosure, in the event the Servicer has reasonable cause to believe that a
Mortgaged Property is contaminated by hazardous or toxic substances or wastes,
or if the Trustee otherwise requests, an environmental inspection or review of
such Mortgaged Property conducted by a qualified inspector shall be arranged for
by the Servicer. Upon completion of the inspection, the Servicer shall promptly
provide the Trustee with a written report of environmental inspection.
(vi) In the event the environmental inspection report indicates that
the Mortgaged Property is contaminated by hazardous or toxic substances or
wastes, the Servicer shall not proceed with foreclosure or acceptance of a deed
in lieu of foreclosure if the estimated costs of the environmental clean up, as
estimated in the environmental inspection report, together with the Servicing
Advances made by the Servicer and the estimated costs of foreclosure or
acceptance of a deed in lieu of foreclosure exceeds the estimated value of the
Mortgaged Property. If however, the aggregate of such clean up and foreclosure
costs and Servicing Advances are less than or equal to the estimated value of
the Mortgaged Property, then the Servicer may, in its reasonable judgment
73
and in accordance with Accepted Servicing Practices, choose to proceed with
foreclosure or acceptance of a deed in lieu of foreclosure and the Servicer
shall be reimbursed for all reasonable costs associated with such foreclosure or
acceptance of a deed in lieu of foreclosure and any related environmental clean
up costs, as applicable, from the related Liquidation Proceeds, or if the
Liquidation Proceeds are insufficient to fully reimburse the Servicer, the
Servicer shall be entitled to be reimbursed from amounts in the related
Collection Account pursuant to Section 3.08 hereof. In the event the Servicer
does not proceed with foreclosure or acceptance of a deed in lieu of foreclosure
pursuant to the first sentence of this paragraph, the Servicer shall be
reimbursed for all Servicing Advances made with respect to the related Mortgaged
Property from the related Collection Account pursuant to Section 3.08 hereof,
the Servicer shall have no further obligation to service such Mortgage Loan
under the provisions of this Agreement and the related Mortgage Loan will be
transferred to Wilshire in accordance with paragraph (iv) above.
(b) With respect to any REO Property, the deed or certificate of sale
shall be taken in the name of the Trustee for the benefit of the
Certificateholders, or its nominee, on behalf of the Certificateholders. The
Trustee's name shall be placed on the title to such REO Property solely as the
Trustee hereunder and not in its individual capacity. The Servicer shall ensure
that the title to such REO Property references this Agreement and the Trustee's
capacity hereunder. Pursuant to its efforts to sell such REO Property, the
Servicer shall in accordance with Accepted Servicing Practices manage, conserve,
protect and operate each REO Property for the purpose of its prompt disposition
and sale. The Servicer, either itself or through an agent selected by the
Servicer, shall manage, conserve, protect and operate the REO Property in the
same manner that it manages, conserves, protects and operates other foreclosed
property for its own account, and in the same manner that similar property in
the same locality as the REO Property is managed. The Servicer may rent such
property, as the Servicer deems to be in the best interest of the Trustee and
the Certificateholders for the period prior to the sale of such REO Property on
such terms and conditions and for such periods as the Servicer deems to be in
the best interest of the Trustee and the Certificateholders. The Servicer shall
furnish to the Trustee on or before each Distribution Date a statement with
respect to any REO Property covering the operation of such REO Property for the
previous calendar month and the Servicer's efforts in connection with the sale
of such REO Property and any rental of such REO Property incidental to the sale
thereof for the previous calendar month. That statement shall be accompanied by
such other information as the Trustee shall reasonably request and which is
necessary to enable the Trustee to comply with the reporting requirements of the
REMIC Provisions. The net monthly rental income, if any, from such REO Property
shall be deposited in the related Collection Account no later than the close of
business on each Determination Date. The Servicer shall perform the tax
reporting and withholding required by Sections 1445 and 6050J of the Code with
respect to foreclosures and abandonments, the tax reporting required by Section
6050H of the Code with respect to the receipt of mortgage interest from
individuals and any tax reporting required by Section 6050P of the Code with
respect to the cancellation of indebtedness by certain financial entities, by
preparing such tax and information returns as may be required, in the form
required, and delivering the same to the Trustee for filing.
To the extent consistent with Accepted Servicing Practices, the
Servicer shall also maintain on each REO Property fire and hazard insurance with
extended coverage in amount which is equal to the outstanding principal balance
of the related Mortgage Loan (as reduced by any amount applied as a reduction of
principal at the time of acquisition of the REO Property), liability
74
insurance and, to the extent required and available under the Flood Disaster
Protection Act of 1973, as amended, flood insurance in the amount required
above. Any costs incurred by the Servicer in maintaining such insurance shall be
recoverable by the Servicer as a Servicing Advance out of payments by the
related Mortgagor or out of Insurance Proceeds or Liquidation Proceeds.
Notwithstanding anything to the contrary in this paragraph, the Servicer shall
be required to pay the costs of maintaining any insurance contemplated by this
Section 3.11(b) only to the extent that such advances, in the good faith
judgment of the Servicer, will be recoverable.
(c) In the event that the Trust Fund acquires any Mortgaged Property
as aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, the Servicer shall dispose of such Mortgaged Property prior to
three years after the end of the calendar year of its acquisition by the Trust
Fund unless (i) the Trustee shall have been supplied with an Opinion of Counsel
to the effect that the holding by the Trust Fund of such Mortgaged Property
subsequent to such three-year period will not result in the imposition of taxes
on "prohibited transactions" of any REMIC hereunder as defined in section 860F
of the Code or cause any REMIC hereunder to fail to qualify as a REMIC at any
time that any Certificates are outstanding, in which case the Trust Fund may
continue to hold such Mortgaged Property (subject to any conditions contained in
such Opinion of Counsel) or (ii) the Servicer shall have applied for, prior to
the expiration of such three-year period, an extension of such three-year period
in the manner contemplated by Section 856(e)(3) of the Code, in which case the
three-year period shall be extended by the applicable extension period. The
Servicer shall be entitled to be reimbursed from the Collection Account, as a
Servicing Advance, for any costs incurred in obtaining such Opinion of Counsel.
Notwithstanding any other provision of this Agreement, no Mortgaged Property
acquired by the Trust Fund shall be rented (or allowed to continue to be rented)
or otherwise used for the production of income by or on behalf of the Trust Fund
in such a manner or pursuant to any terms that would (i) cause such Mortgaged
Property to fail to qualify as "foreclosure property" within the meaning of
section 860G(a)(8) of the Code or (ii) subject any REMIC hereunder to the
imposition of any federal, state or local income taxes on the income earned from
such Mortgaged Property under Section 860G(c) of the Code or otherwise, unless
the Servicer has agreed to indemnify and hold harmless the Trust Fund with
respect to the imposition of any such taxes.
In the event of a default on a Mortgage Loan one or more of whose
obligor is not a United States Person, as that term is defined in Section
7701(a)(30) of the Code, in connection with any foreclosure or acquisition of a
deed in lieu of foreclosure (together, "foreclosure") in respect of such
Mortgage Loan, the Servicer will 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 the Mortgage Loan.
(d) The decision of the Servicer to foreclose on a defaulted Mortgage
Loan shall be subject to a determination by the Servicer that the proceeds of
such foreclosure would exceed the costs and expenses of bringing such a
proceeding. The income earned from the management of any REO Properties, net of
reimbursement to the Servicer for expenses incurred (including any property or
other taxes) in connection with such management and net of applicable accrued
and unpaid Servicing Fees, and unreimbursed Advances and Servicing Advances,
shall be applied to the payment of principal of and interest on the related
defaulted Mortgage Loans (with interest accruing
75
as though such Mortgage Loans were still current) and all such income shall be
deemed, for all purposes in this Agreement, to be payments on account of
principal and interest on the related Mortgage Notes and shall be deposited into
the related Collection Account. To the extent the net income received during any
calendar month is in excess of the amount attributable to amortizing principal
and accrued interest at the related Mortgage Rate on the related Mortgage Loan
for such calendar month, such excess shall be considered to be a partial
prepayment of principal of the related Mortgage Loan.
The Servicer shall not acquire any Mortgaged Property on behalf of any
REMIC created hereunder in connection with a default or imminent default on a
Foreclosure Restricted Loan, if acquiring title to the Mortgaged Property
underlying the loan would cause the adjusted basis, for federal income tax
purposes, of these Mortgaged Properties owned by the related REMIC after
foreclosure, along with any other assets owned by the related REMIC other than
"qualified mortgages" and "permitted investments" within the meaning of Section
860G of the Code, to exceed 0.75% of the adjusted basis of the assets of the
related REMIC. If the adjusted basis of such Mortgaged Properties in
foreclosure, along with any other assets owned by the related REMIC, other than
"qualified mortgages" and "permitted investments" with the meaning of Section
860G of the Code, exceed 1.0% of the adjusted basis of the assets of the related
REMIC immediately after the distribution of principal and interest on any
Distribution Date, the Servicer will dispose of enough of such Mortgaged
Properties in foreclosure, for cash or otherwise, so that the adjusted basis of
such Mortgaged Properties in foreclosure, along with any other assets owned by
the related REMIC, other than "qualified mortgages" and "permitted investments"
within the meaning of Section 860G of the Code, will be less than 1.0% of the
adjusted basis of the assets of the related REMIC.
(e) The proceeds from any liquidation of a Mortgage Loan, as well as
any income from an REO Property, will be applied in the following order of
priority: first, to reimburse the Servicer for any related unreimbursed
Servicing Advances and Servicing Fees; second, to reimburse the Servicer for any
unreimbursed Advances; third, to reimburse the related Collection Account for
any Nonrecoverable Advances (or portions thereof) that were previously withdrawn
by the Servicer pursuant to Section 3.08(iii) that related to such Mortgage
Loan; fourth, to accrued and unpaid interest (to the extent no Advance has been
made for such amount or any such Advance has been reimbursed) on the Mortgage
Loan or related REO Property, at the per annum rate equal to the related
Mortgage Rate reduced by the related Servicing Fee Rate, to the Due Date
occurring in the month in which such amounts are required to be distributed; and
fifth, as a recovery of principal of the Mortgage Loan. Excess proceeds, if any,
from the liquidation of a Liquidated Mortgage Loan will be retained by the
Servicer as additional servicing compensation pursuant to Section 3.14.
(f) [reserved].
(g) The Majority in Interest Class X-2 Certificateholder, at its
option, may (but is not obligated to) repurchase from the Trust Fund, (a) any
related Mortgage Loan that is delinquent in payment by three or more Scheduled
Payments or (b) any related Mortgage Loan with respect to which there has been
initiated legal action or other proceedings for the foreclosure of the related
Mortgaged Property either judicially or non-judicially. If it elects to make any
such repurchase, the Majority in Interest Class X-2 Certificateholder shall
repurchase such Mortgage Loan with its own funds at a price equal to the
Repurchase Price for such Mortgage Loan. The Majority in Interest
76
Class X-2 Certificateholder may designate any servicer to service any such
Mortgage Loan purchased from the Trust.
SECTION 3.12 Trustee to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer will immediately notify the Trustee
(or the Custodian, as the case may be) by delivering, or causing to be delivered
a "Request for Release" substantially in the form of Exhibit M. Upon receipt of
such request, the Trustee (or the Custodian, as the case may be) shall within
three Business Days release the related Mortgage File to the Servicer, and the
Trustee shall within three Business Days of the Servicer's direction execute and
deliver to the Servicer the request for reconveyance, deed of reconveyance or
release or satisfaction of mortgage or such instrument releasing the lien of the
Mortgage in each case provided by the Servicer, together with the Mortgage Note
with written evidence of cancellation thereon. The Servicer is authorized to
cause the removal from the registration on the MERS(R) System of such Mortgage,
if applicable, 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. Expenses incurred in connection with
any instrument of satisfaction or deed of reconveyance shall be chargeable to
the related Mortgagor to the extent permitted by law and otherwise shall
constitute a Servicing Advance. From time to time and as shall be appropriate
for the servicing or foreclosure of any Mortgage Loan, including for such
purpose, collection under any policy of flood insurance, any fidelity bond or
errors or omissions policy, or for the purposes of effecting a partial release
of any Mortgaged Property from the lien of the Mortgage or the making of any
corrections to the Mortgage Note or the Mortgage or any of the other documents
included in the Mortgage File, the Trustee shall, within three Business Days of
delivery to the Trustee (or the Custodian, as the case may be) of a Request for
Release in the form of Exhibit M signed by a Servicing Officer, release the
Mortgage File to the Servicer. Subject to the further limitations set forth
below, the Servicer shall cause the Mortgage File or documents so released to be
returned to the Trustee (or the Custodian, as the case may be) when the need
therefor by the Servicer no longer exists, unless the Mortgage Loan is
liquidated and the proceeds thereof are deposited in the related Collection
Account, in which case the Servicer shall deliver to the Trustee (or the
Custodian, as the case may be) a Request for Release in the form of Exhibit M,
signed by a Servicing Officer.
If the Servicer at any time seeks to initiate a foreclosure proceeding
in respect of any Mortgaged Property as authorized by this Agreement, the
Servicer shall deliver or cause to be delivered to the Trustee, for signature,
as appropriate, any court pleadings, requests for trustee's sale or other
documents necessary to effectuate such foreclosure or any legal action brought
to obtain judgment against the Mortgagor on the Mortgage Note or the Mortgage or
to obtain a deficiency judgment or to enforce any other remedies or rights
provided by the Mortgage Note or the Mortgage or otherwise available at law or
in equity.
77
SECTION 3.13 Documents, Records and Funds in Possession of the
Servicer to be Held for the Trustee.
Notwithstanding any other provisions of this Agreement, the Servicer
shall transmit to the Trustee as required by this Agreement all documents and
instruments in respect of a Mortgage Loan coming into the possession of the
Servicer from time to time required to be delivered to the Trustee pursuant to
the terms hereof and shall account fully to the Trustee for any funds received
by the Servicer or which otherwise are collected by the Servicer as Liquidation
Proceeds or Insurance Proceeds in respect of any Mortgage Loan. All Mortgage
Files and funds collected or held by, or under the control of, the Servicer in
respect of any Mortgage Loans, whether from the collection of principal and
interest payments or from Liquidation Proceeds, including but not limited to,
any funds on deposit in a Collection Account, shall be held by the Servicer for
and on behalf of the Trustee and shall be and remain the sole and exclusive
property of the Trustee, subject to the applicable provisions of this Agreement.
The Servicer also agrees that it shall not create, incur or subject any Mortgage
File or any funds that are deposited in the related Collection Account,
Certificate Account or any related Escrow Account, or any funds that otherwise
are or may become due or payable to the Trustee for the benefit of the
Certificateholders, to any claim, lien, security interest, judgment, levy, writ
of attachment or other encumbrance, or assert by legal action or otherwise any
claim or right of setoff against any Mortgage File or any funds collected on, or
in connection with, a Mortgage Loan, except, however, that the Servicer shall be
entitled to set off against and deduct from any such funds any amounts that are
properly due and payable to the Servicer under this Agreement.
SECTION 3.14 Servicing Fee.
As compensation for its services hereunder, the Servicer shall be
entitled to withdraw from the Collection Account or to retain from interest
payments on the related Mortgage Loans the amount of its Servicing Fee for each
Mortgage Loan, less any amounts in respect of its Servicing Fee payable by the
Servicer pursuant to Section 3.05(b)(vi). The Servicing Fee is limited to, and
payable solely from, the interest portion of such Scheduled Payments collected
by the Servicer or as otherwise provided in Section 3.08.
Additional servicing compensation in the form of Ancillary Income
shall be retained by the Servicer. The Servicer shall be required to pay all
expenses incurred by it in connection with its servicing activities hereunder
(including the payment of any expenses incurred in connection with any
Subservicing Agreement entered into pursuant to Section 3.02) and shall not be
entitled to reimbursement thereof except as specifically provided for in this
Agreement.
SECTION 3.15 Access to Certain Documentation.
The Servicer shall provide to the OTS and the FDIC and to comparable
regulatory authorities supervising Holders of Subordinate Certificates and the
examiners and supervisory agents of the OTS, the FDIC and such other
authorities, access to the documentation regarding the related Mortgage Loans
required by applicable regulations of the OTS and the FDIC. Such access shall be
afforded without charge, but only upon reasonable and prior written request and
during normal business hours at the offices designated by the Servicer. Nothing
in this Section shall limit the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information
78
regarding the Mortgagors and the failure of the Servicer to provide access as
provided in this Section as a result of such obligation shall not constitute a
breach of this Section. Nothing in this Section 3.15 shall require the Servicer
to collect, create, collate or otherwise generate any information that it does
not generate in its usual course of business.
SECTION 3.16 Annual Statement as to Compliance.
Not later than the earlier of (a) March 15 of each calendar year
(other than the calendar year during which the Closing Date occurs) 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, 15 calendar days before the date on 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 (or, in
each case, if such day is not a Business Day, the immediately preceding Business
Day), the Servicer shall deliver to the Depositor, the Rating Agencies and the
Trustee an Officer's Certificate stating, as to the signer thereof, that (i) a
review of the activities of the Servicer during the preceding calendar year and
of the performance of the Servicer under this Agreement has been made under such
officer's supervision, and (ii) to the best of such officer's knowledge, based
on such review, the Servicer has fulfilled all its obligations under this
Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof and the action being taken by the
Servicer to cure such default.
SECTION 3.17 Annual Independent Public Accountants' Servicing
Statement; Financial Statements.
Not later than the earlier of (a) March 15 of each calendar year
(other than the calendar year during which the Closing Date occurs) 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, 15 calendar days before the date on 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 (or, in
each case, if such day is not a Business Day, the immediately preceding Business
Day), the Servicer at its expense shall cause a nationally or regionally
recognized firm of independent public accountants (who may also render other
services to the Servicer, the Seller or any affiliate thereof) which is a member
of the American Institute of Certified Public Accountants to furnish a statement
to the Trustee and the Depositor to the effect that such firm has examined
certain documents and records relating to the servicing of mortgage loans which
the Servicer is servicing, which may include the related Mortgage Loans or
similar mortgage loans, and that, on the basis of such examination, conducted
substantially in compliance with the Uniform Single Attestation Program for
Mortgage Bankers or the Audit Guide for HUD Approved Title II Approved
Mortgagees and Loan Correspondent Programs, nothing has come to their attention
which would indicate that such servicing has not been conducted in compliance
with Accepted Servicing Practices, except for (a) such exceptions as such firm
shall believe to be immaterial, and (b) such other exceptions as shall be set
forth in such statement. In addition, the Servicer shall disclose to such firm
all significant deficiencies relating to the Servicer's compliance with the
minimum servicing standards set forth in this Agreement. In rendering such
statement, such firm may rely, as to matters relating to direct servicing of
mortgage loans by
79
Subservicers, upon comparable statements for examinations conducted
substantially in compliance with the Uniform Single Attestation Program for
Mortgage Bankers or the Audit Guide for HUD Approved Title II Approved
Mortgagees and Loan Correspondent Programs (rendered within one year of such
statement) of independent public accountants with respect to the related
Subservicer. Copies of such statement shall be provided by the Trustee to any
Certificateholder upon request at the Servicer's expense, provided such
statement is delivered by the Servicer to the Trustee.
SECTION 3.18 Maintenance of Fidelity Bond and Errors and Omissions
Insurance.
The Servicer shall maintain with responsible companies, at its own
expense, a blanket Fidelity Bond and an Errors and Omissions Insurance Policy,
with broad coverage on all officers, employees or other persons acting in any
capacity requiring such persons to handle funds, money, documents or papers
relating to the related Mortgage Loans ("Servicer Employees"). The amount of
coverage under any such Fidelity Bond and Errors and Omissions Insurance Policy
shall be at least equal to the coverage maintained by the Servicer in order to
be acceptable to Xxxxxx Xxx or Xxxxxxx Mac to service loans for it or otherwise
in an amount as is commercially available at a cost that is generally not
regarded as excessive by industry standards. No provision of this Section 3.18
requiring such Fidelity Bond and Errors and Omissions Insurance Policy shall
diminish or relieve the Servicer from its duties and obligations as set forth in
this Agreement. The minimum coverage under any such bond and insurance policy
shall be at least equal to the corresponding amounts required by Xxxxxx Mae.
Upon the request of the Trustee, the Servicer shall cause to be delivered to the
Trustee a certificate of insurance of the insurer and the surety including a
statement from the surety and the insurer that such fidelity bond and insurance
policy shall in no event be terminated or materially modified without 30 days'
prior written notice to the Trustee.
SECTION 3.19 Duties of the Credit Risk Manager.
The Depositor appoints The Murrayhill Company as Credit Risk Manager.
For and on behalf of the Depositor, and the Trustee, the Credit Risk Manager
will provide reports and recommendations concerning Mortgage Loans that are past
due, as to which there has been commencement of foreclosure, as to which there
has been forbearance in exercise of remedies which are in default, as to which
obligor is the subject of bankruptcy, receivership, or an arrangement of
creditors, or as to which have become REO Properties. Such reports and
recommendations will be based upon information provided to the Credit Risk
Manager pursuant to the Credit Risk Management Agreement and the Credit Risk
Manager shall look solely to the Servicer for all information and data
(including loss and delinquency information and data) and loan level information
and data relating to the servicing of the Mortgage Loans. If the Credit Risk
Manager is no longer able to perform its duties hereunder, the Depositor shall
terminate the Credit Risk Manager and cause the appointment of a successor
Credit Risk Manager. Upon any termination of the Credit Risk Manager or the
appointment of a successor Credit Risk Manager, the Depositor shall give written
notice thereof to the Seller, the Servicer, the Trustee and each Rating Agency.
Notwithstanding the foregoing, the termination of the Credit Risk Manager
pursuant to this Section 3.19 shall not become effective until the appointment
of a successor Credit Risk Manager.
80
SECTION 3.20 Limitation Upon Liability of the Credit Risk Manager.
Neither the Credit Risk Manager, nor any of the directors, officers,
employees or agents of the Credit Risk Manager, shall be under any liability to
the Trustee, the Certificateholders or the Depositor for any action taken or for
refraining from the taking of any action in good faith pursuant to this
Agreement, in reliance upon information provided by the Servicer under the
Credit Risk Management Agreements or of errors in judgment; provided, however,
that this provision shall not protect the Credit Risk Manager or any such person
against liability that would otherwise be imposed by reason of willful
malfeasance, bad faith or gross negligence in its performance of its duties
under this Agreement or the Credit Risk Manager Agreement. The Credit Risk
Manager and any director, officer, employee or agent of the Credit Risk Manager
may rely in good faith on any document of any kind prima facie properly executed
and submitted by any Person respecting any matters arising hereunder, and may
rely in good faith upon the accuracy of information furnished by any Servicer
pursuant to the Credit Risk Management Agreement in the performance of its
duties thereunder and hereunder.
SECTION 3.21 Advance Facility.
(a) Wilshire is hereby authorized to enter into a financing or other
facility (any such arrangement, an "Advance Facility") under which (1) Wilshire
assigns or pledges to another Person (an "Advancing Person") its 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 Wilshire pursuant to this Agreement. No consent
of the Trustee, Certificateholders or any other party is required before
Wilshire may enter into an Advance Facility; PROVIDED, HOWEVER, that the consent
of the Trustee (which consent shall not be unreasonably withheld) shall be
required before Wilshire may cause to be outstanding at one time more than one
Advance Facility with respect to Advances or more than one Advance Facility with
respect to Servicing Advances. Notwithstanding the existence of any Advance
Facility under which an Advancing Person agrees to fund Advances and/or
Servicing Advances on the Servicer's behalf, Wilshire shall remain obligated
pursuant to this Agreement to make Advances and Servicing Advances pursuant to
and as required by this Agreement, and shall not be relieved of such obligations
by virtue of such Advance Facility. If Wilshire enters into an Advance Facility,
and for so long as an Advancing Person remains entitled to receive reimbursement
for any Advances or Servicing Advances outstanding and previously unreimbursed
pursuant to this Agreement, then Wilshire may elect by providing written notice
to the Trustee not to be permitted to reimburse itself for Advances and/or
Servicing Advances, as applicable, pursuant to Section 3.08 of this Agreement,
but following any such election Wilshire shall be required to include amounts
collected that would otherwise be retained by Wilshire to reimburse it for
previously unreimbursed Advances ("Advan Reimbursement Amounts") and/or
previously unreimbursed Servicing 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) in the remittance to the Trustee made pursuant
to this Agreement to the extent of amounts on deposit in the Collection Account
on the related Servicer Cash Remittance Date. Notwithstanding anything to the
contrary herein, in no event shall Advance Reimbursement Amounts or Servicing
Advance Reimbursement Amounts be included in Interest Remittance Amounts or
Principal Remittance Amounts or distributed to Certificateholders.
81
Wilshire, if making the election set forth herein, shall report to the Trustee
the portions of the Reimbursement Amounts that consist of Advance Reimbursement
Amounts and Servicing Advance Reimbursement Amounts, respectively.
(b) If Wilshire enters into an Advance Facility and makes the election
set forth in Section 3.21(a), Wilshire 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 a trustee or custodian (an "Advance
Facility Trustee") designated in the Advance Facility Notice. An Advance
Facility Notice may only be terminated by the joint written direction of
Wilshire and the related Advancing Person (and any related Advance Facility
Trustee); PROVIDED, HOWEVER, that the provisions of this Section 3.21 shall
cease to be applicable when all Advances and Servicing Advances funded by an
Advancing Person, and when all Advances and Servicing Advances (the rights to be
reimbursed for which have been assigned or pledged to an Advancing Person), have
been repaid to the related Advancing Person in full.
(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 Wilshire would be permitted to reimburse itself in accordance with
Section 3.08(ii), (iii) and (iv) hereof, assuming Wilshire had made the related
Advance(s) and/or Servicing Advance(s). Notwithstanding the foregoing, no Person
shall be entitled to reimbursement from funds held in the Collection Account for
future distribution to Certificateholders pursuant to the provisions of Section
4.01. The Trustee shall not have any duty or liability with respect to the
calculation of any Reimbursement Amount and shall be entitled to rely without
independent investigation on the Advance Facility Notice and on the Servicer's
report of the amount of Advance Reimbursement Amounts and Servicing Advance
Reimbursement Amounts that were included in the remittance from Wilshire to the
Trustee pursuant to Section 3.08(viii). Wilshire shall maintain and provide to
any successor Servicer a detailed accounting on a loan-by-loan basis as to
amounts advanced by, pledged or assigned to, and reimbursed to any Advancing
Person. The successor Servicer shall be entitled to rely on any such information
provided by Wilshire and the successor Servicer shall not be liable for any
errors in such information.
(d) An Advancing Person who receives an assignment or pledge of the
rights to be reimbursed for Advances and/or Servicing Advances, and/or whose
obligations hereunder are limited to the funding of Advances and/or Servicing
Advances shall not be required to meet the criteria for qualification of a
Subservicer set forth in Section 3.02 hereof.
(e) With respect to any Advance Facility pursuant to which Wilshire
has made the election set forth in Section 3.21(a), the documentation
establishing any Advance Facility shall require that Reimbursement Amounts
distributed with respect to each Mortgage Loan 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. Such
documentation shall also require Wilshire to provide to the related Advancing
Person or Advance Facility Trustee loan-by-
82
loan information with respect to each Reimbursement Amount distributed by the
Trustee to such Advancing Person or Advance Facility Trustee on each
Distribution Date, to enable the Advancing Person or Advance Facility Trustee to
make the FIFO allocation of each Reimbursement Amount with respect to each
Mortgage Loan. Wilshire shall remain entitled to be reimbursed by the Advancing
Person or Advance Facility Trustee for all Advances and Servicing Advances
funded by Wilshire to the extent the related rights to be reimbursed therefor
have not been assigned or pledged to an Advancing Person.
(f) If Wilshire enters into an Advance Facility, Wilshire shall
indemnify the Trustee and the Trust and any successor Servicer, as applicable,
from and against any claims, losses, liabilities or damages resulting from any
claim by the related Advancing Person, except to the extent that such claim,
loss, liability or damage resulted from or arose out of negligence, recklessness
or willful misconduct on the part of the successor Servicer or the Trustee, or
failure by the successor Servicer or the Trustee to remit funds as required by
Section 3.21(b). Any amendment to this Section 3.21 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 3.21, including
amendments to add provisions relating to a successor Servicer, may be entered
into by the Trustee, the Seller and Wilshire without the consent of any
Certificateholder notwithstanding anything to the contrary in Section 10.01 of
or elsewhere in this Agreement.
83
ARTICLE IV
DISTRIBUTIONS AND
ADVANCES BY THE SERVICER
SECTION 4.01 Advances by the Servicer.
The Servicer shall deposit in a Collection Account an amount equal to
(i) with respect to the Mortgage Loans other than the Simple Interest Mortgage
Loans, all Scheduled Payments (with interest at the Mortgage Rate less the
Servicing Fee Rate) which were due but not received on the related Mortgage
Loans during the applicable Due Period and (ii) with respect to the Simple
Interest Mortgage Loans, 30 day's interest on each such Mortgage Loan for which
the Scheduled Payment was due but not received during the applicable Due Period,
less the Servicing Fee; provided however, that with respect to any Balloon Loan
that is delinquent on its maturity date, the Servicer will not be required to
advance the related balloon payment but will be required to continue to make
Advances in accordance with this Section 4.01 with respect to such Balloon Loan
in an amount equal to an assumed scheduled payment that would otherwise be due
based on the original amortization schedule for that Mortgage Loan (with
interest at the Mortgage Rate less the Servicing Fee Rate). The Servicer's
obligation to make such Advances as to any related Mortgage Loan will continue
through the last Scheduled Payment due prior to the payment in full of such
Mortgage Loan, or through the date that the related Mortgaged Property has, in
the judgment of the Servicer, been completely liquidated; provided however, that
such obligation with respect to any related Mortgage Loan shall cease if the
Servicer determines, in its reasonable opinion, that Advances with respect to
such Mortgage Loan are Nonrecoverable Advances; provided that the Servicer will
be required to make Advances until the earlier of (i) the time at which the
related Mortgage Loan becomes 120 days delinquent or (ii) the time at which the
Servicer determines that such Advances with respect to such Mortgage Loan are
Nonrecoverable Advances. In the event that the Servicer determines that any such
Advances are Nonrecoverable Advances, the Servicer shall provide the Trustee
with a certificate signed by a Servicing Officer evidencing such determination.
If an Advance is required to be made hereunder, the Servicer shall on
the second Business Day immediately preceding the Distribution Date immediately
following the related Determination Date either (i) deposit in the Collection
Account from its own funds an amount equal to such Advance, (ii) cause to be
made an appropriate entry in the records of the Collection Account that funds in
such account being held for future distribution or withdrawal have been, as
permitted by this Section 4.01, used by the Servicer to make such Advance or
(iii) make Advances in the form of any combination of clauses (i) and (ii)
aggregating the amount of such Advance. Any such funds being held in a
Collection Account for future distribution and so used shall be replaced by the
Servicer from its own funds by deposit in such Collection Account on or before
any future Distribution Date in which such funds would be due. The Servicer
shall be entitled to be reimbursed from the Collection Account for all Advances
of its own funds made pursuant to this Section as provided in Section 3.08.
84
SECTION 4.02 Priorities of Distribution.
(a) On each Distribution Date, prior to making distributions to the
holders of the Certificates, the Trustee first, shall pay itself the Trustee's
Fee for such Distribution Date, and second, shall pay the Credit Risk Manager
the Credit Risk Manager Fee.
(b) With respect to the Available Funds, on each Distribution Date,
the Trustee shall withdraw such Available Funds from the Certificate Account and
based on the information provided to it by the Servicer, apply such funds to
distributions on the Certificates in the following order and priority and, in
each case, to the extent of such Available Funds remaining:
(i) On each Distribution Date, the Trustee shall distribute the
Interest Remittance Amount for such date in the following order of
priority:
A. to the Senior Certificates, pro rata, Current Interest and any
Carryforward Interest, as applicable, for each such Class and such
Distribution Date;
B. to the Class M-1 Certificates, Current Interest and any
Carryforward Interest for such Class and such Distribution Date;
C. to the Class M-2 Certificates, Current Interest and any
Carryforward Interest for such Class and such Distribution Date;
D. to the Class B Certificates Current Interest and any Carryforward
Interest for such Class and such Distribution Date;
E. On the Distribution Dates occurring in June 2003, July 2003 and
August 2003, to the Depositor an amount equal to the amount
received during the related Due Period which constitutes Subsequent
Mortgage Loan Interest; and
F. for application in the same manner as the Monthly Excess Cashflow
for such Distribution Date as provided in clause (iv) of this
Section 4.02(b), any Interest Remittance Amount remaining after
application pursuant to clauses A. through E. above.
(ii) On each Distribution Date (a) prior to the Stepdown Date or (b)
with respect to which a Trigger Event has occurred, the Trustee shall
distribute the Principal Payment Amount for such date in the following
order of priority:
A. commencing on the Distribution Date in September 2008, to the Class
P Certificates, until the Class Principal Balance of such class has
been reduced to zero;
B. first to the Class A-R Certificates, until the Class Principal
Balance thereof is reduced to zero, and then concurrently on a pro
rata basis, to the Class A-1
85
Certificates and Class A-2 Certificates, in each case until the
Class Principal Balance thereof has been reduced to zero;
C. to the Class M-1 Certificates, until the Class Principal Balance of
such Class has been reduced to zero;
D. to the Class M-2 Certificates, until the Class Principal Balance of
such Class has been reduced to zero;
E. to the Class B Certificates, until the Class Principal Balance of
such Class has been reduced to zero;
F. for application in the same manner as the Monthly Excess Cashflow
for such Distribution Date, as provided in clause (iv) of this
Section 4.02(b), any Principal Payment Amount remaining after
application pursuant to clauses A. through E. above.
(iii) On each Distribution Date (a) on or after the Stepdown Date and
(b) with respect to which a Trigger Event has not occurred, the Trustee
shall distribute the Principal Payment Amount for such date in the
following order of priority:
A. commencing on the Distribution Date in September 2008 or
thereafter, to the Class P Certificates, until the Class Principal
Balance of such class has been reduced to zero;
B. to the Class A-1 Certificates and Class A-2 Certificates, the
Senior Principal Payment Amount for such Distribution Date,
concurrently on a pro rata basis, in each case until the Class
Principal Balance thereof has been reduced to zero;
C. to the Class M-1 Certificates, the Class M-1 Principal Payment
Amount for such Distribution Date, until the Class Principal
Balance of such Class has been reduced to zero;
D. to the Class M-2 Certificates, the Class M-2 Principal Payment
Amount for such Distribution Date, until the Class Principal
Balance of such Class has been reduced to zero;
E. to the Class B Certificates, the Class B Principal Payment Amount
for such Distribution Date, until the Class Principal Balance of
such Class has been reduced to zero; and
F. for application as part of Monthly Excess Cashflow for such
Distribution Date, as provided in clause (iv) of this Section
4.02(b), any Principal Payment Amount remaining after application
pursuant to clauses A. through E. above.
86
(iv) On each Distribution Date, the Trustee shall distribute the
Monthly Excess Cashflow for such date in the following order of priority:
A. an amount equal to the aggregate Realized Losses on the Mortgage
Loans incurred during the related Collection Period, to the extent
not covered by amounts withdrawn from the Interest Rate Cap
Account, such amount to be added to the Principal Payment Amount
and distributed as set forth above in Section 4.02(b)(ii) and (iii)
(any such amount, an "Excess Cashflow Loss Payment");
B. (I) except for the first Distribution Date, until the
Overcollateralization Amount equals the Targeted
Overcollateralization Amount for such date, on each
Distribution Date (a) prior to the Stepdown Date or (b) with
respect to which a Trigger Event has occurred, to the extent of
Monthly Excess Interest for such Distribution Date, to fund any
principal distributions to the Class A-1, Class A-2, Class A-R,
Class P, Class M-1, Class M-2 and Class B Certificates required
to be made on such Distribution Date set forth above in clause
(ii) above, after giving effect to the distribution of the
Principal Payment Amount for such Distribution Date, in
accordance with the priorities set forth therein.
(II) on each Distribution Date on or after the Stepdown Date and
with respect to which a Trigger Event has not occurred, to fund
any principal distributions to the Class X-0, Xxxxx X-0, Class
M-1, Class M-2 and Class B Certificates required to be made on
such Distribution Date set forth above in clause (iii) above,
after giving effect to the distribution of the Principal
Payment Amount for such Distribution Date, in accordance with
the priorities set forth therein;
C. to the Class M-1 Certificates, any Deferred Amount for such Class,
with interest thereon at the Pass-Through Rate, to the extent not
paid from amounts on deposit in the Interest Rate Cap Account;
D. to the Class M-2 Certificates, any Deferred Amount for such Class,
with interest thereon at the Pass-Through Rate for each such Class,
to the extent not paid from amounts on deposit in the Interest Rate
Cap Account;
E. to the Class B Certificates, any Deferred Amount for such Class,
with interest thereon at the Pass-Through Rate, to the extent not
paid from amounts on deposit in the Interest Rate Cap Account;
F. to the Class X-1 Certificate, the Class X-1 Distributable Amount
for such Distribution Date reduced by amounts distributed pursuant
to clause E of Section 4.02(b)(i) for such Distribution Date, the
amount of any Overcollateralization Release Amount for such
Distribution Date and, for any
87
Distribution Date on or after which the aggregate Class Principal
Balance of the Regular Certificates has been reduced to zero, the
Overcollateralization Amount; and
G. to the Class A-R Certificate, any remaining amount.
Distributions pursuant to Section 4.02(b)(iv)C. through E. on any
Distribution Date will be made after giving effect to withdrawals from the
Interest Rate Cap Account on such date to pay Deferred Amounts.
(v) On each Distribution Date, the Trustee shall distribute to the
Holder of the Class P Certificate, the aggregate of all Prepayment
Penalties collected during the preceding Prepayment Period.
(vi) On the first Distribution Date only, the Trustee shall distribute
the Monthly Excess Cashflow for such date to the Class X-1 Certificate.
SECTION 4.03 [Reserved]
SECTION 4.04 [Reserved]
SECTION 4.05 Allocation of Realized Losses.
On each Distribution Date, the Trustee shall determine the total of
the Applied Loss Amount, if any, for such Distribution Date. The Applied Loss
Amount for any Distribution Date shall be applied by reducing the Class
Principal Balance of each Class of Subordinate Certificates beginning with the
Class of Subordinate Certificates then outstanding with the lowest relative
payment priority, in each case until the respective Class Principal Balance
thereof is reduced to zero. Any Applied Loss Amount allocated to a Class of
Subordinate Certificates shall be allocated among the Subordinate Certificates
of such Class in proportion to their respective Percentage Interests.
All Realized Losses on the Mortgage Loans shall be allocated on each
Distribution Date to the following REMIC 1 Regular Interests: first, to REMIC 1
Regular Interests LTI-1 until the Uncertificated Principal Balance thereof has
been reduced to zero, then to REMIC 1 Regular Interest LTI-1PF until the
Uncertificated Principal Balance thereof has been reduced to zero, however, that
with respect to the first three Distribution Dates, Realized Losses relating to
the Initial Mortgage Loans shall be allocated to REMIC 1 Regular Interest LTI-1
and Realized Losses relating to the Subsequent Mortgage Loans shall be allocated
to REMIC 1 Regular Interest LTI-1PF until the Uncertificated Principal Balance
thereof has been reduced to zero. All Realized Losses on the REMIC 1 Regular
Interests LTI-1 and LTI-1PF shall be deemed to have been allocated to the
following REMIC 2 Regular Interests in the specified percentages, as follows:
first to Uncertificated Accrued Interest payable to the REMIC 2 Regular
Interests MT-AA and MT-ZZ up to an aggregate amount equal to the excess of (a)
the REMIC 2 Interest Loss Allocation Amount over (b) Prepayment Interest
Shortfalls (to the extent not covered by Compensating Interest) relating to the
Mortgage Loans for such Distribution Date, 98% and 2%, respectively; second, to
the Uncertificated Principal Balances of the REMIC 2 Regular Interests MT-AA and
MT-ZZ up to an aggregate
88
amount equal to the REMIC 2 Principal Loss Allocation Amount, 98% and 2%,
respectively; third, to the Uncertificated Principal Balances of REMIC 2 Regular
Interest MT-AA, REMIC 2 Regular Interest MT-B and REMIC 2 Regular Interest
MT-ZZ, 98%, 1% and 1%, respectively, until the Uncertificated Principal Balance
of REMIC 2 Regular Interest MT-B has been reduced to zero; fourth, to the
Uncertificated Principal Balances of REMIC 2 Regular Interest MT-AA, REMIC 2
Regular Interest MT-M2 and REMIC 2 Regular Interest MT-ZZ, 98%, 1% and 1%,
respectively, until the Uncertificated Principal Balance of REMIC 2 Regular
Interest MT-M2 has been reduced to zero; and fifth, to the Uncertificated
Principal Balances of REMIC 2 Regular Interest MT-AA, REMIC 2 Regular Interest
MT-M1 and REMIC 2 Regular Interest MT-ZZ, 98%, 1% and 1%, respectively, until
the Uncertificated Principal Balance of REMIC 2 Regular Interest MT-M1 has been
reduced to zero.
SECTION 4.06 Monthly Statements to Certificateholders.
(a) Not later than each Distribution Date, the Trustee shall prepare,
and make available on the website maintained by the Trustee at
xxxx://xxx.xxxxxxxx.xxx/xxxxxx, a statement setting forth with respect to the
related distribution, the items listed on Exhibit V.
Assistance in using the website can be obtained by calling the
Trustee's customer service desk at 000-000-0000. Parties that are unable to use
the website are entitled to have a paper copy mailed to them via first class
mail by written notice to the Trustee at its Corporate Trust Office. The
Trustee's responsibility for disbursing the above information to the
Certificateholders is limited to the availability, timeliness and accuracy of
the information derived from the Servicer. The foregoing information shall be
reported to the Trustee each month on or before the Servicer Data Remittance
Date.
(b) Within a reasonable period of time after the end of each calendar
year, the Trustee shall cause to be furnished to each Person who at any time
during the calendar year was a Certificateholder, a statement containing the
information set forth in, items (i)(c), (i)(d), (i)(g), (i)(j), (i)(k), (ii)(c),
(ii)(d), (ii)(g), (ii)(i), (v)(d), (v)(e) and (v)(s) of Exhibit V aggregated for
such calendar year or applicable portion thereof during which such Person was a
Certificateholder. Such obligation of the Trustee shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Trustee pursuant to any requirements of the Code as from time to
time in effect.
SECTION 4.07 Distributions on the REMIC 1 Regular Interests and REMIC
2 Regular Interests.
(a) Distributions on the REMIC 1 Regular Interests.
On each Distribution Date, the Trustee shall cause in the following
order of priority, the following amounts to be distributed by REMIC 1 to REMIC 2
on account of the REMIC 1 Regular Interests or withdrawn from the Distribution
Account and distributed to the holders of the Class A-R Certificates (in respect
of the Class R-1 Interest), as the case may be:
89
(i) first, to the Holders of REMIC 1 Regular Interests LTI-P and
LTI-R, in an amount equal to (x) the related Uncertificated Accrued
Interest for such Distribution Date, plus (y) any amounts in respect
thereof remaining unpaid from previous Distribution Dates and second, to
Holders of Uncertificated REMIC 1 Regular Interests LTI-1 and LTI-1PF an
amount equal to (x) the related Uncertificated Accrued Interest for such
Distribution Date, plus (y) any amounts in respect thereof remaining unpaid
from previous Distribution Dates;
(ii) to the Holders of REMIC 1 Regular Interests, in an amount equal
to the remainder of the Available Funds for such Distribution Date after
the distributions made pursuant to clause (i) above and, in the case of
distributions made pursuant to Section 4.07(a)(ii)(b), the amount of any
Prepayment Penalties for such Distribution Date, allocated as follows:
(a) to the Holders of REMIC 1 Regular Interest LTI-R, an amount
equal to the amount of principal distributed to the holder of the
Corresponding Uncertificated Interest on such Distribution Date pursuant to
Section 4.07(b)(ii)(a);
(b) to the Holders of REMIC 1 Regular Interest LTI-P, an amount
equal to the amount distributed to the holder of the Corresponding
Uncertificated Interest on such Distribution Date pursuant to Section
4.07(b)(ii)(b);
(c) to the Holders of REMIC 1 Regular Interest LTI-1, until the
Uncertificated Principal Balance of Uncertificated REMIC 1 Regular Interest
LTI-1 is reduced to zero;
(d) to the Holders of REMIC 1 Regular Interest LTI-1PF, until the
Uncertificated Principal Balance of REMIC 1 Regular Interest LTI-1PF is
reduced to zero; and
(iii) any remaining amount to the Holders of the Class R-1 Interest;
provided, however, that for the first three Distribution Dates, such amounts
constituting Available Funds relating to the Initial Mortgage Loans shall be
allocated to REMIC 1 Regular Interest LT and such amounts constituting Available
Funds relating to the Subsequent Mortgage Loans and shall be allocated to REMIC
1 Regular Interest LT-1PF.
(b) Distributions on the REMIC 2 Regular Interests.
On each Distribution Date, the Trustee shall cause in the following
order of priority, the following amounts to be distributed by REMIC 2 to REMIC 3
on account of the REMIC 2 Regular Interests or withdrawn from the Distribution
Account and distributed to the holders of the Class A-R Certificates (in respect
of the Class R-2 Interest), as the case may be:
(i) first, to the extent of the sum of Available Funds for such
Distribution Date, to Holders of REMIC 2 Regular Interests MT-AA, MT-A1,
MT-A2, MT-M1, MT-M2, MT-B, MT-ZZ, MT-P and MT-R, pro rata, in an amount
equal to (A) the Uncertificated
90
Accrued Interest for such Distribution Date, plus (B) any amounts in
respect thereof remaining unpaid from previous Distribution Dates. Amounts
payable as Uncertificated Accrued Interest in respect of REMIC 2 Regular
Interest MT-ZZ shall be reduced when the REMIC 2 Overcollateralization
Amount is less than the REMIC 2 Overcollateralization Target Amount, by the
lesser of (x) the amount of such difference and (y) the REMIC 2 Regular
Interest MT-ZZ Maximum Interest Deferral Amount;
(ii) second, to the Holders of REMIC 2 Regular Interests, in an amount
equal to the remainder of the Available Funds for such Distribution Date
after the distributions made pursuant to clause (i) above and, in the case
of distributions made pursuant to Section 4.07(b)(ii)(b), the amount of any
Prepayment Penalties for such Distribution Date, allocated as follows:
(a) to the Holders of REMIC 2 Regular Interest MT-R, an amount
equal to the amount of principal distributed to the holder of the
Corresponding Certificate on such Distribution Date pursuant to Section
4.02; and
(b) to the Holders of REMIC 2 Regular Interest MT-P, an amount
equal to the sum of (i) the amount of principal distributed to the holder
of the Corresponding Certificate on such Distribution Date pursuant to
Section 4.02(b)(ii)A. and (ii) the amount distributed to the holder of the
Corresponding Certificate on such Distribution Date pursuant to Section
4.02(b)(v); and
(iii) third, to the Holders of REMIC 2 Regular Interests, in an amount
equal to the remainder of the Available Funds for such Distribution Date
after the distributions made pursuant to clauses (i) and (ii) above,
allocated as follows:
(a) with respect to the Holders of REMIC 2 Regular Interest
MT-AA, 98.00% of such remainder, until the Uncertificated Principal Balance
of such Uncertificated REMIC 2 Regular Interest is reduced to zero;
(b) with respect to the Holders of REMIC 2 Regular Interest
MT-A1, MT-A2, MT-M1, MT-M2 and MT-B, 1.00% of such remainder, in the same
proportion as principal payments are allocated to the Corresponding
Certificates, until the Uncertificated Principal Balances of such REMIC 2
Regular Interests are reduced to zero;
(c) to the Holders of REMIC 2 Regular Interest MT-ZZ, 1.00% of
such remainder, until the Uncertificated Principal Balance of such REMIC 2
Regular Interest is reduced to zero; and
(d) any remaining amount to the Holders of the Class A-R
Certificates (in respect of the Class R-2 Interest);
provided, however, 98.00% and 2.00% of any principal payments that are
attributable to an Overcollateralization Release Amount shall be allocated to
Holders of REMIC 2 Regular Interest MT-AA and REMIC 2 Regular Interest MT-ZZ,
respectively.
91
SECTION 4.08 [Reserved].
SECTION 4.09 Prepayment Penalties.
Notwithstanding anything in this Agreement to the contrary, in the
event of a Principal Prepayment of a Mortgage Loan, the Servicer may not waive
any Prepayment Penalty or portion thereof required by the terms of the related
Mortgage Note unless (i) the Mortgage Loan is in default or foreseeable default
and such waiver (a) is standard and customary in servicing similar mortgage
loans to the Mortgage Loans and (b) would, in the reasonable judgment of the
Servicer, maximize recovery of total proceeds taking into account the value of
such Prepayment Penalty and the related Mortgage Loan or (ii)(A) the
enforceability thereof is limited (1) by bankruptcy, insolvency, moratorium,
receivership, or other similar law relating to creditors' rights generally or
(2) due to acceleration in connection with a foreclosure or other involuntary
payment, or (B) the enforceability is otherwise limited or prohibited by
applicable law. For the avoidance of doubt, the Servicer may waive a Prepayment
Penalty in connection with a short sale or short payoff on a defaulted Mortgage
Loan. If the Servicer has waived all or a portion of a Prepayment Penalty
relating to a Principal Prepayment, other than as provided above, the Servicer
shall deliver to the Trustee no later than the Business Day immediately
preceding the next Distribution Date, for deposit into the Certificate Account
the amount of such Prepayment Penalty (or such portion thereof as had been
waived) for distribution in accordance with the terms of this Agreement;
provided, however, the Servicer shall not have any obligation to pay the amount
of any uncollected Prepayment Penalty under this Section 4.09 if the Servicer
did not have a copy of the related Mortgage Note, the Servicer requested via
email a copy of the same from the Trustee and the Trustee failed to provide such
a copy within two (2) Business Days of receipt of such request. If the Servicer
has waived all or a portion of a Prepayment Penalty for any reason, it shall
promptly notify the Trustee thereof and shall include such information in any
monthly reports it provides the Trustee.
SECTION 4.10 Servicer to Cooperate.
The Servicer shall provide to the Trustee the information set forth in
Exhibit Z hereto in such form as the Trustee shall reasonably request with
respect to each Mortgage Loan no later than twelve noon on the Servicer Data
Remittance Date to enable the Trustee to calculate the amounts to be distributed
to each Class of Certificates and otherwise perform its distribution, accounting
and reporting requirements hereunder.
SECTION 4.11 The Interest Rate Cap Agreement.
(a) On the Closing Date, the Trustee shall establish and maintain in
its name, in trust for the benefit of the Certificates, the Interest Rate Cap
Account. The Interest Rate Cap Account shall be an Eligible Account, and funds
on deposit therein shall be held separate and apart from, and shall not be
commingled with, any other moneys, including without limitation, other moneys
held by the Trustee pursuant to this Agreement.
(b) On or prior to the Closing Date, the Trustee, on behalf of the
Trust, is hereby directed to enter into the Interest Rate Cap Agreement for the
benefit of the Holders of the LIBOR
92
Certificates. The Interest Rate Cap Agreement will be an asset of the Trust Fund
but will not be an asset of any REMIC. The Trustee shall deposit any amounts
received with respect to the Interest Rate Cap Agreement into the Interest Rate
Cap Account.
(c) The Trustee will prepare and deliver any notices required to be
delivered to the Interest Rate Cap Agreement Counterparty under Sections 2(b),
2(d), 4(d), 5(a), 6(a), 6(b), 6(d) and 12(b) of the ISDA Master Agreement and
Parts 3(a) and 5(g) of Schedule B to the Confirmation.
(d) The Trustee shall terminate the Interest Rate Cap Agreement
Counterparty upon the occurrence of an event of default under the Interest Rate
Cap Agreement of which a Responsible Officer of the Trustee has actual
knowledge. Upon such a termination, the Interest Rate Cap Agreement Counterparty
may be required to pay a termination payment to the Trustee in respect of the
Interest Rate Cap Agreement. Any such termination payment shall be applied by
the Trustee to the purchase of a substantially equivalent interest rate cap
agreement at the direction of the Majority in Interest Class X-1
Certificateholder.
(e) On each Distribution Date, the Trustee shall distribute amounts on
deposit in the Interest Rate Cap Account to pay the following amounts:
(i) to the Class M-1, Class M-2 and Class B Certificates, in that
order, any applicable Deferred Amounts, with interest therein at the
applicable Pass-Through Rate, prior to giving effect to amounts available
to be paid in respect of Deferred Amounts as described in Section
4.02(b)(iv)C. through E. on such Distribution Date; and
(ii) to the Principal Remittance Amount, up to the amount of Realized
Losses on the Mortgage Loans incurred during the related Collection Period,
prior to giving effect to any Excess Cashflow Loss Payment.
(f) Funds in the Interest Rate Cap Account may be invested in Eligible
Investments by the Trustee at the direction of the Majority in Interest Class
X-1 Certificateholder maturing on or prior to the next succeeding Distribution
Date. The Trustee shall account for the Interest Rate Cap Account as an outside
reserve fund within the meaning of Treasury regulation 1.860G-2(h) and not an
asset of any REMIC created pursuant to this Agreement. The Trustee shall treat
amounts paid by the Interest Rate Cap Account as payments made from outside the
R for all federal tax purposes. Any net investment earnings on such amounts
shall be payable to the Class X-1 Certificateholders. The Class X-1
Certificateholders will be the owner of the Interest Rate Cap Account for
federal tax purposes and the Majority in Interest Class X-1 Certificateholder
shall direct the Trustee in writing as to the investment of amounts therein. In
the absence of such written direction, all funds in the Interest Rate Cap
Account shall remain uninvested with no liability for interest or other
compensation thereon. The Trustee shall have no liability for losses on
investments in Eligible Investments made pursuant to this Section 4.10(f) (other
than as obligor on any such investments). Upon termination of the Trust Fund,
any amounts remaining in the Interest Rate Cap Account shall be distributed to
the Class X-1 Certificateholders.
93
(g) Amounts paid under the Interest Rate Cap Agreement not used on any
Distribution Date as described in Section 4.11(e) shall remain on deposit in the
Interest Rate Cap Account and may be available on future Distribution Dates to
make the payments described in Section 4.11(e). However, at no time shall the
amount on deposit in the Interest Rate Cap Account exceed the Target Amount. The
"Target Amount" will be calculated on each Distribution Date, after giving
effect to withdrawals from the Interest Rate Cap Account on such Distribution
Date and distribution and allocation of losses on the LIBOR Certificates on such
Distribution Date, and will equal the sum of (A) the excess, if any, of the
Targeted Overcollateralization Amount over the Overcollateralization Amount, in
each case for such Distribution Date and (B) an amount equal to the excess, if
any, of (1) $756,000 over (2) the aggregate of all amounts paid from the
Interest Rate Cap Account on such Distribution Date and all previous
Distribution Dates pursuant to clauses (e)(i) and (ii) of this Section 4.11. On
each Distribution Date, the Trustee shall distribute amounts in the Interest
Rate Cap Account in excess of the Target Amount (after giving effect to all
distributions on such Distribution Date) and any amounts remaining therein at
the termination of the Trust Fund, to the Class X-1 Certificateholders.
ARTICLE V
THE CERTIFICATES
SECTION 5.01 The Certificates.
The Certificates shall be substantially in the forms attached hereto
as exhibits. The Certificates shall be issuable in registered form, in the
minimum denominations, integral multiples in excess thereof (except that one
Certificate in each Class may be issued in a different amount which must be in
excess of the applicable minimum denomination) and aggregate denominations per
Class set forth in the Preliminary Statement.
Subject to Section 9.02 respecting the final distribution on the
Certificates, on each Distribution Date the Trustee shall make distributions to
each Certificateholder of record on the preceding Record Date either (x) by wire
transfer in immediately available funds to the account of such holder at a bank
or other entity having appropriate facilities therefor, if (i) such Holder has
so notified the Trustee at least five Business Days prior to the related Record
Date and (ii) such Holder shall hold (A) a Notional Amount Certificate, (B) 100%
of the Class Principal Balance of any Class of Certificates or (C) Certificates
of any Class with aggregate principal Denominations of not less than $1,000,000
or (y) by check mailed by first class mail to such Certificateholder at the
address of such holder appearing in the Certificate Register.
The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer upon the written order of the
Depositor. Certificates bearing the manual or facsimile signatures of
individuals who were, at the time such signatures were affixed,
94
authorized to sign on behalf of the Trustee shall bind the Trustee,
notwithstanding that such individuals or any of them have ceased to be so
authorized prior to the countersignature and delivery of any such Certificates
or did not hold such offices at the date of such Certificate. No Certificate
shall be entitled to any benefit under this Agreement, or be valid for any
purpose, unless countersigned by the Trustee by manual signature, and such
countersignature upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly executed and delivered hereunder.
All Certificates shall be dated the date of their countersignature. On the
Closing Date, the Trustee shall countersign the Certificates to be issued at the
written direction of the Depositor, or any affiliate thereof.
The Depositor shall provide, or cause to be provided, to the Trustee
on a continuous basis, an adequate inventory of Certificates to facilitate
transfers.
The Trustee shall have no obligation or duty to monitor, determine or
inquire as to compliance with any restriction or transfer imposed under Article
V of this Agreement or under applicable law with respect to any transfer of any
Certificate, or any interest therein, other than to require delivery of the
certification(s) and/or opinions of counsel described in Article V applicable
with respect to changes in registration of record ownership of Certificates in
the Certificate Register. The Trustee shall have no liability for transfers,
including transfers made through the book-entry facilities of the Depository or
between or among Depository Participants or beneficial owners of the
Certificates made in violation of applicable restrictions.
SECTION 5.02 Certificate Register; Registration of Transfer and
Exchange of Certificates.
(a) The Trustee shall maintain, or cause to be maintained in
accordance with the provisions of Section 5.06, a Certificate Register for the
Trust Fund in which, subject to the provisions of subsections (b) and (c) below
and to such reasonable regulations as it may prescribe, the Trustee shall
provide for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. Upon surrender for registration of transfer of
any Certificate, the Trustee shall execute and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of the same
Class and aggregate Percentage Interest.
At the option of a Certificateholder, Certificates may be exchanged
for other Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest upon surrender of the
Certificates to be exchanged at the office or agency of the Trustee. Whenever
any Certificates are so surrendered for exchange, the Trustee shall execute,
authenticate, and deliver the Certificates which the Certificateholder making
the exchange is entitled to receive. Every Certificate presented or surrendered
for registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to the Trustee duly executed by the
holder thereof or his attorney duly authorized in writing.
No service charge to the Certificateholders shall be made for any
registration of transfer or exchange of Certificates, but payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates may be required.
95
All Certificates surrendered for registration of transfer or exchange
shall be canceled and subsequently disposed of by the Trustee in accordance with
the Trustee's customary procedures.
(b) No transfer of a Private Certificate shall be made unless such
transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under said Act and such state securities laws. Except
in connection with any transfer of a Private Certificate by the Depositor to any
affiliate, in the event that a transfer is to be made in reliance upon an
exemption from the Securities Act and such laws, in order to assure compliance
with the Securities Act and such laws, the Certificateholder desiring to effect
such transfer and such Certificateholder's prospective transferee shall each
certify to the Trustee in writing the facts surrounding the transfer in
substantially the form set forth in Exhibit J (the "Transferor Certificate") and
(i) deliver a letter in substantially the form of either (A) Exhibit K (the
"Investment Letter") provided that all of the Class X Certificates of a Class
shall be transferred to one investor or the Depositor otherwise consents to such
transfer, or (B) Exhibit L (the "Rule 144A Letter") or (ii) there shall be
delivered to the Trustee at the expense of the transferor an Opinion of Counsel
that such transfer may be made pursuant to an exemption from the Securities Act.
The Depositor shall provide to any Holder of a Private Certificate and any
prospective transferee designated by any such Holder, information regarding the
related Certificates and the Mortgage Loans and such other information as shall
be necessary to satisfy the condition to eligibility set forth in Rule
144A(d)(4) for transfer of any such Certificate without registration thereof
under the Securities Act pursuant to the registration exemption provided by Rule
144A. The Trustee and the Servicer shall cooperate with the Depositor in
providing the Rule 144A information referenced in the preceding sentence,
including providing to the Depositor such information regarding the
Certificates, the Mortgage Loans and other matters regarding the Trust Fund as
the Depositor shall reasonably request to meet its obligation under the
preceding sentence. Each Holder of a Private Certificate desiring to effect such
transfer shall, and does hereby agree to, indemnify the Trustee, the Depositor,
the Seller and the Servicer against any liability that may result if the
transfer is not so exempt or is not made in accordance with such federal and
state laws.
No transfer of an ERISA-Restricted Certificate shall be made unless
the Trustee shall have received either (i) a representation from the transferee
of such Certificate, acceptable to and in form and substance satisfactory to the
Trustee (in the event such Certificate is a Private Certificate or a Residual
Certificate, such requirement is satisfied only by the Trustee's receipt of a
representation letter from the transferee substantially in the form of Exhibit K
or Exhibit L, as applicable), to the effect that such transferee is not an
employee benefit plan or arrangement subject to Section 406 of ERISA or a plan
subject to Section 4975 of the Code, nor a person acting on behalf of any such
plan or arrangement nor using the assets of any such plan or arrangement to
effect such transfer or (ii) in the case of any such ERISA-Restricted
Certificate presented for registration in the name of an employee benefit plan
subject to ERISA, or a plan or arrangement subject to Section 4975 of the Code
(or comparable provisions of any subsequent enactments), or a trustee of any
such plan or any other person acting on behalf of any such plan or arrangement
or using such plan's or arrangement's assets, an Opinion of Counsel satisfactory
to the Trustee, which Opinion of Counsel shall not be an expense of either the
Trustee or the Trust Fund, addressed to the Trustee, to the effect that the
purchase or holding of such ERISA-Restricted Certificate will not result in the
assets of the Trust Fund being deemed to be "plan assets" and subject to the
prohibited transaction provisions of ERISA and the Code and will not subject the
Trustee or the Servicer to any obligation in addition
96
to those expressly undertaken in this Agreement or to any liability. For
purposes of the preceding sentence, with respect to an ERISA-Restricted
Certificate that is not a Private Certificate or a Residual Certificate, in the
event the representation letter referred to in the preceding sentence is not
furnished, such representation shall be deemed to have been made to the Trustee
by the ts (including an initial acquiror's) acceptance of the ERISA-Restricted
Certificates. Notwithstanding anything else to the contrary herein, any
purported transfer of an ERISA-Restricted Certificate to or on behalf of an
employee benefit plan subject to ERISA or to the Code without the delivery to
the Trustee of an Opinion of Counsel satisfactory to the Trustee as described
above shall be void and of no effect.
To the extent permitted under applicable law (including, but not
limited to, ERISA), the Trustee shall be under no liability to any Person for
any registration of transfer of any ERISA- Restricted Certificate that is in
fact not permitted by this Section 5.02(b) or for making any payments due on
such Certificate to the Holder thereof or taking any other action with respect
to such Holder under the provisions of this Agreement so long as the transfer
was registered by the Trustee in accordance with the foregoing requirements.
(c) Each Person who has or who acquires any Ownership Interest in a
Residual Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions, and
the rights of each Person acquiring any Ownership Interest in a Residual
Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a
Residual Certificate shall be a Permitted Transferee and shall promptly
notify the Trustee of any change or impending change in its status as a
Permitted Transferee.
(ii) No Ownership Interest in a Residual Certificate may be registered
on the Closing Date or thereafter transferred, and the Trustee shall not
register the Transfer of any Residual Certificate unless, in addition to
the certificates required to be delivered to the Trustee under subparagraph
(b) above, the Trustee shall have been furnished with an affidavit (a
"Transfer Affidavit") of the initial owner or the proposed transferee in
the form attached hereto as Exhibit I.
(iii) Each Person holding or acquiring any Ownership Interest in a
Residual Certificate shall agree (A) to obtain a Transfer Affidavit from
any other Person to whom such Person attempts to Transfer its Ownership
Interest in a Residual Certificate, (B) to obtain a Transfer Affidavit from
any Person for whom such Person is acting as nominee, trustee or agent in
connection with any Transfer of a Residual Certificate and (C) not to
Transfer its Ownership Interest in a Residual Certificate or to cause the
Transfer of an Ownership Interest in a Residual Certificate to any other
Person if it has actual knowledge that such Person is not a Permitted
Transferee.
(iv) Any attempted or purported Transfer of any Ownership Interest in
a Residual Certificate in violation of the provisions of this Section
5.02(c) shall be absolutely null and void and shall vest no rights in the
purported Transferee. If any purported transferee shall become a Holder of
a Residual Certificate in violation of the provisions of this Section
97
5.02(c), then the last preceding Permitted Transferee shall be restored to
all rights as Holder thereof retroactive to the date of registration of
Transfer of such Residual Certificate. The Trustee shall be under no
liability to any Person for any registration of Transfer of a Residual
Certificate that is in fact not permitted by Section 5.02(b) and this
Section 5.02(c) or for making any payments due on such Certificate to the
Holder thereof or taking any other action with respect to such Holder under
the provisions of this Agreement so long as the Transfer was registered
after receipt of the related Transfer Affidavit, Transferor Certificate and
either the Rule 144A Letter or the Investment Letter. The Trustee shall be
entitled but not obligated to recover from any Holder of a Residual
Certificate that was in fact not a Permitted Transferee at the time it
became a Holder or, at such subsequent time as it became other than a
Permitted Transferee, all payments made on such Residual Certificate at and
after either such time. Any such payments so recovered by the Trustee shall
be paid and delivered by the Trustee to the last preceding Permitted
Transferee of such Certificate.
(v) The Depositor shall use its best efforts to make available, upon
receipt of written request from the Trustee, all information necessary to
compute any tax imposed under Section 860E(e) of the Code as a result of a
Transfer of an Ownership Interest in a Residual Certificate to any Holder
who is not a Permitted Transferee.
The restrictions on Transfers of a Residual Certificate set forth in
this Section 5.02(c) shall cease to apply (and the applicable portions of the
legend on a Residual Certificate may be deleted) with respect to Transfers
occurring after delivery to the Trustee of an Opinion of Counsel, which Opinion
of Counsel shall not be an expense of the Trust Fund, the Trustee, the Seller or
the Servicer, to the effect that the elimination of such restrictions will not
cause the Trust Fund hereunder to fail to qualify as a REMIC at any time that
the Certificates are outstanding or result in the imposition of any tax on the
Trust Fund, a Certificateholder or another Person. Each Person holding or
acquiring any Ownership Interest in a Residual Certificate hereby consents to
any amendment of this Agreement which, based on an Opinion of Counsel furnished
to the Trustee, is reasonably necessary (a) to ensure that the record ownership
of, or any beneficial interest in, a Residual Certificate is not transferred,
directly or indirectly, to a Person that is not a Permitted Transferee and (b)
to provide for a means to compel the Transfer of a Residual Certificate which is
held by a Person that is not a Permitted Transferee to a Holder that is a
Permitted Transferee.
(d) The preparation and delivery of all certificates and opinions
referred to above in this Section 5.02 in connection with transfer shall be at
the expense of the parties to such transfers.
(e) Except as provided below, the Book-Entry Certificates shall at all
times remain registered in the name of the Depository or its nominee and at all
times: (i) registration of the Certificates may not be transferred by the
Trustee except to another Depository; (ii) the Depository shall maintain
book-entry records with respect to the Certificate Owners and with respect to
ownership and transfers of such Book-Entry Certificates; (iii) ownership and
transfers of registration of the Book-Entry Certificates on the books of the
Depository shall be governed by applicable rules established by the Depository;
(iv) the Depository may collect its usual and customary fees, charges and
expenses from its Depository Participants; (v) the Trustee shall deal with the
Depository, Depository Participants and indirect participating firms as
representatives of the Certificate Owners of the Book-Entry Certificates for
purposes of exercising the rights of holders under this Agreement,
98
and requests and directions for and votes of such representatives shall not be
deemed to be inconsistent if they are made with respect to different Certificate
Owners; and (vi) the Trustee may rely and shall be fully protected in relying
upon information furnished by the Depository with respect to its Depository
Participants and furnished by the Depository Participants with respect to
indirect participating firms and persons shown on the books of such indirect
participating firms as direct or indirect Certificate Owners.
All transfers by Certificate Owners of 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 only transfer 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.
If (x) (i) the Depository or the Depositor advises the Trustee in
writing that the Depository is no longer willing or able to properly discharge
its responsibilities as Depository, and (ii) the Trustee or the Depositor is
unable to locate a qualified successor, (y) the Depositor at its option advises
the Trustee in writing that it elects to terminate the book-entry system through
the Depository or (z) after the occurrence of an Event of Default, Certificate
Owners representing at least 51% of the Certificate Balance of the Book-Entry
Certificates together advise the Trustee and the Depository through the
Depository Participants in writing that the continuation of a book-entry system
through the Depository is no longer in the best interests of the Certificate
Owners, the Trustee shall notify all Certificate Owners, through the Depository,
of the occurrence of any such event and of the availability of definitive,
fully-registered Certificates (the "Definitive Certificates") to Certificate
Owners requesting the same. Upon surrender to the Trustee of the related Class
of Certificates by the Depository, accompanied by the instructions from the
Depository for registration, the Trustee shall issue the Definitive
Certificates. None of the Sellers, the Servicer, the Depositor or the Trustee
shall be liable for any delay in delivery of such instruction and each may
conclusively rely on, and shall be protected in relying on, such instructions.
The Depositor shall provide the Trustee with an adequate inventory of
certificates to facilitate the issuance and transfer of Definitive Certificates.
Upon the issuance of Definitive Certificates all references herein to
obligations imposed upon or to be performed by the Depository shall be deemed to
be imposed upon and performed by the Trustee, to the extent applicable with
respect to such Definitive Certificates and the Trustee shall recognize the
Holders of the Definitive Certificates as Certificateholders hereunder; provided
that the Trustee shall not by virtue of its assumption of such obligations
become liable to any party for any act or failure to act of the Depository.
SECTION 5.03 Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate and (b) there is delivered to the Trustee such security or
indemnity as may be required by it to hold it harmless, then, in the absence of
notice to the Trustee that such Certificate has been acquired by a bona fide
purchaser, the Trustee shall execute, countersign and deliver, in exchange for
or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like Class, tenor and Percentage Interest. In connection with the
issuance of any new Certificate under this Section 5.03, the Trustee may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be
99
imposed in relation thereto and any other expenses (including the fees and
expenses of the Trustee) connected therewith. Any replacement Certificate issued
pursuant to this Section 5.03 shall constitute complete and indefeasible
evidence of ownership, 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.
The Servicer, the Trustee and any agent of the Servicer or the Trustee
may treat the Person in whose name any Certificate is registered as the owner of
such Certificate for the purpose of receiving distributions as provided in this
Agreement and for all other purposes whatsoever, and none of the Servicer, the
Trustee or any agent of the Servicer or the Trustee shall be affected by any
notice to the contrary.
SECTION 5.05 Access to List of Certificateholders' Names and
Addresses.
If three or more Certificateholders (a) request such information in
writing from the Trustee, (b) state that such Certificateholders desire to
communicate with other Certificateholders with respect to their rights under
this Agreement or under the Certificates, and (c) provide a copy of the
communication which such Certificateholders propose to transmit, or if the
Depositor or a Servicer shall request such information in writing from the
Trustee, then the Trustee shall, within ten Business Days after the receipt of
such request, provide the Depositor, the Servicer or such Certificateholders at
such recipients' expense the most recent list of the Certificateholders of such
Trust Fund held by the Trustee, if any. The Depositor and every
Certificateholder, by receiving and holding a Certificate, agree that the
Trustee shall not be held accountable by reason of the disclosure of any such
information as to the list of the Certificateholders hereunder, regardless of
the source from which such information was derived.
SECTION 5.06 Maintenance of Office or Agency.
The Trustee will maintain or cause to be maintained at its expense an
office or offices or agency or agencies in New York, New York where Certificates
may be surrendered for registration of transfer or exchange. The Trustee
initially designates its Corporate Trust Office for such purposes. The Trustee
will give prompt written notice to the Certificateholders of any change in such
location of any such office or agency.
100
ARTICLE VI
THE DEPOSITOR, THE SELLER AND THE SERVICER
SECTION 6.01 Respective Liabilities of the Depositor, the Sellers and
the Servicer.
The Depositor, the Seller and the Servicer shall each be liable in
accordance herewith only to the extent of the obligations specifically and
respectively imposed upon and undertaken by them herein.
SECTION 6.02 Merger or Consolidation of the Depositor, the Seller or a
Servicer.
The Depositor, the Seller and the Servicer will each keep in full
effect its existence, rights and franchises as a corporation under the laws of
the United States or under the laws of one of the states thereof or as a
federally chartered savings bank organized under the laws of the United States
and will each obtain and preserve its qualification to do business as a foreign
corporation in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Agreement, or any
of the Mortgage Loans and to perform its respective duties under this Agreement.
Notwithstanding the foregoing, the Seller or the Servicer may be merged or
consolidated into another Person in accordance with the following paragraph.
Any Person into which the Depositor, the Seller or the Servicer may be
merged or consolidated, or any Person resulting from any merger or consolidation
to which the Depositor, the Seller or the Servicer shall be a party, or any
person succeeding to the business of the Depositor, the Seller or the Servicer,
shall be the successor of the Depositor, the Seller or the 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 herein to the contrary
notwithstanding, provided, however, that the successor or surviving Person with
respect to a merger or consolidation of the Servicer shall be an institution
which is a Xxxxxx Xxx or Xxxxxxx Mac approved company in good standing. In
addition to the foregoing, there must be delivered to the Trustee a letter from
each of the Rating Agencies, to the effect that such merger, conversion or
consolidation of the Servicer will not result in a disqualification, withdrawal
or downgrade of the then current rating of any of the Certificates.
SECTION 6.03 Limitation on Liability of the Depositor, the Seller, the
Servicer and Others.
None of the Depositor, the Seller, the Servicer nor any of the
directors, officers, employees or agents of the Depositor, the Seller or the
Servicer shall be under any liability to 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 Seller, the Servicer or any such
Person against any breach of representations or warranties made by it herein or
protect the Depositor, the Seller, the Servicer or any such Person from any
liability which would otherwise be imposed by reasons of willful misfeasance,
bad faith or negligence in the performance of duties or by reason of reckless
disregard
101
of obligations and duties hereunder. The Depositor, the Seller, the Servicer and
any director, officer, employee or agent of the Depositor, the Seller or the
Servicer may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising hereunder.
The Depositor, the Seller, the Trustee, the Servicer and any director, officer,
employee or agent of the Depositor, the Seller, the Trustee, or the Servicer
shall be indemnified by the Trust Fund out of the Collection Account 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 incurred by reason of willful misfeasance, bad faith
or negligence in the performance of its duties hereunder or by reason of
reckless disregard of obligations and duties hereunder. None of the Depositor,
the Seller or the Servicer shall be under any obligation to appear in, prosecute
or defend any legal action that is not incidental to its respective duties
hereunder and which in its opinion may involve it in any expense or liability;
provided, however, that any of the Depositor, the Seller or the Servicer may in
its discretion undertake any such action that it may deem necessary or desirable
in respect of this Agreement and the rights and duties of the parties hereto and
interests of the Trustee and the Certificateholders hereunder. In such event,
the legal expenses and costs of such action and any liability resulting
therefrom shall be expenses, costs and liabilities of the Trust Fund, and the
Depositor, the Seller and the Servicer shall be entitled to be reimbursed
therefor out of the Collection Account. The Servicer's right to indemnity or
reimbursement pursuant to this Section 6.03 shall survive the resignation or
termination of the Servicer as set forth herein.
SECTION 6.04 Limitation on Resignation of the Servicer.
(a) Subject to Section 6.04(b) below, the Servicer shall not resign
from the obligations and duties hereby imposed on it except (a)(i) upon
appointment, pursuant to the provisions of Section 7.02, of a successor servicer
which (x) has a net worth of not less than $10,000,000 and (y) is a Xxxxxx Xxx
or Xxxxxxx Mac approved company in good standing and (ii) receipt by the Trustee
of a letter from each Rating Agency that such a resignation and appointment will
not result in a qualification, withdrawal or downgrading of the then current
rating of any of the Certificates, or (b) upon determination that its duties
hereunder are no longer permissible under applicable law. Any such determination
under clause (b) permitting the resignation of the Servicer shall be evidenced
by an Opinion of Counsel to such effect delivered to the Trustee. No such
resignation shall become effective until the Trustee or a successor servicer
shall have assumed the Servicer's responsibilities, duties, liabilities and
obligations hereunder and the requirements of Section 7.02 have been satisfied.
(b) Notwithstanding the foregoing, at the Seller's request, so long as
it is the owner of the servicing rights, Wilshire shall resign upon the Seller's
selection and appointment of a successor servicer; provided that the Seller
delivers to the Trustee the letter required by Section 6.04(a)(ii) above.
102
ARTICLE VII
DEFAULT
SECTION 7.01 Events of Default.
"Event of Default", wherever used herein, means any one of the
following events:
(i) any failure by the Servicer to make any deposit or payment
required pursuant to this Agreement which continues unremedied for a period
of one Business Day (or, in the case of any such failure to make any
deposit or payment due to any outbreak or escalation of hostilities,
declaration by the United States of a national emergency or war or other
calamity or crisis or act of god, for a period of three Business Days)
after the date upon which written notice of such failure, requiring the
same to be remedied, shall have been given to the Servicer by the Trustee
or the Depositor, or to the Servicer and the Trustee by the Holders of
Certificates having not less than 25% of the Voting Rights evidenced by the
Certificates; or
(ii) any failure by the Servicer duly to observe or perform in any
material respect any other of the covenants or agreements on the part of
the Servicer set forth in this Agreement, which failure or breach (a)
materially affects the rights of the Certificateholders and (b) continues
unremedied for a period of 30 days after the date on which written notice
of such failure or breach, requiring the same to be remedied, shall have
been given to the Servicer by the Trustee or the Depositor, or to the
Servicer and the Trustee by the Holders of Certificates having not less
than 25% of the Voting Rights evidenced by the Certificates; or
(iii) if a representation or warranty set forth in Section 2.03(b) or
(c), as applicable, hereof shall prove to be materially incorrect as of the
time made in any respect that materially and adversely affects interests of
the Certificateholders, and the circumstances or condition in respect of
which such representation or warranty was incorrect shall not have been
eliminated or cured, within 30 days (or, if such breach is not capable of
being cured within 30 days and provided that the Servicer believes in good
faith that such breach can be cured and is diligently pursuing the cure
thereof, within 90 days) after the date on which written notice thereof
shall have been given to the Servicer by the Trustee for the benefit of the
Certificateholders or by the Depositor; or
(iv) failure by the Servicer to maintain, if required, its license to
do business in any jurisdiction where the related Mortgaged Property is
located; or
(v) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, including bankruptcy,
marshaling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered against
the Servicer and such decree or order shall have remained in force
undischarged or unstayed for a period of 60 consecutive days; or
103
(vi) the Servicer shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshaling
of assets and liabilities or similar proceedings of or relating to the
Servicer or of or relating to all or substantially all of its property; or
(vii) any failure of the Servicer to make any Advance, to the extent
required under Section 4.01 in the manner and at the time required to be
made from its own funds pursuant to this Agreement and after receipt of
notice from the Trustee, which failure continues unremedied after the close
of business on the Business Day immediately preceding the related
Distribution Date; or
(viii) the 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, bankruptcy or
reorganization statute, make an assignment for the benefit of its
creditors, voluntarily suspend payment of its obligations or cease its
normal business operations for three Business Days; or
(ix) (a) either (I) the servicer rankings or ratings of the Servicer
are downgraded two or more levels below the level in effect on the Closing
Date by one or more of the Rating Agencies rating the Certificates or (II)
the servicer rankings or ratings for the Servicer are downgraded to "below
average" status by one or more of the Rating Agencies rating the
Certificates or (b) one or more Classes of the Certificates are downgraded
or placed on negative watch due in whole or in part to the performance or
servicing of the Servicer.
Other than an Event of Default resulting from a failure of the
Servicer to make any Advance, if an Event of Default described in clauses (i)
through (viii) 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, the Trustee
may, or at the direction of the Holders of Certificates evidencing not less than
51% of the Voting Rights evidenced by the Certificates, the Trustee shall by
notice in writing to the Servicer (with a copy to each Rating Agency), terminate
all of the rights and obligations of the Servicer under this Agreement and in
and to the related Mortgage Loans and the proceeds thereof, other than its
rights as a Certificateholder hereunder and its rights to reimbursement for
Advances or other advances previously made pursuant to this Agreement. If an
Event of Default results from the failure of the Servicer to make an Advance,
the Trustee shall prior to the Distribution Date occurring in the succeeding
calendar month, by notice in writing to the Servicer and the Depositor (with a
copy to each Rating Agency), terminate all of the rights and obligations of the
Servicer under this Agreement prior to the Distribution Date occurring in the
succeeding calendar month and in and to the related Mortgage Loans and the
proceeds thereof, other than its rights as a Certificateholder hereunder. If an
Event of Default described in clause (ix) of this Section occurs, the Trustee
shall, at the direction of the Seller, by notice in writing to the Servicer,
terminate all of the rights and obligations of the Servicer under this Agreement
(other than rights to reimbursement for Advances and Servicing Advances
previously made, as provided in Section 3.08) and shall appoint as successor
Servicer the entity selected by the Seller in accordance with Section 7.02;
provided the Seller shall first furnish to the Trustee a letter from each Rating
Agency that the appointment of such successor will not result in a downgrading
of the rating of any of the Certificates.
104
Upon receipt by the Servicer of such written notice of termination,
all authority and power of the Servicer under this Agreement, whether with
respect to the Mortgage Loans or otherwise, shall pass to and be vested in the
Trustee or its nominee. Upon written request from the Trustee, the Servicer
shall prepare, execute and deliver to the successor entity designated by the
Trustee any and all documents and other instruments, place in such successor's
possession all Mortgage Files, and do or cause to be done all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, including but not limited to the transfer and endorsement or
assignment of the Mortgage Loans and related documents, at the Servicer's sole
expense. The Servicer shall cooperate with the Trustee and such successor in
effecting the termination of the Servicer's responsibilities and rights
hereunder, including without limitation, the transfer to such successor for
administration by it of all cash amounts which shall at the time be credited by
the Servicer to the Collection Account or Escrow Account or thereafter received
with respect to the Mortgage Loans. The Trustee shall thereupon make any
Advance. The Trustee is hereby authorized and empowered to execute and deliver,
on behalf of the 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 related Mortgage Loans and related documents, or otherwise.
SECTION 7.02 Trustee to Act; Appointment of Successor.
On and after the time the Servicer receives a notice of termination
pursuant to Section 7.01 of this Agreement or the resignation of the Servicer
pursuant to Section 6.04, the Trustee shall, subject to and to the extent
provided herein, be the successor to the Servicer, but only in its capacity as
servicer under this Agreement, and not in any other, and the transactions set
forth herein and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Servicer by the terms and provisions
hereof and applicable law including the obligation to make Advances pursuant to
Section 4.01. As compensation therefor, the Trustee shall be entitled to all
funds relating to the related Mortgage Loans that the Servicer would have been
entitled to charge to the Collection Account, provided that the terminated
Servicer shall nonetheless be entitled to payment or reimbursement as provided
in Section 3.08 to the extent that such payment or reimbursement relates to the
period prior to termination of the Servicer. Notwithstanding the foregoing, if
the Trustee has become the successor to the Servicer in accordance with Section
7.01, the Trustee may, if it shall be unwilling to so act, or shall, if it is
prohibited by applicable law from making Advances pursuant to 4.01 hereof, or if
it is otherwise unable to so act, appoint, or petition a court of competent
jurisdiction to appoint, any established mortgage loan servicing institution the
appointment of which does not adversely affect the then current rating of the
Certificates by each Rating Agency, as the successor to the Servicer hereunder
in the assumption of all or any part of the responsibilities, duties or
liabilities of the Servicer hereunder. Any successor to the Servicer shall be an
institution which is a Xxxxxx Mae or Xxxxxxx Mac approved seller/servicer for
first and second loans in good standing, which has a net worth of at least
$10,000,000, which is willing to service the related Mortgage Loans and which
executes and delivers to the Depositor and the Trustee an agreement accepting
such delegation and assignment, containing an assumption by such Person of the
rights, powers, duties, responsibilities, obligations and liabilities of the
Servicer (other than liabilities of the Servicer under Section 6.03 hereof
incurred prior to termination of the Servicer under Section 7.01 hereunder),
with like effect as if originally named as a party to this Agreement; provided
that each Rating Agency
105
acknowledges that its rating of the Certificates in effect immediately prior to
such assignment and delegation will not be qualified, withdrawn or downgraded as
a result of such assignment and delegation. Pending appointment of a successor
to the Servicer hereunder, the Trustee, unless the Trustee is prohibited by law
from so acting, shall, subject to the limitations described herein, 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 the related Mortgage Loans as it and such successor
shall agree; provided, however, that no such compensation shall be in excess of
the Servicing Fee. The Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. Neither the Trustee nor any other successor servicer shall be deemed
to be in default by reason of any failure to make, or any delay in making, any
distribution hereunder or any portion thereof or any failure to perform, or any
delay in performing, any duties or responsibilities hereunder, in either case
caused by the failure of the Servicer to deliver or provide, or any delay in
delivering or providing, any cash, information, documents or records to it.
In connection with the termination or resignation of the Servicer
hereunder, either (i) the successor servicer, including the Trustee if the
Trustee is acting as successor 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 Servicer shall cooperate with the successor Servicer in causing MERS
to revise its records to reflect the transfer of servicing to the successor
Servicer as necessary under MERS' rules and regulations, or (ii) the predecessor
Servicer shall cooperate with the successor 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 Servicer. The predecessor Servicer shall file or cause
to be filed any such assignment in the appropriate recording office. The
predecessor Servicer shall bear any and all fees of MERS, costs of preparing any
assignments of Mortgage, and fees and costs of filing any assignments of
Mortgage that may be required under this subsection.
Any successor to the Servicer shall give notice to the Mortgagors of
such change of servicer and shall, during the term of its service as servicer,
maintain in force the policy or policies that the Servicer is required to
maintain pursuant to this Agreement.
SECTION 7.03 Notification to Certificateholders.
(a) Upon any termination of or appointment of a successor to the
Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders and to each Rating Agency.
(b) Within 60 days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Certificateholders notice of each such
Event of Default hereunder actually known to the Trustee, unless such Event of
Default shall have been cured or waived.
106
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01 Duties of the Trustee.
The Trustee, prior to the occurrence of an Event of Default and after
the curing of all Events of Default that may have occurred, shall undertake to
perform such duties and only such duties as are specifically set forth in this
Agreement. In case an Event of Default has occurred and remains uncured, the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee that are specifically required to be furnished pursuant to any
provision of this Agreement shall examine them to determine whether they are in
the form required by this Agreement; provided, however, that the Trustee shall
not be responsible for the accuracy or content of any such resolution,
certificate, statement, opinion, report, document, order or other instrument.
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) unless an Event of Default actually known to the Trustee shall
have occurred and be continuing, 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 the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Agreement which it believed in good faith to be
genuine and to have been duly executed by the proper authorities respecting
any matters arising hereunder;
(ii) the Trustee shall not be liable for an error of judgment made in
good faith by a Responsible Officer or Responsible Officers of the Trustee,
unless it shall be finally proven that the Trustee was negligent in
ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in accordance
with the direction of Holders of Certificates evidencing not less than 25%
of the Voting Rights of Certificates relating to the time, method and place
of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee under this
Agreement.
107
SECTION 8.02 Certain Matters Affecting the Trustee.
Except as otherwise provided in Section 8.01:
(i) the Trustee may request and conclusively rely upon 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 and the
Trustee shall have no responsibility to ascertain or confirm the
genuineness of any signature of any such party or parties;
(ii) the Trustee may consult with counsel, financial advisers or
accountants and the advice of any such counsel, financial advisers or
accountants 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 advice or
Opinion of Counsel;
(iii) the Trustee shall not be 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;
(iv) 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
Holders of Certificates evidencing not less than 25% of the Voting Rights
allocated to each Class of Certificates;
(v) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents,
affiliates, accountants or attorneys;
(vi) the Trustee shall not be required to risk or expend its own funds
or otherwise incur any financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers hereunder if it
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not assured to it;
(vii) the Trustee shall not be liable for any loss on any investment
of funds pursuant to this Agreement (other than as issuer of the investment
security);
(viii) the Trustee shall not be deemed to have knowledge of an Event
of Default until a Responsible Officer of the Trustee shall have received
written notice thereof; and
(ix) the Trustee shall be under no obligation to exercise any of the
trusts, rights 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
108
Certificateholders, pursuant to the provisions of this Agreement, unless
such Certificateholders shall have offered to the Trustee reasonable
security or indemnity satisfactory to the Trustee against the costs,
expenses and liabilities which may be incurred therein or thereby.
SECTION 8.03 Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates shall be taken
as the statements of the Depositor or the Seller, 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 or of any Mortgage Loan or related document, or of MERS or the
MERS(R) System, other than with respect to the Trustee's execution and
countersignature of the Certificates. The Trustee shall not be accountable for
the use or application by the Depositor or a Servicer of any funds paid to the
Depositor or a Servicer in respect of the Mortgage Loans or deposited in or
withdrawn from the Collection Account by the Depositor or the 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 and may transact business with the Depositor,
the Seller, the Servicer and their affiliates, with the same rights as it would
have if it were not the Trustee.
SECTION 8.05 Trustee's Fees and Expenses.
The Trustee, as compensation for its activities hereunder, shall be
entitled to withdraw from the Certificate Account on each Distribution Date
prior to making distributions pursuant to Section 4.02 an amount equal to the
Trustee Fee for such Distribution Date. The Trustee and any director, officer,
employee or agent of the Trustee shall be indemnified by the Depositor and the
Servicer, to the extent such indemnity related to the failure of the Servicer to
perform its servicing obligations in accordance with this Agreement, and held
harmless against any loss, liability or expense (including reasonable attorney's
fees and expenses) (i) incurred in connection with any claim or legal action
relating to (a) this Agreement, (b) the Custodial Agreement, (c) the
Certificates, or (d) the performance of any of the Trustee's duties hereunder,
other than any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or negligence in the performance of any of the Trustee's
duties hereunder or incurred by reason of any action of the Trustee taken at the
direction of the Certificateholders and (ii) resulting from any error in any tax
or information return prepared by the Servicer. Such indemnity shall survive the
termination of this Agreement or the resignation or removal of the Trustee
hereunder. Without limiting the foregoing, the Depositor covenants and agrees,
except as otherwise agreed upon in writing by the Depositor and the Trustee, and
except for any such expense, disbursement or advance as may arise from the
Trustee's negligence, bad faith or willful misconduct, to pay or reimburse the
Trustee, for all reasonable expenses, disbursements and advances incurred or
made by the Trustee in accordance with any of the provisions of this Agreement
with respect to: (A) the reasonable compensation and the expenses and
disbursements of its counsel not associated with the closing of the issuance of
the Certificates, (B) the reasonable compensation, expenses and disbursements of
any accountant, engineer or appraiser that is not regularly employed by the
Trustee, to the extent that the Trustee must engage
109
such persons to perform acts or services hereunder and (C) printing and
engraving expenses in connection with preparing any Definitive Certificates.
Except as otherwise provided herein, the Trustee shall not be entitled to
payment or reimbursement for any routine ongoing expenses incurred by the
Trustee in the ordinary course of its duties as Trustee, Registrar or agent for
the Tax Matters Person hereunder or for any other expenses.
SECTION 8.06 Eligibility Requirements for the Trustee and Custodian.
The Trustee hereunder shall at all times be a corporation or
association organized and doing business under the laws of a state or the United
States of America, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least $50,000,000, subject
to supervision or examination by federal or state authority and with a credit
rating which would not cause either of the Rating Agencies to reduce their
respective then current Ratings of the Certificates (or having provided such
security from time to time as is sufficient to avoid such reduction) as
evidenced in writing by each Rating Agency. If such corporation or association
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section 8.06 the combined capital and surplus of such
corporation or association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 8.06, the Trustee shall resign immediately in the
manner and with the effect specified in Section 8.07. The entity serving as
Trustee may have normal banking and trust relationships with the Depositor and
its affiliates or a Servicer and its affiliates; provided, however, that such
entity cannot be an affiliate of the Seller, the Depositor or a Servicer other
than the Trustee in its role as successor to a Servicer.
SECTION 8.07 Resignation and Removal of the Trustee.
The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice of resignation to the Depositor, the
Seller, the Servicer and each Rating Agency not less than 60 days before the
date specified in such notice, when, subject to Section 8.08, such resignation
is to take effect, and acceptance by a successor trustee in accordance with
Section 8.08 meeting the qualifications set forth in Section 8.06. If no
successor trustee meeting such qualifications shall have been so appointed and
have accepted appointment within 30 days after the giving of such notice of
resignation or removal (as provided below), the resigning or removed Trustee may
petition any court of competent jurisdiction for the appointment of a successor
trustee.
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 thereto by the Depositor, or if at any time the Trustee shall become
incapable of acting, or shall be adjudged as bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, or a tax
is imposed with respect to the Trust Fund by any state in which the Trustee or
the Trust Fund is located and the imposition of such tax would be avoided by the
appointment of a different trustee, then the Depositor may remove the Trustee
and appoint a successor trustee by written instrument, in triplicate, one copy
of which shall be delivered to the Trustee, one copy to the Servicer and the
Seller and one copy to the successor trustee.
110
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 shall be
delivered by the successor Trustee to the Servicer and the Seller, one complete
set to the Trustee so removed and one complete set to the successor so
appointed. Notice of any removal of the Trustee shall be given to each Rating
Agency by the successor trustee. All costs and expenses incurred by the Trustee
in connection with the removal of the Trustee without cause shall be reimbursed
to the Trustee from amounts on deposit in the Collection Account.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.07 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 8.08.
SECTION 8.08 Successor Trustee.
Any successor trustee appointed as provided in Section 8.07 shall
execute, acknowledge and deliver to the Depositor and to its predecessor trustee
and the Servicer and the Seller an instrument accepting such appointment
hereunder and thereupon the resignation or removal of the predecessor trustee
shall become effective and such successor trustee, without any further act, deed
or conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if originally
named as trustee herein. The Depositor, the 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.
No successor trustee shall accept appointment as provided in this
Section 8.08 unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 8.06 and its appointment shall not
adversely affect the then current rating of the Certificates.
Upon acceptance of appointment by a successor trustee as provided in
this Section 8.08, the Depositor shall mail notice of the succession of such
trustee hereunder to all Holders of Certificates. 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 the Trustee.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to the business of the Trustee, shall be the successor of
the Trustee hereunder, provided that such corporation shall be eligible under
the provisions of Section 8.06 without the execution or filing of any paper or
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
111
SECTION 8.10 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Fund or property securing any Mortgage Note may at the
time be located, the 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 and for the
benefit of the Certificateholders, such title to the Trust Fund or any part
thereof, whichever is applicable, and, subject to the other provisions of this
Section 8.10, such powers, duties, obligations, rights and trusts as the
Servicer and the Trustee may consider necessary or desirable. If the Servicer
shall not have joined in such appointment within 15 days after the receipt by it
of a request to do so, or in the case an Event of Default shall have occurred
and be continuing, the Trustee 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 and no
notice to Certificateholders of the appointment of any co-trustee or separate
trustee shall be required under Section 8.08.
Every separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and conditions:
(i) To the extent necessary to effectuate the purposes of 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 (it being
understood that such separate trustee or co-trustee is not authorized to
act separately without the Trustee joining in such act), except to the
extent that under any law of any jurisdiction in which any particular act
or acts are to be performed (whether as Trustee hereunder or as successor
to the 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 applicable Trust Fund or
any portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at the
direction of the Trustee;
(ii) No trustee hereunder shall be held personally liable by reason of
any act or omission of any other trustee hereunder and such appointment
shall not, and shall not be deemed to, constitute any such separate trustee
or co-trustee as agent of the Trustee;
(iii) The Trustee may at any time accept the resignation of or remove
any separate trustee or co-trustee; and
(iv) The Depositor, and not the Trustee, shall be liable for the
payment of reasonable compensation, reimbursement and indemnification to
any such separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the separate trustees and co-trustees, when
and as effectively as if given to each of
112
them. Every instrument appointing any separate trustee or co-trustee shall refer
to this Agreement and the conditions of this Article VIII. Each separate trustee
and co-trustee, upon its acceptance of the trusts conferred, shall be vested
with the estates or property specified in its instrument of appointment, either
jointly with the Trustee or separately, as may be provided therein, subject to
all the provisions of this Agreement, specifically including every provision of
this Agreement relating to the conduct of, affecting the liability of, or
affording protection to, the Trustee. Every such instrument shall be filed with
the Trustee and a copy thereof given to the Servicer and the Depositor.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION 8.11 Tax Matters.
It is intended that the assets with respect to which the REMIC
elections are to be made, as set forth in the Preliminary Statement, shall
constitute, and that the conduct of matters relating to each such segregated
pool of assets shall be such as to qualify such assets as, a "real estate
mortgage investment conduit" as defined in and in accordance with the Trust Fund
Provisions. In furtherance of such intention, the Trustee covenants and agrees
that it shall act as agent (and the Trustee is hereby appointed to act as agent)
for the Tax Matters Person and on behalf of the Trust Fund and that in such
capacity it shall: (a) prepare and file, or cause to be prepared and filed, in a
timely manner, a U.S. Real Estate Mortgage Investment Conduit Income Tax Return
(Form 1066 or any successor form adopted by the Internal Revenue Service) and
prepare and file or cause to be prepared and filed with the Internal Revenue
Service and applicable state or local tax authorities income tax or information
returns for each taxable year with respect to each of REMIC 1, REMIC 2 and REMIC
3 containing such information and at the times and in the manner as may be
required by the Code or state or local tax laws, regulations, or rules, and
furnish or cause to be furnished to Certificateholders the schedules, statements
or information at such times and in such manner as may be required thereby; (b)
within thirty days of the Closing Date, furnish or cause to be furnished to the
Internal Revenue Service, on Forms 8811 or as otherwise may be required by the
Code, the name, title, address, and telephone number of the person that the
holders of the Certificates may contact for tax information relating thereto,
together with such additional information as may be required by such form, and
update such information at the time or times in the manner required by the Code;
(c) make or cause to be made elections that the assets of each of REMIC 1, REMIC
2 and REMIC 3 be treated as a REMIC on the federal tax return for its first
taxable year (and, if necessary, under applicable state law); (d) prepare and
forward, or cause to be prepared and forwarded, to the Certificateholders and to
the Internal Revenue Service and, if necessary, state tax authorities, all
information returns and reports as and when required to be provided to them in
accordance with the REMIC Provisions, including without limitation, the
calculation of any original issue discount using the Prepayment Assumption; (e)
provide information necessary for the computation of tax imposed on the transfer
of a Residual Certificate to a Person that is not a Permitted Transferee, or an
agent (including a broker, nominee or other middleman) of a Non-Permitted
Transferee, or a pass-th entity in which a Non-Permitted Transferee is the
record holder of an interest (the reasonable cost
113
of computing and furnishing such information may be charged to the Person liable
for such tax); (f) to the extent that they are under its control, conduct
matters relating to such assets at all times that any Certificates are
outstanding so as to maintain the status of REMIC 1, REMIC 2 and REMIC 3 as a
REMIC under the REMIC Provisions; (g) not knowingly or intentionally take any
action or omit to take any action that would cause the termination of the REMIC
status of REMIC 1, REMIC 2 or REMIC 3; (h) pay, from the sources specified in
the fourth paragraph of this Section 8.11, the amount of any federal or state
tax, including prohibited transaction taxes as described below, imposed on the
Trust Fund prior to its termination when and as the same shall be due and
payable (but such obligation shall not prevent the Trustee or any other
appropriate Person from contesting any such tax in appropriate proceedings and
shall not prevent the Trustee from withholding payment of such tax, if permitted
by law, pending the outcome of such proceedings); (i) ensure that federal, state
or local income tax or information returns shall be signed by the Trustee or
such other person as may be required to sign such returns by the Code or state
or local laws, regulations or rules; (j) maintain records relating to the Trust
Fund, including but not limited to the income, expenses, assets and liabilities
thereof and the fair market value and adjusted basis of the assets determined at
such intervals as may be required by the Code, as may be necessary to prepare
the foregoing returns, schedules, statements or information; and (k) as and when
necessary and appropriate, represent the Trust Fund in any administrative or
judicial proceedings relating to an examination or audit by any governmental
taxing authority, request an administrative adjustment as to any taxable year of
the Trust Fund, enter into settlement agreements with any governmental taxing
agency, extend any statute of limitations relating to any tax item of the Trust
Fund, and otherwise act on behalf of the Trust Fund in relation to any tax
matter or controversy involving it.
To the extent that they are under its control, the Servicer shall
conduct matters relating to the assets of each REMIC at all times that any
Certificates are outstanding so as to maintain the status of REMIC 1, REMIC 2
and REMIC 3 as a REMIC under the REMIC Provisions. No Servicer shall knowingly
or intentionally take any action that would cause the termination of the REMIC
status of REMIC 1, REMIC 2 or REMIC 3.
In order to enable the Trustee to perform its duties as set forth
herein, the Depositor shall provide, or cause to be provided, to the Trustee
within ten (10) days after the Closing Date all information or data that the
Trustee requests in writing and determines to be relevant for tax purposes to
the valuations and offering prices of the Certificates, including, without
limitation, the price, yield, prepayment assumption and projected cash flows of
the Certificates and the Mortgage Loans. Thereafter, the Depositor shall provide
to the Trustee promptly upon written request therefor any such additional
information or data that the Trustee may, from time to time, reasonably request
in order to enable the Trustee to perform its duties as set forth herein. The
Depositor hereby indemnifies the Trustee for any losses, liabilities, damages,
claims or expenses of the Trustee arising from any errors or miscalculations of
the Trustee that result from any failure of the Depositor to provide, or to
cause to be provided, accurate information or data to the Trustee on a timely
basis.
In the event that any tax is imposed on "prohibited transactions" of
the Trust Fund as defined in Section 860F(a)(2) of the Code, on the "net income
from foreclosure property" of the Trust Fund as defined in Section 860G(c) of
the Code, on any contribution to the Trust Fund after the Startup Day pursuant
to Section 860G(d) of the Code, or any other tax is imposed, if not paid as
otherwise provided for herein, such tax shall be paid by (i) the Trustee, if any
such other tax arises
114
out of or results from a breach by the Trustee of any of its obligations under
this Agreement, (ii) the Servicer or the Seller, in the case of any such minimum
tax, if such tax arises out of or results from a breach by the Servicer or the
Seller of any of their obligations under this Agreement or (iii) the Seller, if
any such tax arises out of or results from the Seller's obligation to repurchase
a related Mortgage Loan pursuant to Section 2.02 or 2.03 or (iv) in all other
cases, or in the event that the Trustee, the related Servicer or Seller fails to
honor its obligations under the preceding clauses (i), (ii) or (iii), any such
tax will be paid with amounts otherwise to be distributed to the
Certificateholders, as provided in Section 4.02.
Neither the Servicer nor the Trustee shall enter into any arrangement
by which any of REMIC 1, REMIC 2 or REMIC 3 will receive a fee or other
compensation for services nor permit any of REMIC 1, REMIC 2 or REMIC 3 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.
SECTION 8.12 Commission Reporting.
(a) The Trustee and the Servicer shall reasonably cooperate with the
Depositor in connection with the Trust's satisfying the reporting requirements
under the Exchange Act. The Trustee shall prepare on behalf of the Depositor any
Forms 8-K and 10-K customary for similar securities as required by the Exchange
Act and the rules and regulations of the Commission thereunder, and the
Depositor shall sign and the Trustee shall file (via XXXXX) such Forms on behalf
of the Depositor. The Depositor hereby grants to the Trustee a limited power of
attorney to execute and file each such document on behalf of the Depositor. Such
power of attorney shall continue until the earlier of (i) receipt by the Trustee
from the Depositor of written termination of such power of attorney and (ii) the
termination of the Trust.
(b) Each Form 8-K shall be filed by the Trustee within 15 days after
each Distribution Date, with a copy of the statement to the Certificateholders
for such Distribution Date as an exhibit thereto. Prior to March 31st of the
calendar year following the calendar year during which the Closing Date occurs
(or such earlier date as may be required by the Exchange Act and the rules and
regulations of the Commission), the Trustee shall file a Form 10-K, in substance
as required by applicable law or applicable Commission staff's interpretations.
Such Form 10-K shall include as exhibits, the Servicer's annual statement of
compliance described under Section 3.16 and the accountant's report described
under Section 3.17, in each case to the extent they have been timely delivered
to the Trustee. If they are not so timely delivered, the Trustee shall file an
amended Form 10-K including such documents as exhibits promptly after they are
delivered to the Trustee. The Trustee shall have no liability with respect to
any failure to properly or timely prepare or file such periodic reports
resulting from or relating to the Trustee's inability or failure to obtain any
information not resulting from its own negligence or willful misconduct. The
Form 10-K shall also include a certification in the form attached hereto as
Exhibit W (the "Depositor Certification"), which shall be signed by the senior
officer of the Depositor in charge of securitization. The Trustee shall have no
responsibility to file any items other than those specified in this Section
8.12.
(c) Not later than 15 calendar days before the date on which the
Depositor's annual report on Form 10-K is required to be filed in accordance
with the Exchange Act and the rules
115
and regulations of the Commission (or, if such day is not a Business Day, the
immediately preceding Business Day), the Trustee shall sign a certification in
the form attached hereto as Exhibit X (the "Trustee Certification") for the
benefit of the Depositor and its officers, directors and affiliates regarding
certain aspects of items 1 through 3 of the Depositor Certification. In
addition, the Trustee shall, subject to the provisions of Section 8.01 and 8.02
hereof, indemnify and hold harmless the Depositor and each Person, if any, who
"controls" the Depositor within the meaning of the Securities Act and its
officers, directors and affiliates from and against any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments and other costs and expenses arising out of or based upon a
breach of the Trustee's obligations under this Section 8.12 or any inaccuracy
made in the Trustee Certification. If the indemnification provided for in this
Section 8.12(c) is unavailable or insufficient to hold harmless such Persons,
then the Trustee shall contribute to the amount paid or payable by such Persons
as a result of the losses, claims, damages or liabilities of such Persons in
such proportion as is appropriate to reflect the relative fault of the Depositor
on the one hand and the Trustee on the other. The Trustee acknowledges that the
Depositor is relying on the Trustee's performance of its obligations under this
Section 8.12 in order to perform its obligations under Section 8.12(b) above.
(d) Not later than 15 calendar days before the date on 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 (or, if
such day is not a Business Day, the immediately preceding Business Day), the
Servicer will deliver to the Depositor and the Trustee an Officer's Certificate
for the prior calendar year in substantially the form of Exhibit Y to this
Agreement. The Servicer agrees to indemnify and hold harmless the Depositor, the
Trustee and each Person, if any, who " the Depositor or the Trustee within the
meaning of the Securities Act and their respective officers, directors and
affiliates from and against any losses, damages, penalties, fines, forfeitures,
reasonable and necessary legal fees and related costs, judgments and other
costs, fees and expenses that such Person may sustain arising out of third party
claims based on (i) the failure of the Servicer to deliver or caused to be
delivered when required any Officer's Certificate pursuant to this Section
8.12(d), or (ii) any material misstatement or omission contained in any
Officer's Certificate provided pursuant to this Section 8.12(d). If an event
occurs that would otherwise result in an indemnification obligation under
clauses (i) or (ii) above, but the indemnification provided for in this Section
8.12(d) by the Servicer is unavailable or insufficient to hold harmless such
Persons, then the Servicer shall contribute to the amount paid or payable by
such Persons as a result of the losses, claims, damages or liabilities of such
Persons in such proportion as is appropriate to reflect the relative fault of
the Depositor or Trustee on the one hand and the Servicer on the other. The
Servicer acknowledges that the Depositor and the Trustee are relying on the
Servicer's performance of its obligations under this Agreement in order to
perform their respective obligations under this Section 8.12.
(e) Upon any filing with the Commission, the Trustee shall promptly
deliver to the Depositor a copy of any executed report, statement or
information.
(f) If the Commission issues additional interpretative guidance or
promulgates additional rules or regulations, or if other changes in applicable
law occur, that would require the reporting arrangements, or the allocation of
responsibilities with respect thereto, described in this Section 8.12, to be
conducted differently than as described, the Depositor, Servicer and Trustee
will reasonably cooperate to amend the provisions of this Section 8.12 in order
to comply with such
116
amended reporting requirements and such amendment of this Section 8.12. Any such
amendment shall be made in accordance with Section 10.01 without the consent of
the Certificateholders, and may result in a change in the reports filed by the
Trustee on behalf of the Trust under the Exchange Act. Notwithstanding the
foregoing, the Depositor, Servicer and Trustee shall not be obligated to enter
into any amendment pursuant to this Section 8.12 that adversely affects its
obligations and immunities under this Agreement.
(g) Prior to January 31 of the first year in which the Trustee is able
to do so under applicable law, the Trustee shall file a Form 15D Suspension
Notification with respect to the Trust.
117
ARTICLE IX
TERMINATION
SECTION 9.01 Termination upon Liquidation or Purchase of the Mortgage
Loans.
Subject to Section 9.03, the rights, obligations and responsibilities
of the Depositor, the Seller, the Servicer and the Trustee created hereunder
with respect to the Trust Fund shall terminate upon the earlier of (a) the
purchase by the Optional Termination Holder of all Mortgage Loans (and REO
Properties) remaining at the price equal to the sum of (A) 100% of the Aggregate
Collateral Balance plus one month's accrued interest thereon at the applicable
Mortgage Rate, (B) the lesser of (x) the appraised value of any REO Property as
determined by the higher of two appraisals completed by two independent
appraisers selected by the Depositor at the expense of the Depositor and (y) the
Stated Principal Balance of each Mortgage Loan related to any REO Property, in
each case plus accrued and unpaid interest thereon at the applicable Mortgage
Rate and (C) any unreimbursed Servicing Advances and (b) the later of (i) the
maturity or other liquidation (or any Advance with respect thereto) of the last
Mortgage Loan remaining in the Trust Fund and the disposition of all REO
Property and (ii) the distribution to Certificateholders of all amounts required
to be distributed to them pursuant to this Agreement. In no event shall the
trusts created hereby continue beyond the expiration of 21 years from the death
of the survivor of the descendants of Xxxxxx X. Xxxxxxx, the late Ambassador of
the United States to the Court of St. James's, living on the date hereof. The
right to repurchase all Mortgage Loans and REO Properties pursuant to clause (a)
above shall be conditioned upon the aggregate Stated Principal Balance of the
Mortgage Loans and the appraised value of the REO Properties at the time of any
such repurchase, aggregating less than ten percent of the Aggregate Collateral
Balance as of the Cut-off Date.
SECTION 9.02 Final Distribution on the Certificates.
If on any Determination Date, the Trustee determines that there are no
Outstanding Mortgage Loans and no other funds or assets in the Trust Fund other
than the funds in the Collection Accounts and Certificate Account, the Trustee
shall promptly send a final distribution notice to each Certificateholder. If
the Optional Termination Holder above elects to terminate the Trust Fund
pursuant to Section 9.01, at least 20 days prior to the date notice is to be
mailed to the affected Certificateholders such Person shall notify the Servicer
and the Trustee of the date the Depositor intends to terminate the Trust Fund
and of the applicable repurchase price of the Mortgage Loans and REO Properties.
Notice of any termination of the Trust Fund, specifying the
Distribution Date on which Certificateholders shall surrender their Certificates
for payment of the final distribution and cancellation, shall be given promptly
by the Trustee by letter to Certificateholders mailed not earlier than the 10th
day and not later than the 15th day of the month next preceding the month of
such final distribution. Any such notice shall specify (a) the Distribution Date
upon which final distribution on the Certificates will be made upon presentation
and surrender of Certificates at the office therein designated, (b) the amount
of such final distribution, (c) the location of the office or agency at which
such presentation and surrender must be made, and (d) that the Record Date
otherwise applicable
118
to such Distribution Date is not applicable, distributions being made only upon
presentation and surrender of the Certificates at the office therein specified.
The Trustee shall give such notice to each Rating Agency at the time such notice
is given to Certificateholders.
Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to the Certificateholders of each Class, in each case on
the final Distribution Date and in the order set forth in Section 4.02, in the
case of the Certificateholders, in proportion to their respective Percentage
Interests, with respect to Certificateholders of the same Class, an amount equal
to (i) as to each Class of Regular Certificates, the Certificate Balance thereof
plus accrued interest thereon (or on their Notional Amount, if applicable) in
the case of an interest-bearing Certificate and (ii) as to the Residual
Certificates, the amount, if any, which remains on deposit in the Collection
Accounts (other than the amounts retained to meet claims) after application
pursuant to clause (i) above.
In the event that any affected Certificateholders shall not surrender
Certificates for cancellation within six months after the date specified in the
above mentioned written notice, the Trustee shall give a second written notice
to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
six months after the second notice all the applicable Certificates shall not
have been surrendered for cancellation, the Trustee may take appropriate steps,
or may appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets which remain a part of
the Trust Fund. If within one year after the second notice all Certificates
shall not have been surrendered for cancellation, the Class A-R
Certificateholders shall be entitled to all unclaimed funds and other assets of
the Trust Fund which remain subject hereto and the Trustee shall be discharged
from all further liability with respect to the Certificates and this Agreement.
SECTION 9.03 Additional Termination Requirements.
(a) In the event that the Optional Termination Holder exercises its
purchase option with respect to the Mortgage Loans as provided in Section 9.01,
at such time as the Mortgage Loans are so purchased, the Trust Fund shall be
terminated in accordance with the following additional requirements, unless the
Trustee has been supplied with an Opinion of Counsel, at the expense of the
Depositor, to the effect that the failure to comply with the requirements of
this Section 9.03 will not (i) result in the imposition of taxes on "prohibited
transactions" on any REMIC as defined in Section 860F of the Code, or (ii) cause
REMIC 1, REMIC 2 or REMIC 3 to fail to qualify as a REMIC at any time that any
Certificates are outstanding:
(1) Within 90 days prior to the final Distribution Date set forth
in the notice given by the Trustee under Section 9.02, the
Depositor shall prepare and the Trustee, at the expense of the
Depositor, shall adopt a plan of complete liquidation within
the meaning of Section 860F(a)(4) of the Code which, as
evidenced by an Opinion of Counsel (which opinion shall not be
an expense of the Trustee, the Tax Matters Person or the Trust
Fund), meets the requirements of a qualified liquidation;
119
(2) Within 90 days after the time of adoption of such a plan of
complete liquidation, the Trustee shall sell all of the assets
of the Trust Fund to the Depositor for cash in accordance with
Section 9.01; and
On the date specified for final payment of the
Certificates, the Trustee shall, after payment of any
unreimbursed Advances, Servicing Advances, Servicing Fees or
other fee compensation payable to the Servicer pursuant to
this Agreement, make final distributions of principal and
interest on the Certificates in accordance with Section 4.02
and distribute or credit, or cause to be distributed or
credited, to the Holders of the Residual Certificates all cash
on hand after such final payment (other than the cash retained
to meet claims), and the Trust Fund (and any REMIC) shall
terminate at that time.
(b) The Trustee as agent for REMIC 1, REMIC 2 and REMIC 3 hereby
agrees to adopt and sign such a plan of complete liquidation upon the written
request of the Depositor, and the receipt of the Opinion of Counsel referred to
in Section 9.03(a)(1) and to take such other action in connection therewith as
may be reasonably requested by the Depositor.
(c) By their acceptance of the Certificates, the Holders thereof
hereby authorize the Depositor to prepare and the Trustee to adopt and sign a
plan of complete liquidation.
120
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01 Amendment.
This Agreement may be amended from time to time by the Depositor, the
Servicer, the Seller and the Trustee without the consent of any of the
Certificateholders (i) to cure any ambiguity or mistake, (ii) to correct any
defective provision herein or to supplement any provision herein which may be
inconsistent with any other provision herein, (iii) to add to the duties of the
Depositor, the Seller or any Servicer, (iv) to add any other provisions with
respect to matters or questions arising hereunder or (v) to modify, alter,
amend, add to or rescind any of the terms or provisions contained in this
Agreement; provided that any action pursuant to clauses (iv) or (v) above shall
not, as evidenced by an Opinion of Counsel (which Opinion of Counsel shall not
be an expense of the Trustee or the Trust Fund, but shall be at the expense of
the party proposing such amendment), adversely affect in any material respect
the interests of any Certificateholder; provided, however, that no such Opinion
of Counsel shall be required if the Person requesting the amendment obtains a
letter from each Rating Agency stating that the amendment would not result in
the downgrading or withdrawal of the respective ratings then assigned to the
Certificates; it being understood and agreed that any such letter in and of
itself will not represent a determination as to the materiality of any such
amendment and will represent a determination only as to the credit issues
affecting any such rating. The Trustee, the Depositor, the Seller and the
Servicer also may at any time and from time to time amend this Agreement without
the consent of the Certificateholders to modify, eliminate or add to any of its
provisions to such extent as shall be necessary or helpful to (i) maintain the
qualification of REMIC 1, REMIC 2 or REMIC 3 as a REMIC under the Code, (ii)
avoid or minimize the risk of the imposition of any tax on the Trust Fund
pursuant to the Code that would be a claim at any time prior to the final
redemption of the Certificates or (iii) comply with any other requirements of
the Code, provided that the Trustee has been provided an Opinion of Counsel,
which opinion shall be an expense of the party requesting such opinion but in
any case shall not be an expense of the Trustee or the Trust Fund, to the effect
that such action is necessary or helpful to, as applicable, (i) maintain such
qualification, (ii) avoid or minimize the risk of the imposition of such a tax
or (iii) comply with any such requirements of the Code.
This Agreement may also be amended from time to time by the Depositor,
the Servicer, the Seller and the Trustee with the consent of the Holders of a
Majority in Interest of each Class of Certificates 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 of modifying in any manner the rights of
the Holders of Certificates; provided, however, that no such amendment shall (i)
reduce in any manner the amount of, or delay the timing of, payments required to
be distributed on any Certificate without the consent of the Holder of such
Certificate, (ii) adversely affect in any material respect the interests of the
Holders of any Class of Certificates in a manner other than as described in
clause (i), without the consent of the Holders of Certificates of such Class
evidencing, as to such Class, Percentage Interests aggregating 66%, or (iii)
reduce the aforesaid percentages of Certificates the Holders of which are
required to consent to any such amendment, without the consent of the Holders of
all such Certificates then outstanding.
121
Notwithstanding any contrary provision of this Agreement, the Trustee
shall not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel, which opinion shall not be an expense of the
Trustee or the Trust Fund, but shall be at the expense of the party preparing
such amendment, to the effect that such amendment will not cause the imposition
of any federal tax on the Trust Fund or the Certificateholders or cause REMIC 1,
REMIC 2 or REMIC 3 to fail to qualify as a REMIC at any time that any
Certificates are outstanding.
Promptly after the execution of any amendment to this Agreement, the
Trustee shall furnish written notification of the substance or a copy of such
amendment to each Certificateholder if the consent of Certificateholders was
required and each Rating Agency.
It shall not be necessary for the consent of Certificateholders under
this Section 10.01 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.
Nothing in this Agreement shall require the Trustee to enter into an
amendment without receiving an Opinion of Counsel (which Opinion shall not be an
expense of the Trustee or the Trust Fund), satisfactory to the Trustee that (i)
such amendment is permitted and is not prohibited by this Agreement and that all
requirements for amending this Agreement have been complied with; and (ii)
either (A) the amendment does not adversely affect in any material respect the
interests of any Certificateholder or (B) the conclusion set forth in the
immediately preceding clause (A) is not required to be reached pursuant to this
Section 10.01.
SECTION 10.02 Recordation of Agreement; Counterparts.
This Agreement is subject to recordation in all appropriate public
offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the properties subject to the Mortgages are
situated, and in any other appropriate public recording office or elsewhere,
such recordation to be effected by the Depositor at its expense, but only upon
direction by the Trustee accompanied by an Opinion of Counsel to the effect that
such recordation materially and beneficially affects 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 10.03 Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND
TO BE PERFORMED IN THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES
122
HERETO AND THE CERTIFICATEHOLDERS SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
SECTION 10.04 [Reserved]
SECTION 10.05 Notices.
(a) The Trustee shall use its best efforts to promptly provide notice
to each Rating Agency with respect to each of the following of which it has
actual knowledge:
(i) Any material change or amendment to this Agreement;
(ii) The occurrence of any Event of Default that has not been cured;
(iii) The resignation or termination of any Servicer or the Trustee
and the appointment of any successor;
(iv) The repurchase or substitution of Mortgage Loans pursuant to
Sections 2.02 and 2.03; and
(v) The final payment to Certificateholders.
In addition, the Trustee shall promptly furnish to each Rating Agency
copies of the following to the extent such items are in its possession:
(i) Each report to Certificateholders described in Section 4.06 and
3.19;
(ii) Each annual statement as to compliance described in Section 3.16;
(iii) Each annual independent public accountants' servicing report
described in Section 3.17; and
(iv) Any notice of a purchase of a Mortgage Loan pursuant to Section
2.02, 2.03 or 3.11.
All directions, demands and notices hereunder shall be in writing and
shall be deemed to have been duly given when delivered to (a) in the case of the
Depositor and the Seller, Eleven Madison Avenue, 4th Floor, New York, New York
10010, Attention: Xxxxxxx Xxxxxx (with a copy to Credit Suisse First Boston
Mortgage Securities Corp., Eleven Madison Avenue, 4th Floor, New York, New York
10010, Attention: Office of the General Counsel), (b) in the case of the
Trustee, the Corporate Trust Office or such other address as the Trustee may
hereafter furnish to the Depositor and the Servicer, (c) in the case of
Wilshire, 00000 XX Xxxxxxxx Xxx, Xxxxx 000, Xxxxxxxxx, Xxxxxx 00000 Attention:
Xxx Xxxxxxx, with a copy to Stoel Rives LLP, 000 XX Xxxxx, Xxxxxxxx, Xxxxxx
00000 Attention: Xxxx Xxxxxx or such other address as may be hereafter furnished
in writing to the Depositor and the Trustee by the Servicer and (d) in the case
of each of the Rating Agencies, the address specified therefor in the definition
corresponding to the name of such Rating
123
Agency. Notices to Certificateholders shall be deemed given when mailed, first
class postage prepaid, to their respective addresses appearing in the
Certificate Register.
SECTION 10.06 Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
SECTION 10.07 Assignment.
Notwithstanding anything to the contrary contained herein, except as
provided in Sections 6.02 and 6.04, this Agreement may not be assigned by the
Servicer without the prior written consent of the Trustee and Depositor;
provided, however, that neither the Depositor nor the Trustee shall consent to
any such assignment unless each Rating Agency has confirmed in writing that such
assignment will not cause a reduction or withdrawal of the ratings then assigned
by it to any Class of Certificates.
SECTION 10.08 Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the trust created hereby, nor entitle such
Certificateholder's legal representative or heirs to claim an accounting or to
take any action or commence any proceeding in any court for a petition or
winding up of the trust created hereby, or otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.
No Certificateholder shall have any right to vote (except as provided
herein) or in any manner otherwise control the operation and management of the
Trust Fund, or the obligations of the parties hereto, nor shall anything herein
set forth or contained in the terms of the Certificates be construed so as to
constitute the Certificateholders from time to time as partners or members of an
association; nor shall any Certificateholder be under any liability to any third
party by reason of any action taken by the parties to this Agreement pursuant to
any provision hereof.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Agreement,
unless such Holder previously shall have given to the Trustee a written notice
of an Event of Default and of the continuance thereof, as herein provided, and
unless the Holders of Certificates evidencing not less than 25% of the Voting
Rights evidenced by the Certificates shall also have made written request to the
Trustee to institute such action, suit or proceeding in its own name as Trustee
hereunder and shall have offered to the Trustee such 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
124
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the Certificates, or to obtain or seek
to obtain priority over or preference to any other such Holder or to enforce any
right under this Agreement, except in the manner herein provided and for the
common benefit of all Certificateholders. For the protection and enforcement of
the provisions of this Section 10.08, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
SECTION 10.09 Certificates Nonassessable and Fully Paid.
It is the intention of the Depositor that Certificateholders shall not
be personally liable for obligations of the Trust Fund, that the interests in
the Trust Fund represented by the Certificates shall be nonassessable for any
reason whatsoever, and that the Certificates, upon due authentication thereof by
the Trustee pursuant to this Agreement, are and shall be deemed fully paid.
125
IN WITNESS WHEREOF, the Depositor, the Trustee, the Seller and the
Servicer have caused their names to be signed hereto by their respective
officers thereunto duly authorized as of the day and year first above written.
CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP., as Depositor
By: /S/XXXX X. XXXXXX
---------------------------
Name: Xxxx X. Xxxxxx
Title: Vice Presiden
JPMORGAN CHASE BANK,
as Trustee
By: /S/ XXXXXX XXXXX
---------------------------
Name: Xxxxxx Xxxxx
Title: Trust Officer
DLJ MORTGAGE CAPITAL, INC.,
as Seller
By: /S/ XXXXX XXXXXXXXXX
---------------------------
Name: Xxxxx Xxxxxxxxxx
Title: Vice President
WILSHIRE CREDIT CORPORATION,
as a Servicer
By: /S/ XXXXXXX XXXXXX
---------------------------
Name: Xxxxxxx Xxxxxx
Title: Senior Vice President
[NOTARY PAGES TO BE ATTACHED]
124
EXHIBIT A
[FORM OF CLASS A CERTIFICATE]
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, AS AMENDED (THE "CODE").
A-1
Certificate No. [____] [____]% [Adjustable] Pass-Through Rate
Cut-off Date: Initial Certificate Balance of this Certificate
May 1, 2003 ("Denomination"):
$[_________________]
First Distribution Date: Initial Certificate Balances of all Certificates of
June 25, 2003 this Class:
$[_________________]
Maturity Date: CUSIP: [_________________]
[______________]
CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP.
Home Equity Mortgage Trust 2003-3
Home Equity Mortgage Pass-Through Certificates, Series 2003-3
Class [_______]
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust Fund
consisting primarily of a pool of conventional mortgage loans (the
"Mortgage Loans") secured by fixed rate, second lien residential mortgage
loans.
Credit Suisse First Boston Mortgage Securities Corp., as Depositor
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Balance at any time may be less than
the Certificate Balance as set forth herein. This Certificate is payable solely
from the assets of the Trust and does not evidence an obligation of, or an
interest in, and is not guaranteed by the Depositor, the Seller, the Servicer or
the Trustee referred to below or any of their respective affiliates. This
Certificate and the Mortgage Loans are not guaranteed or insured by any
governmental agency or instrumentality.
This certifies that [ ] is the registered owner of the Percentage Interest
evidenced by this Certificate (obtained by dividing the denomination of this
Certificate by the aggregate of the denominations of all Certificates of the
Class to which this Certificate belongs) in certain monthly distributions with
respect to a Trust Fund consisting primarily of the Mortgage Loans deposited by
Credit Suisse First Boston Mortgage Securities Corp. (the "Depositor"). The
Trust Fund was created pursuant to a Pooling and Servicing Agreement dated as of
the Cut-off Date specified above (the "Agreement") among the Depositor, DLJ
Mortgage Capital, Inc. as seller ("DLJMC"), Wilshire Credit Corporation as
servicer ("Wilshire") and JPMorgan Chase Bank as trustee (the "Trustee"). To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned to such terms in the Agreement. This Certificate is issued under and is
subject to the terms, provisions
A-2
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.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement
or be valid for any purpose unless manually countersigned by an authorized
signatory of the Trustee.
A-3
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: May 29, 2003
JPMORGAN CHASE BANK,
as Trustee
By_________________________________
Countersigned:
By_________________________________
Authorized Signatory of
JPMORGAN CHASE BANK,
as Trustee
A-4
EXHIBIT B
[FORM OF SUBORDINATE CERTIFICATE]
[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, AS AMENDED (THE "CODE").
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO CERTAIN CERTIFICATES AS
DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.
[NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER A REPRESENTATION LETTER TO THE EFFECT
THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR A PLAN SUBJECT
TO SECTION 4975 OF THE CODE, OR, IF THE PURCHASER IS AN INSURANCE COMPANY, A
REPRESENTATION IN ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO
HEREIN OR AN OPINION OF COUNSEL IN ACCORDANCE WITH THE PROVISIONS OF THE
AGREEMENT REFERRED TO HEREIN. NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY
HEREIN, ANY PURPORTED TRANSFER OF THIS CERTIFICATE TO OR ON BEHALF OF AN
EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR TO THE CODE WITHOUT THE OFFICER'S
CERTIFICATE OR THE OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AS DESCRIBED
ABOVE SHALL BE VOID AND OF NO EFFECT.]
[THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED ("THE ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.]
B-1
Certificate No. [____] [Adjustable] [Variable] Pass-Through Rate
Cut-off Date: Initial [Certificate Balance] [Notional Amount]
May 1, 2003 of this Certificate ("Denomination"):
$[_________________]
First Distribution Date: Initial [Certificate Balances] [Notional
June 25, 0000 Xxxxxx] of all Certificates of this Class:
$[_________________]
Maturity Date: CUSIP: [_________________]
[______________]
CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP.
Home Equity Mortgage Trust 2003-3
Home Equity Mortgage Pass-Through Certificates, Series 2003-3
Class [_______]
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust Fund
consisting primarily of a pool of conventional mortgage loans (the
"Mortgage Loans") secured by fixed rate, second lien residential mortgage
loans.
Credit Suisse First Boston Mortgage Securities Corp., as Depositor
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Balance at any time may be less than
the Certificate Balance as set forth herein. This Certificate is payable solely
from the assets of the Trust and does not evidence an obligation of, or an
interest in, and is not guaranteed by the Depositor, the Seller, the Servicer or
the Trustee referred to below or any of their respective affiliates. This
Certificate and the Mortgage Loans are not guaranteed or insured by any
governmental agency or instrumentality.
This certifies that [__________] is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the denomination of
this Certificate by the aggregate of the denominations of all Certificates of
the Class to which this Certificate belongs) in certain monthly distributions
with respect to a Trust Fund consisting primarily of the Mortgage Loans
deposited by Credit Suisse First Boston Mortgage Securities Corp. (the
"Depositor"). The Trust Fund was created pursuant to a Pooling and Servicing
Agreement dated as of the Cut-off Date specified above (the "Agreement") among
the Depositor, DLJ Mortgage Capital, Inc. as seller ("DLJMC"), Wilshire Credit
Corporation as servicer ("Wilshire") and JPMorgan Chase Bank as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned to such terms in the Agreement. This Certificate is
issued under and is subject to the terms, provisions
B-2
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.
[No transfer of a Certificate of this Class shall be made unless the
Trustee shall have received either (i) a representation letter from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Trustee, to the effect that such transferee is not an
employee benefit plan subject to Section 406 of ERISA or Section 4975 of the
Code, or a person acting on behalf of any such plan or arrangement or using the
assets of any such plan or arrangement to effect such transfer, which
representation letter shall not be an expense of the Trustee or the Trust Fund,
(ii) if the purchaser is an insurance company, a representation that the
purchaser is an insurance company which is purchasing such Certificates with
funds contained in an "insurance company general account" (as such term is
defined in Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE
95-60")) and that the purchase and holding of such Certificates satisfy the
requirements for exemptive relief under Sections I and III of PTCE 95-60 or
(iii) in the case of any such Certificate presented for registration in the name
of an employee benefit plan subject to ERISA, or Section 4975 of the Code (or
comparable provisions of any subsequent enactments), or a trustee of any such
plan or any other person acting on behalf of any such plan or arrangement, or
using such plan's or arrangement's assets, an Opinion of Counsel satisfactory to
the Trustee to the effect that the purchase or holding of such Certificate will
not result in the assets of the Trust Fund being deemed to be "plan assets" and
subject to the prohibited transaction provisions of ERISA and the Code and will
not subject the Trustee or the Servicer to any obligation in addition to those
undertaken in this Agreement, which Opinion of Counsel shall not be an expense
of the Trustee or the Trust Fund. Notwithstanding anything else to the contrary
herein, any purported transfer of a Certificate to or on behalf of an employee
benefit plan subject to ERISA or to the Code without the Opinion of Counsel
satisfactory to the Trustee as described above shall be void and of no effect.]
[No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under said Act and such laws. In the event that a
transfer is to be made in reliance upon an exemption from the Securities Act and
such laws, in order to assure compliance with the Securities Act and such laws,
the Certificateholder desiring to effect such transfer and such
Certificateholder's prospective transferee shall each certify to the Trustee in
writing the facts surrounding the transfer. In the event that such a transfer is
to be made within three years from the date of the initial issuance of
Certificates pursuant hereto, there shall also be delivered (except in the case
of a transfer pursuant to Rule 144A of the Securities Act) to the Trustee an
Opinion of Counsel that such transfer may be made pursuant to an exemption from
the Securities Act and such state securities laws, which Opinion of Counsel
shall not be obtained at the expense of the Trustee, the Seller, the Servicer or
the Depositor. The Holder hereof desiring to effect such transfer shall, and
does hereby agree to, indemnify the Trustee and the Depositor 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.]
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
B-3
This Certificate shall not be entitled to any benefit under the Agreement
or be valid for any purpose unless manually countersigned by an authorized
signatory of the Trustee.
B-4
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: May 29, 2003
JPMORGAN CHASE BANK,
as Trustee
By_________________________________
Countersigned:
By_________________________________
Authorized Signatory of
JPMORGAN CHASE BANK,
as Trustee
B-5
EXHIBIT C
[FORM OF RESIDUAL CERTIFICATE]
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, AS AMENDED (THE "CODE").
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER A REPRESENTATION LETTER TO THE EFFECT
THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR A PLAN SUBJECT
TO SECTION 4975 OF THE CODE, OR AN OPINION OF COUNSEL IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN. NOTWITHSTANDING ANYTHING ELSE TO
THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF THIS CERTIFICATE TO OR ON BEHALF
OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR TO THE CODE WITHOUT THE OPINION
OF COUNSEL SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID AND OF
NO EFFECT.
C-1
Certificate No. [____] Variable Pass-Through Rate
Cut-off Date: Initial Certificate Balance of this Certificate
May 1, 2003 ("Denomination"):
$[_________________]
First Distribution Date: Initial Certificate Balances of all Certificates of
June 25, 2003 this Class:
$[_________________]
Maturity Date: CUSIP: [_________________]
[______________]
CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP.
Home Equity Mortgage Trust 2003-3
Home Equity Mortgage Pass-Through Certificates, Series 2003-3
Class [_______]
evidencing the distributions allocable to the Class A-R Certificates with
respect to a Trust Fund consisting primarily of a pool of conventional
mortgage loans (the "Mortgage Loans") secured by fixed rate, second lien
residential mortgage loans.
Credit Suisse First Boston Mortgage Securities Corp., as Depositor
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Balance at any time may be less than
the Certificate Balance as set forth herein. This Certificate is payable solely
from the assets of the Trust and does not evidence an obligation of, or an
interest in, and is not guaranteed by the Depositor, the Seller, the Servicer or
the Trustee referred to below or any of their respective affiliates. This
Certificate and the Mortgage Loans are not guaranteed or insured by any
governmental agency or instrumentality.
This certifies that [______________________] is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate by the aggregate of the denominations of all
Certificates of the Class to which this Certificate belongs) in certain monthly
distributions with respect to a Trust Fund consisting primarily of the Mortgage
Loans deposited by Credit Suisse First Boston Mortgage Securities Corp. (the
"Depositor"). The Trust Fund was created pursuant to a Pooling and Servicing
Agreement dated as of the Cut-off Date specified above (the "Agreement") among
the Depositor, DLJ Mortgage Capital, Inc. as seller ("DLJMC"), Wilshire Credit
Corporation as servicer ("Wilshire") and JPMorgan Chase Bank as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned to such terms 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.
C-2
Any distribution of the proceeds of any remaining assets of the Trust Fund
will be made only upon presentment and surrender of this Class A-R Certificate
at the Corporate Trust Office or the office or agency maintained by the Trustee
in New York, New York.
No transfer of a Class A-R Certificate shall be made unless the Trustee
shall have received either (i) a representation letter from the transferee of
such Certificate, acceptable to and in form and substance satisfactory to the
Trustee, to the effect that such transferee is not an employee benefit plan
subject to Section 406 of ERISA or Section 4975 of the Code, or a person acting
on behalf of any such plan or arrangement or using the assets of any such plan
or arrangement to effect such transfer, which representation letter shall not be
an expense of the Trustee or the Trust Fund or (ii) in the case of any such
Class A-R Certificate presented for registration in the name of an employee
benefit plan subject to ERISA, or Section 4975 of the Code (or comparable
provisions of any subsequent enactments), or a trustee of any such plan or any
other person acting on behalf of any such plan or arrangement, or using such
plan's or arrangement's assets, an Opinion of Counsel satisfactory to the
Trustee to the effect that the purchase or holding of such Class A-R Certificate
will not result in the assets of the Trust Fund being deemed to be "plan assets"
and subject to the prohibited transaction provisions of ERISA and the Code and
will not subject the Trustee to any obligation in addition to those undertaken
in this Agreement, which Opinion of Counsel shall not be an expense of the
Trustee or the Trust Fund. Notwithstanding anything else to the contrary herein,
any purported transfer of a Class A-R Certificate to or on behalf of an employee
benefit plan subject to ERISA or to the Code without the Opinion of Counsel
satisfactory to the Trustee as described above shall be void and of no effect.
Each Holder of this Class A-R Certificate will be deemed to have agreed to
be bound by the restrictions of the Agreement, including but not limited to the
restrictions that (i) each person holding or acquiring any Ownership Interest in
this Class A-R Certificate must be a Permitted Transferee, (ii) no Ownership
Interest in this Class A-R Certificate may be transferred without delivery to
the Trustee of (a) a transfer affidavit of the proposed transferee and (b) a
transfer certificate of the transferor, each of such documents to be in the form
described in the Agreement, (iii) each person holding or acquiring any Ownership
Interest in this Class A-R Certificate must agree to require a transfer
affidavit and to deliver a transfer certificate to the Trustee as required
pursuant to the Agreement, (iv) each person holding or acquiring an Ownership
Interest in this Class A-R Certificate must agree not to transfer an Ownership
Interest in this Class A-R Certificate if it has actual knowledge that the
proposed transferee is not a Permitted Transferee and (v) any attempted or
purported transfer of any Ownership Interest in this Class A-R Certificate in
violation of such restrictions will be absolutely null and void and will vest no
rights in the purported transferee.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement
or be valid for any purpose unless manually countersigned by an authorized
signatory of the Trustee.
C-3
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: May 29, 2003
JPMORGAN CHASE BANK,
as Trustee
By_________________________________
Countersigned:
By_________________________________
Authorized Signatory of
JPMORGAN CHASE BANK,
as Trustee
C-4
EXHIBIT D
[RESERVED]
D-1
EXHIBIT E
[FORM OF CLASS P 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, AS AMENDED (THE "CODE").
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER A REPRESENTATION LETTER TO THE EFFECT
THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR A PLAN SUBJECT
TO SECTION 4975 OF THE CODE OR AN OPINION OF COUNSEL IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN. NOTWITHSTANDING ANYTHING ELSE TO
THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF THIS CERTIFICATE TO OR ON BEHALF
OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR TO THE CODE WITHOUT THE OPINION
OF COUNSEL SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID AND OF
NO EFFECT.
E-1
Certificate No. [____] Variable Pass-Through Rate
Cut-off Date: Initial Certificate Balance of this Certificate
May 1, 2003 ("Denomination"):
$[_________________]
First Distribution Date: Initial Certificate Balances of all Certificates of
June 25, 2003 this Class:
$[_________________]
Maturity Date: CUSIP: [_________________]
[______________]
CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP.
Home Equity Mortgage Trust 2003-3
Home Equity Mortgage Pass-Through Certificates, Series 2003-3
Class [_______]
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust Fund
consisting primarily of a pool of conventional mortgage loans (the
"Mortgage Loans") secured by fixed rate, first and second lien residential
mortgage loans.
Credit Suisse First Boston Mortgage Securities Corp., as Depositor
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Balance of this Class P Certificate
at any time may be less than the Initial Certificate Balance set forth on the
face hereof, as described herein. This Class P Certificate does not evidence an
obligation of, or an interest in, and is not guaranteed by the Depositor, the
Servicer or the Trustee referred to below or any of their respective affiliates.
This certifies that _________________ is the registered owner of the
Percentage Interest evidenced by this Class P Certificate (obtained by dividing
the Denomination of this Class P Certificate by the Initial Class Principal
Balance) in certain distributions with respect to a Trust consisting primarily
of the Mortgage Loans deposited by Credit Suisse First Boston Mortgage
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of May 1, 2003 (the "Agreement") among the
Depositor, DLJ Mortgage Capital Inc., as seller ("DLJMC"), Wilshire Credit
Corporation, as servicer ("Wilshire") and JPMorgan Chase Bank, as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Class P Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Class P Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
E-2
This Certificate does not have a pass-through rate and will be entitled to
distributions only to the extent set forth in the Agreement.
No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the Act
and any applicable state securities laws or is exempt from the registration
requirements under said Act and such laws. In the event that a transfer is to be
made in reliance upon an exemption from the Act and such laws, in order to
assure compliance with the Act and such laws, the Certificateholder desiring to
effect such transfer and such Certificateholder's prospective transferee shall
each certify to the Trustee and the Depositor in writing the facts surrounding
the transfer. In the event that such a transfer is not to be made pursuant to
Rule 144A of the Act, there shall be delivered to the Trustee and the Depositor
of an Opinion of Counsel that such transfer may be made pursuant to an exemption
from the Act, which Opinion of Counsel shall not be obtained at the expense of
the Trustee, the Seller, the Servicer or the Depositor; or there shall be
delivered to the Trustee and the Depositor a transferor certificate by the
transferor and an investment letter shall be executed by the transferee. The
Holder hereof desiring to effect such transfer shall, and does hereby agree to,
indemnify the Trustee and the Depositor against any liability that may result if
the transfer is not so exempt or is not made in accordance with such federal and
state laws.
No transfer of a Class P Certificate shall be made unless the Trustee shall
have received either (i) a representation letter from the transferee of such
Certificate, acceptable to and in form and substance satisfactory to the
Trustee, to the effect that such transferee is not an employee benefit plan
subject to Section 406 of ERISA or Section 4975 of the Code, or a person acting
on behalf of any such plan or arrangement or using the assets of any such plan
or arrangement to effect such transfer, which representation letter shall not be
an expense of the Trustee or the Trust Fund or (ii) in the case of any such
Class P Certificate presented for registration in the name of an employee
benefit plan subject to ERISA, or Section 4975 of the Code (or comparable
provisions of any subsequent enactments), or a trustee of any such plan or any
other person acting on behalf of any such plan or arrangement, or using such
plan's or arrangement's assets, an Opinion of Counsel satisfactory to the
Trustee to the effect that the purchase or holding of such Class P Certificate
will not result in the assets of the Trust Fund being deemed to be "plan assets"
and subject to the prohibited transaction provisions of ERISA and the Code and
will not subject the Trustee to any obligation in addition to those undertaken
in this Agreement, which Opinion of Counsel shall not be an expense of the
Trustee or the Trust Fund. Notwithstanding anything else to the contrary herein,
any purported transfer of a Class P Certificate to or on behalf of an employee
benefit plan subject to ERISA or to the Code without the Opinion of Counsel
satisfactory to the Trustee as described above shall be void and of no effect.
Reference is hereby made to the further provisions of this Class P
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Class P Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
E-3
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: May 29, 2003
JPMORGAN CHASE BANK,
as Trustee
By_________________________________
Countersigned:
By_________________________________
Authorized Signatory of
JPMORGAN CHASE BANK,
as Trustee
E-4
EXHIBIT F
[FORM OF REVERSE OF CERTIFICATES]
CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP.
Home Equity Mortgage Trust 2003-3
Home Equity Mortgage Pass-Through Certificates, Series 2003-3
Class [_______]
This Certificate is one of a duly authorized issue of Certificates
designated as Credit Suisse First Boston Mortgage Securities Corp., Mortgage
Pass-Through Certificates, of the Series specified on the face hereof (herein
collectively called the "Certificates"), and representing a beneficial ownership
interest in the Trust Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds on deposit in the Certificate Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
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 on the first
Distribution Date specified on the face hereof, to the Person in whose name this
Certificate is registered at the close of business on the applicable Record Date
in an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to Holders of Certificates
of the Class to which this Certificate belongs on such Distribution Date
pursuant to the Agreement. [The Record Date applicable to each Distribution Date
is the last Business Day of the month next preceding the month of such
Distribution Date.][The Record Date applicable to each Distribution Date is the
Business Day immediately preceding the related Distribution Date; provided that
if this Certificate is not a Book-Entry Certificate, then the Record Date
applicable to each Distribution Date is the last Business Day of the month next
preceding such Distribution Date.]
Distributions on this Certificate shall be made by wire transfer of
immediately available funds to the account of the Holder hereof at a bank or
other entity having appropriate facilities therefor, if such Certificateholder
shall have so notified the Trustee in writing at least five Business Days prior
to the related Record Date and such Certificateholder shall satisfy the
conditions to receive such form of payment set forth in the Agreement, or, if
not, by check mailed by first class mail to the address of such
Certificateholder appearing in the Certificate Register. The final distribution
on each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the Corporate Trust Office or such other
location specified in the notice to Certificateholders of such final
distribution.
F-1
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Servicer, the Seller and the Trustee with the consent of
the Holders of Certificates affected by such amendment evidencing the requisite
Percentage Interest, as provided in the Agreement. 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 therefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the 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 of the Trustee upon surrender of this Certificate for registration of
transfer at the Corporate Trust Office or the office or agency maintained by the
Trustee in New York, New York, accompanied by a 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 the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest in the Trust
Fund will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons 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 the same Class in authorized denominations
and evidencing the same 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 Servicer, the Seller and the Trustee and any agent of
the Depositor or the Trustee may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and the Seller, the
Depositor, the Trustee, or any such agent shall be affected by any notice to the
contrary.
On any Distribution Date on which the sum of the aggregate Stated Principal
Balance of the Mortgage Loans and the appraised value of the REO Properties at
the time of repurchase is less than 10% of the sum of the Aggregate Collateral
Balance of the Mortgage Loans, the Optional Termination Holder will have the
option to repurchase, in whole, from the Trust Fund all remaining Mortgage Loans
and REO Properties at a purchase price determined as provided in the Agreement.
In the event that no such optional termination occurs, the obligations and
responsibilities created by the Agreement will terminate upon the later of the
maturity or other liquidation (or any advance with respect thereto) of the last
Mortgage Loan remaining in the Trust Fund and the distribution to
Certificateholders of all amounts required to be distributed pursuant to the
Agreement. In no event, however, will the trust created by the Agreement
continue beyond the expiration of 21 years from
F-2
the death of the last survivor of the descendants living at the date of the
Agreement of a certain person named in the Agreement.
Any term used herein that is defined in the Agreement shall have the
meaning assigned in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.
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 Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trustee 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
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds 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.
F-3
EXHIBIT G
FORM OF INITIAL CERTIFICATION OF CUSTODIAN
May 29, 2003
________________
________________
Cut-off Date Principal Balance:
$_______________
JPMorgan Chase Bank,
as Trustee, for the
Home Equity Mortgage Pass-Through Certificates, Series 2003-3
0 Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Re: Custodial Agreement, dated as of May 1, 2003, between JPMorgan
Chase BANK, AS TRUSTEE AND LASALLE BANK NATIONAL ASSOCIATION, AS
CUSTODIAN
----------------------------------------------------------------
Ladies and Gentlemen:
In accordance with the provisions of Section 4 of the above-referenced
Custodial Agreement, the undersigned, as the Custodian, hereby certifies as to
each Mortgage Loan in the Mortgage Loan Schedule that (i) it has received: the
original Mortgage Note and Assignment of Mortgage with respect to each Mortgage
Loan identified on the Mortgage Loan Schedule attached hereto as Exhibit A and
(ii) such Mortgage Note has been reviewed by it and appears regular on its face
and relates.
The Custodian makes no representations as to: (i) the validity, legality,
enforceability, sufficiency, due authorization or genuineness of any of the
documents contained in each Custodial File or of any of the Mortgage Loans or
(ii) the collectability, insurability, effectiveness or suitability of any such
Mortgage Loan.
The Custodian hereby confirms that it is holding each such Mortgage Note
and Assignment of Mortgage as agent and bailee of, and custodian for the
exclusive use and benefit, and subject to the sole direction, of the Trustee
pursuant to the terms and conditions of the Custodial Agreement.
This Trust Receipt and Initial Certification is not divisible or
negotiable.
The Custodian will accept and act on instructions with respect to the
Mortgage Loans subject hereto upon surrender of this Trust Receipt and Initial
Certification at its office at LaSalle Bank National Association: 0000 Xxxxx
Xxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxxxx, 00000.
G-1
Capitalized terms used herein shall have the meaning ascribed to them in
the Custodial Agreement.
LASALLE BANK NATIONAL
ASSOCIATION
as Custodian
By:________________________________
Name:
Title:
G-2
EXHIBIT H
FORM OF FINAL CERTIFICATION OF CUSTODIAN
Trust Receipt #_________
Cut-off Date Principal Balance
$_____________
[To be addressed to the Trustee of record]
_____________________________
_____________________________
Re: Custodial Agreement, dated as of May 1, 2003, between JPMorgan
Chase BANK, AS TRUSTEE AND LASALLE BANK NATIONAL ASSOCIATION, AS
CUSTODIAN
----------------------------------------------------------------
Ladies and Gentlemen:
In accordance with the provisions of Section 6 of the above-referenced
Custodial Agreement, the undersigned, as the Custodian, hereby certifies that as
to each Mortgage Loan listed on the Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or any Mortgage Loan listed on the attachment hereto)
it has reviewed the Custodial Files and has determined that (i) all documents
required to be delivered to it pursuant to Sections 2(i)-(ix) of the Custodial
Agreement are in its possession; (ii) such documents have been reviewed by it
and appear regular on their face and related to such Mortgage Loan; (iii) all
Assignments of Mortgage or intervening assignments of mortgage, as applicable,
have been submitted for recording in the jurisdictions in which recording is
necessary; and (iv) each Mortgage Note has been endorsed as provided in Section
2(ii) of the Custodial Agreement and each Mortgage has been assigned in
accordance with Section 2(iii) of the Custodial Agreement. The Custodian makes
no representations as to: (i) validity, legality, enforceability, sufficiency,
due authorization or genuineness of any of the documents contained in each
Custodial File or of any of the Mortgage Loans, or (ii) The collectability,
insurability, effectiveness or suitability of any such Mortgage Loan.
The Custodian hereby confirms that it is holding each such Custodial File
as agent and bailee of, and custodian for the exclusion use and benefit, and
subject to the sole direction, of Trustee pursuant to the terms and conditions
of the Custodial Agreement.
This Trust Receipt and Final Certification is not divisible or negotiable.
The Custodian will accept and act on instructions with respect to the
Mortgage Loans subject hereto upon surrender of this Trust Receipt and Final
Certification at its office at LaSalle Bank National Association: 0000 Xxxxx
Xxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxxxx, 00000.
H-1
Capitalized terms used herein shall have the meaning ascribed to them in
the Custodial Agreement.
LASALLE BANK NATIONAL
ASSOCIATION,
as Custodian
By:________________________________
Name:
Title:
H-2
EXHIBIT I
TRANSFER AFFIDAVIT
CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP.
Home Equity Mortgage Trust 2003-3
Home Equity Mortgage Pass-Through Certificates, Series 2003-3
Class [_______]
STATE OF )
) ss.:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is an officer of _______________ , the proposed
Transferee of an Ownership Interest in a Class A-R Certificate (the
"Certificate") issued pursuant to the Pooling and Servicing Agreement, (the
"Agreement"), relating to the above-referenced Series, among Credit Suisse First
Boston Mortgage Securities Corp. as depositor, DLJ Mortgage Capital, Inc. as
seller ("DLJMC"), Wilshire Credit Corporation as servicer ("Wilshire") and
JPMorgan Chase Bank as trustee (the "Trustee"). Capitalized terms used, but not
defined herein or in Exhibit 1 hereto, shall have the meanings ascribed to such
terms in the Agreement. The Transferee has authorized the undersigned to make
this affidavit on behalf of the Transferee.
2. The Transferee is, as of the date hereof, and will be, as of the date of
the Transfer, a Permitted Transferee. The Transferee is acquiring its Ownership
Interest in the Certificate either (i) for its own account or (ii) as nominee,
trustee or agent for another Person and has attached hereto an affidavit from
such Person in substantially the same form as this affidavit. The Transferee has
no knowledge that any such affidavit is false.
3. The Transferee has been advised of, and understands that (i) a tax will
be imposed on Transfers of the Certificate to Persons that are not Permitted
Transferees; (ii) such tax will be imposed on the transferor, or, if such
Transfer is through an agent (which includes a broker, nominee or middleman) for
a Person that is not a Permitted Transferee, on the agent; and (iii) the Person
otherwise liable for the tax shall be relieved of liability for the tax if the
subsequent Transferee furnished to such Person an affidavit that such subsequent
Transferee is a Permitted Transferee and, at the time of Transfer, such Person
does not have actual knowledge that the affidavit is false.
4. The Transferee has been advised of, and understands that a tax will be
imposed on a "pass-through entity" holding the Certificate if at any time during
the taxable year of the pass-through entity a Person that is not a Permitted
Transferee is the record holder of an interest in such entity. The Transferee
understands that such tax will not be imposed for any period with respect to
which the record holder furnishes to the pass-through entity an affidavit that
such record holder is a Permitted Transferee and the pass-through entity does
not have actual knowledge that such affidavit is false. (For this purpose, a
"pass-through entity" includes a regulated investment company, a real estate
investment trust or common trust fund, a partnership, trust or estate, and
I-1
certain cooperatives and, except as may be provided in Treasury Regulations,
persons holding interests in pass-through entities as a nominee for another
Person.)
5. The Transferee has reviewed the provisions of Section 5.02(c) of the
Agreement (attached hereto as Exhibit 2 and incorporated herein by reference)
and understands the legal consequences of the acquisition of an Ownership
Interest in the Certificate including, without limitation, The restrictions on
subsequent Transfers and the provisions regarding voiding the Transfer and
mandatory sales. The Transferee expressly agrees to be bound by and to abide by
the provisions of Section 5.02(c) of the Agreement and the restrictions noted on
the face of the Certificate. The Transferee understands and agrees that any
breach of any of the representations included herein shall render the Transfer
to the Transferee contemplated hereby null and void.
6. The Transferee agrees to require a Transfer Affidavit from any Person to
whom the Transferee attempts to Transfer its Ownership Interest in the
Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such Transfer by the Transferee, The
Transferee agrees to deliver to the Trustee a certificate substantially in the
form set forth as EXHIBIT J to the Agreement (a "Transferor Certificate") to the
effect that such Transferee has no actual knowledge that the Person to which the
Transfer is to be made is not a Permitted Transferee.
7. The Transferee does not have the intention to impede the assessment or
collection of any tax legally required to be paid with respect to the
Certificate.
8. The Transferee's taxpayer identification number is [_____________].
9. The Transferee is a United States Person.
10. The Transferee is aware that the Certificate may be a "noneconomic
residual interest" within the meaning of proposed Treasury regulations
promulgated pursuant to the Code and that the transferor of a noneconomic
residual interest will remain liable for any taxes due with respect to the
income on such residual interest, unless no significant purpose of the transfer
was to impede the assessment or collection of tax.
11. The Transferee is (a) not an employee benefit plan that is subject to
ERISA or a plan that is subject to Section 4975 of the Code, and the Transferee
is not acting on behalf of such a plan or (b) an employee benefit plan that is
subject to ERISA or a plan that is subject to Section 4975 of the Code, and the
Transferee is not acting on behalf of such a plan and will provide an Opinion of
Counsel in accordance with the provisions of Agreement.
* * *
I-2
IN WITNESS WHEREOF, The Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
duly authorized officer and its corporate seal to be hereunto affixed, duly
attested, this _____ day of _____________, 20___.
___________________________________
Print Name of Transferee
By:________________________________
Name:
Title:
[Corporate Seal]
ATTEST:
______________________________
[Assistant] Secretary
Personally appeared before me the above-named , known or proved to me to be
the same person who executed the foregoing instrument and to be the of the
Transferee, and acknowledged that he executed the same as his free act and deed
and the free act and deed of the Transferee.
Subscribed and sworn before me this ______ day of _______________, 20___.
___________________________________
NOTARY PUBLIC
My Commission expires the _____ day of
_________________, 20___.
I-3
EXHIBIT 1
to
EXHIBIT I
CERTAIN DEFINITIONS
-------------------
"Ownership Interest": As to any Residual Certificate, any ownership
interest in such Certificate, including any interest in such Certificate as the
Holder thereof and any other interest therein, whether direct or indirect, legal
or beneficial.
"Permitted Transferee": Any person other than (i) The United States, any
State or political subdivision thereof, or any agency or instrumentality of any
of the foregoing, (ii) a foreign government, International Organization or any
agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in section 521 of the Code)
which is exempt from tax imposed by Chapter 1 of the Code (including the tax
imposed by section 511 of the Code on unrelated business taxable income) on any
excess inclusions (as defined in section 860E(c)(1) of the Code) with respect to
any Residual Certificate, (iv) rural electric and telephone cooperatives
described in section 1381(a)(2)(C) of the Code, (v) a Person that is not a
citizen or resident of the United States, a corporation, partnership, or other
entity created or organized in or under the laws of the United States, any State
thereof or the District of Columbia, or an estate whose income from sources
without the United States is includible in gross income for federal income tax
purposes regardless of its connection with the conduct of a trade or business
within the United States or a trust if a court within the United States is able
to exercise primary supervision over the administration of the trust and one or
more United States persons have the authority to control all substantial
decisions of the trust unless such Person has furnished the transferor and the
Trustee with a duly completed Internal Revenue Service Form W-8ECI or successor
form, and (vi) any other Person so designated by the Depositor based upon an
Opinion of Counsel that the Transfer of an Ownership Interest in a Residual
Certificate to such Person may cause the Trust Fund hereunder to fail to qualify
as a REMIC at any time that the Certificates are outstanding. The terms "United
States," "State" and "International Organization" shall have the meanings set
forth in section 7701 of the Code or successor provisions. A corporation will
not be treated as an instrumentality of the United States or of any State or
political subdivision thereof for these purposes if all of its activities are
subject to tax and, with the exception of the Federal Home Loan Mortgage
Corporation, a majority of its board of directors is not selected by such
government unit.
"Person": Any individual, corporation, partnership, joint venture,
association, limited liability company, joint-stock company, trust,
unincorporated organization or government, or any agency or political
subdivision thereof.
"Transfer": Any direct or indirect transfer or sale of any Ownership
Interest in a Residual Certificate.
"Transferee": Any Person who is acquiring by Transfer any Ownership
Interest in a Residual Certificate.
I-1-1
EXHIBIT 2
to
EXHIBIT I
SECTION 5.02(C) OF THE AGREEMENT
--------------------------------
Each Person who has or who acquires any Ownership Interest in a Residual
Certificate shall be deemed by the acceptance or acquisition of such Ownership
Interest to have agreed to be bound by the following provisions, and the rights
of each Person acquiring any Ownership Interest in a Residual Certificate are
expressly subject to the following provisions:
I-2-1
EXHIBIT J
FORM OF TRANSFEROR CERTIFICATE
__________, 200__
Credit Suisse First Boston Mortgage Securities Corp.
00 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxx
JPMorgan Chase Bank
0 Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Credit Suisse First Boston Mortgage Securities Corp., Home
Equity Mortgage Trust 2003-3 Home Equity Mortgage
Pass-Through Certificates, Series 2003-3, Class [___]
-----------------------------------------------------
Ladies and Gentlemen:
In connection with our disposition of the above Certificates we certify
that (a) we understand that the Certificates have not been registered under the
Securities Act of 1933, as amended (The "Act"), and are being disposed by us in
a transaction that is exempt from the registration requirements of the Act, (b)
we have not offered or sold any Certificates to, or solicited offers to buy any
Certificates from, any person, or otherwise approached or negotiated with any
person with respect thereto, in a manner that would be deemed, or taken any
other action which would result in, a violation of Section 5 of the Act and (c)
to the extent we are disposing of a Class A-R Certificate, we have no knowledge
the Transferee is not a Permitted Transferee.
Very truly yours,
___________________________________
Print Name of Transferor
By:________________________________
Authorized Officer
J-1
EXHIBIT K
FORM OF INVESTMENT LETTER (NON-RULE 144A)
__________, 200__
Credit Suisse First Boston Mortgage Securities Corp.
00 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxx
JPMorgan Chase Bank
0 Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Credit Suisse First Boston Mortgage Securities Corp., Home
Equity Mortgage Trust 2003-3 Home Equity Mortgage
Pass-Through Certificates, Series 2003-3, Class [___]
-----------------------------------------------------
Ladies and Gentlemen:
In connection with our acquisition of the above Certificates we certify
that (a) we understand that the Certificates are not being registered under the
Securities Act of 1933, as amended (The "Act"), or any state securities laws and
are being transferred to us in a transaction that is exempt from the
registration requirements of the Act and any such laws, (b) we are an
insitutional "accredited investor," as defined in Regulation D under the Act,
and have such knowledge and experience in financial and business matters that we
are capable of evaluating the merits and risks of investments in the
Certificates, (c) we have had the opportunity to ask questions of and receive
answers from the Depositor concerning the purchase of the Certificates and all
matters relating thereto or any additional information deemed necessary to our
decision to purchase the Certificates, (d) we are not an employee benefit plan
that is subject to the Employee Retirement Income Security Act of 1974, as
amended, or a plan or arrangement that is subject to Section 4975 of the
Internal Revenue Code of 1986, as amended, nor are we acting on behalf of any
such plan or arrangement nor are we using the assets of any such plan or
arrangement to effect such acquisition(e) of Prohibited Transaction Class
Exemption 95-60 ("PTCE 95-60")) and that the purchase and holding of such
Certificates are covered under PTCE 95-60, (e) if an insurance company, we are
purchasing the Certificates with funds contained in an "insurance company
general account" (as defined in Section V(e) of Prohibited Transaction Class
Exemption 95-60 ("PTCE 95-60")) and our purchase and holding of the Certificates
are covered under XXXX 00-00, (x) we are acquiring the Certificates for
investment for our own account and not with a view to any distribution of such
Certificates (but without prejudice to our right at all times to sell or
otherwise dispose of the Certificates in accordance with clause (h) below), (g)
we have not offered or sold any Certificates to, or solicited offers to buy any
Certificates from, any person, or otherwise approached or negotiated with any
person with respect thereto, or taken any other action which would result in a
violation of Section 5 of the Act, and (h) we will not sell, transfer or
otherwise dispose of any Certificates unless (1) such
K-1
sale, transfer or other disposition is made pursuant to an effective
registration statement under the Act or is exempt from such registration
requirements, and if requested, we will at our expense provide an opinion of
counsel satisfactory to the addressees of this Certificate that such sale,
transfer or other disposition may be made pursuant to an exemption from the Act,
(2) the purchaser or transferee of such Certificate has executed and delivered
to you a certificate to substantially the same effect as this certificate, and
(3) the purchaser or transferee has otherwise complied with any conditions for
transfer set forth in the Pooling and Servicing Agreement.
Very truly yours,
___________________________________
Print Name of Transferee
By:________________________________
Authorized Officer
K-2
EXHIBIT L
FORM OF RULE 144A LETTER
____________, 200__
Credit Suisse First Boston Mortgage Securities Corp.
00 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxx
JPMorgan Chase Bank
0 Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Credit Suisse First Boston Mortgage Securities Corp.,
Home Equity Mortgage Trust 2003-3 Home Equity Mortgage
Pass-Through Certificates, Series 2003-3, Class [___]
-----------------------------------------------------
Ladies and Gentlemen:
In connection with our acquisition of the above Certificates we certify
that (a) we understand that the Certificates are not being registered under the
Securities Act of 1933, as amended (The "Act"), or any state securities laws and
are being transferred to us in a transaction that is exempt from the
registration requirements of the Act and any such laws, (b) we have such
knowledge and experience in financial and business matters that we are capable
of evaluating the merits and risks of investments in the Certificates, (c) we
have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (d) we are not an employee benefit plan that is
subject to the Employee Retirement Income Security Act of 1974, as amended, or a
plan or arrangement that is subject to Section 4975 of the Internal Revenue Code
of 1986, as amended, nor are we acting on behalf of any such plan or arrangement
nor using the assets of any such plan or arrangement to effect such acquisition,
(e) we have not, nor has anyone acting on our behalf offered, transferred,
pledged, sold or otherwise disposed of the Certificates, any interest in the
Certificates or any other similar security to, or solicited any offer to buy or
accept a transfer, pledge or other disposition of the Certificates, any interest
in the Certificates or any other similar security from, or otherwise approached
or negotiated with respect to the Certificates, any interest in the Certificates
or any other similar security with, any person in any manner, or made any
general solicitation by means of general advertising or in any other manner, or
taken any other action, that would constitute a distribution of the Certificates
under the Act or that would render the disposition of the Certificates a
violation of Section 5 of the Act or require registration pursuant thereto, nor
will act, nor has authorized or will authorize any person to act, in such manner
with respect to the Certificates, (f) we are a "qualified institutional buyer"
as that term is defined in Rule 144A under the Act ("Rule 144A") and have
completed either of the forms of certification to that effect attached hereto as
Annex 1 or Annex 2, (g) we are aware that the sale to us is being made in
reliance on Rule 144A, and (h) we are acquiring the Certificates for our own
L-1
account or for resale pursuant to Rule 144A and further, understand that such
Certificates may be resold, pledged or transferred only (A) 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 (B) pursuant to another exemption from registration under the Act.
Very truly yours,
___________________________________
Print Name of Transferee
By:________________________________
Authorized Officer
L-2
ANNEX 1 TO EXHIBIT L
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Transferees Other Than Registered Investment Companies]
The undersigned (The "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:
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, as amended ("Rule 144A") because (i) the Buyer owned and/or
invested on a discretionary basis $___________1 in securities (except for the 1
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule 144A and (ii)
the Buyer satisfies the criteria in the category marked below.
___ Corporation, etc. The Buyer is a corporation (other than a bank,
savings and loan association or similar institution), Massachusetts or
similar business trust, partnership, or charitable organization described
in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended.
___ Bank. The Buyer (a) is a national bank or banking institution organized
under the laws of any State, territory or the District of Columbia, the
business of which is substantially confined to banking and is supervised by
the State or territorial banking commission or similar official or is a
foreign bank or equivalent institution, and (b) has an audited net worth of
at least $25,000,000 as demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
___ Savings and Loan. The Buyer (a) is a savings and loan association,
building and loan association, cooperative bank, homestead association or
similar institution, which is supervised and examined by a State or Federal
authority having supervision over any such institutions or is a foreign
savings and loan association or equivalent institution and (b) has an
audited net worth of at least $25,000,000 as demonstrated in its latest
annual financial statements, a copy of which is attached hereto.
___ Broker-dealer. The Buyer is a dealer registered pursuant to Section 15
of the Securities Exchange Act of 1934.
--------
1 Buyer must own and/or invest on a discretionary basis at least $100,000,000
in securities unless Buyer is a dealer, and, in that case, Buyer must own
and/or invest on a discretionary basis at least $10,000,000 in securities.
L-1-1
___ 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, territory or the District of Columbia.
___ State or Local Plan. The Buyer is a plan established and maintained by
a State, its political subdivisions, or any agency or instrumentality of
the State or its political subdivisions, for the benefit of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan within the meaning of
Title I of the Employee Retirement Income Security Act of 1974.
___ Investment Advisor. The Buyer is an investment advisor registered under
the Investment Advisors Act of 1940.
___ Small Business Investment Company. Buyer is a small business investment
company licensed by the U.S. Small Business Administration under Section
301(c) or (d) of the Small Business Investment Act of 1958.
___ Business Development Company. Buyer is a business development company
as defined in Section 202(a)(22) of the Investment Advisors Act of 1940.
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) securities issued or guaranteed by the U.S. or any instrumentality
thereof, (iv) bank deposit notes and certificates of deposit, (v) loan
participations, (vi) repurchase agreements, (vii) securities owned but subject
to a repurchase agreement and (viii) currency, interest rate and commodity
swaps.
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, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.
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.
L-1-2
6. Until the date of purchase of the Rule 144A Securities, the Buyer will
notify each of the parties to which this certification is made of any changes in
the information and conclusions herein. Until such notice is given, the Buyer's
purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan is provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.
___________________________________
Print Name of Buyer
By:________________________________
Name:
Title:
Date:______________________________
L-1-3
ANNEX 2 TO EXHIBIT L
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Transferees That are Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief Financial Officer
or Senior Vice President of the Buyer or, if the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933, as amended ("Rule 144A") because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of the Adviser.
2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.
___ The Buyer owned $ in securities (other than the excluded securities
referred to below) as of the end of the Buyer's most recent fiscal year
(such amount being calculated in accordance with Rule 144A).
___ The Buyer is part of a Family of Investment Companies which owned in
the aggregate $ in securities (other than the excluded securities referred
to below) as of the end of the Buyer's most recent fiscal year (such amount
being calculated in accordance with Rule 144A).
3. 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).
4. The term "securities" as used herein does not include (i) securities of
issuers that are affiliated with the Buyer or are part of the Buyer's
Family of Investment Companies, (ii) securities issued or guaranteed by the
U.S. or any instrumentality thereof, (iii) bank deposit notes and
certificates of deposit, (iv) loan participations, (v) repurchase
agreements, (vi)
L-2-1
securities owned but subject to a repurchase agreement and (vii) currency,
interest rate and commodity swaps.
5. The Buyer is familiar with Rule 144A and understands that the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates are relying and will continue to rely on the statements made herein
because one or more sales to the Buyer will be in reliance on Rule 144A. In
addition, the Buyer will only purchase for the Buyer's own account.
6. Until the date of purchase of the Certificates, the undersigned will notify
the parties listed in the Rule 144A Transferee Certificate to which this
certification relates of any changes in the information and conclusions
herein. Until such notice is given, the Buyer's purchase of the
Certificates will constitute a reaffirmation of this certification by the
undersigned as of the date of such purchase.
___________________________________
Print Name of Buyer or Adviser
By:________________________________
Name:
Title:
IF AN ADVISER:
___________________________________
Print Name of Buyer
Date:______________________________
L-2-2
EXHIBIT M
REQUEST FOR RELEASE
(for Trustee)
CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP.
Home Equity Mortgage Trust 2003-3
Home Equity Mortgage Pass-Through Certificates, Series 2003-3
LOAN INFORMATION
----------------
Name of Mortgagor: ___________________________________
Servicer
Loan No.: ___________________________________
TRUSTEE
Name:
Address: ___________________________________
___________________________________
___________________________________
Trustee
Mortgage File No.:
The undersigned Servicer hereby acknowledges that it has received from
LaSalle Bank National Association, as Custodian for the Holders of Mortgage
Pass-Through Certificates, of the above-referenced Series, the documents
referred to below (the "Documents"). All capitalized terms not otherwise defined
in this Request for Release shall have the meanings given them in the Pooling
and Servicing Agreement (the "Pooling and Servicing Agreement") relating to the
above-referenced Series among Credit Suisse First Boston Mortgage Securities
Corp. as depositor, DLJ Mortgage Capital, Inc. as seller ("DLJMC"), Wilshire
Credit Corporation as servicer ("Wilshire") and JPMorgan Chase Bank as trustee
(the "Trustee").
( ) Mortgage Note dated _____________________, _______, in the original
principal sum of $___________________, made by ____________________.
payable to, or endorsed to the order of, the Trustee.
( ) Mortgage recorded on ________________ as instrument no. ______________
in the County Recorder's Office of the County of ___________________,
State of ___________ in book/reel/docket _________________ of official
records at page/image _____________.
M-1
( ) Deed of Trust recorded on _____________ as instrument no.
______________ in the County Recorder's Office of the County of
_______________, State of ______________ in book/reel/docket
_____________________ of official records at page/image _________.
( ) Assignment of Mortgage or Deed of Trust to the Trustee, recorded on
_________ as instrument no. ______________ in the County Recorder's
Office of the County of ______, State of ________________ in
book/reel/docket _______________ of official records at page/image
_______________.
( ) Other documents, including any amendments, assignments or other
assumptions of the Mortgage Note or Mortgage.
( ) ________________________________________________________
( ) ________________________________________________________
( ) ________________________________________________________
( ) ________________________________________________________
The undersigned Servicer hereby acknowledges and agrees as follows:
(1) Such Servicer shall hold and retain possession of the
Documents in trust for the benefit of the Trustee, solely for the
purposes provided in the Agreement.
(2) Such Servicer shall not cause or knowingly permit the
Documents to become subject to, or encumbered by, any claim,
liens, security interest, charges, writs of attachment or other
impositions nor shall the Servicer, if applicable, assert or seek
to assert any claims or rights of setoff to or against the
Documents or any proceeds thereof.
(3) Such Servicer shall return each and every Document previously
requested from the Mortgage File to the Custodian when the need
therefor no longer exists, unless the Mortgage Loan relating to
the Documents has been liquidated and the proceeds thereof have
been remitted to the Certificate Account and except as expressly
provided in the Agreement.
(4) The Documents and any proceeds thereof, including any
proceeds of proceeds, coming into the possession or control of
such Servicer shall at all times be earmarked for the account of
the Custodian, and such Servicer shall keep the Documents and any
proceeds separate and distinct from all other property in such
Servicer's possession, custody or control.
[Servicer]
By_________________________________
M-2
Its________________________________
Date: ____________, 20__
M-3
EXHIBIT N
[RESERVED]
N-1
EXHIBIT O-1
FORM OF COLLECTION ACCOUNT CERTIFICATION
[ ], 20__
[Servicer's name] hereby certifies that it has established the account
described below as a Collection Account pursuant to Section 3.05 of the Pooling
and Servicing Agreement, dated as of May 1, 2003, among Credit Suisse First
Boston Mortgage Securities Corp. as depositor, DLJ Mortgage Capital, Inc. as
seller ("DLJMC"), Wilshire Credit Corporation as servicer ("Wilshire") and
JPMorgan Chase Bank as trustee (the "Trustee").
Title of Account: [Servicer's Name], in trust for the Holders of Credit
Suisse First Boston Mortgage Securities Corp., Home Equity
Mortgage Pass-Through Certificates, Series 2003-3.
Account Number: ______________
Address of officer or branch of the Company at which Account is maintained:
______________________
______________________
______________________
[Servicer's Name], AS SERVICER
By:___________________
Name:_________________
Title:________________
O-1-1
EXHIBIT O-2
FORM OF COLLECTION ACCOUNT LETTER AGREEMENT
[ ], 20__
To: ________________
________________
________________
(The "Depository")
As Servicer under the Pooling and Servicing Agreement, dated as of May 1,
2003, among Credit Suisse First Boston Mortgage Securities Corp. as depositor,
DLJ Mortgage Capital, Inc. as seller ("DLJMC"), Wilshire Credit Corporation as
servicer ("Wilshire") and JPMorgan Chase Bank as trustee (the "Trustee") (the
"Agreement"), we hereby authorize and request you to establish an account, as a
Collection Account pursuant to Section 3.05 of the Agreement, to be designated
as "[Servicer's Name], in trust for the Holders of Credit Suisse First Boston
Mortgage Securities Corp., Home Equity Mortgage Pass-Through Certificates,
Series 2003-3." All deposits in the account shall be subject to withdrawal
therefrom by order signed by the Servicer. This letter is submitted to you in
duplicate. Please execute and return one original to us.
[Servicer's Name], AS SERVICER
By:________________________________
Name:______________________________
Title:_____________________________
Date:______________________________
O-2-1
The undersigned, as Depository, hereby certifies that the above described
account has been established under Account Number _________ at the office of the
Depository indicated above and agrees to honor withdrawals on such account as
provided above. The full amount deposited at any time in the account will be
insured up to applicable limits by the Federal Deposit Insurance Corporation
through the Bank Insurance Fund ("BIF") or the Savings Association Insurance
Fund ("SAIF").
___________________________________
Depository
By:________________________________
Name:______________________________
Title:_____________________________
Date:______________________________
X-0-0
XXXXXXX X-0
FORM OF ESCROW ACCOUNT CERTIFICATION
[ ], 20__
[Servicer's Name] hereby certifies that it has established the account
described below as an Escrow Account pursuant to Section 3.06 of the Pooling and
Servicing Agreement, dated as of May 1, 2003, among Credit Suisse First Boston
Mortgage Securities Corp. as depositor, DLJ Mortgage Capital, Inc. as seller
("DLJMC"), Wilshire Credit Corporation as servicer ("Wilshire") and JPMorgan
Chase Bank as trustee (The "Trustee").
Title of Account: "Credit Suisse First Boston Mortgage Securities Corp.,
Home Equity Mortgage Trust 2003-3, Home Equity Mortgage
Pass-Through Certificates, Series 2003-3"
Account Number: __________________________
Address of officer or branch
of the Company at
which Account is maintained:
__________________________
[Servicer's Name], AS SERVICER
By:_______________________
Name:_____________________
Title:____________________
X-0-0
XXXXXXX X-0
FORM OF ESCROW ACCOUNT LETTER AGREEMENT
[ ], 20__
To: ________________________
________________________
________________________
(The "Depository")
As Servicer under the Pooling and Servicing Agreement, dated as of May 1,
2003, among Credit Suisse First Boston Mortgage Securities Corp. as depositor,
DLJ Mortgage Capital, Inc. as seller ("DLJMC"), Wilshire Credit Corporation as
servicer ("Wilshire") and JPMorgan Chase Bank as trustee (the "Trustee") (the
"Agreement"), we hereby authorize and request you to establish an account, as an
Escrow Account pursuant to Section 3.06 of the Agreement, to be designated as
"Credit Suisse First Boston Mortgage Securities Corp., Home Equity Mortgage
Trust 2003-3, Home Equity Mortgage Pass-Through Certificates, Series 2003-3".
All deposits in the account shall be subject to withdrawal therefrom by order
signed by the Servicer. This letter is submitted to you in duplicate. Please
execute and return one original to us.
[SERVICER'S NAME], AS SERVICER
By:___________________________
Name:_________________________
Title:________________________
Date:_________________________
P-2-1
The undersigned, as Depository, hereby certifies that the above described
account has been established under Account Number ________________ at the office
of the Depository indicated above and agrees to honor withdrawals on such
account as provided above. The full amount deposited at any time in the account
will be insured up to applicable limits by the Federal Deposit Insurance
Corporation through the Bank Insurance Fund ("BIF") or the Savings Association
Insurance Fund ("SAIF").
___________________________
Depository
By:________________________
Name:______________________
Title:_____________________
Date:______________________
P-2-2
EXHIBIT Q
FORM OF MONTHLY REMITTANCE ADVICE
1) Standard CPI Reports:
T62C-Monthly Accounting Report
T62E-Liquidation Report
S50Y-Private Pool Detail Report
S214-Summary of Paid in Full Collections
S215-Summary of Collections
P139-Trial Balance
2) Standard CPI Tape Format:
PNB Scheduled Balance Tape
SPNB Determination Diskette/P45K
At such times as [_______________] is no longer the Servicer of the [________]
Mortgage Loans under the Agreement, the Monthly Remittance Advice also shall
include: (i) the aggregate Excess Servicing Fee to be remitted to
[___________________] on the Distribution Date, (ii) the aggregate Prepayment
Penalties collected by the Servicer of such loans during the preceding calendar
month, and (iii) a list of the Mortgage Loans for which Prepayment Penalties are
being remitted (including with respect to each related Mortgage Loan, the loan
number, borrower name and dollar amount of Prepayment Penalties collected for
such Mortgage Loan).
Q-1
EXHIBIT R
FORM OF CUSTODIAL AGREEMENT
(Available Upon Request)
R-1
EXHIBIT S
[Reserved]
S-1
EXHIBIT T
[Reserved]
T-1
EXHIBIT U
CHARGED OFF LOAN DATA REPORT
(Available Upon Request)
U-1
EXHIBIT V
FORM OF MONTHLY STATEMENT TO CERTIFICATEHOLDERS
(i) with respect to each Class of Certificates which are not Notional
Amount Certificates and, unless otherwise stated, the related Distribution Date,
a. the initial Class Principal Balance of such Class as of the Closing
Date;
b. the Class Principal Balance of such Class before giving effect to
the distribution of principal and interest;
c. the amount of the related distribution on such Class allocable to
interest;
d. the amount of the related distribution on such Class allocable to
principal;
e. the sum of the principal and interest payable to such Class;
f. the Realized Loss allocable to such Class;
g. the Carryforward Interest allocable to such Class;
h. the Class Principal Balance of such Class after giving effect to
the distribution of principal and interest;
i. the Pass-Through Rate for such Class;
j. any Basis Risk Shortfall allocable to such Class, if such amount is
greater than zero;
k. any shortfall in principal allocable to such Class, if such amount
is greater than zero; and
l. any shortfall in interest allocable to such Class, if such amount
is greater than zero.
(ii) with respect to each Class of Certificates which are Notional Amount
Certificates and, unless otherwise stated, the related Distribution Date,
a. the Notional Amount of such Class as of the Cut-off Date;
b. the Notional Amount of such Class before giving effect to the
distribution of interest;
c. the amount of the related distribution on such Class allocable to
interest;
V-1
d. the amount of the related distribution on such Class allocable to
principal;
e. the sum of the principal and interest payable to such class;
f. the Realized Loss allocable to such Class;
g. the Deferred Interest allocable to such Class;
h. the Notional Amount of such Class after giving effect to the
distribution of interest;
i. the Pass-Through Rate for such Class; and
j. any Basis Risk Shortfall allocable to such Class, if such amount is
greater than zero.
(iii) with respect to a $1000 factor of the Initial Class Principal Balance
of each Class of Certificates which are not Notional Amount Certificates and the
related Distribution Date,
a. the CUSIP number assigned to such Class;
b. the Class Principal Balance of such Class factor prior to giving
effect to the distribution of principal and interest;
c. the amount of the related distribution allocable to interest on
such Class factor;
d. the amount of the related distribution allocable to principal on
such Class factor;
e. the sum of the principal and interest payable to such Class factor;
and
f. the Class Principal Balance of such Class factor after giving
effect to the distribution of principal and interest.
(iv) with respect to a $1000 factor of the Initial Class Principal Balance
of each Class of Certificates which are Notional Amount Certificates and the
related Distribution Date,
a. the CUSIP number assigned to such Class;
b. the Notional Amount of such Class factor prior to giving effect to
the distribution of interest;
c. the amount of the related distribution allocable to interest on
such Class factor;
d. the amount of the related distribution allocable to principal on
such Class factor;
V-2
e. the sum of the principal and interest payable to such Class factor;
and
f. the Notional Amount of such Class factor after giving effect to the
distribution of interest.
(v) with respect to the related Distribution Date,
a. the Principal Payment Amount or Principal Remittance Amount;
b. the amount of Curtailments;
c. the amount of Curtailment interest adjustments;
d. the Scheduled Payment of principal;
e. the amount of Principal Prepayments;
f. the amount of principal as a result of repurchased Mortgage Loans;
g. the Substitution Adjustment Amount;
h. the aggregate amount of scheduled interest prior to reduction for
fees;
i. the amount of Net Recoveries;
j. the amount of reimbursements of Nonrecoverable Advances previously
made;
k. the amount of recovery of reimbursements previously deemed
nonrecoverable;
l. the amount of net Liquidation Proceeds;
m. the amount of Insurance Proceeds;
n. the amount of any other distributions allocable to principal;
o. the number of Mortgage Loans as of the first day of the related
Collection Period;
p. the aggregate Stated Principal Balance of the Mortgage Loans as of
the first day of the related Collection Period;
q. the number of Mortgage Loans as of the last day of the related
Collection Period;
V-3
r. the aggregate Stated Principal Balance of the Mortgage Loans as of
the last day of the related Collection Period;
s. the sum of the Servicing Fee, the Credit Risk Manager Fee, the
Mortgage Pool Insurer Fee and the Trustee Fee ;
t. the amount of current Advances ;
u. the amount of outstanding Advances ;
v. the number and aggregate principal amounts of Mortgage Loans
delinquent (1) 31 to 60 days, (2) 61 to 90 days and (3) 91 days or more,
including delinquent bankrupt Mortgage Loans but excluding Mortgage Loans in
foreclosure and REO Property;
w. the number and aggregate principal amounts of Mortgage Loans that
are currently in bankruptcy, but not delinquent;
x. the number and aggregate principal amounts of Mortgage Loans that
are in foreclosure;
y. the Delinquency Rate, Rolling Three Month Delinquency Rate, the
Senior Enhancement Percentage and whether a Trigger Event is in effect ;
z. the number and aggregate principal amount of any REO Properties as
of the close of business on the Determination Date preceding such Distribution
Date;
aa. current Realized Losses;
bb. Cumulative Net Realized Losses and whether a Cumulative Loss Event
is occurring;
cc. the weighted average term to maturity of the Mortgage Loans as of
the close of business on the last day of the calendar month preceding the
related Distribution Date;
dd. the number of Mortgage Loans that have Prepayment Penalties and
for which prepayments were made during the related Collection Period, as
applicable;
ee. the aggregate principal balance of Mortgage Loans that have
Prepayment Penalties and for which prepayments were made during the related
Collection Period, as applicable;
ff. the aggregate amount of Prepayment Penalties collected during the
related Collection Period, as applicable;
gg. [reserved];
V-4
hh. the amount of any funds remaining in the related Pre-Funding
Account as of such Distribution Date;
ii. the weighted average Net Mortgage Rate;
jj. the Net Excess Spread; and
kk. The amount on deposit in the Interest Rate Cap Account (including
a breakdown of amounts withdrawn in connection with such Distribution Date and
the Target Amount for the preceding Distribution Date).
(vi) with respect to the related Distribution Date,
a. the Targeted Overcollateralization Amount;
b. the Overcollateralization Amount;
c. the amount, if any, by which the Targeted Overcollateralization
Amount exceeds the Overcollateralization Amount;
d. the Overcollateralization Release Amount;
e. the Monthly Excess Interest; and
f. the amount of any payment to the Class X-1 Certificates.
V-5
EXHIBIT W
FORM OF DEPOSITOR CERTIFICATION
Re: Credit Suisse First Boston Mortgage Securities Corp. Home Equity
Mortgage Trust 2003-3
I, __________________________, certify that:
1. I have reviewed this annual report on Form 10-K, and all reports on Form 8-K
containing distribution and servicing reports filed in respect of periods
included in the year covered by this annual report, of Home Equity Mortgage
Trust 2003-3 (the "Trust");
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 distribution information required to be prepared
by the Trustee based upon the servicing information required to be provided by
each Servicer under the Pooling and Servicing Agreement is included in these
reports;
4. Based on my knowledge and upon the annual compliance statements included in
the report and required to be delivered to the Trustee in accordance with the
terms of the Pooling and Servicing Agreement and based upon the review required
under the Pooling and Servicing Agreement, and except as disclosed in the
report, each Servicer has fulfilled its obligations under the Pooling and
Servicing Agreement; and
5. The reports disclose all significant deficiencies relating to each Servicer's
compliance with the minimum servicing standards based, in each case, upon the
report provided by an independent public accountant, after conducting a review
in compliance with the Uniform Single Attestation Program for Mortgage Bankers
or similar standard as set forth in the Pooling and Servicing 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: each Servicer
and the Trustee.
Capitalized terms used but not defined herein have the meanings ascribed to
them in the Pooling and Servicing Agreement, dated May 1, 2003 (the "Pooling and
Servicing Agreement"), among Credit Suisse First Boston Mortgage Securities
Corp., as depositor (the "Depositor"), DLJ Mortgage Capital, Inc., as seller,
Wilshire Credit Corporation, as servicer ("Wilshire") and JPMorgan Chase Bank,
as trustee (the "Trustee").
___________________________________
[Name]
[Title]
W-1
[Date]
W-2
EXHIBIT X
FORM OF TRUSTEE CERTIFICATION
Re: Credit Suisse First Boston Mortgage Securities Corp. Home Equity
Mortgage Trust 2003-3
JPMorgan Chase Bank (the "Trustee") hereby certifies to Credit Suisse First
Boston Mortgage Securities Corp. (the "Depositor"), and each Person, if any, who
"controls" the Depositor within the meaning of the Securities Act of 1933, as
amended, and its officers, directors and affiliates, and with the knowledge and
intent that they will rely upon this certification, that:
1. The Trustee has reviewed the annual report on Form 10-K for the fiscal year
[___], and all reports on Form 8-K containing distribution reports filed in
respect of periods included in the year covered by that annual report, of the
Depositor relating to the above-referenced trust;
2. Based on the Trustee's knowledge, and assuming the accuracy and completeness
of the information supplied to the Trustee by each Servicer, the distribution
information in the distribution reports contained in all reports on Form 8-K
included in the year covered by the annual report on Form 10-K for fiscal year
[_____], prepared by the Trustee, taken as a whole, does not contain any untrue
statement of a material fact or omit to state a material fact required by the
Pooling and Servicing Agreement to be included therein and 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 that annual
report; and
3. Based on the Trustee's knowledge, the distribution information required to be
provided by the Trustee under the Pooling and Servicing Agreement is included in
these reports.
Capitalized terms used but not defined herein have the meanings ascribed to
them in the Pooling and Servicing Agreement, dated May 1, 2003 (the "Pooling and
Servicing Agreement"), among Credit Suisse First Boston Mortgage Securities
Corp., as depositor (the "Depositor"), DLJ Mortgage Capital, Inc., as seller,
Wilshire Credit Corporation, as servicer ("Wilshire"), as servicer and JPMorgan
Chase Bank, as trustee (the "Trustee").
JPMORGAN CHASE BANK,
as Trustee
By:________________________________
[Name]
[Title] [Date]
X-1
EXHIBIT Y
FORM SERVICER CERTIFICATION
Re: Credit Suisse First Boston Mortgage Securities Corp. Home Equity
Mortgage Trust 2003-3
I, ___________________________, a duly elected and acting officer of
[__________________] (the "Servicer"), certify pursuant to Section 8.12(d) of
the Pooling and Servicing Agreement to the Depositor, the Trustee and each
Person, if any, who "controls" the Depositor or the Trustee within the meaning
of the Securities Act of 1933, as amended, and their respective officers and
directors, with respect to the calendar year immediately preceding the date of
this Certificate (the "Relevant Year"), as follows":
1. For purposes of this Certificate, "Relevant Information" means the
information in the certificate provided pursuant to Section 3.16 of the Pooling
and Servicing Agreement (the "Annual Compliance Certificate") for the Relevant
Year and the information in all servicing reports required pursuant to the
Pooling and Servicing Agreement to be provided by the Servicer to the Trustee
during the Relevant Year (as such information is amended or corrected in writing
and delivered to the Trustee). Based on my knowledge, the Relevant Information,
taken as a whole, does not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein which is necessary
to make the statements made therein, in light of the circumstances under which
such statements were made, not misleading as of the last day of the Relevant
Year;
2. The Relevant Information required to be provided to the Trustee under the
Pooling and Servicing Agreement has been provided to the Trustee;
3. I am responsible for reviewing the activities performed by the Servicer under
the Pooling and Servicing Agreement during the Relevant Year. Based upon the
review required under the Pooling and Servicing Agreement and except as
disclosed in the Annual Compliance Certificate or the accountants' statement
provided pursuant to Section 3.17 of the Pooling and Servicing Agreement, to the
best of my knowledge, the Servicer has fulfilled its obligations under the
Pooling and Servicing Agreement throughout the Relevant Year.
Capitalized terms used but not defined herein have the meanings ascribed to
them in the Pooling and Servicing Agreement, dated May 1, 2003 (the "Pooling and
Servicing Agreement"), among Credit Suisse First Boston Mortgage Securities
Corp., as depositor (the "Depositor"), DLJ Mortgage Capital, Inc., as seller,
Wilshire Credit Corporation, as servicer ("Wilshire") and JPMorgan Chase Bank,
as trustee (the "Trustee").
[________________________________],
as Servicer
By:________________________________
[Name]
[Title]
Y-1
EXHIBIT Z
INFORMATION TO BE PROVIDED BY SERVICER TO TRUSTEE
The following information with respect to each Mortgage Loan will be
e-mailed by each Servicer to the Trustee in accordance with Section 4.10:
Servicer loan number
Trust loan number (if applicable)
Scheduled net interest
Scheduled principal
Curtailment applied
Curtailment adjustment
Mortgage Rate
Servicing Fee Rate
P&I payment
Beginning scheduled balance
Ending scheduled balance
Ending actual principal balance
Due Date
Prepayment in full principal
Prepayment in full net interest
Prepayment in full penalty
Delinquencies:
1-30
31-60
61-90
90+
Foreclosures
REO Properties
Loss amounts and loss types
Z-1
EXHIBIT AA
FORM OF INTEREST RATE CAP AGREEMENT
SWISS RE FINANCIAL PRODUCTS CORPORATION
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000/Phone: (000) 000-0000/5433
DATE: May 29, 2003
TO: JPMorgan Chase Bank, not in its individual capacity,
but solely as Trustee for Home Equity Mortgage Trust 2003-3
("Party B")
0 Xxx Xxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Institutional Trust Services
Tel: (000) 000-0000
Fax: (000) 000-0000
FROM: Swiss Re Financial Products Corporation ("Party A")
RE: CAP TRANSACTION
Our Reference Number: 154748
Dear Sir or Madam:
The purpose of this letter agreement is to confirm the terms and conditions
of the Transaction entered into between JPMorgan Chase Bank, as Trustee (the
"Trustee") pursuant to the Pooling and Servicing Agreement (the "PSA"), dated as
of May 1, 2003, among Credit Suisse First Boston Mortgage Securities Corp. as
depositor, DLJ Mortgage Capital, Inc., as seller, Wilshire Credit Corporation,
as servicer and the Trustee, as trustee and Swiss Re Financial Products
Corporation (each a "party" and together "the parties") on the Trade Date
specified below (the "Transaction"). The definitions and provisions contained in
the 2000 ISDA (the "Definitions"), in each case as published by the
International Swaps and Derivatives Association, Inc., are incorporated into
this Confirmation. In the event of any inconsistency between the Definitions and
this Confirmation, this Confirmation will govern.
This letter agreement constitutes a "Confirmation" and the definitions and
provisions contained in the original June 2000 ISDA Definitions (the
"Definitions") as published by the International Swaps and Derivatives
Association, Inc., ("ISDA") are incorporated into this Confirmation. This
Confirmation will be governed by and subject to the terms and conditions which
AA-1
would be applicable if, prior to the Trade Date, the parties had executed and
delivered an ISDA Master Agreement (Multicurrency-Cross Border), in the form
published by ISDA in 1992 (the "Master Agreement"), with the attached Schedule B
as the Schedule to the Master Agreement and the modifications provided below
(collectively, the "Agreement"). In the event of any inconsistency between the
provisions of the Master Agreement and this Confirmation and the attached
Schedule B, this Confirmation will govern.
1. This Confirmation evidences a complete binding agreement between the parties
as to the terms of the Transaction to which this Confirmation relates. In
addition, each party represents to the other party and will be deemed to
represent to the other party on the date on which it enters into a Transaction
that (absent a written agreement between the parties that expressly imposes
affirmative obligations to the contrary for that Transaction):
(i) Principal. In the case of Party A, it is acting as principal and not as
agent when entering into the Transaction and in the case of Party B, it is
acting as Trustee when entering into the Transaction.
(ii) Non-Reliance. In the case of Party A, it is acting for its own account
and, in the case of Party B, it is acting as Trustee, and in the case of both
parties, it has made its own independent decisions to enter into the Transaction
and as to whether the Transaction is appropriate or proper for it based upon its
own judgment and upon advice from such advisors as it has deemed necessary. It
is not relying on any communication (written or oral) of the other party as
investment advice or as a recommendation to enter into the Transaction; it being
understood that information and explanations related to the terms and conditions
of the Transaction shall not be considered investment advice or a recommendation
to enter into the Transaction. No communication (written or oral) received from
the other party shall be deemed to be an assurance or guarantee as to the
expected results of the Transaction.
(iii) Evaluation and Understanding. It is capable of evaluating and
understanding (on its own behalf or through independent professional advice),
and understands and accepts, the terms, conditions and risks of the Agreement
and that Transaction. It is also capable of assuming, and assumes, the financial
and other risks of the Agreement and that Transaction.
( iv) Status of Parties. The other party is not acting as an agent,
fiduciary or advisor for it in respect of that Transaction
2. The terms of the particular Transaction to which this Confirmation relates
are as follows:
Notional Amount: See Amortization Schedule, Schedule A
Trade Date: May 29, 2003
Effective Date: May 25, 2003
Termination Date: May 25, 2005, subject to adjustment in
accordance with the Modified Following
Business Day Convention
AA-2
Fixed Amounts:
Fixed Rate Payer: Party B
Fixed Rate Payer Payment Date: May 29, 2003
Fixed Amount: USD 387,500.00
Floating Amounts:
Floating Rate Payer: Party A
Cap Rate: See Amortization Schedule, Schedule A
Floating Rate Payer Period End Dates: The 25th day of each month of each year
commencing June 25, 2003, through and
including the Termination Date, subject
to adjustment in accordance with the
Modified Following Business Day
Convention.
Floating Rate Payer Payment Dates: One (1) Business Day prior to each
Floating Rate Payer Period End Date
Floating Rate Payer Payment Amount: Notional Amount times Floating Rate Day
Count Fraction times (the greater of (a)
zero and (b) Floating Rate Option minus
Cap Rate)
Floating Rate Option: USD-LIBOR-BBA
Designated Maturity: One month
Spread: None
Floating Rate Day Count Fraction: Actual/360
Reset Dates: First day of each Calculation Period
Business Days for payment: New York and London
Calculation Agent: Party A
3. Recording of Conversations
Each party (i) consents to the recording of the telephone conversations of
trading and marketing personnel of the parties, (ii) agrees to obtain any
necessary consent of, and give notice of such recording to, such personnel of
it, and (iii) agrees that recordings may be submitted in evidence in any
proceedings relating to this Agreement or any potential Transaction.
AA-3
4. Account Details:
Account for payments to Party A: JPMorgan Chase Bank
SWIFT: XXXXXX00
Account of: Swiss Re Financial Products
Account No.: 066-911184
Account for payments to Party B:
JPMorgan Chase Bank
New York
ABA No. 000000000
Account of: [PLEASE SUPPLY/CONFIRM
ACCOUNT INFORMATION]
Account No.:
5. Offices:
The Office of Party A for this Transaction is: New York
The Office of Party B for this Transaction is: New York
Please promptly confirm that the foregoing correctly sets forth the terms
of the Transaction entered into between us by executing this Confirmation and
returning it to us by facsimile to:
Swiss Re Financial Products Corporation
Attention: Derivatives Documentation
Fax: (000) 000-0000 Phone: (000) 000-0000/5433
SWISS RE FINANCIAL PRODUCTS CORPORATION
By: ________________________________________
Authorized Signatory
Accepted and confirmed as of the date first written above:
JPMORGAN CHASE BANK, NOT IN ITS INDIVIDUAL CAPACITY,
BUT SOLELY AS TRUSTEE FOR HOME EQUITY MORTGAGE TRUST 2003-3
By: _______________________________________
Name:
Title:
AA-4
Schedule A to the Confirmation dated as of May 29, 2003
Re: Reference Number 154748
Amortization Schedule, subject to adjustment in accordance with the Modified
Following Business Day Convention
From and including To but excluding Notional Amount Cap Rate
(USD)
May 25, 2003 June 25, 2003 102,500,000.00 1.31
June 25, 2003 July 25, 2003 100,567,368.00 1.31
July 25, 2003 August 25, 2003 98,725,663.00 1.31
August 25, 2003 September 25, 2003 96,679,460.00 1.31
September 25, 2003 October 25, 2003 94,440,400.00 1.31
October 25, 2003 November 25, 2003 92,021,927.00 1.31
November 25, 2003 December 25, 2003 89,431,084.00 1.31
December 25, 2003 January 25, 2004 86,685,678.50 1.31
January 25, 2004 February 25, 2004 83,784,944.00 1.31
February 25, 2004 March 25, 2004 80,913,610.00 1.31
March 25, 2004 April 25, 2004 78,129,589.50 1.339837
April 25, 2004 May 25, 2004 75,435,463.00 1.412057
May 25, 2004 June 25, 2004 72,697,863.50 1.49557
June 25, 2004 July 25, 2004 70,005,260.50 1.590987
July 25, 2004 August 25, 2004 67,473,268.50 1.672899
August 25, 2004 September 25, 2004 65,060,786.50 1.755992
September 25, 2004 October 25, 2004 62,778,987.00 1.872821
October 25, 2004 November 25, 2004 60,581,777.50 1.984119
November 25, 2004 December 25, 2004 58,443,801.00 2.093056
December 25, 2004 January 25, 2005 56,438,467.50 2.183308
January 25, 2005 February 25, 2005 54,520,285.50 2.277239
February 25, 2005 March 25, 2005 52,595,240.00 2.381677
March 25, 2005 April 25, 2005 50,760,114.00 2.449029
April 25, 2005 May 25, 2005 48,954,787.50 2.527013
Schedule B to the Confirmation dated as of May 29, 2003
Re: Reference Number 154748
Between Swiss Re Financial Products Corporation ("Party A") and JPMorgan
Chase Bank, as Trustee (the "Trustee") pursuant to the Pooling and Servicing
Agreement (the "PSA"), dated as of May 1, 2003, among Credit Suisse First Boston
Mortgage Securities Corp. as depositor, DLJ Mortgage Capital, Inc., as seller,
Wilshire Credit Corporation, as servicer and the Trustee, as trustee.
AA-5
Part 1. Termination Provisions.
(a) "Specified Entity" means in relation to Party A for the purpose of the
Agreement:
Section 5(a)(v): none.
Section 5(a)(vi): none.
Section 5(a)(vii): none.
Section 5(b)(iv): none.
and in relation to Party B for the purpose of the Agreement:
Section 5(a)(v): none.
Section 5(a)(vi): none.
Section 5(a)(vii): none.
Section 5(b)(iv): none.
(b) "Specified Transaction" will have the meaning specified in Section 14 of the
Agreement.
(c) The "Breach of Agreement" provisions of Section 5(a)(ii) of the Agreement
will be inapplicable to Party A and Party B.
(d) The "Credit Support Default" provisions of Section 5(a)(iii) of the
Agreement will be inapplicable to Party B.
(e) The "Misrepresentation" provisions of Section 5(a)(iv) of the Agreement will
be inapplicable to Party A and Party B.
(f) The "Default Under Specified Transaction" provisions of Section 5(a)(v) of
the Agreement will be inapplicable to Party A and Party B.
(g) The "Cross Default" provisions of Section 5(a)(vi) of the Agreement will be
inapplicable to Party A and Party B.
(h) The "Credit Event Upon Merger" provisions of Section 5(b)(iv) of the
Agreement will be inapplicable to Party A and Party B.
(i) The "Automatic Early Termination" provision of Section 6(a) of the Agreement
will be inapplicable to Party A and Party B; provided that where there is an
Event of Default under Section 5(a)(vii)(1), (3), (4), (5), (6) or, to the
extent analogous thereto, (8), and the Defaulting Party is governed by a system
of law that does not permit termination to take place after the occurrence of
such Event of Default, then the Automatic Early Termination provisions of
Section 6(a) will apply.
If an Early Termination Date has occurred under Section 6(a) of the
Agreement as a result of Automatic Early Termination, and if the Non-defaulting
Party determines that it has either sustained or incurred a loss or damage or
benefited from a gain in respect of any Transaction, as a result of movement in
interest rates, currency exchange rates, other relevant rates or market
AA-6
quotations between the Early Termination Date and the date upon which the
Non-defaulting Party first becomes aware that such Event of Default has occurred
under Section 6(a) of the Agreement, then (i) the amount of such loss or damage
shall be added to the amount due by the Defaulting Party or deducted from the
amount due by the Non-defaulting Party, as the case may be (in both cases
pursuant to Section 6(e)(i)(3) of the Agreement); or (ii) the amount of such
gain shall be deducted from the amount due by the Defaulting Party or added to
the amount due by the Non-defaulting Party, as the case may be (in both cases
pursuant to Section 6(e)(i)(3) of the Agreement).
(j) Payments on Early Termination. For the purpose of Section 6(e) of the
Agreement:
(i) Market Quotation will apply; and
(ii) The Second Method will apply.
(k) "Termination Currency" means United States Dollars.
(l) "Additional Termination Event" will not apply, except as provided in any
confirmation.
Part 2. Tax Representations.
Payer Representations. For the purpose of Section 3(e) of the Agreement,
Party A and Party B will make the following representation:
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 Agreement) to
be made by it to the other party under this Agreement. In making this
representation, it may rely on (i) the accuracy of any representations made by
the other party pursuant to Section 3(f) of the Agreement, (ii) the satisfaction
of the agreement contained in Section 4(a)(i) or 4(a)(iii) of the Agreement and
the accuracy and effectiveness of any document provided by the other party
pursuant to Section 4(a)(i) or 4(a)(iii) of the Agreement and (iii) the
satisfaction of the agreement of the other party contained in Section 4(d) of
the 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) of the Agreement by reason of material
prejudice to its legal or commercial position.
Payee Representations. For the purpose of Section 3(f) of the Agreement,
Party A and Party B make the following representations:
(i) Party A represents that it is a corporation organized under the laws of the
State of Delaware.
(ii) Party B represents that it is the Trustee under the PSA.
Part 3. Agreement to Deliver Documents.
For the purpose of Sections 4(a)(i) and (ii) of the Agreement, Party A and Party
B agree to deliver the following documents, as applicable:
AA-7
(a) Tax forms, documents or certificates to be delivered are:
Party Required to Deliver Form/Document/Certificate Date by which to be
Document Delivered
Party A and Party B Any form or document Promptly upon reasonable
required or reasonably demand by the other party.
requested to allow the other
party to make payments
under the Agreement without
any deduction or withholding
for or on account of any Tax,
or with such deduction or
withholding at a reduced rate.
(b) Other documents to be delivered and covered by the Section 3(d)
representation are:--
Party required to Form/Document/or Date by which Covered by
deliver Certificate to be delivered Section 3(d)
representation
Party A and Party B Certified copy of the Board Concurrently Yes
of Directors resolution (or with the
equivalent authorizing execution and
documentation) which sets delivery of the
forth the authority of each Confirmation.
signatory to the
Confirmation signing on its
behalf and the authority of
such party to enter into
Transactions contemplated
and performance of its
obligations hereunder.
AA-8
Party A and Party B Incumbency Certificate (or, Concurrently Yes
if available the current with the
authorized signature book or execution and
equivalent authorizing delivery of the
documentation) specifying Confirmation
the names, titles, authority unless
and specimen signatures of previously
the persons authorized to delivered and
execute the Confirmation still in full
which sets forth the force and
specimen signatures of each effect
signatory to the
Confirmation signing on its
behalf.
Party A The Guaranty of Swiss Concurrently Yes
Reinsurance Company with the
("Swiss Re") dated as of execution and
April 10, 2003, issued by delivery of the
Swiss Re as Party A's Credit Confirmation
Support Provider (in the unless
form annexed hereto as previously
Exhibit A). delivered and
still in full
force and
effect.
Party B The PSA Concurrently No.
with the
execution and
delivery of the
Confirmation.
Part 4. Miscellaneous.
(a) Addresses for Notices. For the purposes of Section 12(a) of the Agreement:
Addresses for notices or communications to Party A and to Party B shall be
those set forth on the first page of the Confirmation, and with respect to Party
B, with a copy to:
Xxxxx Xxxxxxxxxx
Credit Suisse First Boston
11 Madison Avenue, 0xx Xxxxx
XX-0
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
(b) Process Agent. For the purpose of Section 13(c) of the Agreement:
Party A appoints as its Process Agent: none.
Party B appoints as its Process Agent: none.
(c) Offices. With respect to Party A, the provisions of Section 10(a) of the
Agreement will apply.
(d) Multibranch Party. For the purpose of Section 10(c) of the Agreement:
Party A is not a Multibranch Party.
Party B is not a Multibranch Party.
(e) Calculation Agent. The Calculation Agent is Party A.
(f) Credit Support Document. Details of any Credit Support Document: Guaranty of
Swiss Re dated as of April 10, 2003 in the form annexed hereto as Exhibit A.
(g) Credit Support Provider.
Credit Support Provider means in relation to Party A: Swiss Re. Credit
Support Provider means in relation to Party B: none.
(h) Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York (without reference to
conflicts of law provisions thereof).
(i) Netting of Payments. Subparagraph (ii) of Section 2(c) of the Agreement will
apply to the Transaction evidenced by the Confirmation.
(j) "Affiliate" will have the meaning specified in Section 14 of the Agreement.
(k) Jurisdiction. Section 13(b) of the Agreement is hereby amended by: (i)
deleting in the second line of
subparagraph (i) thereof the word "non-": and (ii) deleting the final
paragraph thereof.
Part 5. Other Provisions.
(a) Modifications to the Agreement. Section 3(a) of the Agreement shall be
amended to include the following additional representations after paragraph
3(a)(v): (vi) Eligible Contract Participant etc. It is an "eligible contract
participant" as defined in Section 1a(12) of the U.S. Commodity Exchange Act (7
U.S.C. 1a), as amended by the Commodity Futures Modernization Act of 2000 and
the Transaction evidenced hereby has been the subject of individual negotiations
and is intended to be exempt from, or otherwise not subject to regulation
thereunder.
AA-10
(b) Waiver of Right to Trial by Jury. Each party hereby irrevocably waives any
and all rights to trial by jury in any legal proceeding arising out of or
relating to this Agreement or any Transaction hereunder.
(c) Absence of Litigation. In Section 3(c) of the Agreement the words "or any of
its Affiliates" shall be deleted.
(d) Tax Event. In Section 5(b)(ii)(y) of the Agreement the words ", or there is
a substantial likelihood that it will," shall be deleted.
(e) Fully-paid Party Protected.
Notwithstanding the terms of Sections 5 and 6 of the Agreement, if Party B has
satisfied its payment obligations under Section 2(a)(i) of the Agreement, then
unless Party A is required pursuant to appropriate proceedings to return to
Party B or otherwise returns to Party B upon demand of Party B any portion of
such payment, (a) the occurrence of an event described in Section 5(a) of the
Agreement with respect to Party B with respect to this Transaction shall not
constitute an Event of Default or Potential Event of Default with respect to
Party B as the Defaulting Party and (b) Party A shall be entitled to designate
an Early Termination Event pursuant to Section 6 of the Agreement only as a
result of a Termination Event set forth in either Section 5(b)(i) or Section
5(b)(ii) of the Agreement with respect to Party A as the Affected Party or
Section 5(b)(iii) of the Agreement with respect to Party A as the Burdened
Party. For purposes of the Transaction to which this Confirmation relates, Party
B's only obligation under Section 2(a)(i) of the Agreement is to pay the Fixed
Amount on the Fixed Rate Payer Payment Date.
(f) Trustee Capacity.
It is expressly understood and agreed by the parties hereto that insofar as this
Confirmation is executed by the Trustee (i) this Confirmation is executed and
delivered JPMorgan Chase Bank, not in its individual capacity but solely as
Trustee under the PSA in the exercise of the powers and authority conferred and
vested in it thereunder and (iii) under no circumstances JPMorgan Chase Bank in
its individual capacity be personally liable for the payment of any indebtedness
or expenses or be personally liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken under this Confirmation.
(g) Transfer, Amendment and Assignment.
No transfer, amendment, waiver, supplement, assignment or other modification of
this Transaction shall be permitted by either party unless (i) each party has
given prior written consent to the party and (ii) each of Standard and Poors, a
Division of XxXxxx-Xxxx Companies, Inc. ("S&P") and Xxxxx'x Investors Service,
Inc. ("Moody's") have been provided notice of such modification and confirms in
writing (including by facsimile transmission) within five Business Days after
such notice is given that it will not downgrade, withdraw or modify its
then-current rating of the Home Equity Mortgage Pass-Through Certificates,
Series 2003-3 (the "Securities").
(h) Proceedings.
AA-11
Party A shall not institute against or cause any other person to institute
against, or join any other person in instituting against, the Home Equity
Mortgage Trust 2003-3, any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceedings, or other proceedings under any federal or state
bankruptcy, dissolution or similar law, for a period of one year and one day
following indefeasible payment in full of the Securities.
(i) Set-off.
The provisions for Set-off set forth in Section 6(e) of the Agreement shall
not apply for purposes of this Transaction.
(j) Section 1(c)
For purposes of Section 1(c) of the Agreement, this Transaction shall be
the sole Transaction under the Agreement.
(k) Rating Agency Downgrade
If a Ratings Event (as defined below) occurs with respect to Party A (or
any applicable credit support provider), then Party A shall at its own expense,
(i) assign this Transaction hereunder to a third party within (30) days of such
Ratings Event that meets or exceeds, or as to which any applicable credit
support provider meets or exceeds, the Approved Ratings Thresholds (as defined
below) on terms substantially similar to this Confirmation or (ii) deliver
collateral, in an amount equal to the Exposure (as defined below), and an
executed ISDA Credit Support Annex within (30) days of such Ratings Event and
subject to S&P's and Moody's written confirmation that delivery of such
collateral in the context of such downgrade will not result in a withdrawal,
qualification or downgrade of the then current ratings assigned to the
Securities. For avoidance of doubt, a downgrade of the rating on the Securities
could occur in the event that Party A does not post sufficient collateral. For
purposes of this Transaction, a "Ratings Event" shall occur with respect to
Party A (or any applicable credit support provider), if its short-term unsecured
and unsubordinated debt ceases to be rated at least "A-1" by S&P and at least
"P-1" by Moody's (including in connection with a merger, consolidation or other
similar transaction by Party A or any applicable credit support provider) such
ratings being referred to herein as the "Approved Ratings Thresholds," (unless,
within 30 days thereafter, each of Moody's and S&P has reconfirmed the ratings
of the Securities, as applicable, which was in effect immediately prior thereto.
Only with respect to such Ratings Event, "Exposure" shall mean the greater of
the following: (i) the xxxx-to-market value of the Transaction as of the
Valuation Date (as such term is defined in the ISDA Credit Support Annex); (ii)
the amount of the next payment due under the Transaction and (iii) one percent
of the Notional Amount for the respective Calculation Period.
(l) Additional Termination Events
Additional Termination Events will apply if a Ratings Event has occurred
and Party A has not, within 30 days, complied with clause (k) above, then an
Additional Termination Event shall
AA-12
have occurred with respect to Party A and Party A shall be the sole Affected
Party with respect to such an Additional Termination Event.
(m) Amendment to ISDA Form.
The "Failure to Pay or Deliver" provision in Section 5(a)(i) of the
Agreement is hereby amended by deleting the word "third" in the third line
thereof and inserting the word "first" in place thereof.
AA-13
SCHEDULE I
MORTGAGE LOAN SCHEDULE
(Available Upon Request)
I-1
SCHEDULE II
SELLER'S REPRESENTATIONS AND WARRANTIES
(i) The Seller is a corporation duly organized, validly existing and in
good standing under the laws of the state of its incorporation;
(ii) The Seller has full corporate power to own its property, to carry on
its business as presently conducted and to enter into and perform its
obligations under this Agreement;
(iii) The execution and delivery by the Seller of this Agreement have been
duly authorized by all necessary corporate action on the part of the Seller; and
neither the execution and delivery of this Agreement, nor the consummation of
the transactions herein contemplated hereby, nor compliance with the provisions
hereof, will conflict with or result in a breach of, or constitute a default
under, any of the provisions of any law, governmental rule, regulation,
judgment, decree or order binding on the Seller or its properties or the
certificate of incorporation or by-laws of the Seller, except those conflicts,
breaches or defaults which would not reasonably be expected to have a material
adverse effect on the Seller's ability to enter into this Agreement and to
consummate the transactions contemplated hereby;
(iv) The execution, delivery and performance by the Seller of this
Agreement and the consummation of the transactions contemplated hereby do not
require the consent or approval of, The giving of notice to, The registration
with, or the taking of any other action in respect of, any state, federal or
other governmental authority or agency, except those consents, approvals,
notices, registrations or other actions as have already been obtained, given or
made and, in connection with the recordation of the Mortgages, powers of
attorney or assignments of Mortgages not yet completed;
(v) this Agreement has been duly executed and delivered by the Seller and,
assuming due authorization, execution and delivery by the Trustee, The Servicer
and the Depositor, constitutes a valid and binding obligation of the Seller
enforceable against it in accordance with its terms (subject to applicable
bankruptcy and insolvency laws and other similar laws affecting the enforcement
of the rights of creditors generally); and
(vi) there are no actions, litigation, suits or proceedings pending or to
the knowledge of the Seller, threatened against the Seller before or by any
court, administrative agency, arbitrator or governmental body (i) with respect
to any of the transactions contemplated by this Agreement or (ii) with respect
to any other matter which in the judgment of the Seller if determined adversely
to the Seller would reasonably be expected to materially and adversely affect
the Seller's ability to perform its obligations under this Agreement; and the
Seller is not in default with respect to any order of any court, administrative
agency, arbitrator or governmental body so as to materially and adversely affect
the transactions contemplated by this Agreement.
II-1
SCHEDULE III
WILSHIRE REPRESENTATIONS AND WARRANTIES
(i) Wilshire is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation;
(ii) Wilshire has full corporate power to own its property, to carry on its
business as presently conducted and to enter into and perform its obligations
under this Agreement;
(iii) The execution and delivery by Wilshire of this Agreement have been
duly authorized by all necessary corporate action on the part of Wilshire; and
neither the execution and delivery of this Agreement, nor the consummation of
the transactions herein contemplated hereby, nor compliance with the provisions
hereof, will conflict with or result in a breach of, or constitute a default
under, any of the provisions of any law, governmental rule, regulation,
judgment, decree or order binding on Wilshire or its properties or the
certificate of incorporation or bylaws of Wilshire, except those conflicts,
breaches or defaults which would not reasonably be expected to have a material
adverse effect on Wilshire ability to enter into this Agreement and to
consummate the transactions contemplated hereby;
(iv) this Agreement has been duly executed and delivered by Wilshire and,
assuming due authorization, execution and delivery by the Trustee, the Seller
and the Depositor, constitutes a valid and binding obligation of Wilshire
enforceable against it in accordance with its terms (subject to applicable
bankruptcy and insolvency laws and other similar laws affecting the enforcement
of the rights of creditors generally); and
(v) there are no actions, litigation, suits or proceedings pending or to
the knowledge of Wilshire, threatened against Wilshire before or by any court,
administrative agency, arbitrator or governmental body (a) with respect to any
of the transactions contemplated by this Agreement or (b) with respect to any
other matter which in the judgment of Wilshire if determined adversely to
Wilshire would reasonably be expected to materially and adversely affect
Wilshire's ability to perform its obligations under this Agreement, other than
as Servicer has previously advised Seller; and Wilshire is not in default with
respect to any order of any court, administrative agency, arbitrator or
governmental body so as to materially and adversely affect the transactions
contemplated by this Agreement.
IIIA-1
SCHEDULE IV
REPRESENTATIONS AND WARRANTIES RELATING TO THE MORTGAGE LOANS
(i) The Seller or its affiliate is the sole owner of record and holder of
the Mortgage Loan and the indebtedness evidenced by the Mortgage Note.
Immediately prior to the transfer and assignment to the Depositor on the Closing
Date, The Mortgage Loan, including the Mortgage Note and the Mortgage, were not
subject to an assignment or pledge, and the Seller had good and marketable title
to and was the sole owner thereof and had full right to transfer and sell the
Mortgage Loan to the Depositor free and clear of any encumbrance, equity, lien,
pledge, charge, claim or security interest and has the full right and authority
subject to no interest or participation of, or agreement with, any other party,
to sell and assign the Mortgage Loan and following the sale of the Mortgage
Loan, The Depositor will own such Mortgage Loan free and clear of any
encumbrance, equity, participation interest, lien, pledge, charge, claim or
security interest.
(ii) Any and all requirements of any federal, state or local law including,
without limitation, usury, truth-in-lending, real estate settlement procedures,
consumer credit protection, equal credit opportunity, or disclosure, recording
and all applicable predatory and abusive lending laws applicable to the Mortgage
Loan have been complied with in all material respects.
(iii) The terms of the Mortgage Note and the Mortgage have not been
impaired, waived, altered or modified in any respect, except by written
instruments which have been recorded to the extent any such recordation is
required by law, or, necessary to protect the interest of the Depositor. No
instrument of waiver, alteration or modification has been executed, and no
Mortgagor has been released, in whole or in part, from the terms thereof except
in connection with an assumption agreement and which assumption agreement is
part of the Mortgage File and the terms of which are reflected in the Mortgage
Loan Schedule; the substance of any such waiver, alteration or modification has
been approved by the issuer of any related Primary Insurance Policy and title
insurance policy, to the extent required by the related policies.
(iv) The Mortgage Loan complies with all the terms, conditions and
requirements of the originator's underwriting standards in effect at the time of
origination of such Mortgage Loan.
(v) The information set forth in the Mortgage Loan Schedule, attached to
the Agreement as Schedule I, is complete, true and correct in all material
respects as of the Cut-off Date.
(vi) The related Mortgage is a valid, subsisting, enforceable and perfected
second lien on the Mortgaged Property, all buildings on the Mortgaged Property
and all installations and mechanical, electrical, plumbing, heating and air
conditioning systems affixed to such buildings, and all additions, alterations
and replacements made at any time with respect to the foregoing securing the
Mortgage Note's original principal balance. The Mortgage and the Mortgage Note
do not contain any evidence of any security interest or other interest or right
thereto. Such lien is free and clear of all adverse claims, liens and
encumbrances having priority over the first or second lien, as applicable, of
the Mortgage subject only to (1) with respect to any Second Mortgage Loan, the
related First Mortgage Loan, (2) the lien of non-delinquent current real
property taxes and assessments not yet due and payable, (3) covenants,
conditions and restrictions, rights of way, easements and other matters of the
public record as of the date of recording which are acceptable to mortgage
lending institutions generally and either (A) which are referred to or otherwise
considered
IV-1
in the appraisal made for the originator of the Mortgage Loan, or (B) which do
not adversely affect the appraised value of the Mortgaged Property as set forth
in such appraisal, and (4) other matters to which like properties are commonly
subject which do not materially interfere with the benefits of the security
intended to be provided by the Mortgage or the use, enjoyment, value or
marketability of the related Mortgaged Property. Any security agreement, chattel
mortgage or equivalent document related to and delivered in connection with the
Mortgage Loan establishes and creates (1) with respect to any First Mortgage
Loan, a valid, subsisting, enforceable and perfected first lien and first
priority security interest and (2) with respect to any second lien Mortgage
Loan, a valid, subsisting, enforceable and perfected second lien and second
priority security interest, in each case, on the property described therein, and
the Seller has the full right to sell and assign the same to the Depositor.
(vii) There are no mechanics' or similar liens or claims which have been
filed for work, labor or material (and no rights are outstanding that under law
could give rise to such liens) affecting the related Mortgaged Property which
are or may be liens prior to or equal to the lien of the related Mortgage.
(viii) All taxes, governmental assessments, insurance premiums, water,
sewer and municipal charges, leasehold payments or ground rents which previously
became due and owing have been paid, or escrow funds have been established in an
amount sufficient to pay for every such escrowed item which remains unpaid and
which has been assessed but is not yet due and payable.
(ix) The Mortgage Note and the Mortgage are not subject to any right of
rescission, set-off, counterclaim or defense, including, without limitation, the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render the
Mortgage Note or Mortgage unenforceable, in whole or in part, or subject to any
right of rescission, set-off, counterclaim or defense, including the defense of
usury, and no such right of rescission, set-off, counterclaim or defense has
been asserted with respect thereto.
(x) The Mortgaged Property is not subject to any material damage by waste,
fire, earthquake, windstorm, flood or other casualty. At origination of the
Mortgage Loan there was, and there currently is, no proceeding pending for the
total or partial condemnation of the Mortgaged Property.
(xi) All improvements subject to the Mortgage which were considered in
determining the appraised value of the Mortgaged Property lie wholly within the
boundaries and building restriction lines of the Mortgaged Property (and wholly
within the project with respect to a condominium unit) and no improvements on
adjoining properties encroach upon the Mortgaged Property except those which are
insured against by a title insurance policy and all improvements on the property
comply with all applicable zoning and subdivision laws and ordinances.
(xii) Seller has delivered or caused to be delivered to the Trustee or the
Custodian on behalf of the Trustee the original Mortgage bearing evidence that
such instruments have been recorded in the appropriate jurisdiction where the
Mortgaged Property is located as determined by the Seller (or, in lieu of the
original of the Mortgage or the assignment thereof, a duplicate or conformed
copy of the Mortgage or the instrument of assignment, if any, together with a
certificate of receipt from the Seller or the settlement agent who handled the
closing of the Mortgage Loan, certifying that such copy or copies represent true
and correct copy(ies) of the original(s) and that such original(s) have been or
are currently submitted to be recorded in the appropriate governmental
IV-2
recording office of the jurisdiction where the Mortgaged Property is located) or
a certification or receipt of the recording authority evidencing the same.
(xiii) The Mortgage File contains each of the documents specified in
Section 2.01(b) of the Agreement.
(xiv) As of the Closing Date, each Mortgage Loan shall be serviced in all
material respects in accordance with the terms of the Agreement.
(xv) All buildings or other customarily insured improvements upon the
Mortgaged Property are insured by an insurer acceptable under the FNMA Guides,
against loss by fire, hazards of extended coverage and such other hazards as are
provided for in the FNMA Guides or by FHLMC, as well as all additional
requirements set forth in this Agreement. All such standard hazard policies are
in full force and effect and on the date of origination contained a standard
mortgagee clause naming the Seller and its successors in interest and assigns as
loss payee and such clause is still in effect and all premiums due thereon have
been paid. If at the time of origination, the Mortgage Loan was required to have
flood insurance coverage in accordance with the Flood Disaster Protection Act of
1973, as amended, such Mortgage Loan is covered by a flood insurance policy
meeting the requirements of the current guidelines of the Federal Insurance
Administration which policy conforms to FNMA and FHLMC requirements, as well as
all additional requirements set forth in this Agreement. Such policy was issued
by an insurer acceptable under FNMA or FHLMC guidelines. The Mortgage obligates
the Mortgagor thereunder to maintain all such insurance at the Mortgagor's cost
and expense, and upon the Mortgagor's failure to do so, authorizes the holder of
the Mortgage to maintain such insurance at the Mortgagor's cost and expense and
to seek reimbursement therefor from the Mortgagor.
(xvi) The Mortgage creates a first or second lien or a first or second
priority ownership interest in an estate in fee simple in real property securing
the related Mortgage Note.
(xvii) As of the Cut-off Date, no Mortgage Loan is (a) a non-performing
loan (i.e. a mortgage loan that is more than 90 days delinquent); (b) a
re-performing loan (i.e. a mortgage loan that was more than 90 days delinquent
within the twelve month period preceding the Cut-off Date but is contractually
current); or (c) a sub-performing loan (i.e. a mortgage loan that is at least 30
days delinquent but subject to a payment plan or agreement pursuant to which the
Mortgagor is contractually current).
(xviii) The Mortgage Note and the related Mortgage are original and genuine
and each is the legal, valid and binding obligation of the maker thereof,
enforceable in all respects in accordance with its terms subject to bankruptcy,
insolvency, moratorium, reorganization and other laws of general application
affecting the rights of creditors and by general equitable principles.
(xix) No Mortgage Loan that was originated on or after October 1, 2002 and
before March 7, 2003, which is secured by a Mortgaged Property located in the
State of Georgia is a "home loan" as defined in the Georgia Fair Lending Act (HB
1361), as amended.
(xx) Each Mortgage Loan at the time it was made complied in all material
respects with applicable local, state and federal laws, including, but not
limited to, all applicable predatory and abusive lending laws.
V-3
