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FINANCIAL ASSET SECURITIES CORP.,
Depositor
XXXXXX LOAN SERVICING LP,
Servicer
and
DEUTSCHE BANK NATIONAL TRUST COMPANY,
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of December 1, 2002
___________________________
Fremont Home Loan Trust 2002-2
Asset-Backed Certificates, Series 2002-2
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1.01. Defined Terms.........................................................3
SECTION 1.02. Accounting....................................................42
SECTION 1.03. Allocation of Certain Interest Shortfalls.....................43
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. Conveyance of Mortgage Loans..................................44
SECTION 2.02. Acceptance by Trustee.........................................47
SECTION 2.03. Repurchase or Substitution of Mortgage Loans by the
Originator....................................................48
SECTION 2.04. Intentionally Omitted.........................................50
SECTION 2.05. Representations, Warranties and Covenants of the Servicer.....50
SECTION 2.06. Representations and Warranties of the Depositor...............53
SECTION 2.07. Issuance of Certificates......................................54
SECTION 2.08. [Reserved]....................................................54
SECTION 2.09. Acceptance of REMIC 1 and REMIC 2 by the Trustee; Conveyance
of REMIC I Regular Interests, Class M-2A Interest and Class
M-3 Interest; Issuance of Certificates........................54
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE MORTGAGE LOANS
SECTION 3.01. Servicer to Act as Servicer...................................57
SECTION 3.02. Sub-Servicing Agreements Between Servicer and Sub-Servicers...58
SECTION 3.03. Successor Sub-Servicers.......................................60
SECTION 3.04. Liability of the Servicer.....................................60
SECTION 3.05. No Contractual Relationship Between Sub-Servicers and the
Trustee or Certificateholders.................................60
SECTION 3.06. Assumption or Termination of Sub-Servicing Agreements by
Trustee61.......................................................
SECTION 3.07. Collection of Certain Mortgage Loan Payments..................61
SECTION 3.08. Sub-Servicing Accounts........................................62
SECTION 3.09. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts............................................62
SECTION 3.10. Collection Account and Distribution Account...................63
i
SECTION 3.11. Withdrawals from the Collection Account and Distribution
Account ......................................................65
SECTION 3.12. Investment of Funds in the Collection Account and the
Distribution Account..........................................67
SECTION 3.13. [Reserved]....................................................69
SECTION 3.14. Maintenance of Hazard Insurance and Errors and Omissions
and Fidelity Coverage.........................................69
SECTION 3.15. Enforcement of Due-On-Sale Clauses; Assumption Agreements.....70
SECTION 3.16. Realization Upon Defaulted Mortgage Loans.....................71
SECTION 3.17. Trustee to Cooperate; Release of Mortgage Files...............73
SECTION 3.18. Servicing Compensation........................................74
SECTION 3.19. Reports to the Trustee; Collection Account Statements.........75
SECTION 3.20. Statement as to Compliance....................................75
SECTION 3.21. Independent Public Accountants' Servicing Report..............75
SECTION 3.22. Access to Certain Documentation; Filing of Reports by
Trustee.......................................................76
SECTION 3.23. Title, Management and Disposition of REO Property.............77
SECTION 3.24. Obligations of the Servicer in Respect of Prepayment
Interest Shortfalls...........................................81
SECTION 3.25. [Reserved]....................................................81
SECTION 3.26. Obligations of the Servicer in Respect of Mortgage Rates
and Monthly Payments..........................................81
SECTION 3.27. Solicitations.................................................81
SECTION 3.28. Net WAC Rate Carryover Reserve Account........................82
SECTION 3.29. Advance Facility..............................................83
SECTION 3.30. PMI Policy; Claims Under the PMI Policy.......................85
ARTICLE IV
FLOW OF FUNDS
SECTION 4.01. Distributions.................................................86
SECTION 4.02. Reserved......................................................91
SECTION 4.03. Statements....................................................91
SECTION 4.04. Remittance Reports; Advances..................................94
SECTION 4.05. [Reserved]....................................................95
SECTION 4.06. [Reserved]....................................................95
SECTION 4.07. Distributions on the REMIC Regular Interests..................95
SECTION 4.08. Allocation of Realized Losses.................................96
ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates..............................................98
SECTION 5.02. Registration of Transfer and Exchange of Certificates.........98
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates............103
SECTION 5.04. Persons Deemed Owners........................................104
SECTION 5.05. Appointment of Paying Agent..................................104
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ARTICLE VI
THE SERVICER AND THE DEPOSITOR
SECTION 6.01. Liability of the Servicer and the Depositor..................105
SECTION 6.02. Merger or Consolidation of, or Assumption of the Obligations
of, the Servicer or the Depositor............................105
SECTION 6.03. Limitation on Liability of the Servicer and Others...........105
SECTION 6.04. Servicer Not to Resign.......................................106
SECTION 6.05. Delegation of Duties.........................................107
SECTION 6.06. Reserved.....................................................107
SECTION 6.07. Inspection...................................................107
ARTICLE VII
DEFAULT
SECTION 7.01. Servicer Events of Termination...............................108
SECTION 7.02. Trustee to Act; Appointment of Successor.....................109
SECTION 7.03. Waiver of Defaults...........................................111
SECTION 7.04. Notification to Certificateholders...........................111
SECTION 7.05. Survivability of Servicer Liabilities........................111
ARTICLE VIII
THE TRUSTEE
SECTION 8.01. Duties of Trustee............................................112
SECTION 8.02. Certain Matters Affecting the Trustee........................113
SECTION 8.03. Trustee Not Liable for Certificates or Mortgage Loans........114
SECTION 8.04. Trustee May Own Certificates.................................115
SECTION 8.05. Trustee Fee and Expenses.....................................115
SECTION 8.06. Eligibility Requirements for Trustee.........................116
SECTION 8.07. Resignation or Removal of Trustee............................116
SECTION 8.08. Successor Trustee............................................117
SECTION 8.09. Merger or Consolidation of Trustee...........................117
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee................117
SECTION 8.11. Limitation of Liability......................................119
SECTION 8.12. Trustee May Enforce Claims Without Possession of
Certificates.................................................119
SECTION 8.13. Suits for Enforcement........................................119
SECTION 8.14. Waiver of Bond Requirement...................................120
SECTION 8.15. Waiver of Inventory, Accounting and Appraisal Requirement....120
ARTICLE IX
REMIC ADMINISTRATION
SECTION 9.01. REMIC Administration.........................................121
SECTION 9.02. Prohibited Transactions and Activities.......................123
iii
SECTION 9.03. Indemnification with Respect to Certain Taxes and Loss of
REMIC Status.................................................123
ARTICLE X
TERMINATION
SECTION 10.01. Termination..................................................125
SECTION 10.02. Additional Termination Requirements..........................127
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01. Amendment....................................................128
SECTION 11.02. Recordation of Agreement; Counterparts.......................129
SECTION 11.03. Limitation on Rights of Certificateholders...................129
SECTION 11.04. Governing Law; Jurisdiction..................................130
SECTION 11.05. Notices......................................................130
SECTION 11.06. Severability of Provisions...................................131
SECTION 11.07. Article and Section References...............................131
SECTION 11.08. Notice to the Rating Agencies................................131
SECTION 11.09. Further Assurances...........................................132
SECTION 11.10. Benefits of Agreement........................................132
SECTION 11.11 Acts of Certificateholders...................................132
iv
Exhibits:
---------
Exhibit A-1 Form of Class A-1 Certificates
Exhibit A-2 Form of Class A-2 Certificates
Exhibit A-3 Form of Class M-1 Certificates
Exhibit A-4 Form of Class M-2A Certificates
Exhibit A-5 Form of Class M-2B Certificates
Exhibit A-6 Form of Class M-3 Certificates
Exhibit A-7 Form of Class C Certificates
Exhibit A-8 Form of Class P Certificates
Exhibit A-9 Form of Class R Certificates
Exhibit A-10 Form of Class R-X Certificates
Exhibit B [Reserved]
Exhibit C Form of Mortgage Loan Purchase Agreement
Exhibit D Mortgage Loan Schedule
Exhibit E Request for Release
Exhibit F-1 Form of Trustee's Initial Certification
Exhibit F-2 Form of Trustee's Final Certification
Exhibit F-3 Form of Receipt of Mortgage Note
Exhibit G [Reserved]
Exhibit H Form of Lost Note Affidavit
Exhibit I Form of Limited Power of Attorney
Exhibit J Form of Investment Letter
Exhibit K Form of Transfer Affidavit for Residual Certificates
Exhibit L Form of Transferor Certificate
Exhibit M Form of ERISA Representation Letter
Exhibit N-1 Form of Depositor's Certification
Exhibit N-2 Form of Trustee's Certification
Exhibit N-3 Form of Servicer's Certification
Exhibit O Form of Cap Contracts
Schedule I Prepayment Charge Schedule
Schedule II PMI Mortgage Loans
v
This Pooling and Servicing Agreement is dated as of December 1, 2002
(the "Agreement"), among FINANCIAL ASSET SECURITIES CORP., as depositor (the
"Depositor"), XXXXXX LOAN SERVICING LP, as servicer (the "Servicer") and
DEUTSCHE BANK NATIONAL TRUST COMPANY, as trustee (the "Trustee").
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 ten 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-2A
Certificates, (v) the Class M-2B Certificates, (vi) the Class M-3 Certificates,
(vii) the Class C Certificates, (viii) the Class P Certificates, (ix) the Class
R Certificates and (x) the Class R-X Certificates.
REMIC 1
-------
As provided herein, the Trustee will make an election to treat the
segregated pool of assets consisting of the Group I Mortgage Loans, the Group II
Mortgage Loans and certain other related assets subject to this Agreement
(exclusive of the Net WAC Rate Carryover Reserve Account and any Servicer
Prepayment Charge Payment Amounts) 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 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.
Uncertificated REMIC 1 Initial Uncertificated Assumed Final
Designation Pass-Through Rate Principal Balance Maturity Date(1)
----------- ---------------------- ---------------------- ----------------
LTAA Variable(2) $476,925,724.15 October 2033
LTA1 Variable(2) $ 2,894,070.00 October 2033
LTA2 Variable(2) $ 1,376,360.00 October 2033
LTM1 Variable(2) $ 231,160.00 October 2033
LTM2A Variable(2) $ 106,830.00 October 2033
LTM2B Variable(2) $ 100,000.00 October 2033
LTM3 Variable(2) $ 124,100.00 October 2033
LTZZ Variable(2) $ 4,900,658.04 October 2033
LTP Variable(2) $ 100.00 October 2033
________________
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the thirteenth Distribution Date immediately following the
maturity date for the Mortgage Loan with the latest possible maturity date
has been designated as the "latest possible maturity date" for each REMIC 1
Regular Interest.
(2) Calculated in accordance with the definition of "Uncertificated REMIC 1
Pass-Through Rate" herein.
REMIC 2
-------
As provided herein, the Trustee shall make an election to treat the
segregated pool of assets consisting of the 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 represents the sole class of
"residual interests" in REMIC 2 for purposes of the REMIC Provisions.
The following table sets forth (or describes) the Class designation,
Pass-Through Rate and Original Class Certificate Principal Balance for each
Class of Certificates that represents one or more of the "regular interests" in
REMIC 2 created hereunder:
Original Class Certificate Pass-Through Assumed Final
Class Designation Principal Balance Rate Maturity Date(1)
-------------------- -------------------------- ------------ ----------------
Class A-1........... $289,407,000.00 Variable(2) October 2033
Class A-2........... $137,636,000.00 Variable(2) October 2033
Class M-1........... $ 23,116,000.00 Variable(2) October 2033
Class M-2A Interest. $ 10,683,000.00 Variable(2) October 2033
Class M-2B.......... $ 10,000,000.00 Variable(2) October 2033
Class M-3 Interest.. $ 12,410,000.00 Variable(2) October 2033
Class C............. $ 3,406,902.19(3) Variable(2) October 2033
Class P............. $ 100.00 N/A(4) October 2033
________________
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the thirteenth Distribution Date immediately following the
maturity date for the Mortgage Loan with the latest maturity date has been
designated as the "latest possible maturity date" for each REMIC 2 Regular
Interest.
(2) Calculated in accordance with the definition of "Pass-Through Rate" herein.
(3) The Class C Certificates will accrue interest at their variable
Pass-Through Rate on the Notional Amount of the Class C Certificates
outstanding from time to time which shall equal the aggregate of the
Uncertificated Principal Balances of the REMIC 1 Regular Interests. The
Class C Certificates will not accrue interest on its Class Certificate
Principal Balance.
(4) The Class P Certificates will not accrue interest.
REMIC 3
-------
As provided herein, the Trustee shall make an election to treat the
Class M-2A Interest 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 represents the sole class of "residual interests" in REMIC 3 for
purposes of the REMIC Provisions.
The following table sets forth (or describes) the Class designation,
Pass-Through Rate and Original Class Certificate Principal Balance for the Class
M-2A Certificates.
Original Class Certificate Pass-Through Assumed Final
Class Designation Principal Balance Rate Maturity Date(1)
----------------- -------------------------- ------------ ----------------
Class M-2A $10,683,000.00 Variable(2) October 2033
________________
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the thirteenth Distribution Date immediately following the
maturity date for the Mortgage Loan with the latest possible maturity date
has been designated as the "latest possible maturity date" for the Class
M-2A Certificates.
(2) The Class M-2A Certificates will receive 100% of amounts received in
respect of the Class M-2A Interest.
2
REMIC 4
-------
As provided herein, the Trustee shall make an election to treat the
Class M-3 Interest as a REMIC for federal income tax purposes, and such
segregated pool of assets will be designated as "REMIC 4." The Class R-4
Interest represents the sole class of "residual interests" in REMIC 4 for
purposes of the REMIC Provisions.
The following table sets forth (or describes) the Class designation,
Pass-Through Rate and Original Class Certificate Principal Balance for the Class
M-3 Certificates.
Original Class Certificate Pass-Through Assumed Final
Class Designation Principal Balance Rate Maturity Date(1)
----------------- -------------------------- ------------ ----------------
Class M-3 $12,410,000.00 Variable(2) October 2033
________________
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the thirteenth Distribution Date immediately following the
maturity date for the Mortgage Loan with the latest possible maturity date
has been designated as the "latest possible maturity date" for the Class
M-3 Certificates.
(2) The Class M-3 Certificates will receive 100% of amounts received in respect
of the Class M-3 Interest.
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms.
Whenever used in this Agreement or in the Preliminary Statement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article. Unless otherwise specified, all
calculations in respect of interest on the Class A-1 Certificates, the Class A-2
Certificates, the Class M-1 Certificates, the Class M-2A Certificates and the
Class M-3 Certificates shall be made on the basis of the actual number of days
elapsed and a 360-day year and all other calculations of interest described
herein shall be made on the basis of a 360-day year consisting of twelve 30-day
months. The Class P Certificates and the Residual Certificates are not entitled
to distributions in respect of interest and, accordingly, will not accrue
interest.
"1933 Act": The Securities Act of 1933, as amended.
"Account": Either of the Collection Account and Distribution Account.
"Accrual Period": With respect to the Class A-1 Certificates, the Class A-2
Certificates, the Class M-1 Certificates, the Class M-2A Certificates and the
Class M-3 Certificates and each Distribution Date, the period commencing on the
preceding Distribution Date (or in the case of the first such Accrual Period,
commencing on the Closing Date) and ending on the day preceding the current
Distribution Date. With respect to the Class M-2B Certificates and the Class C
Certificates and each Distribution Date, the calendar month prior to the month
of such Distribution Date.
3
"Adjustable-Rate Mortgage Loan": A first lien Mortgage Loan which provides
at any period during the life of such loan for the adjustment of the Mortgage
Rate payable in respect thereto. The Adjustable Rate Mortgage Loans are
identified as such on the Mortgage Loan Schedule.
"Adjusted Net Maximum Mortgage Rate": With respect to any Mortgage Loan (or
the related REO Property), as of any date of determination, a per annum rate of
interest equal to the applicable Maximum Mortgage Rate for such Mortgage Loan
(or the Mortgage Rate in the case of any Fixed- Rate Mortgage Loan) as of the
first day of the month preceding the month in which the related Distribution
Date occurs minus the sum of (i) the Trustee Fee Rate, (ii) the Servicing Fee
Rate and (iii) the PMI Insurer Fee Rate, if applicable.
"Adjusted Net Mortgage Rate": With respect to any Mortgage Loan (or the
related REO Property), as of any date of determination, a per annum rate of
interest equal to the applicable Mortgage Rate for such Mortgage Loan as of the
first day of the month preceding the month in which the related Distribution
Date occurs minus the sum of (i) the Trustee Fee Rate, (ii) the Servicing Fee
Rate and (iii) the PMI Insurer Fee Rate, if applicable.
"Adjustment Date": With respect to each Adjustable-Rate Mortgage Loan, each
adjustment date, on which the Mortgage Rate of such Mortgage Loan changes
pursuant to the related Mortgage Note. The first Adjustment Date following the
Cut-off Date as to each Adjustable-Rate Mortgage Loan is set forth in the
Mortgage Loan Schedule.
"Advance": As to any Mortgage Loan or REO Property, any advance made by the
Servicer in respect of any Distribution Date pursuant to Section 4.04.
"Advance Facility": As defined in Section 3.29 hereof.
"Advance Facility Notice": As defined in Section 3.29 hereof.
"Advance Financing Person": As defined in Section 3.29 hereof.
"Advance Reimbursement Amounts": As defined in Section 3.29 hereof.
"Adverse REMIC Event": As defined in Section 9.01(f) hereof.
"Affiliate": With respect to any Person, any other Person controlling,
controlled by or under common control with such Person. For purposes of this
definition, "control" means the power to direct the management and policies of a
Person, directly or indirectly, whether through ownership of voting securities,
by contract or otherwise and "controlling" and "controlled" shall have meanings
correlative to the foregoing.
"Agreement": This Pooling and Servicing Agreement and all amendments hereof
and supplements hereto.
"Allocated Realized Loss Amount": With respect to any Distribution Date and
any Class of Mezzanine Certificates, the sum of (i) any Realized Losses
allocated to such Class of Certificates
4
on such Distribution Date and (ii) the amount of any Allocated Realized Loss
Amount for such Class of Certificates remaining unpaid from the previous
Distribution Date.
"Assignment": An assignment of Mortgage, notice of transfer or equivalent
instrument, in recordable form, which is sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect or
record the sale of the Mortgage.
"Assumed Final Maturity Date": As to each Class of Certificates, the date
set forth as such in the Preliminary Statement.
"Available Funds": With respect to any Distribution Date, an amount equal
to the excess of (i) the sum of (a) the aggregate of the related Monthly
Payments received on the Mortgage Loans on or prior to the related Determination
Date, (b) Net Liquidation Proceeds, Insurance Proceeds, Principal Prepayments,
proceeds from repurchases of and substitutions for such Mortgage Loans and other
unscheduled recoveries of principal and interest in respect of the Mortgage
Loans received during the related Prepayment Period, (c) the aggregate of any
amounts received in respect of a related REO Property withdrawn from any REO
Account and deposited in the Collection Account for such Distribution Date, (d)
the aggregate of any amounts deposited in the Collection Account by the Servicer
in respect of related Prepayment Interest Shortfalls for such Distribution Date,
(e) the aggregate of any Advances made by the Servicer for such Distribution
Date in respect of the Mortgage Loans, (f) the aggregate of any related advances
made by the Trustee in respect of the Mortgage Loans for such Distribution Date
pursuant to Section 7.02 and (g) the amount of any Prepayment Charges collected
by the Servicer in connection with the full or partial prepayment of any of the
Mortgage Loans and any Servicer Prepayment Charge Payment Amount over (ii) the
sum of (a) amounts reimbursable or payable to the Servicer pursuant to Section
3.11(a) or the Trustee pursuant to Section 3.11(b), (b) amounts deposited in the
Collection Account or the Distribution Account pursuant to clauses (a) through
(g) above, as the case may be, in error, (c) the amount of any Prepayment
Charges collected by the Servicer in connection with the full or partial
prepayment of any of the Mortgage Loans and any Servicer Prepayment Charge
Payment Amount, (d) the Trustee Fee payable from the Distribution Account
pursuant to Section 8.05, (e) the PMI Insurer Fee payable from the Distribution
Account and (f) any indemnification payments or expense reimbursements made by
the Trust Fund pursuant to Section 8.05.
"Balloon Mortgage Loan": A Mortgage Loan that provides for the payment of
the unamortized principal balance of such Mortgage Loan in a single payment at
the maturity of such Mortgage Loan that is substantially greater than the
preceding monthly payment.
"Balloon Payment": A payment of the unamortized principal balance of a
Mortgage Loan in a single payment at the maturity of such Mortgage Loan that is
substantially greater than the preceding Monthly Payment.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11 of the
United States Code), as amended.
"Book-Entry Certificates": Any of the Certificates that shall be registered
in the name of the Depository or its nominee, the ownership of which is
reflected on the books of the Depository or on
5
the books of a Person maintaining an account with the Depository (directly, as a
"Depository Participant", or indirectly, as an indirect participant in
accordance with the rules of the Depository and as described in Section 5.02
hereof). On the Closing Date, the Class A Certificates and the Mezzanine
Certificates shall be Book-Entry Certificates.
"Business Day": Any day other than a Saturday, a Sunday or a day on which
banking or savings institutions in the State of Delaware, the State of New York,
the State of Texas, the State of California or in the city in which the
Corporate Trust Office of the Trustee is located are authorized or obligated by
law or executive order to be closed.
"Cap Contracts": The cap contracts between Greenwich Capital Derivatives,
Inc. and the counterparty thereunder, assigned to the Trustee pursuant to
Section 2.01, forms of which are attached hereto as Exhibit O.
"Certificate": Any Regular Certificate or Residual Certificate.
"Certificateholder" or "Holder": The Person in whose name a Certificate is
registered in the Certificate Register, except that a Disqualified Organization
or non-U.S. Person shall not be a Holder of a Residual Certificate for any
purpose hereof and, solely for the purposes of giving any consent pursuant to
this Agreement, any Certificate registered in the name of the Depositor or the
Servicer or any Affiliate thereof shall be deemed not to be outstanding and the
Voting Rights to which it is entitled shall not be taken into account in
determining whether the requisite percentage of Voting Rights necessary to
effect any such consent has been obtained, except as otherwise provided in
Section 11.01. The Trustee may conclusively rely upon a certificate of the
Depositor or the Servicer in determining whether a Certificate is held by an
Affiliate thereof. All references herein to "Holders" or "Certificateholders"
shall reflect the rights of Certificate Owners as they may indirectly exercise
such rights through the Depository and participating members thereof, except as
otherwise specified herein; provided, however, that the Trustee shall be
required to recognize as a "Holder" or "Certificateholder" only the Person in
whose name a Certificate is registered in the Certificate Register.
"Certificate Margin": With respect to the Class A-1 Certificates on each
Distribution Date (A) on or prior to the Optional Termination Date, 0.500% per
annum and (B) after the Optional Termination Date, 1.000% per annum. With
respect to the Class A-2 Certificates on each Distribution Date (A) on or prior
to the Optional Termination Date, 0.550% per annum and (B) after the Optional
Termination Date, 1.100% per annum. With respect to the Class M-1 Certificates
on each Distribution Date (A) on or prior to the Optional Termination Date,
1.150% per annum and (B) after the Optional Termination Date, 1.725% per annum.
With respect to the Class M-2A Certificates on each Distribution Date (A) on or
prior to the Optional Termination Date, 2.250% per annum and (B) after the
Optional Termination Date, 3.375% per annum. With respect to the Class M-3
Certificates on each Distribution Date (A) on or prior to the Optional
Termination Date, 2.700% per annum and (B) after the Optional Termination Date,
4.050% per annum.
"Certificate Owner": With respect to each Book-Entry Certificate, any
beneficial owner thereof.
6
"Certificate Principal Balance": With respect to any Class of Regular
Certificates (other than the Class C Certificates) immediately prior to any
Distribution Date, will be equal to the Initial Certificate Principal Balance
thereof reduced by the sum of all amounts actually distributed in respect of
principal of such Class and, in the case of a Mezzanine Certificate, Realized
Losses allocated thereto on all prior Distribution Dates. With respect to the
Class C Certificates as of any date of determination, an amount equal to the
excess, if any, of (A) the then aggregate Uncertificated Principal Balances of
the REMIC 1 Regular Interests over (B) the then aggregate Certificate Principal
Balances of the Class A Certificates, the Mezzanine Certificates and the Class P
Certificates then outstanding.
"Certificate Register" and "Certificate Registrar": The register maintained
and registrar appointed pursuant to Section 5.02 hereof.
"Class": Collectively, Certificates which have the same priority of payment
and bear the same class designation and the form of which is identical except
for variation in the Percentage Interest evidenced thereby.
"Class A Certificates": Any Class A-1 Certificate or Class A-2 Certificate.
"Class A Principal Distribution Amount": With respect to any Distribution
Date, the sum of (i) the Class A-1 Principal Distribution Amount and (ii) the
Class A-2 Principal Distribution Amount.
"Class A-1 Certificate": Any one of the Class A-1 Certificates executed by
the Trustee, and authenticated and delivered by the Certificate Registrar,
substantially in the form annexed hereto as Exhibit A-1, representing the right
to distributions as set forth herein and therein and evidencing a regular
interest in REMIC 2.
"Class A-1 Principal Distribution Amount": The excess of (x) the
Certificate Principal Balance of the Class A-1 Certificates immediately prior to
such Distribution Date over (y) the lesser of (A) the product of (i) 75.50% and
(ii) the aggregate Stated Principal Balance of the Group I Mortgage Loans as of
the last day of the related Due Period (after giving effect to scheduled
payments of principal due during the related Due Period, to the extent received
or advanced, and unscheduled collections of principal received during the
related Prepayment Period) and (B) the aggregate Stated Principal Balance of the
Group I Mortgage Loans as of the last day of the related Due Period (after
giving effect to scheduled payments of principal due during the related Due
Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period) minus the related
Overcollateralization Floor.
"Class A-2 Certificate": Any one of the Class A-2 Certificates executed by
the Trustee, and authenticated and delivered by the Certificate Registrar,
substantially in the form annexed hereto as Exhibit A-2, representing the right
to distributions as set forth herein and therein and evidencing a regular
interest in REMIC 2.
"Class A-2 Principal Distribution Amount": The excess of (x) the
Certificate Principal Balance of the Class A-2 Certificates immediately prior to
such Distribution Date over (y) the lesser
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of (A) the product of (i) 75.50% and (ii) the aggregate Stated Principal Balance
of the Group II Mortgage Loans as of the last day of the related Due Period
(after giving effect to scheduled payments of principal due during the related
Due Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period) and (B) the aggregate
Stated Principal Balance of the Group II Mortgage Loans as of the last day of
the related Due Period (after giving effect to scheduled payments of principal
due during the related Due Period, to the extent received or advanced, and
unscheduled collections of principal received during the related Prepayment
Period) minus the related Overcollateralization Floor.
"Class C Certificates": Any one of the Class C Certificates executed by the
Trustee, and authenticated and delivered by the Certificate Registrar,
substantially in the form annexed hereto as Exhibit A-7, representing the right
to distributions as set forth herein and therein and evidencing a regular
interest in REMIC 2.
"Class M-1 Certificate": Any one of the Class M-1 Certificates executed by
the Trustee, and authenticated and delivered by the Certificate Registrar,
substantially in the form annexed hereto as Exhibit A-3, representing the right
to distributions as set forth herein and therein and evidencing a regular
interest in REMIC 2.
"Class M-1 Principal Distribution Amount": The excess of (x) the sum of (i)
the aggregate Certificate Principal Balance of the Class A Certificates (after
taking into account the payment of the Class A Principal Distribution Amount on
such Distribution Date) and (ii) the Certificate Principal Balance of the Class
M-1 Certificates immediately prior to such Distribution Date over (y) the lesser
of (A) the product of (i) 85.00% and (ii) the Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period (after giving effect
to scheduled payments of principal due during the related Due Period, to the
extent received or advanced, and unscheduled collections of principal received
during the related Prepayment Period) and (B) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period
(after giving effect to scheduled payments of principal due during the related
Due Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period) minus the related
Overcollateralization Floor.
"Class M-2A Certificate": Any one of the Class M-2A Certificates executed
by the Trustee, and authenticated and delivered by the Certificate Registrar,
substantially in the form annexed hereto as Exhibit A-4, representing the right
to distributions as set forth herein and therein and evidencing a regular
interest in REMIC 3.
"Class M-2A Interest": An uncertificated interest in the Trust Fund held by
the Trustee on behalf of the Holders of the Class M-2A Certificates, evidencing
a Regular Interest in REMIC 2 for purposes of the REMIC Provisions.
"Class M-2B Certificate": Any one of the Class M-2B Certificates executed
by the Trustee, and authenticated and delivered by the Certificate Registrar,
substantially in the form annexed hereto as Exhibit A-5, representing the right
to distributions as set forth herein and therein and evidencing a regular
interest in REMIC 2.
8
"Class M-2 Principal Distribution Amount": The excess of (x) the sum of (i)
the aggregate Certificate Principal Balance of the Class A Certificates (after
taking into account the payment of the Class A Principal Distribution Amount on
such Distribution Date), (ii) the Certificate Principal Balance of the Class M-1
Certificates (after taking into account the payment of the Class M-1 Principal
Distribution Amount on such Distribution Date) and (iii) the aggregate
Certificate Principal Balance of the Class M-2A Certificates and the Class M-2B
Certificates immediately prior to such Distribution Date over (y) the lesser of
(A) the product of (i) 93.50% and (ii) the aggregate Stated Principal Balance of
the Mortgage Loans as of the last day of the related Due Period (after giving
effect to scheduled payments of principal due during the related Due Period, to
the extent received or advanced, and unscheduled collections of principal
received during the related Prepayment Period) and (B) the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period (after giving effect to scheduled payments of principal due during the
related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period) minus
the related Overcollateralization Floor.
"Class M-3 Certificate": Any one of the Class M-3 Certificates executed by
the Trustee, and authenticated and delivered by the Certificate Registrar,
substantially in the form annexed hereto as Exhibit A-6, representing the right
to distributions as set forth herein and therein and evidencing a regular
interest in REMIC 4.
"Class M-3 Interest": An uncertificated interest in the Trust Fund held by
the Trustee on behalf of the Holders of the Class M-3 Certificates, evidencing a
Regular Interest in REMIC 2 for purposes of the REMIC Provisions.
"Class M-3 Principal Distribution Amount": The excess of (x) the sum of (i)
the aggregate Certificate Principal Balance of the Class A Certificates (after
taking into account the payment of the Class A Principal Distribution Amount on
such Distribution Date), (ii) the Certificate Principal Balance of the Class M-1
Certificates (after taking into account the payment of the Class M-1 Principal
Distribution Amount on such Distribution Date), (iii) the aggregate Certificate
Principal Balance of the Class M-2A Certificates and the Class M-2B Certificates
(after taking into account the payment of the Class M-2 Principal Distribution
Amount on such Distribution Date) and (iv) the Certificate Principal Balance of
the Class M-3 Certificates immediately prior to such Distribution Date over (y)
the lesser of (A) the product of (i) 98.60% and (ii) the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period (after giving effect to scheduled payments of principal due during the
related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period) and (B)
the aggregate Stated Principal Balance of the Mortgage Loans as of the last day
of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced,
and unscheduled collections of principal received during the related Prepayment
Period) minus the related Overcollateralization Floor.
"Class P Certificate": Any one of the Class P Certificates executed by the
Trustee, and authenticated and delivered by the Certificate Registrar,
substantially in the form annexed hereto as Exhibit A-8, representing the right
to distributions as set forth herein and therein and evidencing a regular
interest in REMIC 2.
9
"Class R Certificate": The Class R Certificate executed by the Trustee, and
authenticated and delivered by the Certificate Registrar, substantially in the
form annexed hereto as Exhibit A-9 and evidencing the ownership of the Class R-1
Interest and the Class R-2 Interest.
"Class R-1 Interest": The uncertificated Residual Interest in REMIC 1.
"Class R-2 Interest": The uncertificated Residual Interest in REMIC 2.
"Class R-3 Interest": The uncertificated Residual Interest in REMIC 3.
"Class R-4 Interest": The uncertificated Residual Interest in REMIC 4.
"Class R-X Certificate": The Class R-X Certificate executed by the Trustee,
and authenticated and delivered by the Certificate Registrar, substantially in
the form annexed hereto as Exhibit A-10 and evidencing the ownership of the
Class R-3 Interest and the Class R-4 Interest.
"Close of Business": As used herein, with respect to any Business Day, 5:00
p.m. (New York time).
"Closing Date": December 30, 2002.
"Code": The Internal Revenue Code of 1986.
"Collection Account": The account or accounts created and maintained by the
Servicer pursuant to Section 3.10(a), which shall be entitled "Deutsche Bank
National Trust Company, as Trustee, in trust for registered Holders of Fremont
Home Loan Trust 2002-2, Asset-Backed Certificates, Series 2002-2," which must be
an Eligible Account.
"Compensating Interest": As defined in Section 3.24 hereof.
"Corporate Trust Office": The principal corporate trust office of the
Trustee at which at any particular time its corporate trust business in
connection with this Agreement shall be administered, which office at the date
of the execution of this instrument is located at 0000 Xxxx Xx. Xxxxxx Xxxxx,
Xxxxx Xxx, XX 00000-0000, or at such other address as the Trustee may designate
from time to time by notice to the Certificateholders, the Depositor, the
Servicer, the Originator and the Seller.
"Corresponding Certificate": With respect to (i) REMIC 1 Regular Interest
LTA1, (ii) REMIC 1 Regular Interest LTA2, (iii) REMIC 1 Regular Interest LTM1,
(iv) REMIC 1 Regular Interest LTM2A, (v) REMIC 1 Regular Interest LTM2B, (vi)
REMIC 1 Regular Interest LTM3 and (vii) REMIC 1 Regular Interest LTP, (i) the
Class A-1 Certificates, (ii) the Class A-2 Certificates, (iii) the Class M-1
Certificates, (iv) Class M-2A Certificates, (v) Class M-2B Certificates, (vi)
the Class M-3 Certificates and (vii) Class P Certificates, respectively.
"Credit Enhancement Percentage": For any Distribution Date, the percentage
equivalent of a fraction, the numerator of which is the sum of the aggregate
Certificate Principal Balances of the Mezzanine Certificates and the Class C
Certificates, and the denominator of which is the aggregate
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Stated Principal Balance of the Mortgage Loans, calculated prior to taking into
account payments of principal on the Mortgage Loans and distribution of the
Group I Principal Distribution Amount and the Group II Principal Distribution
Amount to the Holders of the Certificates then entitled to distributions of
principal on such Distribution Date.
"Cumulative Loss Percentage": With respect to any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the aggregate
amount of Realized Losses incurred from the Cut-off Date to the last day of the
preceding calendar month and the denominator of which is the aggregate Stated
Principal Balance of the Mortgage Loans as of the Cut-off Date.
"Custodian": Deutsche Bank National Trust Company, as custodian of the
Mortgage Files, or any successor thereto.
"Cut-off Date": With respect to each Mortgage Loan, the later of (i) the
date of origination of such Mortgage Loan or (ii) December 1, 2002.
"Cut-off Date Principal Balance": With respect to any Mortgage Loan, the
unpaid principal balance thereof as of the Cut-off Date of such Mortgage Loan
(or as of the applicable date of substitution with respect to a Qualified
Substitute Mortgage Loan), after giving effect to scheduled payments due on or
before the Cut-off Date, whether or not received.
"Debt Service Reduction": With respect to any Mortgage Loan, a reduction in
the scheduled Monthly Payment for such Mortgage Loan by a court of competent
jurisdiction in a proceeding under the Bankruptcy Code, except such a reduction
resulting from a Deficient Valuation.
"Deficient Valuation": With respect to any Mortgage Loan, a valuation of
the related Mortgaged Property by a court of competent jurisdiction in an amount
less than the then outstanding principal balance of the Mortgage Loan, which
valuation results from a proceeding initiated under the Bankruptcy Code.
"Definitive Certificates": As defined in Section 5.02(c) hereof.
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be replaced by one
or more Qualified Substitute Mortgage Loans.
"Delinquency Percentage": For any Distribution Date, the percentage
obtained by dividing (x) the aggregate Principal Balance of Mortgage Loans that
are Delinquent 60 days or more, that are in foreclosure, that have been
converted to REO Properties or that have been discharged by reason of bankruptcy
by (y) the aggregate Principal Balance of the Mortgage Loans, in each case, as
of the last day of the previous calendar month.
"Delinquent": With respect to any Mortgage Loan and related Monthly
Payment, the Monthly Payment due on a Due Date which is not made by the Close of
Business on the next scheduled Due Date for such Mortgage Loan. For example, a
Mortgage Loan is 60 or more days Delinquent if the Monthly Payment due on a Due
Date is not made by the Close of Business on the second scheduled Due Date after
such Due Date.
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"Depositor": Financial Asset Securities Corp., a Delaware corporation, or
any successor in interest.
"Depository": The initial Depository shall be The Depository Trust Company,
whose nominee is Cede & Co., or any other organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended. The Depository shall initially be the registered Holder of the
Book-Entry Certificates. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(3) of the Uniform Commercial Code of
the State of New York. Upon request, the Depository may also be Clearstream
Banking Luxembourg and the Euroclear System.
"Depository Participant": A broker, dealer, bank or other financial
institution or other person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
"Determination Date": With respect to any Distribution Date, the 15th day
of the calendar month in which such Distribution Date occurs or, if such 15th
day is not a Business Day, the Business Day immediately preceding such 15th day.
"Directly Operate": With respect to any REO Property, the furnishing or
rendering of services to the tenants thereof, the management or operation of
such REO Property, the holding of such REO Property primarily for sale to
customers, the performance of any construction work thereon or any use of such
REO Property in a trade or business conducted by the REMIC other than through an
Independent Contractor; provided, however, that the Trustee (or the Servicer on
behalf of the Trustee) shall not be considered to Directly Operate an REO
Property solely because the Trustee (or the Servicer on behalf of the Trustee)
establishes rental terms, chooses tenants, enters into or renews leases, deals
with taxes and insurance, or makes decisions as to repairs or capital
expenditures with respect to such REO Property.
"Disqualified Organization": A "disqualified organization" under Section
860E of the Code, which as of the Closing Date is any of: (i) the United States,
any state or political subdivision thereof, any foreign government, any
international organization, or any agency or instrumentality of any of the
foregoing, (ii) any organization (other than a cooperative described in Section
521 of the Code) which is exempt from the tax imposed by Chapter 1 of the Code
unless such organization is subject to the tax imposed by Section 511 of the
Code, (iii) any organization described in Section 1381(a)(2)(C) of the Code or
(iv) an "electing large partnership" within the meaning of Section 775 of the
Code. A corporation will not be treated as an instrumentality of the United
States or of any state or political subdivision thereof, if all of its
activities are subject to tax and, a majority of its board of directors is not
selected by a governmental unit. The term "United States", "state" and
"international organizations" shall have the meanings set forth in Section 7701
of the Code.
"Distribution Account": The trust account or accounts created and
maintained by the Trustee pursuant to Section 3.10(b) which shall be entitled
"Distribution Account, Deutsche Bank National Trust Company, as Trustee, in
trust for the registered Certificateholders of Fremont Home Loan Trust 2002-2,
Asset-Backed Certificates, Series 2002-2" and which must be an Eligible Account.
12
"Distribution Date": The 25th day of any calendar month, or if such 25th
day is not a Business Day, the Business Day immediately following such 25th day,
commencing in January 2003.
"Due Date": With respect to each Mortgage Loan and any Distribution Date,
the first day of the calendar month in which such Distribution Date occurs on
which the Monthly Payment for such Mortgage Loan was due (or, in the case of any
Mortgage Loan under the terms of which the Monthly Payment for such Mortgage
Loan was due on a day other than the first day of the calendar month in which
such Distribution Date occurs, the day during the related Due Period on which
such Monthly Payment was due), exclusive of any days of grace.
"Due Period": With respect to any Distribution Date, the period commencing
on the second day of the month preceding the month in which such Distribution
Date occurs and ending on the first day of the month in which such Distribution
Date occurs.
"Eligible Account": Any of (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the short-term unsecured debt obligations of such holding company) are
rated A-1 by S&P, F-1 by Fitch and P-1 by Xxxxx'x (or comparable ratings if S&P,
Fitch and Xxxxx'x are not the Rating Agencies) at the time any amounts are held
on deposit therein, (ii) an account or accounts the deposits in which are fully
insured by the FDIC (to the limits established by such corporation), the
uninsured deposits in which account are otherwise secured such that, as
evidenced by an Opinion of Counsel delivered to the Trustee and to each Rating
Agency, the Certificateholders will have a claim with respect to the funds in
such account or a perfected first priority security interest against such
collateral (which shall be limited to Permitted Investments) securing such funds
that is superior to claims of any other depositors or creditors of the
depository institution with which such account is maintained, (iii) a trust
account or accounts maintained with the trust department of a federal or state
chartered depository institution, national banking association or trust company
acting in its fiduciary capacity or (iv) an account otherwise acceptable to each
Rating Agency without reduction or withdrawal of their then current ratings of
the Certificates as evidenced by a letter from each Rating Agency to the
Trustee. Eligible Accounts may bear interest.
"ERISA": The Employee Retirement Income Security Act of 1974, as amended.
"Escrow Payments": The amounts constituting ground rents, taxes,
assessments, water rates, fire and hazard insurance premiums and other payments
required to be escrowed by the Mortgagor with the mortgagee pursuant to any
Mortgage Loan.
"Excess Overcollateralized Amount": With respect to the Class A
Certificates and the Mezzanine Certificates and any Distribution Date, the
excess, if any, of (i) the Overcollateralized Amount for such Distribution Date,
assuming that 100% of the Principal Remittance Amount is applied as a principal
payment on such Distribution Date over (ii) the Overcollateralization Target
Amount for such Distribution Date.
"Extra Principal Distribution Amount": With respect to any Distribution
Date, the lesser of (x) the Monthly Interest Distributable Amount payable on the
Class C Certificates on such
13
Distribution Date as reduced by Realized Losses allocated thereto with respect
to such Distribution Date pursuant to Section 4.08 and (y) the
Overcollateralization Deficiency Amount for such Distribution Date.
"Xxxxxx Mae": Federal National Mortgage Association or any successor
thereto.
"FDIC": Federal Deposit Insurance Corporation or any successor thereto.
"Final Recovery Determination": With respect to any defaulted Mortgage Loan
or any REO Property (other than a Mortgage Loan or REO Property purchased by the
Originator or the Servicer pursuant to or as contemplated by Section 2.03 or
10.01), a determination made by the Servicer that all Insurance Proceeds,
Liquidation Proceeds and other payments or recoveries which the Servicer, in its
reasonable good faith judgment, expects to be finally recoverable in respect
thereof have been so recovered. The Servicer shall maintain records, prepared by
a Servicing Officer, of each Final Recovery Determination made thereby.
"Fitch": Fitch Ratings, or its successor in interest.
"Fixed-Rate Mortgage Loan": A first lien Mortgage Loan which provides for a
fixed Mortgage Rate payable with respect thereto. The Fixed-Rate Mortgage Loans
are identified as such on the Mortgage Loan Schedule.
"Formula Rate": For any Distribution Date and the Class A-1 Certificates,
the Class A-2 Certificates, the Class M-1 Certificates, the Class M-2A
Certificates and the Class M-3 Certificates, the lesser of (i) LIBOR plus the
related Certificate Margin and (ii) the Maximum Cap Rate.
"Xxxxxxx Mac": The Federal Home Loan Mortgage Corporation, or any successor
thereto.
"Gross Margin": With respect to each Adjustable-Rate Mortgage Loan, the
fixed percentage set forth in the related Mortgage Note that is added to the
Index on each Adjustment Date in accordance with the terms of the related
Mortgage Note used to determine the Mortgage Rate for such Mortgage Loan.
"Group I Allocation Percentage": With respect to any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is (i) the Group I
Principal Remittance Amount for such Distribution Date, and the denominator of
which is (ii) the Principal Remittance Amount for such Distribution Date.
"Group I Basic Principal Distribution Amount": With respect to any
Distribution Date, the excess of (i) the Group I Principal Remittance Amount for
such Distribution Date over (ii)(a) the Overcollateralization Release Amount, if
any, for such Distribution Date multiplied by (b) the Group I Allocation
Percentage.
"Group I Interest Remittance Amount": With respect to any Distribution
Date, that portion of the Available Funds for such Distribution Date
attributable to interest received or advanced with respect to the Group I
Mortgage Loans.
14
"Group I Mortgage Loan": A Mortgage Loan assigned to Loan Group I with a
principal balance that conforms to Xxxxxx Xxx and Xxxxxxx Mac guidelines.
"Group I Principal Distribution Amount": With respect to any Distribution
Date, the sum of (i) the Group I Basic Principal Distribution Amount for such
Distribution Date and (ii)(a) the Extra Principal Distribution Amount for such
Distribution Date multiplied by (b) the Group I Allocation Percentage.
"Group I Principal Remittance Amount": With respect to any Distribution
Date, the sum of (i) each scheduled payment of principal collected or advanced
on the Group I Mortgage Loans by the Servicer that were due during the related
Due Period, (ii) the principal portion of all partial and full principal
prepayments of the Group I Mortgage Loans applied by the Servicer during the
related Prepayment Period, (iii) the principal portion of all related Net
Liquidation Proceeds and Insurance Proceeds received during such Prepayment
Period with respect to the Group I Mortgage Loans, (iv) that portion of the
Purchase Price, representing principal of any repurchased Group I Mortgage Loan,
deposited to the Collection Account during such Prepayment Period, (v) the
principal portion of any related Substitution Adjustments deposited in the
Collection Account during such Prepayment Period with respect to the Group I
Mortgage Loans and (vi) on the Distribution Date on which the Trust Fund is to
be terminated pursuant to Section 10.01, that portion of the Termination Price,
in respect of principal on the Group I Mortgage Loans.
"Group II Allocation Percentage": With respect to any Distribution Date,
the percentage equivalent of a fraction, the numerator of which is (i) the Group
II Principal Remittance Amount for such Distribution Date, and the denominator
of which is (ii) the Principal Remittance Amount for such Distribution Date.
"Group II Basic Principal Distribution Amount": With respect to any
Distribution Date, the excess of (i) the Group II Principal Remittance Amount
for such Distribution Date over (ii)(a) the Overcollateralization Release
Amount, if any, for such Distribution Date multiplied by (b) the Group II
Allocation Percentage.
"Group II Interest Remittance Amount": With respect to any Distribution
Date, that portion of the Available Funds for such Distribution Date
attributable to interest received or advanced with respect to the Group II
Mortgage Loans.
"Group II Mortgage Loan": A Mortgage Loan assigned to Loan Group II with a
principal balance that may or may not conform to Xxxxxx Mae and Xxxxxxx Mac
guidelines.
"Group II Principal Distribution Amount": With respect to any Distribution
Date, the sum of (i) the Group II Basic Principal Distribution Amount for such
Distribution Date and (ii)(a) the Extra Principal Distribution Amount for such
Distribution Date multiplied by (b) the Group II Allocation Percentage.
"Group II Principal Remittance Amount": With respect to any Distribution
Date, the sum of (i) each scheduled payment of principal collected or advanced
on the Group II Mortgage Loans by the Servicer that were due during the related
Due Period, (ii) the principal portion of all partial and
15
full principal prepayments of the Group II Mortgage Loans applied by the
Servicer during the related Prepayment Period, (iii) the principal portion of
all related Net Liquidation Proceeds and Insurance Proceeds received during such
Prepayment Period with respect to the Group II Mortgage Loans, (iv) that portion
of the Purchase Price, representing principal of any repurchased Group II
Mortgage Loan, deposited to the Collection Account during such Prepayment
Period, (v) the principal portion of any related Substitution Adjustments
deposited in the Collection Account during such Prepayment Period with respect
to the Group II Mortgage Loans and (vi) on the Distribution Date on which the
Trust Fund is to be terminated pursuant to Section 10.01, that portion of the
Termination Price, in respect of principal on the Group II Mortgage Loans.
"Independent": When used with respect to any specified Person, any such
Person who (a) is in fact independent of the Depositor, the Servicer and their
respective Affiliates, (b) does not have any direct financial interest in or any
material indirect financial interest in the Depositor or the Servicer or any
Affiliate thereof, and (c) is not connected with the Depositor or the Servicer
or any Affiliate thereof as an officer, employee, promoter, underwriter,
trustee, partner, director or Person performing similar functions; provided,
however, that a Person shall not fail to be Independent of the Depositor or the
Servicer or any Affiliate thereof merely because such Person is the beneficial
owner of 1% or less of any class of securities issued by the Depositor or the
Servicer or any Affiliate thereof, as the case may be.
"Independent Contractor": Either (i) any Person (other than the Servicer)
that would be an "independent contractor" with respect to any of the REMICs
created hereunder within the meaning of Section 856(d)(3) of the Code if such
REMIC were a real estate investment trust (except that the ownership tests set
forth in that section shall be considered to be met by any Person that owns,
directly or indirectly, 35% or more of any Class of Certificates), so long as
each such REMIC does not receive or derive any income from such Person and
provided that the relationship between such Person and such REMIC is at arm's
length, all within the meaning of Treasury Regulation Section 1.856-4(b)(5), or
(ii) any other Person (including the Servicer) if the Trustee has received an
Opinion of Counsel to the effect that the taking of any action in respect of any
REO Property by such Person, subject to any conditions therein specified, that
is otherwise herein contemplated to be taken by an Independent Contractor will
not cause such REO Property to cease to qualify as "foreclosure property" within
the meaning of Section 860G(a)(8) of the Code (determined without regard to the
exception applicable for purposes of Section 860D(a) of the Code), or cause any
income realized in respect of such REO Property to fail to qualify as Rents from
Real Property.
"Index": With respect to each Adjustable-Rate Mortgage Loan and with
respect to each related Adjustment Date, the index as specified in the related
Mortgage Note.
"Initial Certificate Principal Balance": With respect to any Regular
Certificate, the amount designated "Initial Certificate Principal Balance" on
the face thereof.
"Insurance Proceeds": Proceeds of any title policy, hazard policy or other
insurance policy covering a Mortgage Loan (including the PMI Policy), to the
extent such proceeds are received by the Servicer and are not to be 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
16
mortgage loans held for its own account, subject to the terms and conditions of
the related Mortgage Note and Mortgage.
"Interest Determination Date": With respect to the Class A Certificates and
the Mezzanine Certificates and each Accrual Period, the second LIBOR Business
Day preceding the commencement of such Accrual Period.
"Late Collections": With respect to any Mortgage Loan, all amounts received
subsequent to the Determination Date immediately following any related Due
Period, whether as late payments of Monthly Payments or as Insurance Proceeds,
Liquidation Proceeds or otherwise, which represent late payments or collections
of principal and/or interest due (without regard to any acceleration of payments
under the related Mortgage and Mortgage Note) but delinquent on a contractual
basis for such Due Period and not previously recovered.
"LIBOR": With respect to each Accrual Period, the rate determined by the
Trustee on the related Interest Determination Date on the basis of the London
interbank offered rate for one-month United States dollar deposits, as such rate
appears on the Telerate Page 3750, as of 11:00 a.m. (London time) on such
Interest Determination Date. If such rate does not appear on Telerate Page 3750,
the rate for such Interest Determination Date will be determined on the basis of
the offered rates of the Reference Banks for one-month United States dollar
deposits, as of 11:00 a.m. (London time) on such Interest Determination Date.
The Trustee will request the principal London office of each of the Reference
Banks to provide a quotation of its rate. On such Interest Determination Date,
LIBOR for the related Accrual Period will be established by the Trustee as
follows:
(i) If on such Interest Determination Date two or more Reference Banks
provide such offered quotations, LIBOR for the related Accrual Period shall
be the arithmetic mean of such offered quotations (rounded upwards if
necessary to the nearest whole multiple of 1/16 of 1%); and
(ii) If on such Interest Determination Date fewer than two Reference Banks
provide such offered quotations, LIBOR for the related Accrual Period shall
be the higher of (i) LIBOR as determined on the previous Interest
Determination Date and (ii) the Reserve Interest Rate.
"LIBOR Business Day": Any day on which banks in London, England and The
City of New York are open and conducting transactions in foreign currency and
exchange.
"Liquidated Mortgage Loan": As to any Distribution Date, any Mortgage Loan
in respect of which the Servicer has determined, in accordance with the
servicing procedures specified herein, as of the end of the related Prepayment
Period, that all Liquidation Proceeds which it expects to recover with respect
to the liquidation of the Mortgage Loan or disposition of the related REO
Property have been recovered.
"Liquidation Event": With respect to any Mortgage Loan, any of the
following events: (i) such Mortgage Loan is paid in full, (ii) a Final Recovery
Determination is made as to such Mortgage Loan or (iii) such Mortgage Loan is
removed from the Trust Fund by reason of its being purchased, sold or replaced
pursuant to or as contemplated by Section 2.03 or Section 10.01. With respect to
17
any REO Property, either of the following events: (i) a Final Recovery
Determination is made as to such REO Property or (ii) such REO Property is
removed from the Trust Fund by reason of its being sold or purchased pursuant to
Section 3.23 or Section 10.01.
"Liquidation Proceeds": The amount (other than amounts received in respect
of the rental of any REO Property prior to REO Disposition) received by the
Servicer in connection with (i) the taking of all or a part of a Mortgaged
Property by exercise of the power of eminent domain or condemnation, (ii) the
liquidation of a defaulted Mortgage Loan by means of a trustee's sale,
foreclosure sale or otherwise or (iii) the repurchase, substitution or sale of a
Mortgage Loan or an REO Property pursuant to or as contemplated by Section 2.03,
Section 3.23 or Section 10.01.
"Loan-to-Value Ratio": As of any date and as to any Mortgage Loan, the
fraction, expressed as a percentage, the numerator of which is the Principal
Balance of the Mortgage Loan and the denominator of which is the Value of the
related Mortgaged Property.
"Loan Group": Either Loan Group I or Loan Group II, as the context
requires.
"Loan Group I": The group of Mortgage Loans identified in the Mortgage Loan
Schedule as having been assigned to Loan Group I.
"Loan Group II": The group of Mortgage Loans identified in the Mortgage
Loan Schedule as having been assigned to Loan Group II.
"Losses": As defined in Section 9.03.
"Lost Note Affidavit": With respect to any Mortgage Loan as to which the
original Mortgage Note has been permanently lost, misplaced or destroyed and has
not been replaced, an affidavit from the Originator certifying that the original
Mortgage Note has been lost, misplaced or destroyed (together with a copy of the
related Mortgage Note) and indemnifying the Trust against any loss, cost or
liability resulting from the failure to deliver the original Mortgage Note in
the form of Exhibit H hereto.
"Majority Certificateholders": The Holders of Certificates evidencing at
least 51% of the Voting Rights.
"Marker Rate": With respect to the Class C Certificates and any
Distribution Date, a per annum rate equal to two (2) times the weighted average
of the Uncertificated REMIC 1 Pass- Through Rates for REMIC 1 Regular Interest
LTA1, REMIC 1 Regular Interest LTA2, REMIC 1 Regular Interest LTM1, REMIC 1
Regular Interest LTM2A, REMIC 1 Regular Interest LTM2B, REMIC 1 Regular Interest
LTM3 and REMIC 1 Regular Interest LTZZ, with the rate on REMIC 1 Regular
Interest LTA1 subject to a cap equal to the lesser of (i) LIBOR plus the
Certificate Margin of the Class A-1 Certificates and (ii) the Maximum Cap Rate
for the purpose of this calculation; with the rate on REMIC 1 Regular Interest
LTA2 subject to a cap equal to the lesser of (i) LIBOR plus the Certificate
Margin of the Class A-2 Certificates and (ii) the Maximum Cap Rate for the
purpose of this calculation; with the rate on REMIC 1 Regular Interest LTM1
subject to a cap equal to the lesser of (i) LIBOR plus the Certificate Margin of
the Class M-1 Certificates and (ii) the Maximum
18
Cap Rate for the purpose of this calculation; with the rate on REMIC 1 Regular
Interest LTM2A subject to a cap equal to the lesser of (i) LIBOR plus the
Certificate Margin of the Class M-2A Certificates and (ii) the Maximum Cap Rate
for the purpose of this calculation; with the rate on REMIC 1 Regular Interest
LTM2B subject to a cap equal to the Pass-Through Rate of the Class M- 2B
Certificates for the purpose of this calculation; with the rate on REMIC 1
Regular Interest LTM3 subject to a cap equal to the lesser of (i) LIBOR plus the
Certificate Margin of the Class M-3 Certificates and (ii) the Maximum Cap Rate
for the purpose of this calculation and with the rate on REMIC 1 Regular
Interest LTZZ subject to a cap of zero for the purpose of this calculation;
provided, however, that for this purpose, calculations of the Uncertificated
REMIC 1 Pass-Through Rate and the related caps with respect to REMIC 1 Regular
Interest LTA1, REMIC 1 Regular Interest LTA2, REMIC 1 Regular Interest LTM1,
REMIC 1 Regular Interest LTM2A and REMIC 1 Regular Interest LTM3 shall be
multiplied by a fraction, the numerator of which is the actual number of days in
the Accrual Period and the denominator of which is 30.
"Maximum Cap Rate": For any Distribution Date and the Class A-1
Certificates, the Class A-2 Certificates, the Class M-1 Certificates, the Class
M-2A Certificates and the Class M-3 Certificates, a per annum rate equal to the
product of (x) the weighted average of the Adjusted Net Maximum Mortgage Rates
of the Mortgage Loans, weighted on the basis of the outstanding Principal
Balances of the Mortgage Loans as of the first day of the month preceding the
month of such Distribution Date and (y) a fraction, the numerator of which is 30
and the denominator of which is the actual number of days elapsed in the related
Accrual Period.
"Maximum Uncertificated Accrued Interest Deferral Amount": With respect to
any Distribution Date, the excess of (a) accrued interest at the Uncertificated
REMIC 1 Pass-Through Rate applicable to REMIC 1 Regular Interest LTZZ for such
Distribution Date on a balance equal to the Uncertificated Principal Balance of
REMIC 1 Regular Interest LTZZ minus the REMIC 1 Overcollateralization Amount, in
each case for such Distribution Date, over (b) Uncertificated Accrued Interest
on REMIC 1 Regular Interest LTA1 with the rate on REMIC 1 Regular Interest LTA1
subject to a cap equal to the lesser of (i) LIBOR plus the Certificate Margin of
the Class A-1 Certificates and (ii) the related Maximum Cap Rate for the purpose
of this calculation; Uncertificated Accrued Interest on REMIC 1 Regular Interest
LTA2 with the rate on REMIC 1 Regular Interest LTA2 subject to a cap equal to
the lesser of (i) LIBOR plus the Certificate Margin of the Class A-2
Certificates and (ii) the related Maximum Cap Rate for the purpose of this
calculation; Uncertificated Accrued Interest on REMIC 1 Regular Interest LTM1
with the rate on REMIC 1 Regular Interest LTM1 subject to a cap equal to the
lesser of (i) LIBOR plus the Certificate Margin of the Class M-1 Certificates
and (ii) the related Maximum Cap Rate for the purpose of this calculation;
Uncertificated Accrued Interest on REMIC 1 Regular Interest LTM2A with the rate
on REMIC 1 Regular Interest LTM2A subject to a cap equal to the lesser of (i)
LIBOR plus the Certificate Margin of the Class M- 2A Certificates and (ii) the
related Maximum Cap Rate for the purpose of this calculation; Uncertificated
Accrued Interest on REMIC 1 Regular Interest LTM2B with the rate on REMIC 1
Regular Interest LTM2B subject to a cap equal to the Pass-Through Rate of the
Class M-2B Certificates for the purpose of this calculation for such
Distribution Date; and Uncertificated Accrued Interest on REMIC 1 Regular
Interest LTM3 with the rate on REMIC 1 Regular Interest LTM3 subject to a cap
equal to the lesser of (i) LIBOR plus the Certificate Margin of the Class M-3
Certificates and (ii) the related Maximum Cap Rate for the purpose of this
calculation for such Distribution Date; provided, however, that for this
purpose, calculations of the Uncertificated
19
REMIC 1 Pass-Through Rate and the related caps with respect to REMIC 1 Regular
Interest LTA1, REMIC 1 Regular Interest LTA2, REMIC 1 Regular Interest LTM1,
REMIC 1 Regular Interest LTM2A and REMIC 1 Regular Interest LTM3 shall be
multiplied by a fraction, the numerator of which is the actual number of days in
the Accrual Period and the denominator of which is 30.
"Maximum Mortgage Rate": With respect to each Adjustable-Rate Mortgage
Loan, the percentage set forth in the related Mortgage Note as the maximum
Mortgage Rate thereunder.
"Mezzanine Certificate": Any Class M-1 Certificate, Class M-2A Certificate,
Class M-2B Certificate or Class M-3 Certificate.
"Minimum Mortgage Rate": With respect to each Adjustable-Rate Mortgage
Loan, the percentage set forth in the related Mortgage Note as the minimum
Mortgage Rate thereunder.
"Monthly Interest Distributable Amount": With respect to the Class A
Certificates, Mezzanine Certificates and the Class C Certificates and any
Distribution Date, the amount of interest accrued during the related Accrual
Period at the related Pass-Through Rate on the Certificate Principal Balance (or
Notional Amount in the case of the Class C Certificates) of such Class
immediately prior to such Distribution Date, in each case, reduced by any Net
Prepayment Interest Shortfalls, Relief Act Interest Shortfalls or other
shortfalls allocated to such Certificate as provided in Section 1.03.
"Monthly Payment": With respect to any Mortgage Loan, the scheduled monthly
payment of principal and interest on such Mortgage Loan which is payable by the
related Mortgagor from time to time under the related Mortgage Note, determined:
(a) after giving effect to (i) any Deficient Valuation and/or Debt Service
Reduction with respect to such Mortgage Loan and (ii) any reduction in the
amount of interest collectible from the related Mortgagor pursuant to the Relief
Act; (b) without giving effect to any extension granted or agreed to by the
Servicer pursuant to Section 3.07; and (c) on the assumption that all other
amounts, if any, due under such Mortgage Loan are paid when due.
"Moody's": Xxxxx'x Investors Service, Inc., or its successor in interest.
"Mortgage": The mortgage, deed of trust or other instrument creating a
first lien on, or first priority security interest in, a Mortgaged Property
securing a Mortgage Note.
"Mortgage File": The mortgage documents listed in Section 2.01 pertaining
to a particular Mortgage Loan and any additional documents required to be added
to the Mortgage File pursuant to this Agreement.
"Mortgage Loan": Each mortgage loan transferred and assigned to the Trustee
pursuant to Section 2.01 or Section 2.03(d) as from time to time held as a part
of the Trust Fund, the Mortgage Loans so held being identified in the Mortgage
Loan Schedule.
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"Mortgage Loan Purchase Agreement": The agreement among the Originator, the
Seller and the Depositor, regarding the transfer of the Mortgage Loans by the
Seller to or at the direction of the Depositor, substantially in the form
attached hereto as Exhibit C.
"Mortgage Loan Schedule": As of any date, the list of Mortgage Loans
included in REMIC 1 on such date, separately identifying the Group I Mortgage
Loans and the Group II Mortgage Loans, attached hereto as Exhibit D. The
Mortgage Loan Schedule shall be prepared by the Seller and shall set forth the
following information with respect to each Mortgage Loan, as applicable:
(1) the Mortgage Loan identifying number;
(2) the Mortgagor's name;
(3) the street address of the Mortgaged Property including the state and
zip code;
(4) a code indicating whether the Mortgaged Property was represented by the
borrower, at the time of origination, as being owner-occupied;
(5) the type of Residential Dwelling constituting the Mortgaged Property;
(6) the original months to maturity;
(7) the stated remaining months to maturity from the Cut-off Date based on
the original amortization schedule;
(8) the Loan-to-Value Ratio at origination;
(9) the Mortgage Rate in effect immediately following the Cut-off Date;
(10) the date on which the first Monthly Payment was due on the Mortgage
Loan;
(11) the stated maturity date;
(12) the amount of the Monthly Payment at origination;
(13) the amount of the Monthly Payment due on the first Due Date after the
Cut- off Date;
(14) the last Due Date on which a Monthly Payment was actually applied to
the unpaid Stated Principal Balance;
(15) the original principal amount of the Mortgage Loan;
(16) the Stated Principal Balance of the Mortgage Loan as of the Close of
Business on the Cut-off Date;
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(17) a code indicating the purpose of the Mortgage Loan (i.e., purchase
financing, rate/term refinancing, cash-out refinancing);
(18) the Mortgage Rate at origination;
(19) a code indicating the documentation program (i.e., full documentation,
limited income verification, no income verification, alternative income
verification);
(20) the risk grade;
(21) the Value of the Mortgaged Property;
(22) the sale price of the Mortgaged Property, if applicable;
(23) the actual unpaid principal balance of the Mortgage Loan as of the
Cut-off Date;
(24) the type and term of the related Prepayment Charge;
(25) with respect to any Adjustable-Rate Mortgage Loan, the rounding code,
the minimum Mortgage Rate, the maximum Mortgage Rate, the Gross Margin, the
next Adjustment Date and the Periodic Rate Cap;
(26) the program code; and
(27) whether such Mortgage Loan is covered under the PMI Policy.
The Mortgage Loan Schedule shall set forth the following information, with
respect to the Mortgage Loans in the aggregate and for each Loan Group as of the
Cut-off Date: (1) the number of Mortgage Loans (separately identifying the
number of Fixed-Rate Mortgage Loans and the number of Adjustable-Rate Mortgage
Loans); (2) the current Principal Balance of the Mortgage Loans; (3) the
weighted average Mortgage Rate of the Mortgage Loans and (4) the weighted
average remaining term to maturity of the Mortgage Loans. The Mortgage Loan
Schedule shall be amended from time to time by the Servicer in accordance with
the provisions of this Agreement. With respect to any Qualified Substitute
Mortgage Loan, Cut-off Date shall refer to the related Cut-off Date for such
Mortgage Loan, determined in accordance with the definition of Cut-off Date
herein.
"Mortgage Note": The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgage Pool": The pool of Mortgage Loans, identified on Exhibit D from
time to time, and any REO Properties acquired in respect thereof.
"Mortgage Rate": With respect to each Fixed-Rate Mortgage Loan, the rate
set forth in the related Mortgage Note. With respect to each Adjustable-Rate
Mortgage Loan, the annual rate at which interest accrues on such Mortgage Loan
from time to time in accordance with the provisions of the related Mortgage
Note, which rate (A) as of any date of determination until the first
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Adjustment Date following the Cut-off Date shall be the rate set forth in the
Mortgage Loan Schedule as the Mortgage Rate in effect immediately following the
Cut-off Date and (B) as of any date of determination thereafter shall be the
rate as adjusted on the most recent Adjustment Date, to equal the sum, rounded
to the next highest or nearest 0.125% (as provided in the Mortgage Note), of the
Index, determined as set forth in the related Mortgage Note, plus the related
Gross Margin subject to the limitations set forth in the related Mortgage Note.
With respect to each Mortgage Loan that becomes an REO Property, as of any date
of determination, the annual rate determined in accordance with the immediately
preceding sentence as of the date such Mortgage Loan became an REO Property.
"Mortgaged Property": The underlying property securing a Mortgage Loan,
including any REO Property, consisting of a fee simple estate in a parcel of
real property improved by a Residential Dwelling.
"Mortgagor": The obligor on a Mortgage Note.
"Net Liquidation Proceeds": With respect to any Liquidated Mortgage Loan or
any other disposition of related Mortgaged Property (including REO Property) the
related Liquidation Proceeds and Insurance Proceeds net of Advances, Servicing
Advances, Servicing Fees and any other accrued and unpaid servicing fees
received and retained in connection with the liquidation of such Mortgage Loan
or Mortgaged Property.
"Net Monthly Excess Cashflow": With respect to each Distribution Date, the
sum of (a) any Overcollateralization Release Amount for such Distribution Date
and (b) the excess of (x) Available Funds for such Distribution Date over (y)
the sum for such Distribution Date of (A) the Monthly Interest Distributable
Amounts for the Class A Certificates and the Mezzanine Certificates, (B) the
Unpaid Interest Shortfall Amounts for the Class A Certificates and (C) the
Principal Remittance Amount.
"Net Mortgage Rate": With respect to any Mortgage Loan (or the related REO
Property), as of any date of determination, a per annum rate of interest equal
to the then applicable Mortgage Rate for such Mortgage Loan minus the Servicing
Fee Rate.
"Net Prepayment Interest Shortfall": With respect to any Distribution Date,
the excess, if any, of any Prepayment Interest Shortfalls for such date over the
related Compensating Interest.
"Net WAC Rate": For any Distribution Date and the Class A-1 Certificates,
the Class A-2 Certificates, the Class M-1 Certificates, the Class M-2A
Certificates and the Class M-3 Certificates, a per annum rate equal to the
product of (x) the weighted average of the Adjusted Net Mortgage Rates of the
Mortgage Loans, weighted on the basis of the outstanding Principal Balances of
the Mortgage Loans as of the first day of the month preceding the month of such
Distribution Date and (y) a fraction, the numerator of which is 30 and the
denominator of which is the actual number of days elapsed in the related Accrual
Period. For federal income tax purposes, the economic equivalent of such rate
shall be expressed as the Uncertificated REMIC 1 Pass-Through Rate of the REMIC
1 Regular Interest for which such Class of Certificates is the Corresponding
Certificate.
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"Net WAC Rate Carryover Amount": With respect to the Class A-1
Certificates, the Class A-2 Certificates, the Class M-1 Certificates, the Class
M-2A Certificates and the Class M-3 Certificates and any Distribution Date, the
sum of (A) the positive excess of (i) the amount of interest accrued on such
Class of Certificates on such Distribution Date calculated at the related
Formula Rate, over (ii) the amount of interest accrued on such Class of
Certificates at the Net WAC Rate for such Distribution Date and (B) the Net WAC
Rate Carryover Amount for the previous Distribution Date not previously paid,
together with interest thereon at a rate equal to the related Formula Rate for
such Class of Certificates for such Distribution Date and for such Accrual
Period.
"Net WAC Rate Carryover Reserve Account": The account established and
maintained pursuant to Section 3.28.
"New Lease": Any lease of REO Property entered into on behalf of the Trust,
including any lease renewed or extended on behalf of the Trust if the Trust has
the right to renegotiate the terms of such lease.
"Nonrecoverable Advance": Any Advance or Servicing Advance previously made
or proposed to be made in respect of a Mortgage Loan or REO Property that, in
the good faith business judgment of the Servicer, will not be ultimately
recoverable from Late Collections, Insurance Proceeds, Liquidation Proceeds or
condemnation proceeds on such Mortgage Loan or REO Property as provided herein.
"Notional Amount": Immediately prior to any Distribution Date with respect
to the Class C Certificates, the aggregate of the Uncertificated Principal
Balances of REMIC 1 Regular Interests.
"Officers' Certificate": A certificate signed by the Chairman of the Board,
the Vice Chairman of the Board, the President or a vice president (however
denominated), and by the Treasurer, the Secretary, or one of the assistant
treasurers or assistant secretaries of the Servicer, the Seller or the
Depositor, as applicable.
"Opinion of Counsel": A written opinion of counsel, who may, without
limitation, be a salaried counsel for the Depositor or the Servicer, acceptable
to the Trustee, except that any opinion of counsel relating to (a) the
qualification of any REMIC as a REMIC or (b) compliance with the REMIC
Provisions must be an opinion of Independent counsel.
"Optional Termination Date": The first Distribution Date on which the
Servicer may opt to terminate the Trust Fund pursuant to Section 10.01.
"Original Class Certificate Principal Balance": With respect to the Class A
Certificates, the Mezzanine Certificates, the Class C Certificates and the Class
P Certificates, the corresponding amounts set forth opposite such Class above in
the Preliminary Statement.
"Original Mortgage Loan": Any of the Mortgage Loans included in the Trust
Fund as of the Closing Date. The aggregate principal balance of the Original
Mortgage Loans as of the Closing Date is equal to $486,659,002.19.
24
"Original Notional Amount": With respect to the Class C Certificates,
$486,659,002.19.
"Originator": Fremont Investment & Loan, a California corporation, or its
successor in interest.
"Overcollateralization Deficiency Amount": With respect to any Distribution
Date, the amount, if any, by which the Overcollateralization Target Amount
exceeds the Overcollateralized Amount on such Distribution Date (after giving
effect to distributions in respect of the Group I Basic Principal Distribution
Amount and the Group II Basic Principal Distribution Amount on such Distribution
Date).
"Overcollateralization Floor": With respect to the Class A-1 Principal
Distribution Amount, $1,649,044.38. With respect to the Class A-2 Principal
Distribution Amount, $784,250.63. With respect to each of the Class M-1
Principal Distribution Amount, the Class M-2 Principal Distribution Amount and
the Class M-3 Principal Distribution Amount, $2,433,295.01.
"Overcollateralization Release Amount": With respect to any Distribution
Date, the lesser of (x) the Principal Remittance Amount for such Distribution
Date and (y) the Excess Overcollateralized Amount.
"Overcollateralization Target Amount": With respect to any Distribution
Date, (i) prior to the Stepdown Date, $3,406,613.02 (ii) on or after the
Stepdown Date provided a Trigger Event is not in effect, the greater of (A) the
lesser of (x) 1.40% of the aggregate Principal Balance of the Mortgage Loans as
of the last day of the related Due Period (after giving effect to scheduled
payments of principal due during the related Due Period, to the extent received
or advanced, and unscheduled collections of principal received during the
related Prepayment Period) and (y) $3,406,613.02 and (B) $2,433,295.01 and (iii)
on or after the Stepdown Date if a Trigger Event is in effect, the
Overcollateralization Target Amount for the immediately preceding Distribution
Date.
"Overcollateralized Amount": For any Distribution Date, the amount equal to
(i) the aggregate Principal Balance of the Mortgage Loans as of the last day of
the related Due Period (after giving effect to scheduled payments of principal
due during the related Due Period, to the extent received or advanced, and
unscheduled collections of principal received during the related Prepayment
Period) as of the related Determination Date minus (ii) the sum of the aggregate
Certificate Principal Balance of the Class A Certificates, the Mezzanine
Certificates and the Class P Certificates as of such Distribution Date after
giving effect to distributions to be made on such Distribution Date.
"Ownership Interest": As to any Certificate, any ownership or security
interest in such Certificate, including any interest in such Certificate as the
Holder thereof and any other interest therein, whether direct or indirect, legal
or beneficial, as owner or as pledgee.
"Pass-Through Rate": With respect to the Class A-1 Certificates, the Class
A-2 Certificates, the Class M-1 Certificates, the Class M-2A Certificates and
the Class M-3 Certificates and any Distribution Date, the lesser of (x) the
related Formula Rate for such Distribution Date and (y) the Net WAC Rate for
such Distribution Date. With respect to the Class M-2B Certificates on each
25
Distribution Date (A) on or prior to the Optional Termination Date, 4.500% per
annum and (B) after the Optional Termination Date, 5.000% per annum. With
respect to the Class C 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 (I) below, and the
denominator of which is the aggregate of the Uncertificated Principal Balances
of the REMIC 1 Regular Interests. For purposes of calculating the Pass-Through
Rate for the Class C Certificates, the numerator is equal to the sum of the
following components:
(A) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LTAA minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LTAA;
(B) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LTA1 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LTA1;
(C) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LTA2 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LTA2;
(D) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LTM1 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LTM1;
(E) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LTM2A minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LTM2A;
(F) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LTM2B minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LTM2B;
(G) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LTM3 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LTM3;
(H) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LTZZ minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LTZZ; and
(I) 100% of the interest on the REMIC 1 Regular Interest LTP.
"Paying Agent": Any paying agent appointed pursuant to Section 5.05.
"Percentage Interest": With respect to any Certificate (other than a
Residual Certificate), a fraction, expressed as a percentage, the numerator of
which is the Initial Certificate Principal Balance
26
represented by such Certificate and the denominator of which is the Original
Class Certificate Principal Balance of the related Class. With respect to a
Residual Certificate, the portion of the Class evidenced thereby, expressed as a
percentage, as stated on the face of such Certificate; provided, however, that
the sum of all such percentages for each such Class totals 100%.
"Periodic Rate Cap": With respect to each Adjustable-Rate Mortgage Loan and
any Adjustment Date therefor, the fixed percentage set forth in the related
Mortgage Note, which is the maximum amount by which the Mortgage Rate for such
Mortgage Loan may increase or decrease (without regard to the Maximum Mortgage
Rate or the Minimum Mortgage Rate) on such Adjustment Date from the Mortgage
Rate in effect immediately prior to such Adjustment Date.
"Permitted Investments": Any one or more of the following obligations or
securities acquired at a purchase price of not greater than par, regardless of
whether issued or managed by the Depositor, the Servicer, the Trustee or any of
their respective Affiliates or for which an Affiliate of the Trustee serves as
an advisor:
(i) direct obligations of, or obligations fully guaranteed as to timely
payment of principal and interest by, the United States or any agency or
instrumentality thereof, provided such obligations are backed by the full
faith and credit of the United States;
(ii) (A) demand and time deposits in, certificates of deposit of, bankers'
acceptances issued by or federal funds sold by any depository institution or
trust company (including the Trustee or its agent acting in their respective
commercial capacities) incorporated under the laws of the United States of
America or any state thereof and subject to supervision and examination by
federal and/or state authorities, so long as, at the time of such investment
or contractual commitment providing for such investment, such depository
institution or trust company (or, if the only Rating Agency is S&P, in the
case of the principal depository institution in a depository institution
holding company, debt obligations of the depository institution holding
company) or its ultimate parent has a short-term uninsured debt rating in one
of the two highest available ratings of Fitch and Xxxxx'x and the highest
available rating category of S&P and provided that each such investment has
an original maturity of no more than 365 days; and provided further that, if
the only Rating Agency is S&P and if the depository or trust company is a
principal subsidiary of a bank holding company and the debt obligations of
such subsidiary are not separately rated, the applicable rating shall be that
of the bank holding company; and, provided further that, if the original
maturity of such short- term obligations of a domestic branch of a foreign
depository institution or trust company shall exceed 30 days, the short-term
rating of such institution shall be A-1+ in the case of S&P if S&P is the
Rating Agency; and (B) any other demand or time deposit or deposit which is
fully insured by the FDIC;
(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 principal) rated F1+ or
higher by Fitch, P-1 by Xxxxx'x and rated 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 prices 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,
27
if the Trustee is supplying the collateral, an agent for the Trustee, 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 that are issued by
any corporation incorporated under the laws of the United States of America
or any State thereof and that are rated by a Rating Agency in its highest
long-term unsecured rating category at the time of such investment or
contractual commitment providing for such investment;
(v) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a
specified date not more than 30 days after the date of acquisition thereof)
that is rated by a Rating Agency in its highest short-term unsecured debt
rating available at the time of such investment;
(vi) units of money market funds, including those money market funds
managed or advised by the Trustee or its Affiliates, that have been rated
"AAA" by Fitch (if rated by Fitch), "Aaa" by Xxxxx'x and "AAA" by S & P; and
(vii) if previously confirmed in writing to the Trustee, any other demand,
money market or time deposit, or any other obligation, security or
investment, as may be acceptable to the Rating Agencies in writing as a
permitted investment of funds backing securities having ratings equivalent to
its highest initial rating of the Class A Certificates;
provided, that no instrument described hereunder shall evidence either the right
to receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provide a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations.
"Permitted Transferee": Any transferee of a Residual Certificate other than
a Disqualified Organization or a non-U.S. Person.
"Person": Any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Plan": Any employee benefit plan or certain other retirement plans and
arrangements, including individual retirement accounts and annuities, Xxxxx
plans and bank collective investment funds and insurance company general or
separate accounts in which such plans, accounts or arrangements are invested,
that are subject to ERISA and Section 4975 of the Code.
"PMI Insurer": Radian Guaranty Inc., a Pennsylvania corporation, or its
successors in interest.
"PMI Insurer Fee": The amount payable to the PMI Insurer on each
Distribution Date, which amount shall equal one twelfth of the product of (i)
the PMI Insurer Fee Rate (without regard to the
28
words "per annum"), multiplied by (ii) the aggregate Principal Balance of the
PMI Mortgage Loans and any related REO Properties as of the first day of the
related Due Period (after giving effect to scheduled payments of principal due
during the Due Period relating to the previous Distribution Date, to the extent
received or advanced) plus any applicable premium taxes on PMI Mortgage Loans
located in West Virginia and Kentucky.
"PMI Insurer Fee Rate": 1.11% per annum.
"PMI Mortgage Loans": The list of Mortgage Loans insured by the PMI Insurer
attached hereto as Schedule II.
"PMI Policy": The Primary Mortgage Insurance Policy No. 59131 (policy
reference number: 02-998062) with respect to the PMI Mortgage Loans, including
all endorsements thereto dated the Closing Date, issued by the PMI Insurer and
the Commitment Letter, dated December 18, 2002, between the PMI Insurer and the
Seller.
"Pool Balance": As of any date of determination, the aggregate principal
balance of the Mortgage Loans in both Loan Groups as of such date.
"Prepayment Assumption": As defined in the Prospectus Supplement.
"Prepayment Charge": With respect to any Mortgage Loan, the charges or
premiums, if any, due in connection with a full or partial prepayment of such
Mortgage Loan in accordance with the terms thereof (other than any Servicer
Prepayment Charge Payment Amount).
"Prepayment Charge Schedule": As of any date, the list of Prepayment
Charges on the Mortgage Loans included in the Trust Fund on such date, attached
hereto as Schedule I (including the Prepayment Charge Summary attached thereto).
The Prepayment Charge Schedule shall set forth the following information with
respect to each Prepayment Charge:
(i) the Mortgage Loan identifying number;
(ii) a code indicating the type of Prepayment Charge;
(iii) the state of origination of the related Mortgage Loan;
(iv) the date on which the first monthly payment was due on the related
Mortgage Loan;
(v) the term of the related Prepayment Charge; and
(vi) the principal balance of the related Mortgage Loan as of the Cut-off
Date.
"Prepayment Interest Shortfall": With respect to any Distribution Date, for
each Mortgage Loan that was the subject of a Principal Prepayment in full during
the portion of the related Prepayment Period occurring between the first day of
the related Prepayment Period and the last day of the calendar month preceding
the month in which such Distribution Date occurs, an amount equal
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to interest at the applicable Net Mortgage Rate on the amount of such Principal
Prepayment for the number of days commencing on the date on which the prepayment
is applied and ending on the last day of the calendar month preceding the month
in which such Distribution Date occurs. The obligations of the Servicer in
respect of any Prepayment Interest Shortfall are set forth in Section 3.24.
"Prepayment Period": With respect to any Distribution Date, the calendar
month preceding the calendar month in which such Distribution Date occurs.
"Principal Balance": As to any Mortgage Loan other than a Liquidated
Mortgage Loan, and any day, the related Cut-off Date Principal Balance, minus
all collections credited against the Cut-off Date Principal Balance of any such
Mortgage Loan. For purposes of this definition, a Liquidated Mortgage Loan shall
be deemed to have a Principal Balance equal to the Principal Balance of the
related Mortgage Loan as of the final recovery of related Liquidation Proceeds
and a Principal Balance of zero thereafter. As to any REO Property and any day,
the Principal Balance of the related Mortgage Loan immediately prior to such
Mortgage Loan becoming REO Property minus any REO Principal Amortization
received with respect thereto on or prior to such day.
"Principal Prepayment": Any payment of principal made by the Mortgagor on a
Mortgage Loan which is received in advance of its scheduled Due Date and which
is not accompanied by an amount of interest representing the full amount of
scheduled interest due on any Due Date in any month or months subsequent to the
month of prepayment.
"Principal Remittance Amount": With respect to any Distribution Date, the
sum of the Group I Principal Remittance Amount and the Group II Principal
Remittance Amount.
"Prospectus Supplement": That certain Prospectus Supplement dated December
26, 2002 relating to the public offering of the Class A Certificates and the
Mezzanine Certificates.
"Purchase Price": With respect to any Mortgage Loan or REO Property to be
purchased pursuant to or as contemplated by Section 2.03 or 10.01, and as
confirmed by an Officers' Certificate from the Servicer to the Trustee, an
amount equal to the sum of (i) 100% of the Principal Balance thereof as of the
date of purchase (or such other price as provided in Section 10.01), (ii) in the
case of (x) a Mortgage Loan, accrued interest on such Principal Balance at the
applicable Mortgage Rate in effect from time to time from the Due Date as to
which interest was last covered by a payment by the Mortgagor or an advance by
the Servicer, which payment or advance had as of the date of purchase been
distributed pursuant to Section 4.01, through the end of the calendar month in
which the purchase is to be effected, and (y) an REO Property, the sum of (1)
accrued interest on such Principal Balance at the applicable Mortgage Rate in
effect from time to time from the Due Date as to which interest was last covered
by a payment by the Mortgagor or an advance by the Servicer through the end of
the calendar month immediately preceding the calendar month in which such REO
Property was acquired, plus (2) REO Imputed Interest for such REO Property for
each calendar month commencing with the calendar month in which such REO
Property was acquired and ending with the calendar month in which such purchase
is to be effected, net of the total of all net rental income, Insurance
Proceeds, Liquidation Proceeds and Advances that as of the date of purchase had
been distributed as or to cover REO Imputed Interest pursuant to Section 4.04,
(iii) any unreimbursed
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Servicing Advances and Advances and any unpaid Servicing Fees allocable to such
Mortgage Loan or REO Property, (iv) any amounts previously withdrawn from the
Collection Account in respect of such Mortgage Loan or REO Property pursuant to
Section 3.23 and (v) in the case of a Mortgage Loan required to be purchased
pursuant to Section 2.03, expenses reasonably incurred or to be incurred by the
Servicer or the Trustee in respect of the breach or defect giving rise to the
purchase obligation.
"Qualified Insurer": Any insurance company acceptable to Xxxxxx Xxx.
"Qualified Substitute Mortgage Loan": A mortgage loan substituted for a
Deleted Mortgage Loan pursuant to the terms of this Agreement or the Mortgage
Loan Purchase Agreement which must, on the date of such substitution, (i) have
an outstanding principal balance (or in the case of a substitution of more than
one mortgage loan for a Deleted Mortgage Loan, an aggregate principal balance),
after application of all scheduled payments of principal and interest due during
or prior to the month of substitution, not in excess of, and not more than 5%
less than, the outstanding principal balance of the Deleted Mortgage Loan as of
the Due Date in the calendar month during which the substitution occurs, (ii)
have a Mortgage Rate not less than (and not more than one percentage point in
excess of) the Mortgage Rate of the Deleted Mortgage Loan, (iii) if the
Qualified Substitute Mortgage Loan is an Adjustable-Rate Mortgage Loan, have a
Maximum Mortgage Rate not less than the Maximum Mortgage Rate on the Deleted
Mortgage Loan, (iv) if the Qualified Substitute Mortgage Loan is an
Adjustable-Rate Mortgage Loan, have a Minimum Mortgage Rate not less than the
Minimum Mortgage Rate of the Deleted Mortgage Loan, (v) if the Qualified
Substitute Mortgage Loan is an Adjustable-Rate Mortgage Loan, have a Gross
Margin equal to or greater than the Gross Margin of the Deleted Mortgage Loan,
(vi) if the Qualified Substitute Mortgage Loan is an Adjustable-Rate Mortgage
Loan, have a next Adjustment Date not more than two months later than the next
Adjustment Date on the Deleted Mortgage Loan, (vii) be covered by the PMI Policy
if the Deleted Mortgage Loan was covered by the PMI Policy, (viii) have a
remaining term to maturity not greater than (and not more than one year less
than) that of the Deleted Mortgage Loan, (ix) be current as of the date of
substitution, (x) have a Loan-to-Value Ratio as of the date of substitution
equal to or lower than the Loan-to-Value Ratio of the Deleted Mortgage Loan as
of such date, (xi) have a risk grading determined by the Originator at least
equal to the risk grading assigned on the Deleted Mortgage Loan, (xii) have been
underwritten or reunderwritten by the Originator in accordance with the same
underwriting criteria and guidelines as the Deleted Mortgage Loan, (xiii)
[reserved]; and (xiv) conform to each representation and warranty set forth in
Section 3.01 of the Mortgage Loan Purchase Agreement applicable to the Deleted
Mortgage Loan. In the event that one or more mortgage loans are substituted for
one or more Deleted Mortgage Loans, the amounts described in clause (i) hereof
shall be determined on the basis of aggregate principal balances, the Mortgage
Rates described in clauses (ii) through (vi) hereof shall be satisfied for each
such mortgage loan, the risk gradings described in clause (x) hereof shall be
satisfied as to each such mortgage loan, the terms described in clause (viii)
hereof shall be determined on the basis of weighted average remaining term to
maturity (provided that no such mortgage loan may have a remaining term to
maturity longer than the Deleted Mortgage Loan), the Loan-to-Value Ratios
described in clause (x) hereof shall be satisfied as to each such mortgage loan
and, except to the extent otherwise provided in this sentence, the
representations and warranties described in clause (xiv) hereof must be
satisfied as to each Qualified Substitute Mortgage Loan or in the aggregate, as
the case may be.
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"Rating Agency or Rating Agencies": Fitch, Xxxxx'x and S&P or their
successors. If such agencies or their successors are no longer in existence,
"Rating Agencies" shall be such nationally recognized statistical rating
agencies, or other comparable Persons, designated by the Depositor, notice of
which designation shall be given to the Trustee and Servicer.
"Realized Loss": With respect to any Liquidated Mortgage Loan, the amount
of loss realized equal to the portion of the Principal Balance remaining unpaid
after application of all Net Liquidation Proceeds in respect of such Mortgage
Loan.
"Record Date": With respect to (i) the Class A-1 Certificates, the Class
A-2 Certificates, the Class M-1 Certificates, the Class M-2A Certificates and
the Class M-3 Certificates, the Close of Business on the Business Day
immediately preceding the related Distribution Date and (ii) the Class M-2B
Certificates, the Class P Certificates, the Class C Certificates and the
Residual Certificates, the Close of Business on the last Business Day of the
calendar month preceding the month in which the related Distribution Date
occurs; provided, however, that following the date on which Definitive
Certificates for any of the Class A-1 Certificates, the Class A-2 Certificates,
the Class M-1 Certificates, the Class M-2A Certificates and the Class M-3
Certificates are available pursuant to Section 5.02, the Record Date for such
Certificates that are Definitive Certificates shall be the last Business Day of
the calendar month preceding the month in which the related Distribution Date
occurs.
"Reference Banks": Those banks (i) with an established place of business in
London, England, (ii) not controlling, under the control of or under common
control with the Originator or the Servicer or any affiliate thereof and (iii)
which have been designated as such by the Trustee after consultation with the
Depositor; provided, however, that if fewer than two of such banks provide a
LIBOR rate, then any leading banks selected by the Trustee after consultation
with the Depositor which are engaged in transactions in United States dollar
deposits in the international Eurocurrency market.
"Refinanced Mortgage Loan": A Mortgage Loan the proceeds of which were not
used to purchase the related Mortgaged Property.
"Regular Certificate": Any of the Class A Certificates, Mezzanine
Certificates, Class C Certificates or Class P Certificates.
"Relief Act": The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
"Relief Act Interest Shortfall": With respect to any Distribution Date, for
any Mortgage Loan with respect to which there has been a reduction in the amount
of interest collectible thereon for the most recently ended Due Period as a
result of the application of the Relief Act, the amount by which (i) interest
collectible on such Mortgage Loan during such Due Period is less than (ii) one
month's interest on the Principal Balance of such Mortgage Loan at the Mortgage
Rate for such Mortgage Loan before giving effect to the application of the
Relief Act.
"REMIC": A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
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"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, 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 PMI Policy, required to be
maintained pursuant to this Agreement and any proceeds thereof, (iv) the
Depositor's rights under the Mortgage Loan Purchase Agreement (including any
security interest created thereby), (v) [reserved] and (vi) the Collection
Account, the Distribution Account (subject to the last sentence of this
definition) and any REO Account and such assets that are deposited therein from
time to time and any investments thereof, together with any and all income,
proceeds and payments with respect thereto. Notwithstanding the foregoing,
however, a REMIC election will not be made with respect to the Net WAC Rate
Carryover Reserve Account or any Servicer Prepayment Charge Payment Amounts.
"REMIC 1 Interest Loss Allocation Amount": With respect to any Distribution
Date, an amount equal to (a) the product of (i) the aggregate Principal Balance
of the Mortgage Loans and related REO Properties then outstanding and (ii) the
Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular Interest LTAA minus
the Marker Rate, divided by (b) 12.
"REMIC 1 Overcollateralization Target Amount": 1% of the
Overcollateralization Target Amount.
"REMIC 1 Overcollateralization Amount": With respect to any date of
determination, (i) 1% of the aggregate Uncertificated Principal Balances of the
REMIC 1 Regular Interests minus (ii) the aggregate of the Uncertificated
Principal Balances of REMIC 1 Regular Interest LTA1, REMIC 1 Regular Interest
LTA2, REMIC 1 Regular Interest LTM1, REMIC 1 Regular Interest LTM2A, REMIC 1
Regular Interest LTM2B, REMIC 1 Regular Interest LTM3 and REMIC 1 Regular
Interest LTP, in each case as of such date of determination.
"REMIC 1 Principal Loss Allocation Amount": With respect to any
Distribution Date, an amount equal to the product of (i) the aggregate 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 of
the Uncertificated Principal Balances of REMIC 1 Regular Interest LTA1, REMIC 1
Regular Interest LTA2, REMIC 1 Regular Interest LTM1, REMIC 1 Regular Interest
LTM2A, REMIC 1 Regular Interest LTM2B and REMIC 1 Regular Interest LTM3 and the
denominator of which is the aggregate of the Uncertificated Principal Balances
of REMIC 1 Regular Interest LTA1, REMIC 1 Regular Interest LTA2, REMIC 1 Regular
Interest LTM1, REMIC 1 Regular Interest LTM2A, REMIC 1 Regular Interest LTM2B,
REMIC 1 Regular Interest LTM3 and REMIC 1 Regular Interest LTZZ.
"REMIC 1 Regular Interest LTAA": 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 LTAA 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
33
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 LTA1": 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 LTA1 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 LTA2": 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 LTA2 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 LTM1": 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 LTM1 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 LTM2A": 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 LTM2A 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 LTM2B": 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 LTM2B 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 LTM3": 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 LTM3 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.
34
"REMIC 1 Regular Interest LTP": 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 LTP 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 LTZZ": 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 LTZZ 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 Interests": REMIC 1 Regular Interest LTAA, REMIC 1 Regular
Interest LTA1, REMIC 1 Regular Interest LTA2, REMIC 1 Regular Interest LTM1,
REMIC 1 Regular Interest LTM2A, REMIC 1 Regular Interest LTM2B, REMIC 1 Regular
Interest LTM3, REMIC 1 Regular Interest LTZZ and REMIC 1 Regular Interest LTP.
"REMIC 2": The segregated pool of assets consisting of all of the REMIC 1
Regular Interests conveyed in trust to the Trustee, for the benefit of the
Holders of the Regular Certificates and the Class 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 Regular Interests": The Regular Certificates (other than the Class
M-2A Certificates and the Class M-3 Certificates), the Class M-2A Interest and
the Class M-3 Interest.
"REMIC 3": The segregated pool of assets consisting of the Class M-2A
Interest conveyed in trust to the Trustee, for the benefit of the Holders of the
Class M-2A Certificates and the Class R- X 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 4": The segregated pool of assets consisting of the Class M-3
Interest conveyed in trust to the Trustee, for the benefit of the Holders of the
Class M-3 Certificates and the Class R-X Certificates (in respect of the Class
R-4 Interest), pursuant to Article II hereunder, and all amounts deposited
therein, with respect to which a separate REMIC election is to be made.
"REMIC Provisions": Provisions of the federal income tax law relating to
real estate mortgage investment conduits which appear at Section 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations and rulings promulgated thereunder, as the foregoing may be in
effect from time to time.
"Remittance Report": A report prepared by the Servicer and delivered to the
Trustee pursuant to Section 4.04.
35
"Rents from Real Property": With respect to any REO Property, gross income
of the character described in Section 856(d) of the Code.
"REO Account": The account or accounts maintained by the Servicer in
respect of an REO Property pursuant to Section 3.23.
"REO Disposition": The sale or other disposition of an REO Property on
behalf of the Trust Fund.
"REO Imputed Interest": As to any REO Property, for any calendar month
during which such REO Property was at any time part of the Trust Fund, one
month's interest at the applicable Net Mortgage Rate on the Principal Balance of
such REO Property (or, in the case of the first such calendar month, of the
related Mortgage Loan if appropriate) as of the Close of Business on the
Distribution Date in such calendar month.
"REO Principal Amortization": With respect to any REO Property, for any
calendar month, the excess, if any, of (a) the aggregate of all amounts received
in respect of such REO Property during such calendar month, whether in the form
of rental income, sale proceeds (including, without limitation, that portion of
the Termination Price paid in connection with a purchase of all of the Mortgage
Loans and REO Properties pursuant to Section 10.01 that is allocable to such REO
Property) or otherwise, net of any portion of such amounts (i) payable pursuant
to Section 3.23 in respect of the proper operation, management and maintenance
of such REO Property or (ii) payable or reimbursable to the Servicer pursuant to
Section 3.23 for unpaid Servicing Fees in respect of the related Mortgage Loan
and unreimbursed Servicing Advances and Advances in respect of such REO Property
or the related Mortgage Loan, over (b) the REO Imputed Interest in respect of
such REO Property for such calendar month.
"REO Property": A Mortgaged Property acquired by the Servicer on behalf of
the Trust Fund through foreclosure or deed-in-lieu of foreclosure, as described
in Section 3.23.
"Request for Release": A release signed by a Servicing Officer, in the form
of Exhibit E attached hereto.
"Reserve Interest Rate": With respect to any Interest Determination Date,
the rate per annum that the Trustee determines to be either (i) the arithmetic
mean (rounded upwards if necessary to the nearest whole multiple of 1/16 of 1%)
of the one-month United States dollar lending rates which banks in The City of
New York selected by the Depositor are quoting on the relevant Interest
Determination Date to the principal London offices of leading banks in the
London interbank market or (ii) in the event that the Trustee can determine no
such arithmetic mean, in the case of any Interest Determination Date after the
initial Interest Determination Date, the lowest one-month United States dollar
lending rate which such New York banks selected by the Depositor are quoting on
such Interest Determination Date to leading European banks.
"Residential Dwelling": Any one of the following: (i) a detached one-family
dwelling, (ii) a detached two- to four-family dwelling, (iii) a one-family
dwelling unit in a Xxxxxx Xxx eligible
36
condominium project, (iv) a manufactured home, or (v) a detached
one-family dwelling in a planned unit development, none of which
is a co-operative or mobile home.
"Residual Certificate": The Class R Certificates and the Class R-X
Certificates.
"Residual Interest": The sole class of "residual interests" in a REMIC
within the meaning of Section 860G(a)(2) of the Code.
"Responsible Officer": When used with respect to the Trustee, any director,
any vice president, any assistant vice president, the Secretary, any assistant
secretary, the Treasurer, any assistant treasurer or any other officer of the
Trustee customarily performing functions similar to those performed by any of
the above designated officers and, with respect to a particular matter, to whom
such matter is referred because of such officer's knowledge of and familiarity
with the particular subject.
"S&P": Standard & Poor's Ratings Services, a division of The XxXxxx-Xxxx
Companies, Inc., or its successor in interest.
"Seller": Greenwich Capital Financial Products, Inc., a Delaware
corporation, in its capacity as Seller under the Mortgage Loan Purchase
Agreement.
"Servicer": Xxxxxx Loan Servicing LP, a Delaware limited partnership, or
any successor servicer appointed as herein provided, in its capacity as Servicer
hereunder.
"Servicer's Assignee": As defined in Section 3.29 hereof.
"Servicer Certification": As defined in Section 3.22(b) hereof.
"Servicer Event of Termination": One or more of the events described in
Section 7.01.
"Servicer Prepayment Charge Payment Amount": The amounts payable by the
Servicer in respect of any waived Prepayment Charges pursuant to Section 2.05 or
Section 3.01.
"Servicer Remittance Date": With respect to any Distribution Date, the
Business Day prior to such Distribution Date.
"Servicer Termination Test": With respect to any Distribution Date, the
Servicer Termination Test will be failed if the Cumulative Loss Percentage the
applicable percentages set forth below with respect to such Distribution Date:
Distribution Date Percentage
January 2006 through December 2006 2.00%
January 2007 through December 2007 3.00%
January 2008 through December 2008 4.00%
January 2009 through December 2009 4.75%
37
January 2010 and thereafter 5.25%
"Servicing Account": The account or accounts created and maintained
pursuant to Section 3.09.
"Servicing Advances": All customary, reasonable and necessary "out of
pocket" costs and expenses (including reasonable attorneys' fees and expenses)
incurred by the Servicer in the performance of its servicing obligations,
including, but not limited to, the cost of (i) the preservation, restoration,
inspection and protection of the Mortgaged Property, (ii) any enforcement or
judicial proceedings, including foreclosures, (iii) the management and
liquidation of the REO Property and (iv) compliance with the obligations under
Sections 3.01, 3.09, 3.14, 3.16, and 3.23. The Servicer shall not be required to
make any Servicing Advance that would be a Nonrecoverable Advance.
"Servicing Rights Pledgee": One or more lenders, selected by the Servicer,
to which the Servicer will pledge and assign all of its right, title and
interest in, to and under this Agreement, including Wachovia Bank, National
Association, as the representative of certain lenders.
"Servicing Fee": With respect to each Mortgage Loan and for any calendar
month, an amount equal to one month's interest (or in the event of any payment
of interest which accompanies a Principal Prepayment in full made by the
Mortgagor during such calendar month, interest for the number of days covered by
such payment of interest) at the Servicing Fee Rate on the same principal amount
on which interest on such Mortgage Loan accrues for such calendar month. A
portion of such Servicing Fee may be retained by any Sub-Servicer as its
servicing compensation.
"Servicing Fee Rate": 0.50% per annum.
"Servicing Officer": Any officer of the Servicer involved in, or
responsible for, the administration and servicing of Mortgage Loans, whose name
and specimen signature appear on a list of servicing officers furnished by the
Servicer to the Trustee and the Depositor on the Closing Date, as such list may
from time to time be amended.
"Servicing Transfer Costs": Shall mean all reasonable costs and expenses
incurred by the Trustee in connection with the transfer of master servicing from
a predecessor servicer, including, without limitation, any reasonable costs or
expenses associated with the complete transfer of all master servicing data and
the completion, correction or manipulation of such master servicing data as may
be required by the Trustee to correct any errors or insufficiencies in the
master servicing data or otherwise to enable the Trustee (or any successor
servicer appointed pursuant to Section 7.02) to service the Mortgage Loans
properly and effectively.
"Startup Day": As defined in Section 9.01(b) hereof.
"Stated Principal Balance": With respect to any Mortgage Loan: (a) as of
any date of determination up to but not including the Distribution Date on which
the proceeds, if any, of a Liquidation Event with respect to such Mortgage Loan
would be distributed, the outstanding principal balance of such Mortgage Loan as
of the Cut-off Date as shown in the Mortgage Loan Schedule, minus the sum of (i)
the principal portion of each Monthly Payment due on a Due Date
38
subsequent to the Cut-off Date to the extent received from the Mortgagor or
advanced by the Servicer and distributed pursuant to Section 4.01 on or before
such date of determination, (ii) all Principal Prepayments received after the
Cut-off Date to the extent distributed pursuant to Section 4.01 on or before
such date of determination, (iii) all Liquidation Proceeds and Insurance
Proceeds to the extent distributed pursuant to Section 4.01 on or before such
date of determination, and (iv) any Realized Loss incurred with respect thereto
as a result of a Deficient Valuation made during or prior to the Due Period for
the most recent Distribution Date coinciding with or preceding such date of
determination; and (b) as of any date of determination coinciding with or
subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such Mortgage Loan would be distributed, zero.
With respect to any REO Property: (a) as of any date of determination up to but
not including the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed, an
amount (not less than zero) equal to the Stated Principal Balance of the related
Mortgage Loan as of the date on which such REO Property was acquired on behalf
of the Trust Fund, minus the aggregate amount of REO Principal Amortization in
respect of such REO Property for all previously ended calendar months, to the
extent distributed pursuant to Section 4.01 on or before such date of
determination; and (b) as of any date of determination coinciding with or
subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed, zero.
"Stepdown Date": The earlier to occur of (i) the Distribution Date on which
the aggregate Certificate Principal Balance of the Class A Certificates has been
reduced to zero and (ii) the later to occur of (x) the Distribution Date
occurring in January 2006 and (y) the first Distribution Date on which the
Credit Enhancement Percentage (calculated for this purpose only after taking
into account payments of principal on the Mortgage Loans and distribution of the
Group I Principal Distribution Amount and the Group II Principal Distribution
Amount to the Certificates then entitled to distributions of principal on such
Distribution Date) is equal to or greater than 24.50%.
"Sub-Servicer": Any Person with which either Servicer has entered into a
Sub- Servicing Agreement and which meets the qualifications of a Sub-Servicer
pursuant to Section 3.02.
"Sub-Servicing Account": An account established by a Sub-Servicer which
meets the requirements set forth in Section 3.08 and is otherwise acceptable to
the applicable Servicer.
"Sub-Servicing Agreement": The written contract between either Servicer and
a Sub- Servicer relating to servicing and administration of certain Mortgage
Loans as provided in Section 3.02.
"Substitution Adjustment": As defined in Section 2.03(d) hereof.
"Tax Matters Person": The tax matters person appointed pursuant to Section
9.01(e) hereof.
"Tax Returns": The federal income tax return on Internal Revenue Service
Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax Return,
including Schedule Q thereto, Quarterly Notice to Residual Interest Holders of
the REMIC Taxable Income or Net Loss Allocation, or any successor forms, to be
filed by the Trustee on behalf of each REMIC, together with any and
39
all other information reports or returns that may be required to be furnished to
the Certificateholders or filed with the Internal Revenue Service or any other
governmental taxing authority under any applicable provisions of federal, state
or local tax laws.
"Termination Price": As defined in Section 10.01(a) hereof.
"Terminator": As defined in Section 10.01(a) hereof.
"Trigger Event": A Trigger Event is in effect with respect to any
Distribution Date on or after the Stepdown Date if:
(a) the Delinquency Percentage exceeds 40.00% of the Credit Enhancement
Percentage or
(b) the aggregate amount of Realized Losses incurred since the Cut-off Date
through the last day of the related Due Period divided by the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date exceeds the
applicable percentages set forth below with respect to such Distribution Date:
DISTRIBUTION DATE OCCURRING IN PERCENTAGE
---------------------------------- ----------
January 2006 through December 2006 1.75%
January 2007 through December 2007 2.75%
January 2008 through December 2008 3.75%
January 2009 through December 2009 4.50%
January 2010 and thereafter 5.00%
"Trust": Fremont Home Trust 2002-2, the trust created hereunder.
"Trust Fund": All of the assets of the Trust, which is the trust created
hereunder consisting of REMIC 1, REMIC 2, REMIC 3, REMIC 4 and the right to
receive any amounts payable under the Cap Contracts, the Net WAC Rate Carryover
Reserve Account and any Servicer Prepayment Charge Payment Amounts.
"Trustee": Deutsche Bank National Trust Company, a national banking
association, or any successor trustee appointed as herein provided.
"Trustee Fee": The amount payable to the Trustee on each Distribution Date
pursuant to Section 8.05 as compensation for all services rendered by it in the
execution of the trust hereby created and in the exercise and performance of any
of the powers and duties of the Trustee hereunder, which amount shall equal one
twelfth of the product of (i) the Trustee Fee Rate (without regard to the words
"per annum"), multiplied by (ii) the aggregate Principal Balance of the Mortgage
Loans and any REO Properties (after giving effect to scheduled payments of
principal due during the Due Period relating to the previous Distribution Date,
to the extent received or advanced and prepayments collected during the
Prepayment Period relating to the previous Distribution Date).
40
"Trustee Fee Rate": 0.01% per annum.
"Unadjusted Net WAC 30/360 Rate": For any Distribution Date, a per annum
rate equal to the weighted average of the Adjusted Net Mortgage Rates of the
Mortgage Loans for such Distribution Date.
"Uncertificated Accrued Interest": With respect to each REMIC 1 Regular
Interest on each Distribution Date, an amount equal to one month's interest at
the related Uncertificated REMIC 1 Pass-Through Rate on the Uncertificated
Principal Balance of such REMIC 1 Regular Interest. In each case, Uncertificated
Accrued Interest will be reduced by any Net Prepayment Interest Shortfalls,
Relief Act Interest Shortfalls or other shortfalls allocated to such Certificate
as provided in Section 1.03.
"Uncertificated Principal Balance": With respect to each REMIC 1 Regular
Interest, the amount of such REMIC 1 Regular Interest outstanding as of any date
of determination. As of the Closing Date, the Uncertificated Principal Balance
of each REMIC 1 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 1
Regular Interest shall be reduced by all distributions of principal made on such
REMIC 1 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 4.08, and the
Uncertificated Principal Balances of REMIC 1 Regular Interest LTZZ shall be
increased by interest deferrals as provided in Section 4.07.
"Uncertificated REMIC 1 Pass-Through Rate": For any Distribution Date and
each REMIC 1 Regular Interest, the Unadjusted Net WAC 30/360 Rate of the
Mortgage Loans for such Distribution Date.
"Uninsured Cause": Any cause of damage to a Mortgaged Property such that
the complete restoration of such property is not fully reimbursable by the
hazard insurance policies required to be maintained pursuant to Section 3.14.
"United States Person" or "U.S. Person": A citizen or resident of the
United States, a corporation, partnership (or other entity treated as a
corporation or partnership for United States federal income tax purposes)
created or organized in, or under the laws of, the United States, any state
thereof, or the District of Columbia (except in the case of a partnership, to
the extent provided in Treasury regulations) provided that, for purposes solely
of the restrictions on the transfer of Residual Certificates, no partnership or
other entity treated as a partnership for United States federal income tax
purposes shall be treated as a United States Person unless all persons that own
an interest in such partnership either directly or through any entity that is
not a corporation for United States federal income tax purposes are required by
the applicable operative agreement to be United States Persons, or an estate the
income of which from sources without the United States is includible in gross
income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States, or
a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United
41
States persons have authority to control all substantial decisions of the trust.
The term "United States" shall have the meaning set forth in Section 7701 of the
Code or successor provisions.
"Unpaid Interest Shortfall Amount": With respect to the Class A
Certificates and the Mezzanine Certificates and (i) the first Distribution Date,
zero, and (ii) any Distribution Date after the first Distribution Date, the
amount, if any, by which (a) the sum of (1) the Monthly Interest Distributable
Amount for such Class for the immediately preceding Distribution Date and (2)
the outstanding Unpaid Interest Shortfall Amount, if any, for such Class for
such preceding Distribution Date exceeds (b) the aggregate amount distributed on
such Class in respect of interest pursuant to clause (a) of this definition on
such preceding Distribution Date, plus interest on the amount of interest due
but not paid on the Certificates of such Class on such preceding Distribution
Date, to the extent permitted by law, at the Pass-Through Rate for such Class
for the related Accrual Period.
"Value": With respect to any Mortgaged Property, the lesser of (i) the
lesser of (a) the value thereof as determined by an appraisal made for the
originator of the Mortgage Loan at the time of origination of the Mortgage Loan
by an appraiser who met the minimum requirements of Xxxxxx Xxx and Xxxxxxx Mac,
and (b) the value thereof as determined by a review appraisal conducted by the
Originator in the event any such review appraisal determines an appraised value
ten percent or more lower than the value thereof as determined by the appraisal
referred to in clause (i)(a) above and (ii) the purchase price paid for the
related Mortgaged Property by the Mortgagor with the proceeds of the Mortgage
Loan, provided, however, in the case of a Refinanced Mortgage Loan, such value
of the Mortgaged Property is based solely upon the lesser of (1) the value
determined by an appraisal made for the Originator of such Refinanced Mortgage
Loan at the time of origination of such Refinanced Mortgage Loan by an appraiser
who met the minimum requirements of Xxxxxx Mae and Xxxxxxx Mac and (2) the value
thereof as determined by a review appraisal conducted by the Originator in the
event any such review appraisal determines an appraised value ten percent or
more lower than the value thereof as determined by the appraisal referred to in
clause (ii)(1) above.
"Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. At all times the Class A
Certificates, the Mezzanine Certificates and the Class C Certificates shall have
98% of the Voting Rights (allocated among the Holders of the Class A
Certificates, the Mezzanine Certificates and the Class C Certificates in
proportion to the then outstanding Certificate Principal Balances of their
respective Certificates), the Class P Certificates shall have 1% of the Voting
Rights and the Residual Certificates shall have 1% of the Voting Rights. The
Voting Rights allocated to any Class of Certificates (other than the Class P
Certificates and the Residual Certificates) shall be allocated among all Holders
of each such Class in proportion to the outstanding Certificate Principal
Balance of such Certificates, and the Voting Rights allocated to the Class P
Certificates and the Residual Certificates shall be allocated among all Holders
of each such Class in proportion to such Holders' respective Percentage
Interest; provided, however that when none of the Regular Certificates are
outstanding, 100% of the Voting Rights shall be allocated among Holders of the
Residual Certificates in accordance with such Holders' respective Percentage
Interests in the Certificates of such Class.
SECTION 1.02. Accounting.
42
Unless otherwise specified herein, for the purpose of any definition or
calculation, whenever amounts are required to be netted, subtracted or added or
any distributions are taken into account such definition or calculation and any
related definitions or calculations shall be determined without duplication of
such functions.
SECTION 1.03. Allocation of Certain Interest Shortfalls.
For purposes of calculating the amount of the Monthly Interest
Distributable Amount for the Class A Certificates, the Mezzanine Certificates
and the Class C Certificates for any Distribution Date, (1) the aggregate amount
of any Net Prepayment Interest Shortfalls and any Relief Act Interest Shortfalls
incurred in respect of the Mortgage Loans for any Distribution Date shall be
allocated first, among the Class C Certificates on a PRO RATA basis based on,
and to the extent of, one month's interest at the then applicable Pass-Through
Rate on the Notional Amount of each such Certificate and, thereafter, among the
Class A Certificates and the Mezzanine Certificates on a PRO RATA basis based
on, and to the extent of, one month's interest at the then applicable respective
Pass-Through Rate on the respective Certificate Principal Balance of each such
Certificate and (2) the aggregate amount of any Realized Losses, Net WAC Rate
Carryover Amounts and any amounts payable to the PMI Insurer pursuant to Section
4.01(d)(ix) incurred for any Distribution Date shall be allocated among the
Class C Certificates on a PRO RATA basis based on, and to the extent of, one
month's interest at the then applicable Pass-Through Rate on the Notional Amount
of each such Certificate.
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 Net Prepayment Interest Shortfalls and any Relief Act Interest
Shortfalls incurred in respect of the Mortgage Loans for any Distribution Date
shall be allocated first, to Uncertificated Accrued Interest payable to REMIC 1
Regular Interest LTAA and REMIC 1 Regular Interest LTZZ up to an aggregate
amount equal to the REMIC 1 Interest Loss Allocation Amount, 98% and 2%,
respectively, and thereafter among REMIC 1 Regular Interest LTAA, REMIC 1
Regular Interest LTA1, REMIC 1 Regular Interest LTA2, REMIC 1 Regular Interest
LTM1, REMIC 1 Regular Interest LTM2A, REMIC 1 Regular Interest LTM2B, REMIC 1
Regular Interest LTM3 and REMIC 1 Regular Interest LTZZ PRO RATA based on, and
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 REMIC 1 Regular Interest.
43
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. Conveyance of Mortgage Loans.
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 for the benefit of the Certificateholders all the right, title
and interest of the Depositor, including any security interest therein for the
benefit of the Depositor, in and to (i) each Mortgage Loan identified on the
Mortgage Loan Schedule, including the related Cut-off Date Principal Balance,
all interest accruing thereon on and after the Cut-off Date and all collections
in respect of interest and principal due after the Cut- off Date; (ii) property
which secured each such Mortgage Loan and which has been acquired by foreclosure
or deed in lieu of foreclosure; (iii) its interest in any insurance policies
(including the PMI Policy) in respect of the Mortgage Loans; (iv) the rights of
the Depositor under the Mortgage Loan Purchase Agreement, (v) the right to
receive any amounts payable under the Cap Contracts, (vi) all other assets
included or to be included in the Trust Fund and (vii) all proceeds of any of
the foregoing. Such assignment includes all interest and principal due and
collected by the Depositor or the Servicer after the Cut-off Date with respect
to the Mortgage Loans.
In connection with such transfer and assignment, the Depositor, does hereby
deliver to, and deposit with the Trustee, or its designated agent (the
"Custodian"), the following documents or instruments with respect to each
Original Mortgage Loan so transferred and assigned, the following documents or
instruments (with respect to each Mortgage Loan, a "Mortgage File") :
(i) the original Mortgage Note, endorsed either (A) in blank, in which case
the Trustee shall cause the endorsement to be completed or (B) in the
following form: "Pay to the order of Deutsche Bank National Trust Company, as
Trustee, without recourse" or with respect to any lost Mortgage Note, an
original Lost Note Affidavit stating that the original mortgage note was
lost, misplaced or destroyed, together with a copy of the related mortgage
note; provided, however, that such substitutions of Lost Note Affidavits for
original Mortgage Notes may occur only with respect to Mortgage Loans, the
aggregate Cut-off Date Principal Balance of which is less than or equal to
1.00% of the Pool Balance as of the Cut-off Date;
(ii) the original Mortgage with evidence of recording thereon, and the
original recorded power of attorney, if the Mortgage was executed pursuant to
a power of attorney, with evidence of recording thereon or, if such Mortgage
or power of attorney has been submitted for recording but has not been
returned from the applicable public recording office, has been lost or is not
otherwise available, a copy of such Mortgage or power of attorney, as the
case may be, certified to be a true and complete copy of the original
submitted for recording;
(iii) an original Assignment, in form and substance acceptable for
recording. The Mortgage shall be assigned either (A) in blank or (B) to
"Deutsche Bank National Trust Company, as Trustee, without recourse";
44
(iv) an original copy of any intervening assignment of Mortgage showing a
complete chain of assignments;
(v) the original or a certified copy of lender's title insurance policy;
and
(vi) the original or copies of each assumption, modification, written
assurance or substitution agreement, if any.
The Depositor herewith also delivers to the Trustee an executed copy of the
Mortgage Loan Purchase Agreement and the PMI Policy.
If any of the documents referred to in Section 2.01(ii), (iii) or (iv)
above has as of the Closing Date been submitted for recording but either (x) has
not been returned from the applicable public recording office or (y) has been
lost or such public recording office has retained the original of such document,
the obligations of the Depositor to deliver such documents shall be deemed to be
satisfied upon (1) delivery to the Trustee or the Custodian no later than the
Closing Date, of a copy of each such document certified by the Originator in the
case of (x) above or the applicable public recording office in the case of (y)
above to be a true and complete copy of the original that was submitted for
recording and (2) if such copy is certified by the Originator, delivery to the
Trustee or the Custodian, promptly upon receipt thereof of either the original
or a copy of such document certified by the applicable public recording office
to be a true and complete copy of the original. If the original lender's title
insurance policy, or a certified copy thereof, was not delivered pursuant to
Section 2.01(v) above, the Depositor shall deliver or cause to be delivered to
the Trustee or the Custodian, the original or a copy of a written commitment or
interim binder or preliminary report of title issued by the title insurance or
escrow company, with the original or a certified copy thereof to be delivered to
the Trustee or the Custodian, promptly upon receipt thereof. The Servicer or the
Depositor shall deliver or cause to be delivered to the Trustee or the Custodian
promptly upon receipt thereof any other documents constituting a part of a
Mortgage File received with respect to any Mortgage Loan, including, but not
limited to, any original documents evidencing an assumption or modification of
any Mortgage Loan.
Upon discovery or receipt of notice of any materially defective document
in, or that a document is missing from, a Mortgage File, the Trustee shall
notify the Servicer and the Servicer (or, to the extent provided in Section
3.02, the Trustee) shall enforce the obligations of the Originator under the
Mortgage Loan Purchase Agreement to cure such defect or deliver such missing
document to the Trustee or the Custodian within 90 days. If the Originator does
not cure such defect or deliver such missing document within such time period,
the Servicer (or, to the extent provided in Section 3.02, the Trustee) shall
enforce the obligations of the Originator to either repurchase or substitute for
such Mortgage Loan in accordance with Section 2.03. In connection with the
foregoing, it is understood that the Trustee shall have no duty to discover any
such defects except in the course of performing its review of the Mortgage Files
to the extent set forth herein.
The Trustee shall enforce the obligations of the Seller under the Mortgage
Loan Purchase Agreement to cause the Assignments which were delivered in blank
to be completed and to record all Assignments referred to in Section 2.01(iii)
hereof and, to the extent necessary, in Section 2.01(iv) hereof. The Trustee
shall enforce the obligations of the Seller under the Mortgage Loan
45
Purchase Agreement to deliver such assignments for recording within 180 days of
the Closing Date. In the event that any such Assignment is lost or returned
unrecorded because of a defect therein, the Trustee shall enforce the
obligations of the Seller under the Mortgage Loan Purchase Agreement to promptly
have a substitute Assignment prepared or have such defect cured, as the case may
be, and thereafter cause each such Assignment to be duly recorded.
Notwithstanding the foregoing, the Assignments of Mortgage shall not be
required to be submitted for recording with respect to any Mortgage Loan in any
jurisdiction where the Rating Agencies do not require recordation in order to
receive the ratings on the Certificates at the time of their initial issuance
(which jurisdictions, as of such time of their initial issuance, are Maryland
and Florida); provided, however, each Assignment shall be submitted for
recording in the manner described above, at no expense to the Trust Fund or
Trustee, upon the earliest to occur of: (i) reasonable direction by the Holders
of Certificates entitled to at least 25% of the Voting Rights, (ii) the
occurrence of a Servicer Event of Termination, (iii) the occurrence of a
bankruptcy, insolvency or foreclosure relating to the Seller, (iv) the
occurrence of a servicing transfer as described in Section 7.02 hereof, (v) upon
receipt of notice from the Servicer, the occurrence of a bankruptcy, insolvency
or foreclosure relating to the Mortgagor under the related Mortgage and (vi)
upon receipt of notice from the Servicer, any Mortgage Loan that is 90 days or
more Delinquent. In the event of (i) through (vi) set forth in the immediately
preceding sentence, the Trustee shall enforce the obligations of the Seller to
deliver such Assignments for recording as provided above, promptly and in any
event within 30 days following receipt of notice by the Seller. Notwithstanding
the foregoing, if the Seller fails to pay the cost of recording the Assignments,
such expense will be paid by the Trustee and the Trustee shall be reimbursed for
such expenses by the Trust.
In the event that any Mortgage Note is endorsed in blank as of the Closing
Date, promptly following the Closing Date, the Trustee shall cause (at the
Seller's expense) to be completed such endorsements "Pay to the order of
Deutsche Bank National Trust Company, as Trustee, without recourse."
The Servicer shall forward to the Custodian original documents evidencing
an assumption, modification, consolidation or extension of any Mortgage Loan
entered into in accordance with this Agreement within two weeks of their
execution; provided, however, that the Servicer shall provide the Custodian with
a certified true copy of any such document submitted for recordation within two
weeks of its execution, and shall provide the original of any document submitted
for recordation or a copy of such document certified by the appropriate public
recording office to be a true and complete copy of the original within 365 days
of its submission for recordation. In the event that the Servicer cannot provide
a copy of such document certified by the public recording office within such 365
day period, the Servicer shall deliver to the Custodian, within such 365 day
period, an Officers' Certificate of the Servicer which shall (A) identify the
recorded document, (B) state that the recorded document has not been delivered
to the Custodian due solely to a delay caused by the public recording office,
(C) state the amount of time generally required by the applicable recording
office to record and return a document submitted for recordation, if known and
(D) specify the date the applicable recorded document is expected to be
delivered to the Custodian, and, upon receipt of a copy of such document
certified by the public recording office, the Servicer shall immediately deliver
such document to the Custodian. In the event the appropriate public recording
office will not
46
certify as to the accuracy of such document, the Servicer shall
deliver a copy of such document certified by an officer of the
Servicer to be a true and complete copy of the original to the
Custodian.
SECTION 2.02. Acceptance by Trustee.
Subject to the provisions of Section 2.01 and subject to the review
described below and any exceptions noted on the exception report described in
the next paragraph below, the Trustee acknowledges receipt of the documents
referred to in Section 2.01 above and all other assets included in the
definition of "Trust Fund" and declares that it holds and will hold such
documents and the other documents delivered to it constituting a Mortgage File,
and that it holds or will hold all such assets and such other assets included in
the definition of "Trust Fund" in trust for the exclusive use and benefit of all
present and future Certificateholders.
The Trustee agrees to execute and deliver (or cause the Custodian to
execute and deliver) to the Depositor and the Servicer on or prior to the
Closing Date an acknowledgment of receipt of the related original Mortgage Note
for each Mortgage Loan (with any exceptions noted), substantially in the form
attached as Exhibit F-3 hereto.
The Trustee agrees, for the benefit of the Certificateholders, to review,
or that it has reviewed pursuant to Section 2.01 (or to cause the Custodian to
review or that it has caused the Custodian to have reviewed) each Mortgage File
on or prior to the Closing Date, with respect to each Original Mortgage Loan
(or, with respect to any document delivered after the Startup Day, within 45
days of receipt and with respect to any Qualified Substitute Mortgage, within 45
days after the assignment thereof). The Trustee further agrees, for the benefit
of the Certificateholders, to certify to the Depositor and the Servicer in
substantially the form attached hereto as Exhibit F-1, within 45 days after the
Closing Date, with respect to each Original Mortgage Loan (or, with respect to
any document delivered after the Startup Day, within 45 days of receipt and with
respect to any Qualified Substitute Mortgage, within 45 days after the
assignment thereof) that, as to each Mortgage Loan listed in the Mortgage Loan
Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
specifically identified in the exception report annexed thereto as not being
covered by such certification), (i) all documents required to be delivered to it
pursuant Section 2.01 of this Agreement are in its possession, (ii) such
documents have been reviewed by it and have not been mutilated, damaged or torn
and appear on their face to relate to such Mortgage Loan and (iii) based on its
examination and only as to the foregoing, the information set forth in the
Mortgage Loan Schedule that corresponds to items (1) and (2) of the Mortgage
Loan Schedule accurately reflects information set forth in the Mortgage File. It
is herein acknowledged that, in conducting such review, the Trustee (or the
Custodian, as applicable) is under no duty or obligation to inspect, review or
examine any such documents, instruments, certificates or other papers to
determine that they are genuine, legally enforceable, valid or binding or
appropriate for the represented purpose or that they have actually been recorded
or that they are other than what they purport to be on their face.
Prior to the first anniversary date of this Agreement the Trustee shall
deliver (or cause the Custodian to deliver) to the Depositor and the Servicer a
final certification in the form annexed hereto as Exhibit F-2, with any
applicable exceptions noted thereon.
47
If in the process of reviewing the Mortgage Files and making or preparing,
as the case may be, the certifications referred to above, the Trustee (or the
Custodian, as applicable) finds any document or documents constituting a part of
a Mortgage File to be missing or not to conform with respect to any
characteristics which are within the scope of the Trustee's (or the Custodian's,
as applicable) review as provided herein, at the conclusion of its review, the
Trustee shall so notify the Seller, the Depositor, the Originator and the
Servicer. In addition, upon the discovery by the Depositor or the Servicer (or
upon receipt by the Trustee of written notification of such breach) of a breach
of any of the representations and warranties made by the Originator in the
Mortgage Loan Purchase Agreement in respect of any Mortgage Loan which
materially adversely affects such Mortgage Loan or the interests of the related
Certificateholders in such Mortgage Loan, the party discovering such breach
shall give prompt written notice to the other parties to this Agreement.
The Depositor and the Trustee intend that the assignment and transfer
herein contemplated constitute a sale of the Mortgage Loans, the related
Mortgage Notes and the related documents, conveying good title thereto free and
clear of any liens and encumbrances, from the Depositor to the Trustee in trust
for the benefit of the Certificateholders and that such property not be part of
the Depositor's estate or property of the Depositor in the event of any
insolvency by the Depositor. In the event that such conveyance is deemed to be,
or to be made as security for, a loan, the parties intend that the Depositor
shall be deemed to have granted and does hereby grant to the Trustee a first
priority perfected security interest in all of the Depositor's right, title and
interest in and to the Mortgage Loans, the related Mortgage Notes and the
related documents, and that this Agreement shall constitute a security agreement
under applicable law.
SECTION 2.03. Repurchase or Substitution of Mortgage Loans by the
Originator.
(a) Upon discovery or receipt of written notice of any materially defective
document in, or that a document is missing from, a Mortgage File or of the
breach by the Originator of any representation, warranty or covenant under the
Mortgage Loan Purchase Agreement in respect of any Mortgage Loan which
materially adversely affects the value of such Mortgage Loan or the interest
therein of the Certificateholders, the Trustee shall promptly notify the
Servicer of such defect, missing document or breach and the Servicer shall
request that the Originator deliver such missing document or that the Originator
cure such defect or breach within 90 days from the date the Originator was
notified of such missing document, defect or breach, and if the Originator does
not deliver such missing document or if the Originator does not cure such defect
or breach in all material respects during such period, the Servicer (or, to the
extent provided in Section 3.02, the Trustee) shall enforce the Originator's
obligation under the Mortgage Loan Purchase Agreement and cause the Originator
to repurchase such Mortgage Loan from the Trust Fund at the Purchase Price on or
prior to the Determination Date following the expiration of such 90 day period
(subject to Section 2.03(e)). The Purchase Price for the repurchased Mortgage
Loan shall be remitted to the Servicer for deposit in the Collection Account,
and the Trustee, upon receipt of written certification from the Servicer of such
deposit, shall release to the Originator the related Mortgage File and shall
execute and deliver such instruments of transfer or assignment, in each case
without recourse, as the Originator shall furnish to it and as shall be
necessary to vest in the Originator any Mortgage Loan released pursuant hereto
and the Trustee shall have no further responsibility with regard to such
Mortgage File (it being understood that the Trustee shall have no responsibility
for determining the sufficiency of such assignment for its intended purpose). In
lieu of repurchasing any such Mortgage
48
Loan as provided above, the Originator may cause such Mortgage Loan to be
removed from the Trust Fund (in which case it shall become a Deleted Mortgage
Loan) and substitute one or more Qualified Substitute Mortgage Loans in the
manner and subject to the limitations set forth in Section 2.03(d). It is
understood and agreed that the obligation of the Originator to cure or to
repurchase (or to substitute for) any Mortgage Loan as to which a document is
missing, a material defect in a constituent document exists or as to which such
a breach has occurred and is continuing shall constitute the sole remedy against
the Originator respecting such omission, defect or breach available to the
Trustee on behalf of the Certificateholders.
(b) Within 90 days of the earlier of discovery by the Depositor or receipt
of notice by the Depositor of the breach of any representation, warranty or
covenant of the Depositor set forth in Section 2.06, which materially and
adversely affects the interests of the Certificateholders in any Mortgage Loan,
the Depositor shall cure such breach in all material respects.
(c) Within 90 days of the earlier of discovery by the Servicer or receipt
of notice by the Servicer of the breach of any representation, warranty or
covenant of the Servicer set forth in Section 2.05 which materially and
adversely affects the interests of the Certificateholders in any Mortgage Loan,
the Servicer shall cure such breach in all material respects.
(d) Any substitution of Qualified Substitute Mortgage Loans for Deleted
Mortgage Loans made pursuant to Section 2.03(a) must be effected prior to the
last Business Day that is within two years after the Closing Date. As to any
Deleted Mortgage Loan for which the Originator substitutes a Qualified
Substitute Mortgage Loan or Loans, such substitution shall be effected by the
Originator delivering to the Trustee, for such Qualified Substitute Mortgage
Loan or Loans, the Mortgage Note, the Mortgage and the Assignment to the
Trustee, and such other documents and agreements, with all necessary
endorsements thereon, as are required by Section 2.01, together with an
Officers' Certificate providing that each such Qualified Substitute Mortgage
Loan satisfies the definition thereof and specifying the Substitution Adjustment
(as described below), if any, in connection with such substitution. The Trustee
shall acknowledge receipt for such Qualified Substitute Mortgage Loan or Loans
and, within 45 days thereafter, shall review such documents as specified in
Section 2.02 and deliver to the Servicer, with respect to such Qualified
Substitute Mortgage Loan or Loans, a certification substantially in the form
attached hereto as Exhibit F-1, with any applicable exceptions noted thereon.
Within one year of the date of substitution, the Trustee shall deliver to the
Servicer a certification substantially in the form of Exhibit F-2 hereto with
respect to such Qualified Substitute Mortgage Loan or Loans, with any applicable
exceptions noted thereon. Monthly Payments due with respect to Qualified
Substitute Mortgage Loans in the month of substitution are not part of the Trust
Fund and will be retained by the Originator. For the month of substitution,
distributions to Certificateholders will reflect the collections and recoveries
in respect of such Deleted Mortgage Loan in the Due Period preceding the month
of substitution and the Originator shall thereafter be entitled to retain all
amounts subsequently received in respect of such Deleted Mortgage Loan. The
Servicer shall give or cause to be given written notice to the Trustee, who
shall forward such notice to the Certificateholders, that such substitution has
taken place, shall amend the Mortgage Loan Schedule to reflect the removal of
such Deleted Mortgage Loan from the terms of this Agreement and the substitution
of the Qualified Substitute Mortgage Loan or Loans and shall deliver a copy of
such amended Mortgage Loan Schedule to the Trustee. Upon such substitution by
the Originator, such Qualified Substitute Mortgage Loan or Loans shall
constitute part of the
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Mortgage Pool and shall be subject in all respects to the terms of this
Agreement and the Mortgage Loan Purchase Agreement, including all applicable
representations and warranties thereof included in the Mortgage Loan Purchase
Agreement as of the date of substitution.
For any month in which the Originator substitutes one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Servicer
will determine the amount (the "Substitution Adjustment"), if any, by which the
aggregate Purchase Price of all such Deleted Mortgage Loans exceeds the
aggregate, as to each such Qualified Substitute Mortgage Loan, of the principal
balance thereof as of the date of substitution, together with one month's
interest on such principal balance at the applicable Mortgage Rate. On the date
of such substitution, the Originator will deliver or cause to be delivered to
the Servicer for deposit in the Collection Account an amount equal to the
Substitution Adjustment, if any, and the Trustee, upon receipt of the related
Qualified Substitute Mortgage Loan or Loans and certification by the Servicer of
such deposit, shall release to the Originator the related Mortgage File or Files
and shall execute and deliver such instruments of transfer or assignment, in
each case without recourse, as the Originator shall deliver to it and as shall
be necessary to vest therein any Deleted Mortgage Loan released pursuant hereto.
In addition, the Originator shall obtain at its own expense and deliver to
the Trustee an Opinion of Counsel to the effect that such substitution will not
cause (a) any federal tax to be imposed on the Trust Fund, including without
limitation, any federal tax imposed on "prohibited transactions" under Section
860F(a)(I) of the Code or on "contributions after the startup date" under
Section 860G(d)(I) of the Code or (b) any REMIC to fail to qualify as a REMIC at
any time that any Certificate is outstanding. If such Opinion of Counsel can not
be delivered, then such substitution may only be effected at such time as the
required Opinion of Counsel can be given.
(e) Upon discovery by the Depositor, the Servicer or the Trustee that any
Mortgage Loan does not constitute a "qualified mortgage" within the meaning of
Section 860G(a)(3) of the Code, the party discovering such fact shall within two
Business Days give written notice thereof to the other parties hereto. In
connection therewith, the Originator or the Depositor, as the case may be, shall
repurchase or, subject to the limitations set forth in Section 2.03(d),
substitute one or more Qualified Substitute Mortgage Loans for the affected
Mortgage Loan within 90 days of the earlier of discovery or receipt of such
notice with respect to such affected Mortgage Loan. Such repurchase or
substitution shall be made (i) by the Originator if the affected Mortgage Loan's
status as a non- qualified mortgage is or results from a breach of any
representation, warranty or covenant made by the Originator under the Mortgage
Loan Purchase Agreement or (ii) the Depositor, if the affected Mortgage Loan's
status as a non-qualified mortgage is a breach of any representation or warranty
of the Depositor set forth in Section 2.06, or if its status as a non-qualified
mortgage is a breach of no representation or warranty. Any such repurchase or
substitution shall be made in the same manner as set forth in Section 2.03(a) or
2.03(d), if made by the Originator, or Section 2.03(b), if made by the
Depositor. The Trustee shall reconvey to the Depositor or the Originator, as the
case may be, the Mortgage Loan to be released pursuant hereto in the same
manner, and on the same terms and conditions, as it would a Mortgage Loan
repurchased for breach of a representation or warranty.
SECTION 2.04. Intentionally Omitted.
SECTION 2.05. Representations, Warranties and Covenants of the Servicer.
50
The Servicer hereby represents, warrants and covenants to the Trustee, for
the benefit of each of the Trustee and the Certificateholders and to the
Depositor that as of the Closing Date or as of such date specifically provided
herein:
(i) The Servicer is a limited partnership duly formed, validly existing and
in good standing as a limited partnership under the laws of the State of
Delaware and is duly authorized and qualified to transact any and all
business contemplated by this Agreement to be conducted by the Servicer in
any state in which a Mortgaged Property is located or is otherwise not
required under applicable law to effect such qualification and, in any event,
is in compliance with the doing business laws of any such State, to the
extent necessary to ensure its ability to enforce each Mortgage Loan and to
service the Mortgage Loans in accordance with the terms of this Agreement;
(ii) The Servicer has the full power and authority to conduct its business
as presently conducted by it and to execute, deliver and perform, and to
enter into and consummate, all transactions contemplated by this Agreement.
The Servicer has duly authorized the execution, delivery and performance of
this Agreement, has duly executed and delivered this Agreement, and this
Agreement, assuming due authorization, execution and delivery by the
Depositor and the Trustee, constitutes a legal, valid and binding obligation
of the Servicer, enforceable against it in accordance with its terms except
as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity;
(iii) The execution and delivery of this Agreement by the Servicer, the
servicing of the Mortgage Loans by the Servicer hereunder, the consummation
by the Servicer of any other of the transactions herein contemplated, and the
fulfillment of or compliance with the terms hereof are in the ordinary course
of business of the Servicer and will not (A) result in a breach of any term
or provision of the limited partnership agreement of the Servicer or (B)
conflict with, result in a breach, violation or acceleration of, or result in
a default under, the terms of any other material agreement or instrument to
which the Servicer is a party or by which it may be bound, or any statute,
order or regulation applicable to the Servicer of any court, regulatory body,
administrative agency or governmental body having jurisdiction over the
Servicer; and the Servicer is not a party to, bound by, or in breach or
violation of any indenture or other agreement or instrument, or subject to or
in violation of any statute, order or regulation of any court, regulatory
body, administrative agency or governmental body having jurisdiction over it,
which materially and adversely affects or, to the Servicer's knowledge, would
in the future materially and adversely affect, (x) the ability of the
Servicer to perform its obligations under this Agreement, (y) the business,
operations, financial condition, properties or assets of the Servicer taken
as a whole or (z) the legality, validity or enforceability of this Agreement;
(iv) The Servicer is a HUD approved mortgagee pursuant to Section 203 and
Section 211 of the National Housing Act. No event has occurred, including but
not limited to a change in insurance coverage, that would make the Servicer
unable to comply with HUD eligibility requirements or that would require
notification to HUD;
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(v) The Servicer does not believe, nor does it have any reason or cause to
believe, that it cannot perform each and every covenant made by it and
contained in this Agreement;
(vi) No litigation is pending against the Servicer that would materially
and adversely affect the execution, delivery or enforceability of this
Agreement or the ability of the Servicer to service the Mortgage Loans or to
perform any of its other obligations hereunder in accordance with the terms
hereof;
(vii) There are no actions or proceedings against, or investigations known
to it of, the Servicer before any court, administrative or other tribunal (A)
that might prohibit its entering into this Agreement, (B) seeking to prevent
the consummation of the transactions contemplated by this Agreement or (C)
that might prohibit or materially and adversely affect the performance by the
Servicer of its obligations under, or the validity or enforceability of, this
Agreement;
(viii) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Servicer of, or compliance by the Servicer with, this
Agreement or the consummation by it of the transactions contemplated by this
Agreement, except for such consents, approvals, authorizations or orders, if
any, that have been obtained prior to the Closing Date;
(ix) [reserved];
(x) Neither this Agreement nor any information, certificate of an officer,
statement furnished in writing or report delivered to the Trustee by the
Servicer in connection with the transactions contemplated hereby contains or
will contain any untrue statement of a material fact;
(xi) The Servicer will not waive any Prepayment Charge unless it is waived
in accordance with the standard set forth in Section 3.01; and
(xii) The Servicer has fully furnished and will continue to fully furnish,
in accordance with the Fair Credit Reporting Act and its implementing
regulations, accurate and complete information (e.g., favorable and
unfavorable) on its borrower credit files to Equifax, Experian and Trans
Union Credit Information Company or their successors (the "Credit
Repositories") in a timely manner.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.05 shall survive delivery of the Mortgage
Files to the Trustee and shall inure to the benefit of the Trustee, the
Depositor and the Certificateholders. Upon discovery by any of the Depositor,
the Servicer or the Trustee of a breach of any of the foregoing representations,
warranties and covenants which materially and adversely affects the value of any
Mortgage Loan, Prepayment Charge or the interests therein of the
Certificateholders, the party discovering such breach shall give prompt written
notice (but in no event later than two Business Days following such discovery)
to the Servicer and the Trustee. Notwithstanding the foregoing, within 90 days
of the earlier of discovery by the Servicer or receipt of notice by the Servicer
of the breach of the representation or covenant of the Servicer set forth in
Section 2.05(xi) above which materially and adversely affects the interests of
the Holders of the Class P Certificates in any Prepayment Charge, the Servicer
must pay the amount of such
52
waived Prepayment Charge, for the benefit of the holders of the Class P
Certificates, by depositing such amount into the Collection Account. The
foregoing shall not, however, limit any remedies available to the
Certificateholders, the Depositor or the Trustee on behalf of the
Certificateholders, pursuant to the Mortgage Loan Purchase Agreement respecting
a breach of the representations, warranties and covenants of the Originator made
in its capacity as a party to the Mortgage Loan Purchase Agreement.
SECTION 2.06. Representations and Warranties of the Depositor.
The Depositor represents and warrants to the Trust and the Trustee on
behalf of the Certificateholders as follows:
(i) This agreement constitutes a legal, valid and binding obligation of the
Depositor, enforceable against the Depositor in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
affecting the enforcement of creditors' rights in general and except as such
enforceability may be limited by general principles of equity (whether
considered in a proceeding at law or in equity);
(ii) Immediately prior to the sale and assignment by the Depositor to the
Trustee on behalf of the Trust of each Mortgage Loan, the Depositor had good
and marketable title to each Mortgage Loan (insofar as such title was
conveyed to it by the Seller) subject to no prior lien, claim, participation
interest, mortgage, security interest, pledge, charge or other encumbrance or
other interest of any nature;
(iii) As of the Closing Date, the Depositor has transferred all right,
title and interest in the Mortgage Loans to the Trustee on behalf of the
Trust;
(iv) The Depositor has not transferred the Mortgage Loans to the Trustee on
behalf of the Trust with any intent to hinder, delay or defraud any of its
creditors;
(v) The Depositor has been duly incorporated and is validly existing as a
corporation in good standing under the laws of Delaware, with full corporate
power and authority to own its assets and conduct its business as presently
being conducted;
(vi) The Depositor is not in violation of its articles of incorporation or
by-laws or in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to which
the Depositor is a party or by which it or its properties may be bound, which
default might result in any material adverse changes in the financial
condition, earnings, affairs or business of the Depositor or which might
materially and adversely affect the properties or assets, taken as a whole,
of the Depositor;
(vii) The execution, delivery and performance of this Agreement by the
Depositor, and the consummation of the transactions contemplated thereby, do
not and will not result in a material breach or violation of any of the terms
or provisions of, or, to the knowledge of the Depositor,
53
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Depositor is a party
or by which the Depositor is bound or to which any of the property or assets
of the Depositor is subject, nor will such actions result in any violation of
the provisions of the articles of incorporation or by-laws of the Depositor
or, to the best of the Depositor's knowledge without independent
investigation, any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Depositor or any of
its properties or assets (except for such conflicts, breaches, violations and
defaults as would not have a material adverse effect on the ability of the
Depositor to perform its obligations under this Agreement);
(viii) To the best of the Depositor's knowledge without any independent
investigation, no consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of the
United States or any other jurisdiction is required for the issuance of the
Certificates, or the consummation by the Depositor of the other transactions
contemplated by this Agreement, except such consents, approvals,
authorizations, registrations or qualifications as (a) may be required under
State securities or Blue Sky laws, (b) have been previously obtained or (c)
the failure of which to obtain would not have a material adverse effect on
the performance by the Depositor of its obligations under, or the validity or
enforceability of, this Agreement; and
(ix) There are no actions, proceedings or investigations pending before or,
to the Depositor's knowledge, threatened by any court, administrative agency
or other tribunal to which the Depositor is a party or of which any of its
properties is the subject: (a) which if determined adversely to the Depositor
would have a material adverse effect on the business, results of operations
or financial condition of the Depositor; (b) asserting the invalidity of this
Agreement or the Certificates; (c) seeking to prevent the issuance of the
Certificates or the consummation by the Depositor of any of the transactions
contemplated by this Agreement, as the case may be; or (d) which might
materially and adversely affect the performance by the Depositor of its
obligations under, or the validity or enforceability of, this Agreement.
SECTION 2.07. Issuance of Certificates.
The Trustee acknowledges the assignment to it of the Mortgage Loans and the
delivery to it of the Mortgage Files, subject to the provisions of Sections 2.01
and 2.02, together with the assignment to it of all other assets included in the
Trust Fund, receipt of which is hereby acknowledged. Concurrently with such
assignment and delivery and in exchange therefor, 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
Certificates in authorized denominations. The interests evidenced by the
Certificates constitute the entire beneficial ownership interest in the Trust
Fund.
SECTION 2.08. [Reserved].
SECTION 2.09. Acceptance of REMIC 1 and REMIC 2 by the Trustee; Conveyance
of REMIC I Regular Interests, Class M-2A Interest and Class
M-3 Interest; Issuance of Certificates.
54
(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 assets described in the definition of REMIC 1 for the benefit of the
holders of the REMIC 1 Regular Interests (which are uncertificated) and the
Class R Certificates (in respect of the Class R-1 Interest). The Trustee
acknowledges receipt of the REMIC 1 Regular Interests (which are 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 1 Regular Interests and the Class R
Certificates (in respect of the Class R-1 Interest). The interests evidenced by
the Class R-1 Interest, together with the REMIC 1 Regular Interests, constitute
the entire beneficial ownership interest in REMIC 1.
(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 1 Regular Interests (which are uncertificated) for the benefit of the
Holders of the Regular Certificates (other than the Class M-2A Certificates and
the Class M-3 Certificates), the Class M-2A Interest (which is uncertificated),
the Class M-3 Interest (which is uncertificated) and the Class R Certificates
(in respect of the Class R-2 Interest). The interests evidenced by the Class R-2
Interest, together with the Regular Certificates (other than the Class M-2A
Certificates and the Class M-3 Certificates), the Class M-2A Interest and the
Class M-3 Interest, constitute the entire beneficial ownership interest in REMIC
2.
(c) 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 Class M-2A Interest (which is uncertificated) for the benefit of the Holders
of the Class M-2A Certificates and the Class R-X Certificates (in respect of the
Class R-3 Interest). The interests evidenced by the Class R-3 Interest, together
with the Class M-2A Certificates, constitute the entire beneficial ownership
interest in REMIC 3. 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 Class M-3 Interest (which is uncertificated) for the benefit of
the Holders of the Class M-3 Certificates and the Class R-X Certificates (in
respect of the Class R-4 Interest). The interests evidenced by the Class R-4
Interest, together with the Class M-3 Certificates, constitute the entire
beneficial ownership interest in REMIC 4.
(d) In exchange for the REMIC 1 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 (other than the Class M-2A Certificates and the Class M-3
Certificates) in authorized denominations, which Certificates, together with the
Class M-2A Interest, the Class M-3 Interest and the Class R Certificates (in
respect of the Class R-2 Interest), evidence the entire beneficial ownership
interest in REMIC 2.
(e) In exchange for the Class M-2A Interest 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 Class
M-2A Certificates in authorized denominations, which Certificates, together
55
with the Class R-X Certificates (in respect of the Class R-3 Interest), evidence
the entire beneficial ownership interest in REMIC 3. In exchange for the Class
M-3 Interest 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 Class M-3 Certificates in authorized denominations,
which Certificates, together with the Class R-X Certificates (in respect of the
Class R-4 Interest), evidence the entire beneficial ownership interest in REMIC
4.
(f) 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 REMIC 4 (including the Residual Interest therein represented by the Class
R-4 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 R Certificates (evidencing the Class
R-1 Interest and the Class R-2 Interest) and the Class R-X Certificates
(evidencing the Class R-3 Interest and the Class R-4 Interest) in authorized
denominations.
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ARTICLE III
ADMINISTRATION AND SERVICING
OF THE MORTGAGE LOANS
SECTION 3.01. Servicer to Act as Servicer.
The Servicer shall service and administer the Mortgage Loans on behalf of
the Trust and in the best interests of and for the benefit of the
Certificateholders (as determined by the Servicer in its reasonable judgment) in
accordance with the terms of this Agreement and the Mortgage Loans and, to the
extent consistent with such terms, in the same manner in which it services and
administers similar mortgage loans for its own portfolio, giving due
consideration to customary and usual standards of practice of mortgage lenders
and loan servicers administering similar mortgage loans but without regard to:
(i) any relationship that the Servicer, any Sub-Servicer or any Affiliate
of the Servicer or any Sub-Servicer may have with the related Mortgagor;
(ii) the ownership or non-ownership of any Certificate by the Servicer or
any Affiliate of the Servicer;
(iii) the Servicer's obligation to make Advances or Servicing Advances; or
(iv) the Servicer's or any Sub-Servicer's right to receive compensation for
its services hereunder or with respect to any particular transaction.
To the extent consistent with the foregoing, the Servicer (a) shall seek
the timely and complete recovery of principal and interest on the Mortgage Notes
and (b) shall waive (or permit a Sub-Servicer to waive) a Prepayment Charge only
under the following circumstances: (i) such waiver is standard and customary in
servicing similar Mortgage Loans and (ii) either (A) such waiver relates to a
default or a reasonably foreseeable default and would, in the reasonable
judgment of the Servicer, maximize recovery of total proceeds taking into
account the value of such Prepayment Charge and the related Mortgage Loan or (B)
the collection of such Prepayment Charge is prohibited by applicable law. If a
Prepayment Charge is waived other than as permitted by meeting the standards
described in clauses (i) and (ii) above, then as a remedy for the breach of such
covenant, the Servicer shall to pay the amount of such waived Prepayment Charge,
for the benefit of the Holders of the Class P Certificates, by depositing such
amount into the Collection Account together with and at the time that the amount
prepaid on the related Mortgage Loan is required to be deposited into the
Collection Account. Notwithstanding any other provisions of this Agreement, any
payments made by the Servicer in respect of any Prepayment Charges waived other
than as permitted above shall be deemed to be paid outside of the Trust Fund.
Subject only to the above-described servicing standards and the terms of
this Agreement and of the Mortgage Loans, the Servicer shall have full power and
authority, acting alone or through Sub- Servicers as provided in Section 3.02,
to do or cause to be done any and all things in connection with such servicing
and administration which it may deem necessary or desirable. Without limiting
the
57
generality of the foregoing, the Servicer in its own name or in the name of a
Sub-Servicer is hereby authorized and empowered by the Trustee when the Servicer
believes it appropriate in its best judgment in accordance with the servicing
standards set forth above, to execute and deliver, on behalf of the
Certificateholders and the Trustee, and upon notice to the Trustee, 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 the Mortgaged Properties and to institute foreclosure proceedings or
obtain a deed-in-lieu of foreclosure so as to convert the ownership of such
properties, and to hold or cause to be held title to such properties, on behalf
of the Trustee and Certificateholders. The Servicer shall service and administer
the Mortgage Loans in accordance with applicable state and federal law and shall
provide to the Mortgagors any reports required to be provided to them thereby.
The Servicer shall also comply in the performance of this Agreement with all
reasonable rules and requirements of each insurer under any standard hazard
insurance policy. Subject to Section 3.17, within 15 days of the Closing Date,
the Trustee shall execute, at the written request of the Servicer, and furnish
to the Servicer and any Sub-Servicer a limited power of attorney in the form of
Exhibit I, executed by each payee or last endorsee, as applicable, of each of
the Mortgage Notes and each mortgagee or last assignee, as applicable, of each
of the Mortgages and other documents necessary or appropriate to enable the
Servicer or any Sub- Servicer to carry out their servicing and administrative
duties hereunder; PROVIDED, such limited powers of attorney or other documents
shall be prepared by the Servicer and submitted to the Trustee for execution.
The Trustee shall not be liable for the actions of the Servicer or any
Sub-Servicers under such powers of attorney.
Subject to Section 3.09 hereof, in accordance with the standards of the
preceding paragraph, the Servicer, on escrowed accounts, shall advance or cause
to be advanced funds as necessary for the purpose of effecting the payment of
taxes and assessments on the Mortgaged Properties, which advances shall be
Servicing Advances reimbursable in the first instance from related collections
from the Mortgagors pursuant to Section 3.09, and further as provided in Section
3.11. Any cost incurred by the Servicer or by Sub-Servicers in effecting the
payment of taxes and assessments on a Mortgaged Property shall not, for the
purpose of calculating distributions to Certificateholders, be added to the
unpaid Principal Balance of the related Mortgage Loan, notwithstanding that the
terms of such Mortgage Loan so permit.
Notwithstanding anything in this Agreement to the contrary, the Servicer
may not make any future advances with respect to a Mortgage Loan (except as
provided in Section 4.04) and the Servicer shall not (i) permit any modification
with respect to any Mortgage Loan that would change the Mortgage Rate, reduce or
increase the Principal Balance (except for reductions resulting from actual
payments of principal) or change the final maturity date on such Mortgage Loan
(unless, as provided in Section 3.07, the Mortgagor is in default with respect
to the Mortgage Loan or such default is, in the judgment of the Servicer,
reasonably foreseeable) or (ii) permit any modification, waiver or amendment of
any term of any Mortgage Loan that would both (A) effect an exchange or
reissuance of such Mortgage Loan under Section 1001 of the Code (or Treasury
regulations promulgated thereunder) and (B) cause any REMIC created hereunder to
fail to qualify as a REMIC under the Code or the imposition of any tax on
"prohibited transactions" or "contributions after the startup date" under the
REMIC Provisions.
SECTION 3.02. Sub-Servicing Agreements Between Servicer and Sub-Servicers.
58
(a) The Servicer may enter into Sub-Servicing Agreements with Sub-Servicers
for the servicing and administration of the Mortgage Loans; provided, however,
that such agreements would not result in a withdrawal or a downgrading by any
Rating Agency of the rating on any Class of Certificates. The Trustee is hereby
authorized to acknowledge, at the request of the Servicer, any Sub-Servicing
Agreement that meets the requirements applicable to Sub-Servicing Agreements set
forth in this Agreement and that is otherwise permitted under this Agreement. No
such acknowledgment shall be deemed to imply that the Trustee has consented to
any such Sub-Servicing Agreement, has passed upon whether such Sub-Servicing
Agreement meets the requirements applicable to Sub-Servicing Agreements set
forth in this Agreement or has passed upon whether such Sub-Servicing Agreement
is otherwise permitted under this Agreement.
Each Sub-Servicer shall be (i) authorized to transact business in the state
or states where the related Mortgaged Properties it is to service are situated,
if and to the extent required by applicable law to enable the Sub-Servicer to
perform its obligations hereunder and under the Sub-Servicing Agreement and (ii)
a Xxxxxxx Mac or Xxxxxx Mae approved mortgage servicer. Each Sub-Servicing
Agreement must impose on the Sub-Servicer requirements conforming to the
provisions set forth in Section 3.08 and provide for servicing of the Mortgage
Loans consistent with the terms of this Agreement. The Servicer will examine
each Sub-Servicing Agreement and will be familiar with the terms thereof. The
terms of any Sub-Servicing Agreement will not be inconsistent with any of the
provisions of this Agreement. The Servicer and the Sub-Servicers may enter into
and make amendments to the Sub-Servicing Agreements or enter into different
forms of Sub-Servicing Agreements; provided, however, that any such amendments
or different forms shall be consistent with and not violate the provisions of
this Agreement, and that no such amendment or different form shall be made or
entered into which could be reasonably expected to be materially adverse to the
interests of the Certificateholders without the consent of the Holders of
Certificates entitled to at least 66% of the Voting Rights; provided, further,
that the consent of the Holders of Certificates entitled to at least 66% of the
Voting Rights shall not be required (i) to cure any ambiguity or defect in a
Sub-Servicing Agreement, (ii) to correct, modify or supplement any provisions of
a Sub- Servicing Agreement, or (iii) to make any other provisions with respect
to matters or questions arising under a Sub-Servicing Agreement, which, in each
case, shall not be inconsistent with the provisions of this Agreement. Any
variation without the consent of the Holders of Certificates entitled to at
least 66% of the Voting Rights from the provisions set forth in Section 3.08
relating to insurance or priority requirements of Sub-Servicing Accounts, or
credits and charges to the Sub- Servicing Accounts or the timing and amount of
remittances by the Sub-Servicers to the Servicer, are conclusively deemed to be
inconsistent with this Agreement and therefore prohibited. The Servicer shall
deliver to the Trustee copies of all Sub-Servicing Agreements, and any
amendments or modifications thereof, promptly upon the Servicer's execution and
delivery of such instruments.
(b) As part of its servicing activities hereunder, the Servicer, for the
benefit of the Trustee and the Certificateholders, shall enforce the obligations
of each Sub-Servicer under the related Sub- Servicing Agreement and (except as
otherwise provided in Section 2.01) of the Originator and the Seller under the
Mortgage Loan Purchase Agreement, including, without limitation, any obligation
to make advances in respect of delinquent payments as required by a
Sub-Servicing Agreement, or to purchase a Mortgage Loan on account of missing or
defective documentation or on account of a breach of a representation, warranty
or covenant, as described in Section 2.03(a). Such enforcement, including,
without limitation, the legal prosecution of claims, termination of
Sub-Servicing
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Agreements, and the pursuit of other appropriate remedies, shall be in such form
and carried out to such an extent and at such time as the Servicer, in its good
faith business judgment, would require were it the owner of the related Mortgage
Loans. The Servicer shall pay the costs of such enforcement at its own expense,
and shall be reimbursed therefor only (i) from a general recovery resulting from
such enforcement, to the extent, if any, that such recovery exceeds all amounts
due in respect of the related Mortgage Loans, or (ii) from a specific recovery
of costs, expenses or attorneys' fees against the party against whom such
enforcement is directed. Except as otherwise provided in Section 2.01,
enforcement of the Mortgage Loan Purchase Agreement against the Originator and
the Seller shall be effected by the Servicer to the extent it is not the
Originator or the Seller and otherwise by the Trustee in accordance with the
foregoing provisions of this paragraph.
SECTION 3.03. Successor Sub-Servicers.
The Servicer shall be entitled to terminate any Sub-Servicing Agreement and
the rights and obligations of any Sub-Servicer pursuant to any Sub-Servicing
Agreement in accordance with the terms and conditions of such Sub-Servicing
Agreement. In the event of termination of any Sub- Servicer, all servicing
obligations of such Sub-Servicer shall be assumed simultaneously by the Servicer
without any act or deed on the part of such Sub-Servicer or the Servicer, and
the Servicer either shall service directly the related Mortgage Loans or shall
enter into a Sub- Servicing Agreement with a successor Sub-Servicer which
qualifies under Section 3.02.
Any Sub-Servicing Agreement shall include the provision that such agreement
may be immediately terminated by the Servicer or the Trustee (if the Trustee is
acting as Servicer) without fee, in accordance with the terms of this Agreement,
in the event that the Servicer (or the Trustee, if such party is then acting as
Servicer) shall, for any reason, no longer be the Servicer (including
termination due to a Servicer Event of Termination).
SECTION 3.04. Liability of the Servicer.
Notwithstanding any Sub-Servicing Agreement or the provisions of this
Agreement relating to agreements or arrangements between the Servicer and a
Sub-Servicer or reference to actions taken through a Sub-Servicer or otherwise,
the Servicer shall remain obligated and primarily liable to the Trustee and the
Certificateholders for the servicing and administering of the Mortgage Loans in
accordance with the provisions of Section 3.01 without diminution of such
obligation or liability by virtue of such Sub-Servicing Agreements or
arrangements or by virtue of indemnification from the Sub-Servicer and to the
same extent and under the same terms and conditions as if the Servicer alone
were servicing and administering the Mortgage Loans. The Servicer shall be
entitled to enter into any agreement with a Sub-Servicer for indemnification of
the Servicer by such Sub-Servicer and nothing contained in this Agreement shall
be deemed to limit or modify such indemnification.
SECTION 3.05. No Contractual Relationship Between Sub-Servicers and the
Trustee or Certificateholders.
Any Sub-Servicing Agreement that may be entered into and any transactions
or services relating to the Mortgage Loans involving a Sub-Servicer in its
capacity as such shall be deemed to be between the Sub-Servicer and the Servicer
alone, and the Trustee or Certificateholders shall not
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be deemed parties thereto and shall have no claims, rights, obligations, duties
or liabilities with respect to the Sub-Servicer except as set forth in Section
3.06. The Servicer shall be solely liable for all fees owed by it to any
Sub-Servicer, irrespective of whether the Servicer's compensation pursuant to
this Agreement is sufficient to pay such fees.
SECTION 3.06. Assumption or Termination of Sub-Servicing Agreements by
Trustee.
In the event the Servicer shall for any reason no longer be the servicer
(including by reason of the occurrence of a Servicer Event of Termination), the
Trustee shall thereupon assume all of the rights and obligations of the Servicer
under each Sub-Servicing Agreement that the Servicer may have entered into,
unless the Trustee elects to terminate any Sub-Servicing Agreement in accordance
with its terms as provided in Section 3.03. Upon such assumption, the Trustee
(or the successor servicer appointed pursuant to Section 7.02) shall be deemed,
subject to Section 3.03, to have assumed all of the departing Servicer's
interest therein and to have replaced the departing Servicer as a party to each
Sub-Servicing Agreement to the same extent as if each Sub-Servicing Agreement
had been assigned to the assuming party, except that (i) the departing Servicer
shall not thereby be relieved of any liability or obligations under any
Sub-Servicing Agreement that arose before it ceased to be the Servicer and (ii)
neither the Trustee nor any successor Servicer shall be deemed to have assumed
any liability or obligation of the Servicer that arose before it ceased to be
the Servicer.
The Servicer at its expense shall, upon request of the Trustee, deliver to
the assuming party all documents and records relating to each Sub-Servicing
Agreement and the Mortgage Loans then being serviced and an accounting of
amounts collected and held by or on behalf of it, and otherwise use its best
efforts to effect the orderly and efficient transfer of the Sub-Servicing
Agreements to the assuming party. All Servicing Transfer Costs shall be paid by
the predecessor Servicer upon presentation of reasonable documentation of such
costs, and if such predecessor Servicer defaults in its obligation to pay such
costs, such costs shall be paid by the successor Servicer or the Trustee (in
which case the successor Servicer or the Trustee, as applicable, shall be
entitled to reimbursement therefor from the assets of the Trust).
SECTION 3.07. Collection of Certain Mortgage Loan Payments.
The Servicer shall make reasonable efforts to collect all payments called
for under the terms and provisions of the Mortgage Loans, and shall, to the
extent such procedures shall be consistent with this Agreement and the terms and
provisions of any applicable insurance policies, follow such collection
procedures as it would follow with respect to mortgage loans comparable to the
Mortgage Loans and held for its own account. Consistent with the foregoing, the
Servicer may in its discretion (i) waive any late payment charge or, if
applicable, any penalty interest, or (ii) extend the due dates for the Monthly
Payments due on a Mortgage Note for a period of not greater than 180 days;
provided, however, that any extension pursuant to clause (ii) above shall not
affect the amortization schedule of any Mortgage Loan for purposes of any
computation hereunder, except as provided below. In the event of any such
arrangement pursuant to clause (ii) above, the Servicer shall make timely
advances on such Mortgage Loan during such extension pursuant to Section 4.04
and in accordance with the amortization schedule of such Mortgage Loan without
modification thereof by reason of such arrangement. Notwithstanding the
foregoing, in the event that any Mortgage Loan is in default or, in the judgment
of the Servicer, such default is reasonably foreseeable, the Servicer,
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consistent with the standards set forth in Section 3.01, may also waive, modify
or vary any term of such Mortgage Loan (including modifications that would
change the Mortgage Rate, forgive the payment of principal or interest or extend
the final maturity date of such Mortgage Loan), accept payment from the related
Mortgagor of an amount less than the Stated Principal Balance in final
satisfaction of such Mortgage Loan, or consent to the postponement of strict
compliance with any such term or otherwise grant indulgence to any Mortgagor
(any and all such waivers, modifications, variances, forgiveness of principal or
interest, postponements, or indulgences collectively referred to herein as
"forbearance"). The Servicer's analysis supporting any forbearance and the
conclusion that any forbearance meets the standards of Section 3.01 shall be
reflected in writing in the Mortgage File.
SECTION 3.08. Sub-Servicing Accounts.
In those cases where a Sub-Servicer is servicing a Mortgage Loan pursuant
to a Sub- Servicing Agreement, the Sub-Servicer will be required to establish
and maintain one or more accounts (collectively, the "Sub-Servicing Account").
The Sub-Servicing Account shall be an Eligible Account and shall comply with all
requirements of this Agreement relating to the Collection Account. The
Sub-Servicer shall deposit in the clearing account in which it customarily
deposits payments and collections on mortgage loans in connection with its
mortgage loan servicing activities on a daily basis, and in no event more than
one Business Day after the Sub-Servicer's receipt thereof, all proceeds of
Mortgage Loans received by the Sub-Servicer less its servicing compensation to
the extent permitted by the Sub-Servicing Agreement, and shall thereafter
deposit such amounts in the Sub-Servicing Account, in no event more than two
Business Days after the receipt of such amounts. The Sub-Servicer shall
thereafter deposit such proceeds in the Collection Account or remit such
proceeds to the Servicer for deposit in the Collection Account not later than
two Business Days after the deposit of such amounts in the Sub-Servicing
Account. For purposes of this Agreement, the Servicer shall be deemed to have
received payments on the Mortgage Loans when the Sub-Servicer receives such
payments.
SECTION 3.09. Collection of Taxes, Assessments and Similar Items; Servicing
Accounts.
The Servicer shall establish and maintain, or cause to be established and
maintained, one or more accounts (the "Servicing Accounts"), into which all
Escrow Payments shall be deposited and retained. Servicing Accounts shall be
Eligible Accounts. The Servicer shall deposit in the clearing account in which
it customarily deposits payments and collections on mortgage loans in connection
with its mortgage loan servicing activities on a daily basis, and in no event
more than one Business Day after the Servicer's receipt thereof, all Escrow
Payments collected on account of the Mortgage Loans and shall thereafter deposit
such Escrow Payments in the Servicing Accounts, in no event more than two
Business Days after the receipt of such Escrow Payments, all Escrow Payments
collected on account of the Mortgage Loans for the purpose of effecting the
payment of any such items as required under the terms of this Agreement.
Withdrawals of amounts from a Servicing Account may be made only to (i) effect
payment of taxes, assessments, hazard insurance premiums, and comparable items
in a manner and at a time that assures that the lien priority of the Mortgage is
not jeopardized (or, with respect to the payment of taxes, in a manner and at a
time that avoids the loss of the Mortgaged Property due to a tax sale or the
foreclosure as a result of a tax lien); (ii)
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reimburse the Servicer (or a Sub-Servicer to the extent provided in the related
Sub-Servicing Agreement) out of related collections for any Servicing Advances
made pursuant to Section 3.01 (with respect to taxes and assessments) and
Section 3.14 (with respect to hazard insurance); (iii) refund to Mortgagors any
sums as may be determined to be overages; (iv) pay interest, if required and as
described below, to Mortgagors on balances in the Servicing Account; or (v)
clear and terminate the Servicing Account at the termination of the Servicer's
obligations and responsibilities in respect of the Mortgage Loans under this
Agreement in accordance with Article X. In the event the Servicer shall deposit
in a Servicing Account any amount not required to be deposited therein, it may
at any time withdraw such amount from such Servicing Account, any provision
herein to the contrary notwithstanding. The Servicer will be responsible for the
administration of the Servicing Accounts and will be obligated to make Servicing
Advances to such accounts when and as necessary to avoid the lapse of insurance
coverage on the Mortgaged Property, or which the Servicer knows, or in the
exercise of the required standard of care of the Servicer hereunder should know,
is necessary to avoid the loss of the Mortgaged Property due to a tax sale or
the foreclosure as a result of a tax lien. If any such payment has not been made
and the Servicer receives notice of a tax lien with respect to the Mortgage
being imposed, the Servicer will, promptly and to the extent required to avoid
loss of the Mortgaged Property, advance or cause to be advanced funds necessary
to discharge such lien on the Mortgaged Property. As part of its servicing
duties, the Servicer or Sub- Servicers shall pay to the Mortgagors interest on
funds in the Servicing Accounts, to the extent required by law and, to the
extent that interest earned on funds in the Servicing Accounts is insufficient,
to pay such interest from its or their own funds, without any reimbursement
therefor. The Servicer may pay to itself any excess interest on funds in the
Servicing Accounts, to the extent such action is in conformity with the
servicing standard set forth in Section 3.01, is permitted by law and such
amounts are not required to be paid to Mortgagors or used for any of the other
purposes set forth above.
SECTION 3.10. Collection Account and Distribution Account.
(a) On behalf of the Trust Fund, the Servicer shall establish and maintain,
or cause to be established and maintained, one or more accounts (such account or
accounts, the "Collection Account"), held in trust for the benefit of the
Trustee and the Certificateholders. On behalf of the Trust Fund, the Servicer
shall deposit or cause to be deposited in the clearing account in which it
customarily deposits payments and collections on mortgage loans in connection
with its mortgage loan servicing activities on a daily basis, and in no event
more than one Business Day after the Servicer's receipt thereof, and shall
thereafter deposit in the Collection Account, in no event more than two Business
Days after the Servicer's receipt thereof, as and when received or as otherwise
required hereunder, the following payments and collections received or made by
it subsequent to the Cut-off Date (other than in respect of principal or
interest on the Mortgage Loans due on or before the Cut-off Date) or payments
(other than Principal Prepayments) received by it on or prior to the Cut-off
Date but allocable to a Due Period subsequent thereto:
(i) all payments on account of principal, including Principal Prepayments
(but not Prepayment Charges), on the Mortgage Loans;
(ii) all payments on account of interest (net of the related Servicing Fee)
on each Mortgage Loan;
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(iii) all Insurance Proceeds and Liquidation Proceeds and condemnation
proceeds (other than proceeds collected in respect of any particular REO
Property and amounts paid in connection with a purchase of Mortgage Loans and
REO Properties pursuant to Section 10.01);
(iv) any amounts required to be deposited pursuant to Section 3.12 in
connection with any losses realized on Permitted Investments with respect to
funds held in the Collection Account;
(v) any amounts required to be deposited by the Servicer pursuant to the
second paragraph of Section 3.14(a) in respect of any blanket policy
deductibles;
(vi) all proceeds of any Mortgage Loan repurchased or purchased in
accordance with Section 2.03 or Section 10.01;
(vii) all amounts required to be deposited in connection with Substitution
Adjustments pursuant to Section 2.03;
(viii) all Prepayment Charges collected by the Servicer and any Servicer
Prepayment Charge Payment Amounts in connection with the Principal Prepayment
of any of the Mortgage Loans; and
(ix) without duplication, all payments of claims under the PMI Policy.
The foregoing requirements for deposit in the Collection Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of Servicing Fees, late payment
charges, assumption fees, insufficient funds charges and ancillary income (other
than Prepayment Charges) need not be deposited by the Servicer in the Collection
Account and may be retained by the Servicer as additional compensation. In the
event the Servicer shall deposit in the Collection Account any amount not
required to be deposited therein, it may at any time withdraw such amount from
the Collection Account, any provision herein to the contrary notwithstanding.
(b) On behalf of the Trust Fund, the Trustee shall establish and maintain
one or more accounts (such account or accounts, the "Distribution Account"),
held in trust for the benefit of the Trustee and the Certificateholders. On
behalf of the Trust Fund, the Servicer shall deliver to the Trustee in
immediately available funds for deposit in the Distribution Account on or before
1:00 p.m. New York time (i) on the Servicer Remittance Date, that portion of the
Available Funds (calculated without regard to the references in the definition
thereof to amounts that may be withdrawn from the Distribution Account) for the
related Distribution Date then on deposit in the Collection Account, the amount
of all Prepayment Charges collected during the applicable Prepayment Period by
the Servicer and Servicer Prepayment Charge Payment Amounts in connection with
the Principal Prepayment of any of the Mortgage Loans then on deposit in the
Collection Account and (ii) on each Business Day as of the commencement of which
the balance on deposit in the Collection Account exceeds $75,000 following any
withdrawals pursuant to the next succeeding sentence, the amount of such excess,
but only if the Collection Account constitutes an Eligible Account solely
pursuant to clause (ii) of the definition of "Eligible Account." If the balance
on deposit in the Collection Account exceeds $75,000 as of the commencement of
business on any Business Day and the
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Collection Account constitutes an Eligible Account solely pursuant to clause
(ii) of the definition of "Eligible Account," the Servicer shall, on or before
1:00 p.m. New York time on such Business Day, withdraw from the Collection
Account any and all amounts payable or reimbursable to the Servicer, the Trustee
or any Sub-Servicer pursuant to Section 3.11 and shall pay such amounts to the
Persons entitled thereto.
(c) Funds in the Collection Account and the Distribution Account may be
invested in Permitted Investments in accordance with the provisions set forth in
Section 3.12. The Servicer shall give written notice to the Trustee of the
location of the Collection Account maintained by it when established and prior
to any change thereof. The Trustee shall give notice to the Servicer and the
Depositor of the location of the Distribution Account when established and prior
to any change thereof.
(d) Funds held in the Collection Account at any time may be delivered by
the Servicer to the Trustee for deposit in an account (which may be the
Distribution Account and must satisfy the standards for the Distribution Account
as set forth in the definition thereof) and for all purposes of this Agreement
shall be deemed to be a part of the Collection Account; provided, however, that
the Trustee shall have the sole authority to withdraw any funds held pursuant to
this subsection (d). In the event the Servicer shall deliver to the Trustee for
deposit in the Distribution Account any amount not required to be deposited
therein, it may at any time request that the Trustee withdraw such amount from
the Distribution Account and remit to it any such amount, any provision herein
to the contrary notwithstanding. In addition, the Servicer, with respect to
items (i) through (iv) below, shall deliver to the Trustee from time to time for
deposit, and the Trustee, with respect to items (i) through (iv) below, shall so
deposit, in the Distribution Account:
(i) any Advances, as required pursuant to Section 4.04;
(ii) any amounts required to be deposited pursuant to Section 3.23(d) or
(f) in connection with any REO Property;
(iii) any amounts to be paid in connection with a purchase of Mortgage
Loans and REO Properties pursuant to Section 10.01;
(iv) any Compensating Interest to be deposited pursuant to Section 3.24 in
connection with any Prepayment Interest Shortfall; and
(v) any amounts required to be paid to the Trustee pursuant to the
Agreement, including, but not limited to Section 3.06 and Section 7.02.
SECTION 3.11. Withdrawals from the Collection Account and Distribution
Account.
(a) The Servicer shall, from time to time, make withdrawals from the
Collection Account for any of the following purposes or as described in Section
4.04:
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(i) to remit to the Trustee for deposit in the Distribution Account the
amounts required to be so remitted pursuant to Section 3.10(b) or permitted
to be so remitted pursuant to the first sentence of Section 3.10(d);
(ii) subject to Section 3.16(d), to reimburse the Servicer for (a) any
unreimbursed Advances to the extent of amounts received which represent Late
Collections (net of the related Servicing Fees), Liquidation Proceeds and
Insurance Proceeds on Mortgage Loans with respect to which such Advances were
made in accordance with the provisions of Section 4.04; or (b) any
unreimbursed Advances with respect to the final liquidation of a Mortgage
Loan that are Nonrecoverable Advances, but only to the extent that Late
Collections, Liquidation Proceeds and Insurance Proceeds received with
respect to such Mortgage Loan are insufficient to reimburse the Servicer for
such unreimbursed Advances;
(iii) subject to Section 3.16(d), to pay the Servicer or any Sub-Servicer
(a) any unpaid Servicing Fees, (b) any unreimbursed Servicing Advances with
respect to each Mortgage Loan, but only to the extent of any Late
Collections, Liquidation Proceeds and Insurance Proceeds received with
respect to such Mortgage Loan, and (c) any Servicing Advances made with
respect to a Mortgage Loan that, upon a Final Recovery Determination with
respect to such Mortgage Loan are Nonrecoverable Advances, but only to the
extent that Late Collections, Liquidation Proceeds, Insurance Proceeds and
condemnation proceeds received with respect to such Mortgage Loan are
insufficient to reimburse the Servicer or any Sub-Servicer for Servicing
Advances;
(iv) to pay to the Servicer as servicing compensation (in addition to the
Servicing Fee) on the Servicer Remittance Date any interest or investment
income earned on funds deposited in the Collection Account;
(v) to pay the Originator with respect to each Mortgage Loan that has
previously been purchased or replaced pursuant to Section 2.03 all amounts
received thereon subsequent to the date of purchase or substitution, and to
pay the Servicer with respect to each Mortgage Loan that has previously been
purchased pursuant to Section 3.16(c) all amounts received thereon subsequent
to the date of purchase;
(vi) to reimburse the Servicer for any Advance or Servicing Advance
previously made which the Servicer has determined to be a Nonrecoverable
Advance in accordance with the provisions of Section 4.04;
(vii) to pay, or to reimburse the Servicer for Servicing Advances in
respect of, expenses incurred in connection with any Mortgage Loan pursuant
to Section 3.16(b);
(viii) to reimburse the Servicer for expenses incurred by or reimbursable
to the Servicer pursuant to Section 6.03;
(ix) [reserved];
(x) to reimburse itself for expenses incurred pursuant to Section
9.01(c)(i);
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(xi) [reserved]; and
(xii) to clear and terminate the Collection Account pursuant to Section
10.01.
The foregoing requirements for withdrawal from the Collection Account shall
be exclusive. In the event the Servicer shall deposit in the Collection Account
any amount not required to be deposited therein, it may at any time withdraw
such amount from the Collection Account, any provision herein to the contrary
notwithstanding.
The Servicer shall keep and maintain separate accounting, on a Mortgage
Loan by Mortgage Loan basis, for the purpose of justifying any withdrawal from
the Collection Account, to the extent held by or on behalf of it, pursuant to
subclauses (ii), (iii), (iv), (v), (vi) and (vii) above. The Servicer shall
provide written notification to the Trustee, on or prior to the next succeeding
Servicer Remittance Date, upon making any withdrawals from the Collection
Account pursuant to subclause (vi) above; provided that an Officers' Certificate
in the form described under Section 4.04(d) shall suffice for such written
notification to the Trustee in respect hereof.
(b) The Trustee shall, from time to time, make withdrawals from the
Distribution Account, for any of the following purposes, without priority:
(i) to make distributions in accordance with Section 4.01;
(ii) to pay itself the Trustee Fee pursuant to Section 8.05;
(iii) to pay any amounts in respect of taxes pursuant to Section 9.01(g);
(iv) to clear and terminate the Distribution Account pursuant to Section
10.01;
(v) to pay any amounts required to be paid to the Trustee pursuant to this
Agreement, including but not limited to funds required to be paid pursuant to
Section 3.06, Section 7.02 and Section 8.05;
(vi) to pay to the Trustee, any interest or investment income earned on
funds deposited in the Distribution Account; and
(vii) to pay the PMI Insurer the PMI Insurer Fee.
SECTION 3.12. Investment of Funds in the Collection Account and the
Distribution Account.
(a) The Servicer may direct any depository institution maintaining the
Collection Account to invest the funds on deposit in such account, and the
Trustee may direct any depository institution maintaining the Distribution
Account to invest the funds on deposit in such account or to hold such funds
uninvested (each such account, for the purposes of this Section 3.12, an
"Investment Account"). All investments pursuant to this Section 3.12 shall be in
one or more Permitted Investments bearing interest or sold at a discount, and
maturing, unless payable on
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demand, (i) no later than the Business Day immediately preceding the date on
which such funds are required to be withdrawn from such account pursuant to this
Agreement, if a Person other than the Trustee is the obligor thereon or if such
investment is managed or advised by a Person other than the Trustee or an
Affiliate of the Trustee, and (ii) no later than the date on which such funds
are required to be withdrawn from such account pursuant to this Agreement, if
the Trustee is the obligor thereon or if such investment is managed or advised
by the Trustee or any Affiliate. All such Permitted Investments shall be held to
maturity, unless payable on demand. Any investment of funds in an Investment
Account shall be made in the name of the Trustee (in its capacity as such), or
in the name of a nominee of the Trustee. The Trustee shall be entitled to sole
possession (except with respect to investment direction of funds held in the
Collection Account and any income and gain realized thereon) over each such
investment, and any certificate or other instrument evidencing any such
investment shall be delivered directly to the Trustee or its agent, together
with any document of transfer necessary to transfer title to such investment to
the Trustee or its nominee. In the event amounts on deposit in an Investment
Account are at any time invested in a Permitted Investment payable on demand,
the Trustee shall:
(x) consistent with any notice required to be given thereunder, demand that
payment thereon be made on the last day such Permitted Investment may
otherwise mature hereunder in an amount equal to the lesser of (1) all
amounts then payable thereunder and (2) the amount required to be withdrawn
on such date; and
(y) demand payment of all amounts due thereunder promptly upon
determination by a Responsible Officer of the Trustee that such Permitted
Investment would not constitute a Permitted Investment in respect of funds
thereafter on deposit in the Investment Account.
(b) All income and gain realized from the investment of funds deposited in
the Collection Account and any REO Account held by or on behalf of the Servicer
shall be for the benefit of the Servicer and shall be subject to its withdrawal
in accordance with Section 3.11, Section 3.31 or Section 3.23, as applicable.
The Servicer shall deposit in the Collection Account or any REO Account, as
applicable, the amount of any loss of principal incurred in respect of any such
Permitted Investment made with funds in such Account immediately upon
realization of such loss.
(c) All income and gain realized from the investment of funds deposited in
the Distribution Account shall be for the benefit of the Trustee. The Trustee
shall deposit in the Distribution Account the amount of any loss of principal
incurred in respect of any such Permitted Investment made with funds in such
Account immediately upon realization of such loss. Notwithstanding the
foregoing, the Trustee may at its discretion, and without liability, hold the
funds in the Distribution Account uninvested.
(d) Except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted Investment, or
if a default occurs in any other performance required under any Permitted
Investment, the Trustee may and, subject to Section 8.01 and Section 8.02(a)(v),
upon the request of the Holders of Certificates representing more than 50% of
the Voting Rights allocated to any Class of Certificates, shall take such action
as may be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate proceedings.
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SECTION 3.13. [Reserved].
SECTION 3.14. Maintenance of Hazard Insurance and Errors and Omissions and
Fidelity Coverage.
(a) The Servicer shall cause to be maintained for each Mortgage Loan hazard
insurance with extended coverage on the Mortgaged Property in an amount which is
at least equal to the least of (i) the current Principal Balance of such
Mortgage Loan, (ii) the amount necessary to fully compensate for any damage or
loss to the improvements that are a part of such property on a replacement cost
basis, in each case in an amount not less than such amount as is necessary to
avoid the application of any coinsurance clause contained in the related hazard
insurance policy and (iii) the maximum insurable value of the improvements which
are a part of such Mortgaged Property. The Servicer shall also cause to be
maintained hazard insurance with extended coverage on each REO Property in an
amount which is at least equal to the lesser of (i) the maximum insurable value
of the improvements which are a part of such property and (ii) the outstanding
Principal Balance of the related Mortgage Loan at the time it became an REO
Property. The Servicer will comply in the performance of this Agreement with all
reasonable rules and requirements of each insurer under any such hazard
policies. Any amounts to be collected by the Servicer under any such policies
(other than amounts to be applied to the restoration or repair of the property
subject to the related Mortgage or amounts to be released to the Mortgagor in
accordance with the procedures that the Servicer would follow in servicing loans
held for its own account, subject to the terms and conditions of the related
Mortgage and Mortgage Note) shall be deposited in the Collection Account,
subject to withdrawal pursuant to Section 3.11, if received in respect of a
Mortgage Loan, or in the REO Account, subject to withdrawal pursuant to Section
3.23, if received in respect of an REO Property. Any cost incurred by the
Servicer in maintaining any such insurance shall not, for the purpose of
calculating distributions to Certificateholders, be added to the unpaid
Principal Balance of the related Mortgage Loan, notwithstanding that the terms
of such Mortgage Loan so permit. It is understood and agreed that no earthquake
or other additional insurance is to be required of any Mortgagor other than
pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require any Mortgagor to obtain such additional insurance. If
the Mortgaged Property or REO Property is at any time in an area identified in
the Federal Register by the Federal Emergency Management Agency as having
special flood hazards and flood insurance has been made available, the Servicer
will cause to be maintained a flood insurance policy in respect thereof. Such
flood insurance shall be in an amount equal to the lesser of (i) the unpaid
Principal Balance of the related Mortgage Loan and (ii) the maximum amount of
such insurance available for the related Mortgaged Property under the national
flood insurance program (assuming that the area in which such Mortgaged Property
is located is participating in such program).
In the event that the Servicer shall obtain and maintain a blanket policy
with an insurer having a General Policy Rating of B:VI or better in Best's Key
Rating Guide (or such other rating that is comparable to such rating) insuring
against hazard losses on all of the Mortgage Loans, it shall conclusively be
deemed to have satisfied its obligations as set forth in the first two sentences
of this Section 3.14, it being understood and agreed that such policy may
contain a deductible clause, in which case the Servicer shall, in the event that
there shall not have been maintained on the related Mortgaged Property or REO
Property a policy complying with the first two sentences of this Section 3.14,
and there shall have been one or more losses which would have been covered by
such policy,
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deposit to the Collection Account from its own funds the amount not otherwise
payable under the blanket policy because of such deductible clause. In
connection with its activities as administrator and servicer of the Mortgage
Loans, the Servicer agrees to prepare and present, on behalf of itself, the
Trustee and Certificateholders, claims under any such blanket policy in a timely
fashion in accordance with the terms of such policy.
(b) The Servicer shall keep in force during the term of this Agreement a
policy or policies of insurance covering errors and omissions for failure in the
performance of the Servicer's obligations under this Agreement, which policy or
policies shall be in such form and amount that would meet the requirements of
Xxxxxx Xxx or Xxxxxxx Mac if it were the purchaser of the Mortgage Loans, unless
the Servicer has obtained a waiver of such requirements from Xxxxxx Mae or
Xxxxxxx Mac. The Servicer shall also maintain a fidelity bond in the form and
amount that would meet the requirements of Xxxxxx Mae or Xxxxxxx Mac, unless the
Servicer has obtained a waiver of such requirements from Xxxxxx Mae or Xxxxxxx
Mac. The Servicer shall be deemed to have complied with this provision if an
Affiliate of the Servicer has such errors and omissions and fidelity bond
coverage and, by the terms of such insurance policy or fidelity bond, the
coverage afforded thereunder extends to the Servicer. Any such errors and
omissions policy and fidelity bond shall by its terms not be cancelable without
thirty days' prior written notice to the Trustee. The Servicer shall also cause
each Sub-Servicer to maintain a policy of insurance covering errors and
omissions and a fidelity bond which would meet such requirements.
SECTION 3.15. Enforcement of Due-On-Sale Clauses; Assumption Agreements.
The Servicer will, to the extent it has actual knowledge of any conveyance
or prospective conveyance of any Mortgaged Property by any Mortgagor (whether by
absolute conveyance or by contract of sale, and whether or not the Mortgagor
remains or is to remain liable under the Mortgage Note and/or the Mortgage),
exercise its rights to accelerate the maturity of such Mortgage Loan under the
"due-on-sale" clause, if any, applicable thereto; provided, however, that the
Servicer shall not be required to take such action if in its sole business
judgment the Servicer believes it is not in the best interests of the Trust Fund
and shall not exercise any such rights if prohibited by law from doing so. If
the Servicer reasonably believes it is unable under applicable law to enforce
such "due- on-sale" clause, or if any of the other conditions set forth in the
proviso to the preceding sentence apply, the Servicer will enter into an
assumption and modification agreement from or with the person to whom such
property has been conveyed or is proposed to be conveyed, pursuant to which such
person becomes liable under the Mortgage Note and, to the extent permitted by
applicable state law, the Mortgagor remains liable thereon. The Servicer is also
authorized to enter into a substitution of liability agreement with such person,
pursuant to which the original Mortgagor is released from liability and such
person is substituted as the Mortgagor and becomes liable under the Mortgage
Note, provided that no such substitution shall be effective unless such person
satisfies the underwriting criteria of the Servicer and has a credit risk rating
at least equal to that of the original Mortgagor. In connection with any
assumption or substitution, the Servicer shall apply such underwriting standards
and follow such practices and procedures as shall be normal and usual in its
general mortgage servicing activities and as it applies to other mortgage loans
owned solely by it. The Servicer shall not take or enter into any assumption and
modification agreement, however, unless (to the extent practicable in the
circumstances) it shall have received confirmation, in writing, of the continued
effectiveness of any applicable hazard insurance policy. Any fee collected by
the
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Servicer in respect of an assumption, modification or substitution of liability
agreement shall be retained by the Servicer as additional servicing
compensation. In connection with any such assumption, no material term of the
Mortgage Note (including but not limited to the related Mortgage Rate and the
amount of the Monthly Payment) may be amended or modified, except as otherwise
required pursuant to the terms thereof. The Servicer shall notify the Trustee
that any such substitution, modification or assumption agreement has been
completed by forwarding to the Trustee the executed original of such
substitution, modification or assumption agreement, which document shall be
added to the related Mortgage File and shall, for all purposes, be considered a
part of such Mortgage File to the same extent as all other documents and
instruments constituting a part thereof.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Mortgage Loan by operation of law or by the terms of the Mortgage Note or any
assumption which the Servicer may be restricted by law from preventing, for any
reason whatsoever. For purposes of this Section 3.15, the term "assumption" is
deemed to also include a sale (of the Mortgaged Property) subject to the
Mortgage that is not accompanied by an assumption or substitution of liability
agreement.
SECTION 3.16. Realization Upon Defaulted Mortgage Loans.
(a) The Servicer shall use its best efforts, consistent with the servicing
standards set forth in Section 3.01, to foreclose upon or otherwise comparably
convert the ownership of properties securing such of the Mortgage Loans as come
into and continue in default and as to which no satisfactory arrangements can be
made for collection of delinquent payments pursuant to Section 3.07. The
Servicer shall be responsible for all costs and expenses incurred by it in any
such proceedings; provided, however, that such costs and expenses will be
recoverable as Servicing Advances by the Servicer as contemplated in Section
3.11(a) and Section 3.23. The foregoing is subject to the provision that, in any
case in which a Mortgaged Property shall have suffered damage from an Uninsured
Cause, the Servicer shall not be required to expend its own funds toward the
restoration of such property unless it shall determine in its discretion that
such restoration will increase the proceeds of liquidation of the related
Mortgage Loan after reimbursement to itself for such expenses.
(b) Notwithstanding the foregoing provisions of this Section 3.16 or any
other provision of this Agreement, with respect to any Mortgage Loan as to which
the Servicer has received actual notice of, or has actual knowledge of, the
presence of any toxic or hazardous substance on the related Mortgaged Property,
the Servicer shall not, on behalf of the Trustee, either (i) obtain title to
such Mortgaged Property as a result of or in lieu of foreclosure or otherwise,
or (ii) otherwise acquire possession of, or take any other action with respect
to, such Mortgaged Property, if, as a result of any such action, the Trustee,
the Trust Fund or the Certificateholders would be considered to hold title to,
to be a "mortgagee-in-possession" of, or to be an "owner" or "operator" of such
Mortgaged Property within the meaning of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended from time to time,
or any comparable law, unless the Servicer has also previously determined, based
on its reasonable judgment and a report prepared by a Person who regularly
conducts environmental audits using customary industry standards, that:
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(1) such Mortgaged Property is in compliance with applicable environmental
laws or, if not, that it would be in the best economic interest of the Trust
Fund to take such actions as are necessary to bring the Mortgaged Property
into compliance therewith; and
(2) there are no circumstances present at such Mortgaged Property relating
to the use, management or disposal of any hazardous substances, hazardous
materials, hazardous wastes, or petroleum-based materials for which
investigation, testing, monitoring, containment, clean-up or remediation
could be required under any federal, state or local law or regulation, or
that if any such materials are present for which such action could be
required, that it would be in the best economic interest of the Trust Fund to
take such actions with respect to the affected Mortgaged Property.
The cost of the environmental audit report contemplated by this Section
3.16 shall be advanced by the Servicer, subject to the Servicer's right to be
reimbursed therefor from the Collection Account as provided in Section
3.11(a)(vii), such right of reimbursement being prior to the rights of
Certificateholders to receive any amount in the Collection Account received in
respect of the affected Mortgage Loan or other Mortgage Loans.
For the purposes of this Section 3.16(b), actual notice and actual
knowledge of the Servicer means actual notice to or actual knowledge of a
Responsible Officer of the Servicer involved in the servicing of the relevant
Mortgage Loan. Actual knowledge of the Servicer does not include knowledge
imputable by virtue of the availability of or accessibility to information
relating to environmental or hazardous waste sites or the locations thereof.
If the Servicer determines, as described above, that it is in the best
economic interest of the Trust Fund to take such actions as are necessary to
bring any such Mortgaged Property into compliance with applicable environmental
laws, or to take such action with respect to the containment, clean-up or
remediation of hazardous substances, hazardous materials, hazardous wastes or
petroleum-based materials affecting any such Mortgaged Property, then the
Servicer shall take such action as it deems to be in the best economic interest
of the Trust Fund; provided that any amounts disbursed by the Servicer pursuant
to this Section 3.16(b) shall constitute Servicing Advances, subject to Section
4.04(d). The cost of any such compliance, containment, clean-up or remediation
shall be advanced by the Servicer, subject to the Servicer's right to be
reimbursed therefor from the Collection Account as provided in Section
3.11(a)(vii), such right of reimbursement being prior to the rights of
Certificateholders to receive any amount in the Collection Account received in
respect of the affected Mortgage Loan or other Mortgage Loans.
(c) The Servicer may, at its option, purchase a Mortgage Loan which has
become 90 or more days delinquent or for which the Servicer has accepted a deed
in lieu of foreclosure. Prior to purchase pursuant to this Section 3.16(c), the
Servicer shall be required to continue to make Advances pursuant to Section
4.04. The Servicer shall not use any procedure in selecting Mortgage Loans to be
repurchased which is materially adverse to the interests of the
Certificateholders. The Servicer shall purchase such delinquent Mortgage Loan at
a price equal to the Purchase Price of such Mortgage Loan. Any such purchase of
a Mortgage Loan pursuant to this Section 3.16(c) shall be accomplished by
deposit in the Collection Account of the amount of the Purchase Price. Upon the
satisfaction of the requirements set forth in Section 3.17(a), the Trustee shall
immediately deliver
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the Mortgage File and any related documentation to the Servicer and will execute
such documents provided to it as are necessary to convey the Mortgage Loan to
the Servicer.
(d) Proceeds received in connection with any Final Recovery Determination,
as well as any recovery resulting from a partial collection of Insurance
Proceeds, Liquidation Proceeds or condemnation proceeds, in respect of any
Mortgage Loan, will be applied in the following order of priority: first, to
unpaid Servicing Fees; second, to reimburse the Servicer or any Sub-Servicer for
any related unreimbursed Servicing Advances pursuant to Section 3.11(a)(iii) and
Advances pursuant to Section 3.11(a)(ii); third, to accrued and unpaid interest
on the Mortgage Loan, to the date of the Final Recovery Determination, or to the
Due Date prior to the Distribution Date on which such amounts are to be
distributed if not in connection with a Final Recovery Determination; and
fourth, as a recovery of principal of the Mortgage Loan. If the amount of the
recovery so allocated to interest is less than the full amount of accrued and
unpaid interest due on such Mortgage Loan, the amount of such recovery will be
allocated by the Servicer as follows: first, to unpaid Servicing Fees; and
second, to the balance of the interest then due and owing. The portion of the
recovery so allocated to unpaid Servicing Fees shall be reimbursed to the
Servicer or any Sub-Servicer pursuant to Section 3.11(a)(iii).
SECTION 3.17. Trustee to Cooperate; Release of Mortgage Files.
(a) Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full shall be escrowed in a manner
customary for such purposes, the Servicer shall deliver to the Trustee, in
written (with two executed copies) or electronic format, a Request for Release
in the form of Exhibit E hereto (which certification shall include a statement
to the effect that all amounts received or to be received in connection with
such payment which are required to be deposited in the Collection Account
pursuant to Section 3.10 have been or will be so deposited) signed by a
Servicing Officer (or in a mutually agreeable electronic format that will, in
lieu of a signature on its face, originate from a Servicing Officer) and shall
request delivery to it of the Mortgage File. Upon receipt of such certification
and request, the Trustee shall, within three Business Days, release and send by
overnight mail, at the expense of the Servicer, the related Mortgage File to the
Servicer. No expenses incurred in connection with any instrument of satisfaction
or deed of reconveyance shall be chargeable to the Collection Account or the
Distribution Account.
(b) From time to time and as appropriate for the servicing or foreclosure
of any Mortgage Loan, including, for this purpose, collection under any
insurance policy relating to the Mortgage Loans, the Trustee shall, upon any
request made by or on behalf of the Servicer and delivery to the Trustee, in
written (with two executed copies) or electronic format, of a Request for
Release in the form of Exhibit E hereto signed by a Servicing Officer (or in a
mutually agreeable electronic format that will, in lieu of a signature on its
face, originate from a Servicing Officer), release the related Mortgage File to
the Servicer within three Business Days, and the Trustee shall, at the written
direction of the Servicer, execute such documents as shall be necessary to the
prosecution of any such proceedings. Such Request for Release shall obligate the
Servicer to return each and every document previously requested from the
Mortgage File to the Trustee when the need therefor by the Servicer no longer
exists, unless the Mortgage Loan has been liquidated and the Liquidation
Proceeds relating to the Mortgage Loan have been deposited in the Collection
Account or the
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Mortgage File or such document has been delivered to an attorney, or to a public
trustee or other public official as required by law, for purposes of initiating
or pursuing legal action or other proceedings for the foreclosure of the
Mortgaged Property either judicially or non-judicially, and the Servicer has
delivered, or caused to be delivered, to the Trustee an additional Request for
Release certifying as to such liquidation or action or proceedings. Upon the
request of the Trustee, the Servicer shall provide notice to the Trustee of the
name and address of the Person to which such Mortgage File or such document was
delivered and the purpose or purposes of such delivery. Upon receipt of a
Request for Release, in written (with two executed copies) or electronic format,
from a Servicing Officer stating that such Mortgage Loan was liquidated and that
all amounts received or to be received in connection with such liquidation that
are required to be deposited into the Collection Account have been so deposited,
or that such Mortgage Loan has become an REO Property, such Mortgage Loan shall
be released by the Trustee to the Servicer or its designee within three Business
Days.
(c) Upon written certification of a Servicing Officer, the Trustee shall
execute and deliver to the Servicer or the Sub-Servicer, as the case may be,
copies of, any court pleadings, requests for trustee's sale or other documents
necessary to the foreclosure or trustee's sale in respect of a Mortgaged
Property or to any legal action brought to obtain judgment against any Mortgagor
on the Mortgage Note or Mortgage or to obtain a deficiency judgment, or to
enforce any other remedies or rights provided by the Mortgage Note or Mortgage
or otherwise available at law or in equity. Each such certification shall
include a request that such pleadings or documents be executed by the Trustee
and a statement as to the reason such documents or pleadings are required and
that the execution and delivery thereof by the Trustee will not invalidate or
otherwise affect the lien of the Mortgage, except for the termination of such a
lien upon completion of the foreclosure or trustee's sale.
SECTION 3.18. Servicing Compensation.
As compensation for the activities of the Servicer hereunder, the Servicer
shall be entitled to the Servicing Fee with respect to each Mortgage Loan
payable solely from payments of interest in respect of such Mortgage Loan,
subject to Section 3.24. In addition, the Servicer shall be entitled to recover
unpaid Servicing Fees out of Insurance Proceeds, Liquidation Proceeds or
condemnation proceeds to the extent permitted by Section 3.11(a)(iii) and out of
amounts derived from the operation and sale of an REO Property to the extent
permitted by Section 3.23. Except as provided in Section 3.29 or Section 6.04,
the right to receive the Servicing Fee may not be transferred in whole or in
part except in connection with the transfer of all of the Servicer's
responsibilities and obligations under this Agreement; provided, however, that
the Servicer may pay from the Servicing Fee any amounts due to a Sub-Servicer
pursuant to a Sub-Servicing Agreement entered into under Section 3.02.
Additional servicing compensation in the form of assumption fees, late
payment charges, insufficient funds charges, ancillary income or otherwise
(other than Prepayment Charges) shall be retained by the Servicer only to the
extent such fees or charges are received by the Servicer. The Servicer shall
also be entitled pursuant to Section 3.11(a)(iv) to withdraw from the Collection
Account and pursuant to Section 3.23(b) to withdraw from any REO Account, as
additional servicing compensation, interest or other income earned on deposits
therein, subject to Section 3.12 and
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Section 3.24. The Servicer shall be required to pay all expenses incurred by it
in connection with its servicing activities hereunder (including premiums for
the insurance required by Section 3.14, to the extent such premiums are not paid
by the related Mortgagors or by a Sub-Servicer and servicing compensation of
each Sub-Servicer) and shall not be entitled to reimbursement therefor except as
specifically provided herein.
SECTION 3.19. Reports to the Trustee; Collection Account Statements.
Not later than twenty days after each Distribution Date, the Servicer shall
forward, upon request, to the Trustee and the Depositor the most current
available bank statement for the Collection Account. Copies of such statement
shall be provided by the Trustee to any Certificateholder and to any Person
identified to the Trustee as a prospective transferee of a Certificate, upon
request at the expense of the requesting party, provided such statement is
delivered by the Servicer to the Trustee.
SECTION 3.20. Statement as to Compliance.
The Servicer will deliver to the Trustee and the Depositor not later than
the 15th day of March following the end of each fiscal year of the Servicer
(which, as of the Closing Date, ends on the last day of December), commencing in
2003, an Officers' Certificate stating, as to each signatory thereof, that (i) a
review of the activities of the Servicer during the preceding year and of
performance under this Agreement has been made under such officers' supervision
and (ii) to the best of such officers' knowledge, based on such review, the
Servicer has fulfilled all of its obligations under this Agreement throughout
such year, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature
and status thereof. Copies of any such statement shall be provided by the
Trustee to any Certificateholder and to any Person identified to the Trustee as
a prospective transferee of a Certificate, upon request at the expense of the
requesting party, provided such statement is delivered by the Servicer to the
Trustee.
SECTION 3.21. Independent Public Accountants' Servicing Report.
Not later than the 15th day of March following the end of each fiscal year
of the Servicer (which, as of the Startup Day, ends on the last day of
December), commencing in 2003, the Servicer, at its expense, shall cause a
nationally recognized firm of independent certified public accountants to
furnish to the Servicer a report stating that (i) it has obtained a letter of
representation regarding certain matters from the management of the Servicer
which includes an assertion that the Servicer has complied with certain minimum
residential mortgage loan servicing standards, identified in the Uniform Single
Attestation Program for Mortgage Bankers established by the Mortgage Bankers
Association of America, with respect to the servicing of residential mortgage
loans during the most recently completed fiscal year and (ii) on the basis of an
examination conducted by such firm in accordance with standards established by
the American Institute of Certified Public Accountants, such representation is
fairly stated in all material respects, subject to such exceptions and other
qualifications that may be appropriate. In rendering its report such firm may
rely, as to matters relating to the direct servicing of residential mortgage
loans by Sub-Servicers, upon comparable reports of firms of independent
certified public accountants rendered on the basis of examinations conducted in
accordance with the same standards (rendered within one year of such report)
with respect to those Sub-Servicers. Immediately upon receipt of such report,
the Servicer shall furnish
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a copy of such report to the Trustee and each Rating Agency. Copies of such
statement shall be provided by the Trustee to any Certificateholder upon request
at the Servicer's expense, provided that such statement is delivered by the
Servicer to the Trustee.
SECTION 3.22. Access to Certain Documentation; Filing of Reports by
Trustee.
(a) The Servicer shall provide to the Office of Thrift Supervision, the
FDIC, and any other federal or state banking or insurance regulatory authority
that may exercise authority over any Certificateholder, access to the
documentation regarding the Mortgage Loans required by applicable laws and
regulations. Such access shall be afforded without charge, but only upon
reasonable request and during normal business hours at the offices of the
Servicer designated by it. In addition, access to the documentation regarding
the Mortgage Loans will be provided to any Certificateholder, the Trustee and to
any Person identified to the Servicer as a prospective transferee of a
Certificate, upon reasonable request during normal business hours at the offices
of the Servicer designated by it at the expense of the Person requesting such
access.
(b)(i) The Trustee and the Servicer shall reasonably cooperate with the
Depositor in connection with the Trust's satisfying the reporting requirements
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
Trustee shall prepare on behalf of the Trust any Forms 8-K and 10-K customary
for similar securities as required by the Exchange Act and the Rules and
Regulations of the Securities and Exchange Commission thereunder, and the
Depositor shall sign (or shall cause another entity acceptable to the Securities
and Exchange Commission to sign) and the Trustee shall file (via the Securities
and Exchange Commission's Electronic Data Gathering and Retrieval System) such
forms on behalf of the Depositor (or such other entity). The Depositor hereby
grants to the Trustee a limited power of attorney to execute any Form 8-K 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. Notwithstanding anything herein to the contrary, the Depositor, and not
the Trustee, shall be responsible for executing each Form 10-K filed on behalf
of the Trust.
(ii) 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 30th of each year
(or such earlier date as may be required by the Exchange Act and the Rules and
Regulations of the Securities and Exchange Commission), the Trustee shall file a
Form 10-K, in substance as required by applicable law or applicable Security and
Exchange Commission staff's interpretations. The Trustee shall prepare such Form
10-K and provide the Depositor with such Form 10-K not later than March 20th of
each year. Following its receipt thereof, the Depositor shall execute such Form
10-K and provide the original of such Form 10-K to the Trustee not later than
March 25th (or, if the applicable March 25th is not a Business Day, the next
succeeding Business Day) of each year; provided, however, that if the filing of
such Form 10-K shall be required to occur on a date earlier than March 30th of
each year as may be required by the Exchange Act and the Rules and Regulations
of the Securities and Exchange Commission, then the time periods for preparation
and execution of such Form 10-K set forth in this sentence shall be adjusted
accordingly). Such Form 10-K when filed shall include as exhibits the Servicer's
annual statement of compliance described under Section 3.20 and the accountant's
report described under Section 3.21, in each case to the extent they have been
timely delivered to the Trustee. If they are
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not so timely delivered, the Trustee shall file an amended Form 10-K including
such documents as exhibits reasonably promptly after they are delivered to the
Trustee. The Trustee shall have no liability with respect to any failure to
properly 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 N-1 (the "Certification"),
which shall be signed by the senior officer of the Depositor in charge of
securitization.
(iii) In addition, (x) the Trustee shall sign a certification (in the form
attached hereto as Exhibit N-2) for the benefit of the Depositor and its
officers, directors and Affiliates regarding certain aspects of items 1 through
3 of the Certification (provided, however, that the Trustee shall not undertake
an analysis of the accountant's report attached as an exhibit to the Form 10-K),
and (y) the Servicer shall sign a certification (in the form attached hereto as
Exhibit N-3) for the benefit of the Depositor, the Trustee and their officers,
directors and Affiliates regarding certain aspects of items 1, 2, 3, 4 and 5 of
the Certification (the "Servicer Certification").
In addition, (A) the Trustee shall indemnify and hold harmless the
Depositor and its officers, directors and Affiliates from and against any
losses, damages, penalties, fines, forfeitures, reasonable and necessary legal
fees and related costs, judgments and other costs and expenses arising out of or
based upon a breach of the Trustee's obligations under this Section 3.22(b)
caused by the Trustee's negligence, bad faith or willful misconduct in
connection therewith, and (B) the Servicer shall indemnify and hold harmless the
Depositor, the Trustee and their respective officers, directors and Affiliates
from and against any actual 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 (I) the failure of the Servicer to
timely deliver the Servicer Certification or (II) any material misstatement in
the Servicer Certification. If the indemnification provided for herein is
unavailable or insufficient to hold harmless the Depositor, then (i) the Trustee
agrees that it shall contribute to the amount paid or payable by the Depositor
as a result of the losses, claims, damages or liabilities of the Depositor in
such proportion as is appropriate to reflect the relative fault of the Depositor
on the one hand and the Trustee on the other in connection with a breach of the
Trustee's obligations under this Section 3.22(b) caused by the Trustee's
negligence, bad faith or willful misconduct in connection therewith and (ii) the
Servicer agrees that it shall contribute to the amount paid or payable by the
Depositor as a result of the losses, claims, damages or liabilities of the
Depositor in such proportion as is appropriate to reflect the relative fault of
the Depositor on the one hand and the Servicer on the other in connection with
the Servicer Certification and the related obligations of the Servicer under
this Section 3.22(b).
(iv) Upon any filing with the Securities and Exchange Commission, the
Trustee shall promptly deliver to the Depositor a copy of any executed report,
statement or information.
(v) Prior to January 30 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.
(vi) To the extent that, following the Closing Date, the Depositor
certifies that reports and certifications differing from those required under
this Section 3.22(b) comply with the reporting requirements under the Exchange
Act, the Trustee and the Servicer hereby agree that they will
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reasonably cooperate to amend the provisions of this Section 3.22(b) in order to
comply with such amended reporting requirements and such amendment of this
Section 3.22(b); provided, however, that the Trustee shall not be responsible
for executing any Form 10-K or the Certification. Any such amendment may result
in the reduction of the reports filed by the Depositor under the Exchange Act.
SECTION 3.23. Title, Management and Disposition of REO Property.
(a) The deed or certificate of sale of any REO Property shall be taken in
the name of the Trustee, or its nominee, in trust for the benefit of the
Certificateholders. The Servicer, on behalf of REMIC 1, shall sell any REO
Property as soon as practicable and in any event no later than the end of the
third full taxable year after the taxable year in which such REMIC acquires
ownership of such REO Property for purposes of Section 860G(a)(8) of the Code or
request from the Internal Revenue Service, no later than 60 days before the day
on which the three-year grace period would otherwise expire, an extension of
such three-year period, unless the Servicer shall have delivered to the Trustee
an Opinion of Counsel, addressed to the Trustee and the Depositor, to the effect
that the holding by the REMIC of such REO Property subsequent to three years
after its acquisition will not result in the imposition on the REMIC of taxes on
"prohibited transactions" thereof, as defined in Section 860F of the Code, or
cause any of the REMICs created hereunder to fail to qualify as a REMIC under
Federal law at any time that any Certificates are outstanding. The Servicer
shall manage, conserve, protect and operate each REO Property for the
Certificateholders solely for the purpose of its prompt disposition and sale in
a manner which does not cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code or
result in the receipt by any of the REMICs created hereunder of any "income from
non-permitted assets" within the meaning of Section 860F(a)(2)(B) of the Code,
or any "net income from foreclosure property" which is subject to taxation under
the REMIC Provisions.
(b) The Servicer shall separately account for all funds collected and
received in connection with the operation of any REO Property and shall
establish and maintain, or cause to be established and maintained, with respect
to REO Properties an account held in trust for the Trustee for the benefit of
the Certificateholders (the "REO Account"), which shall be an Eligible Account.
The Servicer shall be permitted to allow the Collection Account to serve as the
REO Account, subject to separate ledgers for each REO Property. The Servicer
shall be entitled to retain or withdraw any interest income paid on funds
deposited in the REO Account.
(c) The Servicer shall have full power and authority, subject only to the
specific requirements and prohibitions of this Agreement, to do any and all
things in connection with any REO Property as are consistent with the manner in
which the Servicer manages and operates similar property owned by the Servicer
or any of its Affiliates, all on such terms and for such period (subject to the
requirement of prompt disposition set forth in Section 3.23(a))as the Servicer
deems to be in the best interests of Certificateholders. In connection
therewith, the Servicer shall deposit, or cause to be deposited in the clearing
account in which it customarily deposits payments and collections on mortgage
loans in connection with its mortgage loan servicing activities on a daily
basis, and in no event more than one Business Day after the Servicer's receipt
thereof, and shall thereafter deposit in the REO Account, in no event more than
two Business Days after the Servicer's receipt thereof, all revenues received by
it with respect to an REO Property and shall withdraw therefrom funds
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necessary for the proper operation, management and maintenance of such REO
Property including, without limitation:
(i) all insurance premiums due and payable in respect of such REO Property;
(ii) all real estate taxes and assessments in respect of such REO Property
that may result in the imposition of a lien thereon; and
(iii) all costs and expenses necessary to maintain such REO Property.
To the extent that amounts on deposit in the REO Account with respect to an
REO Property are insufficient for the purposes set forth in clauses (i) through
(iii) above with respect to such REO Property, the Servicer shall advance from
its own funds such amount as is necessary for such purposes if, but only if, the
Servicer would make such advances if the Servicer owned the REO Property and if
in the Servicer's judgment, the payment of such amounts will be recoverable from
the rental or sale of the REO Property.
Notwithstanding the foregoing, neither the Servicer nor the Trustee shall:
(A) authorize the Trust Fund to enter into, renew or extend any New Lease
with respect to any REO Property, if the New Lease by its terms will give
rise to any income that does not constitute Rents from Real Property;
(B) authorize any amount to be received or accrued under any New Lease
other than amounts that will constitute Rents from Real Property;
(C) authorize any construction on any REO Property, other than the
completion of a building or other improvement thereon, and then only if more
than ten percent of the construction of such building or other improvement
was completed before default on the related Mortgage Loan became imminent,
all within the meaning of Section 856(e)(4)(B) of the Code; or
(D) authorize any Person to Directly Operate any REO Property on any date
more than 90 days after its date of acquisition by the Trust Fund;
unless, in any such case, the Servicer has obtained an Opinion of Counsel,
provided to the Trustee, to the effect that such action will not cause such REO
Property to fail to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code at any time that it is held by the REMIC, in
which case the Servicer may take such actions as are specified in such Opinion
of Counsel.
The Servicer may contract with any Independent Contractor for the operation
and management of any REO Property, provided that:
(1) the terms and conditions of any such contract shall not be inconsistent
herewith;
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(2) any such contract shall require, or shall be administered to require,
that the Independent Contractor pay all costs and expenses incurred in
connection with the operation and management of such REO Property, including
those listed above and remit all related revenues (net of such costs and
expenses) to the Servicer as soon as practicable, but in no event later than
thirty days following the receipt thereof by such Independent Contractor;
(3) none of the provisions of this Section 3.23(c) relating to any such
contract or to actions taken through any such Independent Contractor shall be
deemed to relieve the Servicer of any of its duties and obligations to the
Trustee on behalf of the Certificateholders with respect to the operation and
management of any such REO Property; and
(4) the Servicer shall be obligated with respect thereto to the same extent
as if it alone were performing all duties and obligations in connection with
the operation and management of such REO Property.
The Servicer shall be entitled to enter into any agreement with any
Independent Contractor performing services for it related to its duties and
obligations hereunder for indemnification of the Servicer by such Independent
Contractor, and nothing in this Agreement shall be deemed to limit or modify
such indemnification. The Servicer shall be solely liable for all fees owed by
it to any such Independent Contractor, irrespective of whether the Servicer's
compensation pursuant to Section 3.18 is sufficient to pay such fees; provided,
however, that to the extent that any payments made by such Independent
Contractor would constitute Servicing Advances if made by the Servicer, such
amounts shall be reimbursable as Servicing Advances made by the Servicer.
(d) In addition to the withdrawals permitted under Section 3.23(c), the
Servicer may from time to time make withdrawals from the REO Account for any REO
Property: (i) to pay itself or any Sub-Servicer unpaid Servicing Fees in respect
of the related Mortgage Loan; and (ii) to reimburse itself or any Sub-Servicer
for unreimbursed Servicing Advances and Advances made in respect of such REO
Property or the related Mortgage Loan. On the Servicer Remittance Date, the
Servicer shall withdraw from each REO Account maintained by it and deposit into
the Distribution Account in accordance with Section 3.10(d)(ii), for
distribution on the related Distribution Date in accordance with Section 4.01,
the income from the related REO Property received during the prior calendar
month, net of any withdrawals made pursuant to Section 3.23(c) or this Section
3.23(d).
(e) Subject to the time constraints set forth in Section 3.23(a), each REO
Disposition shall be carried out by the Servicer in a manner, at such price and
upon such terms and conditions as shall be normal and usual in the servicing
standard set forth in Section 3.01.
(f) The proceeds from the REO Disposition, net of any amount required by
law to be remitted to the Mortgagor under the related Mortgage Loan and net of
any payment or reimbursement to the Servicer or any Sub-Servicer as provided
above, shall be deposited in the Distribution Account in accordance with Section
3.10(d)(ii) on the Servicer Remittance Date in the month following the receipt
thereof for distribution on the related Distribution Date in accordance with
Section 4.01. Any REO Disposition shall be for cash only (unless changes in the
REMIC Provisions made subsequent to the Startup Day allow a sale for other
consideration).
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(g) The Servicer shall file information returns with respect to the receipt
of mortgage interest received in a trade or business, reports of foreclosures
and abandonments of any Mortgaged Property and cancellation of indebtedness
income with respect to any Mortgaged Property as required by Sections 6050H,
6050J and 6050P of the Code, respectively. Such reports shall be in form and
substance sufficient to meet the reporting requirements imposed by such Sections
6050H, 6050J and 6050P of the Code.
SECTION 3.24. Obligations of the Servicer in Respect of Prepayment Interest
Shortfalls.
Not later than 1:00 p.m. New York time on each Servicer Remittance Date,
the Servicer shall remit to the Distribution Account an amount ("Compensating
Interest") equal to the lesser of (A) the aggregate of the Prepayment Interest
Shortfalls for the related Distribution Date and (B) 50% of its aggregate
Servicing Fee received in the related Due Period. The Servicer shall not have
the right to reimbursement for any amounts remitted to the Trustee in respect of
Compensating Interest. Such amounts so remitted shall be included in the
Available Funds and distributed therewith on the next Distribution Date. The
Servicer shall not be obligated to pay Compensating Interest with respect to
Relief Act Interest Shortfalls.
SECTION 3.25. [Reserved].
SECTION 3.26. Obligations of the Servicer in Respect of Mortgage Rates and
Monthly Payments.
In the event that a shortfall in any collection on or liability with
respect to the Mortgage Loans in the aggregate results from or is attributable
to adjustments to Mortgage Rates, Monthly Payments or Stated Principal Balances
that were made by the Servicer in a manner not consistent with the terms of the
related Mortgage Note and this Agreement, the Servicer, upon discovery or
receipt of notice thereof, immediately shall deposit in the Collection Account
from its own funds the amount of any such shortfall and shall indemnify and hold
harmless the Trust Fund, the Trustee, the Depositor and any successor servicer
in respect of any such liability. Such indemnities shall survive the termination
or discharge of this Agreement. Notwithstanding the foregoing, this Section 3.26
shall not limit the ability of the Servicer to seek recovery of any such amounts
from the related Mortgagor under the terms of the related Mortgage Note, as
permitted by law.
SECTION 3.27. Solicitations.
From and after the Closing Date, the Servicer agrees that it will not take
any action or permit or cause any action to be taken by any of its agents and
Affiliates, or by any independent contractors or independent mortgage brokerage
companies on the Servicer's behalf, to personally, by telephone or mail, solicit
the Mortgagor under any Mortgage Loan for the purpose of refinancing such
Mortgage Loan; provided, that the Servicer may solicit any Mortgagor for whom
the Servicer has received a request for verification of mortgage, a request for
demand for payoff, a mortgagor initiated written or verbal communication
indicating a desire to prepay the related Mortgage Loan, another mortgage
company has pulled a credit report on the mortgagor or the mortgagor initiates a
title search; provided further, it is understood and agreed that promotions
undertaken by the Servicer or
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any of its Affiliates which (i) concern optional insurance products or other
additional products or (ii) are directed to the general public at large,
including, without limitation, mass mailings based on commercially acquired
mailing lists, newspaper, radio, telephone and television advertisements shall
not constitute solicitation under this Section, nor is the Servicer prohibited
from responding to unsolicited requests or inquiries made by a Mortgagor or an
agent of a Mortgagor. Furthermore, the Servicer shall be permitted to include in
its monthly statements to borrowers or otherwise, statements regarding the
availability of the Servicer's counseling services with respect to refinancing
mortgage loans.
SECTION 3.28. Net WAC Rate Carryover Reserve Account.
No later than the Closing Date, the Trustee shall establish and maintain
with itself a separate, segregated trust account titled, "Net WAC Rate Carryover
Reserve Account, Deutsche Bank National Trust Company, as Trustee, in trust for
registered Holders of Fremont Home Loan Trust 2002-2, Asset-Backed Certificates,
Series 0000-0." Xx the Closing Date, the Depositor will deposit, or cause to be
deposited, into the Net WAC Rate Carryover Reserve Account $1,000.
The Trustee shall deposit into the Net WAC Rate Carryover Reserve Account
any payments received by the Trustee under the Cap Contracts. In addition, on
each Distribution Date as to which there is a Net WAC Rate Carryover Amount
payable to the Class A-1 Certificates, the Class A-2 Certificates, the Class M-1
Certificates, the Class M-2A Certificates or the Class M-3 Certificates, the
Trustee has been directed by the Class C Certificateholders to, and therefore
will, deposit into the Net WAC Rate Carryover Reserve Account the amounts
described in Section 4.01(d)(viii), rather than distributing such amounts to the
Class C Certificateholders. On each such Distribution Date, the Trustee shall
hold all such amounts for the benefit of the Holders of the Class A-1
Certificates, the Class A-2 Certificates, the Class M-1 Certificates, the Class
M-2A Certificates and the Class M-3 Certificates, and will distribute such
amounts to the Holders of the Class A-1 Certificates, the Class A-2
Certificates, the Class M-1 Certificates, the Class M-2A Certificates and the
Class M-3 Certificates in the amounts and priorities set forth in Section
4.01(e). If no Net WAC Rate Carryover Amounts are payable on a Distribution
Date, the Trustee shall deposit into the Net WAC Rate Carryover Reserve Account
on behalf of the Class C Certificateholders, from amounts otherwise
distributable to the Class C Certificateholders, an amount such that when added
to other amounts already on deposit in the Net WAC Rate Carryover Reserve
Account, the aggregate amount on deposit therein is equal to $1,000.
On each Distribution Date, any amounts remaining in the Net WAC Rate
Reserve Account (other than $1,000 as set forth above) after the payment of any
Net WAC Rate Carryover Amounts on the Class A-1 Certificates, the Class A-2
Certificates, the Class M-1 Certificates, the Class M-2A Certificates and the
Class M-3 Certificates for such Distribution Date, shall be retained in the Net
WAC Rate Carryover Reserve Account. On the Distribution Date on which the
Certificate Principal Balances of the Class A-1 Certificates, the Class A-2
Certificates, the Class M-1 Certificates, the Class M-2A Certificates and the
Class M-3 Certificates have been reduced to zero, after the payment of any Net
WAC Rate Carryover Amounts on the Class A-1 Certificates, the Class A-2
Certificates, the Class M-1 Certificates, the Class M-2A Certificates and the
Class M-3 Certificates for such Distribution Date, and on each Distribution Date
thereafter, the Trustee shall withdraw any amount on deposit in the Net WAC Rate
Carryover Reserve Account and shall distribute such amount to the
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Holders of the Class C Certificates. In addition, upon any earlier termination
of the Trust, after the payment of any Net WAC Rate Carryover Amounts on the
Class A-1 Certificates, the Class A-2 Certificates, the Class M-1 Certificates,
the Class M-2A Certificates and the Class M-3 Certificates, the Trustee shall
withdraw any amount on deposit in the Net WAC Rate Carryover Reserve Account and
shall distribute such amount to the Holders of the Class C Certificates.
For federal and state income tax purposes, the Class C Certificateholders
will be deemed to be the owners of the Net WAC Rate Carryover Reserve Account
and all amounts deposited into the Net WAC Rate Carryover Reserve Account (other
than the initial deposit therein of $1,000 and any deposits therein of amounts
received by the Trustee under the Cap Contracts) shall be treated as amounts
distributed by REMIC 2 to the Holders of the Class C Certificates. The Net WAC
Rate Carryover Reserve Account will be an "outside reserve fund" within the
meaning of Treasury regulation Section 1.860G-2(h). The Net WAC Rate Carryover
Reserve Account will be part of the Trust but not part of any REMIC and any
payments to the Holders of the Class A-1 Certificates, the Class A-2
Certificates, the Class M-1 Certificates, the Class M-2A Certificates and the
Class M-3 Certificates of Net WAC Rate Carryover Amounts will not be payments
with respect to a "regular interest" in a REMIC within the meaning of Code
Section 860(G)(a)(1).
By accepting a Class C Certificate, each Class C Certificateholder hereby
agrees to direct the Trustee, and the Trustee hereby is directed, to deposit
into the Net WAC Rate Carryover Reserve Account the amounts described in Section
4.01(d)(viii) on each Distribution Date as to which there is any Net WAC Rate
Carryover Amount rather than distributing such amounts to the Class C
Certificateholders. By accepting a Class C Certificate, each Class C
Certificateholder further agrees that such direction is given for good and
valuable consideration, the receipt and sufficiency of which is acknowledged by
such acceptance.
At the direction of the Holders of a majority in Percentage Interest in the
Class C Certificates, the Trustee shall direct any depository institution
maintaining the Net WAC Rate Carryover Reserve Account to invest the funds in
such account in one or more Permitted Investments bearing interest or sold at a
discount, and maturing, unless payable on demand, (i) no later than the Business
Day immediately preceding the date on which such funds are required to be
withdrawn from such account pursuant to this Agreement, if a Person other than
the Trustee or an Affiliate manages or advises such investment, and (ii) no
later than the date on which such funds are required to be withdrawn from such
account pursuant to this Agreement, if the Trustee or an Affiliate manages or
advises such investment. If no investment direction of the Holders of a majority
in Percentage Interest in the Class C Certificates with respect to the Net WAC
Rate Carryover Reserve Account is received by the Trustee, the Trustee shall
invest the funds in such account in the following Permitted Investment for so
long as such Permitted Investment is managed by the Trustee or an Affiliate of
the Trustee and is of the kind described in clause (vi) of the definition of
Permitted Investments: Deutsche Bank Treasury Money Fund No. 835.
For federal tax return and information reporting, the right of the Holders
of the Class A-1 Certificates, the Class A-2 Certificates, the Class M-1
Certificates, the Class M-2A Certificates and the Class M-3 Certificates to
receive payments from the Net WAC Rate Carryover Reserve Account in respect of
any Net WAC Rate Carryover Amount shall be assigned a value of zero.
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SECTION 3.29. Advance Facility.
(a) The Servicer is hereby authorized to enter into a financing or other
facility (any such arrangement, an "Advance Facility"), the documentation for
which complies with Section 3.29(e) below, under which (1) the Servicer assigns
or pledges its rights under this Agreement to be reimbursed for any or all
Advances and/or Servicing Advances to (i) a special-purpose bankruptcy-remote
entity (an "SPV") (or to a Person, who simultaneously assigns or pledges such
rights to an SPV) or (ii) a lender (a "Lender"), which, in the case of an SPV,
in turn, directly or through other assignees and/or pledgees, assigns or pledges
such rights to a Person, which may include a trustee acting on behalf of holders
of debt instruments (any such Person or any such Lender, an "Advance Financing
Person"), and/or (2) an Advance Financing Person agrees to fund some or all
Advances and/or Servicing Advances required to be made by the Servicer pursuant
to this Agreement. No consent of the Trustee, Certificateholders or any other
party shall be required before the Servicer may enter into an Advance Facility
nor shall the Trustee or the Certificateholders be a third party beneficiary of
any obligation of an Advance Financing Person to the Servicer. Notwithstanding
the existence of any Advance Facility under which an Advance Financing Person
agrees to fund Advances and/or Servicing Advances, the Servicer shall remain
obligated pursuant to this Agreement to make Advances and/or 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 a Servicer enters into an
Advance Facility, and for so long as an Advance Financing Person remains
entitled to receive reimbursement for any Advances and/or Servicing Advances
outstanding and previously unreimbursed pursuant to this Agreement, then, to the
extent prohibited under such Advance Facility, such Servicer shall not be
permitted to reimburse itself for Advances and/or Servicing Advances pursuant to
Section 3.11(a) of this Agreement, but instead such Servicer's assignee and the
designee (the "Servicer's Assignee") shall have the right to receive from the
Collection Account collections that such Servicer would otherwise have the right
to receive from the Collection Account pursuant to said Section 3.11(a) of this
Agreement, amounts available to reimburse previously unreimbursed Advances
and/or Servicing Advances ("Advance Reimbursement Amounts").
(b) If the Servicer enters into an Advance Facility, the Servicer and the
related Advance Financing Person shall deliver to the Trustee a written notice
of the existence of such Advance Facility (an "Advance Facility Notice"),
stating the identity of the Advance Financing Person and the Servicer's
Assignee, and specifying what Advances and/or Servicing Advances are covered by
the Advance Facility. An Advance Facility may be terminated by the joint written
direction of the Servicer and the related Advance Financing Person.
(c) Advance Reimbursement Amounts (i) shall consist solely of amounts in
respect of Advances and/or Servicing Advances for which the Servicer would be
permitted to reimburse itself in accordance with Section 3.11(a) hereof,
assuming the Servicer had made the related Advance(s) and/or Servicing
Advance(s) and (ii) shall not consist of amounts payable to a successor Servicer
in accordance with Section 3.11(a) to the extent permitted under Section 3.29(e)
below.
(d) An Advance Financing Person who receives an assignment or pledge of
rights to receive Advance Reimbursement Amounts and/or whose obligations are
limited to the funding of
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Advances and/or Servicing Advances pursuant to an Advance Facility shall not be
required to meet the criteria for qualification as a Sub-Servicer.
(e) As between a predecessor Servicer and its Advance Financing Person, on
the one hand, and a successor Servicer and its Advance Financing Person if any,
on the other hand, Advance Reimbursement Amounts on a loan-by-loan basis with
respect to each Mortgage Loan as to which an Advance and/or Servicing Advance
shall have been made and be outstanding shall be allocated on a "first-in, first
out" ("FIFO") basis. In the event that some or all of an Advance Reimbursement
Amount related to Advances and/or Servicing Advances that were made by a Person
other than such predecessor Servicer or its related Advance Financing Person
shall have been paid in error to the Servicer's Assignee related to such
predecessor Servicer, then such Servicer's Assignee shall be required to remit
any portion of such Advance Reimbursement Amount to each Person entitled to such
portion of such Advance Reimbursement Amount. At any time when an Advance
Financing Person shall have ceased funding Advances and/or Servicing Advances,
including without limitation a servicing transfer pursuant to Article VII, and
the Servicer's Assignee shall have received from the Collection Account Advance
Reimbursement Amounts sufficient to reimburse all Advances and/or Servicing
Advances, the right to reimbursement for which were assigned to the Servicer's
Assignee, then the Servicer's Assignee and the Advance Financing Person and the
Servicer related to such Servicer's Assignee and Advance Financing Person shall
deliver a written notice to the Trustee terminating the Advance Facility.
Without limiting the generality of the foregoing, the Servicer shall remain
entitled to be reimbursed by the Advance Financing Person for all Advances
and/or Servicing Advances funded by the Servicer to the extent the related
Advance Reimbursement Amounts have not been assigned or pledged to such Advance
Financing Person or Servicer's Assignee.
(f) For purposes of any Officer's Certificate of the Servicer made pursuant
to Section 4.04(d), any Nonrecoverable Advance referred to therein may have been
made by such Servicer or any predecessor Servicer. In making its determination
that any Advance or Servicing Advance theretofore made has become a
Nonrecoverable Advance, the Servicer shall apply the same criteria in making
such determination regardless of whether such Advance or Servicing Advance shall
have been made by the Servicer or any predecessor Servicer.
SECTION 3.30. PMI Policy; Claims Under the PMI Policy.
Notwithstanding anything to the contrary elsewhere in this Article III, the
Servicer shall not agree to any modification or assumption of a PMI Mortgage
Loan or take any other action with respect to a PMI Mortgage Loan that could
result in denial of coverage under the PMI Policy. The Servicer shall notify the
PMI Insurer that the Trustee, on behalf of the Certificateholders, is the
Insured, as that term is defined in the PMI Policy, of each PMI Mortgage Loan.
The Servicer shall, on behalf of the Trustee, prepare and file on a timely basis
with the PMI Insurer, with a copy to the Trustee, all claims which may be made
under the PMI Policy with respect to the PMI Mortgage Loans. Consistent with all
rights and obligations hereunder, the Servicer shall take all actions required
under the PMI Policy as a condition to the payment of any such claim. Any amount
received from the PMI Insurer with respect to any such PMI Mortgage Loan shall
be deposited by the Servicer, no later than two Business Days following receipt
thereof, into the Collection Account.
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ARTICLE IV
FLOW OF FUNDS
SECTION 4.01. Distributions.
(a)(I) On each Distribution Date, the Trustee shall withdraw from the
Distribution Account that portion of Available Funds for such Distribution Date
consisting of the Group I Interest Remittance Amount for such Distribution Date,
and make the following disbursements and transfers in the order of priority
described below, in each case to the extent of the Group I Interest Remittance
Amount remaining for such Distribution Date:
(i) to the Holders of the Class A-1 Certificates, the Monthly Interest
Distributable Amount and the Unpaid Interest Shortfall Amount, if any, for
such Certificates; and
(ii) to the Holders of the Class A-2 Certificates, an amount equal to the
excess, if any, of (x) the amount required to be distributed pursuant to
Section 4.01(a)(II)(i) below for such Distribution Date over (y) the amount
actually distributed pursuant to such clause from the Group II Interest
Remittance Amount.
(II) On each Distribution Date the Trustee shall withdraw from the
Distribution Account that portion of Available Funds for such Distribution Date
consisting of the Group II Interest Remittance Amount for such Distribution
Date, and make the following disbursements and transfers in the order of
priority described below, in each case to the extent of the Group II Interest
Remittance Amount remaining for such Distribution Date.
(i) to the Holders of the Class A-2 Certificates, the Monthly Interest
Distributable Amount and the Unpaid Interest Shortfall Amount, if any, for
such Certificates; and
(ii) to the Holders of the Class A-1 Certificates, an amount equal to the
excess, if any, of (x) the amount required to be distributed pursuant to
Section 4.01(a)(I)(i) above for such Distribution Date over (y) the amount
actually distributed pursuant to such clause from the Group I Interest
Remittance Amount.
(III) On each Distribution Date, following the distributions made pursuant
to Section 4.01(a)(I) and (II) above, the Trustee shall make the following
disbursements and transfers in the order of priority described below, in each
case to the extent of the sum of the Group I Interest Remittance Amount and the
Group II Interest Remittance Amount remaining undistributed for such
Distribution Date.
(i) to the Holders of the Class M-1 Certificates, the Monthly Interest
Distributable Amount allocable to such Certificates;
(ii) concurrently, to the Holders of the Class M-2A Certificates and the
Class M-2B Certificates, the Monthly Interest Distributable Amounts allocable
to such Certificates, on a PRO RATA basis based on their respective
entitlements; and
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(iii) to the Holders of the Class M-3 Certificates, the Monthly Interest
Distributable Amount allocable to such Certificates.
(b)(I) On each Distribution Date (a) prior to the Stepdown Date or (b) on
which a Trigger Event is in effect, distributions in respect of principal to the
extent of the Group I Principal Distribution Amount shall be made in the
following amounts and order of priority:
(i) first, to the Holders of the Class A-1 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero; and
(ii) second, after taking into account the amount distributed to the
Holders of the Class A-2 Certificates pursuant to clause (b)(II)(i) below on
such Distribution Date, to the Holders of the Class A-2 Certificates, until
the Certificate Principal Balance thereof has been reduced to zero.
(II) On each Distribution Date (a) prior to the Stepdown Date or (b) on
which a Trigger Event is in effect, distributions in respect of principal to the
extent of the Group II Principal Distribution Amount shall be made in the
following amounts and order of priority:
(i) first, to the Holders of the Class A-2 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero; and
(ii) second, after taking into account the amount distributed to the
Holders of the Class A-1 Certificates pursuant to clause (b)(I)(i) above on
such Distribution Date, to the Holders of the Class A-1 Certificates, until
the Certificate Principal Balance thereof has been reduced to zero.
(III) On each Distribution Date (a) prior to the Stepdown Date or (b) on
which a Trigger Event is in effect, distributions in respect of principal to the
extent of the sum of the Group I Principal Distribution Amount and the Group II
Principal Distribution Amount remaining undistributed for such Distribution Date
shall be made in the following amounts and order of priority:
(i) first, to the Holders of the Class M-1 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero;
(ii) second, concurrently, to the Holders of the Class M-2A Certificates
and the Class M- 2B Certificates, on a PRO RATA basis based on their
respective Certificate Principal Balances, until the Certificate Principal
Balances thereof have been reduced to zero; and
(iii) third, to the Holders of the Class M-3 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero.
(c)(I) On each Distribution Date (a) on or after the Stepdown Date and (b)
on which a Trigger Event is not in effect, distributions in respect of principal
to the extent of the Group I Principal Distribution Amount shall be made in the
following amounts and order of priority:
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(i) first, to the Holders of the Class A-1 Certificates, the Class A-1
Principal Distribution Amount until the Certificate Principal Balance thereof
has been reduced to zero; and
(ii) second, to the extent of the portion, if any, of the Class A-1
Principal Distribution Amount remaining undistributed pursuant to clause
(c)(I)(i) above on such Distribution Date, and after taking into account the
amount distributed to the Holders of the Class A-2 Certificates pursuant to
clause (c)(II)(i) below on such Distribution Date, to the Holders of the
Class A-2 Certificates, until the Certificate Principal Balance thereof has
been reduced to zero; and
(iii) third, to the holders of the Class A-2 Certificates, an amount equal
to the excess, if any, of (x) the amount required to be distributed pursuant
to clause (c)(II)(i) below for such Distribution Date over (y) the sum of (A)
the amount actually distributed pursuant to clause (c)(II)(i) below from the
Group II Principal Distribution Amount on such Distribution Date and (B) the
amount, if any, distributed to the Holders of the Class A-2 Certificates
pursuant to clause (c)(I)(ii) above on such Distribution Date.
(II) On each Distribution Date (a) on or after the Stepdown Date and (b) on
which a Trigger Event is not in effect, distributions in respect of principal to
the extent of the Group II Principal Distribution Amount shall be made in the
following amounts and order of priority:
(i) first, to the Holders of the Class A-2 Certificates, the Class A-2
Principal Distribution Amount until the Certificate Principal Balance thereof
has been reduced to zero;
(ii) second, to the extent of the portion, if any, of the Class A-2
Principal Distribution Amount remaining undistributed pursuant to clause
(c)(II)(i) above on such Distribution Date, and after taking into account the
amount distributed to the holders of the Class A-1 Certificates pursuant to
clause (c)(I)(i) above on such Distribution Date, to the holders of the Class
A-1 Certificates, until the Certificate Principal Balance thereof has been
reduced to zero; and
(iii) third, to the holders of the Class A-1 Certificates, an amount equal
to the excess, if any, of (x) the amount required to be distributed pursuant
to clause (c)(I)(i) above for such Distribution Date over (y) the sum of (A)
the amount actually distributed pursuant to clause (c)(I)(i) above from the
Group I Principal Distribution Amount on such Distribution Date and (B) the
amount, if any, distributed to the holders of the Class A-1 Certificates
pursuant to clause (c)(II)(ii) above on such Distribution Date.
(III) On each Distribution Date (a) on or after the Stepdown Date and (b)
on which a Trigger Event is not in effect, distributions in respect of principal
to the extent of the sum of the Group I Principal Distribution Amount and the
Group II Principal Distribution Amount remaining undistributed for such
Distribution Date shall be made in the following amounts and order of priority:
(i) first, to the Holders of the Class M-1 Certificates, the Class M-1
Principal Distribution Amount until the Certificate Principal Balance thereof
has been reduced to zero;
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(ii) second, concurrently, to the Holders of the Class M-2 Certificates, on
a PRO RATA basis based on their respective Certificate Principal Balances,
the Class M-2 Principal Distribution Amount until the Certificate Principal
Balances thereof have been reduced to zero; and
(iii) third, to the Holders of the Class M-3 Certificates, the Class M-3
Principal Distribution Amount until the Certificate Principal Balance thereof
has been reduced to zero.
(d) On each Distribution Date, the Net Monthly Excess Cashflow shall be
distributed as follows:
(i) to the Holders of the Class or Classes of Certificates then entitled to
receive distributions in respect of principal, in an amount equal to any
Extra Principal Distribution Amount, distributable to such Holders as part of
the Group I Principal Distribution Amount and/or the Group II Principal
Distribution Amount as described under Section 4.01(b) and Section 4.01(c)
above;
(ii) to the Holders of the Class M-1 Certificates, in an amount equal to
the Unpaid Interest Shortfall Amount allocable to such Certificates;
(iii) to the Holders of the Class M-1 Certificates, in an amount equal to
the Allocated Realized Loss Amount allocable to such Certificates;
(iv) concurrently, to the Holders of the Class M-2A Certificates and the
Class M-2B Certificates, in an amount equal to the Unpaid Interest Shortfall
Amounts allocable to such Certificates, on a PRO RATA basis based on their
respective entitlements;
(v) concurrently, to the Holders of the Class M-2A Certificates and the
Class M-2B Certificates, in an amount equal to the Allocated Realized Loss
Amounts allocable to such Certificates on a PRO RATA basis based on their
respective entitlements;
(vi) to the Holders of the Class M-3 Certificates, in an amount equal to
the Unpaid Interest Shortfall Amount allocable to such Certificates;
(vii) to the Holders of the Class M-3 Certificates, in an amount equal to
the Allocated Realized Loss Amount allocable to such Certificates;
(viii) to the Net WAC Rate Carryover Reserve Account, the sum of (A) the
excess, if any, of (x) $1,000 over (y) the amount on deposit therein
(inclusive of amounts received by the Trustee under the Cap Contracts and
deposited in such account but exclusive of any amounts therein representing
any investment income on such account) and (B) the excess, if any, of (x) the
aggregate of any Net WAC Rate Carryover Amounts for the Class A-1
Certificates, Class X- 0 Certificates, Class M-1 Certificates, Class M-2A
Certificates and Class M-3 Certificates over (y) the amount on deposit
therein (inclusive of amounts received by the Trustee under the Cap Contracts
and deposited in such account and inclusive of the amount deposited therein
pursuant to clause (A) above but exclusive of any amounts therein
representing any investment income on such account);
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(ix) to the PMI Insurer, reimbursement of any payments made under the PMI
Policy, to the extent such payments were the result of incorrect data
supplied to the PMI Insurer by the Seller;
(x) to the Holders of the Class C Certificates, the Monthly Interest
Distributable Amount for such Class and any remaining Overcollateralization
Release Amount for such Distribution Date;
(xi) if such Distribution Date follows the Prepayment Period during which
occurs the latest date on which a Prepayment Charge may be required to be
paid in respect of any Mortgage Loans, to the Holders of the Class P
Certificates, in reduction of the Certificate Principal Balance thereof,
until the Certificate Principal Balance thereof is reduced to zero; and
(xii) any remaining amounts to the Holders of the Residual Certificates (in
respect of the Class R-1 Interest, Class R-2 Interest, the Class R-3 Interest
or the Class R-4 Interest, as appropriate).
(e) On each Distribution Date, after making the distributions of the
Available Funds as set forth in Section 4.01(a) through (d) above, the Trustee
will FIRST, withdraw from the Net WAC Rate Carryover Reserve Account all income
from the investment of funds in the Net WAC Rate Carryover Reserve Account and
distribute such amount to the Holders of the Class C Certificates, and SECOND,
withdraw from the Net WAC Rate Carryover Reserve Account, to the extent of
amounts remaining on deposit therein, the aggregate of any Net WAC Rate
Carryover Amounts for the Class A-1 Certificates, Class A-2 Certificates, Class
M-1 Certificates, Class M-2A Certificates and Class M-3 Certificates for such
Distribution Date. The Trustee will distribute such aggregate amount in the
following order of priority:
(i) to the Class A-1 Certificates and the Class A-2 Certificates, FIRST, in
the case of the Class A-1 Certificates from payments made under the Cap
Contract related to the Class A-1 Certificates and in the case of the Class
A-2 Certificates from payments made under the Cap Contract related to the
Class A-2 Certificates, respectively, in each case in until the Net WAC Rate
Carryover Amount for such Class has been paid in full, and SECOND,
concurrently, to the Class A-1 Certificates and the Class A-2 Certificates,
on a PRO RATA basis based on the Net WAC Rate Carryover Amounts for each such
Class, until each such amount has been distributed in full, from payments
made under the Cap Contracts, to the extent not otherwise paid to the Classes
of Certificates to which such Cap Contracts relate, and then from amounts on
deposit in the Net WAC Rate Carryover Reserve Account other than amounts paid
under the Cap Contracts;
(ii) to the Class M-1 Certificates, the Net WAC Rate Carryover Amount for
such Class first, from payments made under the Cap Contract related to the
Class M-1 Certificates, second, from payments made under the other Cap
Contracts, to the extent not otherwise paid to the Classes of Certificates to
which such Cap Contracts relate and to the extent not paid pursuant to clause
(i) above and third, from amounts on deposit in the Net WAC Rate Carryover
Reserve Account other than amounts paid under the Cap Contracts to the extent
not paid pursuant to clause (i) above;
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(iii) to the Class M-2A Certificates, the Net WAC Rate Carryover Amount for
such Class first, from payments made under the Cap Contract related to the
Class M-2A Certificates, second, from payments made under the other Cap
Contracts, to the extent not otherwise paid to the Classes of Certificates to
which such Cap Contracts relate and to the extent not paid pursuant to
clauses (i) and (ii) above and third, from amounts on deposit in the Net WAC
Rate Carryover Reserve Account other than amounts paid under the Cap
Contracts to the extent not paid pursuant to clauses (i) and (ii) above; and
(iv) to the Class M-3 Certificates, the Net WAC Rate Carryover Amount for
such Class first, from payments made under the Cap Contract related to the
Class M-3 Certificates, second, from payments made under the other Cap
Contracts, to the extent not otherwise paid to the Classes of Certificates to
which such Cap Contracts relate and to the extent not paid pursuant to
clauses (i), (ii) and (iii) above and third, from amounts on deposit in the
Net WAC Rate Carryover Reserve Account other than amounts paid under the Cap
Contracts to the extent not paid pursuant to clauses (i), (ii) and (iii)
above.
(f) On each Distribution Date, all amounts representing Prepayment Charges
in respect of the Mortgage Loans received during the related Prepayment Period
and any Servicer Prepayment Charge Amounts paid by the Servicer during the
related Prepayment Period will be withdrawn from the Distribution Account and
distributed by the Trustee to the Holders of the Class P Certificates and shall
not be available for distribution to the Holders of any other Class of
Certificates. The payment of the foregoing amounts to the Holders of the Class P
Certificates shall not reduce the Certificate Principal Balances thereof.
(g) The Trustee shall make distributions in respect of a Distribution Date
to each Certificateholder of record on the related Record Date (other than as
provided in Section 10.01 respecting the final distribution), in the case of
Certificateholders of the Regular Certificates, by check or money order mailed
to such Certificateholder at the address appearing in the Certificate Register,
or by wire transfer. Distributions among Certificateholders shall be made in
proportion to the Percentage Interests evidenced by the Certificates held by
such Certificateholders.
(h) Each distribution with respect to a Book-Entry Certificate shall be
paid to the Depository, which shall credit the amount of such distribution to
the accounts of its Depository Participants in accordance with its normal
procedures. Each Depository Participant shall be responsible for disbursing such
distribution to the Certificate Owners that it represents and to each indirect
participating brokerage firm (a "brokerage firm" or "indirect participating
firm") for which it acts as agent. Each brokerage firm shall be responsible for
disbursing funds to the Certificate Owners that it represents. All such credits
and disbursements with respect to a Book-Entry Certificate are to be made by the
Depository and the Depository Participants in accordance with the provisions of
the Certificates. None of the Trustee, the Depositor or the Servicer shall have
any responsibility therefor except as otherwise provided by applicable law.
SECTION 4.02. Reserved.
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SECTION 4.03. Statements.
(a) On each Distribution Date, based, as applicable, on information
provided to it by the Servicer, the Trustee shall prepare and make available to
each Holder of the Regular Certificates, the Servicer and the Rating Agencies, a
statement as to the distributions made on such Distribution Date:
(i) the amount of the distribution made on such Distribution Date to the
Holders of each Class of Regular Certificates, separately identified,
allocable to principal and the amount of the distribution made to the Holders
of the Class P Certificates allocable to Prepayment Charges and Servicer
Prepayment Charge Payment Amounts;
(ii) the amount of the distribution made on such Distribution Date to the
Holders of each Class of Regular Certificates (other than the Class P
Certificates) allocable to interest, separately identified;
(iii) the Overcollateralized Amount, the Overcollateralization Release
Amount, the Overcollateralization Deficiency Amount and the
Overcollateralization Target Amount as of such Distribution Date and the
Excess Overcollateralized Amount for the Mortgage Pool for such Distribution
Date;
(iv) the aggregate amount of servicing compensation received by the
Servicer with respect to the related Due Period and such other customary
information as the Trustee deems necessary or desirable, or which a
Certificateholder reasonably requests, to enable Certificateholders to
prepare their tax returns;
(v) the aggregate amount of Advances for the related Due Period;
(vi) the Pool Balance at the Close of Business at the end of the related
Due Period;
(vii) the number, aggregate principal balance, weighted average remaining
term to maturity and weighted average Mortgage Rate of the Mortgage Loans as
of the related Determination Date;
(viii) the number and aggregate unpaid principal balance of Mortgage Loans
that were (A) Delinquent (exclusive of Mortgage Loans in bankruptcy or
foreclosure and REO Properties) (1) 30 to 59 days, (2) 60 to 89 days and (3)
90 or more days, (B) as to which foreclosure proceedings have been commenced
and Delinquent (1) 30 to 59 days, (2) 60 to 89 days and (3) 90 or more days,
(C) in bankruptcy and Delinquent (1) 30 to 59 days, (2) 60 to 89 days and (3)
90 or more days, in each case as of the Close of Business on the last day of
the calendar month preceding such Distribution Date and (D) REO Properties;
(ix) (A) the dollar amount of payments received related to claims under the
PMI Policy during the related Prepayment Period (and the number of Mortgage
Loans to which such payments related); (B) the cumulative dollar amount of
payments received related to claims under the PMI Policy since the Closing
Date (and the number of Mortgage Loans to which such
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payments related); (C) the dollar amount of claims made under the PMI Policy
that were denied during the Prepayment Period (and the number of Mortgage
Loans to which such denials related); and (D) the dollar amount of the
cumulative claims made under the PMI Policy that were denied since the
Closing Date (and the number of Mortgage Loans to which such denials
related);
(x) the total number and cumulative principal balance of all REO Properties
as of the Close of Business of the last day of the preceding Prepayment
Period;
(xi) the aggregate amount of Principal Prepayments made during the related
Prepayment Period;
(xii) the aggregate amount of Realized Losses incurred during the related
Prepayment Period and the cumulative amount of Realized Losses;
(xiii) the aggregate amount of extraordinary Trust Fund expenses withdrawn
from the Collection Account for such Distribution Date;
(xiv) the Certificate Principal Balance of the Class A Certificates, the
Mezzanine Certificates and the Class C Certificates, after giving effect to
the distributions made on such Distribution Date;
(xv) the Monthly Interest Distributable Amount in respect of each Class of
Class A Certificates, each Class of Mezzanine Certificates and the Class C
Certificates for such Distribution Date and the Unpaid Interest Shortfall
Amount, if any, with respect to the Class A Certificates, the Mezzanine
Certificates and the Class C Certificates for such Distribution Date;
(xvi) the aggregate amount of any Prepayment Interest Shortfalls for such
Distribution Date, to the extent not covered by payments by the Servicer
pursuant to Section 3.26;
(xvii) the Credit Enhancement Percentage for such Distribution Date;
(xviii) the Net WAC Rate Carryover Amount for the Class A-1 Certificates,
the Class A-2 Certificates, the Class M-1 Certificates, the Class M-2A
Certificates and the Class M-3 Certificates, if any, for such Distribution
Date and the amount remaining unpaid after reimbursements therefor on such
Distribution Date;
(xix) any Overcollateralization Target Amount, Overcollateralized Amount
and Overcollateralization Deficiency Amount after giving effect to the
distribution of principal on such Distribution Date;
(xx) when the Stepdown Date or a Trigger Event has occurred;
(xxi) the Available Funds;
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(xxii) the respective Pass-Through Rates applicable to each Class of Class
A Certificates, each Class of Mezzanine Certificates and the Class C
Certificates for such Distribution Date and the Pass-Through Rate applicable
to each Class of Class A Certificates and each Class of Mezzanine
Certificates for the immediately succeeding Distribution Date; and
(xxiii) the amount of payments, if any, made under the Cap Contracts,
received by the Trustee and deposited into the Net WAC Rate Carryover Reserve
Account for such Distribution Date.
The Trustee will make such statement (and, at its option, any additional
files containing the same information in an alternative format) available each
month to Certificateholders and the Rating Agencies via the Trustee's internet
website. The Trustee's internet website shall initially be located at
"xxx.xxxxxxxxxxxxxx.xx.xxx". 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 above distribution option are entitled to have a paper copy
mailed to them via first class mail by calling the customer service desk and
indicating such. The Trustee shall have the right to change the way such
statements are distributed in order to make such distribution more convenient
and/or more accessible to the above parties and the Trustee shall provide timely
and adequate notification to all above parties regarding any such changes. As a
condition to access to the Trustee's internet website, the Trustee may require
registration and the acceptance of a disclaimer. The Trustee will not be liable
for the dissemination of information in accordance with this Agreement. The
Trustee shall also be entitled to rely on but shall not be responsible for the
content or accuracy of any information provided by third parties for purposes of
preparing the Distribution Date statement and may affix thereto any disclaimer
it deems appropriate in its reasonable discretion (without suggesting liability
on the part of any other party thereto).
In the case of information furnished pursuant to subclauses (i) through
(iii) above, the amounts shall be expressed in a separate section of the report
as a dollar amount for each Class for each $1,000 original dollar amount as of
the Cut-off Date.
(b) Within a reasonable period of time after the end of each calendar year,
the Trustee shall, upon written request, furnish to each Person who at any time
during the calendar year was a Certificateholder of a Regular Certificate, if
requested in writing by such Person, such information as is reasonably necessary
to provide to such Person a statement containing the information set forth in
subclauses (i) through (iii) above, 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 prepared and furnished
by the Trustee to Certificateholders pursuant to any requirements of the Code as
are in force from time to time.
(c) On each Distribution Date, the Trustee shall make available to the
Residual Certificateholders a copy of the reports forwarded to the Regular
Certificateholders in respect of such Distribution Date with such other
information as the Trustee deems necessary or appropriate.
(d) Within a reasonable period of time after the end of each calendar year,
the Trustee shall deliver to each Person who at any time during the calendar
year was a Residual
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Certificateholder, if requested in writing by such Person, such information as
is reasonably necessary to provide to such Person a statement containing the
information provided pursuant to the previous paragraph aggregated for such
calendar year or applicable portion thereof during which such Person was a
Residual Certificateholder. Such obligation of the Trustee shall be deemed to
have been satisfied to the extent that substantially comparable information
shall be prepared and furnished to Certificateholders by the Trustee pursuant to
any requirements of the Code as from time to time in force.
SECTION 4.04. Remittance Reports; Advances.
(a) On the second Business Day following each Determination Date, the
Servicer shall deliver to the Trustee by telecopy or electronic mail (or by such
other means as the Servicer and the Trustee may agree from time to time) a
Remittance Report with respect to the related Distribution Date. Not later than
the second Business Day following each Determination Date, the Servicer shall
deliver or cause to be delivered to the Trustee in addition to the information
provided on the Remittance Report, such other information reasonably available
to it with respect to the Mortgage Loans as the Trustee may reasonably require
to perform the calculations necessary to make the distributions contemplated by
Section 4.01 and to prepare the statements to Certificateholders contemplated by
Section 4.03. The Trustee shall not be responsible to recompute, recalculate or
verify any information provided to it by the Servicer.
(b) The amount of Advances to be made by the Servicer for any Distribution
Date shall equal, subject to Section 4.04(d), the sum of (i) the aggregate
amount of Monthly Payments (net of the related Servicing Fee), due during the
related Due Period in respect of the Mortgage Loans, which Monthly Payments were
delinquent on a contractual basis as of the Close of Business on the related
Determination Date and (ii) with respect to each REO Property, which REO
Property was acquired during or prior to the related Due Period and as to which
REO Property an REO Disposition did not occur during the related Due Period, an
amount equal to the excess, if any, of the REO Imputed Interest on such REO
Property for the most recently ended calendar month, over the net income from
such REO Property transferred to the Distribution Account pursuant to Section
3.23 for distribution on such Distribution Date. For purposes of the preceding
sentence, the Monthly Payment on each Balloon Mortgage Loan with a delinquent
Balloon Payment is equal to the assumed monthly payment that would have been due
on the related Due Date based on the original principal amortization schedule
for the such Balloon Mortgage Loan.
On or before 3:00 p.m. New York time on the Servicer Remittance Date, the
Servicer shall remit in immediately available funds to the Trustee for deposit
in the Distribution Account an amount equal to the aggregate amount of Advances,
if any, to be made in respect of the Mortgage Loans and REO Properties for the
related Distribution Date either (i) from its own funds or (ii) from the
Collection Account, to the extent of funds held therein for future distribution
(in which case it will cause to be made an appropriate entry in the records of
Collection Account that amounts held for future distribution have been, as
permitted by this Section 4.04, used by the Servicer in discharge of any such
Advance) or (iii) in the form of any combination of (i) and (ii) aggregating the
total amount of Advances to be made by the Servicer with respect to the Mortgage
Loans and REO Properties. Any amounts held for future distribution used by the
Servicer to make an Advance as permitted in the preceding sentence shall be
appropriately reflected in the Servicer's records and
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replaced by the Servicer by deposit in the Collection Account on or before any
future Servicer Remittance Date to the extent that the Available Funds for the
related Distribution Date (determined without regard to Advances to be made on
the Servicer Remittance Date) shall be less than the total amount that would be
distributed to the Classes of Certificateholders pursuant to Section 4.01 on
such Distribution Date if such amounts held for future distributions had not
been so used to make Advances. The Trustee will provide notice to the Servicer
by telecopy by the Close of Business on any Servicer Remittance Date in the
event that the amount remitted by the Servicer to the Trustee on such date is
less than the Advances required to be made by the Servicer for the related
Distribution Date, as set forth in the related Remittance Report.
(c) The obligation of the Servicer to make such Advances is mandatory,
notwithstanding any other provision of this Agreement but subject to (d) below,
and, with respect to any Mortgage Loan, shall continue until the Mortgage Loan
is paid in full or until all Liquidation Proceeds thereon have been recovered,
or a Final Recovery Determination has been made thereon.
(d) Notwithstanding anything herein to the contrary, no Advance or
Servicing Advance shall be required to be made hereunder by the Servicer if such
Advance or Servicing Advance would, if made, constitute a Nonrecoverable
Advance. The determination by the Servicer that it has made a Nonrecoverable
Advance or that any proposed Advance or Servicing Advance, if made, would
constitute a Nonrecoverable Advance, shall be evidenced by an Officers'
Certificate of the Servicer delivered to the Depositor and the Trustee.
SECTION 4.05. [Reserved]
SECTION 4.06. [Reserved]
SECTION 4.07. Distributions on the REMIC Regular Interests.
(a) 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 R Certificates (in respect
of the Class R-1 Interest), as the case may be:
(i) first, to the extent of Available Funds, to Holders of REMIC 1 Regular
Interest LTAA, REMIC 1 Regular Interest LTA1, REMIC 1 Regular Interest LTA2,
REMIC 1 Regular Interest LTM1, REMIC 1 Regular Interest LTM2A, REMIC 1
Regular Interest LTM2B, REMIC 1 Regular Interest LTM3, REMIC 1 Regular
Interest LTZZ and REMIC 1 Regular Interest LTP, PRO RATA, in an amount equal
to (A) the Uncertificated Accrued Interest for such Distribution Date, plus
(B) any amounts in respect thereof remaining unpaid from previous
Distribution Dates. Amounts payable as Uncertificated Accrued Interest in
respect of REMIC 1 Regular Interest LTZZ shall be reduced and deferred when
the REMIC 1 Overcollateralization Amount is less than the REMIC 1
Overcollateralization Target Amount, by the lesser of (x) the amount of such
difference and (y) the Maximum Uncertificated Accrued Interest Deferral
Amount; and
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(ii) second, 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, allocated as
follows:
(a) to the Holders of REMIC 1 Regular Interest LTAA and REMIC 1
Regular Interest LTP, 98.00% of such remainder, until the Uncertificated
Principal Balance of such Uncertificated REMIC 1 Regular Interest is
reduced to zero; provided, however, that REMIC 1 Regular Interest LTP shall
not be reduced until the Distribution Date immediately following the
expiration of the latest Prepayment Charge as identified on the Prepayment
Charge Schedule or any Distribution Date thereafter, at which point such
amount shall be distributed to REMIC 1 Regular Interest LTP, until $100 has
been distributed pursuant to this clause;
(b) to the Holders of REMIC 1 Regular Interest LTA1, REMIC 1 Regular
Interest LTA2, REMIC 1 Regular Interest LTM1, REMIC 1 Regular Interest
LTM2A, REMIC 1 Regular Interest LTM2B and REMIC 1 Regular Interest LTM3,
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 1 Regular Interests are reduced to zero;
(c) to the Holders of REMIC 1 Regular Interest LTZZ, 1.00% of such
remainder, until the Uncertificated Principal Balance of such REMIC 1
Regular Interest is reduced to zero; and
(d) any remaining amount to the Holders of the Class R Certificates
(in respect of the Class R-1 Interest);
provided, however, that (i) 98.00% and (ii) 2.00% of any principal payments that
are attributable to an Overcollateralization Release Amount shall be allocated
to Holders of (i) REMIC 1 Regular Interest LTAA and REMIC 1 Regular Interest
LTP, in that order and (ii) REMIC 1 Regular Interest LTZZ, respectively;
provided that REMIC 1 Regular Interest LTP shall not be reduced until the
Distribution Date immediately following the expiration of the latest Prepayment
Charge as identified on the Prepayment Charge Schedule or any Distribution Date
thereafter, at which point such amount shall be distributed to REMIC 1 Regular
Interest LT1P, until $100 has been distributed pursuant to this clause.
SECTION 4.08. Allocation of Realized Losses.
(a) All Realized Losses on the Mortgage Loans allocated to any Regular
Certificate shall be allocated by the Trustee on each Distribution Date as
follows: first, to Net Monthly Excess Cashflow; second, to the Class C
Certificates, until the Certificate Principal Balance thereof has been reduced
to zero; third, to the Class M-3 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero; fourth, concurrently, to the Class
M-2A Certificates and the Class M-2B Certificates, on a PRO RATA basis based on
the Certificate Principal Balances thereof, until the Certificate Principal
Balances thereof have been reduced to zero; and fifth, to the Class M-1
Certificates, until the Certificate Principal Balance thereof has been reduced
to zero. All Realized
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Losses to be allocated to the Certificate Principal Balances of all Classes on
any Distribution Date shall be so allocated after the actual distributions to be
made on such date as provided above. All references above to the Certificate
Principal Balance of any Class of Certificates shall be to the Certificate
Principal Balance of such Class immediately prior to the relevant Distribution
Date, before reduction thereof by any Realized Losses, in each case to be
allocated to such Class of Certificates, on such Distribution Date.
Any allocation of Realized Losses to a Mezzanine Certificate on any
Distribution Date shall be made by reducing the Certificate Principal Balance
thereof by the amount so allocated; any allocation of Realized Losses to a Class
C Certificates shall be made first by reducing the amount otherwise payable in
respect thereof pursuant to Section 4.01(d)(x). No allocations of any Realized
Losses shall be made to the Certificate Principal Balances of the Class A
Certificates or the Class P Certificates.
(b) All Realized Losses on the Mortgage Loans shall be deemed to have been
allocated in the specified percentages, as follows: first, to Uncertificated
Accrued Interest payable to the REMIC 1 Regular Interest LTAA and REMIC 1
Regular Interest LTZZ up to an aggregate amount equal to the REMIC 1 Interest
Loss Allocation Amount, 98% and 2%, respectively; second, to the Uncertificated
Principal Balances of REMIC 1 Regular Interest LTAA and REMIC 1 Regular Interest
LTZZ up to an aggregate amount equal to the REMIC 1 Principal Loss Allocation
Amount, 98% and 2%, respectively; third, to the Uncertificated Principal
Balances of REMIC 1 Regular Interest LTAA, REMIC 1 Regular Interest LTM3 and
REMIC 1 Regular Interest LTZZ, 98%, 1% and 1%, respectively, until the
Uncertificated Principal Balance of REMIC 1 Regular Interest LTM3 has been
reduced to zero; fourth, concurrently, to (x) the Uncertificated Principal
Balances of REMIC 1 Regular Interest LTAA, REMIC 1 Regular Interest LTM2A and
REMIC 1 Regular Interest LTZZ, 98%, 1% and 1%, respectively, until the
Uncertificated Principal Balance of REMIC 1 Regular Interest LTM2A has been
reduced to zero, and (y) the Uncertificated Principal Balances of REMIC 1
Regular Interest LTAA, REMIC 1 Regular Interest LTM2B and REMIC 1 Regular
Interest LTZZ, 98%, 1% and 1%, respectively, until the Uncertificated Principal
Balance of REMIC 1 Regular Interest LTM2B has been reduced to zero, on a PRO
RATA basis based on the respective Uncertificated Principal Balances of REMIC 1
Regular Interest LTM2A and REMIC 1 Regular Interest LTM2B; and fifth, to the
Uncertificated Principal Balances of REMIC 1 Regular Interest LTAA, REMIC 1
Regular Interest LTM1 and REMIC 1 Regular Interest LTZZ, 98%, 1% and 1%,
respectively, until the Uncertificated Principal Balance of REMIC 1 Regular
Interest LTM1 has been reduced to zero.
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ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates.
Each of the Class A Certificates, the Mezzanine Certificates, the Class P
Certificates, the Class C Certificates and the Residual Certificates shall be
substantially in the forms annexed hereto as exhibits, and shall, on original
issue, be executed, authenticated and delivered by the Trustee to or upon the
order of the Depositor concurrently with the sale and assignment to the Trustee
of the Trust Fund. The Class A Certificates and the Mezzanine Certificates shall
be initially evidenced by one or more Certificates representing a Percentage
Interest with a minimum dollar denomination of $50,000 and integral dollar
multiples of $1.00 in excess thereof, except that one Certificate of each such
Class of Certificates may be in a different denomination so that the sum of the
denominations of all outstanding Certificates of such Class shall equal the
Certificate Principal Balance of such Class on the Closing Date. The Class P
Certificates, the Class C Certificates and the Residual Certificates are
issuable in any Percentage Interests; provided, however, that the sum of all
such percentages for each such Class totals 100% and no more than ten
Certificates of each Class may be issued and outstanding at any one time.
The Certificates shall be executed on behalf of the Trust by manual or
facsimile signature on behalf of the Trustee by a Responsible Officer.
Certificates bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures were affixed, authorized to sign on behalf of
the Trustee shall bind the Trust, notwithstanding that such individuals or any
of them have ceased to be so authorized prior to the authentication and delivery
of such Certificates or did not hold such offices at the date of such
Certificate. No Certificate shall be entitled to any benefit under this
Agreement or be valid for any purpose, unless such Certificate shall have been
manually authenticated by the Trustee substantially in the form provided for
herein, and such authentication upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the date
of their authentication. Subject to Section 5.02(c), the Class A Certificates
and the Mezzanine Certificates shall be Book-Entry Certificates. The other
Classes of Certificates shall not be Book-Entry Certificates.
SECTION 5.02. Registration of Transfer and Exchange of Certificates.
(a) The Certificate Registrar shall cause to be kept at the Corporate Trust
Office a Certificate Register in which, subject to such reasonable regulations
as it may prescribe, the Certificate Registrar shall provide for the
registration of Certificates and of transfers and exchanges of Certificates as
herein provided. The Trustee shall initially serve as Certificate Registrar for
the purpose of registering Certificates and transfers and exchanges of
Certificates as herein provided.
Upon surrender for registration of transfer of any Certificate at any
office or agency of the Certificate Registrar maintained for such purpose
pursuant to the foregoing paragraph and, in the case of a Residual Certificate,
upon satisfaction of the conditions set forth below, the Trustee on
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behalf of the Trust shall execute, authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of the same
aggregate Percentage Interest.
At the option of the Certificateholders, Certificates may be exchanged for
other Certificates in authorized denominations and the same aggregate Percentage
Interests, upon surrender of the Certificates to be exchanged at any such office
or agency. Whenever any Certificates are so surrendered for exchange, the
Trustee shall execute on behalf of the Trust and 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 (if so required by the Trustee or the Certificate Registrar)
be duly endorsed by, or be accompanied by a written instrument of transfer
satisfactory to the Trustee and the Certificate Registrar duly executed by, the
Holder thereof or his attorney duly authorized in writing. In addition, (i) with
respect to each Class R Certificate, the holder thereof may exchange, in the
manner described above, such Class R Certificate for two separate certificates,
each representing such holder's respective Percentage Interest in the Class R-1
Interest and the Class R-2 Interest that was evidenced by the Class R
Certificate being exchanged and (ii) with respect to each Class R-X Certificate,
the holder thereof may exchange, in the manner described above, such Class R-X
Certificate for two separate certificates, each representing such holder's
respective Percentage Interest in the Class R-3 Interest and the Class R-4
Interest that was evidenced by the Class R-X Certificate being exchanged.
(b) Except as provided in paragraph (c) 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 such 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 Certificates; (iii) ownership
and transfers of registration of such 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 for all
purposes deal with the Depository as representative of the Certificate Owners of
the Certificates for purposes of exercising the rights of Holders under this
Agreement, and requests and directions for and votes of such representative
shall not be deemed to be inconsistent if they are made with respect to
different Certificate Owners; (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; and (vii)
the direct participants of the Depository shall have no rights under this
Agreement under or with respect to any of the Certificates held on their behalf
by the Depository, and the Depository may be treated by the Trustee and its
agents, employees, officers and directors as the absolute owner of the
Certificates for all purposes whatsoever.
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 Owners. Each Depository
Participant shall only transfer Book-Entry Certificates of Certificate Owners
that it represents or of brokerage firms for which it acts as agent in
accordance with the Depository's normal procedures. The parties hereto are
hereby authorized to execute a Letter of Representations with the Depository or
take such other action as may be necessary or desirable
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to register a Book-Entry Certificate to the Depository. In the event of any
conflict between the terms of any such Letter of Representation and this
Agreement, the terms of this Agreement shall control.
(c) If (i)(x) the Depository or the Depositor advises the Trustee in
writing that the Depository is no longer willing or able to discharge properly
its responsibilities as Depository and (y) the Trustee or the Depositor is
unable to locate a qualified successor, (ii) the Depositor, at its sole option,
with the consent of the Trustee, elects to terminate the book-entry system
through the Depository or (iii) after the occurrence of a Servicer Event of
Termination, the Certificate Owners of the Book-Entry Certificates representing
Percentage Interests of such Classes aggregating not less than 51% advise the
Trustee and Depository through the Financial Intermediaries and the Depository
Participants in writing that the continuation of a book-entry system through the
Depository to the exclusion of definitive, fully registered certificates (the
"Definitive Certificates") to Certificate Owners is no longer in the best
interests of the Certificate Owners. Upon surrender to the Certificate Registrar
of the Book-Entry Certificates by the Depository, accompanied by registration
instructions from the Depository for registration, the Trustee shall, at the
Depositor's expense, in the case of (ii) above, or the Servicer's expense, in
the case of (i) and (iii) above, execute on behalf of the Trust and authenticate
the Definitive Certificates. Neither the Depositor nor the Trustee shall be
liable for any delay in delivery of such instructions and may conclusively rely
on, and shall be protected in relying on, such instructions. Upon the issuance
of Definitive Certificates, the Trustee, the Certificate Registrar, the
Servicer, any Paying Agent and the Depositor shall recognize the Holders of the
Definitive Certificates as Certificateholders hereunder.
(d) No transfer, sale, pledge or other disposition of any Class C
Certificate, Class P Certificate or Residual Certificate shall be made unless
such disposition is exempt from the registration requirements of the Securities
Act of 1933, as amended (the "1933 Act"), and any applicable state securities
laws or is made in accordance with the 1933 Act and laws. In the event of any
such transfer, except with respect to the initial transfer of any Class C
Certificate, Class P Certificate or Residual Certificates by the Depositor (i)
unless such transfer is made in reliance upon Rule 144A (as evidenced by the
investment letter delivered to the Trustee, in substantially the form attached
hereto as Exhibit J) under the 1933 Act, the Trustee and the Depositor shall
require a written Opinion of Counsel (which may be in-house counsel) acceptable
to and in form and substance reasonably satisfactory to the Trustee and the
Depositor that such transfer may be made pursuant to an exemption, describing
the applicable exemption and the basis therefor, from the 1933 Act or is being
made pursuant to the 1933 Act, which Opinion of Counsel shall not be an expense
of the Trustee or the Depositor or (ii) the Trustee shall require the transferor
to execute a transferor certificate (in substantially the form attached hereto
as Exhibit L) and the transferee to execute an investment letter (in
substantially the form attached hereto as Exhibit J) acceptable to and in form
and substance reasonably satisfactory to the Depositor and the Trustee
certifying to the Depositor and the Trustee the facts surrounding such transfer,
which investment letter shall not be an expense of the Trustee or the Depositor.
The Holder of a Class C Certificate, Class P Certificate or Residual Certificate
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.
Notwithstanding the foregoing, no certification or Opinion of Counsel
described in this Section 5.02(d) will be required in connection with the
transfer, on the Closing Date, of any Residual
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Certificate by the Depositor to an "accredited investor" within the meaning of
Rule 501 of the 1933 Act.
No transfer of a Class C Certificate, Class P Certificate or Residual
Certificate or any interest therein shall be made to any Plan subject to ERISA
or Section 4975 of the Code, any Person acting, directly or indirectly, on
behalf of any such Plan or any Person acquiring such Certificates with "Plan
Assets" of a Plan within the meaning of the Department of Labor regulation
promulgated at 29 C.F.R. ss. 2510.3-101 ("Plan Assets"), as certified by such
transferee in the form of Exhibit M, unless the Depositor, the Trustee and the
Servicer are provided with an Opinion of Counsel which establishes to the
satisfaction of the Depositor, the Trustee and the Servicer that the purchase of
such Certificates is permissible under applicable law, will not constitute or
result in any prohibited transaction under ERISA or Section 4975 of the Code and
will not subject the Depositor, the Servicer, the Trustee or the Trust Fund to
any obligation or liability (including obligations or liabilities under ERISA or
Section 4975 of the Code) in addition to those undertaken in this Agreement,
which Opinion of Counsel shall not be an expense of the Depositor, the Servicer,
the Trustee or the Trust Fund. Neither a certification nor an Opinion of Counsel
will be required in connection with the initial transfer of any such Certificate
by the Depositor to an affiliate of the Depositor (in which case, the Depositor
or any affiliate thereof shall have deemed to have represented that such
affiliate is not a Plan or a Person investing Plan Assets) and the Trustee shall
be entitled to conclusively rely upon a representation (which, upon the request
of the Trustee, shall be a written representation) from the Depositor of the
status of such transferee as an affiliate of the Depositor.
Each Transferee of a Mezzanine Certificate will be deemed to have
represented by virtue of its purchase or holding of such Certificate (or
interest therein) that either (a) such Transferee is not a Plan or purchasing
such Certificate with Plan Assets, (b) it has acquired and is holding such
Certificate in reliance on Prohibited Transaction Exemption ("PTE") 90-59, 55
Fed. Reg. 36724 (September 6, 1990), as amended by PTE 97-34, 62 Fed. Reg. 39021
(July 21, 1997), PTE 2000-58, 65 Fed. Reg. 67765 (November 13, 2000) and PTE
2002-41 67 Fed. Reg. 54487 (August 22, 2002) (the "Exemption"), and that it
understands that there are certain conditions to the availability of the
Exemption including that such Certificate must be rated, at the time of
purchase, not lower than "BBB-" (or its equivalent) by a Rating Agency or (c)
the following conditions are satisfied: (i) such Transferee is an insurance
company, (ii) the source of funds used to purchase or hold such Certificate (or
interest therein) is an "insurance company general account" (as defined in U.S.
Department of Labor Prohibited Transaction Class Exemption ("PTCE") 95-60, and
(iii) the conditions set forth in Sections I and III of PTCE 95-60 have been
satisfied.
If any Class C Certificate, Class P Certificate or Residual Certificate or
any interest therein is acquired or held in violation of the provisions of the
second preceding paragraph, the next preceding permitted beneficial owner will
be treated as the beneficial owner of that Certificate retroactive to the date
of transfer to the purported beneficial owner. Any purported beneficial owner
whose acquisition or holding of any such Certificate or interest therein was
effected in violation of the provisions of the preceding paragraph shall
indemnify and hold harmless the Depositor, the Servicer, the Trustee and the
Trust from and against any and all liabilities, claims, costs or expenses
incurred by those parties as a result of that acquisition or holding.
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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 to have
irrevocably appointed the Depositor or its designee as its attorney-in-fact to
negotiate the terms of any mandatory sale under clause (v) below and to execute
all instruments of transfer and to do all other things necessary in connection
with any such sale, 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 Person shall acquire an Ownership Interest in a Residual
Certificate unless such Ownership Interest is a PRO RATA undivided interest.
(iii) In connection with any proposed transfer of any Ownership Interest in
a Residual Certificate, the Trustee shall as a condition to registration of
the transfer, require delivery to it, in form and substance satisfactory to
it, of each of the following:
(A) an affidavit in the form of Exhibit K hereto from the proposed
transferee to the effect that such transferee is a Permitted
Transferee and that it is not acquiring its Ownership Interest in the
Residual Certificate that is the subject of the proposed transfer as a
nominee, trustee or agent for any Person who is not a Permitted
Transferee; and
(B) a covenant of the proposed transferee to the effect that the proposed
transferee agrees to be bound by and to abide by the transfer
restrictions applicable to the Residual Certificates.
(iv) Any attempted or purported transfer of any Ownership Interest in a
Residual Certificate in violation of the provisions of this Section shall be
absolutely null and void and shall vest no rights in the purported transferee.
If any purported transferee shall, in violation of the provisions of this
Section, become a Holder of a Residual Certificate, then the prior Holder of
such Residual Certificate that is a Permitted Transferee shall, upon discovery
that the registration of transfer of such Residual Certificate was not in fact
permitted by this Section, 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 this Section or for making any distributions due on such Residual Certificate
to the Holder thereof or taking any other action with respect to such Holder
under the provisions of this Agreement so long as the Trustee received the
documents specified in clause (iii). The Trustee shall be entitled to recover
from any Holder of a Residual Certificate that was in fact not a Permitted
Transferee at the time such distributions were made all distributions made on
such Residual Certificate. Any such distributions so recovered by the Trustee
shall be distributed and delivered by the Trustee to the prior Holder of such
Residual Certificate that is a Permitted Transferee.
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(v) If any Person other than a Permitted Transferee acquires any Ownership
Interest in a Residual Certificate in violation of the restrictions in this
Section, then the Trustee shall have the right but not the obligation, without
notice to the Holder of such Residual Certificate or any other Person having an
Ownership Interest therein, to notify the Depositor to arrange for the sale of
such Residual Certificate. The proceeds of such sale, net of commissions (which
may include commissions payable to the Depositor or its affiliates in connection
with such sale), expenses and taxes due, if any, will be remitted by the Trustee
to the previous Holder of such Residual Certificate that is a Permitted
Transferee, except that in the event that the Trustee determines that the Holder
of such Residual Certificate may be liable for any amount due under this Section
or any other provisions of this Agreement, the Trustee may withhold a
corresponding amount from such remittance as security for such claim. The terms
and conditions of any sale under this clause (v) shall be determined in the sole
discretion of the Trustee and it shall not be liable to any Person having an
Ownership Interest in a Residual Certificate as a result of its exercise of such
discretion.
(vi) If any Person other than a Permitted Transferee acquires any Ownership
Interest in a Residual Certificate in violation of the restrictions in this
Section, then the Trustee upon receipt of reasonable compensation will provide
to the Internal Revenue Service, and to the persons specified in Sections
860E(e)(3) and (6) of the Code, information needed to compute the tax imposed
under Section 860E(e)(5) of the Code on transfers of residual interests to
disqualified organizations.
The foregoing provisions of this Section shall cease to apply to transfers
occurring on or after the date on which there shall have been delivered to the
Trustee, in form and substance satisfactory to the Trustee, (i) written
notification from each Rating Agency that the removal of the restrictions on
transfer set forth in this Section will not cause such Rating Agency to
downgrade its rating of the Certificates and (ii) an Opinion of Counsel to the
effect that such removal will not cause any REMIC created hereunder to fail to
qualify as a REMIC.
(e) No service charge shall be made for any registration of transfer or
exchange of Certificates of any Class, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
All Certificates surrendered for registration of transfer or exchange shall
be canceled by the Certificate Registrar and disposed of pursuant to its
standard procedures.
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Certificate
Registrar or the Certificate Registrar receives evidence to its satisfaction of
the destruction, loss or theft of any Certificate and (ii) there is delivered to
the Trustee, the Depositor and the Certificate Registrar such security or
indemnity as may be required by them to save each of them harmless, then, in the
absence of notice to the Trustee or the Certificate Registrar that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute on behalf of the Trust, authenticate and deliver, in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like tenor and Percentage Interest. Upon the issuance of any new
Certificate under this Section, the Trustee or the Certificate Registrar may
require the payment of a sum sufficient to cover any tax or other
105
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee and the Certificate
Registrar) in connection therewith. Any duplicate Certificate issued pursuant to
this Section, shall constitute complete and indefeasible evidence of ownership
in the Trust, 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 Depositor, the Trustee, the Certificate Registrar, any
Paying Agent and any agent of the Servicer, the Depositor, the Trustee, the
Certificate Registrar or any Paying Agent may treat the Person, including a
Depository, in whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions pursuant to Section 4.01
and for all other purposes whatsoever, and none of the Servicer, the Trust, the
Trustee nor any agent of any of them shall be affected by notice to the
contrary.
SECTION 5.05. Appointment of Paying Agent.
(a) The Paying Agent shall make distributions to Certificateholders from
the Distribution Account pursuant to Section 4.01 and shall report the amounts
of such distributions to the Trustee. The duties of the Paying Agent may include
the obligation (i) to withdraw funds from the Collection Account pursuant to
Section 3.11(a) and for the purpose of making the distributions referred to
above and (ii) to distribute statements and provide information to
Certificateholders as required hereunder. The Paying Agent hereunder shall at
all times be an entity duly organized and validly existing under the laws of the
United States of America or any state thereof, authorized under such laws to
exercise corporate trust powers and subject to supervision or examination by
federal or state authorities. The Paying Agent shall initially be the Trustee.
The Trustee may appoint a successor to act as Paying Agent, which appointment
shall be reasonably satisfactory to the Depositor.
(b) The Trustee shall cause the Paying Agent (if other than the Trustee) to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee that such Paying Agent shall hold all sums, if any,
held by it for payment to the Certificateholders in trust for the benefit of the
Certificateholders entitled thereto until such sums shall be paid to such
Certificateholders and shall agree that it shall comply with all requirements of
the Code regarding the withholding of payments in respect of Federal income
taxes due from Certificate Owners and otherwise comply with the provisions of
this Agreement applicable to it.
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ARTICLE VI
THE SERVICER AND THE DEPOSITOR
SECTION 6.01. Liability of the Servicer and the Depositor.
The Servicer shall be liable in accordance herewith only to the extent of
the obligations specifically imposed upon and undertaken by Servicer herein. The
Depositor shall be liable in accordance herewith only to the extent of the
obligations specifically imposed upon and undertaken by the Depositor.
SECTION 6.02. Merger or Consolidation of, or Assumption of the Obligations
of, the Servicer or the Depositor.
Any entity into which the Servicer or Depositor may be merged or
consolidated, or any entity resulting from any merger, conversion or
consolidation to which the Servicer or the Depositor shall be a party, or any
corporation succeeding to the business of the Servicer or the Depositor, shall
be the successor of the Servicer or the Depositor, 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 Servicer shall satisfy
all the requirements of Section 7.02 with respect to the qualifications of a
successor Servicer.
SECTION 6.03. Limitation on Liability of the Servicer and Others.
Neither the Servicer or the Depositor nor any of the directors or officers
or employees or agents of the Servicer or the Depositor shall be under any
liability to the Trust or the Certificateholders for any action taken or for
refraining from the taking of any action by the Servicer or the Depositor in
good faith pursuant to this Agreement, or for errors in judgment; provided,
however, that this provision shall not protect the Servicer, the Depositor or
any such Person against any liability which would otherwise be imposed by reason
of its willful misfeasance, bad faith or negligence in the performance of duties
of the Servicer or the Depositor, as the case may be, or by reason of its
reckless disregard of its obligations and duties of the Servicer or the
Depositor, as the case may be, hereunder; provided, further, that this provision
shall not be construed to entitle the Servicer to indemnity in the event that
amounts advanced by the Servicer to retire any senior lien exceed Liquidation
Proceeds (in excess of related liquidation expenses) realized with respect to
the related Mortgage Loan. The Servicer and any director or officer or employee
or agent of 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 Servicer and the Depositor, and any director or officer
or employee or agent of the Servicer or the Depositor, shall be indemnified by
the Trust and held harmless against any loss, liability or expense incurred in
connection with any legal action relating to this Agreement or the Certificates,
other than any loss, liability or expense related to any specific Mortgage Loan
or Mortgage Loans (except as any such loss, liability or expense shall be
otherwise reimbursable pursuant to this Agreement) and any loss, liability or
expense incurred by reason of its willful misfeasance, bad faith or negligence
in the performance of duties hereunder or by reason of its reckless disregard of
obligations and duties hereunder. The Servicer or the Depositor may undertake
any such action which it may deem necessary or desirable in respect of this
107
Agreement, and the rights and duties of the parties hereto and the interests of
the Certificateholders hereunder. In such event, unless the Depositor or the
Servicer acts without the consent of the Holders of Certificates entitled to at
least 51% of the Voting Rights, the reasonable legal expenses and costs of such
action and any liability resulting therefrom shall be expenses, costs and
liabilities of the Trust and the Servicer shall be entitled to be reimbursed
therefor from the Collection Account as and to the extent provided in Section
3.11, any such right of reimbursement being prior to the rights of the
Certificateholders to receive any amount in the Collection Account. The
Servicer's right to indemnity or reimbursement pursuant to this Section shall
survive any resignation or termination of the Servicer pursuant to Section 6.04
or 7.01 with respect to any losses, expenses, costs or liabilities arising prior
to such resignation or termination (or arising from events that occurred prior
to such resignation or termination). This paragraph shall apply to the Servicer
solely in its capacity as Servicer hereunder and in no other capacities.
SECTION 6.04. Servicer Not to Resign.
The Servicer shall not resign from the obligations and duties hereby
imposed on it except upon determination that its duties hereunder are no longer
permissible under applicable law. Any such determination pursuant to the
preceding sentence permitting the resignation of the Servicer shall be evidenced
by an Opinion of Counsel to such effect obtained at the expense of the Servicer
and delivered to the Trustee. No resignation of the Servicer shall become
effective until the Trustee or a successor servicer shall have assumed the
Servicer's responsibilities, duties, liabilities (other than those liabilities
arising prior to the appointment of such successor) and obligations under this
Agreement.
Except as expressly provided herein, the Servicer shall not assign or
transfer any of its rights, benefits or privileges hereunder to any other
Person, or delegate to or subcontract with, or authorize or appoint any other
Person to perform any of the duties, covenants or obligations to be performed by
the Servicer hereunder. The foregoing prohibition on assignment shall not
prohibit the Servicer from designating a Sub-Servicer as payee of any
indemnification amount payable to the Servicer hereunder; provided, however, no
Sub-Servicer shall be a third-party beneficiary hereunder and the parties hereto
shall not be required to recognize any Subservicer as an indemnitee under this
Agreement.
The Trustee and the Depositor hereby specifically (i) consent to the pledge
and assignment by the Servicer of all of the Servicer's right, title and
interest in, to and under this Agreement to the Servicing Rights Pledgee, for
the benefit of certain lenders and (ii) provided that no Servicer Event of
Termination exists, agree that upon delivery to the Trustee by the Servicing
Rights Pledgee of a letter signed by the Servicer whereunder the Servicer shall
resign as Servicer under this Agreement, the Trustee shall, in accordance with
Section 7.02, appoint the Servicing Rights Pledgee or its designee as successor
Servicer, provided that at the time of such appointment, the Servicing Rights
Pledgee or such designee meets the requirements of a successor Servicer pursuant
to Section 7.02(a) hereof and agrees to be subject to the terms of this
Agreement. If, pursuant to any provision hereof, the duties of the Servicer are
transferred to a successor servicer, the entire amount of the Servicing Fee and
other compensation payable to the Servicer pursuant hereto shall thereafter be
payable to such successor servicer.
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SECTION 6.05. Delegation of Duties.
In the ordinary course of business, the Servicer at any time may delegate
any of its duties hereunder to any Person, including any of its Affiliates, who
agrees to conduct such duties in accordance with standards comparable to those
set forth in Section 3.01. Such delegation shall not relieve the Servicer of its
liabilities and responsibilities with respect to such duties and shall not
constitute a resignation within the meaning of Section 6.04. Except as provided
in Section 3.02, no such delegation is permitted that results in the delegee
subservicing any Mortgage Loans. The Servicer shall provide the Trustee with 60
days prior written notice prior to the delegation of any of its duties to any
Person other than any of the Servicer's Affiliates or their respective
successors and assigns.
SECTION 6.06. Reserved.
SECTION 6.07. Inspection.
The Servicer, in its capacity as Servicer, shall afford the Trustee, upon
reasonable notice, during normal business hours, access to all records
maintained by the Servicer in respect of its rights and obligations hereunder
and access to officers of the Servicer responsible for such obligations. Upon
request, the Servicer shall furnish to the Trustee its most recent publicly
available financial statements and such other information relating to its
capacity to perform its obligations under this Agreement.
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ARTICLE VII
DEFAULT
SECTION 7.01. Servicer Events of Termination.
(a) If any one of the following events ("Servicer Events of Termination")
shall occur and be continuing:
(i) (A) The failure by the Servicer to make any Advance; or (B) any other
failure by the Servicer to deposit in the Collection Account or Distribution
Account any deposit required to be made under the terms of this Agreement
which continues unremedied for a period of one Business Day after the date
upon which written notice of such failure shall have been given to the
Servicer by the Trustee or to the Servicer and the Trustee by any Holders of
a Regular Certificate evidencing at least 25% of the Voting Rights; or
(ii) The failure by the Servicer to make any required Servicing Advance
which failure continues unremedied for a period of 30 days, or the failure by
the Servicer duly to observe or perform, in any material respect, any other
covenants, obligations or agreements of the Servicer as set forth in this
Agreement, which failure continues unremedied for a period of 30 days, after
the date (A) on which written notice of such failure, requiring the same to
be remedied, shall have been given to the Servicer by the Trustee or to the
Trustee by any Holders of a Regular Certificate evidencing at least 25% of
the Voting Rights or (B) of actual knowledge of such failure by a Servicing
Officer of the Servicer; or
(iii) The entry against the Servicer of a decree or order by a court or
agency or supervisory authority having jurisdiction in the premises for the
appointment of a trustee, conservator, receiver or liquidator in any
insolvency, conservatorship, receivership, readjustment of debt, marshalling
of assets and liabilities or similar proceedings, or for the winding up or
liquidation of its affairs, and the continuance of any such decree or order
unstayed and in effect for a period of 60 days; or
(iv) The Servicer shall voluntarily go into liquidation, consent to the
appointment of a conservator or receiver or liquidator or similar person in
any insolvency, readjustment of debt, marshalling 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 a decree or order of a court or
agency or supervisory authority having jurisdiction in the premises for the
appointment of a conservator, receiver, liquidator or similar person in any
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of its affairs,
shall have been entered against the Servicer and such decree or order shall
have remained in force undischarged, unbonded or unstayed for a period of 60
days; or the Servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors or voluntarily suspend payment of its obligations;
or
(v) Any failure by the Servicer of the Servicer Termination Test;
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(b) then, and in each and every such case, so long as a Servicer Event of
Termination shall not have been remedied within the applicable grace period, (x)
with respect solely to clause (i)(A) above, if such Advance is not made by 11:00
A.M., New York time, on the Business Day immediately following the Servicer
Remittance Date (provided the Trustee shall give the Servicer notice of such
failure to advance by 5:00 P.M. New York time on the Servicer Remittance Date),
the Trustee shall terminate all of the rights and obligations of the Servicer
under this Agreement, to the extent permitted by law, and in and to the Mortgage
Loans and the proceeds thereof and the Trustee, or a successor servicer
appointed in accordance with Section 7.02, shall immediately make such Advance
and assume, pursuant to Section 7.02, the duties of a successor Servicer and (y)
in the case of (i)(B), (ii), (iii), (iv) and (v) above, the Trustee shall, at
the direction of the Holders of each Class of Regular Certificates evidencing
Percentage Interests aggregating not less than 51%, by notice then given in
writing to the Servicer (and to the Trustee if given by Holders of
Certificates), terminate all of the rights and obligations of the Servicer as
servicer under this Agreement. Any such notice to the Servicer shall also be
given to each Rating Agency, the Depositor and the Servicer. On or after the
receipt by the Servicer (and by the Trustee if such notice is given by the
Holders) of such written notice, all authority and power of the Servicer under
this Agreement, whether with respect to the Certificates or the Mortgage Loans
or otherwise, shall pass to and be vested in the Trustee pursuant to and under
this Section; and, without limitation, and 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 of each Mortgage Loan and related documents or otherwise. The
Servicer agrees to cooperate with the Trustee (or the applicable successor
Servicer) in effecting the termination of the responsibilities and rights of the
Servicer hereunder, including, without limitation, the delivery to the Trustee
of all documents and records requested by it to enable it to assume the
Servicer's functions under this Agreement within ten Business Days subsequent to
such notice, the transfer within one Business Day subsequent to such notice to
the Trustee (or the applicable successor Servicer) for the administration by it
of all cash amounts that shall at the time be held by the Servicer and to be
deposited by it in the Collection Account, the Distribution Account, any REO
Account or any Servicing Account or that have been deposited by the Servicer in
such accounts or thereafter received by the Servicer with respect to the
Mortgage Loans or any REO Property received by the Servicer. All reasonable
costs and expenses (including attorneys' fees) incurred in connection with
transferring the Mortgage Files to the successor Servicer and amending this
Agreement to reflect such succession as Servicer pursuant to this Section shall
be paid by the predecessor Servicer (or if the predecessor Servicer is the
Trustee, the initial Servicer) upon presentation of reasonable documentation of
such costs and expenses and to the extent not paid by the Servicer, by the
Trust.
SECTION 7.02. Trustee to Act; Appointment of Successor.
(a) Within 90 days of the time the Servicer (and the Trustee, if notice is
sent by the Holders) receives a notice of termination pursuant to Section 7.01
or 6.04, the Trustee (or such other successor Servicer as is approved in
accordance with this Agreement) shall be the successor in all respects to the
Servicer in its capacity as servicer under this Agreement and the transactions
set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Servicer
by the terms and provisions hereof arising on and after its succession.
Notwithstanding the foregoing, the parties hereto agree that the Trustee, in its
capacity as successor
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Servicer, immediately will assume all of the obligations of the Servicer to make
advances. Notwithstanding the foregoing, the Trustee, in its capacity as
successor Servicer, shall not be responsible for the lack of information and/or
documents that it cannot obtain through reasonable efforts. As compensation
therefor, the Trustee (or such other successor Servicer) shall be entitled to
such compensation as the Servicer would have been entitled to hereunder if no
such notice of termination had been given. Notwithstanding the above, (i) if the
Trustee is unwilling to act as successor Servicer or (ii) if the Trustee is
legally unable so to act, the Trustee shall appoint or petition a court of
competent jurisdiction to appoint, any established housing and home finance
institution, bank or other mortgage loan or home equity loan servicer having a
net worth of not less than $50,000,000 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; provided, that the appointment of any
such successor Servicer will not result in the qualification, reduction or
withdrawal of the ratings assigned to the Certificates by the Rating Agencies as
evidenced by a letter to such effect from the Rating Agencies. Pending
appointment of a successor to the Servicer hereunder, the Trustee shall act in
such capacity as hereinabove provided. In connection with such appointment and
assumption, the successor shall be entitled to receive compensation out of
payments on Mortgage Loans in an amount equal to the compensation which the
Servicer would otherwise have received pursuant to Section 3.18 (or such other
compensation as the Trustee and such successor shall agree, not to exceed the
Servicing Fee). The appointment of a successor Servicer shall not affect any
liability of the predecessor Servicer which may have arisen under this Agreement
prior to its termination as Servicer to pay any deductible under an insurance
policy pursuant to Section 3.14 or to reimburse the Trustee pursuant to Section
3.06), nor shall any successor Servicer be liable for any acts or omissions of
the predecessor Servicer or for any breach by such Servicer of any of its
representations or warranties contained herein or in any related document or
agreement. The Trustee and such successor shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession.
All Servicing Transfer Costs shall be paid by the predecessor Servicer upon
presentation of reasonable documentation of such costs, and if such predecessor
Servicer defaults in its obligation to pay such costs, such costs shall be paid
by the successor Servicer or the Trustee (in which case the successor Servicer
or the Trustee, as applicable, shall be entitled to reimbursement therefor from
the assets of the Trust).
(b) Any successor to the Servicer, including the Trustee, shall during the
term of its service as servicer continue to service and administer the Mortgage
Loans for the benefit of Certificateholders, and maintain in force a policy or
policies of insurance covering errors and omissions in the performance of its
obligations as Servicer hereunder and a fidelity bond in respect of its
officers, employees and agents to the same extent as the Servicer is so required
pursuant to Section 3.14.
(c) In the event of a Servicer Event of Termination, notwithstanding
anything to the contrary above, the Trustee and the Depositor hereby agree that
upon delivery to the Trustee by the Servicing Rights Pledgee of a letter signed
by the Servicer within ten Business Days of when notification of such event
shall have been provided to the Trustee, whereunder the Servicer shall resign as
Servicer under this Agreement, the Trustee shall, in accordance with Section
7.02, appoint the Servicing Rights Pledgee or its designee as successor
Servicer, provided that at the time of such appointment, the Servicing Rights
Pledgee or such designee meets the requirements of a successor Servicer set
forth above (including, but not limited to the requirement that the appointment
of any
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such successor Servicer will not result in the qualification, reduction or
withdrawal of the ratings assigned to the Certificates by the Rating Agencies as
evidenced by a letter to such effect from the Rating Agencies) and the Servicing
Rights Pledgee or such designee agrees to be subject to the terms of this
Agreement.
SECTION 7.03. Waiver of Defaults.
The Majority Certificateholders may, on behalf of all Certificateholders,
waive any events permitting removal of the Servicer as servicer pursuant to this
Article VII, provided, however, that the Majority Certificateholders may not
waive a default in making a required distribution on a Certificate without the
consent of the Holder of such Certificate. Upon any waiver of a past default,
such default shall cease to exist and any Servicer Event of Termination arising
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereto except to the extent expressly so waived.
Notice of any such waiver shall be given by the Trustee to the Rating Agencies.
SECTION 7.04. Notification to Certificateholders.
(a) Upon any termination or appointment of a successor to the Servicer
pursuant to this Article VII or Section 6.04, the Trustee shall give prompt
written notice thereof to the Certificateholders at their respective addresses
appearing in the Certificate Register and each Rating Agency.
(b) No later than 60 days after the occurrence of any event which
constitutes or which, with notice or a lapse of time or both, would constitute a
Servicer Event of Termination for five Business Days after a Responsible Officer
of the Trustee becomes aware of the occurrence of such an event, the Trustee
shall transmit by mail to all Certificateholders notice of such occurrence
unless such default or Servicer Event of Termination shall have been waived or
cured.
SECTION 7.05. Survivability of Servicer Liabilities.
Notwithstanding anything herein to the contrary, upon termination of the
Servicer hereunder, any liabilities of the Servicer which accrued prior to such
termination shall survive such termination.
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ARTICLE VIII
THE TRUSTEE
SECTION 8.01. Duties of Trustee.
The Trustee, prior to the occurrence of a Servicer Event of Termination and
after the curing of all Servicer Events of Termination which may have occurred,
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement. If a Servicer Event of Termination has occurred (which
has not been cured) of which a Responsible Officer has knowledge, 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 man would
exercise or use under the circumstances in the conduct of his own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement; provided, however, that the
Trustee will not be responsible for the accuracy or content of any such
resolutions, certificates, statements, opinions, reports, documents or other
instruments. If any such instrument is found not to conform to the requirements
of this Agreement in a material manner the Trustee shall take such action as it
deems appropriate to have the instrument corrected, and if the instrument is not
corrected to the Trustee's satisfaction, the Trustee will provide notice thereof
to the Certificateholders.
No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own misconduct; provided, however, that:
(i) prior to the occurrence of a Servicer Event of Termination, and after
the curing of all such Servicer Events of Termination which may have
occurred, the duties and obligations of the Trustee shall be determined
solely by the express provisions of this Agreement, the Trustee shall not be
liable except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or obligations
shall be read into this Agreement against the Trustee and, in the absence of
bad faith on the part of the Trustee, the Trustee may conclusively rely, as
to the truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Trustee and
conforming to the requirements of this Agreement;
(ii) the Trustee shall not be personally liable for an error of judgment
made in good faith by a Responsible Officer of the Trustee, unless it shall
be proved that the Trustee was negligent in ascertaining the pertinent facts;
(iii) the Trustee shall not be personally liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in accordance with
the direction of the Majority Certificateholders relating to the time, method
and place of conducting any proceeding for any
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remedy available to the Trustee, or exercising or omitting to exercise any
trust or power conferred upon the Trustee, under this Agreement; and
(iv) the Trustee shall not be charged with knowledge of any failure by the
Servicer to comply with the obligations of the Servicer referred to in
clauses (i) and (ii) of Section 7.01(a) or of the existence of any Servicer
Termination Event unless a Responsible Officer of the Trustee at the
Corporate Trust Office obtains actual knowledge of such failure or the
Trustee receives written notice of such failure from the Depositor, the
Servicer or the Majority Certificateholders.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of the Servicer under this Agreement, except during such
time, if any, as the Trustee shall be the successor to, and be vested with the
rights, duties, powers and privileges of, the Servicer in accordance with the
terms of this Agreement.
SECTION 8.02. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
(i) the Trustee may request and 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 reasonably believed by it to be genuine and to have been
signed or presented by the proper party or parties, and the manner of
obtaining consents and of evidencing the authorization of the execution
thereof by Certificateholders shall be subject to such reasonable regulations
as the Trustee may prescribe;
(ii) the Trustee may consult with counsel and any Opinion of Counsel shall
be full and complete authorization and protection in respect of any action
taken or suffered or omitted by it hereunder in good faith and in accordance
with such Opinion of Counsel;
(iii) the Trustee shall be under no obligation to exercise any of the
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 Certificateholders, pursuant to the provisions of
this Agreement, unless such Certificateholders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby; the right of the
Trustee to perform any discretionary act enumerated in this Agreement shall
not be construed as a duty, and the Trustee shall not be answerable for other
than its negligence or willful misconduct in the performance of any such act;
(iv) the Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized
or within the discretion or rights or powers conferred upon it by this
Agreement;
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(v) prior to the occurrence of a Servicer Event of Termination and after
the curing of all Servicer Events of Termination which may have occurred, the
Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or other
paper or documents, unless requested in writing to do so by the Majority
Certificateholder; provided, however, that if the payment within a reasonable
time to the Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the opinion of the
Trustee, not reasonably assured to the Trustee by the security afforded to it
by the terms of this Agreement, the Trustee may require reasonable indemnity
against such cost, expense or liability as a condition to such proceeding.
The reasonable expense of every such examination shall be paid by the
Servicer or, if paid by the Trustee, shall be reimbursed by the Servicer upon
demand and, if not reimbursed by the Servicer, shall be reimbursed by the
Trust. Nothing in this clause (v) shall derogate from the obligation of the
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Mortgagors;
(vi) the Trustee shall not be accountable, shall have no liability and
makes no representation as to any acts or omissions hereunder of the Servicer
until such time as the Trustee may be required to act as Servicer pursuant to
Section 7.02 and thereupon only for the acts or omissions of the Trustee as
successor Servicer;
(vii) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys, custodians or nominees;
(viii) the right of the Trustee to perform any discretionary act enumerated
in this Agreement shall not be construed as a duty, and the Trustee shall not
be answerable for other than its negligence or willful misconduct in the
performance of such act; and
(ix) the Trustee shall not be personally liable for any loss resulting from
the investment of funds held in the Collection Account or the REO Account
made at the direction of the Servicer pursuant to Section 3.12.
SECTION 8.03. Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than the
authentication of the Trustee on the Certificates) shall be taken as the
statements of the Depositor, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representations as to the validity
or sufficiency of this Agreement or of the Certificates (other than the
signature and authentication of the Trustee on the Certificates) or of any
Mortgage Loan or related document. The Trustee shall not be accountable for the
use or application by the Servicer, or for the use or application of any funds
paid to the Servicer in respect of the Mortgage Loans or deposited in or
withdrawn from the Collection Account by the Servicer. The Trustee shall at no
time have any responsibility or liability for or with respect to the legality,
validity and enforceability of any Mortgage or any Mortgage Loan, or the
perfection and priority of any Mortgage or the maintenance of any such
perfection and priority, or for or with respect to the sufficiency of the Trust
or its ability to generate the payments to be distributed to Certificateholders
under this Agreement, including, without limitation: the existence, condition
and ownership of any Mortgaged Property; the existence
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and enforceability of any hazard insurance thereon (other than if the Trustee
shall assume the duties of the Servicer pursuant to Section 7.02); the validity
of the assignment of any Mortgage Loan to the Trustee or of any intervening
assignment; the completeness of any Mortgage Loan; the performance or
enforcement of any Mortgage Loan (other than if the Trustee shall assume the
duties of the Servicer pursuant to Section 7.02); the compliance by the
Depositor, the Originator, the Seller or the Servicer with any warranty or
representation made under this Agreement or in any related document or the
accuracy of any such warranty or representation prior to the Trustee's receipt
of notice or other discovery of any non-compliance therewith or any breach
thereof; any investment of monies by or at the direction of the Servicer or any
loss resulting therefrom, it being understood that the Trustee shall remain
responsible for any Trust property that it may hold in its individual capacity;
the acts or omissions of any of the Servicer (other than if the Trustee shall
assume the duties of the Servicer pursuant to Section 7.02), any Sub-Servicer or
any Mortgagor; any action of the Servicer (other than if the Trustee shall
assume the duties of the Servicer pursuant to Section 7.02), or any Sub-
Servicer taken in the name of the Trustee; the failure of the Servicer or any
Sub-Servicer to act or perform any duties required of it as agent of the Trustee
hereunder; or any action by the Trustee taken at the instruction of the Servicer
(other than if the Trustee shall assume the duties of the Servicer pursuant to
Section 7.02); provided, however, that the foregoing shall not relieve the
Trustee of its obligation to perform its duties under this Agreement, including,
without limitation, the Trustee's duty to review the Mortgage Files pursuant to
Section 2.01. The Trustee shall have no responsibility for filing any financing
or continuation statement in any public office at any time or to otherwise
perfect or maintain the perfection of any security interest or lien granted to
it hereunder (unless the Trustee shall have become the successor Servicer).
SECTION 8.04. Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Certificates with the same rights as it would have if it were not
Trustee and may transact any banking and trust business with the Originator, the
Servicer, the Depositor or their Affiliates.
SECTION 8.05. Trustee Fee and Expenses.
(a) The Trustee shall withdraw from the Distribution Account on each
Distribution Date and pay to itself the Trustee Fee prior to making any
distributions to Certificateholders. The Trustee, or any director, officer,
employee or agent of the Trustee, shall be indemnified by REMIC 1 and held
harmless against any loss, liability or expense (not including expenses and
disbursements incurred or made by the Trustee, including the compensation and
the expenses and disbursements of its agents and counsel, in the ordinary course
of the Trustee's performance in accordance with the provisions of this
Agreement) incurred by the Trustee arising out of or in connection with the
acceptance or administration of its obligations and duties under this Agreement,
other than any loss, liability or expense (i) resulting from a breach of the
Servicer's obligations and duties under this Agreement for which the Trustee is
indemnified under Section 8.05(b) or (ii) any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or negligence of the
Trustee in the performance of its duties hereunder or by reason of the Trustee's
reckless disregard of obligations and duties hereunder or as a result of a
breach of the Trustee's obligations under Article X hereof. Any amounts payable
to the Trustee, or any director, officer, employee or agent of the Trustee, in
respect of the indemnification provided by this Section 8.05(a), or pursuant to
any other right of reimbursement
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from the Trust Fund that the Trustee, or any director, officer, employee or
agent of the Trustee, may have hereunder in its capacity as such, may be
withdrawn by the Trustee from the Distribution Account at any time. The
foregoing indemnity shall survive the resignation or removal of the Trustee.
(b) The Servicer agrees to indemnify the Trustee or any director, officer,
employee or agent of the Trustee from, and hold it harmless against, any loss,
liability or expense resulting from a breach of the Servicer's obligations and
duties under this Agreement. Such indemnity shall survive the termination or
discharge of this Agreement and the resignation or removal of the Trustee and
the Servicer for actions prior to such resignation or removal. Any payment
hereunder made by the Servicer to the Trustee shall be from the Servicer's own
funds, without reimbursement from the Trust Fund therefor.
SECTION 8.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be an entity duly organized and
validly existing under the laws of the United States of America or any state
thereof, authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least $50,000,000 and subject to supervision
or examination by federal or state authority. If such entity 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 entity shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. The principal office of the Trustee (other than the
initial Trustee) shall be in a state with respect to which an Opinion of Counsel
has been delivered to such Trustee at the time such Trustee is appointed Trustee
to the effect that the Trust will not be a taxable entity under the laws of such
state. 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.
SECTION 8.07. Resignation or Removal of Trustee.
The Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice thereof to the Depositor, the Servicer and each
Rating Agency. Upon receiving such notice of resignation, the Depositor shall
promptly appoint a successor Trustee by written instrument, in duplicate, one
copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor Trustee. If no successor Trustee shall have been so
appointed and having accepted appointment within 30 days after the giving of
such notice of resignation, the resigning 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
therefor by the Depositor or if at any time the Trustee shall be legally unable
to act, or shall be adjudged a bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation, then the Depositor or the
Servicer may remove the Trustee. If the Depositor or the
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Servicer removes the Trustee under the authority of the immediately preceding
sentence, the Depositor shall promptly appoint a successor Trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee.
The Majority Certificateholders may at any time remove the Trustee by
written instrument or instruments delivered to the Servicer, the Depositor and
the Trustee; the Depositor shall thereupon use its best efforts to appoint a
successor trustee in accordance with this Section.
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 not become
effective until 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, the Servicer and to its predecessor
Trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor Trustee shall become effective, and
such successor Trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with like effect as if originally named as Trustee. 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
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 the appointment of such
successor Trustee shall not result in a downgrading of the Regular Certificates
by either Rating Agency, as evidenced by a letter from each Rating Agency.
Upon acceptance of appointment by a successor Trustee as provided in this
Section 8.08, the successor Trustee shall mail notice of the appointment of a
successor Trustee hereunder to all Holders of Certificates at their addresses as
shown in the Certificate Register and to each Rating Agency.
SECTION 8.09. Merger or Consolidation of Trustee.
Any entity into which the Trustee may be merged or converted or with which
it may be consolidated, or any entity resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any entity succeeding to
the business of the Trustee, shall be the successor of the Trustee hereunder,
provided such entity shall be eligible under the provisions of Section 8.06 and
8.08, 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.
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee.
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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 or any Mortgaged Property may at the time be located, the
Depositor 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, and to
vest in such Person or Persons, in such capacity and for the benefit of the
Certificateholders, such title to the Trust, or any part thereof, 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. Any such co-trustee or separate trustee shall be subject to the
written approval of the Servicer. If the Servicer shall not have joined in such
appointment within 15 days after the receipt by it of a request so to do, or in
the case a Servicer Event of Termination 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. The Servicer shall be responsible for the fees of any co-trustee
or separate trustee appointed hereunder.
Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed upon
the Trustee 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 Trust or any portion
thereof in any such jurisdiction) shall be exercised and performed singly by
such separate trustee or co-trustee, but solely at the direction of the
Trustee;
(ii) no trustee hereunder shall be held personally liable by reason of any
act or omission of any other trustee hereunder; and
(iii) the Servicer and the Trustee, acting jointly, may at any time accept
the resignation of or remove any separate trustee or co-trustee except that
following the occurrence of a Servicer Event of Termination, the Trustee
acting alone may accept the resignation or remove any separate trustee or
co-trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then separate trustees and co-trustees, as
effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
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of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Depositor and the Servicer.
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. Limitation of Liability.
The Certificates are executed by the Trustee, not in its individual
capacity but solely as Trustee of the Trust, in the exercise of the powers and
authority conferred and vested in it by the Trust Agreement. Each of the
undertakings and agreements made on the part of the Trustee in the Certificates
is made and intended not as a personal undertaking or agreement by the Trustee
but is made and intended for the purpose of binding only the Trust.
SECTION 8.12. Trustee May Enforce Claims Without Possession of
Certificates.
(a) All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and such proceeding instituted by the Trustee shall
be brought in its own name or in its capacity as Trustee for the benefit of all
Holders of such Certificates, subject to the provisions of this Agreement. Any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursement and advances of the Trustee, its agents and
counsel, be for the ratable benefit of the Certificateholders in respect of
which such judgment has been recovered.
(b) The Trustee shall afford the Seller, the Depositor, the Servicer and
each Certificateholder upon reasonable prior notice during normal business
hours, access to all records maintained by the Trustee in respect of its duties
hereunder and access to officers of the Trustee responsible for performing such
duties. Upon request, the Trustee shall furnish the Depositor, the Servicer and
any requesting Certificateholder with its most recent financial statements. The
Trustee shall cooperate fully with the Seller, the Servicer, the Depositor and
such Certificateholder and shall make available to the Seller, the Servicer, the
Depositor and such Certificateholder for review and copying such books,
documents or records as may be requested with respect to the Trustee's duties
hereunder. The Seller, the Depositor, the Servicer and the Certificateholders
shall not have any responsibility or liability for any action or failure to act
by the Trustee and are not obligated to supervise the performance of the Trustee
under this Agreement or otherwise.
SECTION 8.13. Suits for Enforcement.
In case a Servicer Event of Termination or other default by the Servicer or
the Depositor hereunder shall occur and be continuing, the Trustee, shall, at
the direction of the Majority Certificateholders, or may, proceed to protect and
enforce its rights and the rights of the
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Certificateholders under this Agreement by a suit, action or proceeding in
equity or at law or otherwise, whether for the specific performance of any
covenant or agreement contained in this Agreement or in aid of the execution of
any power granted in this Agreement or for the enforcement of any other legal,
equitable or other remedy, as the Trustee, being advised by counsel, and subject
to the foregoing, shall deem most effectual to protect and enforce any of the
rights of the Trustee and the Certificateholders.
SECTION 8.14. Waiver of Bond Requirement.
The Trustee shall be relieved of, and each Certificateholder hereby waives,
any requirement of any jurisdiction in which the Trust, or any part thereof, may
be located that the Trustee post a bond or other surety with any court, agency
or body whatsoever.
SECTION 8.15. Waiver of Inventory, Accounting and Appraisal Requirement.
The Trustee shall be relieved of, and each Certificateholder hereby waives,
any requirement of any jurisdiction in which the Trust, or any part thereof, may
be located that the Trustee file any inventory, accounting or appraisal of the
Trust with any court, agency or body at any time or in any manner whatsoever.
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ARTICLE IX
REMIC ADMINISTRATION
SECTION 9.01. REMIC Administration.
(a) REMIC elections as set forth in the Preliminary Statement shall be made
by the Trustee on Form 1066 or other appropriate federal tax or information
return for the taxable year ending on the last day of the calendar year in which
the Certificates are issued. The regular interests and residual interest in each
REMIC shall be as designated in the Preliminary Statement.
(b) The Closing Date is hereby designated as the "Startup Day" of each
REMIC within the meaning of section 860G(a)(9) of the Code.
(c) The Trustee shall pay any and all expenses relating to any tax audit of
any REMIC (including, but not limited to, any professional fees or any
administrative or judicial proceedings with respect to any Trust REMIC that
involve the Internal Revenue Service or state tax authorities), including the
expense of obtaining any tax related Opinion of Counsel. The Trustee shall be
entitled to reimbursement of expenses incurred pursuant to this Section 9.01(c)
to the extent provided in Section 8.05.
(d) The Trustee shall prepare, sign and file, all of the REMICs' federal
and state tax and information returns (including Form 8811) as the direct
representative each REMIC created hereunder. The expenses of preparing and
filing such returns shall be borne by the Trustee.
(e) The Holder of the Class R Certificate at any time holding the largest
Percentage Interest thereof shall be the "tax matters person" as defined in the
REMIC Provisions (the related "Tax Matters Person") with respect to REMIC 1 and
REMIC 2 and shall act as Tax Matters Person for REMIC 1 and REMIC 2. The Holder
of the Class R-X Certificate at any time holding the largest Percentage Interest
thereof shall be the "tax matters person" as defined in the REMIC Provisions
(the related "Tax Matters Person") with respect to REMIC 3 and REMIC 4 and shall
act as Tax Matters Person for REMIC 3 and REMIC 4. The Trustee, as agent for the
Tax Matters Person, shall perform on behalf of each REMIC all reporting and
other tax compliance duties that are the responsibility of such REMIC under the
Code, the REMIC Provisions, or other compliance guidance issued by the Internal
Revenue Service or any state or local taxing authority. Among its other duties,
if required by the Code, the REMIC Provisions, or other such guidance, the
Trustee, as agent for the Tax Matters Person, shall provide (i) to the Treasury
or other governmental authority such information as is necessary for the
application of any tax relating to the transfer of a Residual Certificate to any
disqualified person or organization and (ii) to the Certificateholders such
information or reports as are required by the Code or REMIC Provisions. The
Trustee, as agent for the Tax Matters Person, shall represent each REMIC in any
administrative or judicial proceedings relating to an examination or audit by
any governmental taxing authority, request an administrative adjustment as to
any taxable year of any REMIC, enter into settlement agreements with any
government taxing agency, extend any statute of limitations relating to any item
of any REMIC and otherwise act on behalf of any REMIC in relation to any tax
matter involving the Trust.
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(f) The Trustee, the Servicer and the Holders of Certificates shall take
any action or cause the REMIC to take any action necessary to create or maintain
the status of each REMIC as a REMIC under the REMIC Provisions and shall assist
each other as necessary to create or maintain such status. Neither the Trustee,
the Servicer nor the Holder of any Residual Certificate shall take any action,
cause any REMIC created hereunder to take any action or fail to take (or fail to
cause to be taken) any action that, under the REMIC Provisions, if taken or not
taken, as the case may be, could (i) endanger the status of such REMIC as a
REMIC or (ii) result in the imposition of a tax upon such REMIC (including but
not limited to the tax on prohibited transactions as defined in Code Section
860F(a)(2) and the tax on prohibited contributions set forth on Section 860G(d)
of the Code) (either such event, an "Adverse REMIC Event") unless the Trustee
and the Servicer have received an Opinion of Counsel (at the expense of the
party seeking to take such action) to the effect that the contemplated action
will not endanger such status or result in the imposition of such a tax. In
addition, prior to taking any action with respect to any REMIC created hereunder
or the assets therein, or causing such REMIC to take any action, which is not
expressly permitted under the terms of this Agreement, any Holder of a Residual
Certificate will consult with the Trustee and the Servicer, or their respective
designees, in writing, with respect to whether such action could cause an
Adverse REMIC Event to occur with respect to any REMIC, and no such Person shall
take any such action or cause any REMIC to take any such action as to which the
Trustee or the Servicer has advised it in writing that an Adverse REMIC Event
could occur.
(g) Each Holder of a Residual Certificate shall pay when due any and all
taxes imposed on each REMIC created hereunder by federal or state governmental
authorities. To the extent that such Trust taxes are not paid by a Residual
Certificateholder, the Trustee shall pay any remaining REMIC taxes out of
current or future amounts otherwise distributable to the Holder of the Residual
Certificate in the REMICs or, if no such amounts are available, out of other
amounts held in the Distribution Account, and shall reduce amounts otherwise
payable to Holders of regular interests in the related REMIC. Subject to the
foregoing, in the event that a REMIC incurs a state or local tax, including
franchise taxes, as a result of a determination that such REMIC is domiciled in
the State of California for state tax purposes by virtue of the location of the
Servicer, the Servicer agrees to pay on behalf of such REMIC when due, any and
all state and local taxes imposed as a result of such a determination, in the
event that the Holder of the related Residual Certificate fails to pay such
taxes, if any, when imposed.
(h) The Trustee, as agent for the Tax Matters Person, shall, for federal
income tax purposes, maintain books and records with respect to each REMIC
created hereunder on a calendar year and on an accrual basis.
(i) No additional contributions of assets shall be made to any REMIC
created hereunder, except as expressly provided in this Agreement with respect
to eligible substitute mortgage loans.
(j) Neither the Trustee nor the Servicer shall enter into any arrangement
by which any REMIC created hereunder will receive a fee or other compensation
for services.
(k) On or before April 15 of each calendar year beginning in 2003, the
Servicer shall deliver to the Trustee and each Rating Agency an Officers'
Certificate stating the Servicer's compliance with the provisions of this
Section 9.01.
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(l) The Trustee will apply for an Employee Identification Number from the
Internal Revenue Service via a Form SS-4 or other acceptable method for all tax
entities and shall complete the Form 8811.
SECTION 9.02. Prohibited Transactions and Activities.
Neither the Depositor, the Servicer nor the Trustee shall sell, dispose of,
or substitute for any of the Mortgage Loans, except in a disposition pursuant to
(i) the foreclosure of a Mortgage Loan, (ii) the bankruptcy of the Trust Fund,
(iii) the termination of any REMIC created hereunder pursuant to Article X of
this Agreement, (iv) a substitution pursuant to Article II of this Agreement or
(v) a repurchase of Mortgage Loans pursuant to Article II of this Agreement, nor
acquire any assets for any REMIC, nor sell or dispose of any investments in the
Distribution Account for gain, nor accept any contributions to either REMIC
after the Closing Date, unless it has received an Opinion of Counsel (at the
expense of the party causing such sale, disposition, or substitution) that such
disposition, acquisition, substitution, or acceptance will not (a) affect
adversely the status of any REMIC created hereunder as a REMIC or of the
interests therein other than the Residual Certificates as the regular interests
therein, (b) affect the distribution of interest or principal on the
Certificates, (c) result in the encumbrance of the assets transferred or
assigned to the Trust Fund (except pursuant to the provisions of this Agreement)
or (d) cause any REMIC created hereunder to be subject to a tax on prohibited
transactions or prohibited contributions pursuant to the REMIC Provisions.
SECTION 9.03. Indemnification with Respect to Certain Taxes and Loss of
REMIC Status.
(a) In the event that any REMIC fails to qualify as a REMIC, loses its
status as a REMIC, or incurs federal, state or local taxes as a result of a
prohibited transaction or prohibited contribution under the REMIC Provisions due
to the negligent performance by the Servicer of its duties and obligations set
forth herein, the Servicer shall indemnify the Trustee and the Trust Fund
against any and all losses, claims, damages, liabilities or expenses ("Losses")
resulting from such negligence; provided, however, that the Servicer shall not
be liable for any such Losses attributable to the action or inaction of the
Trustee, the Depositor or the Holder of such Residual Certificate, as
applicable, nor for any such Losses resulting from misinformation provided by
the Holder of such Residual Certificate on which the Servicer has relied. The
foregoing shall not be deemed to limit or restrict the rights and remedies of
the Holder of such Residual Certificate now or hereafter existing at law or in
equity. Notwithstanding the foregoing, however, in no event shall the Servicer
have any liability (1) for any action or omission that is taken in accordance
with and in compliance with the express terms of, or which is expressly
permitted by the terms of, this Agreement, (2) for any Losses other than arising
out of a negligent performance by the Servicer of its duties and obligations set
forth herein, and (3) for any special or consequential damages to
Certificateholders (in addition to payment of principal and interest on the
Certificates).
(b) In the event that any REMIC fails to qualify as a REMIC, loses its
status as a REMIC, or incurs federal, state or local taxes as a result of a
prohibited transaction or prohibited contribution under the REMIC Provisions due
to the negligent performance by the Trustee of its duties and obligations set
forth herein, the Trustee shall indemnify the Trust Fund against any and all
Losses resulting from such negligence; provided, however, that the Trustee shall
not be liable for any such
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Losses attributable to the action or inaction of the Servicer, the Depositor or
the Holder of such Residual Certificate, as applicable, nor for any such Losses
resulting from misinformation provided by the Holder of such Residual
Certificate on which the Trustee has relied. The foregoing shall not be deemed
to limit or restrict the rights and remedies of the Holder of such Residual
Certificate now or hereafter existing at law or in equity. Notwithstanding the
foregoing, however, in no event shall the Trustee have any liability (1) for any
action or omission that is taken in accordance with and in compliance with the
express terms of, or which is expressly permitted by the terms of, this
Agreement, (2) for any Losses other than arising out of a negligent performance
by the Trustee of its duties and obligations set forth herein, and (3) for any
special or consequential damages to Certificateholders (in addition to payment
of principal and interest on the Certificates).
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ARTICLE X
TERMINATION
SECTION 10.01. Termination.
(a) The respective obligations and responsibilities of the Servicer, the
Depositor and the Trustee created hereby (other than the obligation of the
Trustee to make certain payments to Certificateholders after the final
Distribution Date and the obligation of the Servicer to send certain notices as
hereinafter set forth) shall terminate upon notice to the Trustee upon the
earliest of (i) the Distribution Date on which the Certificate Principal
Balances of the Regular Certificates have been reduced to zero, (ii) the final
payment or other liquidation of the last Mortgage Loan in the Trust, (iii) the
optional purchase by the Servicer of the Mortgage Loans as described below and
(iv) the Distribution Date in October 2033. Notwithstanding the foregoing, in no
event shall the trust created hereby continue beyond the expiration of 21 years
from the death of the last survivor of the descendants of Xxxxxx X. Xxxxxxx, the
late ambassador of the United States to the Court of St. James's, living on the
date hereof.
The majority Holder of the Class C Certificates (unless such Holder is the
Seller, Greenwich Capital Markets, Inc. or an Affiliate of either of them), or
if such Holder fails to exercise such option or if such Holder is the Seller,
Greenwich Capital Markets, Inc. or an Affiliate of either of them, the Servicer
(either Holder or the Servicer, as applicable, the "Terminator"), may, at its
option, terminate this Agreement on any date on which the aggregate of the
Principal Balances of the Mortgage Loans (after giving effect to scheduled
payments of principal due during the related Due Period, to the extent received
or advanced, and unscheduled collections of principal received during the
related Prepayment Period) on such date is equal to or less than 10% of the
aggregate Principal Balances of the Original Mortgage Loans on the Cut-off Date,
by purchasing, on the next succeeding Distribution Date, all of the outstanding
Mortgage Loans and REO Properties at a price equal to the fair market value of
the Mortgage Loans and REO Properties (as determined as of the close of business
on the third Business Day next preceding the date upon which notice of any such
termination is furnished to the related Certificateholders pursuant to Section
10.01(c) by (x) the Servicer, if it is the Terminator, (y) the majority Holder
of the Class C Certificates and (z) if the Class A Certificates or a Class of
Mezzanine Certificates will not receive all amounts owed to it as a result of
the termination, the Trustee, provided that if this clause (z) applies to such
determination, such determination shall be based solely upon an appraisal
obtained as provided in the last sentence of this paragraph), plus accrued and
unpaid interest thereon at the weighted average of the Mortgage Rates through
the end of the Due Period preceding the final Distribution Date plus
unreimbursed Servicing Advances, Advances, any unpaid Servicing Fees allocable
to such Mortgage Loans and REO Properties and any accrued and unpaid Net WAC
Rate Carryover Amounts (the "Termination Price"); provided, however, such option
may only be exercised if (i) the Termination Price is sufficient to result in
the payment of all interest accrued on, as well as amounts necessary to retire
the principal balance of, each class of notes issued pursuant to the Indenture,
dated December 30, 2002, among Fremont NIM Trust 2002-2 as issuer and the
Trustee as indenture trustee and (ii) the fair market value of the Mortgage
Loans and REO Properties described above is at least equal to the Principal
Balance of the Mortgage Loans (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced,
and unscheduled collections of
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principal received during the related Prepayment Period) and the appraised value
of the REO Properties. If the determination of the fair market value of the
Mortgage Loans and REO Properties shall be required to be made by the Servicer,
if it is the Terminator, the majority Holder of the Class C Certificates and the
Trustee as provided above, such determination shall be based on an appraisal of
the value of the Mortgage Loans and REO Properties conducted by an independent
appraiser mutually agreed upon by the Servicer, if it is the Terminator, the
majority Holder of the Class C Certificates and the Trustee in their reasonable
discretion, and (A) such appraisal shall be obtained at no expense to the
Trustee and (B) the Trustee may conclusively rely on, and shall be protected in
relying on, such appraisal.
In connection with any such purchase pursuant to the preceding paragraph,
the Terminator shall deposit in the Distribution Account all amounts then on
deposit in the Collection Account, which deposit shall be deemed to have
occurred immediately preceding such purchase.
Any such purchase shall be accomplished by deposit into the Distribution
Account on the Determination Date before such Distribution Date of the
Termination Price.
(b) Notice of any termination, specifying the Distribution Date (which
shall be a date that would otherwise be a Distribution Date) upon which the
Certificateholders may surrender their Certificates to the Trustee for payment
of the final distribution and cancellation, shall be given promptly by the
Trustee upon the Trustee receiving notice of such date from the Terminator, by
letter to the Certificate Insurer and to the Certificateholders mailed not
earlier than the 15th day and not later than the 25th day of the month next
preceding the month of such final distribution specifying (1) the Distribution
Date upon which final distribution of the Certificates will be made upon
presentation and surrender of such Certificates at the office or agency of the
Trustee therein designated, (2) the amount of any such final distribution and
(3) that the Record Date otherwise applicable to such Distribution Date is not
applicable, distributions being made only upon presentation and surrender of the
Certificates at the office or agency of the Trustee therein specified.
(c) Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to the Holders of the Certificates on the Distribution
Date for such final distribution, in proportion to the Percentage Interests of
their respective Class and to the extent that funds are available for such
purpose, an amount equal to the amount required to be distributed to such
Holders in accordance with the provisions of Section 4.01 for such Distribution
Date. By acceptance of the Residual Certificates, the Holders of the Residual
Certificates agree, in connection with any termination hereunder, to assign and
transfer any amounts in excess of the par value of the Mortgage Loans, and to
the extent received in respect of such termination, to pay any such amounts to
the Holders of the Class C Certificates.
(d) In the event that all Certificateholders shall not surrender their
Certificates for final payment and cancellation on or before such final
Distribution Date, the Trustee shall promptly following such date cause all
funds in the Distribution Account not distributed in final distribution to
Certificateholders to be withdrawn therefrom and credited to the remaining
Certificateholders by depositing such funds in a separate Servicing Account for
the benefit of such Certificateholders, and the Servicer (if the Servicer has
exercised its right to purchase the Mortgage Loans) or the Trustee (in any other
case) shall give a second written notice to the remaining Certificateholders, to
surrender
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their Certificates for cancellation and receive the final distribution with
respect thereto. If within nine months after the second notice all the
Certificates shall not have been surrendered for cancellation, the Residual
Certificateholders shall be entitled to all unclaimed funds and other assets
which remain subject hereto, and the Trustee upon transfer of such funds shall
be discharged of any responsibility for such funds, and the Certificateholders
shall look to the Residual Certificateholders for payment.
SECTION 10.02. Additional Termination Requirements.
(a) In the event that the Terminator exercises its purchase option as
provided in Section 10.01, each REMIC shall be terminated in accordance with the
following additional requirements, unless the Trustee shall have been furnished
with an Opinion of Counsel to the effect that the failure of the Trust to comply
with the requirements of this Section will not (i) result in the imposition of
taxes on "prohibited transactions" of the Trust as defined in Section 860F of
the Code or (ii) cause any REMIC constituting part of the Trust Fund to fail to
qualify as a REMIC at any time that any Certificates are outstanding:
(i) Within 90 days prior to the final Distribution Date, the Terminator
shall adopt and the Trustee shall sign a plan of complete liquidation of each
REMIC created hereunder meeting the requirements of a "Qualified Liquidation"
under Section 860F of the Code and any regulations thereunder; and
(ii) At or after the time of adoption of such a plan of complete
liquidation and at or prior to the final Distribution Date, the Trustee shall
sell all of the assets of the Trust Fund to the Terminator for cash pursuant
to the terms of the plan of complete liquidation.
(b) By their acceptance of Certificates, the Holders thereof hereby agree
to appoint the Trustee as their attorney in fact to: (i) adopt such a plan of
complete liquidation (and the Certificateholders hereby appoint the Trustee as
their attorney in fact to sign such plan) as appropriate and (ii) to take such
other action in connection therewith as may be reasonably required to carry out
such plan of complete liquidation all in accordance with the terms hereof.
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ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01. Amendment.
This Agreement may be amended from time to time by the Depositor, the
Servicer and the Trustee; and without the consent of the Certificateholders (i)
to cure any ambiguity, (ii) to correct or supplement any provisions herein which
may be defective or inconsistent with any other provisions herein (iii) to amend
the provisions of Section 3.22(b) or (iv) to make any other provisions with
respect to matters or questions arising under this Agreement which shall not be
inconsistent with the provisions of this Agreement; provided that such action
shall not, as evidenced by either (a) an Opinion of Counsel delivered to the
Trustee or (b) written notice to the Depositor, the Servicer and the Trustee
from the Rating Agencies that such action will not result in the reduction or
withdrawal of the rating of any outstanding Class of Certificates with respect
to which it is a Rating Agency, adversely affect in any material respect the
interests of any Certificateholder. No amendment shall be deemed to adversely
affect in any material respect the interests of any Certificateholder who shall
have consented thereto, and no Opinion of Counsel or Rating Agency confirmation
shall be required to address the effect of any such amendment on any such
consenting Certificateholder. Notwithstanding the foregoing, neither an Opinion
of Counsel or written notice to the Depositor, the Servicer and the Trustee from
the Rating Agencies will be required in connection with an amendment to the
provisions of Section 3.22(b).
In addition, this Agreement may be amended from time to time by the
Depositor, the Servicer and the Trustee with the consent of the Majority
Certificateholders 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 or waiver shall (x) reduce in any manner the
amount of, or delay the timing of, payments on the Certificates or distributions
which are required to be made on any Certificate without the consent of the
Holder of such Certificate, (y) adversely affect in any material respect the
interests of the Holders of any Class of Certificates (as evidenced by either
(i) an Opinion of Counsel delivered to the Trustee or (ii) written notice to the
Depositor, the Servicer and the Trustee from the Rating Agencies that such
action will not result in the reduction or withdrawal of the rating of any
outstanding Class of Certificates with respect to which it is a Rating Agency)
in a manner other than as described in clause (x) above, without the consent of
the Holders of Certificates of such Class evidencing at least a 66% Percentage
Interest in such Class, or (z) reduce the percentage of Voting Rights required
by clause (y) above without the consent of the Holders of all Certificates of
such Class then outstanding. Upon approval of an amendment, a copy of such
amendment shall be sent to the Rating Agencies.
Notwithstanding any provision of this Agreement to the contrary, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel, delivered by (and at the expense of)
the Person seeking such Amendment, to the effect that such amendment will not
result in the imposition of a tax on any REMIC created hereunder constituting
part of the Trust Fund pursuant to the REMIC Provisions or cause any REMIC
created
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hereunder constituting part of the Trust to fail to qualify as a REMIC at any
time that any Certificates are outstanding and that the amendment is being made
in accordance with the terms hereof.
Promptly after the execution of any such amendment the Trustee shall
furnish, at the expense of the Person that requested the amendment if such
Person is the Servicer (but in no event at the expense of the Trustee),
otherwise at the expense of the Trust, a copy of such amendment and the Opinion
of Counsel referred to in the immediately preceding paragraph to the Servicer
and each Rating Agency.
It shall not be necessary for the consent of Certificateholders under this
Section 11.01 to approve the particular form of any proposed amendment; instead
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.
The Trustee may, but shall not be obligated to, enter into any amendment
pursuant to this Section 11.01 that affects its rights, duties and immunities
under this Agreement or otherwise.
SECTION 11.02. Recordation of Agreement; Counterparts.
To the extent permitted by applicable law, this Agreement is subject to
recordation in all appropriate public offices for real property records in all
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
Servicer at the expense of the Trust, but only upon direction of
Certificateholders 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 together constitute but one and the
same instrument.
SECTION 11.03. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not (i) operate to
terminate this Agreement or the Trust, (ii) entitle such Certificateholder's
legal representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust, or (iii)
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
Except as expressly provided for herein, no Certificateholder shall have
any right to vote or in any manner otherwise control the operation and
management of the Trust, 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
131
association; nor shall any Certificateholder be under any liability to any third
person by reason of any action taken by the parties to this Agreement pursuant
to any provision hereof.
No Certificateholder shall have any right by virtue of any provision of
this Agreement to institute any suit, action or proceeding in equity or at law
upon or under or with respect to this Agreement, unless such Holder previously
shall have given to the Trustee a written notice of default and of the
continuance thereof, as hereinbefore provided, and unless also the Holders of
Certificates entitled to at least 25% of the Voting Rights shall have made
written request upon the Trustee to institute such action, suit or proceeding in
its own name as Trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee for 15 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 is understood
and intended, and expressly covenanted by each Certificateholder with every
other Certificateholder and the Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatever by virtue of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, which priority or
preference is not otherwise provided for herein, or to enforce any right under
this Agreement, except in the manner herein provided and for the equal, ratable
and common benefit of all Certificateholders. For the protection and enforcement
of the provisions of this Section 11.03 each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
SECTION 11.04. Governing Law; Jurisdiction.
This Agreement shall be construed in accordance with the laws of the State
of New York, and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws. With respect to any claim
arising out of this Agreement, each party irrevocably submits to the exclusive
jurisdiction of the courts of the State of New York and the United States
District Court located in the Borough of Manhattan in The City of New York, and
each party irrevocably waives any objection which it may have at any time to the
laying of venue of any suit, action or proceeding arising out of or relating
hereto brought in any such courts, irrevocably waives any claim that any such
suit, action or proceeding brought in any such court has been brought in any
inconvenient forum and further irrevocably waives the right to object, with
respect to such claim, suit, action or proceeding brought in any such court,
that such court does not have jurisdiction over such party, provided that
service of process has been made by any lawful means.
SECTION 11.05. Notices.
All directions, demands and notices hereunder shall be in writing and shall
be deemed to have been duly given if personally delivered at or mailed by first
class mail, postage prepaid, by facsimile or by express delivery service, to (a)
in the case of the Servicer, Xxxxxx Loan Servicing LP 0000 Xxxx Xxxxxxx Xxxxx,
Xxxxxxx, Xxxxx 00000, Attention: Xxxxxx XxXxxxx (telecopy number: (713)
960-0539), or such other address or telecopy number as may hereafter be
furnished to the Depositor and the Trustee in writing by the Servicer, (b) in
the case of the Trustee, Deutsche Bank National Trust Company, 0000 Xxxx Xx.
Xxxxxx Xxxxx, Xxxxx Xxx, Xxxxxxxxxx 00000-0000, Attention: GC02F1 (telecopy
number: (000) 000-0000), or such other address or telecopy number
132
as may hereafter be furnished to the Depositor and the Servicer in writing by
the Trustee, and (c) in the case of the Depositor, Financial Asset Securities
Corp., 000 Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxx 00000, Attention: Legal, or
such other address as may be furnished to the Servicer and the Trustee in
writing by the Depositor. Any notice required or permitted to be mailed to a
Certificateholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Notice of any
Servicer Event of Termination shall be given by telecopy and by certified mail.
Any notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have duly been given when mailed, whether or not the
Certificateholder receives such notice. A copy of any notice required to be
telecopied hereunder shall also be mailed to the appropriate party in the manner
set forth above.
SECTION 11.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall for any reason whatsoever be held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
SECTION 11.07. Article and Section References.
All article and section references used in this Agreement, unless otherwise
provided, are to articles and sections in this Agreement.
SECTION 11.08. Notice to the Rating Agencies.
(a) Each of the Trustee and the Servicer shall be obligated to use its best
reasonable efforts promptly to provide notice to the Rating Agencies with
respect to each of the following of which a Responsible Officer of the Trustee
or Servicer, as the case may be, has actual knowledge:
(i) any material change or amendment to this Agreement;
(ii) the occurrence of any Servicer Event of Termination that has not been
cured or waived;
(iii) the resignation or termination of the Servicer or the Trustee;
(iv) the final payment to Holders of the Certificates of any Class;
(v) any change in the location of any Account; and
(vi) if the Trustee is acting as successor Servicer pursuant to Section
7.02 hereof, any event that would result in the inability of the Trustee to
make Advances.
133
(b) In addition, the Trustee shall promptly make available to each Rating
Agency copies of each Statement to Certificateholders described in Sections 4.03
and 3.19 hereof and the Servicer shall promptly furnish to each Rating Agency
copies of the following:
(i) each annual statement as to compliance described in Section 3.20
hereof;
(ii) each annual independent public accountants' servicing report described
in Section 3.21 hereof; and
(iii) each notice delivered pursuant to Section 7.01(a) hereof which
relates to the fact that the Servicer has not made an Advance.
Any such notice pursuant to this Section 11.08 shall be in writing and
shall be deemed to have been duly given if personally delivered or mailed by
first class mail, postage prepaid, or by express delivery service to (i) Fitch
Ratings, Xxx Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, (ii) Xxxxx'x
Investors Service, Inc., 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 and (iii)
Standard & Poor's, a division of The XxXxxx-Xxxx Companies, Inc., 00 Xxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000, Attention: Residential Mortgage
Surveillance Group.
SECTION 11.09. Further Assurances.
Notwithstanding any other provision of this Agreement, neither the Regular
Certificateholders nor the Trustee shall have any obligation to consent to any
amendment or modification of this Agreement unless they have been provided
reasonable security or indemnity against their out-of-pocket expenses (including
reasonable attorneys' fees) to be incurred in connection therewith.
SECTION 11.10. Benefits of Agreement.
Nothing in this Agreement or in the Certificates, expressed or implied,
shall give to any Person, other than the Certificateholders and the parties
hereto and their successors hereunder, any benefit or any legal or equitable
right, remedy or claim under this Agreement.
SECTION 11.11 Acts of Certificateholders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by the
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Certificateholders in person or by
agent duly appointed in writing, and such action shall become effective when
such instrument or instruments are delivered to the Trustee and the Servicer.
Such instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "act" of the Certificateholders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Agreement and conclusive in favor of the Trustee and the Trust,
if made in the manner provided in this Section 11.11.
134
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by
the certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Whenever such execution is
by a signer acting in a capacity other than his or her individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority.
(c) Any request, demand, authorization, direction, notice, consent, waiver
or other action by any Certificateholder shall bind every future Holder of such
Certificate and the Holder of every Certificate issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof, in respect of
anything done, omitted or suffered to be done by the Trustee or the Trust in
reliance thereon, whether or not notation of such action is made upon such
Certificate.
135
IN WITNESS WHEREOF, the Depositor, the Servicer and the Trustee have caused
their names to be signed hereto by their respective officers thereunto duly
authorized, all as of the day and year first above written.
FINANCIAL ASSET SECURITIES CORP.,
as Depositor
By: /s/ Xxxxx Xxxxx
---------------------------------
Name: Xxxxx Xxxxx
Title: Senior Vice President
XXXXXX LOAN SERVICING LP, as Servicer
By: /s/ Xxxxx X. Xxxxxx, Xx.
--------------------------------
Name: Xxxxx X. Xxxxxx, Xx.
Title: Executive Vice President
DEUTSCHE BANK NATIONAL TRUST COMPANY,
as Trustee
By: /s/ Xxxxxxx X. Xxxx
---------------------------------
Name: Xxxxxxx X. Xxxx
Title: Associate
By: /s/ Xxxxxxx Xxxxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Associate
STATE OF )
) ss.:
COUNTY OF )
On the ___th day of December, 2002 before me, a notary public in and for
said State, personally appeared _______________ known to me to be a
______________ of Financial Asset Securities Corp., a Delaware corporation that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
____________________________________
Notary Public
STATE OF )
) ss.:
COUNTY OF )
On the ___th day of December, 2002 before me, a notary public in and for
said State, personally appeared _______________ known to me to be a
_______________ of Xxxxxx Loan Servicing LP, a corporation that executed the
within instrument, and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
____________________________________
Notary Public
STATE OF )
) ss.:
COUNTY OF )
On the ___th day of December, 2002 before me, a notary public in and for
said State, personally appeared __________________, known to me to be an
_____________________ of Deutsche Bank National Trust Company, a
____________________ that executed the within instrument, and also known to me
to be the person who executed it on behalf of said association, and acknowledged
to me that such corporation executed the within instrument.
On the ___th day of December, 2002 before me, a notary public in and for
said State, personally appeared __________________, known to me to be an
_____________________ of Deutsche Bank National Trust Company, a
____________________ that executed the within instrument, and also known to me
to be the person who executed it on behalf of said association, and acknowledged
to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
____________________________________
Notary Public
EXHIBIT A-1
FORM OF CLASS A-1 CERTIFICATES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
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").
Certificate No. : 1
Cut-off Date : December 1, 2002
First Distribution Date : January 25, 2002
Initial Certificate Principal Balance
of this Certificate ("Denomination") : $289,407,000.00
Original Class Certificate
Principal Balance of this Class : $289,407,000.00
Percentage Interest : 100.00%
Pass-Through Rate : Variable
CUSIP : [__________]
Class : A-1
Assumed Maturity Date : [month/year]
A-1-1
Fremont Home Loan Trust 2002-2
Asset-Backed Certificates,
Series 2002-2
Class A-1
evidencing the Percentage Interest in the distributions allocable
to the Certificates of the above-referenced Class with respect to
the Trust consisting of first lien adjustable rate and fixed rate
mortgage loans (the "Mortgage Loans")
FINANCIAL ASSET SECURITIES CORP., as Depositor
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Principal Balance of this Class A-1
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class A-1
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 Cede & Co. is the registered owner of the Percentage
Interest evidenced by this Class A-1 Certificate (obtained by dividing the
Denomination of this Class A-1 Certificate by the Original Class Certificate
Principal Balance) in certain monthly distributions with respect to a Trust
consisting primarily of the Mortgage Loans deposited by Financial Asset
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of December 1, 2002 (the "Agreement") among the
Depositor, Xxxxxx Loan Servicing LP, as servicer (the "Servicer"), and Deutsche
Bank National Trust Company, a national banking association, as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Class A-1 Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Class A-1 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 Class A-1
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 A-1 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-1-2
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: December __, 2002
FREMONT HOME LOAN TRUST 2002-2
By: DEUTSCHE BANK NATIONAL
TRUST COMPANY, not in its
individual capacity, but
solely as Trustee
By_____________________________
This is one of the Class A-1 Certificates
referenced in the within-mentioned Agreement
By__________________________________________
Authorized Signatory of
Deutsche Bank National Trust Company,
as Trustee
[Reverse of Class A-1 Certificate]
Fremont Home Loan Trust 2002-2
Asset-Backed Certificates,
Series 2002-2
This Certificate is one of a duly authorized issue of Certificates
designated as Fremont Home Loan Trust 2002-2, Asset-Backed Certificates, Series
2002-2 (herein collectively called the "Certificates"), and representing a
beneficial ownership interest in the Trust 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 Distribution 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, then the
Business Day immediately following such Distribution Date (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.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. 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 of the Trustee specified in the notice to
Certificateholders of such final distribution.
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 and the Trustee and of Holders of the requisite
percentage of the Percentage Interests of each Class of Certificates affected by
such amendment, as specified 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.
A-1-4
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the Corporate Trust Office of the Trustee
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 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 and the Trustee and any agent of the Depositor,
the Servicer or the Trustee may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Trustee, the Servicer or any such agent shall be affected by any notice to
the contrary.
On any Distribution Date following the date at which the remaining
aggregate Principal Balance of the Mortgage Loans is less than 10% of the sum of
the aggregate Principal Balance of the Original Mortgage Loans as of the Cut-off
Date, the Servicer may purchase, in whole, from the Trust the Mortgage Loans 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 notice to the Trustee upon the earliest of
(i) the Distribution Date on which the Certificate Principal Balances of the
Regular Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
in [month/year].
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
A-1-5
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.
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
A-1-6
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.
X-0-0
XXXXXXX X-0
FORM OF CLASS A-2 CERTIFICATES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
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").
Certificate No. : 1
Cut-off Date : December 1, 2002
First Distribution Date : January 25, 2002
Initial Certificate Principal Balance
of this Certificate ("Denomination") : $137,636,000.00
Original Class Certificate
Principal Balance of this Class : $137,636,000.00
Percentage Interest : 100.00%
Pass-Through Rate : Variable
CUSIP : [__________]
Class : A-2
Assumed Maturity Date : [month/year]
A-2-1
Fremont Home Loan Trust 2002-2
Asset-Backed Certificates,
Series 2002-2
Class A-2
evidencing the Percentage Interest in the distributions allocable
to the Certificates of the above-referenced Class with respect to
the Trust consisting of first lien adjustable rate and fixed rate
mortgage loans (the "Mortgage Loans")
FINANCIAL ASSET SECURITIES CORP., as Depositor
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Principal Balance of this Class A-2
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class A-2
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 Cede & Co. is the registered owner of the Percentage
Interest evidenced by this Class A-2 Certificate (obtained by dividing the
Denomination of this Class A-2 Certificate by the Original Class Certificate
Principal Balance) in certain monthly distributions with respect to a Trust
consisting primarily of the Mortgage Loans deposited by Financial Asset
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of December 1, 2002 (the "Agreement") among the
Depositor, Xxxxxx Loan Servicing LP, as servicer (the "Servicer"), and Deutsche
Bank National Trust Company, a national banking association, as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Class A-2 Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Class A-2 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 Class A-2
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 A-2 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-2-2
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: December __, 2002
FREMONT HOME LOAN TRUST 2002-2
By: DEUTSCHE BANK NATIONAL
TRUST COMPANY, not in its
individual capacity, but
solely as Trustee
By_____________________________
This is one of the Class A-2 Certificates
referenced in the within-mentioned Agreement
By__________________________________________
Authorized Signatory of
Deutsche Bank National Trust Company,
as Trustee
A-2-3
[Reverse of Class A-2 Certificate]
Fremont Home Loan Trust 2002-2
Asset-Backed Certificates,
Series 2002-2
This Certificate is one of a duly authorized issue of Certificates
designated as Fremont Home Loan Trust 2002-2, Asset-Backed Certificates, Series
2002-2 (herein collectively called the "Certificates"), and representing a
beneficial ownership interest in the Trust 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 Distribution 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, then the
Business Day immediately following such Distribution Date (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.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. 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 of the Trustee specified in the notice to
Certificateholders of such final distribution.
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 and the Trustee and of Holders of the requisite
percentage of the Percentage Interests of each Class of Certificates affected by
such amendment, as specified 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.
A-2-4
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the Corporate Trust Office of the Trustee
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 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 and the Trustee and any agent of the Depositor,
the Servicer or the Trustee may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Trustee, the Servicer or any such agent shall be affected by any notice to
the contrary.
On any Distribution Date following the date at which the remaining
aggregate Principal Balance of the Mortgage Loans is less than 10% of the sum of
the aggregate Principal Balance of the Original Mortgage Loans as of the Cut-off
Date, the Servicer may purchase, in whole, from the Trust the Mortgage Loans 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 notice to the Trustee upon the earliest of
(i) the Distribution Date on which the Certificate Principal Balances of the
Regular Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
in [month/year].
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
A-2-5
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.
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
A-2-6
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.
X-0-0
XXXXXXX X-0
FORM OF CLASS M-1 CERTIFICATES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1 CERTIFICATES AND THE CLASS A-2
CERTIFICATES TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING AGREEMENT
REFERRED TO 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").
Certificate No. : 1
Cut-off Date : December 1, 2002
First Distribution Date : January 25, 2002
Initial Certificate Principal Balance
of this Certificate ("Denomination") : $23,116,000.00
Original Class Certificate
Principal Balance of this Class : $23,116,000.00
Percentage Interest : 100.00%
Pass-Through Rate : Variable
CUSIP : [__________]
Class : M-1
Assumed Maturity Date : [month/year]
A-2-1
Fremont Home Loan Trust 2002-2
Asset-Backed Certificates,
Series 2002-2
Class M-1
evidencing the Percentage Interest in the distributions allocable
to the Certificates of the above-referenced Class with respect to
the Trust consisting of first lien adjustable rate and fixed rate
mortgage loans (the "Mortgage Loans")
FINANCIAL ASSET SECURITIES CORP., as Depositor
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Principal Balance of this Class M-1
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class M-1
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 Cede & Co. is the registered owner of the Percentage
Interest evidenced by this Class M-1 Certificate (obtained by dividing the
Denomination of this Class M-1 Certificate by the Original Class Certificate
Principal Balance) in certain monthly distributions with respect to a Trust
consisting primarily of the Mortgage Loans deposited by Financial Asset
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of December 1, 2002 (the "Agreement") among the
Depositor, Xxxxxx Loan Servicing LP, as servicer (the "Servicer"), and Deutsche
Bank National Trust Company, a national banking association, as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Class M-1 Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Class M-1 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 Class M-1
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 M-1 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-2-2
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: December __, 2002
FREMONT HOME LOAN TRUST 2002-2
By: DEUTSCHE BANK NATIONAL TRUST
COMPANY, not in its individual
capacity, but solely as Trustee
By_________________________________
This is one of the Class M-1 Certificates
referenced in the within-mentioned Agreement
By_________________________________________
Authorized Signatory of
Deutsche Bank National Trust Company,
as Trustee
A-2-3
[Reverse of Class M-1 Certificate]
Fremont Home Loan Trust 2002-2
Asset-Backed Certificates,
Series 2002-2
This Certificate is one of a duly authorized issue of Certificates
designated as Fremont Home Loan Trust 2002-2, Asset-Backed Certificates, Series
2002-2 (herein collectively called the "Certificates"), and representing a
beneficial ownership interest in the Trust 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 Distribution 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, then the
Business Day immediately following such Distribution Date (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.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. 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 of the Trustee specified in the notice to
Certificateholders of such final distribution.
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 and the Trustee and of Holders of the requisite
percentage of the Percentage Interests of each Class of Certificates affected by
such amendment, as specified 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.
A-2-4
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the Corporate Trust Office of the Trustee
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 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 and the Trustee and any agent of the Depositor,
the Servicer or the Trustee may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Trustee, the Servicer or any such agent shall be affected by any notice to
the contrary.
On any Distribution Date following the date at which the remaining
aggregate Principal Balance of the Mortgage Loans is less than 10% of the sum of
the aggregate Principal Balance of the Original Mortgage Loans as of the Cut-off
Date, the Servicer may purchase, in whole, from the Trust the Mortgage Loans 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 notice to the Trustee upon the earliest of
(i) the Distribution Date on which the Certificate Principal Balances of the
Regular Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
in [month/year].
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
A-2-5
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.
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
A-2-6
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.
X-0-0
XXXXXXX X-0
FORM OF CLASS M-2A CERTIFICATES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1 CERTIFICATES, THE A-2
CERTIFICATES AND THE CLASS M-1 CERTIFICATES TO THE EXTENT DESCRIBED IN THE
POOLING AND SERVICING AGREEMENT REFERRED TO 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").
Certificate No. : 1
Cut-off Date : December 1, 2002
First Distribution Date : January 25, 2002
Initial Certificate Principal Balance
of this Certificate ("Denomination") : $10,683,000.00
Original Class Certificate
Principal Balance of this Class : $10,683,000.00
Percentage Interest : 100.00%
Pass-Through Rate : Variable
CUSIP : [__________]
Class : M-2A
Assumed Maturity Date : [month/year]
A-4-1
Fremont Home Loan Trust 2002-2
Asset-Backed Certificates,
Series 2002-2
Class M-2A
evidencing the Percentage Interest in the distributions allocable
to the Certificates of the above-referenced Class with respect to
the Trust consisting of first lien adjustable rate and fixed rate
mortgage loans (the "Mortgage Loans")
FINANCIAL ASSET SECURITIES CORP., as Depositor
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Principal Balance of this Class M-2A
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class M-2A
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 Cede & Co. is the registered owner of the Percentage
Interest evidenced by this Class M-2A Certificate (obtained by dividing the
Denomination of this Class M-2A Certificate by the Original Class Certificate
Principal Balance) in certain monthly distributions with respect to a Trust
consisting primarily of the Mortgage Loans deposited by Financial Asset
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of December 1, 2002 (the "Agreement") among the
Depositor, Xxxxxx Loan Servicing LP, as servicer (the "Servicer"), and Deutsche
Bank National Trust Company, a national banking association, as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Class M-2A Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Class M-2A 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 Class M-2A
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 M-2A 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-4-2
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: December __, 2002
FREMONT HOME LOAN TRUST 2002-2
By: DEUTSCHE BANK NATIONAL TRUST
COMPANY, not in its individual
capacity, but solely as Trustee
By_________________________________
This is one of the Class M-2A Certificates
referenced in the within-mentioned Agreement
By____________________________________
Authorized Signatory of
Deutsche Bank National Trust Company,
as Trustee
A-4-3
[Reverse of Class M-2A Certificate]
Fremont Home Loan Trust 2002-2
Asset-Backed Certificates,
Series 2002-2
This Certificate is one of a duly authorized issue of Certificates
designated as Fremont Home Loan Trust 2002-2, Asset-Backed Certificates, Series
2002-1 (herein collectively called the "Certificates"), and representing a
beneficial ownership interest in the Trust 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 Distribution 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, then the
Business Day immediately following such Distribution Date (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.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. 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 of the Trustee specified in the notice to
Certificateholders of such final distribution.
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 and the Trustee and of Holders of the requisite
percentage of the Percentage Interests of each Class of Certificates affected by
such amendment, as specified 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.
A-4-4
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the Corporate Trust Office of the Trustee
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 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 and the Trustee and any agent of the Depositor,
the Servicer or the Trustee may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Trustee, the Servicer or any such agent shall be affected by any notice to
the contrary.
On any Distribution Date following the date at which the remaining
aggregate Principal Balance of the Mortgage Loans is less than 10% of the sum of
the aggregate Principal Balance of the Original Mortgage Loans as of the Cut-off
Date, the Servicer may purchase, in whole, from the Trust the Mortgage Loans 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 notice to the Trustee upon the earliest of
(i) the Distribution Date on which the Certificate Principal Balances of the
Regular Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
in [month/year].
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
A-4-5
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.
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
A-4-6
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.
X-0-0
XXXXXXX X-0
FORM OF CLASS M-2B CERTIFICATES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1 CERTIFICATES, THE A-2
CERTIFICATES, THE CLASS M-1 CERTIFICATES AND THE CLASS M-2A CERTIFICATES TO THE
EXTENT DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO 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").
Certificate No. : 1
Cut-off Date : December 1, 2002
First Distribution Date : January 25, 2002
Initial Certificate Principal Balance
of this Certificate ("Denomination") : $10,000,000.00
Original Class Certificate
Principal Balance of this Class : $10,000,000.00
Percentage Interest : 100.00%
Pass-Through Rate : Variable
CUSIP : [__________]
Class : M-2B
Assumed Maturity Date : [month/year]
A-5-1
Fremont Home Loan Trust 2002-2
Asset-Backed Certificates,
Series 2002-2
Class M-2B
evidencing the Percentage Interest in the distributions allocable
to the Certificates of the above-referenced Class with respect to
the Trust consisting of first lien adjustable rate and fixed rate
mortgage loans (the "Mortgage Loans")
FINANCIAL ASSET SECURITIES CORP., as Depositor
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Principal Balance of this Class M-2B
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class M-2B
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 Cede & Co. is the registered owner of the Percentage
Interest evidenced by this Class M-2B Certificate (obtained by dividing the
Denomination of this Class M-2B Certificate by the Original Class Certificate
Principal Balance) in certain monthly distributions with respect to a Trust
consisting primarily of the Mortgage Loans deposited by Financial Asset
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of December 1, 2002 (the "Agreement") among the
Depositor, Xxxxxx Loan Servicing LP, as servicer (the "Servicer"), and Deutsche
Bank National Trust Company, a national banking association, as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Class M-2B Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Class M-2B 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 Class M-2B
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 M-2B 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-5-2
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: December __, 2002
FREMONT HOME LOAN TRUST 2002-2
By: DEUTSCHE BANK NATIONAL TRUST
COMPANY, not in its individual
capacity, but solely as Trustee
By_________________________________
This is one of the Class M-2B Certificates
referenced in the within-mentioned Agreement
By____________________________________
Authorized Signatory of
Deutsche Bank National Trust Company,
as Trustee
A-5-3
[Reverse of Class M-2B Certificate]
Fremont Home Loan Trust 2002-2
Asset-Backed Certificates,
Series 2002-2
This Certificate is one of a duly authorized issue of Certificates
designated as Fremont Home Loan Trust 2002-2, Asset-Backed Certificates, Series
2002-2 (herein collectively called the "Certificates"), and representing a
beneficial ownership interest in the Trust 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 Distribution 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, then the
Business Day immediately following such Distribution Date (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.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. 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 of the Trustee specified in the notice to
Certificateholders of such final distribution.
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 and the Trustee and of Holders of the requisite
percentage of the Percentage Interests of each Class of Certificates affected by
such amendment, as specified 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.
A-5-4
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the Corporate Trust Office of the Trustee
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 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 and the Trustee and any agent of the Depositor,
the Servicer or the Trustee may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Trustee, the Servicer or any such agent shall be affected by any notice to
the contrary.
On any Distribution Date following the date at which the remaining
aggregate Principal Balance of the Mortgage Loans is less than 10% of the sum of
the aggregate Principal Balance of the Original Mortgage Loans as of the Cut-off
Date, the Servicer may purchase, in whole, from the Trust the Mortgage Loans 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 notice to the Trustee upon the earliest of
(i) the Distribution Date on which the Certificate Principal Balances of the
Regular Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
in [month/year].
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
A-5-5
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.
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
A-5-6
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.
X-0-0
XXXXXXX X-0
FORM OF CLASS M-3 CERTIFICATES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1 CERTIFICATES, THE A-2
CERTIFICATES, THE CLASS M-1 CERTIFICATES, THE CLASS M-2A CERTIFICATES AND THE
CLASS M-2B CERTIFICATES TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO 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").
Certificate No. : 1
Cut-off Date : December 1, 2002
First Distribution Date : January 25, 2002
Initial Certificate Principal Balance
of this Certificate ("Denomination") : $12,410,000.00
Original Class Certificate
Principal Balance of this Class : $12,410,000.00
Percentage Interest : 100.00%
Pass-Through Rate : Variable
CUSIP : [__________]
Class : M-3
Assumed Maturity Date : [month/year]
A-6-1
Fremont Home Loan Trust 2002-2
Asset-Backed Certificates,
Series 2002-2
Class M-3
evidencing the Percentage Interest in the distributions allocable
to the Certificates of the above-referenced Class with respect to
the Trust consisting of first lien adjustable rate and fixed rate
mortgage loans (the "Mortgage Loans")
FINANCIAL ASSET SECURITIES CORP., as Depositor
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Principal Balance of this Class M-3
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class M-3
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 Cede & Co. is the registered owner of the Percentage
Interest evidenced by this Class M-3 Certificate (obtained by dividing the
Denomination of this Class M-3 Certificate by the Original Class Certificate
Principal Balance) in certain monthly distributions with respect to a Trust
consisting primarily of the Mortgage Loans deposited by Financial Asset
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of December 1, 2002 (the "Agreement") among the
Depositor, Xxxxxx Loan Servicing LP, as servicer (the "Servicer"), and Deutsche
Bank National Trust Company, a national banking association, as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Class M-3 Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Class M-3 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 Class M-3
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 M-3 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-6-2
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: December __, 2002
FREMONT HOME LOAN TRUST 2002-2
By: DEUTSCHE BANK NATIONAL TRUST
COMPANY, not in its individual
capacity, but solely as Trustee
By_________________________________
This is one of the Class M-3 Certificates
referenced in the within-mentioned Agreement
By____________________________________
Authorized Signatory of
Deutsche Bank National Trust Company,
as Trustee
A-6-3
[Reverse of Class M-3 Certificate]
Fremont Home Loan Trust 2002-2
Asset-Backed Certificates,
Series 2002-2
This Certificate is one of a duly authorized issue of Certificates
designated as Fremont Home Loan Trust 2002-2, Asset-Backed Certificates, Series
2002-2 (herein collectively called the "Certificates"), and representing a
beneficial ownership interest in the Trust 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 Distribution 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, then the
Business Day immediately following such Distribution Date (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.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. 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 of the Trustee specified in the notice to
Certificateholders of such final distribution.
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 and the Trustee and of Holders of the requisite
percentage of the Percentage Interests of each Class of Certificates affected by
such amendment, as specified 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.
A-6-4
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the Corporate Trust Office of the Trustee
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 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 and the Trustee and any agent of the Depositor,
the Servicer or the Trustee may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Trustee, the Servicer or any such agent shall be affected by any notice to
the contrary.
On any Distribution Date following the date at which the remaining
aggregate Principal Balance of the Mortgage Loans is less than 10% of the sum of
the aggregate Principal Balance of the Original Mortgage Loans as of the Cut-off
Date, the Servicer may purchase, in whole, from the Trust the Mortgage Loans 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 notice to the Trustee upon the earliest of
(i) the Distribution Date on which the Certificate Principal Balances of the
Regular Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
in [month/year].
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
A-6-5
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.
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
A-6-6
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.
X-0-0
XXXXXXX X-0
FORM OF CLASS C CERTIFICATES
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.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1 CERTIFICATES, THE A-2
CERTIFICATES, THE CLASS M-1 CERTIFICATES, THE CLASS M-2A CERTIFICATES, THE CLASS
M-2B CERTIFICATES AND THE CLASS M-3 CERTIFICATES TO THE EXTENT DESCRIBED IN THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA"), SHALL BE MADE EXCEPT IN COMPLIANCE WITH THE
PROCEDURES DESCRIBED HEREIN.
Certificate No. : 1
Cut-off Date : December 1, 2002
First Distribution Date : January 25, 2002
Initial Certificate Principal Balance
of this Certificate ("Denomination") : $3,407,002.[01]-UPDATE PENNIES
Original Class Certificate
Principal Balance of this Class : $3,407,002.[01]
Percentage Interest : 100.00%
Class : C
A-7-1
Fremont Home Loan Trust 2002-2
Asset-Backed Certificates,
Series 2002-2
Class C
evidencing the Percentage Interest in the distributions allocable
to the Certificates of the above-referenced Class with respect to
the Trust consisting of first lien adjustable rate and fixed rate
mortgage loans (the "Mortgage Loans")
FINANCIAL ASSET SECURITIES CORP., as Depositor
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Principal Balance of this Class C
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class C
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 C Certificate (obtained by dividing the
Denomination of this Class C Certificate by the Original Class Certificate
Principal Balance) in certain distributions with respect to a Trust consisting
primarily of the Mortgage Loans deposited by Financial Asset Securities Corp.
(the "Depositor"). The Trust was created pursuant to a Pooling and Servicing
Agreement dated as of December 1, 2002 (the "Agreement") among the Depositor,
Xxxxxx Loan Servicing LP, as servicer (the "Servicer"), and Deutsche Bank
National Trust Company, a national banking association, as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Class C Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Class C 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 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 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.
A-7-2
No transfer of this Certificate to a Plan subject to ERISA or Section 4975
of the Code, any Person acting, directly or indirectly, on behalf of any such
Plan or any person using Plan Assets to acquire this Certificate shall be made
except in accordance with Section 5.02(d) of the Agreement.
Reference is hereby made to the further provisions of this Class C
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 C 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-7-3
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: December __, 2002
FREMONT HOME LOAN TRUST 2002-2
By: DEUTSCHE BANK NATIONAL TRUST
COMPANY, not in its individual
capacity, but solely as Trustee
By_________________________________
This is one of the Class C Certificates
referenced in the within-mentioned Agreement
By__________________________________________
Authorized Signatory of
Deutsche Bank National Trust Company,
as Trustee
A-7-4
[Reverse of Class C Certificate]
Fremont Home Loan Trust 2002-2
Asset-Backed Certificates,
Series 2002-2
This Certificate is one of a duly authorized issue of Certificates
designated as Fremont Home Loan Trust 2002-2, Asset-Backed Certificates, Series
2002-2 (herein collectively called the "Certificates"), and representing a
beneficial ownership interest in the Trust 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 Distribution 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, then the
Business Day immediately following such Distribution Date (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.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. 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 of the Trustee specified in the notice to
Certificateholders of such final distribution.
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 and the Trustee and of Holders of the requisite
percentage of the Percentage Interests of each Class of Certificates affected by
such amendment, as specified 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.
A-7-5
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 Certificate Registrar upon surrender of this Certificate for
registration of transfer at the Corporate Trust Office of the Trustee
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 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 and the Trustee and any agent of the Depositor,
the Servicer or the Trustee may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Trustee, the Servicer or any such agent shall be affected by any notice to
the contrary.
On any Distribution Date following the date at which the remaining
aggregate Principal Balance of the Mortgage Loans is less than 10% of the sum of
the aggregate Principal Balance of the Original Mortgage Loans as of the Cut-off
Date, the Servicer may purchase, in whole, from the Trust the Mortgage Loans 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 notice to the Trustee upon the earliest of
(i) the Distribution Date on which the Certificate Principal Balances of the
Regular Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
in [month/year].
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
A-7-6
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.
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
A-7-7
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.
X-0-0
XXXXXXX X-0
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.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA"), SHALL BE MADE EXCEPT IN COMPLIANCE WITH THE
PROCEDURES DESCRIBED HEREIN.
Certificate No. : 1
Cut-off Date : December 1, 2002
First Distribution Date : January 25, 2002
Initial Certificate Principal Balance
of this Certificate ("Denomination") : $100.00
Original Class Certificate
Principal Balance of this Class : $100.00
Percentage Interest : 100.00%
Class : P
A-8-1
Fremont Home Loan Trust 2002-2
Asset-Backed Certificates,
Series 2002-2
Class P
evidencing the Percentage Interest in the distributions allocable
to the Certificates of the above-referenced Class with respect to
the Trust consisting of first lien adjustable rate and fixed rate
mortgage loans (the "Mortgage Loans")
FINANCIAL ASSET SECURITIES CORP., as Depositor
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Principal Balance of this Class P
Certificate at any time may be less than the Initial Certificate Principal
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 Original Class Certificate
Principal Balance) in certain distributions with respect to a Trust consisting
primarily of the Mortgage Loans deposited by Financial Asset Securities Corp.
(the "Depositor"). The Trust was created pursuant to a Pooling and Servicing
Agreement dated as of December 1, 2002 (the "Agreement") among the Depositor,
Xxxxxx Loan Servicing LP, as servicer (the "Servicer"), and Deutsche Bank
National Trust Company, a national banking association, 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.
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 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
A-8-2
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 this Certificate to a Plan subject to ERISA or Section 4975
of the Code, any Person acting, directly or indirectly, on behalf of any such
Plan or any person using Plan Assets to acquire this Certificate shall be made
except in accordance with Section 5.02(d) of the Agreement.
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.
A-8-3
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: December __, 2002
FREMONT HOME LOAN TRUST 2002-2
By: DEUTSCHE BANK NATIONAL TRUST
COMPANY, not in its individual
capacity, but solely as Trustee
By_________________________________
This is one of the Class P Certificates
referenced in the within-mentioned Agreement
By__________________________________________
Authorized Signatory of
Deutsche Bank National Trust Company,
as Trustee
A-8-4
[Reverse of Class P Certificate]
Fremont Home Loan Trust 2002-2
Asset-Backed Certificates,
Series 2002-2
This Certificate is one of a duly authorized issue of Certificates
designated as Fremont Home Loan Trust 2002-2, Asset-Backed Certificates, Series
2002-2 (herein collectively called the "Certificates"), and representing a
beneficial ownership interest in the Trust 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 Distribution 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, then the
Business Day immediately following such Distribution Date (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.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. 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 of the Trustee specified in the notice to
Certificateholders of such final distribution.
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 and the Trustee and of Holders of the requisite
percentage of the Percentage Interests of each Class of Certificates affected by
such amendment, as specified 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.
A-8-5
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 Certificate Registrar upon surrender of this Certificate for
registration of transfer at the Corporate Trust Office of the Trustee
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 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 and the Trustee and any agent of the Depositor,
the Servicer or the Trustee may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Trustee, the Servicer or any such agent shall be affected by any notice to
the contrary.
On any Distribution Date following the date at which the remaining
aggregate Principal Balance of the Mortgage Loans is less than 10% of the sum of
the aggregate Principal Balance of the Original Mortgage Loans as of the Cut-off
Date, the Servicer may purchase, in whole, from the Trust the Mortgage Loans 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 notice to the Trustee upon the earliest of
(i) the Distribution Date on which the Certificate Principal Balances of the
Regular Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
in [month/year].
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
A-8-6
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.
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
A-8-7
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.
X-0-0
XXXXXXX X-0
FORM OF CLASS R[-X] CERTIFICATES
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").
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.
THIS CLASS R[-X] CERTIFICATE HAS NO PRINCIPAL BALANCE, DOES NOT BEAR INTEREST
AND WILL NOT RECEIVE ANY DISTRIBUTIONS EXCEPT AS PROVIDED HEREIN.
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.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA"), SHALL BE MADE EXCEPT IN COMPLIANCE WITH THE
PROCEDURES DESCRIBED HEREIN.
Certificate No. : 1
Cut-off Date : December 1, 2002
First Distribution Date : January 25, 2002
Percentage Interest : 100.00%
Class : R[-X]
A-9-1
Fremont Home Loan Trust 2002-2
Asset-Backed Certificates,
Series 2002-2
Class R[-X]
evidencing the Percentage Interest in the distributions allocable
to the Certificates of the above-referenced Class with respect to
the Trust consisting primarily of a pool of first lien adjustable
rate and fixed rate mortgage loans (the "Mortgage Loans")
FINANCIAL ASSET SECURITIES CORP., as Depositor
This 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 Certificate specified above in the interest
represented by all Certificates of the Class to which this Certificate belongs
in a Trust consisting primarily of the Mortgage Loans deposited by Financial
Asset Securities Corp. (the "Depositor"). The Trust was created pursuant to a
Pooling and Servicing Agreement dated as of December 1, 2002 (the "Agreement")
among the Depositor, Xxxxxx Loan Servicing LP, as servicer (the "Servicer"), and
Deutsche Bank National Trust Company, a national banking association, as trustee
(the "Trustee"). To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
This Certificate does not have a principal balance or pass-through rate and
will be entitled to distributions only to the extent set forth in the Agreement.
In addition, any distribution of the proceeds of any remaining assets of the
Trust will be made only upon presentment and surrender of this Certificate at
the Corporate Trust Office or the office or agency maintained by the Trustee in
Minneapolis, Minnesota.
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 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.
A-9-2
No transfer of this Certificate to a Plan subject to ERISA or Section 4975
of the Code, any Person acting, directly or indirectly, on behalf of any such
Plan or any person using Plan Assets to acquire this Certificate shall be made
except in accordance with Section 5.02(d) of the Agreement.
Each Holder of this 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 Certificate must be a Permitted Transferee, (ii) no Ownership Interest in
this 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
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 Certificate must agree
not to transfer an Ownership Interest in this 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 Certificate in
violation of such restrictions will be absolutely null and void and will vest no
rights in the purported transferee. Pursuant to the Agreement, The Trustee will
provide the Internal Revenue Service and any pertinent persons with the
information needed to compute the tax imposed under the applicable tax laws on
transfers of residual interests to disqualified organizations, if any person
other than a Permitted Transferee acquires an Ownership Interest on a Class
R[-X] Certificate in violation of the restrictions mentioned above.
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
officer of the Trustee.
A-9-3
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: December __, 2002
FREMONT HOME LOAN TRUST 2002-2
By: DEUTSCHE BANK NATIONAL TRUST
COMPANY, not in its individual
capacity, but solely as Trustee
By_________________________________
This is one of the Class R[-X] Certificates
referenced in the within-mentioned Agreement
By__________________________________________
Authorized Signatory of
Deutsche Bank National Trust Company,
as Trustee
A-9-4
[Reverse of Class R[-X] Certificate]
Fremont Home Loan Trust 2002-2
Asset-Backed Certificates,
Series 2002-2
This Certificate is one of a duly authorized issue of Certificates
designated as Fremont Home Loan Trust 2002-2, Asset-Backed Certificates, Series
2002-2 (herein collectively called the "Certificates"), and representing a
beneficial ownership interest in the Trust 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 Distribution 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, then the
Business Day immediately following such Distribution Date (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.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. 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 of the Trustee specified in the notice to
Certificateholders of such final distribution.
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 and the Trustee and of Holders of the requisite
percentage of the Percentage Interests of each Class of Certificates affected by
such amendment, as specified 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.
A-9-5
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 Certificate Registrar upon surrender of this Certificate for
registration of transfer at the Corporate Trust Office of the Trustee
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 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 and the Trustee and any agent of the Depositor,
the Servicer or the Trustee may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Trustee, the Servicer or any such agent shall be affected by any notice to
the contrary.
On any Distribution Date following the date at which the remaining
aggregate Principal Balance of the Mortgage Loans is less than 10% of the sum of
the aggregate Principal Balance of the Original Mortgage Loans as of the Cut-off
Date, the Servicer may purchase, in whole, from the Trust the Mortgage Loans 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 notice to the Trustee upon the earliest of
(i) the Distribution Date on which the Certificate Principal Balances of the
Regular Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
in [month/year].
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
A-9-6
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.
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
A-9-7
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.
A-9-8
EXHIBIT B
[RESERVED]
A-8-1
EXHIBIT C
FORM OF MORTGAGE LOAN PURCHASE AGREEMENT
C-1
FREMONT INVESTMENT & LOAN,
as Originator
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.,
as Seller
and
FINANCIAL ASSET SECURITIES CORP.,
as Purchaser
MORTGAGE LOAN PURCHASE AGREEMENT
Dated as of December 30, 2002
Adjustable-Rate and Fixed-Rate Mortgage Loans
Fremont Home Loan Trust 2002-2
TABLE OF CONTENTS
Page
----
ARTICLE I.
DEFINITIONS
Section 1.01 Definitions...................................................2
ARTICLE II.
SALE OF MORTGAGE LOANS; PAYMENT OF PURCHASE PRICE
Section 2.01 Sale of Mortgage Loans........................................3
Section 2.02 Obligations of the Seller and Seller Upon Sale................3
Section 2.03 Payment of Purchase Price for the Mortgage Loans..............5
ARTICLE III.
REPRESENTATIONS AND WARRANTIES; REMEDIES FOR BREACH
Section 3.01 Originator Representations and Warranties Relating to the
Mortgage Loans ...............................................6
Section 3.02 Originator Representations and Warranties Relating to the
Originator....................................................6
Section 3.03 Seller Representations and Warranties Relating to the
Seller........................................................7
Section 3.04 Remedies for Breach of Representations and Warranties.........9
ARTICLE IV.
ORIGINATOR'S AND SELLER'S COVENANTS
Section 4.01 Covenants of the Originator and the Seller...................11
Section 5.01 Indemnification..............................................12
ARTICLE VI.
TERMINATION
Section 6.01 Termination..................................................15
ARTICLE VII.
MISCELLANEOUS PROVISIONS
Section 7.01 Amendment....................................................15
Section 7.02 Governing Law................................................15
Section 7.03 Notices. ....................................................15
Section 7.05 Counterparts.................................................15
Section 7.06 Further Agreements...........................................16
Section 7.07 Intention of the Parties.....................................16
Section 7.08 Successors and Assigns; Assignment of Purchase Agreement.....16
Section 7.09 Survival.....................................................17
i
MORTGAGE LOAN PURCHASE AGREEMENT, dated as of December 26, 2002 (the
"Agreement"), among Fremont Investment & Loan (the "Originator"), Greenwich
Capital Financial Products, Inc. (the "Seller") and Financial Asset Securities
Corp. (the "Purchaser").
WITNESSETH
WHEREAS, the Seller is the owner of (a) the notes or other evidence of
indebtedness (the "Mortgage Notes") so indicated on Schedule I hereto referred
to below and (b) the other documents or instruments constituting the Mortgage
File (collectively, the "Mortgage Loans"); and
WHEREAS, the Seller, as of the date hereof, owns the mortgages (the
"Mortgages") on the properties (the "Mortgaged Properties") securing such
Mortgage Loans, including rights to (a) any property acquired by foreclosure or
deed in lieu of foreclosure or otherwise and (b) the proceeds of any insurance
policies covering the Mortgage Loans or the Mortgaged Properties or the obligors
on the Mortgage Loans; and
WHEREAS, the parties hereto desire that the Seller sell the Mortgage
Loans to the Purchaser pursuant to the terms of this Agreement; and
WHEREAS, the Originator originated the Mortgage Loans and previously
sold the Mortgage Loans; and
WHEREAS, pursuant to the terms of a Pooling and Servicing Agreement
dated as of December 1, 2002 (the "Pooling and Servicing Agreement") among the
Purchaser as depositor, Xxxxxx Loan Servicing LP as servicer and Deutsche Bank
National Trust Company as trustee (the "Trustee"), the Purchaser will convey the
Mortgage Loans to Fremont Home Loan Trust 2002-2 (the "Trust"); and
WHEREAS, the Originator is obligated , in connection with the
transactions contemplated by this Agreement, to make certain representations,
warranties and covenants with respect to itself and the Mortgage Loans.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.01 DEFINITIONS. All capitalized terms used but not defined
herein and below shall have the meanings assigned thereto in the Pooling and
Servicing Agreement.
ARTICLE II.
SALE OF MORTGAGE LOANS; PAYMENT OF PURCHASE PRICE
Section 2.01 SALE OF MORTGAGE LOANS. The Seller, concurrently with the
execution and delivery of this Agreement, does hereby sell, assign, set over,
and otherwise convey to the Purchaser, without recourse, (i) all of its right,
title and interest in and to each Mortgage Loan, including the related Cut-off
Date Principal Balance, all interest accruing thereon on or after the Cut-off
Date and all collections in respect of interest and principal due after the
Cut-off Date; (ii) property which secured such Mortgage Loan and which has been
acquired by foreclosure or deed in lieu of foreclosure; (iii) its interest in
any insurance policies in respect of the Mortgage Loans and (iv) all proceeds of
any of the foregoing. In addition to the sale of the Mortgage Loans, the Seller
will cause Greenwich Capital Derivatives, Inc. ("GCD") to enter into the Cap
Contracts and will cause GCD to transfer the Cap Contracts to the Purchaser.
Section 2.02 OBLIGATIONS OF THE SELLER AND SELLER UPON SALE. In connection
with any transfer pursuant to Section 2.01 hereof, the Seller further agrees, at
its own expense on or prior to the Closing Date, (a) to cause its books and
records to indicate that the Mortgage Loans have been sold to the Purchaser
pursuant to this Agreement and (b) to deliver to the Purchaser and the Trustee a
computer file containing a true and complete list of all such Mortgage Loans
specifying for each such Mortgage Loan, as of the Cut-off Date, (i) its account
number and (ii) the Cut-off Date Principal Balance. Such file, which forms a
part of Exhibit C to the Pooling and Servicing Agreement, shall also be marked
as Schedule I to this Agreement and is hereby incorporated into and made a part
of this Agreement.
In connection with any conveyance by the Seller, the Seller shall on
behalf of the Purchaser deliver to, and deposit with the Trustee, as assignee of
the Purchaser, on or before the Closing Date, the following documents or
instruments with respect to each Mortgage Loan:
(i) the original Mortgage Note, endorsed either (A) in blank, in which
case the Trustee shall cause the endorsement to be completed or (B) in the
following form: "Pay to the order of Deutsche Bank National Trust Company,
as Trustee, without recourse" or with respect to any lost Mortgage Note, an
original Lost Note Affidavit stating that the original mortgage note was
lost, misplaced or destroyed, together with a copy of the related mortgage
note; provided, however, that such substitutions of Lost Note Affidavits
for original Mortgage Notes may occur only with respect to Mortgage Loans,
the aggregate Cut-off Date Principal Balance of which is less than or equal
to 1.00% of the Pool Balance as of the Cut- off Date;
(ii) the original Mortgage with evidence of recording thereon, and the
original recorded power of attorney, if the Mortgage was executed pursuant
to a power of attorney, with evidence of recording thereon or, if such
Mortgage or power of attorney has been submitted for recording but has not
been returned from the applicable public recording office, has been lost or
is not otherwise available, a copy of such Mortgage or power of attorney,
as the case may be, certified to be a true and complete copy of the
original submitted for recording;
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(iii) an original Assignment, in form and substance acceptable for
recording. The Mortgage shall be assigned either (A) in blank or (B) to
"Deutsche Bank National Trust Company, as Trustee, without recourse";
(iv) an original copy of any intervening assignment of Mortgage
showing a complete chain of assignments;
(v) the original or a certified copy of lender's title insurance
policy; and
(vi) the original or copies of each assumption, modification, written
assurance or substitution agreement, if any.
The Seller hereby confirms to the Purchaser and the Trustee that it
has caused the appropriate entries to be made in its general accounting records
to indicate that such Mortgage Loans have been transferred to the Trustee and
constitute part of the Trust in accordance with the terms of the Pooling and
Servicing Agreement.
If any of the documents referred to in Section 2.02(ii), (iii) or (iv)
above has as of the Closing Date been submitted for recording but either (x) has
not been returned from the applicable public recording office or (y) has been
lost or such public recording office has retained the original of such document,
the obligations of the Seller to deliver such documents shall be deemed to be
satisfied upon (1) delivery to the Trustee or the Custodian, no later than the
Closing Date, of a copy of each such document certified by the Originator in the
case of (x) above or the applicable public recording office in the case of (y)
above to be a true and complete copy of the original that was submitted for
recording and (2) if such copy is certified by the Originator, delivery to the
Trustee or the Custodian, promptly upon receipt thereof of either the original
or a copy of such document certified by the applicable public recording office
to be a true and complete copy of the original. If the original lender's title
insurance policy, or a certified copy thereof, was not delivered pursuant to
Section 2.02(v) above. The Seller shall deliver or cause to be delivered to the
Trustee or the Custodian, the original or a copy of a written commitment or
interim binder or preliminary report of title issued by the title insurance or
escrow company, with the original or a certified copy thereof to be delivered to
the Trustee or the Custodian, promptly upon receipt thereof. The Seller shall
deliver or cause to be delivered to the Trustee or the Custodian promptly upon
receipt thereof any other documents constituting a part of a Mortgage File
received with respect to any Mortgage Loan, including, but not limited to, any
original documents evidencing an assumption or modification of any Mortgage
Loan.
Upon discovery or receipt of notice of any materially defective
document in, or that a document is missing from, a Mortgage File, the Originator
shall have 90 days to cure such defect or deliver such missing document to the
Purchaser. If the Originator does not cure such defect or deliver such missing
document within such time period, the Originator shall either repurchase or
substitute for such Mortgage Loan pursuant to Section 2.03 of the Pooling and
Servicing Agreement.
The Purchaser hereby acknowledges its acceptance of all right, title
and interest to the Mortgage Loans and other property, now existing and
hereafter created, conveyed to it pursuant to Section 2.01.
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The parties hereto intend that the transaction set forth herein be a
sale by the Seller to the Purchaser of all the Seller's right, title and
interest in and to the Mortgage Loans and other property described above. In the
event the transaction set forth herein is deemed not to be a sale, the Seller
hereby grants to the Purchaser a security interest in all of the Seller's right,
title and interest in, to and under the Mortgage Loans and other property
described above, whether now existing or hereafter created, to secure all of the
Seller's obligations hereunder; and this Agreement shall constitute a security
agreement under applicable law.
The Seller shall cause the Assignments which were delivered in blank
to be completed and shall cause all Assignments referred to in Section 2.02(iii)
hereof and, to the extent necessary, in Section 2.02(iv) hereof to be recorded.
The Seller shall be required to deliver such assignments for recording within
180 days of the Closing Date. The Seller shall furnish the Trustee, or its
designated agent, with a copy of each Assignment submitted for recording. In the
event that any such Assignment is lost or returned unrecorded because of a
defect therein, the Trustee shall, at the expense of the Seller, promptly have a
substitute Assignment prepared or have such defect cured, as the case may be,
and thereafter cause each such Assignment to be duly recorded.
Notwithstanding the foregoing, the Assignments of Mortgage shall not
be required to be submitted for recording with respect to any Mortgage Loan in
any jurisdiction where the Rating Agencies do not require recordation in order
to receive the ratings on the Certificates at the time of their initial
issuance; provided, however, each Assignment shall be submitted for recording in
the manner described above, at the expense to the Trust Fund or Trustee, upon
the earliest to occur of: (i) reasonable direction by the Holders of
Certificates entitled to at least 25% of the Voting Rights, (ii) the occurrence
of a Servicer Event of Termination, (iii) the occurrence of a bankruptcy,
insolvency or foreclosure relating to the Seller, (iv) the occurrence of a
servicing transfer as described in Section 7.02 hereof, (v) upon receipt of
notice from the Servicer, the occurrence of a bankruptcy, insolvency or
foreclosure relating to the Mortgagor under the related Mortgage and (vi) upon
receipt of notice from the Servicer, any Mortgage Loan that is 90 days or more
Delinquent. In the event of (i) through (vi) set forth in the immediately
preceding sentence, the Trustee shall enforce the obligations of the Seller to
deliver such Assignments for recording as provided above, promptly and in any
event within 30 days following receipt of notice by the Seller.
In the event that any Mortgage Note is endorsed in blank as of the
Closing Date, promptly following the Closing Date, the Trustee shall cause (at
the Seller's expense) to be completed such endorsements "Pay to the order of
Deutsche Bank National Trust Company, as Trustee, without recourse."
Section 2.03 PAYMENT OF PURCHASE PRICE FOR THE MORTGAGE LOANS.
In consideration of the sale of the Mortgage Loans from the Seller to
the Purchaser on the Closing Date, the Purchaser agrees to pay to the Seller on
the Closing Date (the "Purchase Price") by transfer of (i) immediately available
funds in an amount equal to the net sale proceeds of the Class A-1 Certificates,
the Class A-2 Certificates, the Class M-1 Certificates, the Class M-2A
Certificates, the Class M-2B Certificates and the Class M-3 Certificates
(collectively, the "Offered Certificates") and (ii) the Class C Certificates,
the Class P Certificates, the Class R Certificates and the Class R-X
Certificates (collectively the "Non-Offered Certificates") which Non-Offered
5
Certificates shall be registered in the name of Greenwich Capital Markets, Inc.
or its designee. The Seller shall pay, and be billed directly for, all expenses
incurred by the Purchaser in connection with the issuance of the Certificates,
including, without limitation, printing fees incurred in connection with the
prospectus (the "Base Prospectus") and prospectus supplement (the "Prospectus
Supplement" and, together with the Base Prospectus, the "Prospectus") relating
to the Offered Certificates, blue sky registration fees and expenses, fees and
expenses of Purchaser's counsel, fees of the rating agencies requested to rate
the Certificates, accountant's fees and expenses and the fees and expenses of
the Trustee and other out-of-pocket costs, if any.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES; REMEDIES FOR BREACH
Section 3.01 ORIGINATOR REPRESENTATIONS AND WARRANTIES RELATING TO THE
MORTGAGE LOANS. The Originator hereby makes the representations and warranties
set forth in Exhibit A to the Purchaser with respect to the Mortgage Loans as of
the Closing Date or as of such other date specifically provided herein.
Section 3.02 ORIGINATOR REPRESENTATIONS AND WARRANTIES RELATING TO THE
ORIGINATOR. The Originator represents, warrants and covenants to the Purchaser
as of the Closing Date or as of such other date specifically provided herein:
(a) The Originator is duly organized, validly existing and in good
standing under the laws of the state of California and is and will remain in
compliance with the laws of each state in which any Mortgaged Property is
located to the extent necessary to ensure the enforceability of each Mortgage
Loan and the servicing of the Mortgage Loan in accordance with the terms of this
Agreement;
(b) The Originator has the full power and authority to hold each
Mortgage Loan, to sell each Mortgage Loan to the Seller, and to execute, deliver
and perform, and to enter into and consummate, all transactions contemplated by
this Agreement. The Originator has duly authorized the execution, delivery and
performance of this Agreement, has duly executed and delivered this Agreement,
and this Agreement, assuming due authorization, execution and delivery by the
Purchaser, constitutes a legal, valid and binding obligation of the Originator,
enforceable against it in accordance with its terms except as the enforceability
thereof may be limited by bankruptcy, insolvency or reorganization;
(c) The execution and delivery of this Agreement by the Originator and
the performance of and compliance with the terms of this Agreement will not
violate the Originator's articles of incorporation or by-laws or constitute a
default under or result in a breach or acceleration of, any material contract,
agreement or other instrument to which the Originator is a party or which may be
applicable to the Originator or its assets;
(d) The Originator is not in violation of, and the execution and
delivery of this Agreement by the Originator and its performance and compliance
with the terms of this Agreement
6
will not constitute a violation with respect to, any order or decree of any
court or any order or regulation of any federal, state, municipal or
governmental agency having jurisdiction over the Originator or its assets, which
violation might have consequences that would materially and adversely affect the
condition (financial or otherwise) or the operation of the Originator or its
assets or might have consequences that would materially and adversely affect the
performance of its obligations and duties hereunder;
(e) The Originator does not believe, nor does it have any reason or
cause to believe, that it cannot perform each and every covenant contained in
this Agreement;
(f) Immediately prior to the transfer of the Mortgage Loans by the
Originator to the Seller, the Originator was the owner of record of the related
Mortgage and the indebtedness evidenced by the related Mortgage Note and in the
event that the Originator retains record title, the Originator shall retain such
record title to each Mortgage, each related Mortgage Note and the related
Mortgage Files with respect thereto in trust for the Seller as the owner thereof
and only for the purpose of servicing and supervising the servicing of each
Mortgage Loan;
(h) There are no actions or proceedings against, or investigations of,
the Originator before any court, administrative or other tribunal (A) that might
prohibit its entering into this Agreement, (B) seeking to prevent the sale of
the Mortgage Loans or the consummation of the transactions contemplated by this
Agreement or (C) that might prohibit or materially and adversely affect the
performance by the Originator of its obligations under, or the validity or
enforceability of, this Agreement;
(i) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Originator of, or compliance by the Originator with, this
Agreement or the consummation of the transactions contemplated by this
Agreement, except for such consents, approvals, authorizations or orders, if
any, that have been obtained prior to the Closing Date;
(j) The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Originator, and the
transfer, assignment and conveyance of the Mortgage Notes and the Mortgages by
the Originator to the Seller are not subject to the bulk transfer or any similar
statutory provisions;
(k) Neither this Agreement nor any written statement, report or other
document prepared and furnished or to be prepared and furnished by the
Originator pursuant to this Agreement or in connection with the transactions
contemplated hereby contains any untrue statement of material fact or omits to
state a material fact necessary to make the statements contained herein or
therein not misleading; and
(l) [Reserved].
Section 3.03 SELLER REPRESENTATIONS AND WARRANTIES RELATING TO THE SELLER.
The Seller represents, warrants and covenants to the Purchaser as of the Closing
Date or as of such other date specifically provided herein:
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(a) The Seller is duly organized, validly existing and in good
standing as a corporation under the laws of the State of Delaware and is and
will remain in compliance with the laws of each state in which any Mortgaged
Property is located to the extent necessary to ensure the enforceability of each
Mortgage Loan in accordance with the terms of this Agreement;
(b) The Seller has the full power and authority to hold each Mortgage
Loan, to sell each Mortgage Loan, to execute, deliver and perform, and to enter
into and consummate, all transactions contemplated by this Agreement. The Seller
has duly authorized the execution, delivery and performance of this Agreement,
has duly executed and delivered this Agreement and this Agreement, assuming due
authorization, execution and delivery by the Purchaser, constitutes a legal,
valid and binding obligation of the Seller, enforceable against it in accordance
with its terns except as the enforceability thereof may be limited by
bankruptcy, insolvency or reorganization;
(c) The execution and delivery of this Agreement by the Seller and the
performance of and compliance with the terms of this Agreement will not violate
the Seller's articles of incorporation or by-laws or constitute a default under
or result in a breach or acceleration of, any material contract, agreement or
other instrument to which the Seller is a party or which may be applicable to
the Seller or its assets;
(d) The Seller is not in violation of, and the execution and delivery
of this Agreement by the Seller and its performance and compliance with the
terms of this Agreement will not constitute a violation with respect to, any
order or decree of any court or any order or regulation of any federal, state,
municipal or governmental agency having jurisdiction over the Seller or its
assets, which violation might have consequences that would materially and
adversely affect the condition (financial or otherwise) or the operation of the
Seller or its assets or might have consequences that would materially and
adversely affect the performance of its obligations and duties hereunder;
(e) [Reserved];
(f) Immediately prior to the payment of the Purchase Price for each
Mortgage Loan, the Seller was the owner of the related Mortgage and the
indebtedness evidenced by the related Mortgage Note and upon the payment of the
Purchase Price by the Purchaser, in the event that the Seller retains record
title, the Seller shall retain such record title to each Mortgage, each related
Mortgage Note and the related Mortgage Files with respect thereto in trust for
the Purchaser as the owner thereof,
(g) The Seller has not transferred the Mortgage Loans to the Purchaser
with any intent to hinder, delay or defraud any of its creditors;
(h) There are no actions or proceedings against, or investigations
known to it of, the Seller before any court, administrative or other tribunal
(A) that might prohibit its entering into this Agreement, (B) seeking to prevent
the sale of the Mortgage Loans or the consummation of the transactions
contemplated by this Agreement or (C) that might prohibit or materially and
adversely affect the performance by the Seller of its obligations under, or
validity or enforceability of, this Agreement;
8
(i) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Seller of, or compliance by the Seller with, this Agreement
or the consummation of the transactions contemplated by this Agreement, except
for such consents, approvals, authorizations or orders, if any, that have been
obtained;
(j) The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Seller. The sale of the
Mortgage Loans is in the ordinary course of business of the Seller and the
assignment and conveyance of the Mortgage Notes and the Mortgages by the Seller
are not subject to the bulk transfer or any similar statutory provisions;
(k) Except with respect to liens released immediately prior to the
transfer herein contemplated, each Mortgage Note and related Mortgage have not
been assigned or pledged and immediately prior to the transfer and assignment
herein contemplated, the Seller held good, marketable and indefeasible title to,
and was the sole owner and holder of, each Mortgage Loan subject to no liens,
charges, mortgages, claims, participation interests, equities, pledges or
security interests of any nature, encumbrances or rights of others
(collectively, a "Lien"); the Seller has full right and authority under all
governmental and regulatory bodies having jurisdiction over the Seller, subject
to no interest or participation of, or agreement with, any party, to sell and
assign the same pursuant to this Agreement; and immediately upon the transfers
and assignments herein contemplated. the Seller shall have transferred all of
its right, title and interest in and to each Mortgage Loan and the Trustee will
hold good, marketable and indefeasible title to, and be the sole owner of, each
Mortgage Loan subject to no Liens.
(l) The Seller does not believe, nor does it have any reason or cause
to believe, that it cannot perform each and every covenant contained in this
Agreement;
(m) The information delivered by the Seller to the Purchaser with
respect to the Seller's loan loss, foreclosure and delinquency experience on
mortgage loans underwritten to similar standards as the Mortgage Loans and
covering mortgaged properties similar to the Mortgaged Properties, is true and
correct in all material respects as of the date of such report; and
(n) Except with respect to any statement regarding the intentions of
the Purchaser, or any other statement contained herein the truth or falsity of
which is dependant solely upon the actions of the Purchaser, this Agreement does
not contain any untrue statement of material fact or omit to state a material
fact necessary to make the statements contained herein not misleading. The
written statements, reports and other documents prepared and furnished or to be
prepared and furnished by the Seller pursuant to this Agreement or in connection
with the transactions contemplated hereby taken in the aggregate do not contain
any untrue statement of material fact or omit to state a material fact necessary
to make the statements contained therein not misleading.
Section 3.04 REMEDIES FOR BREACH OF REPRESENTATIONS AND WARRANTIES. It is
understood and agreed that the representations and warranties set forth in
Subsections 3.01 and 3.02 shall survive the sale of the Mortgage Loans to the
Purchaser and shall inure to the benefit of the Purchaser, notwithstanding any
restrictive or qualified endorsement on any Mortgage Note or Assignment or the
examination or lack of examination of any Mortgage File. With respect to the
representations and
9
warranties contained herein that are made to the knowledge or the best knowledge
of the Originator or as to which the Originator has no knowledge, if it is
discovered that the substance of any such representation and warranty is
inaccurate and the inaccuracy materially and adversely affects the value of the
related Mortgage Loan or the interest therein of the Purchaser or the
Purchaser's assignee, designee or transferee (it being understood that with
respect to the representations and warranties set forth in (qq), (tt), (eee),
(fff) and (ggg) of Exhibit A hereto, a breach of any such representation or
warranty shall in and of itself be deemed to materially adversely affect the
interest therein of the Purchaser and the Purchaser's assignees, designees and
transferees), then notwithstanding the Originator's lack of knowledge with
respect to the substance of such representation and warranty being inaccurate at
the time the representation and warranty was made, such inaccuracy shall be
deemed a breach of the applicable representation and warranty and the Originator
shall take such action described in the following paragraphs of this Section
3.04 in respect of such Mortgage Loan. Upon discovery by any of the Originator,
the Seller or the Purchaser of a breach of any of the foregoing representations
and warranties that materially and adversely affects the value of a Mortgage
Loan or the interest therein of the Purchaser (it being understood that with
respect to the representations and warranties set forth in (qq), (tt), (eee),
(fff) and (ggg) of Exhibit A hereto, a breach of any such representation or
warranty shall in and of itself be deemed to materially adversely affect the
interest therein of the Purchaser and the Purchaser's assignees, designees and
transferees), the party discovering such breach shall give prompt written notice
to the others.
Within 90 days of the earlier of either discovery by or notice to the
Originator of any breach of a representation or warranty made by the Originator
that materially and adversely affects the value of a Mortgage Loan or the
Mortgage Loans or the interest therein of the Purchaser (it being understood
that with respect to the representations and warranties set forth in (qq), (tt),
(eee), (fff) and (ggg) of Exhibit A hereto, a breach of any such representation
or warranty shall in and of itself be deemed to materially adversely affect the
interest therein of the Purchaser and the Purchaser's assignees, designees and
transferees), the Originator shall use its best efforts promptly to cure such
breach in all material respects and, if such breach cannot be cured, the
Originator shall, at the Purchaser's option, repurchase such Mortgage Loan at
the Purchase Price. The Originator may, at the request of the Purchaser and
assuming the Originator has a Qualified Substitute Mortgage Loan, rather than
repurchase a deficient Mortgage Loan as provided above, remove such Mortgage
Loan and substitute in its place a Qualified Substitute Mortgage Loan or Loans.
If the Originator does not provide a Qualified Substitute Mortgage Loan or
Loans, it shall repurchase the deficient Mortgage Loan. Any repurchase of a
Mortgage Loan(s) pursuant to the foregoing provisions of this Section 3.04 shall
occur on a date designated by the Purchaser and shall be accomplished by deposit
in accordance with Section 2.03 of the Pooling and Servicing Agreement. Any
repurchase or substitution required by this Section shall be made in a manner
consistent with Section 2.03 of the Pooling and Servicing Agreement.
Notwithstanding the foregoing, within 90 days of the earlier of
discovery by the Originator or receipt of notice by the Originator of the breach
of the representation of the Originator of representation (aaa) of Exhibit A,
which materially and adversely affects the interests of the Holders of the Class
P Certificates in any Prepayment Charge, the Originator shall pay the amount of
the scheduled Prepayment Charge, for the benefit of the Holders of the Class P
Certificates, by depositing such amount into the Collection Account, net of any
amount previously collected by the
10
Master Servicer and paid by the Master Servicer, for the benefit of the Holders
of the Class P Certificates, in respect of such Prepayment Charge.
At the time of substitution or repurchase of any deficient Mortgage
Loan, the Purchaser and the Originator shall arrange for the reassignment of the
repurchased or substituted Mortgage Loan to the Originator and the delivery to
the Originator of any documents held by the Trustee relating to the deficient or
repurchased Mortgage Loan. In the event the Purchase Price is deposited in the
Collection Account. The Originator shall, simultaneously with such deposit, give
written notice to the Purchaser that such deposit has taken place. Upon such
repurchase, the Mortgage Loan Schedule shall be amended to reflect the
withdrawal of the repurchased Mortgage Loan from this Agreement.
As to any Deleted Mortgage Loan for which the Originator substitutes a
Qualified Substitute Mortgage Loan or Loans, the Originator shall effect such
substitution by delivering to the Purchaser or its designee for such Qualified
Substitute Mortgage Loan or Loans the Mortgage Note, the Mortgage, the
Assignment and such other documents and agreements as are required by the
Pooling and Servicing Agreement. with the Mortgage Note endorsed as required
therein. The Originator shall remit for deposit in the Collection Account the
Monthly Payment due on such Qualified Substitute Mortgage Loan or Loans in the
month following the date of such substitution. Monthly payments due with respect
to Qualified Substitute Mortgage Loans in the month of substitution will be
retained by the Originator. For the month of substitution, distributions to the
Purchaser will include the Monthly Payment due on such Deleted Mortgage Loan in
the month of substitution, and the Originator shall thereafter be entitled to
retain all amounts subsequently received by the Originator in respect of such
Deleted Mortgage Loan. Upon such substitution, the Qualified Substitute Mortgage
Loans shall be subject to the terms of this Agreement in all respects, and the
Originator shall be deemed to have made with respect to such Qualified
Substitute Mortgage Loan or Loans as of the date of substitution, the covenants,
representations and warranties set forth in Subsections 3.01 and 3.02.
It is understood and agreed that the representations and warranties
set forth in Sections 3.01 and 3.02 shall survive delivery of the respective
Mortgage Files to the Trustee on behalf of the Purchaser.
It is understood and agreed that the obligations of the Originator set
forth in this Section 3.04 to cure, repurchase and substitute for a defective
Mortgage Loan and the obligations of the Originator to indemnify the Purchaser
as provided in Section 5.01 constitute the sole remedies of the Purchaser
respecting a missing or defective document or a breach of the representations
and warranties contained in Section 3.01 or 3.02.
ARTICLE IV.
ORIGINATOR'S AND SELLER'S COVENANTS
Section 4.01 COVENANTS OF THE ORIGINATOR AND THE SELLER. The Originator and
the Seller hereby covenants that except for the transfer by the Originator to
the Seller under the Master Mortgage Loan Purchase and Interim Servicing
Agreement, dated July 1, 2002, between the
11
Originator and the Seller (and the Confirmations relating to the Mortgage Loans)
and the transfer hereunder, neither the Originator nor the Seller will sell,
pledge, assign or transfer to any other Person, or grant, create, incur, assume
or suffer to exist any Lien on any Mortgage Loan, or any interest therein; the
Originator and the Seller will notify the Trustee, as assignee of the Purchaser,
of the existence of any Lien on any Mortgage Loan immediately upon discovery
thereof, and the Originator and the Seller will defend the right, title and
interest of the Trust, as assignee of the Purchaser, in, to and under the
Mortgage Loans, against all claims of third parties claiming through or under
the Originator or the Seller; PROVIDED, HOWEVER, that nothing in this Section
4.01 shall prevent or be deemed to prohibit the Originator or the Seller from
suffering to exist upon any of the Mortgage Loans any Liens for municipal or
other local taxes and other governmental charges if such taxes or governmental
charges shall not at the time be due and payable or if the Originator or the
Seller shall currently be contesting the validity thereof in good faith by
appropriate proceedings and shall have set aside on its books adequate reserves
with respect thereto.
ARTICLE V.
INDEMNIFICATION WITH RESPECT TO THE MORTGAGE LOANS
Section 5.01 INDEMNIFICATION.
(a) The Originator indemnifies and holds harmless the Seller, the
Purchaser, Greenwich Capital Markets, Inc. (the "Underwriter"), their respective
officers and directors and each person, if any, who controls the Seller, the
Purchaser and the Underwriter within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, as follows:
(i) against any and all losses, claims, expenses, damages or
liabilities, joint or several, to which the Seller, the Purchaser, the
Underwriter or such officers, directors or controlling persons may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof including, but not limited
to, any loss, claim, expense, damage or liability related to purchases and sales
of the Certificates) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Prospectus
Supplement, or any amendment or supplement thereto, or arise out of, or are
based upon, the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements made therein
not misleading, to the extent that any untrue statement or alleged untrue
statement therein results (or is alleged to have resulted) from an error or
material omission in the information under the heading "Fremont Investment &
Loan" in the Prospectus Supplement, which error was not superseded or corrected
by the delivery to the Purchaser of corrected written or electronic information,
or for which the Originator provided written notice of such error to the
Purchaser prior to the confirmation of the sale of the Certificates; and will
reimburse the Purchaser and each such controlling person for any legal or other
expenses reasonably incurred by the Purchaser or such controlling person in
connection with investigating or defending any such loss, claim, damage.
liability or action as such expenses are incurred;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, to the extent of the aggregate amount paid in settlement of
any litigation, or investigation or proceeding by any governmental agency or
body, commenced or threatened, or of
12
any claim whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, if such settlement is effected with
the written consent of the Purchaser; and
(iii) against any and all expense whatsoever (including the fees
and disbursements of counsel chosen by the Purchaser), reasonably incurred in
investigating, preparing or defending against any litigation, or investigation
or proceeding by any governmental agency or body. commenced or threatened, or
any claim whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such expense
is not paid under clause (i) or clause (ii) above.
This indemnity agreement will be in addition to any liability which
the Originator may otherwise have.
(b) Promptly after receipt by any indemnified party under this Article
V of notice of any claim or the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against any
indemnifying party under this Article V, notify the indemnifying party in
writing of the claim or the commencement of that action; PROVIDED, HOWEVER, that
the failure to notify an indemnifying party shall not relieve it from any
liability which it may have under this Article V except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify any indemnifying party shall not relieve it from any liability
which it may have to any indemnified party otherwise than under this Article V.
If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this Article V for any legal
or other expenses subsequently incurred by the indemnified party in connection
with the defense thereof other than reasonable costs of investigation.
Any indemnified party shall have the right to employ separate counsel
in any such action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless: (i) the employment thereof has been specifically authorized by the
indemnifying party in writing; (ii) such indemnified party shall have been
advised in writing by such counsel that there may be one or more legal defenses
available to it which are different from or additional to those available to the
indemnifying party and in the reasonable judgment of such counsel it is
advisable for such indemnified party to employ separate counsel; or (iii) the
indemnifying party has failed to assume the defense of such action and employ
counsel reasonably satisfactory to the indemnified party, in which case, if such
indemnified party notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such indemnified party, it being understood, however, the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to local
13
counsel) at any time for all such indemnified parties, which firm shall be
designated in writing by the Purchaser, if the indemnified parties under this
Article V consist of the Purchaser.
Each indemnified party, as a condition of the indemnity agreement
contained in Section 5.01(a) hereof, shall use its best efforts to cooperate
with the indemnifying party in the defense of any such action or claim. No
indemnifying party shall be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with its written consent or if there be a final
judgment for the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested an
indemnifying party to consent to a settlement of any action, the indemnifying
party agrees that it shall be liable for any settlement of any proceeding
effected without its written consent if such settlement is entered into more
than 30 days after receipt by such indemnifying party of the aforesaid request
and the indemnifying party has not previously provided the indemnified party
with written notice of its objection to such settlement. No indemnifying party
shall effect any settlement of any pending or threatened proceeding in respect
of which an indemnified party is or could have been a party and indemnity is or
could have been sought hereunder, without the written consent of such
indemnified party, unless settlement includes an unconditional release of such
indemnified party from all liability and claims that are the subject matter of
such proceeding.
(c) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for Section 5.01(a)
above is unavailable or insufficient to hold harmless an indemnified party, the
Originator shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by such indemnity agreement
incurred by such indemnified party in such proportion as shall be appropriate to
reflect the relative benefits received by the Originator on the one hand (from
the sale of the Mortgage Loans to the Seller) and the Seller, the Purchaser and
the Underwriter on the other (from the sale of the Mortgage Loans to the
Purchaser in the case of the Seller, from the sale of its interest in the
Mortgage Loans pursuant to the Prospectus in the case of the Purchaser or from
underwriting fees and discounts in the case of the Underwriter); PROVIDED,
HOWEVER, that no person guilty of fraudulent misrepresentation (within the
meaning of Section 11 (f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(d) The Originator and the Seller, severally and not jointly, agree to
indemnify and to hold each of the Purchaser, the Trustee, each of the officers
and directors of each such entity and each person or entity who controls each
such entity or person and each Certificateholder harmless against any and all
claims, losses, penalties, fines, forfeitures, legal fees and related costs,
judgments, and any other costs, fees and expenses that the Purchaser, the
Trustee, or any such person or entity and any Certificateholder may sustain in
any way (i) related to the failure of the Originator or the Seller, as the case
may be, to perform its duties in compliance with the terms of this Agreement,
(ii) with respect to the Originator, arising from a breach by the Originator of
its representations and warranties in Sections 3.01 and 3.02 of this Agreement,
(iii) with respect to the Seller, arising from a breach by the Seller of its
representations and warranties in Sections 3.03 of this Agreement or (iv)
related to the servicing of the Mortgage Loans by reason of any acts, omissions,
or alleged acts or omissions of the Originator or the Seller, as the case may
be, or any
14
servicer that serviced any such Mortgage Loan during the period in which the
Originator or the Seller, as the case may be, owned such Mortgage Loan. The
Originator and the Seller shall immediately notify the Purchaser, the Trustee
and each Certificateholder if a claim is made by a third party with respect to
this Agreement. The indemnifying party shall assume the defense of any such
claim and pay all expenses in connection therewith, including reasonable counsel
fees, and promptly pay, discharge and satisfy any judgment or decree which may
be entered against the Purchaser, the Trustee or any such person or entity
and/or any Certificateholder in respect of such claim.
ARTICLE VI.
TERMINATION
Section 6.01 TERMINATION. The respective obligations and responsibilities
of the Originator, the Seller and the Purchaser created hereby shall terminate
(except for (i) the Originator's and the Seller's indemnity obligations as
provided herein and (ii) the representations and warranties made by the
Originator and the Seller hereunder and the Originator's and the Seller's
obligations to remedy breaches thereof to the extent set forth herein) upon the
termination of the Trust as provided in Article X of the Pooling and Servicing
Agreement.
ARTICLE VII.
MISCELLANEOUS PROVISIONS
Section 7.01 AMENDMENT. This Agreement may be amended from time to time by
the Originator, the Seller and the Purchaser, by written agreement signed by the
Originator, the Seller and the Purchaser.
Section 7.02 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
Section 7.03 NOTICES. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by registered mail, postage prepaid, addressed as
follows: (i) if to the Originator, Fremont Investment & Loan, 000 Xxxxx
Xxxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxx Xxxxxx, or such
other address as may hereafter be furnished by the Originator, (ii) if to the
Seller, Greenwich Capital Financial Products, Inc., 000 Xxxxxxxxx Xxxx,
Xxxxxxxxx, Xxxxxxxxxxx 00000, Attention: Legal, or such other address as may
hereafter be furnished by the Seller and (iii) if to the Purchaser, Financial
Asset Securities Corp., 000 Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxx 00000,
Attention: Legal, or such other address as may hereafter be furnished by the
Purchaser.
Section 7.04 SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions of terms of this Agreement shall be held
invalid for any reason whatsoever, 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 of
enforceability of the other provisions of this Agreement.
15
Section 7.05 COUNTERPARTS. This Agreement may be executed in one or more
counterparts and by the different parties hereto on separate counterparts, each
of which, when so executed, shall be deemed to be an original and such
counterparts, together, shall constitute one and the same agreement.
Section 7.06 FURTHER AGREEMENTS. The Originator, the Purchaser and the
Seller each agree to execute and deliver to the other such additional documents,
instruments or agreements as may be necessary or reasonable and appropriate to
effectuate the purposes of this Agreement or in connection with the issuance of
any Series of Certificates representing interests in the Mortgage Loans.
Without limiting the generality of the foregoing, as a further inducement
for the Purchaser to purchase the Mortgage Loans from the Seller, the Originator
and the Seller will cooperate with the Purchaser in connection with the sale of
any of the securities representing interests in the Mortgage Loans. In that
connection, the Originator and the Seller will provide to the Purchaser any and
all information and appropriate verification of information, whether through
letters of its auditors and counsel or otherwise, as the Purchaser shall
reasonably request and will provide to the Purchaser such additional
representations and warranties, covenants, opinions of counsel, letters from
auditors, and certificates of public officials or officers of the Originator or
the Seller as are reasonably required in connection with such transactions and
the offering of investment grade securities rated by the Rating Agencies.
Section 7.07 INTENTION OF THE PARTIES. It is the intention of the parties
that the Purchaser is purchasing, and the Seller is selling, the Mortgage Loans
rather than pledging the Mortgage Loans to secure a loan by the Purchaser to the
Seller. Accordingly, the parties hereto each intend to treat the transaction for
federal income tax purposes and all other purposes as a sale by the Seller, and
a purchase by the Purchaser, of the Mortgage Loans. The Purchaser will have the
right to review the Mortgage Loans and the related Mortgage Files to determine
the characteristics of the Mortgage Loans which will affect the federal income
tax consequences of owning the Mortgage Loans and the Seller will cooperate with
all reasonable requests made by the Purchaser in the course of such review.
Section 7.08 SUCCESSORS AND ASSIGNS; ASSIGNMENT OF PURCHASE AGREEMENT. This
Agreement shall bind and inure to the benefit of and be enforceable by the
Originator, the Seller, the Purchaser and the Trustee.
The obligations of the Originator and the Seller under this Agreement
cannot be assigned or delegated to a third party without the consent of the
Purchaser which consent shall be at the Purchaser's sole discretion, except that
the Purchaser acknowledges and agrees that the Originator and the Seller may
assign its obligations hereunder to any Person into which the Originator or the
Seller is merged or any corporation resulting from any merger, conversion or
consolidation to which the Seller or the Originator is a party or any Person
succeeding to the business of the Seller or the Originator. The parties hereto
acknowledge that the Purchaser is acquiring the Mortgage Loans for the purpose
of contributing them to a trust that will issue a series of Certificates
representing undivided interests in such Mortgage Loans. As an inducement to the
Purchaser to purchase the Mortgage Loans, the Seller acknowledges and consents
to the assignment by the Purchaser to the
16
Trustee of all of the Purchaser's rights against the Seller pursuant to this
Agreement insofar as such rights relate to Mortgage Loans transferred to the
Trustee and to the enforcement or exercise of any right or remedy against the
Seller pursuant to this Agreement by the Trustee. In addition, the Originator
acknowledges and consents to the assignment by the Purchaser to the Trustee of
all of the Purchaser's rights against the Originator pursuant to this Agreement
insofar as such rights relate to Mortgage Loans transferred to the Trustee and
to the enforcement or exercise of any right or remedy against the Originator
pursuant to this Agreement by the Trustee. Such enforcement of a right or remedy
by the Trustee shall have the same force and effect as if the right or remedy
had been enforced or exercised by the Purchaser directly.
Section 7.09 SURVIVAL. The representations and warranties set forth in
Sections 3.01, 3.02 and 3.03 and the provisions of Article V hereof shall
survive the purchase of the Mortgage Loans hereunder.
17
IN WITNESS WHEREOF, the Originator, the Seller and the Purchaser have
caused their names to be signed to this Mortgage Loan Purchase Agreement by
their respective officers thereunto duly authorized as of the day and year fist
above written.
FREMONT INVESTMENT & LOAN,
as Originator
By:________________________________
Name:
Title:
FINANCIAL ASSET SECURITIES CORP.,
as Purchaser
By:________________________________
Name:
Title:
GREENWICH CAPITAL FINANCIAL
PRODUCTS, INC., as Seller
By:_________________________________
Name:
Title:
18
SCHEDULE I
MORTGAGE LOANS
AVAILABLE UPON REQUEST
19
EXHIBIT A
Representation and Warranties with Respect to the Mortgage Loans
The Originator hereby represents and warrants to the Purchaser that, as to each
Mortgage Loan, as of the related Closing Date for such Mortgage Loan:
(a) The information set forth in the data tape relating to the
Mortgage Loans in the form most recently provided by the servicer of the
Mortgage Loans to the Purchaser is true and correct;
(b) [Reserved];
(c) All payments required to be made up to the close of business on
the Closing Date for such Mortgage Loan under the terms of the Mortgage Note
have been made; the Originator has not advanced funds, or induced, solicited or
knowingly received any advance of funds from a party other than the owner of the
related Mortgaged Property, directly or indirectly, for the payment of any
amount required by the Mortgage Note or Mortgage; and there has been no
delinquency, exclusive of any period of grace, in any payment by the Mortgagor
thereunder since the origination of the Mortgage Loan;
(d) To the best of the Originator's knowledge, there are no delinquent
taxes, ground rents, water charges, sewer rents, assessments, insurance
premiums, leasehold payments, including assessments payable in future
installments or other outstanding charges affecting the related Mortgaged
Property;
(e) The terms of the Mortgage Note and the Mortgage have not been
impaired, waived, altered or modified in any respect, except by written
instruments, recorded in the applicable public recording office if necessary to
maintain the lien priority of the Mortgage, and which have been delivered to the
Custodian; the substance of any such waiver, alteration or modification has been
approved by the title insurer, to the extent required by the related policy, and
is reflected on the related Mortgage Loan Schedule. No instrument of waiver,
alteration or modification has been executed, and no Mortgagor has been
released, in whole or in part, except in connection with an assumption agreement
approved by the title insurer, to the extent required by the policy, and which
assumption agreement has been delivered to the Custodian and the terms of which
are reflected in the related Mortgage Loan Schedule;
(f) The Mortgage Note and the Mortgage are not subject to any right of
rescission, set off, counterclaim or defense, including the defense of usury,
nor will the operation of any of the terms of the Mortgage Note and the
Mortgage, or the exercise of any right thereunder,
20
render the 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;
(g) All buildings upon the Mortgaged Property are insured by a
generally acceptable insurer in the secondary market against loss by fire,
hazards of extended coverage and such other hazards as are customary in the area
where the Mortgaged Property is located, pursuant to insurance policies
conforming to the requirements of the Servicing Addendum. All such insurance
policies contain a standard mortgagee clause naming the Originator, its
successors and assigns as mortgagee and all premiums thereon have been paid. If
the Mortgaged Property is in an area identified on a Flood Hazard Map or Flood
Insurance Rate Map issued by the Federal Emergency Management Agency as having
special flood hazards (and such flood insurance has been made available) a flood
insurance policy meeting the requirements of the current guidelines of the
Federal Insurance Administration is in effect which policy conforms to the
requirements of FNMA and FHLMC. The Mortgage obligates the Mortgagor thereunder
to maintain all such insurance at the Mortgagor's cost and expense, and on the
Mortgagor's failure to do so, authorizes the holder of the Mortgage to maintain
such insurance at Mortgagor's cost and expense and to seek reimbursement
therefor from the Mortgagor;
(h) Any and all requirements of any federal, state or local law
including, without limitation, usury, truth in lending, real estate settlement
procedures, consumer credit protection, equal credit opportunity, fair housing
or disclosure laws applicable to the origination and servicing of mortgage loans
of a type similar to the Mortgage Loans have been complied with;
(i) The Mortgage has not been satisfied, cancelled, subordinated or
rescinded, in whole or in part, and the Mortgaged Property has not been released
from the lien of the Mortgage, in whole or in part, nor has any instrument been
executed that would effect any such satisfaction, cancellation, subordination,
rescission or release;
(j) The Mortgage is a valid, existing and enforceable first lien (or
if indicated on the Mortgage Loan Schedule, second lien) on the Mortgaged
Property, which Mortgaged Property is free and clear of all encumbrances and
liens (including mechanics liens) having priority over the first lien (or if
indicated on the Mortgage Loan Schedule, second lien) of the Mortgage except
for: (a) the lien of current real property taxes and assessments not yet due and
payable, (b) covenants, conditions and restrictions, rights of way, easements
and other matters of the public record as of the date of recording being
acceptable to mortgage lending institutions generally and specifically referred
to in the lender's title insurance policy delivered to the originator of the
Mortgage Loan and which do not adversely affect the Appraised Value of the
Mortgaged Property, (c) 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
21
the related Mortgaged Property and (d) the first lien on the Mortgaged Property,
in the case of the Mortgages that are second liens. Any security agreement,
chattel mortgage or equivalent document related to and delivered in connection
with the Mortgage Loan establishes and creates a valid, existing and enforceable
first lien (or second lien if such Mortgage Loan Schedule is identified on the
Mortgage Loan Schedule as a second lien Mortgage Loan) and first priority (or
second priority if such Mortgage Loan Schedule is identified on the Mortgage
Loan Schedule as a second lien Mortgage Loan) security interest on the property
described therein and the Originator has full right to sell and assign the same
to the Purchaser;
(k) The Mortgage Note and the related Mortgage are genuine and each is
the legal, valid and binding obligation of the maker thereof, enforceable in
accordance with its terms;
(l) All parties to the Mortgage Note and the Mortgage had legal
capacity to enter into the Mortgage Loan and to execute and deliver the Mortgage
Note and the Mortgage, and the Mortgage Note and the Mortgage have been duly and
properly executed by such parties. The Mortgagor is a natural person;
(m) The proceeds of the Mortgage Loan have been fully disbursed to or
for the account of the Mortgagor and there is no obligation for the Mortgagee to
advance additional funds thereunder and any and all requirements as to
completion of any on site or off site improvement and as to disbursements of any
escrow funds therefor have been complied with. All costs, fees and expenses
incurred in making or closing the Mortgage Loan and the recording of the
Mortgage have been paid, and the Mortgagor is not entitled to any refund of any
amounts paid or due to the Mortgagee pursuant to the Mortgage Note or Mortgage;
(n) The Originator is the sole legal, beneficial and equitable owner
of the Mortgage Note and the Mortgage and has full right to transfer and sell
the Mortgage Loan to the Purchaser free and clear of any encumbrance, equity,
lien, pledge, charge, claim or security interest;
(o) All parties which have had any interest in the Mortgage Loan,
whether as mortgagee, assignee, pledgee or otherwise, are (or, during the period
in which they held and disposed of such interest, were) in compliance with any
and all applicable "doing business" and licensing requirements of the laws of
the state wherein the Mortgaged Property is located;
(p) The Mortgage Loan is covered by an American Land Title Association
("ALTA") ALTA lender's title insurance policy (which, in the case of an
Adjustable Rate Mortgage Loan has an adjustable rate mortgage endorsement in the
form of ALTA 6.0 or 6.1) acceptable to FNMA and FHLMC, issued by a title insurer
acceptable to FNMA and FHLMC and qualified to do business in the jurisdiction
where the Mortgaged Property is located, insuring (subject to the exceptions
contained in (j)(a) and (b) above) the Originator, its successors and assigns as
to the first
22
lien (or second lien if such Mortgage Loan Schedule is identified on the
Mortgage Loan Schedule as a second lien Mortgage Loan) of the Mortgage in the
original principal amount of the Mortgage Loan and, with respect to any
Adjustable Rate Mortgage Loan, against any loss by reason of the invalidity or
unenforceability of the lien resulting from the provisions of the Mortgage
providing for adjustment in the Mortgage Interest Rate and Monthly Payment.
Additionally, such lender's title insurance policy affirmatively insures ingress
and egress to and from the Mortgaged Property, and against encroachments by or
upon the Mortgaged Property or any interest therein. The Originator is the sole
insured of such lender's title insurance policy, and such lender's title
insurance policy is in full force and effect and will be in full force and
effect upon the consummation of the transactions contemplated by this Agreement.
No claims are pending under such lender's title insurance policy, and no prior
holder of the related Mortgage, including the Originator, has done, by act or
omission, anything which would impair the coverage of such lender's title
insurance policy;
(q) There is no default, breach, violation or event of acceleration
existing under the Mortgage or the Mortgage Note and no event which, with the
passage of time or with notice and the expiration of any grace or cure period,
would constitute a default, breach, violation or event of acceleration, and the
Originator has not waived any default, breach, violation or event of
acceleration;
(r) As of the date of origination of the Mortgage Loan and to the best
of the Originator's knowledge as of the Closing Date, 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 lien) affecting
the related Mortgaged Property which are or may be liens prior to, or equal or
coordinate with, the lien of the related Mortgage;
(s) All improvements which were considered in determining the
Appraised Value of the related Mortgaged Property lay wholly within the
boundaries and building restriction lines of the Mortgaged Property, and no
improvements on adjoining properties encroach upon the Mortgaged Property;
(t) The Mortgage Loan was originated by the Originator or by a savings
and loan association, a savings bank, a commercial bank or similar banking
institution which is supervised and examined by a federal or state authority, or
by a mortgagee approved as such by the Secretary of HUD;
(u) Principal payments on the Mortgage Loan commenced no more than
sixty days after the proceeds of the Mortgage Loan were disbursed. The Mortgage
Loan bears interest at the Mortgage Interest Rate. With respect to each Mortgage
Loan, the Mortgage Note is payable on the first or fifteenth day of each month
in Monthly Payments, which, in the case of a Fixed Rate Mortgage Loans, are
sufficient to fully amortize the original principal balance over the original
term
23
thereof and to pay interest at the related Mortgage Interest Rate, and, in the
case of an Adjustable Rate Mortgage Loan, are changed on each Adjustment Date,
and in any case, are sufficient to fully amortize the original principal balance
over the original term thereof and to pay interest at the related Mortgage
Interest Rate. The Index for each Adjustable Rate Mortgage Loan is as listed on
the Mortgage Loan Schedule. The Mortgage Note does not permit negative
amortization. No Mortgage Loan is a Convertible Mortgage Loan;
(v) The origination and collection practices used by the Originator
with respect to each Mortgage Note and Mortgage have been in all respects legal,
proper, prudent and customary in the mortgage origination and servicing
industry. The Mortgage Loan has been serviced by the Originator and any
predecessor servicer in accordance with the terms of the Mortgage Note. With
respect to escrow deposits and Escrow Payments, if any, all such payments are in
the possession of, or under the control of, the Originator and there exist no
deficiencies in connection therewith for which customary arrangements for
repayment thereof have not been made. No escrow deposits or Escrow Payments or
other charges or payments due the Originator have been capitalized under any
Mortgage or the related Mortgage Note and no such escrow deposits or Escrow
Payments are being held by the Originator for any work on a Mortgaged Property
which has not been completed;
(w) To the best of Originator's knowledge, the Mortgaged Property is
free of damage and waste and there is no proceeding pending for the total or
partial condemnation thereof;
(x) The Mortgage and related Mortgage Note contain customary and
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against the Mortgaged Property of the
benefits of the security provided thereby, including, (a) in the case of a
Mortgage designated as a deed of trust, by trustee's sale, and (b) otherwise by
judicial foreclosure. The Mortgaged Property is not subject to any bankruptcy
proceeding or foreclosure proceeding and the Mortgagor is not subject to
protection under applicable bankruptcy laws. There is no homestead or other
exemption available to the Mortgagor which would interfere with the right to
sell the Mortgaged Property at a trustee's sale or the right to foreclose the
Mortgage. The Mortgagor has not notified the Originator and the Originator has
no knowledge of any relief requested or allowed to the Mortgagor under the
Soldiers and Sailors Civil Relief Act of 1940;
(y) The Mortgage Loan was underwritten in accordance with the
underwriting standards of the Originator in effect at the time the Mortgage Loan
was originated; and the Mortgage Note and Mortgage are on forms acceptable to
FNMA and FHLMC;
(z) The Mortgage Note is not and has not been secured by any
collateral except the lien of the corresponding Mortgage on the Mortgaged
Property and the security interest of any applicable security agreement or
chattel mortgage referred to in (j) above;
24
(aa) The Mortgage File contains an appraisal of the related Mortgaged
Property which satisfied the standards of FNMA and FHLMC and was made and
signed, prior to the funding of the Mortgage Loan application, by a qualified
appraiser, duly appointed by the Originator, who had no interest, direct or
indirect in the Mortgaged Property or in any loan made on the security thereof,
whose compensation is not affected by the approval or disapproval of the
Mortgage Loan and who met the minimum qualifications of FNMA and FHLMC. Each
appraisal of the Mortgage Loan was made in accordance with the relevant
provisions of the Financial Institutions Reform, Recovery, and Enforcement Act
of 1989;
(bb) In the event the Mortgage constitutes a deed of trust, a trustee,
duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in the Mortgage, and no fees or
expenses are or will become payable by the Purchaser to the trustee under the
deed of trust, except in connection with a trustee's sale after default by the
Mortgagor or the reconveyance of the deed of trust;
(cc) No Mortgage Loan contains provisions pursuant to which Monthly
Payments are (a) paid or partially paid with funds deposited in any separate
account established by the Originator, the Mortgagor, or anyone on behalf of the
Mortgagor, (b) paid by any source other than the Mortgagor or (c) contains any
other similar provisions which may constitute a "buydown" provision. The
Mortgage Loan is not a graduated payment mortgage loan and the Mortgage Loan
does not have a shared appreciation or other contingent interest feature;
(dd) The Mortgagor has executed a statement to the effect that the
Mortgagor has received all disclosure materials required by applicable law with
respect to the making of fixed rate mortgage loans in the case of Fixed Rate
Mortgage Loans, and adjustable rate mortgage loans in the case of Adjustable
Rate Mortgage Loans and rescission materials with respect to Refinanced Mortgage
Loans, and such statement is and will remain in the Mortgage File;
(ee) No Mortgage Loan was made in connection with (a) the construction
or rehabilitation of a Mortgaged Property or (b) facilitating the trade in or
exchange of a Mortgaged Property;
(ff) The Originator has no knowledge of any circumstances or condition
with respect to the Mortgage, the Mortgaged Property, the Mortgagor or the
Mortgagor's credit standing that can reasonably be expected to cause the
Mortgage Loan to be an unacceptable investment, cause the Mortgage Loan to
become delinquent, or adversely affect the value of the Mortgage Loan;
(gg) As of the date of origination of the Mortgage Loan and to the
best of the Originator's knowledge as of the Closing Date, the Mortgaged
Property is lawfully occupied under applicable law; all inspections, licenses
and certificates required to be made or issued with respect
25
to all occupied portions of the Mortgaged Property and, with respect to the use
and occupancy of the same, including but not limited to certificates of
occupancy, have been made or obtained from the appropriate authorities;
(hh) No error, omission, misrepresentation, negligence, fraud or
similar occurrence with respect to a Mortgage Loan has taken place on the part
of any person, including without limitation the Mortgagor, any appraiser, any
builder or developer, or any other party involved in the origination of the
Mortgage Loan or in the application of any insurance in relation to such
Mortgage Loan;
(ii) The Assignment of Mortgage is in recordable form and is
acceptable for recording under the laws of the jurisdiction in which the
Mortgaged Property is located;
(jj) Any principal advances made to the Mortgagor prior to the Cut off
Date have been consolidated with the outstanding principal amount secured by the
Mortgage, and the secured principal amount, as consolidated, bears a single
interest rate and single repayment term. The lien of the Mortgage securing the
consolidated principal amount is expressly insured as having first lien (or
second lien if such Mortgage Loan Schedule is identified on the Mortgage Loan
Schedule as a second lien Mortgage Loan) priority by a title insurance policy,
an endorsement to the policy insuring the mortgagee's consolidated interest or
by other title evidence acceptable to FNMA and FHLMC. The consolidated principal
amount does not exceed the original principal amount of the Mortgage Loan;
(kk) No Mortgage Loan has a balloon payment feature;
(ll) The source of the down payment with respect to each Mortgage Loan
has been fully verified by the Originator pursuant to the Originator's
underwriting guidelines;
(mm) Interest on each Mortgage Loan is calculated on the basis of a
360-day year consisting of twelve 30-day months;
(nn) The Mortgaged Property is in material compliance with all
applicable environmental laws pertaining to environmental hazards including,
without limitation, asbestos, and neither the Originator nor, to the
Originator's knowledge, the related Mortgagor, has received any notice of any
violation or potential violation of such law;
(oo) Each Mortgage Loan is covered by a fully assignable, life of loan
Tax Service Contract which is assignable to the Purchaser or its designee
without the payment of any fee by the Purchaser or its designee;
26
(pp) Each Mortgage Loan is covered by a Flood Zone Service Contract
which is assignable to the Purchaser or its designee or, for each Mortgage Loan
not covered by such Flood Zone Service Contract, the Originator agrees to
purchase such Flood Zone Service Contract;
(qq) No Mortgage Loan is subject to the provisions of the
Homeownership and Equity Protection Act of 1994 as amended ("HOEPA") or any
comparable state or local statutes or regulations. The total combined points and
fees charged in connection with the originator of the Mortgage Loan does not
exceed 8% of the original principal balance of the Mortgage Loan.
(rr) No predatory or deceptive lending practices, including but not
limited to, the extension of credit to a mortgagor without regard for the
mortgagor's ability to repay the Mortgage Loan and the extension of credit to a
mortgagor which has no apparent benefit to the mortgagor, were employed in
connection with the origination of the Mortgage Loan;
(ss) The debt-to-income ratio of the related Mortgagor was not greater
than 60% at the origination of the related Mortgage Loan;
(tt) None of the proceeds of the Mortgage Loan were used to finance
the purchase of single premium credit life or disability insurance policies or
any comparable insurance.
(uu) No Mortgage loan is secured by property located in the city of
Oakland, California is subject to the provisions of the City of Oakland,
California Anti-Predatory Lending Ordinance No. 12361.
(vv) No Mortgage Loan had a Loan-to-Value Ratio in excess of 100%
origination of such Mortgage Loan;
(ww) The Mortgage Loans were not selected from the outstanding fixed
and adjustable rate one to four-family mortgage loans in the Originator's
portfolio at the related Closing Date as to which the representations and
warranties set forth in this Agreement could be made in a manner so as to affect
adversely the interests of the Purchaser;
(xx) The related Mortgagor under the Mortgage Loan had a FICO Score
not less than 500 at the time of the origination of the Mortgage Loan, unless
such Mortgage Loan was originated under an origination program which does not
require FICO scores to be obtained under the Originator's underwriting
guidelines;
(yy) The Mortgage contains an enforceable provision for the
acceleration of the payment of the unpaid principal balance of the Mortgage Loan
in the event that the Mortgaged Property is sold or transferred without the
prior written consent of the mortgagee thereunder;
27
(zz) The Mortgage Loan complies with all applicable consumer credit
statutes and regulations, including, without limitation, the respective Uniform
Consumer Credit Code laws in effect in Colorado, Idaho, Indiana, Iowa, Kansas,
Maine, Oklahoma, South Carolina, Utah and Wyoming, has been originated by a
properly licensed entity, and in all other respects, complies with all of the
material requirements of any such applicable laws;
(aaa) The information set forth in the Prepayment Charge schedule is
complete, true and correct in all material respects and each Prepayment Charge
is permissible, enforceable and collectable under applicable federal and state
law;
(bbb) The Mortgage Loan was not prepaid in full prior to the Closing
Date and the Originator has not received notification from a Mortgagor that a
prepayment in full shall be made after the Closing Date; and
(ccc) The Originator has no knowledge of any circumstances or
condition with respect to the Mortgage, the mortgaged property, the Mortgagor or
the Mortgagor's credit standing that can be reasonably be expected to cause the
mortgage Loan to be an unacceptable investment, cause the Mortgage Loan to
become delinquent, or adversely affect the value of the Mortgage Loan.
(ddd) With respect to second lien Mortgage Loans, either (a) no
consent for the Mortgage Loan is required by the holder of the related first
lien or (b) such consent has been obtained and is contained in the Mortgage
File.
(eee) No Mortgage Loan secured by a Mortgaged Property located in
Georgia was originated on or after October 1, 2002.
(fff) No Mortgage Loan originated on or after October 1, 2002 will
impose a Prepayment Charge for a term in excess of three years. No other
Mortgage Loan will impose a Prepayment Charge for a term in excess of five
years.
(ggg) The servicer for each Mortgage Loan has fully furnished, in
accordance with the Fair Credit Reporting Act and its implementing regulations,
accurate and complete information (e.g., favorable and unfavorable) on its
borrower credit files to Equifax, Experian, and Trans Union Credit Information
Company (three of the credit repositories), on a monthly basis.
28
EXHIBIT D
MORTGAGE LOAN SCHEDULE
[FILED BY PAPER]
[SEE SCHEDULE I OF MORTGAGE LOAN PURCHASE AGREEMENT]
D-1
EXHIBIT E
REQUEST FOR RELEASE OF DOCUMENTS
To: Deutsche Bank National Trust Company
0000 Xxxx Xx. Xxxxxx Xxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000-0000
Re: Pooling and Servicing Agreement dated as of December 1, 2002, among
the Finance Asset Securities Corp. as Depositor, Xxxxxx Loan Servicing
LP, as Servicer, and Deutsche Bank National Trust Company, a national
banking association, as Trustee
In connection with the administration of the Mortgage Loans held by you as
Trustee pursuant to the above-captioned Pooling and Servicing Agreement, we
request the release, and hereby acknowledge receipt of the Trustee's Mortgage
File Or the Mortgage Loan described below, for the reason indicated.
MORTGAGE LOAN NUMBER:
MORTGAGOR NAME, ADDRESS & ZIP CODE:
REASON FOR REQUESTING DOCUMENTS (CHECK ONE):
_________1. Mortgage Paid in Full
_________2. Foreclosure
_________3. Substitution
_________4. Other Liquidation (Repurchases, etc.)
_________5. Nonliquidation Reason:_____________________
Address to which Trustee should deliver the Trustee's Mortgage File:
________________________________________________________________________________
________________________________________________________________________________
E-1
By:____________________________________
(authorized signer)
Issuer:________________________________
Address:_______________________________
_______________________________
Date:__________________________________
TRUSTEE
Deutsche Bank National Trust Company
Please acknowledge the execution of the above request by your signature and
date below:
____________________________ __________________
Signature Date
Documents returned to Trustee:
______________________________ __________________
Trustee Date
E-2
EXHIBIT F-1
FORM OF TRUSTEE'S INITIAL CERTIFICATION
December __, 2002
Financial Asset Securities Corp.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Re: Pooling and Servicing Agreement dated as of December 1, 2002, among
the Finance Asset Securities Corp. as Depositor, Xxxxxx Loan Servicing
LP, as Servicer, and Deutsche Bank National Trust Company, a national
banking association, as Trustee
Ladies and Gentlemen:
Attached is the Trustee's preliminary exception report delivered in
accordance with Section 2.02 of the referenced Pooling and Servicing Agreement
(the "Pooling and Servicing Agreement"). Capitalized terms used but not
otherwise defined herein shall have the meanings set forth in the Pooling and
Servicing Agreement.
The Trustee has made no independent examination of any documents contained
in each Mortgage File beyond the review specifically required in the Pooling and
Servicing Agreement. The Trustee makes no representations as to (i) the
validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in the Mortgage File pertaining to the Mortgage Loans
identified on the Mortgage Loan Schedule, (ii) the collectability, insurability,
effectiveness or suitability of any such Mortgage Loan or (iii) whether any
Mortgage File includes any of the documents specified in clause (v) of Section
2.01 of the Pooling and Servicing Agreement.
DEUTSCHE BANK NATIONAL TRUST
COMPANY
By:_____________________________________
Name:
Title:
F-1-1
EXHIBIT F-2
FORM OF TRUSTEE'S FINAL CERTIFICATION
________________
[Date]
Financial Asset Securities Corp.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Re: Pooling and Servicing Agreement (the "Pooling and Servicing Agreement"),
dated as of December 1, 2002 among Financial Asset Securities Corp., as
Depositor, Xxxxxx Loan Servicing LP, as Servicer and Deutsche Bank
National Trust Company, as Trustee with respect to Fremont Home Loan
Trust 2002-2, Asset-Backed Certificates, Series 2002-2
------------------------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing Agreement, the
undersigned, as Trustee, hereby certifies that as to each Mortgage Loan listed
in the Mortgage Loan Schedule (other than any Mortgage loan paid in full or
listed on Schedule I hereto) it (or its custodian) has received the applicable
documents listed in Section 2.01 of the Pooling and Servicing Agreement.
The undersigned hereby certifies that as to each Mortgage Loan identified
on the Mortgage Loan Schedule, other than any Mortgage Loan listed on Schedule I
hereto, it has reviewed the documents listed above and has determined that each
such document appears to be complete and, based on an examination of such
documents, the information set forth in items 1, 2, 3, 10, 11, 15 and 28 of the
definition of Mortgage Loan Schedule in the Pooling and Servicing Agreement
accurately reflects information in the Mortgage File.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement. This
Certificate is qualified in all respects by the terms of said Pooling and
Servicing Agreement.
DEUTSCHE BANK NATIONAL TRUST
COMPANY, as Trustee
By:__________________________________
Name:
Title:
F-2-1
EXHIBIT F-3
FORM OF RECEIPT OF MORTGAGE NOTE
Financial Asset Securities Corp.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Re: Fremont Home Loan Trust 2002-2,
Asset-backed Certificates Series 2002-2
---------------------------------------
Ladies and Gentlemen:
Pursuant to Section 2.01 of the Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement"), dated as of December 1, 2002 among Financial
Asset Securities Corp., as Depositor, Xxxxxx Loan Servicing LP, as Servicer and
Deutsche Bank National Trust Company, as Trustee, we hereby acknowledge the
receipt of the original Mortgage Notes (a copy of which is attached hereto as
Exhibit 1) with any exceptions thereto listed on Exhibit 2.
DEUTSCHE BANK NATIONAL TRUST
COMPANY, as Trustee
By:________________________________
Name:
Title:
F-3-1
EXHIBIT G
[RESERVED]
G-1
EXHIBIT H
FORM OF LOST NOTE AFFIDAVIT
---------------------------
Personally appeared before me the undersigned authority to administer
oaths, __________________ who first being duly sworn deposes and says: Deponent
is ________________ of ________________, successor by merger to
_________________________ ("Seller") and who has personal knowledge of the facts
set out in this affidavit.
On ______________________________, _________________________________ did execute
and deliver a promissory note in the principal amount of $____________________.
That said note has been misplaced or lost through causes unknown and is
presently lost and unavailable after diligent search has been made. Seller's
records show that an amount of principal and interest on said note is still
presently outstanding, due, and unpaid, and Seller is still owner and holder in
due course of said lost note.
Seller executes this Affidavit for the purpose of inducing Deutsche Bank
National Trust Company, as trustee on behalf of Fremont Home Loan Trust 2002-2,
Asset-Backed Certificates Series 2002-2, to accept the transfer of the above
described loan from Seller.
Seller agrees to indemnify Deutsche Bank National Trust Company and
Financial Asset Securities Corp. harmless for any losses incurred by such
parties resulting from the above described promissory note has been lost or
misplaced.
By: _______________________
_______________________
STATE OF )
) SS:
COUNTY OF )
On this ______ day of ______________, 20_, before me, a Notary Public, in
and for said County and State, appeared , who acknowledged the extension of the
foregoing and who, having been duly sworn, states that any representations
therein contained are true.
Witness my hand and Notarial Seal this _________ day of 20__.
____________________________
____________________________
My commission expires __________________________.
H-1
EXHIBIT I
FORM OF LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that [NAME OF MORTGAGEE, ASSIGNEE OR LAST
ENDORSEE, AS APPLICABLE], [a ___________________ corporation][a national banking
organization], having its principal place of business at ______________________,
(the "Undersigned"), pursuant to that Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement") among Financial Asset Securities Corp. (the
"Owner"), Deutsche Bank National Trust Company and Xxxxxx Loan Servicing LP
("Xxxxxx"), hereby constitutes and appoints Xxxxxx, by and through Litton's
officers, the Undersigned's true and lawful Attorney-in-Fact, in the
Undersigned's name, place and stead, as their interests may appear, and for the
Undersigned's respective benefit, in connection with all Mortgage Loans serviced
by Xxxxxx pursuant to the Pooling and Servicing Agreement, for the purpose of
performing all acts and executing all documents in the name of the Undersigned
as may be customarily and reasonably necessary and appropriate to effectuate the
following enumerated transactions in respect of any of the mortgages, deeds of
trust or security instrument (each a "Mortgage" or a "Deed of Trust"
respectively) and promissory notes secured thereby (each a "Mortgage Note") for
which the Undersigned is acting as Servicer pursuant to the Pooling and
Servicing Agreement (whether the Undersigned is named therein as mortgagee or
beneficiary or has become mortgagee by virtue of endorsement of the Mortgage
Note secured by any such Mortgage or Deed of Trust) all subject to the terms of
the related Pooling and Servicing Agreement.
This appointment shall apply to the following enumerated transactions only:
1. The modification or re-recording of a Mortgage or Deed of Trust, where said
modification or re-recording is for the purpose of correcting the Mortgage or
Deed of Trust to conform same to the original intent of the parties thereto or
to correct title errors discovered after such title insurance was issued and
said modification or re-recording, in either instance, does not adversely affect
the lien of the Mortgage or Deed of Trust as insured.
2. The subordination of the lien of a Mortgage or Deed of Trust to an easement
in favor of a public utility company or a governmental agency or authority
thereunder with powers of eminent domain; this section shall include, without
limitation, the execution of partial satisfaction/release, partial reconveyances
or the execution of requests to trustees to accomplish same.
3. The conveyance of the properties to the mortgage insurer, or the closing of
the title to the property to be acquired as real estate owned, or conveyance of
title to real estate owned.
4. The completion of loan assumption agreements.
5. The full satisfaction/release of a Mortgage or Deed of Trust or full
reconveyance upon payment and discharge of all sums secured thereby, including,
without limitation, cancellation of the related Mortgage Note.
I-1
6. The assignment of any Mortgage or Deed of Trust and the related Mortgage
Note, in connection with the repurchase of the mortgage loan secured and
evidenced thereby.
7. The full assignment of a Mortgage or Deed of Trust upon payment and discharge
of all sums secured thereby in conjunction with the refinancing thereof,
including, without limitation, the assignment of the related Mortgage Note.
8. With respect to a Mortgage or Deed of Trust, the foreclosure, the taking of a
deed in lieu of foreclosure, or the completion of judicial or non-judicial
foreclosure or termination, cancellation or rescission of any such foreclosure,
including, without limitation, any and all of the following acts:
a) the substitution of trustee(s) serving under a Deed of Trust, in accordance
with state law and the Deed of Trust;
b) the preparation and issuance of statements of breach or non-performance;
c) the preparation and filing of notices of default and/or notices of sale;
d) the cancellation/rescission of notices of default and/or notices of sale;
e) the taking of a deed in lieu of foreclosure; and
f) the preparation and execution of such other documents and performance of such
other actions as may be necessary under the terms of the Mortgage, Deed of Trust
or state law to expeditiously complete said transactions in paragraphs 8(a)
through 8(e) above.
9. The full assignment of a Mortgage or Deed of Trust upon sale of a loan
pursuant to a mortgage loan sale agreement for the sale of a loan or pool of
loans, including, without limitation, the assignment of the related Mortgage
Note.
The Undersigned gives said Attorney-in-Fact full power and authority to execute
such instruments and to do and perform all and every act and thing necessary and
proper to carry into effect the power or powers granted by or under this Limited
Power of Attorney, each subject to the terms and conditions set forth in the
related Pooling and Servicing Agreement and in accordance with the standard of
care applicable to servicers in the Pooling and Servicing Agreement as fully as
the undersigned might or could do, and hereby does ratify and confirm to all
that said Attorney-in-Fact shall lawfully do or cause to be done by authority
hereof. This Limited Power of Attorney shall be effective as of [SERVICING
TRANSFER EFFECTIVE DATE].
Nothing contained herein shall (i) limit in any manner any indemnification
provided by Xxxxxx to the Owner under the Pooling and Servicing Agreement, or
(ii) be construed to xxxxx Xxxxxx the power to initiate or defend any suit,
litigation or proceeding in the name of the Undersigned except as specifically
provided for herein or under the Pooling and Servicing Agreement.
The Owner hereby agrees to indemnify and hold the Undersigned and its directors,
officers, employees and agents harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever incurred by
reason or result of or in connection with the exercise by Xxxxxx of the powers
granted to it hereunder. The foregoing indemnity shall survive the termination
of this Limited Power of Attorney and the Pooling and Servicing Agreement or the
earlier resignation or removal of the Undersigned under the Pooling and
Servicing Agreement.
I-2
Any third party without actual notice of fact to the contrary may rely upon the
exercise of the power granted under this Limited Power of Attorney; and may be
satisfied that this Limited Power of Attorney shall continue in full force and
effect and has not been revoked unless an instrument of revocation has been made
in writing by the undersigned, and such third party put on notice thereof. This
Limited Power of Attorney shall be in addition to and shall not revoke or in any
way limit the authority granted by any previous power of attorney executed by
the Undersigned.
IN WITNESS WHEREOF, ____________________ pursuant to the Pooling and Servicing
Agreement, has caused its corporate seal to be hereto affixed and these presents
to be signed and acknowledged in its name and behalf by ______________________,
its duly elected and authorized _________________________ this ___ day of
_________________, 2002.
By:_____________________________________
Name: ______________________
Title: ___________________________
Acknowledged and Agreed
Xxxxxx Loan Servicing LP
By:_________________________
Name:
Title:
I-3
EXHIBIT J
FORM OF INVESTMENT LETTER [NON-RULE 144A]
[DATE]
Financial Asset Securities Corp.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Deutsche Bank National Trust Company
Re: Fremont Home Loan Trust 2002-2,
Asset-Backed Certificates Series 2002-2
---------------------------------------
Ladies and Gentlemen:
In connection with our acquisition of the above-captioned Certificates, we
certify that (a) we understand that the Certificates are not being registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws and are being transferred to us in a transaction that is exempt
from the registration requirements of the Act and any such laws, (b) we are an
"accredited investor," as defined in Regulation D under the Act, and have such
knowledge and experience in financial and business matters that we are capable
of evaluating the merits and risks of investments in the Certificates, (c) we
have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (d) we are not an employee benefit plan that is
subject to the Employee Retirement Income Security Act of 1974, as amended, or a
plan 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, (e) we are acquiring the
Certificates for investment for our own account and not with a view to any
distribution of such Certificates (but without prejudice to our right at all
times to sell or otherwise dispose of the Certificates in accordance with clause
(g) below), (f) we have not offered or sold any Certificates to, or solicited
offers to buy any Certificates from, any person, or otherwise approached or
negotiated with any person with respect thereto, or taken any other action which
would result in a violation of Section 5 of the Act, and (g) we will not sell,
transfer or otherwise dispose of any Certificates unless (1) such sale, transfer
or other disposition is made pursuant to an effective registration statement
under the Act or is exempt from such registration requirements, and if
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,
[NAME OF TRANSFEREE]
By:_________________________________
Authorized Officer
J-1
FORM OF RULE 144A INVESTMENT LETTER
[DATE]
Financial Asset Securities Corp.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Deutsche Bank National Trust Company
0000 Xxxx Xx. Xxxxxx Xxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000-0000
Re: Fremont Home Loan Trust 2002-2,
Asset-Backed Certificates Series 2002-2
---------------------------------------
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 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, (c) we are not an employee benefit plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended, or a plan 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, (d) we have not, nor has anyone acting
on our behalf offered, transferred, pledged, sold or otherwise disposed of the
Certificates, any interest in the Certificates or any other similar security to,
or solicited any offer to buy or accept a transfer, pledge or other disposition
of the Certificates, any interest in the Certificates or any other similar
security from, or otherwise approached or negotiated with respect to the
Certificates, any interest in the Certificates or any other similar security
with, any person in any manner, or made any general solicitation by means of
general advertising or in any other manner, or taken any other action, that
would constitute a distribution of the Certificates under the Securities Act or
that would render the disposition of the Certificates a violation of Section 5
of the Securities Act or require registration pursuant thereto, nor will act,
nor has authorized or will authorize any person to act, in such manner with
respect to the Certificates, (e) we are a "qualified institutional buyer" as
that term is defined in Rule 144A under the Securities Act and have completed
either of the forms of certification to that effect attached hereto as Annex 1
or Annex 2. We are aware that the sale to us is being made in reliance on Rule
144A. We are acquiring the Certificates for our own account or for resale
pursuant to Rule 144A and further, understand that such Certificates may be
resold, pledged or transferred only (i) to a person reasonably believed to be a
qualified institutional buyer that purchases for its own account or for the
account of a qualified institutional buyer to whom notice is given that the
resale, pledge or transfer is being made in reliance on Rule 144A, or (ii)
pursuant to another exemption from registration under the Securities Act.
Very truly yours,
[NAME OF TRANSFEREE]
By: ________________________________
Authorized Officer
J-2
ANNEX 1 TO EXHIBIT J
--------------------
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 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.
J-3
_______ 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.
J-4
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:__________________________________
J-5
ANNEX 2 TO EXHIBIT J
--------------------
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 Buyers 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) securities owned but
subject to a repurchase agreement and (vii) currency, interest rate and
commodity swaps.
J-6
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:____________________________________
J-7
EXHIBIT K
AFFIDAVIT OF TRANSFER OF R CERTIFICATES
PURSUANT TO SECTION 5.02(d)
FREMONT HOME LOAN TRUST 2002-2
ASSET-BACKED CERTIFICATES, SERIES 2002-2
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 Class R[-X] Certificates (the "Certificate") issued
pursuant to the Pooling and Servicing Agreement, (the "Agreement"), relating to
the above-referenced Certificates, among Financial Asset Securities Corp., as
Depositor, Xxxxxx Loan Servicing LP, as Servicer (the "Servicer") and Deutsche
Bank National Trust Company, as Trustee (the "Trustee"). Capitalized terms used,
but not defined herein 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) to
a Person that is not a Permitted Transferee, on the agent; and (iii) the Person
otherwise liable for the tax shall be relieved of liability for the tax if the
subsequent Transferee furnished to such Person an affidavit that such subsequent
Transferee is a Permitted Transferee and, at the time of Transfer, such Person
does not have actual knowledge that the affidavit is false.
4. The Transferee has been advised of, and understands that a tax will be
imposed on a "pass-through entity" holding the Certificate if at any time during
the taxable year of the pass- through entity a Person that is not a Permitted
Transferee is the record holder of an interest in such entity. The Transferee
understands that such tax will not be imposed for any period with respect to
which the record holder furnishes to the pass-through entity an affidavit that
such record holder is a Permitted Transferee and the pass-through entity does
not have actual knowledge that such affidavit is false. (For this purpose, a
"pass-through entity" includes a regulated investment company, a real estate
investment trust or common trust fund, a partnership, trust or estate, and
certain cooperatives and, except as may be provided in Treasury Regulations,
persons holding interests in pass-through entities as a nominee for another
Person).
K-1
5. The Transferee has reviewed the provisions of Section 5.02(d) of the
Agreement 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(d) 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 K 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 U.S. Person as defined in Code Section 7701-(a)(30).
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 not an employee benefit plan that is subject to ERISA
or a plan that is subject to Section 4975 of the Code, nor is it acting on
behalf of such a plan.
K-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 __________, ___.
[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 _______, ___.
________________________________________________
NOTARY PUBLIC
My Commission expires the ____ day of ____, ___.
K-3
EXHIBIT L
FORM OF TRANSFEROR CERTIFICATE
[DATE]
Financial Asset Securities Corp.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Re: Fremont Home Loan Trust 2002-2,
Asset-Backed Certificates Series 2002-2
---------------------------------------
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, (c) to
the extent we are disposing of a Class [ ] Certificate, we have no knowledge the
Transferee is not a Permitted Transferee and (d) no purpose of the proposed
disposition of a Class [ ] Certificate is to impede the assessment or collection
of tax.
Very truly yours,
TRANSFEROR
By: ____________________________________
Name:
Title:
L-1
EXHIBIT M
FORM OF CERTIFICATION WITH RESPECT TO ERISA AND THE CODE
_____________, 20__
Financial Asset Securities Corp. Deutsche Bank National Trust Company
000 Xxxxxxxxx Xxxx 0000 Xxxx Xx. Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000 Xxxxx Xxx, Xxxxxxxxxx 00000-0000
Re: Fremont Home Loan Trust 2002-2,
Asset-Backed Certificates Series 2002-2
Dear Sirs:
_______________________ (the "Transferee") intends to acquire from
_____________________ (the "Transferor") $____________ Initial Certificate
Principal Balance Fremont Home Loan Trust 2002-2, Asset-Backed Certificates
Series 2002-2, Class [C][P][R[-X]] (the "Certificates"), issued pursuant to a
Pooling and Servicing Agreement (the "Pooling and Servicing Agreement") dated as
of December 1, 2002 among Financial Asset Securities Corp. as depositor (the
"Depositor"), Xxxxxx Loan Servicing LP as servicer (the "Servicer") and Deutsche
Bank National Trust Company as trustee (the "Trustee"). Capitalized terms used
herein and not otherwise defined shall have the meanings assigned thereto in the
Pooling and Servicing Agreement. The Transferee hereby certifies, represents and
warrants to, and covenants with the Depositor, the Trustee and the Servicer the
following:
The Certificates (i) are not being acquired by, and will not be
transferred to, any employee benefit plan within the meaning of section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
other retirement arrangement, including individual retirement accounts and
annuities, Xxxxx plans and bank collective investment funds and insurance
company general or separate accounts in which such plans, accounts or
arrangements are invested, that is subject to Section 406 of ERISA or Section
4975 of the Internal Revenue Code of 1986 (the "Code") (any of the foregoing, a
"Plan"), (ii) are not being acquired with "plan assets" of a Plan within the
meaning of the Department of Labor ("DOL") regulation, 29 C.F.R.ss.2510.3-101,
and (iii) will not be transferred to any entity that is deemed to be investing
in plan assets within the meaning of the DOL regulation at 29 X.X.X.xx.
2510.3-101.
Very truly yours,
[Transferee]
By:_____________________________
Name:
Title:
M-1
EXHIBIT N-1
FORM CERTIFICATION TO BE PROVIDED BY THE DEPOSITOR WITH FORM 10-K
Re: Fremont Home Loan Trust, Series 2002-2
Asset Backed Certificates, Series 2002-2
I, [identify the certifying individual], certify that:
l. I have reviewed this annual report on Form 10-K, and all reports on
Form 8-K containing Distribution Date reports filed in respect of periods
included in the year covered by this annual report, of Financial Asset
Securities Corp. (the "Registrant");
2. Based on my knowledge, the information in these reports, taken as a
whole, does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading as of the
last day of the period covered by this annual report;
3. Based on my knowledge, the servicing information required to be
provided to the Trustee by the Servicer under the Pooling and Servicing
Agreement is included in these reports;
4. I am responsible for reviewing the activities performed by the
Servicer under the Pooling and Servicing Agreement and based upon the review
required under the Pooling and Servicing Agreement, and except as disclosed in
the report, the Servicer has fulfilled its obligations under the Pooling and
Servicing Agreement; and
5. I have disclosed to the Registrant's certified public accountants
all significant deficiencies relating to the Servicer's compliance with the
minimum servicing standards in accordance with a review conducted in compliance
with the Uniform Single Attestation Program for Mortgage Bankers or similar
standard as set forth in the Pooling and Servicing Agreement.
Capitalized terms used but not defined herein have the meanings
ascribed to them in the Pooling and Servicing Agreement, dated December 1, 2002
(the "Pooling and Servicing Agreement"), among the Registrant as Depositor,
Xxxxxx Loan Servicing L.P. as servicer and Deutsche Bank National Trust Company
as trustee.
FINANCIAL ASSET SECURITIES CORP.
By:____________________________________
Name:
Title:
Date:
N-1
EXHIBIT N-2
FORM CERTIFICATION TO BE
PROVIDED TO DEPOSITOR BY THE TRUSTEE
Re: Fremont Home Loan Trust 2002-2 (the "Trust")
Asset-Backed Certificates, Series 2002-2
I, [identify the certifying individual], a [title] of Deutsche Bank
National Trust Company, as Trustee of the Trust, hereby certify to Financial
Asset Securities Corp. (the "Depositor"), and its officers, directors and
affiliates, and with the knowledge and intent that they will rely upon this
certification, that:
1. I have reviewed the annual report on Form 10-K for the fiscal year
[___], and all reports on Form 8-K containing distribution 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 my knowledge, the information in these distribution
reports 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 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 my 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 December 1, 2002
(the "Pooling and Servicing Agreement"), among the Depositor as depositor,
Xxxxxx Loan Servicing LP as servicer and Deutsche Bank National Trust Company as
trustee.
DEUTSCHE BANK NATIONAL TRUST
COMPANY, as Trustee
By:__________________________________
Name:
Title:
Date:
N-2-1
EXHIBIT N-3
FORM CERTIFICATION TO BE
PROVIDED TO DEPOSITOR BY THE SERVICER
Re: Fremont Home Loan Trust, Series 2002-2
Asset Backed Certificates, Series 2002-2
I, [identify the certifying individual], certify to Financial Asset
Securities Corp. (the "Depositor"), and its officers, directors and affiliates,
and with the knowledge and intent that they will rely upon this certification,
that:
1. I have reviewed the information provided to the Trustee by the
Servicer pursuant to Sections [____, _____, _____, and _____] of the Pooling and
Servicing Agreement and information correctly derived by the Trustee from such
information and included in the annual report on Form 10-K for the fiscal year
[___] and on all reports on Form 8-K filed in respect of periods included in the
year covered by that annual report, of the Depositor relating to the Trust Fund
(the "Servicing Information");
2. Based on my knowledge, the Servicing 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 that annual report;
3. Based on my knowledge, the Servicing Information is correct;
4. I am responsible for reviewing the activities performed by the
Servicer under the Pooling and Servicing Agreement and based upon the review
required under the Pooling and Servicing Agreement, and except as disclosed to
the Depositor and the Trustee, the Servicer has fulfilled its obligations under
the Pooling and Servicing Agreement; and
5. I have disclosed to the Servicer's certified public accountants and
the Depositor all significant deficiencies relating to the Servicer's compliance
with the minimum servicing standards in accordance with a review conducted in
compliance with the Uniform Single Attestation Program for Mortgage Bankers or
similar standard as set forth in the Pooling and Servicing Agreement.
N-3-1
Capitalized terms used but not defined herein have the meanings
ascribed to them in the Pooling and Servicing Agreement, dated December 1, 2002
(the "Pooling and Servicing Agreement"), among the Depositor, Xxxxxx Loan
Servicing L.P. as servicer and Deutsche Bank National Trust Company as trustee.
XXXXXX LOAN SERVICING L.P.
By:____________________________
Name:
Title:
Date:
N-3-2
EXHIBIT O
FORM OF CAP CONTRACTS
Available Upon Request
SCHEDULE I
PREPAYMENT CHARGE SCHEDULE
Available Upon Request
SCHEDULE II
PMI MORTGAGE LOANS
Available Upon Request
