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FINANCIAL ASSET SECURITIES CORP.,
Depositor
CENTEX HOME EQUITY COMPANY, LLC
Servicer
and
JPMORGAN CHASE BANK,
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of July 1, 2004
---------------------------
CHEC Loan Trust 2004-1
Asset-Backed Certificates, Series 2004-1
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms...................................................................................6
SECTION 1.02. Accounting.....................................................................................53
SECTION 1.03. Allocation of Certain Interest Shortfalls......................................................53
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. Conveyance of Mortgage Loans...................................................................54
SECTION 2.02. Acceptance by Trustee..........................................................................57
SECTION 2.03. Repurchase or Substitution of Mortgage Loans by the Originator or the
Seller.........................................................................................58
SECTION 2.04. Intentionally Omitted..........................................................................61
SECTION 2.05. Representations, Warranties and Covenants of the Servicer......................................61
SECTION 2.06. Representations and Warranties of the Depositor................................................63
SECTION 2.07. Issuance of Certificates.......................................................................65
SECTION 2.08. [Reserved].....................................................................................65
SECTION 2.09. Conveyance of REMIC Regular Interests and Acceptance of REMIC 1,
REMIC 2, REMIC 3 and REMIC 4 by the Trustee; Issuance of
Certificates ..................................................................................65
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE MORTGAGE LOANS
SECTION 3.01. Servicer to Act as Servicer....................................................................67
SECTION 3.02. Sub-Servicing Agreements Between Servicer and Sub-Servicers....................................69
SECTION 3.03. Successor Sub-Servicers........................................................................70
SECTION 3.04. Liability of the Servicer......................................................................70
SECTION 3.05. No Contractual Relationship Between Sub-Servicers and the Trustee or
Certificateholders.............................................................................70
SECTION 3.06. Assumption or Termination of Sub-Servicing Agreements by Trustee...............................71
i
SECTION 3.07. Collection of Certain Mortgage Loan Payments...................................................71
SECTION 3.08. Sub-Servicing Accounts.........................................................................72
SECTION 3.09. Collection of Taxes, Assessments and Similar Items; Escrow Accounts............................72
SECTION 3.10. Collection Account and Distribution Account....................................................73
SECTION 3.11. Withdrawals from the Collection Account and Distribution
Account...............................................................................73
SECTION 3.12. Investment of Funds in the Collection Account and the Distribution
Account........................................................................................77
SECTION 3.13. [Reserved].....................................................................................78
SECTION 3.14. Maintenance of Hazard Insurance and Errors and Omissions and Fidelity
Coverage.......................................................................................78
SECTION 3.15. Enforcement of Due-On-Sale Clauses; Assumption Agreements......................................80
SECTION 3.16. Realization Upon Defaulted Mortgage Loans......................................................81
SECTION 3.17. Trustee to Cooperate; Release of Mortgage Files................................................83
SECTION 3.18. Servicing Compensation.........................................................................84
SECTION 3.19. Reports to the Trustee; Collection Account Statements..........................................85
SECTION 3.20. Statement as to Compliance.....................................................................85
SECTION 3.21. Independent Public Accountants' Servicing Report...............................................85
SECTION 3.22. Access to Certain Documentation; Filing of Reports by Trustee..................................86
SECTION 3.23. Title, Management and Disposition of REO Property..............................................88
SECTION 3.24. Obligations of the Servicer in Respect of Prepayment Interest Shortfalls.......................91
SECTION 3.25. [Reserved].....................................................................................91
SECTION 3.26. Obligations of the Servicer in Respect of Mortgage Rates and Monthly
Payments.......................................................................................91
SECTION 3.27. [Reserved].....................................................................................91
SECTION 3.28. [Reserved].....................................................................................91
SECTION 3.29. Advance Facility...............................................................................91
ARTICLE IV
FLOW OF FUNDS
SECTION 4.01. Distributions..................................................................................94
SECTION 4.02. [Reserved]....................................................................................100
SECTION 4.03. Statements....................................................................................101
SECTION 4.04. Remittance Reports; Advances..................................................................103
SECTION 4.05. [Reserved]....................................................................................105
SECTION 4.06. Net WAC Rate Carryover Reserve Account........................................................105
SECTION 4.07. Distributions on the REMIC 1 Regular Interests................................................106
SECTION 4.08. Allocation of Realized Losses.................................................................107
ii
ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates..............................................................................110
SECTION 5.02. Registration of Transfer and Exchange of Certificates.........................................110
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.............................................115
SECTION 5.04. Persons Deemed Owners.........................................................................116
SECTION 5.05. Appointment of Paying Agent...................................................................116
ARTICLE VI
THE SERVICER AND THE DEPOSITOR
SECTION 6.01. Liability of the Servicer and the Depositor...................................................117
SECTION 6.02. Merger or Consolidation of, or Assumption of the Obligations of, the
Servicer or the Depositor.....................................................................117
SECTION 6.03. Limitation on Liability of the Servicer and Others............................................117
SECTION 6.04. Servicer Not to Resign........................................................................118
SECTION 6.05. Delegation of Duties..........................................................................118
SECTION 6.06. [Reserved]....................................................................................118
SECTION 6.07. Inspection....................................................................................119
ARTICLE VII
DEFAULT
SECTION 7.01. Servicer Events of Termination................................................................120
SECTION 7.02. Trustee to Act; Appointment of Successor......................................................122
SECTION 7.03. Waiver of Defaults............................................................................123
SECTION 7.04. Notification to Certificateholders............................................................123
SECTION 7.05. Survivability of Servicer Liabilities.........................................................123
ARTICLE VIII
THE TRUSTEE
SECTION 8.01. Duties of Trustee.............................................................................124
SECTION 8.02. Certain Matters Affecting the Trustee.........................................................125
SECTION 8.03. Trustee Not Liable for Certificates or Mortgage Loans.........................................126
SECTION 8.04. Trustee May Own Certificates..................................................................127
SECTION 8.05. Trustee Fee and Expenses......................................................................127
SECTION 8.06. Eligibility Requirements for Trustee..........................................................128
iii
SECTION 8.07. Resignation or Removal of Trustee.............................................................128
SECTION 8.08. Successor Trustee.............................................................................129
SECTION 8.09. Merger or Consolidation of Trustee............................................................129
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee.................................................130
SECTION 8.11. Limitation of Liability.......................................................................131
SECTION 8.12. Trustee May Enforce Claims Without Possession of Certificates.................................131
SECTION 8.13. Suits for Enforcement.........................................................................132
SECTION 8.14. Waiver of Bond Requirement....................................................................132
SECTION 8.15. Waiver of Inventory, Accounting and Appraisal Requirement.....................................132
ARTICLE IX
REMIC ADMINISTRATION
SECTION 9.01. REMIC Administration..........................................................................133
SECTION 9.02. Prohibited Transactions and Activities........................................................135
SECTION 9.03. Indemnification with Respect to Certain Taxes and Loss of REMIC Status........................135
ARTICLE X
TERMINATION
SECTION 10.01. Termination...................................................................................137
SECTION 10.02. Additional Termination Requirements...........................................................138
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01. Amendment.....................................................................................140
SECTION 11.02. Recordation of Agreement; Counterparts........................................................141
SECTION 11.03. Limitation on Rights of Certificateholders....................................................141
SECTION 11.04. Governing Law; Jurisdiction...................................................................142
SECTION 11.05. Notices.......................................................................................142
SECTION 11.06. Severability of Provisions....................................................................143
SECTION 11.07. Article and Section References................................................................143
SECTION 11.08. Notice to the Rating Agencies.................................................................143
SECTION 11.09. Further Assurances............................................................................144
SECTION 11.10. Benefits of Agreement.........................................................................144
SECTION 11.11 Acts of Certificateholders....................................................................144
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Exhibits:
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Exhibit A-1 Form of Class A-1 Certificates
Exhibit A-2 Form of Class A-2 Certificates
Exhibit A-3 Form of Class A-3 Certificates
Exhibit A-4 Form of Class M-1 Certificates
Exhibit A-5 Form of Class M-2 Certificates
Exhibit A-6 Form of Class M-3 Certificates
Exhibit A-7 Form of Class M-4 Certificates
Exhibit A-8 Form of Class M-5 Certificates
Exhibit A-9 Form of Class M-6 Certificates
Exhibit A-10 Form of Class M-7 Certificates
Exhibit A-11 Form of Class M-8 Certificates
Exhibit A-12 Form of Class M-9 Certificates
Exhibit A-13 Form of Class B-1 Certificates
Exhibit A-14 Form of Class B-2 Certificates
Exhibit A-15 Form of Class C Certificates
Exhibit A-16 Form of Class P Certificates
Exhibit A-17 Form of Class R Certificates
Exhibit A-18 Form of Class R-X Certificates
Exhibit A-19 Form of Class R-[1][2][3][4] Interest Certificate
Exhibit B [Reserved]
Exhibit C Form of Assignment 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 Trustee's Receipt of Mortgage Notes
Exhibit G Form of Compliance Certificate
Exhibit H Form of Lost Note Affidavit
Exhibit I Form of 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 Certification to Be Provided by the Depositor with
Form 10-K
Exhibit N-2 Form of Certification to Be Provided to Depositor by the Trustee
Exhibit N-3 Form of Certification to Be Provided to Depositor by the Servicer
Exhibit O Form of Cap Contract
Schedule I Prepayment Charge Schedule
v
This Pooling and Servicing Agreement is dated as of July 1, 2004 (the
"Agreement"), among FINANCIAL ASSET SECURITIES CORP., as depositor (the
"Depositor"), CENTEX HOME EQUITY COMPANY, LLC, as servicer (the "Servicer") and
JPMORGAN CHASE BANK, 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 eighteen classes of
certificates, designated as (i) the Class A-1 Certificates, (ii) the Class A-2
Certificates, (iii) the Class A-3 Certificates, (iv) the Class M-1 Certificates,
(v) the Class M-2 Certificates, (vi) the Class M-3 Certificates, (vii) the Class
M-4 Certificates, (viii) the Class M-5 Certificates, (ix) the Class M-6
Certificates, (x) the Class M-7 Certificates, (xi) the Class M-8 Certificates,
(xii) the Class M-9 Certificates, (xiii) the Class B-1 Certificates, (xiv) the
Class B-2 Certificates, (xv) the Class C Certificates, (xvi) the Class P
Certificates, (xvii) the Class R Certificates and (xviii) 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 Mortgage Loans, and certain other
related assets subject to this Agreement (exclusive of the Net WAC Rate
Carryover Reserve Account, any Servicer Prepayment Charge Payment Amounts and
the Cap Contract) 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 2 Initial Uncertificated Assumed Final
Designation Pass Through Rate Principal Balance Maturity Date(1)
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LTAA Variable(2) $303,207,787.88 July 25, 2034
LTA1 Variable(2) $ 800,000.00 July 25, 2034
LTA2 Variable(2) $ 1,400,000.00 July 25, 2034
LTA3 Variable(2) $ 321,570.00 July 25, 2034
LTM1 Variable(2) $ 97,460.00 July 25, 2034
LTM2 Variable(2) $ 88,180.00 July 25, 2034
LTM3 Variable(2) $ 55,690.00 July 25, 2034
LTM4 Variable(2) $ 47,960.00 July 25, 2034
LTM5 Variable(2) $ 44,860.00 July 25, 2034
LTM6 Variable(2) $ 44,860.00 July 25, 2034
LTM7 Variable(2) $ 37,130.00 July 25, 2034
LTM8 Variable(2) $ 32,490.00 July 25, 2034
LTM9 Variable(2) $ 30,940.00 July 25, 2034
LTB1 Variable(2) $ 30,940.00 July 25, 2034
LTB2 Variable(2) $ 30,940.00 July 25, 2034
LTZZ Variable(2) $ 3,124,894.04 July 25, 2034
LTP Variable(2) $ 100.00 July 25, 2034
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(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date in the month 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.
2
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, the Original Class Certificate Principal Balance and solely
for purposes of satisfying Treasury regulation Section 1.860G-1(a)(4)(iii), the
"latest possible maturity date" for each Class of Certificates that represents
one or more of the "regular interests" in REMIC 2 created hereunder:
Original Class Certificate Assumed Final
Class Designation Principal Balance Pass Through Rate Maturity Date(1)
--------------------------------------------------------------------------------------------------
Class A-1................. $ 80,000,000.00 Variable(2) July 25, 2034
Class A-2................. $140,000,000.00 Variable(2) July 25, 2034
Class A-3................. $ 32,157,000.00 Variable(2) July 25, 2034
Class M-1................. $ 9,746,000.00 Variable(2) July 25, 2034
Class M-2................. $ 8,818,000.00 Variable(2) July 25, 2034
Class M-3................. $ 5,569,000.00 Variable(2) July 25, 2034
Class M-4................. $ 4,796,000.00 Variable(2) July 25, 2034
Class M-5................. $ 4,486,000.00 Variable(2) July 25, 2034
Class M-6................. $ 4,486,000.00 Variable(2) July 25, 2034
Class M-7................. $ 3,713,000.00 Variable(2) July 25, 2034
Class M-8................. $ 3,249,000.00 Variable(2) July 25, 2034
Class M-9................. $ 3,094,000.00 Variable(2) July 25, 2034
Class B-1................. $ 3,094,000.00 Variable(2) July 25, 2034
Class B-2................. $ 3,094,000.00 Variable(2) July 25, 2034
Class C Interest.......... $ 3,093,701.92(3) Variable(2) July 25, 2034
Class P Interest.......... $ 100.00 N/A(4) July 25, 2034
----------------
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date in the month 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 Class of
Certificates that represents one or more of the "regular interests" in
REMIC 2.
(2) Calculated in accordance with the definition of "Pass-Through Rate" herein.
(3) The Class C Interest will accrue interest at their variable Pass-Through
Rate on the Notional Amount of the Class C Interest outstanding from time
to time which shall equal the aggregate of the Uncertificated Principal
Balances of the REMIC 1 Regular Interests (other than REMIC 1 Regular
Interest LTP). The Class C Interest will not accrue interest on its
Certificate Principal Balance.
(4) The Class P Interest will not accrue interest.
3
REMIC 3
As provided herein, the Trustee shall make an election to treat the
segregated pool of assets consisting of the Class C 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
indicated Class of Certificates that represents a "regular interest" in REMIC 3
created hereunder:
Initial Aggregate
Certificate Principal Latest Possible
Class Designation Pass-Through Rate Balance Maturity Date(1)
--------------------------------------------------------------------------------------------
Class C Certificates Variable(2) $3,093,701.92 July 25, 2034
---------------
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date immediately following the maturity date
for the Mortgage Loans with the latest maturity date has been designated as
the "latest possible maturity date" for the Class C Certificates.
(2) The Class C Certificates will receive 100% of amounts received in respect
of the Class C Interest.
4
REMIC 4
As provided herein, the Trustee shall make an election to treat the
segregated pool of assets consisting of the Class P 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
indicated Class of Certificates that represents a "regular interest" in REMIC 4
created hereunder:
Initial Aggregate
Certificate Principal Latest Possible
Class Designation Pass-Through Rate Balance Maturity Date(1)
-----------------------------------------------------------------------------------------------
Class P Certificates Variable(2) $100.00 July 25, 2034
---------------
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date immediately following the maturity date
for the Mortgage Loans with the latest maturity date has been designated as
the "latest possible maturity date" for the Class P Certificates.
(2) The Class P Certificates will receive 100% of amounts received in respect
of the Class P Interest.
5
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 Floating Rate 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 Floating Rate 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 such Distribution Date. With respect to the
Class C Certificates and each Distribution Date, the calendar month prior to the
month of such Distribution Date.
"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 and (ii) the Servicing Fee
Rate.
"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 and (ii) the Servicing Fee
Rate.
"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.
6
"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 Trustee": As defined in Section 3.29 hereof.
"Advancing 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 or the Class B Certificates, the sum of
(i) any Realized Losses allocated to such Class of Certificates 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
and reduced by the amount of any Subsequent Recoveries added to the Certificate
Principal Balance of such Class of Certificates.
"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.
"Assignment Agreement": The Assignment and Recognition Agreement, dated
July 29, 2004, among the Seller, the Originator and the Depositor, pursuant to
which certain of the Seller's rights under the Master Agreement were assigned to
the Depositor, substantially in the form attached hereto as Exhibit C.
"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,
Subsequent Recoveries, proceeds from repurchases of and substitutions for such
Mortgage Loans and other unscheduled recoveries of principal and interest in
7
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 as successor Servicer 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 and
(e) any indemnification payments or expense reimbursements made by the Trust
Fund pursuant to Section 6.03 or Section 8.05.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11 of the
United States Code), as amended.
"Base Rate": For any Distribution Date and the Floating Rate Certificates,
the sum of (i) LIBOR plus (ii) the related Certificate Margin.
"Basic Principal Distribution Amount": With respect to any Distribution
Date, the excess of (i) the Principal Remittance Amount for such Distribution
Date over (ii) the Overcollateralization Release Amount, if any, for such
Distribution Date.
"Book-Entry Certificates": Any of the Certificates that shall be
registered in the name of the Depository or its nominee, the ownership of which
is reflected on the books of the Depository or on the books of a Person
maintaining an account with the Depository (directly, as a "Depository
Participant", or indirectly, as an indirect participant in accordance with the
rules of the Depository and as described in Section 5.02 hereof). On the Closing
Date, the Floating Rate 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 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 Amount": The Cap Amount for the Floating Rate Certificates is equal
to (i) the aggregate amount received by the Trust from the Cap Contract
multiplied by (ii) a fraction equal to (a) the Certificate Principal Balance of
such Class immediately prior to the applicable Distribution Date divided by (b)
the aggregate Certificate Principal Balance of the Floating Rate Certificates
immediately prior to the applicable Distribution Date.
8
"Cap Contract": The Cap Contract between Greenwich Capital Derivatives,
Inc. and the counterparty thereunder, assigned to the Trustee pursuant to
Section 2.01, a form of which is 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, 0.120% per
annum and (B) after the Optional Termination Date, 0.240% per annum. With
respect to the Class A-2 Certificates on each Distribution Date (A) on or prior
to the Optional Termination Date, 0.300% per annum and (B) after the Optional
Termination Date, 0.600% per annum. With respect to the Class A-3 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 M-1 Certificates on each Distribution Date (A) on or
prior to the Optional Termination Date, 0.600% per annum and (B) after the
Optional Termination Date, 0.900% per annum. With respect to the Class M-2
Certificates on each Distribution Date (A) on or prior to the Optional
Termination Date, 0.650% per annum and (B) after the Optional Termination Date,
0.975% per annum. With respect to the Class M-3 Certificates on each
Distribution Date (A) on or prior to the Optional Termination Date, 0.700% per
annum and (B) after the Optional Termination Date, 1.050% per annum. With
respect to the Class M-4 Certificates on each Distribution Date (A) on or prior
to the Optional Termination Date, 1.100% per annum and (B) after the Optional
Termination Date, 1.650% per annum. With respect to the Class M-5 Certificates
on each Distribution Date (A) on or prior to the Optional Termination Date,
1.200% per annum and (B) after the Optional Termination Date, 1.800% per annum.
With respect to the Class M-6 Certificates on each Distribution Date (A) on or
prior to the Optional Termination Date, 1.400% per annum and (B) after the
Optional Termination Date, 2.100% per annum. With respect to the Class M-7
Certificates on each Distribution Date (A) on or prior to the Optional
Termination Date, 1.850% per annum and (B) after the Optional Termination Date,
2.775% per annum. With respect to the Class M-8 Certificates on each
Distribution Date (A) on or prior to the Optional Termination Date, 2.000% per
annum and (B) after the Optional Termination Date, 3.000% per annum. With
respect to the Class M-9 Certificates on each Distribution Date (A) on or prior
to the Optional Termination Date, 3.500% per annum and (B) after the Optional
Termination
9
Date, 5.250% per annum. With respect to the Class B-1 Certificates on each
Distribution Date (A) on or prior to the Optional Termination Date, 3.500% per
annum and (B) after the Optional Termination Date, 5.250% per annum. With
respect to the Class B-2 Certificates on each Distribution Date (A) on or prior
to the Optional Termination Date, 3.500% per annum and (B) after the Optional
Termination Date, 5.250% per annum.
"Certificate Owner": With respect to each Book-Entry Certificate, any
beneficial owner thereof.
"Certificate Principal Balance": With respect to any Class of Regular
Certificates (other than the Class C Certificates) immediately prior to any
Distribution Date plus any Subsequent Recoveries added to the Certificate
Principal Balance of such Certificate pursuant to Section 4.01, will be equal to
the Initial Certificate Principal Balance thereof reduced by (A) the sum of all
amounts actually distributed in respect of principal of such Class and (B) in
the case of a Mezzanine Certificate or Class B 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 Balance of
the Floating Rate 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.
"Certification": As defined in Section 3.22(b)(ii).
"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-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-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-3 Certificate": Any one of the Class A-3 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 A Certificates": Any Class A-1 Certificate, Class A-2 Certificate
or Class A-3 Certificate.
10
"Class B-1 Certificate": Any one of the Class B-1 Certificates executed by
the Trustee, and authenticated and delivered by the Certificate Registrar,
substantially in the form annexed hereto as Exhibit A-13, representing the right
to distributions as set forth herein and therein and evidencing a regular
interest in REMIC 2.
"Class B-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 distribution of the Senior Principal Distribution
Amount on such Distribution Date), (ii) the Certificate Principal Balance of the
Class M-1 Certificates (after taking into account the distribution of the Class
M-1 Principal Distribution Amount on such Distribution Date), (iii) the
Certificate Principal Balance of the Class M-2 Certificates (after taking into
account the distribution of the Class M-2 Principal Distribution Amount on such
Distribution Date), (iv) the Certificate Principal Balance of the Class M-3
Certificates (after taking into account the distribution of the Class M-3
Principal Distribution Amount on such Distribution Date), (v) the Certificate
Principal Balance of the Class M-4 Certificates (after taking into account the
distribution of the Class M-4 Principal Distribution Amount on such Distribution
Date), (vi) the Certificate Principal Balance of the Class M-5 Certificates
(after taking into account the distribution of the Class M-5 Principal
Distribution Amount on such Distribution Date), (vii) the Certificate Principal
Balance of the Class M-6 Certificates (after taking into account the
distribution of the Class M-6 Principal Distribution Amount on such Distribution
Date), (viii) the Certificate Principal Balance of the Class M-7 Certificates
(after taking into account the distribution of the Class M-7 Principal
Distribution Amount on such Distribution Date), (ix) the Certificate Principal
Balance of the Class M-8 Certificates (after taking into account the
distribution of the Class M-8 Principal Distribution Amount on such Distribution
Date), (x) the Certificate Principal Balance of the Class M-9 Certificates
(after taking into account the distribution of the Class M-9 Principal
Distribution Amount on such Distribution Date) and (xi) the Certificate
Principal Balance of the Class B-1 Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) 96.00% 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 Overcollateralization Floor.
"Class B-2 Certificate": Any one of the Class B-2 Certificates executed by
the Trustee, and authenticated and delivered by the Certificate Registrar,
substantially in the form annexed hereto as Exhibit A-14, representing the right
to distributions as set forth herein and therein and evidencing a regular
interest in REMIC 2.
"Class B-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 distribution of the Senior Principal Distribution
Amount on such Distribution Date), (ii) the Certificate Principal Balance of the
Class M-1 Certificates (after taking into account the distribution of the Class
M-1 Principal Distribution Amount on such Distribution Date), (iii) the
Certificate
11
Principal Balance of the Class M-2 Certificates (after taking into account the
distribution of the Class M-2 Principal Distribution Amount on such Distribution
Date), (iv) the Certificate Principal Balance of the Class M-3 Certificates
(after taking into account the distribution of the Class M-3 Principal
Distribution Amount on such Distribution Date), (v) the Certificate Principal
Balance of the Class M-4 Certificates (after taking into account the
distribution of the Class M-4 Principal Distribution Amount on such Distribution
Date), (vi) the Certificate Principal Balance of the Class M-5 Certificates
(after taking into account the distribution of the Class M-5 Principal
Distribution Amount on such Distribution Date), (vii) the Certificate Principal
Balance of the Class M-6 Certificates (after taking into account the
distribution of the Class M-6 Principal Distribution Amount on such Distribution
Date), (viii) the Certificate Principal Balance of the Class M-7 Certificates
(after taking into account the distribution of the Class M-7 Principal
Distribution Amount on such Distribution Date), (ix) the Certificate Principal
Balance of the Class M-8 Certificates (after taking into account the
distribution of the Class M-8 Principal Distribution Amount on such Distribution
Date), (x) the Certificate Principal Balance of the Class M-9 Certificates
(after taking into account the distribution of the Class M-9 Principal
Distribution Amount on such Distribution Date), (xi) the Certificate Principal
Balance of the Class B-1 Certificates (after taking into account the
distribution of the Class B-1 Principal Distribution Amount on such Distribution
Date) and (xii) the Certificate Principal Balance of the Class B-2 Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) 98.00% 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
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-15, representing the right
to distributions as set forth herein and therein and evidencing a regular
interest in REMIC 3.
"Class C Interest": An uncertificated interest in the Trust Fund held by
the Trustee on behalf of the Holders of the Class C Certificates, evidencing a
Regular Interest in REMIC 2 for purposes of the REMIC Provisions.
"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-4, 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 distribution of the Senior Principal Distribution
Amount on such Distribution Date) and (ii) the aggregate 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) 69.30% and (ii) the aggregate
Stated
12
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 Overcollateralization Floor.
"Class M-2 Certificate": Any one of the Class M-2 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.
"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 distribution of the Senior Principal Distribution
Amount on such Distribution Date), (ii) the aggregate Certificate Principal
Balance of the Class M-1 Certificates (after taking into account the
distribution of the Class M-1 Principal Distribution Amount on such Distribution
Date) and (iii) the Certificate Principal Balance of the Class M-2 Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) 75.00% 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
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 2.
"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 distribution of the Senior Principal Distribution
Amount on such Distribution Date), (ii) the aggregate Certificate Principal
Balance of the Class M-1 Certificates (after taking into account the
distribution of the Class M-1 Principal Distribution Amount on such Distribution
Date), (iii) the Certificate Principal Balance of the Class M-2 Certificates
(after taking into account the distribution 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) 78.60% and (ii)
the aggregate Stated Principal Balance of the Mortgage Loans as of the last day
of the related Due Period
13
(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 Overcollateralization Floor.
"Class M-4 Certificate": Any one of the Class M-4 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-4 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 distribution of the Senior Principal Distribution
Amount on such Distribution Date), (ii) the aggregate Certificate Principal
Balance of the Class M-1 Certificates (after taking into account the
distribution of the Class M-1 Principal Distribution Amount on such Distribution
Date), (iii) the Certificate Principal Balance of the Class M-2 Certificates
(after taking into account the distribution of the Class M-2 Principal
Distribution Amount on such Distribution Date), (iv) the Certificate Principal
Balance of the Class M-3 Certificates (after taking into account the
distribution of the Class M-3 Principal Distribution Amount on such Distribution
Date) and (v) the Certificate Principal Balance of the Class M-4 Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) 81.70% 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
Overcollateralization Floor.
"Class M-5 Certificate": Any one of the Class M-5 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.
"Class M-5 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 distribution of the Senior Principal Distribution
Amount on such Distribution Date), (ii) the aggregate Certificate Principal
Balance of the Class M-1 Certificates (after taking into account the
distribution of the Class M-1 Principal Distribution Amount on such Distribution
Date), (iii) the Certificate Principal Balance of the Class M-2 Certificates
(after taking into account the distribution of the Class M-2 Principal
Distribution Amount on such Distribution Date), (iv) the Certificate Principal
Balance of the Class M-3 Certificates (after taking into account the
distribution of the Class M-3 Principal Distribution Amount on such Distribution
Date), (v) the Certificate Principal Balance of the Class M-4 Certificates
(after taking into account the distribution of the Class M-4 Principal
Distribution Amount on such Distribution Date) and (vi) the Certificate
Principal Balance of the Class M-5 Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) 84.60% and (ii)
the aggregate Stated Principal Balance of the Mortgage Loans as of
14
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 Overcollateralization Floor.
"Class M-6 Certificate": Any one of the Class M-6 Certificates executed by
the Trustee, and authenticated and delivered by the Certificate Registrar,
substantially in the form annexed hereto as Exhibit A-9, representing the right
to distributions as set forth herein and therein and evidencing a regular
interest in REMIC 2.
"Class M-6 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 distribution of the Senior Principal Distribution
Amount on such Distribution Date), (ii) the aggregate Certificate Principal
Balance of the Class M-1 Certificates (after taking into account the
distribution of the Class M-1 Principal Distribution Amount on such Distribution
Date), (iii) the Certificate Principal Balance of the Class M-2 Certificates
(after taking into account the distribution of the Class M-2 Principal
Distribution Amount on such Distribution Date), (iv) the Certificate Principal
Balance of the Class M-3 Certificates (after taking into account the
distribution of the Class M-3 Principal Distribution Amount on such Distribution
Date), (v) the Certificate Principal Balance of the Class M-4 Certificates
(after taking into account the distribution of the Class M-4 Principal
Distribution Amount on such Distribution Date), (vi) the Certificate Principal
Balance of the Class M-5 Certificates (after taking into account the
distribution of the Class M-5 Principal Distribution Amount on such Distribution
Date) and (vii) the Certificate Principal Balance of the Class M-6 Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) 87.50% 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
Overcollateralization Floor.
"Class M-7 Certificate": Any one of the Class M-6 Certificates executed by
the Trustee, and authenticated and delivered by the Certificate Registrar,
substantially in the form annexed hereto as Exhibit A-10, representing the right
to distributions as set forth herein and therein and evidencing a regular
interest in REMIC 2.
"Class M-7 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 distribution of the Senior Principal Distribution
Amount on such Distribution Date), (ii) the aggregate Certificate Principal
Balance of the Class M-1 Certificates (after taking into account the
distribution of the Class M-1 Principal Distribution Amount on such Distribution
Date), (iii) the
15
Certificate Principal Balance of the Class M-2 Certificates (after taking into
account the distribution of the Class M-2 Principal Distribution Amount on such
Distribution Date), (iv) the Certificate Principal Balance of the Class M-3
Certificates (after taking into account the distribution of the Class M-3
Principal Distribution Amount on such Distribution Date), (v) the Certificate
Principal Balance of the Class M-4 Certificates (after taking into account the
distribution of the Class M-4 Principal Distribution Amount on such Distribution
Date), (vi) the Certificate Principal Balance of the Class M-5 Certificates
(after taking into account the distribution of the Class M-5 Principal
Distribution Amount on such Distribution Date), (vii) the Certificate Principal
Balance of the Class M-6 Certificates (after taking into account the
distribution of the Class M-6 Principal Distribution Amount on such Distribution
Date) and (viii) the Certificate Principal Balance of the Class M-7 Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) 89.90% 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
Overcollateralization Floor.
"Class M-8 Certificate": Any one of the Class M-6 Certificates executed by
the Trustee, and authenticated and delivered by the Certificate Registrar,
substantially in the form annexed hereto as Exhibit A-11, representing the right
to distributions as set forth herein and therein and evidencing a regular
interest in REMIC 2.
"Class M-8 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 distribution of the Senior Principal Distribution
Amount on such Distribution Date), (ii) the aggregate Certificate Principal
Balance of the Class M-1 Certificates (after taking into account the
distribution of the Class M-1 Principal Distribution Amount on such Distribution
Date), (iii) the Certificate Principal Balance of the Class M-2 Certificates
(after taking into account the distribution of the Class M-2 Principal
Distribution Amount on such Distribution Date), (iv) the Certificate Principal
Balance of the Class M-3 Certificates (after taking into account the
distribution of the Class M-3 Principal Distribution Amount on such Distribution
Date), (v) the Certificate Principal Balance of the Class M-4 Certificates
(after taking into account the distribution of the Class M-4 Principal
Distribution Amount on such Distribution Date), (vi) the Certificate Principal
Balance of the Class M-5 Certificates (after taking into account the
distribution of the Class M-5 Principal Distribution Amount on such Distribution
Date), (vii) the Certificate Principal Balance of the Class M-6 Certificates
(after taking into account the distribution of the Class M-6 Principal
Distribution Amount on such Distribution Date), (viii) the Certificate Principal
Balance of the Class M-7 Certificates (after taking into account the
distribution of the Class M-7 Principal Distribution Amount on such Distribution
Date) and (ix) the Certificate Principal Balance of the Class M-8 Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) 92.00% 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
16
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
Overcollateralization Floor.
"Class M-9 Certificate": Any one of the Class M-6 Certificates executed by
the Trustee, and authenticated and delivered by the Certificate Registrar,
substantially in the form annexed hereto as Exhibit A-12, representing the right
to distributions as set forth herein and therein and evidencing a regular
interest in REMIC 2.
"Class M-9 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 distribution of the Senior Principal Distribution
Amount on such Distribution Date), (ii) the aggregate Certificate Principal
Balance of the Class M-1 Certificates (after taking into account the
distribution of the Class M-1 Principal Distribution Amount on such Distribution
Date), (iii) the Certificate Principal Balance of the Class M-2 Certificates
(after taking into account the distribution of the Class M-2 Principal
Distribution Amount on such Distribution Date), (iv) the Certificate Principal
Balance of the Class M-3 Certificates (after taking into account the
distribution of the Class M-3 Principal Distribution Amount on such Distribution
Date), (v) the Certificate Principal Balance of the Class M-4 Certificates
(after taking into account the distribution of the Class M-4 Principal
Distribution Amount on such Distribution Date), (vi) the Certificate Principal
Balance of the Class M-5 Certificates (after taking into account the
distribution of the Class M-5 Principal Distribution Amount on such Distribution
Date), (vii) the Certificate Principal Balance of the Class M-6 Certificates
(after taking into account the distribution of the Class M-6 Principal
Distribution Amount on such Distribution Date), (viii) the Certificate Principal
Balance of the Class M-7 Certificates (after taking into account the
distribution of the Class M-7 Principal Distribution Amount on such Distribution
Date), (ix) the Certificate Principal Balance of the Class M-8 Certificates
(after taking into account the distribution of the Class M-8 Principal
Distribution Amount on such Distribution Date) and (x) the Certificate Principal
Balance of the Class M-9 Certificates immediately prior to such Distribution
Date over (y) the lesser of (A) the product of (i) 94.00% 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 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-16, representing the right
to distributions as set forth herein and therein and evidencing a regular
interest in REMIC 4.
17
"Class P Interest": An uncertificated interest in the Trust Fund held by
the Trustee on behalf of the Holders of the Class P Certificates, evidencing a
Regular Interest in REMIC 2 for purposes of the REMIC Provisions.
"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-17 and evidencing the ownership of the
Class R-1 Interest and the Class R-2 Interest.
"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-18 and evidencing the
ownership of the Class R-3 Interest and the Class R-4 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.
"Close of Business": As used herein, with respect to any Business Day,
5:00 p.m. (New York time).
"Closing Date": July 29, 2004.
"Code": The Internal Revenue Code of 1986, as amended.
"Collection Account": The account or accounts created and maintained by
the Servicer pursuant to Section 3.10(a), which shall be entitled "Centex Home
Equity Company, LLC, for JPMorgan Chase Bank, as Trustee, in trust for
registered Holders of CHEC Loan Trust 2004-1, Asset-Backed Certificates, Series
2004-1," which account 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 0 Xxx Xxxx Xxxxx, 0xx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000-0000, Attention: Institutional Trust Services/Global
Debt: CHEC Loan Trust-2004-1, or at such other address as the Trustee may
designate from time to time by notice to the Certificateholders, the Depositor,
the Servicer and the Seller.
"Corresponding Certificate": With respect to each REMIC 1 Regular Interest
set forth below, the corresponding Regular Certificate set forth in the table
below:
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REMIC 1 REGULAR INTEREST Regular Certificate
-------------------------------------------------------------------------
LTA1 Class A-1
LTA2 Class A-2
LTA3 Class A-3
LTM1 Class M-1
LTM2 Class M-2
LTM3 Class M-3
LTM4 Class M-4
LTM5 Class M-5
LTM6 Class M-6
LTM7 Class M-7
LTM8 Class M-8
LTM9 Class M-9
LTB1 Class B-1
LTB2 Class B-2
LTP Class P
"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, the Class B
Certificates and the Class C Certificates and the denominator of which is the
aggregate Stated Principal Balance of the Mortgage Loans, calculated prior to
taking into account payments of principal on the Mortgage Loans and distribution
of the Principal Distribution Amount to the Holders of the Certificates then
entitled to distributions of principal on such Distribution Date.
"Custodian": JPMorgan Trust Company, National Association, as custodian of
the Mortgage Files, or any successor thereto.
"Cut-off Date": With respect to each Original Mortgage Loan, July 1, 2004.
"Cut-off Date Principal Balance": With respect to any Mortgage Loan, the
unpaid Stated 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 Stated 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.
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"Delinquency Percentage": For any Distribution Date, the percentage
obtained by dividing (x) the aggregate Stated Principal Balance of Mortgage
Loans that are Delinquent 60 days or more, that are in foreclosure or that are
REO Properties by (y) the aggregate Stated Principal Balance of the Mortgage
Loans, in each case, as of the last day of the previous calendar month.
"Delinquent": A Mortgage Loan is "Delinquent" if any payment due thereon
is not made by the Mortgagor by the close of business on the related Due Date. A
Mortgage Loan is "30 days Delinquent" if such payment has not been received by
the close of business on the corresponding day of the month immediately
succeeding the month in which such payment was due, or, if there is no such
corresponding day (e.g., as when a 30-day month follows a 31-day month in which
a payment was due on the 31st day of such month) then on the last day of such
immediately succeeding month. Similarly for "60 days Delinquent," "90 days
Delinquent" and so on.
"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
20
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, (iv) an "electing large partnership" within the meaning of Section 775 of
the Code or (v) any other Person so designated by the Trustee based upon an
Opinion of Counsel provided by nationally recognized counsel to the Trustee that
the holding of an ownership interest in a Residual Certificate by such Person
may cause any REMIC formed hereunder or any Person having an ownership interest
in any Class of Certificates (other than such Person) to incur liability for any
federal tax imposed under the Code that would not otherwise be imposed but for
the transfer of an ownership interest in the Residual Certificate to such
Person. 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, JPMorgan Chase Bank, as Trustee, in trust for the
registered Certificateholders of CHEC Loan Trust 2004-1, Asset-Backed
Certificates, Series 2004-1" and which must be an Eligible Account.
"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 August 2004.
"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
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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 and P-1 by Xxxxx'x (or comparable ratings if S&P 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
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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 Account": The account or accounts created and maintained pursuant
to Section 3.09.
"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 Floating Rate
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 distributable
on the Class C Certificates on such 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 Xxx": 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, 3.16(c) or 10.01), a determination made by the Servicer that all Insurance
Proceeds, Net 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.
"Fixed-Rate Mortgage Loan": A first or second 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.
"Floating Rate Certificates": The Class A Certificates, the Mezzanine
Certificates and the Class B Certificates.
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"Formula Rate": For any Distribution Date and the Floating Rate
Certificates, the lesser of (i) the Base Rate 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 Adjustable-Rate
Mortgage Loan.
"Highest Priority": As of any date of determination, the Class of
Mezzanine Certificates or Class B Certificates then outstanding with a
Certificate Principal Balance greater than zero, with the highest priority for
payments pursuant to Section 4.01, in the following order of decreasing
priority: Class X-0, Xxxxx X-0, Class M-3, Class M-4, Class M-5, Class M-6,
Class M-7, Class M-8, Class M-9, Class B-1 and Class B-2 Certificates.
"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.
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"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, 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 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 Floating Rate
Certificates and each Accrual Period, the second LIBOR Business Day preceding
the commencement of such Accrual Period.
"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 Mortgage Loans.
"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.
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"Liquidated Mortgage Loan": As to any Distribution Date, any Mortgage Loan
in respect of which the Servicer has determined, in its reasonable judgment, 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, Section 3.16(c) or Section
10.01. With respect to 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 3.16(c), 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 Stated
Principal Balance of the Mortgage Loan and the denominator of which is the Value
of the related Mortgaged Property.
"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 Seller 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 Interest 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 LTA3, REMIC 1 Regular
Interest LTM1, REMIC 1 Regular Interest LTM2, REMIC 1 Regular Interest LTM3,
REMIC 1 Regular Interest LTM4, REMIC 1 Regular Interest LTM5, REMIC 1 Regular
Interest LTM6, REMIC 1 Regular Interest LTM7, REMIC 1 Regular Interest LTM8,
REMIC 1 Regular Interest LTM9, REMIC 1 Regular Interest LTB1, REMIC 1 Regular
Interest LTB2 and REMIC 1 Regular Interest LTZZ, with the rate on each such
REMIC 1 Regular Interest (other than REMIC 1 Regular Interest LTZZ) subject to a
cap equal to the lesser of (i)
25
LIBOR plus the Certificate Margin for the Corresponding Certificate and (ii) the
related Net WAC 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
each such REMIC 1 Regular Interest (other than REMIC 1 Regular Interest LTZZ)
shall be multiplied by a fraction, the numerator of which is the actual number
of days elapsed in the related Accrual Period and the denominator of which is
30.
"Master Agreement": The Master Mortgage Loan Purchase and Interim
Servicing Agreement, dated June 1, 2004, among Xxxxxxx Street Funding II, LLC,
the Originator and the Seller.
"Maximum Cap Rate": For any Distribution Date and the Floating Rate
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 Stated 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) the sum of the Uncertificated
Accrued Interest on REMIC 1 Regular Interest LTA1, REMIC 1 Regular Interest
LTA2, REMIC 1 Regular Interest LTA3, REMIC 1 Regular Interest LTM1, REMIC 1
Regular Interest LTM2, REMIC 1 Regular Interest LTM3, REMIC 1 Regular Interest
LTM4, REMIC 1 Regular Interest LTM5, REMIC 1 Regular Interest LTM6, REMIC 1
Regular Interest LTM7, REMIC 1 Regular Interest LTM8, REMIC 1 Regular Interest
LTM9, REMIC 1 Regular Interest LTB1 and REMIC 1 Regular Interest LTB2 with the
rate on each such REMIC 1 Regular Interest subject to a cap equal to the lesser
of (i) LIBOR plus the related Certificate Margin for the Corresponding
Certificate and (ii) the related Net WAC Rate 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
each such REMIC 1 Regular Interest shall be multiplied by a fraction, the
numerator of which is the actual number of days elapsed in the related 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-2 Certificate,
Class M-3 Certificate, Class M-4 Certificate, Class M-5 Certificate, Class M-6
Certificate, Class M-7 Certificate, Class M-8 Certificate or Class M-9
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.
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"Monthly Interest Distributable Amount": With respect to the Floating Rate
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 and Relief Act Interest Shortfalls (allocated to such Certificate
based on its respective entitlements to interest irrespective of any Net
Prepayment Interest Shortfalls and Relief Act Interest Shortfalls for such
Distribution Date).
"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 or second lien on, or first or second 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.
"Mortgage Loan Schedule": As of any date, the list of Mortgage Loans
included in REMIC 1 on such date, attached hereto as Exhibit D. The Mortgage
Loan Schedule shall be prepared by the Depositor 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, state and zip code of the Mortgaged
Property;
(4) a code indicating whether the Mortgaged Property was represented
by the borrower, at the time of origination, as being owner-occupied;
27
(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;
(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;
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(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; and
(26) the program code.
The Mortgage Loan Schedule shall set forth the following information, with
respect to the Mortgage Loans 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 Stated 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 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
29
accrued and unpaid servicing fees or ancillary income 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 Floating Rate 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 Floating Rate
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 Stated 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 weighted average of the REMIC 1 Pass-Through Rates on
the REMIC 1 Regular Interests, weighted on the basis of the Uncertificated
Principal Balance of each such REMIC 1 Regular Interest.
"Net WAC Rate Carryover Amount": With respect to the Floating Rate
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 4.06.
"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
30
business judgment of the Servicer, will not be ultimately recoverable from Late
Collections, Insurance Proceeds or Liquidation Proceeds of such Mortgage Loan or
REO Property as provided herein.
"Notional Amount": Immediately prior to any Distribution Date with respect
to the Class C Interest, the aggregate Uncertificated Principal Balance of REMIC
1 Regular Interests (other than the REMIC 1 Regular Interest LTP).
"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 Originator 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
Terminator may opt to terminate the Trust Fund pursuant to Section 10.01.
"Original Class Certificate Principal Balance": With respect to the
Floating Rate 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 Cut-off Date is equal to $309,395,801.92.
"Original Notional Amount": With respect to the Class C Interest,
$309,395,801.92.
"Originator": Centex Home Equity Company, LLC, a Delaware 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 (assuming
that 100% of the Principal Remittance Amount is applied as a principal
distribution on such Distribution Date).
"Overcollateralization Floor": With respect to the Floating Rate
Certificates, $1,546,979.01.
"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.
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"Overcollateralization Target Amount": With respect to any Distribution
Date, (i) prior to the Stepdown Date, 1.00% of the aggregate Stated Principal
Balance of the Original Mortgage Loans as of the Cut-off Date, (ii) on or after
the Stepdown Date provided a Trigger Event is not in effect, the greater of (A)
2.00% of 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) 0.50% of the aggregate Stated Principal Balance of the Original
Mortgage Loans as of the Cut-off Date 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. Notwithstanding the foregoing, on and
after any Distribution Date following the reduction of the aggregate Certificate
Principal Balance of the Floating Rate Certificates to zero, the
Overcollateralization Target Amount shall be zero..
"Overcollateralized Amount": For any Distribution Date, the amount equal
to (i) 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 (ii) the sum of the aggregate Certificate Principal Balance of the
Floating Rate 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 Floating Rate 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 C Interest 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 (Q) below, and the
denominator of which is the aggregate Uncertificated Principal Balance of the
REMIC 1 Regular Interests. For purposes of calculating the Pass-Through Rate for
the Class C Interest, 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;
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(D) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LTA3 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LTA3;
(E) 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;
(F) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LTM2 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LTM2;
(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 LTM4 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LTM4;
(I) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LTM5 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LTM5;
(J) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LTM6 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LTM6;
(K) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LTM7 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LTM7;
(L) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LTM8 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LTM8;
(M) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LTM9 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LTM9;
(N) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LTB1 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LTB1;
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(O) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LTB2 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LTB2;
(P) 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
(Q) 100% of the interest on the REMIC 1 Regular Interest LTP.
With respect to the Class C Certificates, 100% of the interest
distributable to the Class C Interest, expressed as a per annum rate.
"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 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
34
debt rating in one of the two highest available ratings of Moody's and the
highest available rating category of Fitch and 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
F-1+ or higher by Fitch, P-1 by Moody's 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, 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 Moody's 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.
35
"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 or Section 4975 of the Code.
"Pool Balance": As of any date of determination, the aggregate Stated
Principal Balance of the Mortgage Loans in the Mortgage Pool 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 Principal 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 Stated Principal Balance of the related Mortgage Loan as of
the Cut-off Date.
"Prepayment Interest Excess": With respect to any Distribution Date, for
each Mortgage Loan that was the subject of a Principal Prepayment in full on the
first day of the calendar month in which such Distribution Date occurs, an
amount equal to interest (to the extent received) at the applicable Net Mortgage
Rate on the amount of such Principal Prepayment for the number of days
commencing on the first day of the calendar month in which such Distribution
Date occurs and ending on the date on which such prepayment is so applied.
36
"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 from the first day
of the related Prepayment Period through the last day of the calendar month
preceding the month in which such Distribution Date occurs, an amount equal to
interest on the amount of such Principal Prepayment for the number of days
commencing on the date such Principal Prepayment was applied and ending on the
last day of the calendar month preceding the month in which such Distribution
Date occurs.
"Prepayment 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.
"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 Distribution Amount": With respect to any Distribution Date,
the sum of (i) the Basic Principal Distribution Amount for such Distribution
Date and (ii) the Extra Principal Distribution Amount for such Distribution
Date.
"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 with respect to such principal on any Due Date in any
month or months subsequent to the month of prepayment.
"Principal Remittance Amount": With respect to any Distribution Date, that
portion of Available Funds equal to the sum of (i) each scheduled payment of
principal collected or advanced on the Mortgage Loans by the Servicer that was
due during the related Due Period, (ii) the principal portion of all partial and
full Principal Prepayments of the Mortgage Loans applied by the Servicer during
the related Prepayment Period, (iii) the principal portion of all related Net
Liquidation Proceeds, Insurance Proceeds and Subsequent Recoveries received
during the related Prepayment Period, (iv) that portion of the Purchase Price,
representing principal of any repurchased Mortgage Loan, deposited in the
Collection Account during the related Prepayment Period, (v) the principal
portion of any related Substitution Adjustments deposited in the Collection
Account during the related Prepayment Period 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.
"Prospectus Supplement": That certain Prospectus Supplement dated July 26,
2004 relating to the public offering of the Class A Certificates and the
Mezzanine Certificates.
37
"Purchase Price": With respect to the Seller or the Servicer and any
Mortgage Loan or REO Property to be purchased pursuant to or as contemplated by
Section 2.03, Section 3.16(c) or Section 10.01, and as confirmed by an Officers'
Certificate from the party purchasing the Mortgage Loan to the Trustee, an
amount equal to the sum of (i) 100% of the Stated 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 Stated 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 Stated 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 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, including any costs and
damages incurred by the Trust Fund in connection with any violation by such loan
of any predatory or abusive lending law. With respect to the Originator and 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 a certificate of a Servicing Officer
to the Trustee, an amount equal to the amount set forth pursuant to the terms of
the Master Agreement.
"Qualified Insurer": Any insurance company acceptable to Xxxxxx Xxx.
"Qualified Substitute Mortgage Loan": With respect to the Seller, 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 Stated Principal Balance (or in
the case of a substitution of more than one mortgage loan for a Deleted Mortgage
Loan, an aggregate Stated 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
Stated 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
38
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)
[reserved], (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 assigned to the Depositor pursuant to the Assignment 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
Stated 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. With respect to the Originator, a mortgage loan
substituted for a Deleted Mortgage Loan pursuant to the terms of the Master
Agreement which must, on the date of such substitution conform to the terms set
forth in the Master Agreement.
"Rating Agency or Rating Agencies": Moody's 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 Stated Principal Balance remaining
unpaid after application of all Net Liquidation Proceeds in respect of such
Mortgage Loan. If the Servicer receives Subsequent Recoveries with respect to
any Mortgage Loan, the amount of the Realized Loss with respect to that Mortgage
Loan will be reduced to the extent such recoveries are applied to principal
distributions on any Distribution Date.
"Record Date": With respect to (i) 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 and (ii) the Floating Rate Certificates, the Close of
Business on the Business Day immediately preceding the related Distribution
Date; provided, however, that following the date on which Definitive
Certificates for a Floating Rate Certificate are available pursuant to Section
5.02, the Record Date for such Certificates shall be the last Business Day of
the calendar month preceding the month in which the related Distribution Date
occurs.
39
"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; provided, however, that if
fewer than two of such banks provide a LIBOR rate, then any leading banks
selected by the Trustee 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 Floating Rate Certificates, Class C
Certificates or Class P Certificates.
"Reimbursement Amount": As defined in Section 3.29.
"Relief Act": The Servicemembers Civil Relief Act, as amended, or any
similar state or local laws.
"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 Stated 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.
"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 required to be maintained pursuant to this
Agreement and any proceeds thereof, (iv) the Depositor's rights under the
Assignment Agreement (including any security interest created thereby) and (v)
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, the Cap Contract 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
Stated Principal Balance of the Mortgage
40
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": 1.00% of the
Overcollateralization Target Amount.
"REMIC 1 Overcollateralization Amount": With respect to any date of
determination, (i) 1.00% of the aggregate Uncertificated Principal Balance of
the REMIC 1 Regular Interests minus (ii) the aggregate of the Uncertificated
Principal Balance of REMIC 1 Regular Interest LTAA, REMIC 1 Regular Interest
LTA1, REMIC 1 Regular Interest LTA2, REMIC 1 Regular Interest LTA3, REMIC 1
Regular Interest LTM1, REMIC 1 Regular Interest LTM2, REMIC 1 Regular Interest
LTM3, REMIC 1 Regular Interest LTM4, REMIC 1 Regular Interest LTM5, REMIC 1
Regular Interest LTM6, REMIC 1 Regular Interest LTM7, REMIC 1 Regular Interest
LTM8, REMIC 1 Regular Interest LTM9, REMIC 1 Regular Interest LTB1, REMIC 1
Regular Interest LTB2 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 Stated
Principal Balance of the Mortgage Loans and related REO Properties then
outstanding and (ii) 1 minus a fraction, the numerator of which is two times the
aggregate Uncertificated Principal Balance of REMIC 1 Regular Interest LTA1,
REMIC 1 Regular Interest LTA2, REMIC 1 Regular Interest LTA3, REMIC 1 Regular
Interest LTM1, REMIC 1 Regular Interest LTM2, REMIC 1 Regular Interest LTM3,
REMIC 1 Regular Interest LTM4, REMIC 1 Regular Interest LTM5, REMIC 1 Regular
Interest LTM6, REMIC 1 Regular Interest LTM7, REMIC 1 Regular Interest LTM8,
REMIC 1 Regular Interest LTM9, REMIC 1 Regular Interest LTB1 and REMIC 1 Regular
Interest LTB2 and the denominator of which is the aggregate Uncertificated
Principal Balance of REMIC 1 Regular Interest LTA1, REMIC 1 Regular Interest
LTA2, REMIC 1 Regular Interest LTA3, REMIC 1 Regular Interest LTM1, REMIC 1
Regular Interest LTM2, REMIC 1 Regular Interest LTM3, REMIC 1 Regular Interest
LTM4, REMIC 1 Regular Interest LTM5, REMIC 1 Regular Interest LTM6, REMIC 1
Regular Interest LTM7, REMIC 1 Regular Interest LTM8, REMIC 1 Regular Interest
LTM9, REMIC 1 Regular Interest LTB1, REMIC 1 Regular Interest LTB2 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 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.
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"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 LTA3": 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 LTA3 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 LTB1": 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 LTB1 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 LTB2": 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 LTB2 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 LTM2": 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 LTM2 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
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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.
"REMIC 1 Regular Interest LTM4": 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 LTM4 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 LTM5": 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 LTM5 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 LTM6": 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 LTM6 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 LTM7": 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 LTM7 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 LTM8": 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 LTM8 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 LTM9": 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 LTM9 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.
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"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
LTA3, REMIC 1 Regular Interest LTM1, REMIC 1 Regular Interest LTM2, REMIC 1
Regular Interest LTM3, Regular Interest LTM4, REMIC 1 Regular Interest LTM5,
REMIC 1 Regular Interest LTM6, REMIC 1 Regular Interest LTM7, REMIC 1 Regular
Interest LTM8, REMIC 1 Regular Interest LTM9, REMIC 1 Regular Interest LTB1,
REMIC 1 Regular Interest LTB2, 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 3": The segregated pool of assets consisting of all of the Class C
Interest conveyed in trust to the Trustee, for the benefit of the Holders of the
Regular Certificates and the Class R-X Certificate (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 all of the Class P
Interest conveyed in trust to the Trustee, for the benefit of the Holders of the
Regular Certificates and the Class R-X Certificate (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.
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"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 Stated 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
45
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 vice
president, any assistant vice president, the Secretary, any assistant secretary,
the Treasurer, any assistant treasurer, the Cashier, any assistant cashier, any
trust officer or assistant trust officer, the Controller and any assistant
controller, in each case, with direct responsibility for the transactions
contemplated hereby 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 assignor under the Assignment Agreement.
"Senior Principal Distribution Amount": The excess of (x) the aggregate
Certificate Principal Balance of the Class A Certificates immediately prior to
such Distribution Date over (y) the lesser of (A) the product of (i) 63.00% 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 Overcollateralization Floor.
"Servicer": Centex Home Equity Company, LLC, a Delaware limited liability
company, or any successor servicer appointed as herein provided, in its capacity
as Servicer hereunder.
"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.
46
"Servicer Remittance Date": With respect to any Distribution Date, the
18th day of the calendar month in which the Distribution Date occurs or, if such
18th day is not a Business Day, the Business Day preceding such 18th day.
"Servicing Advance Reimbursement Amount": As defined in Section 3.29.
"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. Servicing Advances also include any
reasonable "out-of-pocket" costs and expenses (including legal fees) incurred by
the Servicer in connection with executing and recording instruments of
satisfaction, deeds of reconveyance or Assignments of Mortgage in connection
with any foreclosure in respect of any Mortgage Loan to the extent not recovered
from the related Mortgagor or otherwise payable under this Agreement. The
Servicer shall not be required to make any Servicing Advance that would be a
Nonrecoverable Advance.
"Servicing Fee": With respect to each Mortgage Loan and for any calendar
month, an amount equal to the Servicing Fee Rate accrued for such month (or in
the event of any Principal Prepayment in full made by the Mortgagor during such
month, the Servicing Fee Rate accrued for the number of days covered by the
payment of interest accompanying the Principal Prepayment in full), on the same
principal amount on which interest on such Mortgage Loan accrues for such 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 Standard": Shall mean the standards set forth in Section 3.01.
"Servicing Transfer Costs": Shall mean all reasonable costs and expenses
incurred by the Trustee in connection with the transfer of servicing from a
predecessor servicer, including, without limitation, any reasonable costs or
expenses associated with the complete transfer of all servicing data and the
completion, correction or manipulation of such servicing data as may be required
by the Trustee to correct any errors or insufficiencies in the 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.
47
"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 Stated 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
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 first 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 August 2007 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 but prior to
distribution of the Principal Distribution Amount to the Certificates then
entitled to distributions of principal on such Distribution Date) is equal to or
greater than 37.00%.
"Sub-Servicer": Any Person with which the 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 Servicer.
"Sub-Servicing Agreement": The written contract between the Servicer and a
Sub- Servicer relating to servicing and administration of certain Mortgage Loans
as provided in Section 3.02.
"Subsequent Recoveries": As of any Distribution Date, amounts received by
the Servicer (net of any related expenses permitted to be reimbursed pursuant to
Section 3.11)
48
specifically related to a Mortgage Loan that was the subject of a liquidation or
an REO Disposition prior to the related Prepayment Period that resulted in a
Realized Loss.
"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 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 42.00% 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 (reduced by the aggregate
amount of Subsequent Recoveries received since the Cut-off Date through the last
day of the related Due Period) divided by the aggregate Stated 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
-------------------------------------------------------------------------------
August 2007 through July 2008 5.75% for the first month, plus an
additional 1/12th of 1.75% for each
month thereafter.
August 2008 through July 2009 7.50% for the first month, plus an
additional 1/12th of 1.25% for each
month thereafter.
August 2009 through July 2010 8.75% for the first month, plus an
additional 1/12th of 0.50% for each
month thereafter.
August 2010 and thereafter 9.25% for each month.
"Trust": CHEC Loan Trust 2004-1, 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, the Net WAC Rate
Carryover Reserve Account, the Cap Contract and any Servicer Prepayment Charge
Payment Amounts.
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"Trustee": JPMorgan Chase Bank, a New York banking corporation, 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 and (ii) the aggregate
Stated Principal Balance of the Mortgage Loans and any REO Properties (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); provided that the
Trustee Fee shall not be less than $7,000 per annum.
"Trustee Fee Rate": 0.0075% per annum.
"Trustee Reimbursable Expenses": Any amounts reimbursable to the Trustee
pursuant to Sections 2.01, 3.06, 7.02 and 8.05 and, if the Trustee is acting as
Custodian, any related custodial fees (including all attorney fees and
expenses).
"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 and
Relief Act Interest Shortfalls (allocated to such REMIC 1 Regular Interests
based on their respective entitlements to interest irrespective of any Net
Prepayment Interest Shortfalls and Relief Act Interest Shortfalls for such
Distribution Date).
"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 4.07, and the
Uncertificated Principal Balance of REMIC 1 Regular Interest LTZZ shall be
increased by interest deferrals as provided in Section 4.07. With respect to the
Class C Interest as of any date of determination, an amount equal to the excess,
if any, of (A) the then aggregate Uncertificated Principal Balance of the REMIC
1 Regular Interests over (B) the then aggregate Certificate Principal Balance of
the Floating Rate Certificates and the Class P Certificates then outstanding.
The Uncertificated Principal Balance of each REMIC 1 Regular Interest that has
an Uncertificated Principal Balance shall never be less than zero.
"Uncertificated REMIC 1 Pass-Through Rate": For any Distribution Date and
each REMIC 1 Regular Interest, the weighted average of the Adjusted Net Mortgage
Rates of the Mortgage Loans, weighted on the basis of the outstanding Stated
Principal Balances of the Mortgage Loans as of the first day of the month
preceding the month of such Distribution Date.
50
"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 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 Floating Rate
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.
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"Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. At all times the Floating
Rate Certificates and the Class C Certificates shall have 98% of the Voting
Rights (allocated among the Holders of the Floating Rate 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.
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 Floating Rate 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 Floating
Rate 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 and Net WAC Rate Carryover Amounts,
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 among REMIC 1 Regular Interest LTAA, REMIC 1 Regular Interest
LTA1, REMIC 1 Regular Interest LTA2, REMIC 1 Regular Interest LTA3, REMIC 1
Regular Interest LTM1, REMIC 1 Regular Interest LTM2, REMIC 1 Regular Interest
LTM3, REMIC 1 Regular Interest LTM4, REMIC 1 Regular Interest LTM5, REMIC 1
Regular Interest LTM6, REMIC 1 Regular Interest LTM7, REMIC 1 Regular Interest
LTM8, REMIC 1 Regular Interest LTM9, REMIC 1 Regular Interest LTB1, REMIC 1
Regular Interest LTB2 and REMIC 1
52
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.
53
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 in
respect of the Mortgage Loans; (iv) the rights of the Depositor under the Master
Agreement (as assigned to the Depositor pursuant to the terms of the Assignment
Agreement), (v) the right to receive any amounts payable under the Cap Contract,
(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 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 or (B)
in the following form: "Pay to the order of JPMorgan Chase Bank, 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
"JPMorgan Chase Bank, as Trustee, without recourse";
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(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 Assignment Agreement and the Master Agreement.
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
enforce the obligations of the Originator under the Master Agreement to cure
such defect or deliver such missing document to the Trustee or the Custodian
within 120 days. If the Originator does not cure such defect or deliver such
missing document within such time period, the Trustee shall enforce the
obligations of the Originator under the Master Agreement to either repurchase or
substitute for such Mortgage Loan in accordance with Section 2.03.
The Trustee shall enforce the obligations of the Originator under the
Master 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 Originator under the Master 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 Originator under the
Master Agreement to promptly have a
55
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, for administrative convenience and
facilitation of servicing and to reduce closing costs, the Assignments of
Mortgage shall not be required to be submitted for recording unless the Trustee
and the Depositor receives written notice that such failure to record would
result in a withdrawal or a downgrading by any Rating Agency of the rating on
any Class of Certificates; provided, however, each Assignment shall be submitted
for recording by the Originator 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 and
(iv) the occurrence of a servicing transfer as described in Section 7.02 hereof.
In addition to the foregoing, the Servicer shall cause each Assignment of
Mortgage to be recorded in accordance with customary servicing practices in
order to convey, upon foreclosure, the title of any Mortgaged Property to the
Trust as set forth in Section 3.23 hereof. In the event of (i) through (iv) set
forth above, the Trustee shall enforce the obligations of the Originator to
deliver such Assignments for recording as provided above, promptly and in any
event within 30 days following receipt of notice by the Originator from the
Trustee. Notwithstanding the foregoing, if the Originator 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.
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 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.
The Depositor hereby directs the Trustee to execute, deliver and perform
its obligations under the Cap Contract on the Closing Date and thereafter on
behalf of the Holders of the Floating Rate Certificates. The Depositor, the
Servicer and the Holders of the Floating Rate Certificates by their acceptance
of such Certificates acknowledge and agree that the Trustee shall
56
execute, deliver and perform its obligations under the Cap Contract and shall do
so solely in its capacity as Trustee of the Trust Fund and not in its individual
capacity.
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 either (i) the related original
Mortgage Note or (ii) a Lost Note Affidavit, 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
within 45 days of the Closing Date (or, with respect to any document delivered
after the Startup Day, within 45 days of receipt and with respect to any
Qualified Substitute Mortgage Loan, 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 of the Closing Date (or, with respect to
any document delivered after the Startup Day, within 45 days of receipt and with
respect to any Qualified Substitute Mortgage Loan, 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 (other than Section 2.01(vi)) of this Agreement and if
actually delivered to it, the documents required to be delivered to it pursuant
to Section 2.01(vi) of this Agreement are in its possession, (ii) such documents
have been reviewed by it and appear regular on their face and relate to such
Mortgage Loan and (iii) based on its examination of the foregoing documents, the
information set forth in the Mortgage Loan Schedule that corresponds to items
(1), (3), (10), (11), (12), (18), (24) and (25, but only as to Gross Margin,
Maximum Mortgage Rate and Periodic Rate Cap) 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 recordable or 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.
No later than the first anniversary date of this Agreement, or the
following Business Day if such first anniversary date is not a Business Day, the
Trustee shall deliver (or cause the
57
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.
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 defective in any material respect, at the
conclusion of its review the Trustee shall so notify the Originator, the
Depositor 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 Master Agreement or the Seller in the Assignment 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 or the Seller.
(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 or the Seller, as applicable, of any
representation, warranty or covenant under the Master Agreement or the
Assignment Agreement, as applicable, 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
Originator or the Seller, as applicable, of such defect, missing document or
breach and request that the Originator deliver such missing document or cure
such defect or that the Originator or the Seller, as applicable, cure such
breach within 120 days from the date the Originator or the Seller, as
applicable, was notified of such missing document, defect or breach, and if the
Originator does not deliver such missing document or cure such defect or if the
Originator or the Seller, as applicable, does not cure such breach in all
material respects during such period, the Trustee shall enforce the Originator's
obligation under the Master Agreement or the Seller's obligation under the
Assignment Agreement and notify the Originator or the Seller, as applicable, of
its obligation 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 120 day period (subject to Section 2.03(e)); provided that, in connection
with any such breach that could not reasonably have been cured within such 120
day period, if the Originator or the Seller, as applicable, has commenced to
cure such breach within such 120 day period, the Originator or the Seller, as
applicable, shall be
58
permitted to proceed thereafter diligently and expeditiously to cure the same
within the additional period provided under the Assignment Agreement.
Notwithstanding the foregoing, to the extent of a breach by the Originator and
the Seller of any representation, warranty or covenant under the Assignment
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 first request that the Originator cure such breach or
repurchase such Mortgage Loan and if the Originator fails to cure such breach or
repurchase such Mortgage Loan within 60 days of receipt of such request from the
Trustee, the Trustee shall then request that the Seller cure such breach or
repurchase such Mortgage Loan.
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 or the Seller, as applicable, the related Mortgage
File and shall execute and deliver such instruments of transfer or assignment,
in each case without recourse, representation or warranty, as the Originator or
the Seller, as applicable, shall furnish to it and as shall be necessary to vest
in the Originator or the Seller, as applicable, 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 Loan as provided
above, the Originator or the Seller, as applicable, 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);
provided, however, the Originator or the Seller, as applicable, may not
substitute for any Mortgage Loan which breaches a representation or warranty
regarding abusive or predatory lending laws. It is understood and agreed that
the obligation of the Originator or the Seller, as applicable, 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 or the Seller, as applicable, 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 or the Seller, as applicable,
substitutes a Qualified Substitute Mortgage Loan or Loans, such substitution
shall be effected by the Originator or the Seller, as applicable, delivering to
the
59
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
Depositor and 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 Depositor and 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 or the Seller, as applicable. 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 or the Seller, as
applicable, shall thereafter be entitled to retain all amounts subsequently
received in respect of such Deleted Mortgage Loan. The Originator or the Seller,
as applicable, 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 or the Seller, as applicable, such Qualified
Substitute Mortgage Loan or Loans shall constitute part of the Mortgage Pool and
shall be subject in all respects to the terms of this Agreement and the
Assignment Agreement, including all applicable representations and warranties
thereof included in the Assignment Agreement as of the date of substitution.
For any month in which the Originator or the Seller, as applicable,
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 Stated Principal Balance thereof as of the date
of substitution, together with one month's interest on such Stated Principal
Balance at the applicable Mortgage Rate. On the date of such substitution, the
Originator or the Seller, as applicable, 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 or the Seller, as applicable, the
related Mortgage File or Files and shall execute and deliver such instruments of
transfer or assignment, in each case without recourse, representation or
warranty, as the Originator or the Seller, as applicable, shall deliver to it
and as shall be necessary to vest therein any Deleted Mortgage Loan released
pursuant hereto.
In addition, the Originator or the Seller, as applicable, shall obtain at
its own expense and deliver to the Trustee an Opinion of Counsel to the effect
that such substitution will not cause
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(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 Assignment
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.
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 duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its formation and has all
licenses necessary to carry on its business as now being conducted and is
licensed, qualified and in good standing in the states where the Mortgaged
Property is located (or is otherwise exempt under applicable law from such
qualification) if the laws of such state require licensing or
qualification in order to conduct business of the type conducted by the
Servicer or to ensure the enforceability or validity of each Mortgage
Loan; the Servicer has the power and authority to execute and deliver this
Agreement and to perform in accordance herewith; the execution, delivery
and performance of this Agreement (including all instruments of transfer
to be delivered pursuant to this Agreement) and all documents and
instruments contemplated hereby which are executed and delivered by the
Servicer and the consummation of the transactions contemplated hereby have
been duly and validly authorized; this Agreement and all
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documents and instruments contemplated hereby which are executed and
delivered by the Servicer, assuming due authorization, execution and
delivery by the other parties hereto, evidences the valid, binding and
enforceable obligation of the Servicer, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally; and all requisite corporate
action has been taken by the Servicer to make this Agreement and all
documents and instruments contemplated hereby which are executed and
delivered by the Servicer valid and binding upon the Servicer in
accordance with its terms;
(ii) The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Servicer and will
not result in the material breach of any term or provision of the
certificate of formation or limited liability company agreement of the
Servicer or result in the breach of any term or provision of, or conflict
with or constitute a default under or result in the acceleration of any
obligation under, any agreement, indenture or loan or credit agreement or
other instrument to which the Servicer or its property is subject, or
result in the violation of any law, rule, regulation, order, judgment or
decree to which the Servicer or its property is subject;
(iii) The execution and delivery of this Agreement by the Servicer
and the performance and compliance with its obligations and covenants
hereunder do not require the consent or approval of any governmental
authority or, if such consent or approval is required, it has been
obtained;
(iv) [Reserved];
(v) The Servicer 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;
(vi) There is no action, suit, proceeding or investigation pending
or, to its knowledge, threatened against the Servicer that, either
individually or in the aggregate, (A) may result in any change in the
business, operations, financial condition, properties or assets of the
Servicer that might prohibit or materially and adversely affect the
performance by such Servicer of its obligations under, or the validity or
enforceability of, this Agreement, or (B) may result in any material
impairment of the right or ability of the Servicer to carry on its
business substantially as now conducted, or (C) would draw into question
the validity or enforceability of this Agreement or of any action taken or
to be taken in connection with the obligations of the Servicer
contemplated herein, or (D) would otherwise be likely to impair materially
the ability of the Servicer to perform under the terms of this Agreement;
(vii) 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 any untrue statement of a material fact;
(viii) The Servicer will not waive any Prepayment Charge unless it
is waived in accordance with the standard set forth in Section 3.01; and
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(ix) The Servicer has accurately and fully reported, and will
continue to accurately and fully report on a monthly basis, its borrower
credit files for the Mortgage Loans to each of the three national 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(viii) 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 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 Master Agreement respecting a breach of
the representations, warranties and covenants of the Originator.
SECTION 2.06. Representations and Warranties of the Depositor.
The Depositor represents and warrants to the Trust, the Servicer 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;
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(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,
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.
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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. Conveyance of REMIC Regular Interests and Acceptance of
REMIC 1, REMIC 2, REMIC 3 and REMIC 4 by the Trustee;
Issuance of Certificates.
(a) The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey in trust to the
Trustee without recourse all the right, title and interest of the Depositor in
and to the 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 assets described in the definition of REMIC 1 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 and the Class R Certificates (in
respect of the Class R-2 Interest). The Trustee acknowledges receipt of the
REMIC 1 Regular Interests and declares that it holds and will hold the same in
trust for the exclusive use and benefit of the Holders of the Regular
Certificates 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 C Certificates and the Class P
Certificates), the Class C Interest and the Class P 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 C Interest (which is uncertificated) for the benefit of the
Holders of the Class C Certificates and the Class R-X Certificates (in respect
of the Class R-3 Interest). The Trustee acknowledges receipt of the Class C
Interest and declares that it holds and will hold the same in trust for the
exclusive use and benefit of the Holders of the Class C Certificates and the
Class R-X Certificates (in respect of the Class R-3 Interest). The interests
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evidenced by the Class R-3 Interest, together with the Class C Certificates,
constitute the entire beneficial ownership interest in REMIC 3.
(d) 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 P Interest (which is uncertificated) for the benefit of the
Holders of the Class P Certificates and the Class R-X Certificates (in respect
of the Class R-4 Interest). The Trustee acknowledges receipt of the Class P
Interest and declares that it holds and will hold the same in trust for the
exclusive use and benefit of the Holders of the Class P 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 P Certificates,
constitute the entire beneficial ownership interest in REMIC 4.
(e) Concurrently with (i) the assignment and delivery to the Trustee of
REMIC 1 and the acceptance by the Trustee thereof, pursuant to Section 2.01,
Section 2.02 and subsection (a) hereof, (ii) the assignment and delivery to the
Trustee of REMIC 2 (including the Residual Interest therein represented by the
Class R-2 Interest), (iii) the assignment and delivery to the Trustee of REMIC 3
(including the Residual Interest therein represented by the Class R-3 Interest)
and (iv) the assignment and delivery to the Trustee of REMIC 4 (including the
Residual Interest therein represented by the Class R-4 Interest) and the
acceptance by the Trustee thereof, pursuant to subsection (c) hereof, 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, (A) the Class R Certificates in authorized denominations
evidencing the Class R-1 Interest and the Class R-2 Interest and (B) the Class
R-X Certificates in authorized denominations evidencing the Class R-3 Interest
and the Class R-4 Interest.
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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, (ii) 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, (iii)
the collection of such Prepayment Charge would be in violation of applicable
laws or (iv) such waiver is in accordance with the Servicer's internal policies.
If a Prepayment Charge is waived as permitted by meeting the standard described
in clause (iii) above, then the Servicer shall make commercially reasonable
efforts to enforce the Trustee's rights under the Assignment Agreement including
the obligation of the Originator to pay the amount of such waived Prepayment
Charge to the Servicer for deposit in the Collection Account for the benefit of
the Holders of the Class P Certificates. If the Servicer makes a good faith
determination, as evidenced by an officer's certificate delivered by the
Servicer to the Trustee, that the Servicer's efforts are not reasonably expected
to be successful in enforcing such rights, it shall notify the Trustee of such
failure, and the Trustee shall enforce the obligation of the Originator under
the Assignment Agreement to pay to the Servicer the amount of such waived
Prepayment Charge. If a Prepayment Charge is waived as permitted by meeting the
standard described in clause (iv) above, then the Servicer shall deposit the
amount of such waived Prepayment Charge in the Collection Account for the
benefit of the Holders of the Class P Certificates.
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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 generality of the foregoing, the Servicer, in the name of the Trust Fund, is
hereby authorized and empowered by the Trustee when the Servicer believes it
appropriate in its best judgment in accordance with the Servicing Standard, to
execute and deliver, on behalf of the Certificateholders and 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 five (5)
days of the Closing Date, the Trustee shall execute and furnish to the Servicer
and any Sub-Servicer any limited powers of attorney in the form of Exhibit I
hereto 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 by the Servicer or any Sub-Servicers under
such powers of attorney and shall be indemnified by the Servicer (from its own
funds without any right of reimbursement from the Collection Account), for any
costs, liabilities or expenses incurred by the Trustee in connection with the
use or misuse of 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 Stated 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 Stated Principal Balance (except for reductions resulting from
actual payments of principal) or change the final maturity date on such Mortgage
Loan, (unless, in any such case, 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
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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.
(a) The Servicer may enter into Sub-Servicing Agreements with
Sub-Servicers, which may be Affiliates of the Servicer, for the servicing and
administration of the Mortgage Loans; provided, however, such sub-servicing
arrangement and the terms of the related Sub-Servicing Agreement must provide
for the servicing of the Mortgage Loans in a manner consistent with the
servicing arrangement contemplated hereunder. The Trustee is hereby authorized
to acknowledge, at the request of the Servicer, any Sub-Servicing 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. Any variation in any Sub-Servicing
Agreements 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, including,
without limitation, any obligation to make advances in respect of delinquent
payments as required by a Sub-Servicing Agreement. Such enforcement, including,
without limitation, the legal prosecution of claims, termination of
Sub-Servicing 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.
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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 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.
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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, pursuant to its duties under Section 7.02, 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, in accordance with the
Servicing Standard, to collect all payments called for under the terms and
provisions of the Mortgage Loans and the provisions of any applicable insurance
policies provided to the Servicer. Consistent with the foregoing, the Servicer
may in its discretion (i) waive any late payment charge or, if applicable, any
penalty interest, or any provisions of any Mortgage Loan requiring the related
Mortgagor to submit to mandatory arbitration with respect to disputes arising
thereunder 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, 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
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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; Escrow
Accounts.
To the extent required by the related Mortgage Note, the Servicer shall
establish and maintain, or cause to be established and maintained, one or more
accounts (the "Escrow Accounts"), into which all Escrow Payments shall be
deposited and retained. Escrow 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, all Escrow Payments collected on account of the Mortgage Loans and
shall deposit in the Escrow 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 an Escrow 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) 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 Escrow Account; or
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(v) clear and terminate the Escrow 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 Escrow Account any amount not required to be deposited therein, it may at
any time withdraw such amount from such Escrow Account, any provision herein to
the contrary notwithstanding. The Servicer will be responsible for the
administration of the Escrow 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, within 10 Business Days of receipt of such
notice, 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 any
Sub-Servicers shall pay to the Mortgagors interest on funds in the Escrow
Accounts, to the extent required by law and, to the extent that interest earned
on funds in the Escrow 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 Escrow Accounts, to the extent such
action is in conformity with the Servicing Standard, 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 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 Servicing Fee)
on each Mortgage Loan;
(iii) all Insurance Proceeds, Liquidation Proceeds, Subsequent
Recoveries 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;
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(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, Section 3.16(c) or Section 10.01;
(vii) all amounts required to be deposited in connection with
Substitution Adjustments pursuant to Section 2.03; and
(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.
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 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, the amount of any funds reimbursable to an Advancing Person
pursuant to Section 3.29 (unless such amounts are to be remitted in another
manner as specified in the documentation establishing the related Advance
Facility).
(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 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
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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 by the Servicer 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:
(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 or REO
Properties with respect to which such Advances were made in accordance
with the provisions of Section 4.04; or (b) without limiting any right of
withdrawal set forth in clause (vi) below, any unreimbursed Advances that,
upon a Final Recovery Determination with respect to such Mortgage Loan,
are Nonrecoverable Advances, but only to the extent that Late Collections
(net of the related Servicing Fees), 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
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Mortgage Loan, but only to the extent of any Late Collections, Liquidation
Proceeds and Insurance Proceeds received with respect to such Mortgage
Loan or REO Property, and (c) without limiting any right of withdrawal set
forth in clause (vi) below, 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 and Insurance 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 additional 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 itself or the Seller with respect to each Mortgage Loan
that has previously been purchased or replaced pursuant to Section 2.03 or
Section 3.16(c) all amounts received thereon subsequent to the date of
purchase or substitution, as the case may be;
(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) to pay itself any Prepayment Interest Excess;
(x) to reimburse itself for expenses incurred pursuant to Section
9.01(c)(i); and
(xi) 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.
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(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 and reimbursable expenses
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 2.01, Section 3.06, Section 4.01, 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 to an Advancing Person reimbursements for Advances
and/or Servicing Advances pursuant to Section 3.29.
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 and any REO Account to invest the funds on deposit in such
accounts and the Trustee may invest the funds on deposit in the Distribution
Account (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 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 or if the
Trustee or any Affiliate of the Trustee is the Custodian, sub-custodian or
administrator. 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 REO 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:
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(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 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.
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 lesser of (i) the current Principal Balance of
such Mortgage Loan and (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. 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
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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 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
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 on terms substantially equivalent to
those commercially available and maintained by competent servicers, 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, 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
servicer of the Mortgage Loans, the Servicer agrees to prepare and present, on
behalf of itself, the Depositor, 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
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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 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 the extent permitted under the related Mortgage Note, 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 current
underwriting criteria of the Servicer for a mortgage loan similar to the related
Mortgage Loan. In connection with any assumption, modification 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 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,
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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 reasonable efforts, consistent with the
Servicing Standard, 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. Title to any such
property shall be taken in the name of the Trustee or its nominee on behalf of
the Certificateholders or in the name of the Servicer in accordance with the
Servicer's customary servicing practices and held for the benefit of the Trust
Fund, subject to applicable law. 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:
(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.
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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.
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
promptly deliver 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. 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.
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(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 immediately notify or cause to
be notified the Trustee by a certification and shall deliver to the Trustee, in
written or electronic format, which format is acceptable to the Custodian, two
executed copies of 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 or the related Mortgagor, 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 of two
executed copies of a written 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 direction of the Servicer, execute such documents
provided to it by the Servicer 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 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
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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 its activities 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, 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 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.
The Servicer shall be entitled to any Prepayment Interest Excess, which it
may withdraw from the Collection Account pursuant to Section 3.11(a)(ix).
SECTION 3.19. Reports to the Trustee; Collection Account Statements.
Not later than twenty days after each Distribution Date, the Servicer
shall forward to the Trustee and the Depositor an account statement evidencing
the status of the collection account reflecting activity in the previous month
and an Officer's Certificates shall accompany such account statement certifying
that the information contained in such account statement is true and correct.
SECTION 3.20. Statement as to Compliance.
The Servicer will deliver to the Trustee and the Depositor not later than
March 20th of each calendar year, commencing in 2005, an Officers' Certificate
in the form attached hereto as
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Exhibit I stating, as to each signatory thereof, that (i) a review of the
activities of the Servicer during the preceding calendar 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. In
addition to the foregoing, the Servicer will, to the extent reasonable, give any
other servicing information required by the Securities and Exchange Commission
pursuant to applicable law.
SECTION 3.21. Independent Public Accountants' Servicing Report.
Not later than March 20th of each calendar year, commencing in 2005, 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 calendar 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 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.
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(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. Subject to Section 3.22(b)(v),
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 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, subject to Section 3.22(b)(v).
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 not so timely delivered, the
Trustee shall file an amended Form 10-K, at the expense of the Servicer,
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) subject to Section 3.22(b)(v) hereof, 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 the Certification (the "Trustee 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 the Certification (the "Servicer
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Certification"). The Servicer Certification shall be delivered to the Depositor
and the Trustee no later than March 20th or if such day is not a Business Day,
the preceding Business Day, each year (subject to Section 3.22(b)(v) hereof).
In addition, (A) the Trustee shall indemnify and hold harmless the
Depositor and its 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
third party claims based upon a breach of the Trustee's obligations under this
Section 3.22(b) or any material misstatement contained in the Trustee
Certification, other than as a result of incorrect information provided to the
Trustee by the Servicer, 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 that such Person may sustain arising out of third
party claims based upon a breach of the Servicer's obligations under this
Section 3.22(b)(iii), any material misstatement or omission contained in the
Servicer's Certification or any information correctly derived by the Trustee and
included in a Form 8-K or Form 10-K from information provided to the Trustee by
the Servicer under this Agreement. 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 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.
(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 15 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 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, subject to
applicable laws, be taken in the name of the Trustee, or its nominee, in trust
for the benefit of the Certificateholders or in the name of the Servicer in
accordance with the Servicer's customary servicing practices and held for the
benefit of the Trust Fund. The Servicer, on behalf of REMIC
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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 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 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, operate and
dispose of 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
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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,
addressed 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;
(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
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(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.
(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).
(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 the
Code. Such reports shall be in form and substance sufficient to meet the
reporting requirements 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
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lesser of (A) the aggregate of the Prepayment Interest Shortfalls for the
related Distribution Date and (B) 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. [Reserved].
SECTION 3.28. [Reserved].
SECTION 3.29. Advance Facility.
The Servicer is hereby authorized to enter into a financing or other
facility (any such arrangement, an "Advance Facility") under which (1) the
Servicer sells, assigns or pledges to another Person (together with such
Person's successors and assigns, an "Advancing Person") the Servicer's rights
under this Agreement to be reimbursed for any Advances or Servicing Advances
and/or (2) an Advancing Person agrees to fund some or all Advances and/or
Servicing Advances required to be made by the Servicer pursuant to this
Agreement. No consent of the Depositor, the Trustee, the Certificateholders or
any other party shall be required before the Servicer may enter into an Advance
Facility. The Servicer shall notify each other party to this Agreement in
writing prior to or promptly after entering into or terminating any Advance
Facility stating the identity of the Advancing Person. Notwithstanding the
existence of any Advance Facility under which an Advancing Person agrees to fund
Advances and/or Servicing Advances on the Servicer's behalf, the Servicer shall
remain obligated pursuant to this Agreement to make Advances and Servicing
Advances pursuant to and as required by this Agreement. If the Servicer enters
into an Advance Facility, and for so long as an Advancing Person remains
entitled to receive reimbursement for any Advances including Nonrecoverable
Advances ("Advance Reimbursement Amounts") and/or Servicing Advances including
Nonrecoverable Advances ("Servicing Advance Reimbursement Amounts" and together
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with Advance Reimbursement Amounts, "Reimbursement Amounts") (in each case to
the extent such type of Reimbursement Amount is included in the Advance
Facility), as applicable, pursuant to this Agreement, then the Servicer shall
identify, in the Officer's Certificate described in the next two sentences, such
Reimbursement Amounts consistent with the reimbursement rights set forth in
Section 3.11(a)(ii), (iii), (vi) and (vii) and remit such Reimbursement Amounts
in accordance with Section 3.10(b) or otherwise in accordance with the
documentation establishing the Advance Facility to such Advancing Person or to a
trustee, agent or custodian (an "Advance Facility Trustee") designated by such
Advancing Person. Notwithstanding the foregoing, if so required pursuant to the
terms of the Advance Facility, the Servicer may direct, and if so directed the
Trustee is hereby authorized to and shall pay to the Advance Facility Trustee
the Reimbursement Amounts identified pursuant to the preceding sentence. To the
extent that an Advancing Person funds any Advance and the Servicer provides the
Trustee with an Officer's Certificate that such Advancing Person is entitled to
reimbursement, such Advancing Person shall be entitled to receive reimbursement
pursuant to this Agreement for such amount to the extent provided in this
section. Such Officer's Certificate must specify the amount of the
reimbursement, the remittance date, the Section of this Agreement that permits
the applicable Advance to be reimbursed and either the section(s) of the Advance
Facility that entitle the Advancing Person to request reimbursement from the
Trustee, rather than the Servicer, or proof of an event of default by the
Servicer under the Advance Facility entitling the Advancing Person to
reimbursement from the Trustee. Notwithstanding anything to the contrary herein,
in no event shall Advance Reimbursement Amounts or Servicing Advance
Reimbursement Amounts be included in the Available Funds or distributed to
Certificateholders.
Reimbursement Amounts shall consist solely of amounts in respect of
Advances and/or Servicing Advances made with respect to the Mortgage Loans for
which the Servicer would be permitted to reimburse itself in accordance with
this Agreement, assuming the Servicer or the Advancing Person had made the
related Advance(s) and/or Servicing Advance(s). Notwithstanding the foregoing,
except with respect to reimbursement of Nonrecoverable Advances as set forth in
this Agreement, no Person shall be entitled to reimbursement from funds held in
the Collection Account for future distribution to Certificateholders pursuant to
this Agreement. None of the Depositor or the Trustee shall have any duty or
liability with respect to the calculation of any Reimbursement Amount and shall
be entitled to rely, without independent investigation, on the Officer's
Certificate provided pursuant to this Section 3.29, nor shall the Depositor or
the Trustee have any responsibility to track or monitor the administration of
the Advance Facility and the Depositor shall not have any responsibility to
track, monitor or verify the payment of Reimbursement Amounts to the related
Advancing Person or Advance Facility Trustee. The Servicer shall maintain and
provide to any successor servicer and (upon request) the Trustee a detailed
accounting on a loan by loan basis as to amounts advanced by, sold, pledged or
assigned to, and reimbursed to any Advancing Person. The successor servicer
shall be entitled to rely on any such information provided by the predecessor
servicer, and the successor servicer shall not be liable for any errors in such
information. Any successor Servicer shall reimburse the predecessor Servicer and
itself for outstanding Advances and Servicing Advances, respectively, with
respect to each Mortgage Loan on a first in, first out ("FIFO") basis; provided
that the successor Servicer has received prior written notice from the
predecessor Servicer or the Advancing Person of reimbursement amounts owed to
the predecessor Servicer. Liquidation Proceeds with respect to a Mortgage Loan
shall be applied to reimburse Advances outstanding with respect to that Mortgage
Loan before being applied to reimburse Servicing Advances outstanding with
respect to that Mortgage Loan.
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An Advancing Person who receives an assignment or pledge of the rights to
be reimbursed for Advances and/or Servicing Advances, and/or whose obligations
hereunder are limited to the funding or purchase of Advances and/or Servicing
Advances shall not be required to meet the criteria for qualification of a
subservicer set forth in this Agreement.
Upon the direction of and at the expense of the Servicer, the Trustee
agrees to execute such acknowledgments, certificates, and other documents
provided by the Servicer recognizing the interests of any Advance Facility
Trustee in such Reimbursement Amounts as the Servicer may cause to be made
subject to Advance Facilities pursuant to this Section 3.29.
The Servicer shall remain entitled to be reimbursed for all Advances and
Servicing Advances funded by the Servicer to the extent the related rights to be
reimbursed therefor have not been sold, assigned or pledged to an Advancing
Person.
The Servicer shall indemnify the Depositor, the Trustee, any successor
servicer and the Trust Fund for any loss, liability or damage resulting from any
claim by the related Advancing Person, except to the extent that such claim,
loss, liability or damage resulted from or arose out of negligence, recklessness
or willful misconduct or breach of its duties hereunder on the part of the
Depositor, the Trustee or any successor servicer.
Any amendment to this Section 3.29 or to any other provision of this
Agreement that may be necessary or appropriate to effect the terms of an Advance
Facility as described generally in this Section 3.29, including amendments to
add provisions relating to a successor servicer, may be entered into by the
Trustee, the Depositor and the Servicer without the consent of any
Certificateholder, provided such amendment complies with Section 11.01 hereof.
All reasonable costs and expenses (including attorneys' fees) of each party
hereto of any such amendment shall be borne solely by the Servicer. Prior to
entering into an Advance Facility, the Servicer shall notify the Advancing
Person in writing that: (a) the Advances and/or Servicing Advances purchased,
financed by and/or pledged to the Advancing Person are obligations owed to the
Servicer on a non-recourse basis payable only from the cash flows and proceeds
received under this Agreement for reimbursement of Advances and/or Servicing
Advances only to the extent provided herein, and the Trustee and the Trust are
not otherwise obligated or liable to repay any Advances and/or Servicing
Advances financed by the Advancing Person and (b) the Trustee shall not have any
responsibility to calculate any Reimbursement Amounts or to track or monitor the
administration of the Advance Facility between the Servicer and the Advancing
Person.
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ARTICLE IV
FLOW OF FUNDS
SECTION 4.01. Distributions.
(a)(I) On each Distribution Date, to the extent of funds on deposit in the
Distribution Account, the Trustee shall withdraw from the Distribution Account
that portion of Available Funds for such Distribution Date consisting of the
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 Interest Remittance Amount remaining for such
Distribution Date:
(i) to the Holders of the Class A Certificates, on a PRO RATA basis
based on the entitlement of each such Class, the Monthly Interest
Distributable Amount and the Unpaid Interest Shortfall Amount, if any, for
such Certificates;
(ii) to the Holders of the Class M-1 Certificates, the Monthly
Interest Distributable Amount allocable to such Certificates;
(iii) to the Holders of the Class M-2 Certificates, the Monthly
Interest Distributable Amount allocable to such Certificates;
(iv) to the Holders of the Class M-3 Certificates, the Monthly
Interest Distributable Amount allocable to such Certificates;
(v) to the Holders of the Class M-4 Certificates, the Monthly
Interest Distributable Amount allocable to such Certificates;
(vi) to the Holders of the Class M-5 Certificates, the Monthly
Interest Distributable Amount allocable to such Certificates;
(vii) to the Holders of the Class M-6 Certificates, the Monthly
Interest Distributable Amount allocable to such Certificates;
(viii) to the Holders of the Class M-7 Certificates, the Monthly
Interest Distributable Amount allocable to such Certificates;
(ix) to the Holders of the Class M-8 Certificates, the Monthly
Interest Distributable Amount allocable to such Certificates;
(x) to the Holders of the Class M-9 Certificates, the Monthly
Interest Distributable Amount allocable to such Certificates;
(xi) to the Holders of the Class B-1 Certificates, the Monthly
Interest Distributable Amount allocable to such Certificates; and
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(xii) to the Holders of the Class B-2 Certificates, the Monthly
Interest Distributable Amount allocable to such Certificates.
(b) On each Distribution Date (a) prior to the Stepdown Date or (b) on
which a Trigger Event is in effect, to the extent of funds on deposit in the
Distribution Account, distributions in respect of principal to the extent of the
Principal Distribution Amount shall be made in the following amounts and order
of priority:
(i) first, to the Holders of the Class A Certificates (allocated
among the Class A Certificates in the priority described below), until the
Certificate Principal Balances thereof have been reduced to zero;
(ii) second, to the Holders of the Class M-1 Certificates, until the
Certificate Principal Balances thereof have been reduced to zero;
(iii) third, to the Holders of the Class M-2 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero;
(iv) fourth, to the Holders of the Class M-3 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero;
(v) fifth, to the Holders of the Class M-4 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero;
(vi) sixth, to the Holders of the Class M-5 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero;
(vii) seventh, to the Holders of the Class M-6 Certificates, until
the Certificate Principal Balance thereof has been reduced to zero;
(viii) eighth, to the Holders of the Class M-7 Certificates, until
the Certificate Principal Balance thereof has been reduced to zero;
(ix) ninth, to the Holders of the Class M-8 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero;
(x) tenth, to the Holders of the Class M-9 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero;
(xi) eleventh, to the Holders of the Class B-1 Certificates, until
the Certificate Principal Balance thereof has been reduced to zero; and
(xii) twelfth, to the Holders of the Class B-2 Certificates, until
the Certificate Principal Balance thereof has been reduced to zero.
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(c) On each Distribution Date (a) on or after the Stepdown Date and (b) on
which a Trigger Event is not in effect, to the extent of funds on deposit in the
Distribution Account, distributions in respect of principal to the extent of the
Principal Distribution Amount shall be made in the following amounts and order
of priority:
(i) first, to the Holders of the Class A Certificates (allocated
among the Class A Certificates in the priority described below), the
Senior Principal Distribution Amount until the Certificate Principal
Balance thereof has been reduced to zero;
(ii) second, to the Holders of the Class M-1 Certificates, the Class
M-1 Principal Distribution Amount until the Certificate Principal Balances
thereof have been reduced to zero;
(iii) third, to the Holders of the Class M-2 Certificates, the Class
M-2 Principal Distribution Amount until the Certificate Principal Balance
thereof has been reduced to zero;
(iv) fourth, 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;
(v) fifth, to the Holders of the Class M-4 Certificates, the Class
M-4 Principal Distribution Amount until the Certificate Principal Balance
thereof has been reduced to zero;
(vi) sixth, to the Holders of the Class M-5 Certificates, the Class
M-5 Principal Distribution Amount until the Certificate Principal Balance
thereof has been reduced to zero;
(vii) seventh, to the Holders of the Class M-6 Certificates, the
Class M-6 Principal Distribution Amount until the Certificate Principal
Balance thereof has been reduced to zero;
(viii) eighth, to the Holders of the Class M-7 Certificates, the
Class M-7 Principal Distribution Amount until the Certificate Principal
Balance thereof has been reduced to zero;
(ix) ninth, to the Holders of the Class M-8 Certificates, the Class
M-8 Principal Distribution Amount until the Certificate Principal Balance
thereof has been reduced to zero;
(x) tenth, to the Holders of the Class M-9 Certificates, the Class
M-9 Principal Distribution Amount until the Certificate Principal Balance
thereof has been reduced to zero;
(xi) eleventh, to the Holders of the Class B-1 Certificates, the
Class B-1 Principal Distribution Amount until the Certificate Principal
Balance thereof has been reduced to zero; and
(xii) twelfth, to the Holders of the Class B-2 Certificates, the
Class B-2 Principal Distribution Amount until the Certificate Principal
Balance thereof has been reduced to zero.
With respect to the Class A Certificates, all principal distributions will
be distributed sequentially, first, to the Holders of the Class A-1
Certificates, until the Certificate Principal Balance
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of the Class A-1 Certificates has been reduced to zero, second, to the Holders
of the Class A-2 Certificates, until the Certificate Principal Balance of the
Class A-2 Certificates has been reduced to zero and third, to the Holders of the
Class A-3 Certificates, until the Certificate Principal Balance of the Class A-3
Certificates has been reduced to zero; provided, however, on any Distribution
Date on which the aggregate Certificate Principal Balance of the Mezzanine
Certificates, the Class B Certificates and the Class C Certificates has been
reduced to zero, notwithstanding anything contained herein to the contrary, all
distributions of principal to the Class A Certificates will be distributed
concurrently, on a PRO RATA basis based on the Certificate Principal Balance of
each such Class.
(d) On each Distribution Date, to the extent of funds on deposit in the
Distribution Account, 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 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) to the Holders of the Class M-2 Certificates, in an amount
equal to the Unpaid Interest Shortfall Amount allocable to such
Certificates;
(v) to the Holders of the Class M-2 Certificates, in an amount equal
to the Allocated Realized Loss Amount allocable to such Certificates;
(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 Holders of the Class M-4 Certificates, in an amount
equal to the Unpaid Interest Shortfall Amount allocable to such
Certificates;
(ix) to the Holders of the Class M-4 Certificates, in an amount
equal to the Allocated Realized Loss Amount allocable to such
Certificates;
(x) to the Holders of the Class M-5 Certificates, in an amount equal
to the Unpaid Interest Shortfall Amount allocable to such Certificates;
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(xi) to the Holders of the Class M-5 Certificates, in an amount
equal to the Allocated Realized Loss Amount allocable to such
Certificates;
(xii) to the Holders of the Class M-6 Certificates, in an amount
equal to the Unpaid Interest Shortfall Amount allocable to such
Certificates;
(xiii) to the Holders of the Class M-6 Certificates, in an amount
equal to the Allocated Realized Loss Amount allocable to such
Certificates;
(xiv) to the Holders of the Class M-7 Certificates, in an amount
equal to the Unpaid Interest Shortfall Amount allocable to such
Certificates;
(xv) to the Holders of the Class M-7 Certificates, in an amount
equal to the Allocated Realized Loss Amount allocable to such
Certificates;
(xvi) to the Holders of the Class M-8 Certificates, in an amount
equal to the Unpaid Interest Shortfall Amount allocable to such
Certificates;
(xvii) to the Holders of the Class M-8 Certificates, in an amount
equal to the Allocated Realized Loss Amount allocable to such
Certificates;
(xviii) to the Holders of the Class M-9 Certificates, in an amount
equal to the Unpaid Interest Shortfall Amount allocable to such
Certificates;
(xix) to the Holders of the Class M-9 Certificates, in an amount
equal to the Allocated Realized Loss Amount allocable to such
Certificates;
(xx) to the Holders of the Class B-1 Certificates, in an amount
equal to the Unpaid Interest Shortfall Amount allocable to such
Certificates;
(xxi) to the Holders of the Class B-1 Certificates, in an amount
equal to the Allocated Realized Loss Amount allocable to such
Certificates;
(xxii) to the Holders of the Class B-2 Certificates, in an amount
equal to the Unpaid Interest Shortfall Amount allocable to such
Certificates;
(xxiii) to the Holders of the Class B-2 Certificates, in an amount
equal to the Allocated Realized Loss Amount allocable to such
Certificates;
(xxiv) to the Net WAC Rate Carryover Reserve Account, the amount by
which any Net WAC Rate Carryover Amounts for such Distribution Date exceed
the amounts received by the Trustee under the Cap Contract;
(xxv) to the Holders of the Class C Certificates, (a) the Monthly
Interest Distributable Amount and any Overcollateralization Release Amount
for such Distribution Date and (b) on any Distribution Date on which the
aggregate Certificate Principal Balance
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of the Floating Rate Certificates has been reduced to zero, any remaining
amounts in reduction of the Certificate Principal Balance of the Class C
Certificates, until the Certificate Principal Balance thereof has been
reduced to zero;
(xxvi) 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
(xxvii) any remaining amounts to the Holders of the Residual
Certificates (in respect of the Class R-1 Interest, the Class R-2
Interest, the Class R-3 Interest or the Class R-4 Interest, as
appropriate).
Following the foregoing distributions, an amount equal to the amount of
Subsequent Recoveries deposited into the Collection Account pursuant to Section
3.10 shall be applied to increase the Certificate Principal Balance of the Class
of Certificates with the Highest Priority up to the extent of such Realized
Losses previously allocated to that Class of Certificates pursuant to Section
4.08. An amount equal to the amount of any remaining Subsequent Recoveries shall
be applied to increase the Certificate Principal Balance of the Class of
Certificates with the next Highest Priority, up to the amount of such Realized
Losses previously allocated to that Class of Certificates pursuant to Section
4.08. Holders of such Certificates will not be entitled to any distribution in
respect of interest on the amount of such increases for any Interest Accrual
Period preceding the Distribution Date on which such increase occurs. Any such
increases shall be applied to the Certificate Principal Balance of each
Certificate of such Class in accordance with its respective Percentage Interest.
On each Distribution Date, after making the distributions of the Available
Funds as set forth above, the Trustee will withdraw from the Net WAC Rate
Carryover Reserve Account, to the extent of amounts remaining on deposit
therein, the amount of any Net WAC Rate Carryover Amount for such Distribution
Date and distribute such amount in the following order of priority:
(i) concurrently, to each Class of Class A Certificates, the related Cap
Amount, from payments made under the Cap Contract, in each case up to a maximum
amount equal to the related Net WAC Rate Carryover Amount for such Distribution
Date;
(ii) sequentially, to the Class X-0, Xxxxx X-0, Class M-3, Class M-4,
Class M-5, Class M-6, Class M-7, Class M-8, Class M-9, Class B-1 and Class B-2
Certificates, in that order, the related Cap Amount, from payments made under
the Cap Contract, in each case up to a maximum amount equal to the related Net
WAC Rate Carryover Amount for such Distribution Date;
(iii) concurrently, to each Class of Class A Certificates, the related Net
WAC Rate Carryover Amount remaining undistributed pursuant to clause (i) above,
on a PRO RATA basis based on such respective remaining Net WAC Rate Carryover
Amounts; and
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(iv) sequentially, to the Class X-0, Xxxxx X-0, Class M-3, Class M-4,
Class M-5, Class M-6, Class M-7, Class M-8, Class M-9, Class B-1 and Class B-2
Certificates, in that order, the related Net WAC Rate Carryover Amount remaining
undistributed pursuant to clause (ii) above.
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 and on deposit in the Distribution Account 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.
(e) 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 if such Certificateholder has provided to the Trustee wire
transfer instructions by five Business Days prior to such Record Date.
Distributions among Certificateholders shall be made in proportion to the
Percentage Interests evidenced by the Certificates held by such
Certificateholders.
(f) 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.
(g) Except as otherwise provided in Section 10.01, whenever the Trustee
expects that the final distribution with respect to any Class of Certificates
will be made on the next Distribution Date, the Trustee shall, no later than two
days prior to the related Distribution Date, send, by overnight delivery or by
registered mail, to each Holder on such date of such Class of Certificates a
notice to the effect that:
(i) the Trustee expects that the final distribution with respect to
the Certificates of such Class will be made on such Distribution Date but
only upon presentation and surrender of such Certificates at the office of
the Trustee therein specified, and
(ii) no interest shall accrue on such Certificates from and after
the end of the calendar month preceding such final Distribution Date.
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 pursuant to Sections 3.19 and 4.04, 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 which shall include the following information:
(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 (if any) and
the Overcollateralization Target Amount as of such Distribution Date and
the Excess Overcollateralized Amount (if any) 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 Stated 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 Stated 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) [Reserved];
(x) the total number and cumulative Stated Principal Balance of all
REO Properties as of the Close of Business of the last day of the
preceding Prepayment Period;
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(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
since the Closing Date and the aggregate amount of Subsequent Recoveries
received during the related Prepayment Period and the cumulative amount of
Subsequent Recoveries received since the Closing Date;
(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 Floating Rate
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 Floating Rate Certificates and the Class C Certificates for such
Distribution Date and the Unpaid Interest Shortfall Amount, if any, with
respect to the Floating Rate Certificates and the Class C Certificates for
such Distribution Date;
(xvi) the aggregate amount of any Net Prepayment Interest Shortfalls
for such Distribution Date;
(xvii) the Credit Enhancement Percentage for such Distribution Date;
(xviii) the Net WAC Rate Carryover Amount for each Class of Floating
Rate 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 amount of Available Funds;
(xxii) the respective Pass-Through Rates applicable to each Class of
Floating Rate Certificates and the Class C Certificates for such
Distribution Date and the Pass-Through Rate applicable to each Class of
Floating Rate Certificates for the immediately succeeding Distribution
Date; and
(xxiii) payments, if any, received under the Cap Contract.
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
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and the Rating Agencies via the Trustee's internet website located at
"xxxx://xxx.xxxxxxxx.xxx/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 website are entitled to have a paper copy mailed to them via
first class mail by written notice to the Trustee at its Corporate Trust Office.
The Trustee's responsibility for disbursing the above information to the
Certificateholders is limited to the availability, timeliness and accuracy of
the information derived from the Servicer. The foregoing information shall be
reported to the Trustee each month on or before the Servicer Remittance Date.
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 Certificateholder, if requested in writing by 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 in 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
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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.
On or before 1:00 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
the 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 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
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of the Servicer delivered to the Depositor and the Trustee. Furthermore, the
Servicer shall not be required to advance Relief Act Interest Shortfalls.
SECTION 4.05. [Reserved].
SECTION 4.06. 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, JPMorgan Chase Bank, as Trustee, in trust for registered
Holders of CHEC Loan Trust 2004-1, Asset-Backed Certificates, Series 2004-1."
All amounts deposited in the Net WAC Rate Carryover Reserve Account shall be
distributed to the Holders of the Floating Rate Certificates in the manner set
forth in Section 4.01(d).
On each Distribution Date as to which there is a Net WAC Rate Carryover
Amount payable to the Floating Rate 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)(xxiv), rather than distributing such amounts to the Class C
Certificateholders. In addition, any payments received by the Trustee under the
Cap Contract on each Distribution Date will be deposited into the Net WAC Rate
Carryover Reserve Account. On each such Distribution Date, the Trustee shall
hold all such amounts for the benefit of the Holders of the Floating Rate
Certificates, and will distribute such amounts to the Holders of the Floating
Rate Certificates in the amounts and priorities set forth in Section 4.01(d).
On each Distribution Date, any amounts remaining in the Net WAC Rate
Reserve Account after the payment of any Net WAC Rate Carryover Amounts on the
Floating Rate Certificates for such Distribution Date, shall be payable to the
Servicer.
For federal and state income tax purposes, the Servicer will be deemed to
be the owner of the Net WAC Rate Carryover Reserve Account. All amounts
deposited into the Net WAC Rate Carryover Reserve Account (other than amounts
received under the Cap Contract) shall be treated as amounts distributed by
REMIC 2 to the Holder of the Class C Interest and by REMIC 3 to the Holder 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). Upon the termination of the Trust, or the payment in full of the
Floating Rate Certificates, all amounts remaining on deposit in the Net WAC Rate
Carryover Reserve Account will be released by the Trust and distributed to the
Servicer or its designee. 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 Floating Rate 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 above 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
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that such direction is given for good and valuable consideration, the receipt
and sufficiency of which is acknowledged by such acceptance.
Amounts on deposit in the Net WAC Rate Carryover Reserve Account shall
remain uninvested.
For federal tax return and information reporting, the purchase price
allocated to the Cap Contract in respect of any Net WAC Rate Carryover Amount
may be obtained from the Trustee, upon receipt from the Depositor.
SECTION 4.07. Distributions on the REMIC 1 Regular Interests.
(a) On each Distribution Date, the Trustee shall cause in the following
order of priority, the following amounts which shall be deemed 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 LTA3, REMIC 1 Regular Interest
LTM1, REMIC 1 Regular Interest LTM2, REMIC 1 Regular Interest LTM3, REMIC
1 Regular Interest LTM4, REMIC 1 Regular Interest LTM5, REMIC 1 Regular
Interest LTM6, REMIC 1 Regular Interest LTM7, REMIC 1 Regular Interest
LTM8, REMIC 1 Regular Interest LTM9, REMIC 1 Regular Interest LTB1, REMIC
1 Regular Interest LTB2, REMIC 1 Regular Interest LTZZ and REMIC 1 Regular
Interest LTP, on a PRO RATA basis, 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 such amount will be payable to the Holders of REMIC 1
Regular Interest LTA1, REMIC 1 Regular Interest LTA2, REMIC 1 Regular
Interest LTA3, REMIC 1 Regular Interest LTM1, REMIC 1 Regular Interest
LTM2, REMIC 1 Regular Interest LTM3, REMIC 1 Regular Interest LTM4, REMIC
1 Regular Interest LTM5, REMIC 1 Regular Interest LTM6, REMIC 1 Regular
Interest LTM7, REMIC 1 Regular Interest LTM8, REMIC 1 Regular Interest
LTM9, REMIC 1 Regular Interest LTB1 and REMIC 1 Regular Interest LTB2 in
the same proportion as the Overcollateralization Deficiency Amount is
allocated to the Corresponding Certificates and the Uncertificated
Principal Balance of the REMIC 1 Regular Interest LTZZ shall be increased
by such amount; and
(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:
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(a) 98.00% of such remainder to the Holders of REMIC 1 Regular
Interest LTAA and REMIC 1 Regular Interest LTP, 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) 2.00 % of such remainder, first to the Holders of REMIC 1
Regular Interest LTA1, REMIC 1 Regular Interest LTA2, REMIC 1
Regular Interest LTA3, REMIC 1 Regular Interest LTM1, REMIC 1
Regular Interest LTM2, REMIC 1 Regular Interest LTM3, REMIC 1
Regular Interest LTM4, REMIC 1 Regular Interest LTM5, REMIC 1
Regular Interest LTM6, REMIC 1 Regular Interest LTM7, REMIC 1
Regular Interest LTM8, REMIC 1 Regular Interest LTM9, REMIC 1
Regular Interest LTB1 and REMIC 1 Regular Interest LTB2, equal to
1.00% of and 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 and second, to the Holders of REMIC 1 Regular
Interest LTZZ, 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-2 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 B-2 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero; fourth, to the Class B-1 Certificates,
until the Certificate Principal Balance thereof has been reduced to zero; fifth,
to the Class M-9 Certificates, until the Certificate Principal Balance thereof
has been reduced to zero; sixth, to the Class M-8 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero; seventh, to the
Class M-7 Certificates, until the Certificate Principal Balance thereof has been
reduced to zero; eighth, to the Class M-6 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero;
107
ninth, to the Class M-5 Certificates, until the Certificate Principal Balance
thereof has been reduced to zero; tenth, to the Class M-4 Certificates, until
the Certificate Principal Balance thereof has been reduced to zero; eleventh, to
the Class M-3 Certificates, until the Certificate Principal Balance thereof has
been reduced to zero; twelfth, to the Class M-2 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero; and thirteenth,
to the Class M-1 Certificates, until the Certificate Principal Balance thereof
has been reduced to zero. All Realized 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 by reducing the amount otherwise payable in respect
thereof pursuant to Section 4.01(d)(xxv). 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 LTB2 and
REMIC 1 Regular Interest LTZZ, 98%, 1% and 1%, respectively, until the
Uncertificated Principal Balance of REMIC 1 Regular Interest LTB2 has been
reduced to zero; fourth, to the Uncertificated Principal Balances of REMIC 1
Regular Interest LTAA, REMIC 1 Regular Interest LTB1 and REMIC 1 Regular
Interest LTZZ, 98%, 1% and 1%, respectively, until the Uncertificated Principal
Balance of REMIC 1 Regular Interest LTB1 has been reduced to zero; fifth, to the
Uncertificated Principal Balances of REMIC 1 Regular Interest LTAA, REMIC 1
Regular Interest LTM9 and REMIC 1 Regular Interest LTZZ, 98%, 1% and 1%,
respectively, until the Uncertificated Principal Balance of REMIC 1 Regular
Interest LTM9 has been reduced to zero; sixth, to the Uncertificated Principal
Balances of REMIC 1 Regular Interest LTAA, REMIC 1 Regular Interest LTM8 and
REMIC 1 Regular Interest LTZZ, 98%, 1% and 1%, respectively, until the
Uncertificated Principal Balance of REMIC 1 Regular Interest LTM8 has been
reduced to zero; seventh, to the Uncertificated Principal Balances of REMIC 1
Regular Interest LTAA, REMIC 1 Regular Interest LTM7 and REMIC 1 Regular
Interest LTZZ, 98%, 1% and 1%, respectively, until the Uncertificated Principal
Balance of REMIC 1 Regular Interest LTM7 has been reduced to zero; eighth, to
the Uncertificated Principal Balances of REMIC 1 Regular Interest LTAA, REMIC 1
Regular Interest LTM6 and REMIC 1 Regular Interest LTZZ, 98%, 1% and 1%,
respectively, until the Uncertificated Principal Balance of REMIC 1 Regular
Interest LTM6 has been reduced to zero; ninth, to the Uncertificated Principal
Balances of REMIC 1 Regular Interest LTAA, REMIC 1 Regular Interest LTM5 and
REMIC 1 Regular Interest LTZZ, 98%, 1% and 1%, respectively, until the
Uncertificated Principal Balance of REMIC 1 Regular Interest LTM5 has been
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reduced to zero; tenth, to the Uncertificated Principal Balances of REMIC 1
Regular Interest LTAA, REMIC 1 Regular Interest LTM4 and REMIC 1 Regular
Interest LTZZ, 98%, 1% and 1%, respectively, until the Uncertificated Principal
Balance of REMIC 1 Regular Interest LTM4 has been reduced to zero; eleventh, 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; twelfth, to the Uncertificated Principal
Balances of REMIC 1 Regular Interest LTAA, REMIC 1 Regular Interest LTM2 and
REMIC 1 Regular Interest LTZZ, 98%, 1% and 1%, respectively, until the
Uncertificated Principal Balance of REMIC 1 Regular Interest LTM2 has been
reduced to zero; and thirteenth, 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 Floating Rate 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
Floating Rate Certificates shall be initially evidenced by one or more
Certificates representing a Percentage Interest with a minimum dollar
denomination of $25,000 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 be Definitive 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
110
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 (in the form of Exhibit A-19 hereto),
respectively, in each case 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 (in the
form of Exhibit A-19 hereto), respectively, in each case 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
111
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 to register a Book-Entry
Certificate to the Depository.
(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 issuing definitive, fully registered certificates
(the "Definitive Certificates") to Certificate Owners is no longer in the best
interests of the Certificate Owners, then 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 (i) or (ii) above, or the
Servicer's expense, in the case of (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 registration
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 B
Certificate, 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
such laws. In the event of any such transfer, except with respect to the initial
transfer of any Class B Certificate, 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 an 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 B
Certificate, 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 anything to the contrary contained in this Agreement, all
transfers of the Class B Certificates shall be made in reliance upon Rule 144A.
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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 Class R Certificate by the Depositor to an
"accredited investor" within the meaning of Rule 501 of the 1933 Act.
No transfer of a Class B Certificate, 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 Department of
Labor regulations promulgated at 29 C.F.R. ss. 2510.3-101 ("Plan Assets"), as
certified by such transferee in the form of Exhibit M, unless (i) in the case of
a Class C Certificate, a Class P Certificate or Residual Certificate, 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 or (ii) in the
case of a Class B Certificate, (1) it is an insurance company, (2) the source of
funds used to acquire or hold the certificate or interest therein is an
"insurance company general account," as such term is defined in Prohibited
Transaction Class Exemption ("PTCE") 95-60 and (3) the conditions in Sections I
and III of PTCE 95-60 have been satisfied. 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 be 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
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 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 PTCE 95-60), and (iii) the conditions set forth in Sections I and III
of PTCE 95-60 have been satisfied.
If any Mezzanine Certificate, Class B Certificate, Class C Certificate,
Class P Certificate or Residual Certificate or any interest therein is acquired
or held in violation of the provisions of the preceding paragraphs, 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
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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.
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
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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.
(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
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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 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 nor 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 as Servicer or Depositor, as
the case may be, hereunder. 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 (i) any legal action relating to this Agreement or the
Certificates, other than any loss, liability or expense incurred by reason of
its willful misfeasance, bad faith or negligence or by reason of its reckless
disregard of its obligations and duties hereunder or by reason of its failure to
perform its obligations or duties hereunder and (ii) any breach of a
representation or warranty regarding the Mortgage Loans. The Servicer or the
Depositor may undertake any such action which it may deem necessary or desirable
in respect of this 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
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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 assumption of servicing duties by the Trustee or the
appointment of such successor) and obligations under this Agreement. Any such
resignation shall not relieve the Servicer of responsibility for any of the
obligations specified in Sections 7.01 and 7.02 as obligations that survive the
resignation or receipt of notice of termination of the Servicer
Except as expressly provided in this Agreement, 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.
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].
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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.
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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 the
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 (or if such failure or breach cannot be remedied within
30 days, then such remedy shall have been commenced within 30 days and
diligently pursued thereafter; provided, however, that in no event shall
such failure or breach be allowed to exist for a period of greater than 90
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
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statute, make an assignment for the benefit of its creditors or
voluntarily suspend payment of its obligations; or
(v) Centex Corporation or its successors shall fail to own, directly
or indirectly, at least 51% of the Servicer unless the Servicer shall be
rated at least investment grade by each of Standard & Poor's and Xxxxx'x
and, if rated by Fitch Ratings, by Fitch Ratings.
(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, and the Servicer
shall have received, 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 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 Escrow 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.
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Notwithstanding the termination of the Servicer hereunder, the Servicer
shall be entitled to reimbursement of all unpaid Servicing Fees and all
unreimbursed Advances and Servicing Advances in the manner and at the times set
forth herein.
SECTION 7.02. Trustee to Act; Appointment of Successor.
(a) From 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 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. It is understood and agreed by
the parties hereto that there will be a period of transition (not to exceed 90
days) before the transition of servicing obligations is fully effective. 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, unless the Trustee is
prohibited by law from so acting, 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 reasonable 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).
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(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.
SECTION 7.03. Waiver of Defaults.
The Majority Certificateholders may, on behalf of all Certificateholders,
waive, in writing, 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 written 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 lapse of time or both, would constitute a
Servicer Event of Termination or within 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 on their face 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 on its face 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 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 or investigating the
facts related thereto;
(iii) the Trustee shall not be liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in accordance
with the direction of the Majority Certificateholders relating to the
time, method and place of conducting any proceeding for
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any 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) through (iv) of Section 7.01(a) unless a Responsible
Officer of the Trustee at the Corporate Trust Office obtains actual
knowledge of such failure or the Trustee receives, at the Corporate Trust
Office, written notice of such failure from 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 advice or Opinion
of Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in good
faith and in accordance with such advice or Opinion of Counsel;
(iii) the Trustee shall 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;
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(iv) the Trustee shall not be liable for any action taken, suffered
or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Agreement;
(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 Certificateholders; 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. 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 or a custodian; and
(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.
(b) The Depositor hereby directs the Trustee to execute, deliver and
perform its obligations under the Cap Contract on the Closing Date and
thereafter on behalf of the Holders of the Class A Certificates, the Mezzanine
Certificates and the Class B Certificates. The Seller, the Depositor, the
Servicer and the Holders of the Class A Certificates, the Mezzanine Certificates
and the Class B Certificates by their acceptance of such Certificates
acknowledge and agree that the Trustee shall execute, deliver and perform its
obligations under the Cap Contract and shall do so solely in its capacity as
Trustee of the Trust Fund and not in its individual capacity.
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
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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 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 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 and any Trustee Reimbursable
Expenses. The Trustee, and any director, officer, employee or agent of the
Trustee, shall be indemnified by REMIC 1 and held harmless against any loss,
liability or "unanticipated out-of-pocket" expense incurred or paid to third
parties (which expenses shall not include salaries paid to employees, or
allocable overhead, of the Trustee) 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 the Servicer's actions or omissions in connection with this Agreement and
the Mortgage Loans for which the Trustee is indemnified under Section 8.05(b),
(ii) that constitutes
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a specific liability of the Trustee under this Agreement or (iii) 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 its obligations and duties
hereunder. 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 from the
Trust Fund that the Trustee, and 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.
(b) The Servicer agrees to indemnify the Trustee and 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 or 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 any
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 have 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
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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 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
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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.
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
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee to act as co- trustee or co-trustees, jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of the Trust, 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.
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Every instrument appointing any separate trustee or co-trustee shall refer to
this Agreement and the conditions of this Article VIII. Each separate trustee
and co-trustee, upon its acceptance of the trusts conferred, shall be vested
with the estates or property specified in its instrument of appointment, either
jointly with the Trustee or separately, as may be provided therein, subject to
all the provisions of this Agreement, specifically including every provision of
this Agreement relating to the conduct of, affecting the liability of, or
affording protection to, the Trustee. Every such instrument shall be filed with
the Trustee and a copy thereof given to the 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 upon 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 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.
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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 written direction of the Majority Certificateholders, or otherwise may,
proceed to protect and enforce its rights and the rights of the
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 Servicer shall pay any and all tax-related expenses (not including
taxes) of each REMIC, including but not limited to any professional fees or
expenses related to audits or any administrative or judicial proceedings with
respect to each REMIC that involve the Internal Revenue Service or state tax
authorities, but only to the extent that (i) such expenses are ordinary or
routine expenses, including expenses of a routine audit but not expenses of
litigation (except as described in (ii)); or (ii) such expenses or liabilities
(including taxes and penalties) are attributable to the negligence or willful
misconduct of the Servicer in fulfilling its duties hereunder. The Servicer
shall be entitled to reimbursement of expenses to the extent provided in clause
(i) above from the Collection Account.
(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 of 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 "Tax Matters Person") with respect to REMIC 1 and REMIC 2
and shall act as the 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 with respect to REMIC 3 and REMIC 4 and
shall act as the 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
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of any REMIC and otherwise act on behalf of any REMIC in relation to any tax
matter involving the Trust.
(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.
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(k) [Reserved].
(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 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 the Residual Certificate, as applicable,
nor for any such Losses resulting from misinformation provided by any such
Person 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
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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 Servicer and the Trust Fund against any and all Losses resulting
from such negligence; provided, however, that the Trustee shall not be liable
for any such Losses attributable to the action or inaction of the Servicer, the
Depositor or the Holder of the Residual Certificate, as applicable, nor for any
such Losses resulting from misinformation provided by any such Person 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, the obligation of the Servicer to send certain notices as
hereinafter set forth and the indemnification obligations of the Servicer to the
Trustee hereunder) 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 Terminator (as defined below) of the Mortgage Loans as described below
and (iv) the Distribution Date in July 2034. 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 (x) fails to exercise such option or (y) is the Seller, Greenwich
Capital Markets, Inc. or an Affiliate of either of them, the Servicer (with the
written consent of the Depositor or an Affiliate thereof, such consent not to be
unreasonably withheld) (either such Holder or the Servicer, as applicable, the
"Terminator"), may, at its option, terminate this Agreement on any date on which
the aggregate of the Stated 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 Stated Principal Balance 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 greater of (i) the Stated Principal Balance of the Mortgage
Loans and the appraised value of any REO Properties, such appraisal to be
conducted by an Independent appraiser mutually agreed upon by the Terminator and
the Trustee in their reasonable discretion and (ii) the fair market value of the
Mortgage Loans and the REO Properties (as determined by the Terminator and, to
the extent that the Floating Rate Certificates will not receive all amounts owed
to it as a result of the termination, the Trustee, 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)), in each case 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 Amount (the "Termination Price");
provided, however, such option may only be exercised if the Termination Price is
sufficient to pay all interest accrued on, as well as amounts necessary to
retire the note balance of, each class of notes issued pursuant to an indenture,
secured, at least in part, by the Class C Certificates, the Class P Certificates
and/or the Residual Certificates.
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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 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 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 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
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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 each Rating Agency 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 nor 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 each Rating Agency 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
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members of an association; nor shall any Certificateholder be under any
liability to any third person by reason of any action taken by the parties to
this Agreement pursuant to any provision hereof.
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, Centex Home Equity Company, LLC, 0000 X.
Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxx, Xxxxx 00000, Attention: Chief Financial
Officer, with a copy to the General Counsel, 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, the Corporate Trust Office,
Attention: CHEC 2004-1 or such other address or telecopy number as may hereafter
be furnished to the Depositor and the Servicer in writing by the
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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 or telecopy number 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) The Trustee 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 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 the Distribution 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.
(b) In addition, the Trustee shall promptly make available on its website
initially located at xxx.xxxxxxxx.xxx/xxx to each Rating Agency copies of each
Statement to
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Certificateholders described in Sections 4.03 and 3.19 (to the extent received
by it from the Servicer) 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) Xxxxx'x
Investors Service, Inc., 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 and (ii)
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
an 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.
(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
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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.
145
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:
----------------------------------------
Name:
Title:
CENTEX HOME EQUITY COMPANY, LLC,
as Servicer
By:
----------------------------------------
Name:
Title:
JPMORGAN CHASE BANK, as Trustee
By:
----------------------------------------
Name:
Title:
STATE OF )
) ss.:
COUNTY OF )
On the ____ day of July 2004, 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 ____ day of July 2004, before me, a notary public in and for said
State, personally appeared _______________ known to me to be a _______________
of Centex Home Equity Company, LLC, 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 ___ day of July 2004 before me, a notary public in and for said
State, personally appeared __________________, known to me to be an
_____________________ of JPMorgan Chase Bank, a New York banking corporation
that executed the within instrument, and also known to me to be the person who
executed it on behalf of 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 : July 1, 2004
First Distribution Date : August 25, 2004
Initial Certificate Principal Balance
of this Certificate ("Denomination") : $ 80,000,000.00
Original Class Certificate
Principal Balance of this Class : $ 80,000,000.00
Percentage Interest : 100.00%
Pass-Through Rate : Variable
CUSIP : 000000 XX 9
Class : A-1
Assumed Maturity Date : July 25, 2034
A-1-1
CHEC Loan Trust 2004-1
Asset-Backed Certificates,
Series 2004-1
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 and second 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 July 1, 2004 (the "Agreement") among the
Depositor, Centex Home Equity Company, LLC, as servicer (the "Servicer"), and
JPMorgan Chase Bank, a New York banking corporation, 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: July ___, 2004
CHEC LOAN TRUST 2004-1
By: JPMORGAN CHASE BANK, not in its individual
capacity, but solely as Trustee
By_________________________________
This is one of the Certificates
referenced in the within-mentioned Agreement
By__________________________________________
Authorized Signatory of
JPMORGAN CHASE BANK,
as Trustee
A-1-3
[Reverse of Class A-1 Certificate]
CHEC Loan Trust 2004-1
Asset-Backed Certificates,
Series 2004-1
This Certificate is one of a duly authorized issue of Certificates
designated as CHEC Loan Trust 2004-1, Asset-Backed Certificates, Series 2004-1
(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.
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
A-1-4
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 Stated Principal Balance of the Mortgage Loans is less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date,
the Terminator 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 [August] 2034.
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 _____________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
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 : July 1, 2004
First Distribution Date : August 25, 2004
Initial Certificate Principal Balance
of this Certificate ("Denomination") : $ 140,000,000.00
Original Class Certificate
Principal Balance of this Class : $ 140,000,000.00
Percentage Interest : 100.00%
Pass-Through Rate : Variable
CUSIP : 162765 AB 7
Class : A-2
Assumed Maturity Date : July 25, 2034
A-2-1
CHEC Loan Trust 2004-1
Asset-Backed Certificates,
Series 2004-1
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 and second 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 July 1, 2004 (the "Agreement") among the
Depositor, Centex Home Equity Company, LLC, as servicer (the "Servicer"), and
JPMorgan Chase Bank, a New York banking corporation, 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: July ___, 2004
CHEC LOAN TRUST 2004-1
By: JPMORGAN CHASE BANK, not in its individual
capacity, but solely as Trustee
By_________________________________
This is one of the Certificates
referenced in the within-mentioned Agreement
By__________________________________________
Authorized Signatory of
JPMORGAN CHASE BANK,
as Trustee
A-2-3
[Reverse of Class A-2 Certificate]
CHEC LOAN TRUST 2004-1
Asset-Backed Certificates,
Series 2004-1
This Certificate is one of a duly authorized issue of Certificates
designated as CHEC Loan Trust 2004-1, Asset-Backed Certificates, Series 2004-1
(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.
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
A-2-4
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 Stated Principal Balance of the Mortgage Loans is less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date,
the Terminator 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 [August] 2034.
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 _____________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
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 A-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.
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 : July 1, 2004
First Distribution Date : August 25, 2004
Initial Certificate Principal Balance
of this Certificate ("Denomination") : $ 32,157,000.00
Original Class Certificate
Principal Balance of this Class : $ 32,157,000.00
Percentage Interest : 100.00%
Pass-Through Rate : Variable
CUSIP : 162765 AC 5
Class : A-3
Assumed Maturity Date : July 25, 2034
A-3-1
CHEC Loan Trust 2004-1
Asset-Backed Certificates,
Series 2004-1
Class A-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 and second 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-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 A-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 A-3 Certificate (obtained by
dividing the Denomination of this Class A-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 July 1, 2004 (the "Agreement") among the
Depositor, Centex Home Equity Company, LLC, as servicer (the "Servicer"), and
JPMorgan Chase Bank, a New York banking corporation, 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-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 A-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 A-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 A-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-3-2
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: July ___, 2004
CHEC LOAN TRUST 2004-1
By: JPMORGAN CHASE BANK, not in its individual
capacity, but solely as Trustee
By_________________________________
This is one of the Certificates
referenced in the within-mentioned Agreement
By__________________________________________
Authorized Signatory of
JPMORGAN CHASE BANK,
as Trustee
A-3-3
[Reverse of Class A-3 Certificate]
CHEC LOAN TRUST 2004-1
Asset-Backed Certificates,
Series 2004-1
This Certificate is one of a duly authorized issue of Certificates
designated as CHEC Loan Trust 2004-1, Asset-Backed Certificates, Series 2004-1
(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.
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
A-3-4
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 Stated Principal Balance of the Mortgage Loans is less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date,
the Terminator 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 [August] 2034.
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-3-5
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
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-3-6
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 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 : July 1, 2004
First Distribution Date : August 25, 2004
Initial Certificate Principal Balance
of this Certificate ("Denomination") : $ 9,746,000.00
Original Class Certificate
Principal Balance of this Class : $ 9,746,000.00
Percentage Interest : 100.00%
Pass-Through Rate : Variable
CUSIP : 162765 AD 3
Class : M-1
Assumed Maturity Date : July 25, 2034
A-4-1
CHEC Loan Trust 2004-1
Asset-Backed Certificates,
Series 2004-1
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 and second 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 July 1, 2004 (the "Agreement") among the
Depositor, Centex Home Equity Company, LLC, as servicer (the "Servicer"), and
JPMorgan Chase Bank, a New York banking corporation, 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-4-2
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: July ___, 2004
CHEC LOAN TRUST 2004-1
By: JPMORGAN CHASE BANK, not in its individual
capacity, but solely as Trustee
By_________________________________
This is one of the Certificates
referenced in the within-mentioned Agreement
By__________________________________________
Authorized Signatory of
JPMORGAN CHASE BANK,
as Trustee
A-4-3
[Reverse of Class M-1 Certificate]
CHEC Loan Trust 2004-1
Asset-Backed Certificates,
Series 2004-1
This Certificate is one of a duly authorized issue of Certificates
designated as CHEC Loan Trust 2004-1, Asset-Backed Certificates, Series 2004-1
(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.
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
A-4-4
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 Stated Principal Balance of the Mortgage Loans is less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date,
the Terminator 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 [August] 2034.
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 _____________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
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-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.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A 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 : July 1, 2004
First Distribution Date : August 25, 2004
Initial Certificate Principal Balance
of this Certificate ("Denomination") : $ 8,818,000.00
Original Class Certificate
Principal Balance of this Class : $ 8,818,000.00
Percentage Interest : 100.00%
Pass-Through Rate : Variable
CUSIP :
Class : M-2
Assumed Maturity Date : July 25, 2034
A-5-1
CHEC Loan Trust 2004-1
Asset-Backed Certificates,
Series 2004-1
Class M-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 and second 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-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 M-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 M-2 Certificate (obtained by
dividing the Denomination of this Class M-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 July 1, 2004 (the "Agreement") among the
Depositor, Centex Home Equity Company, LLC, as servicer (the "Servicer"), and
JPMorgan Chase Bank, a New York banking corporation, 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-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 M-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 M-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 M-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-5-2
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: July ___, 2004
CHEC LOAN TRUST 2004-1
By: JPMORGAN CHASE BANK, not in its individual
capacity, but solely as Trustee
By_________________________________
This is one of the Certificates
referenced in the within-mentioned Agreement
By__________________________________________
Authorized Signatory of
JPMORGAN CHASE BANK,
as Trustee
A-5-3
[Reverse of Class M-2 Certificate]
CHEC Loan Trust 2004-1
Asset-Backed Certificates,
Series 2004-1
This Certificate is one of a duly authorized issue of Certificates
designated as CHEC Loan Trust 2004-1, Asset-Backed Certificates, Series 2004-1
(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.
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.
A-5-4
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 Stated Principal Balance of the Mortgage Loans is less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date,
the Terminator 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 [August] 2034.
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 _____________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
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 CERTIFICATES, THE CLASS M-1
CERTIFICATES AND THE CLASS M-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 : July 1, 2004
First Distribution Date : August 25, 2004
Initial Certificate Principal Balance
of this Certificate ("Denomination") : $ 5,569,000.00
Original Class Certificate
Principal Balance of this Class : $ 5,569,000.00
Percentage Interest : 100.00%
Pass-Through Rate : Variable
CUSIP : 162765 AF 8
Class : M-3
Assumed Maturity Date : July 25, 2034
A-6-1
CHEC Loan Trust 2004-1
Asset-Backed Certificates,
Series 2004-1
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 and second 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 July 1, 2004 (the "Agreement") among the
Depositor, Centex Home Equity Company, LLC, as servicer (the "Servicer"), and
JPMorgan Chase Bank, a New York banking corporation, 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: July ___, 2004
CHEC LOAN TRUST 2004-1
By: JPMORGAN CHASE BANK, not in its individual
capacity, but solely as Trustee
By_________________________________
This is one of the Certificates
referenced in the within-mentioned Agreement
By__________________________________________
Authorized Signatory of
JPMORGAN CHASE BANK,
as Trustee
A-6-3
[Reverse of Class M-3 Certificate]
CHEC Loan Trust 2004-1
Asset-Backed Certificates,
Series 2004-1
This Certificate is one of a duly authorized issue of Certificates
designated as CHEC Loan Trust 2004-1, Asset-Backed Certificates, Series 2004-1
(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.
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
A-6-4
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 Stated Principal Balance of the Mortgage Loans is less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date,
the Terminator 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 [August] 2034.
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 _____________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
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 M-4 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 CERTIFICATES, THE CLASS M-1
CERTIFICATES, THE CLASS M-2 CERTIFICATES AND THE CLASS M-3 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 : July 1, 2004
First Distribution Date : August 25, 2004
Initial Certificate Principal Balance
of this Certificate ("Denomination") : $ 4,796,000.00
Original Class Certificate
Principal Balance of this Class : $ 4,796,000.00
Percentage Interest : 100.00%
Pass-Through Rate : Variable
CUSIP : 162765 AG 6
Class : M-4
Assumed Maturity Date : July 25, 2034
A-7-1
CHEC Loan Trust 2004-1
Asset-Backed Certificates,
Series 2004-1
Class M-4
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 and second 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-4 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-4
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-4 Certificate (obtained by
dividing the Denomination of this Class M-4 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 July 1, 2004 (the "Agreement") among the
Depositor, Centex Home Equity Company, LLC, as servicer (the "Servicer"), and
JPMorgan Chase Bank, a New York banking corporation, 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-4 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-4 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-4
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-4 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-7-2
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: July ___, 2004
CHEC LOAN TRUST 2004-1
By: JPMORGAN CHASE BANK, not in its individual
capacity, but solely as Trustee
By_________________________________
This is one of the Certificates
referenced in the within-mentioned Agreement
By__________________________________________
Authorized Signatory of
JPMORGAN CHASE BANK,
as Trustee
A-7-3
[Reverse of Class M-4 Certificate]
CHEC Loan Trust 2004-1
Asset-Backed Certificates,
Series 2004-1
This Certificate is one of a duly authorized issue of Certificates
designated as CHEC Loan Trust 2004-1, Asset-Backed Certificates, Series 2004-1
(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.
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
A-7-4
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 Stated Principal Balance of the Mortgage Loans is less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date,
the Terminator 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 [August] 2034.
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-7-5
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
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-7-6
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-5 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 CERTIFICATES, THE CLASS M-1
CERTIFICATES, THE CLASS M-2 CERTIFICATES, THE CLASS M-3 CERTIFICATES AND THE
CLASS M-4 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 : July 1, 2004
First Distribution Date : August 25, 2004
Initial Certificate Principal Balance
of this Certificate ("Denomination") : $ 4,486.000.00
Original Class Certificate
Principal Balance of this Class : $ 4,486,000.00
Percentage Interest : 100.00%
Pass-Through Rate : Variable
CUSIP : 162765 AH 4
Class : M-5
Assumed Maturity Date : July 25, 2034
A-8-1
CHEC Loan Trust 2004-1
Asset-Backed Certificates,
Series 2004-1
Class M-5
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 and second 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-5 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-5
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-5 Certificate (obtained by
dividing the Denomination of this Class M-5 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 July 1, 2004 (the "Agreement") among the
Depositor, Centex Home Equity Company, LLC, as servicer (the "Servicer"), and
JPMorgan Chase Bank, a New York banking corporation, 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-5 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-5 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-5
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-5 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-8-2
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: July ___, 2004
CHEC LOAN TRUST 2004-1
By: JPMORGAN CHASE BANK, not in its individual
capacity, but solely as Trustee
By_________________________________
This is one of the Certificates
referenced in the within-mentioned Agreement
By__________________________________________
Authorized Signatory of
JPMORGAN CHASE BANK,
as Trustee
A-8-3
[Reverse of Class M-5 Certificate]
CHEC Loan Trust 2004-1
Asset-Backed Certificates,
Series 2004-1
This Certificate is one of a duly authorized issue of Certificates
designated as CHEC Loan Trust 2004-1, Asset-Backed Certificates, Series 2004-1
(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.
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
A-8-4
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 Stated Principal Balance of the Mortgage Loans is less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date,
the Terminator 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 [August] 2034.
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-8-5
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
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-8-6
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-6 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 CERTIFICATES, THE CLASS M-1
CERTIFICATES, THE CLASS M-2 CERTIFICATES, THE CLASS M-3 CERTIFICATES, THE CLASS
M-4 CERTIFICATES AND THE CLASS M-5 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 : July 1, 2004
First Distribution Date : August 25, 2004
Initial Certificate Principal Balance
of this Certificate ("Denomination") : $ 4,486,000.00
Original Class Certificate
Principal Balance of this Class : $ 4,486,000.00
Percentage Interest : 100.00%
Pass-Through Rate : Variable
CUSIP : 162765 AJ 0
Class : M-6
Assumed Maturity Date : July 25, 2034
A-9-1
CHEC Loan Trust 2004-1
Asset-Backed Certificates,
Series 2004-1
Class M-6
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 and second 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-6 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-6
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-6 Certificate (obtained by
dividing the Denomination of this Class M-6 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 July 1, 2004 (the "Agreement") among the
Depositor, Centex Home Equity Company, LLC, as servicer (the "Servicer"), and
JPMorgan Chase Bank, a New York banking corporation, 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-6 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-6 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-6
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-6 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-9-2
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: July ___, 2004
CHEC LOAN TRUST 2004-1
By: JPMORGAN CHASE BANK, not in its individual
capacity, but solely as Trustee
By_________________________________
This is one of the Certificates
referenced in the within-mentioned Agreement
By__________________________________________
Authorized Signatory of
JPMORGAN CHASE BANK,
as Trustee
A-9-3
[Reverse of Class M-6 Certificate]
CHEC Loan Trust 2004-1
Asset-Backed Certificates,
Series 2004-1
This Certificate is one of a duly authorized issue of Certificates
designated as CHEC Loan Trust 2004-1, Asset-Backed Certificates, Series 2004-1
(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.
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
A-9-4
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 Stated Principal Balance of the Mortgage Loans is less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date,
the Terminator 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 [August] 2034.
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-9-5
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
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-9-6
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.
A-9-7
EXHIBIT A-10
FORM OF CLASS M-7 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 CERTIFICATES, THE CLASS M-1
CERTIFICATES, THE CLASS M-2 CERTIFICATES, THE CLASS M-3 CERTIFICATES, THE CLASS
M-4 CERTIFICATES, THE CLASS M-5 CERTIFICATES AND THE CLASS M-6 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 : July 1, 2004
First Distribution Date : August 25, 2004
Initial Certificate Principal Balance
of this Certificate ("Denomination") : $ 3,713,000.00
Original Class Certificate
Principal Balance of this Class : $ 3,713,000.00
Percentage Interest : 100.00%
Pass-Through Rate : Variable
CUSIP : 162765 AK 7
Class : M-7
Assumed Maturity Date : July 25, 2034
A-10-1
CHEC Loan Trust 2004-1
Asset-Backed Certificates,
Series 2004-1
Class M-7
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 and second 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-7 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-7
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-7 Certificate (obtained by
dividing the Denomination of this Class M-7 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 July 1, 2004 (the "Agreement") among the
Depositor, Centex Home Equity Company, LLC, as servicer (the "Servicer"), and
JPMorgan Chase Bank, a New York banking corporation, 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-7 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-7 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-7
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-7 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-10-2
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: July ___, 2004
CHEC LOAN TRUST 2004-1
By: JPMORGAN CHASE BANK, not in its individual
capacity, but solely as Trustee
By_________________________________
This is one of the Certificates
referenced in the within-mentioned Agreement
By__________________________________________
Authorized Signatory of
JPMORGAN CHASE BANK,
as Trustee
A-10-3
[Reverse of Class M-7 Certificate]
CHEC Loan Trust 2004-1
Asset-Backed Certificates,
Series 2004-1
This Certificate is one of a duly authorized issue of Certificates
designated as CHEC Loan Trust 2004-1, Asset-Backed Certificates, Series 2004-1
(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.
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
A-10-4
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 Stated Principal Balance of the Mortgage Loans is less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date,
the Terminator 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 [August] 2034.
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-10-5
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
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-10-6
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.
A-10-7
EXHIBIT A-11
FORM OF CLASS M-8 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 CERTIFICATES, THE CLASS M-1
CERTIFICATES, THE CLASS M-2 CERTIFICATES, THE CLASS M-3 CERTIFICATES, THE CLASS
M-4 CERTIFICATES, THE CLASS M-5 CERTIFICATES, THE CLASS M-6 CERTIFICATES AND THE
CLASS M-7 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 : July 1, 2004
First Distribution Date : August 25, 2004
Initial Certificate Principal Balance
of this Certificate ("Denomination") : $ 3,249,000.00
Original Class Certificate
Principal Balance of this Class : $ 3,249,000.00
Percentage Interest : 100.00%
Pass-Through Rate : Variable
CUSIP : 162765 AL 5
Class : M-8
Assumed Maturity Date : July 25, 2034
A-11-1
CHEC Loan Trust 2004-1
Asset-Backed Certificates,
Series 2004-1
Class M-8
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 and second 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-8 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-8
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-8 Certificate (obtained by
dividing the Denomination of this Class M-8 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 July 1, 2004 (the "Agreement") among the
Depositor, Centex Home Equity Company, LLC, as servicer (the "Servicer"), and
JPMorgan Chase Bank, a New York banking corporation, 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-8 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-8 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-8
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-8 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-11-2
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: July ___, 2004
CHEC LOAN TRUST 2004-1
By: JPMORGAN CHASE BANK, not in its individual
capacity, but solely as Trustee
By_________________________________
This is one of the Certificates
referenced in the within-mentioned Agreement
By__________________________________________
Authorized Signatory of
JPMORGAN CHASE BANK,
as Trustee
A-11-3
[Reverse of Class M-8 Certificate]
CHEC Loan Trust 2004-1
Asset-Backed Certificates,
Series 2004-1
This Certificate is one of a duly authorized issue of Certificates
designated as CHEC Loan Trust 2004-1, Asset-Backed Certificates, Series 2004-1
(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.
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
A-11-4
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 Stated Principal Balance of the Mortgage Loans is less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date,
the Terminator 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 [August] 2034.
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-11-5
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
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-11-6
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.
A-11-7
EXHIBIT A-12
FORM OF CLASS M-9 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 CERTIFICATES, THE CLASS M-1
CERTIFICATES, THE CLASS M-2 CERTIFICATES, THE CLASS M-3 CERTIFICATES, THE CLASS
M-4 CERTIFICATES, THE CLASS M-5 CERTIFICATES, THE CLASS M-6 CERTIFICATES, THE
CLASS M-7 CERTIFICATES AND THE CLASS M-8 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 : July 1, 2004
First Distribution Date : August 25, 2004
Initial Certificate Principal Balance
of this Certificate ("Denomination") : $ 3,094,000.00
Original Class Certificate
Principal Balance of this Class : $ 3,094,000.00
Percentage Interest : 100.00%
Pass-Through Rate : Variable
CUSIP : 162765 AM 3
Class : M-9
Assumed Maturity Date : July 25, 2034
A-12-1
CHEC Loan Trust 2004-1
Asset-Backed Certificates,
Series 2004-1
Class M-9
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 and second 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-9 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-9
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-9 Certificate (obtained by
dividing the Denomination of this Class M-9 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 July 1, 2004 (the "Agreement") among the
Depositor, Centex Home Equity Company, LLC, as servicer (the "Servicer"), and
JPMorgan Chase Bank, a New York banking corporation, 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-9 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-9 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-9
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-9 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-12-2
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: July ___, 2004
CHEC LOAN TRUST 2004-1
By: JPMORGAN CHASE BANK, not in its individual
capacity, but solely as Trustee
By_________________________________
This is one of the Certificates
referenced in the within-mentioned Agreement
By__________________________________________
Authorized Signatory of
JPMORGAN CHASE BANK,
as Trustee
A-12-3
[Reverse of Class M-9 Certificate]
CHEC Loan Trust 2004-1
Asset-Backed Certificates,
Series 2004-1
This Certificate is one of a duly authorized issue of Certificates
designated as CHEC Loan Trust 2004-1, Asset-Backed Certificates, Series 2004-1
(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.
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
A-12-4
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 Stated Principal Balance of the Mortgage Loans is less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date,
the Terminator 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 [August] 2034.
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-12-5
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
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-12-6
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.
A-12-7
EXHIBIT A-13
FORM OF CLASS B-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 CERTIFICATES, THE MEZZANINE
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").
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.
A-13-1
Certificate No. : 1
Cut-off Date : July 1, 2004
First Distribution Date : August 25, 2004
Initial Certificate Principal Balance
of this Certificate ("Denomination") : $ 3,094,000.00
Original Class Certificate
Principal Balance of this Class : $ 3,094,000.00
Percentage Interest : 100.00%
Pass-Through Rate : Variable
CUSIP : 162765 AN 1
Class : B-1
Assumed Maturity Date : July 25, 2034
A-13-2
CHEC Loan Trust 2004-1
Asset-Backed Certificates,
Series 2004-1
Class B-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 and second 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
B-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 B-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 B-1 Certificate (obtained by
dividing the Denomination of this Class B-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 July 1, 2004 (the "Agreement") among the
Depositor, Centex Home Equity Company, LLC, as servicer (the "Servicer"), and
JPMorgan Chase Bank, a New York banking corporation, as trustee (the "Trustee").
To the extent not defined herein, the capitalized terms used herein have the
meanings assigned in the Agreement. This Class B-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 B-1 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.
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 B-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.
A-13-3
This Class B-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-13-4
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: July ___, 2004
CHEC LOAN TRUST 2004-1
By: JPMORGAN CHASE BANK, not in its individual
capacity, but solely as Trustee
By_______________________________________
This is one of the Certificates
referenced in the within-mentioned Agreement
By____________________________________
Authorized Signatory of
JPMORGAN CHASE BANK,
as Trustee
A-13-5
[Reverse of Class B-1 Certificate]
CHEC Loan Trust 2004-1
Asset-Backed Certificates,
Series 2004-1
This Certificate is one of a duly authorized issue of Certificates
designated as CHEC Loan Trust 2004-1, Asset-Backed Certificates, Series 2004-1
(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.
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
A-13-6
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 Stated Principal Balance of the Mortgage Loans is less than 10%of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date,
the Terminator 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 [August] 2034.
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-13-7
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
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-13-8
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-13-9
EXHIBIT A-14
Form of Class B-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.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES, THE MEZZANINE
CERTIFICATES AND THE CLASS B-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").
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.
A-14-1
Certificate No. : 1
Cut-off Date : July 1, 2004
First Distribution Date : August 25, 2004
Initial Certificate Principal Balance
of this Certificate ("Denomination") : $ 3,094,000.00
Original Class Certificate
Principal Balance of this Class : $ 3,094,000.00
Percentage Interest : 100.00%
Pass-Through Rate : Variable
CUSIP : 162765 AP 6
Class : B-2
Assumed Maturity Date : July 25, 2034
A-14-2
CHEC Loan Trust 2004-1
Asset-Backed Certificates,
Series 2004-1
Class B-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 and second 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
B-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 B-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 B-2 Certificate (obtained by
dividing the Denomination of this Class B-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 July 1, 2004 (the "Agreement") among the
Depositor, Centex Home Equity Company, LLC, as servicer (the "Servicer"), and
JPMorgan Chase Bank, a New York banking corporation, as trustee (the "Trustee").
To the extent not defined herein, the capitalized terms used herein have the
meanings assigned in the Agreement. This Class B-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 B-2 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.
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 B-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.
A-14-3
This Class B-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-14-4
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: July ___, 2004
CHEC LOAN TRUST 2004-1
By: JPMORGAN CHASE BANK, not in its individual
capacity, but solely as Trustee
By_________________________________
This is one of the Certificates
referenced in the within-mentioned Agreement
By__________________________________________
Authorized Signatory of
JPMORGAN CHASE BANK,
as Trustee
A-14-5
[Reverse of Class B-2 Certificate]
CHEC Loan Trust 2004-1
Asset-Backed Certificates,
Series 2004-1
This Certificate is one of a duly authorized issue of Certificates
designated as CHEC Loan Trust 2004-1, Asset-Backed Certificates, Series 2004-1
(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.
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
A-14-6
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 Stated Principal Balance of the Mortgage Loans is less than 10%of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date,
the Terminator 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 [August] 2034.
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-14-7
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
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-14-8
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-14-9
EXHIBIT A-15
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 CERTIFICATES AND THE MEZZANINE
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 : July 1, 2004
First Distribution Date : August 25, 2004
Initial Certificate Principal Balance $
of this Certificate ("Denomination") :
Original Class Certificate
Principal Balance of this Class : $
Percentage Interest : 100%
Pass-Through Rate : Variable
Class : C
A-15-1
CHEC Loan Trust 2004-1
Asset-Backed Certificates,
Series 2004-1
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 and second 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 Greenwich Capital Financial Products, Inc., 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 July 1, 2004 (the
"Agreement") among the Depositor, Centex Home Equity Company, LLC, as servicer
(the "Servicer"), and JPMorgan Chase Bank, a New York banking corporation, 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.
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.
A-15-2
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-15-3
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: July ___, 2004
CHEC LOAN TRUST 2004-1
By: JPMORGAN CHASE BANK, not in its individual
capacity, but solely as Trustee
By_________________________________
This is one of the Certificates
referenced in the within-mentioned Agreement
By__________________________________________
Authorized Signatory of
JPMORGAN CHASE BANK,
as Trustee
A-15-4
[Reverse of Class C Certificate]
CHEC Loan Trust 2004-1
Asset-Backed Certificates,
Series 2004-1
This Certificate is one of a duly authorized issue of Certificates
designated as CHEC Loan Trust 2004-1, Asset-Backed Certificates, Series 2004-1
(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.
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
A-15-5
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 Stated Principal Balance of the Mortgage Loans is less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date,
the Terminator 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 [August] 2034.
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-15-6
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
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-15-7
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-15-8
EXHIBIT A-16
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 : July 1, 2004
First Distribution Date : August 25, 2004
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-16-1
CHEC Loan Trust 2004-1
Asset-Backed Certificates,
Series 2004-1
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 and second 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 Greenwich Capital Financial Products, Inc. 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 July 1, 2004 (the
"Agreement") among the Depositor, Centex Home Equity Company, LLC, as servicer
(the "Servicer"), and JPMorgan Chase Bank, a New York banking corporation, 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 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.
A-16-2
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-16-3
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: July ___, 2004
CHEC LOAN TRUST 2004-1
By: JPMORGAN CHASE BANK, not in its individual
capacity, but solely as Trustee
By_________________________________
This is one of the Certificates
referenced in the within-mentioned Agreement
By__________________________________________
Authorized Signatory of
JPMORGAN CHASE BANK,
as Trustee
A-16-4
[Reverse of Class P Certificate]
CHEC Loan Trust 2004-1
Asset-Backed Certificates,
Series 2004-1
This Certificate is one of a duly authorized issue of Certificates
designated as CHEC Loan Trust 2004-1, Asset-Backed Certificates, Series 2004-1
(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.
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
A-16-5
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 Stated Principal Balance of the Mortgage Loans is less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date,
the Terminator 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 [August] 2034.
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-16-6
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
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-16-7
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-16-8
EXHIBIT A-17
FORM OF CLASS R 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 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 : July 1, 2004
First Distribution Date : August 25, 2004
Percentage Interest : 100.00%
Class : R
A-17-1
CHEC Loan Trust 2004-1
Asset-Backed Certificates,
Series 2004-1
Class R
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 and second 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 Greenwich Capital Markets, Inc. 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 July 1, 2004
(the "Agreement") among the Depositor, Centex Home Equity Company, LLC, as
servicer (the "Servicer"), and JPMorgan Chase Bank, a New York banking
corporation, 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.
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.
A-17-2
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
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-17-3
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: July ___, 2004
CHEC LOAN TRUST 2004-1
By: JPMORGAN CHASE BANK, not in its individual
capacity, but solely as Trustee
By_________________________________
This is one of the Certificates
referenced in the within-mentioned Agreement
By__________________________________________
Authorized Signatory of
JPMORGAN CHASE BANK,
as Trustee
A-17-4
[Reverse of Class R Certificate]
CHEC Loan Trust 2004-1
Asset-Backed Certificates,
Series 2004-1
This Certificate is one of a duly authorized issue of Certificates
designated as CHEC Loan Trust 2004-1, Asset-Backed Certificates, Series 2004-1
(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.
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
A-17-5
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 Stated Principal Balance of the Mortgage Loans is less than 10%of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date,
the Terminator 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 [August] 2034.
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-17-6
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
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-17-7
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-17-8
EXHIBIT A-18
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 : July 1, 2004
First Distribution Date : August 25, 2004
Percentage Interest : 100.00%
Class : R
A-18-1
CHEC Loan Trust 2004-1
Asset-Backed Certificates,
Series 2004-1
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 and second 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 Greenwich Capital Markets, Inc. 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 July 1, 2004
(the "Agreement") among the Depositor, Centex Home Equity Company, LLC, as
servicer (the "Servicer"), and JPMorgan Chase Bank, a New York banking
corporation, 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.
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.
A-18-2
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-18-3
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: July ___, 2004
CHEC LOAN TRUST 2004-1
By: JPMORGAN CHASE BANK, not in its individual
capacity, but solely as Trustee
By_________________________________
This is one of the Certificates
referenced in the within-mentioned Agreement
By__________________________________________
Authorized Signatory of
JPMORGAN CHASE BANK,
as Trustee
A-18-4
[Reverse of Class R-X Certificate]
CHEC Loan Trust 2004-1
Asset-Backed Certificates,
Series 2004-1
This Certificate is one of a duly authorized issue of Certificates
designated as CHEC Loan Trust 2004-1, Asset-Backed Certificates, Series 2004-1
(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.
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
A-18-5
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 Stated Principal Balance of the Mortgage Loans is less than 10%of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date,
the Terminator 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 [August] 2034.
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-18-6
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
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-18-7
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-18-8
EXHIBIT A-19
FORM OF CLASS R-[1][2][3][4] INTEREST 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-[1][2][3][4] INTEREST 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 : July 1, 2004
First Distribution Date : August 25, 2004
Percentage Interest : 100.00%
Class : R-[1][2][3][4] Interest
A-19-1
CHEC Loan Trust 2004-1
Asset-Backed Certificates,
Series 2004-1
Class R-[1][2][3][4] Interest
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 and second 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 Greenwich Capital Markets, Inc. 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 July 1, 2004
(the "Agreement") among the Depositor, Centex Home Equity Company, LLC, as
servicer (the "Servicer"), and JPMorgan Chase Bank, a New York banking
corporation, 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.
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.
A-19-2
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-[1][2][3][4] Interest 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-19-3
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: July ___, 2004
CHEC LOAN TRUST 2004-1
By: JPMORGAN CHASE BANK, not in its individual
capacity, but solely as Trustee
By_________________________________
This is one of the Certificates
referenced in the within-mentioned Agreement
By__________________________________________
Authorized Signatory of
JPMORGAN CHASE BANK,
as Trustee
A-19-4
[Reverse of Class R-[1][2][3][4] Interest Certificate]
CHEC Loan Trust 2004-1
Asset-Backed Certificates,
Series 2004-1
This Certificate is one of a duly authorized issue of Certificates
designated as CHEC Loan Trust 2004-1, Asset-Backed Certificates, Series 2004-1
(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.
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
A-19-5
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 Stated Principal Balance of the Mortgage Loans is less than 10%of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date,
the Terminator 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 [August] 2034.
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-19-6
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
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-19-7
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-19-8
EXHIBIT B
RESERVED
B-1
EXHIBIT C
FORM OF ASSIGNMENT AND RECOGNITION AGREEMENT
C-1
EXHIBIT D
MORTGAGE LOAN SCHEDULE
Filed By Paper.
D-1
EXHIBIT E
REQUEST FOR RELEASE OF DOCUMENTS
To: JPMorgan Chase Bank
0 Xxx Xxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Institutional Trust Services/Global Debt
Re: Pooling and Servicing Agreement dated as of July 1, 2004 among
Financial Asset Securities Corp., as Depositor, Centex Home
Equity Company, LLC, as Servicer And JPMorgan Chase Bank, 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
JPMorgan Chase Bank
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
[ DATE ]
Financial Asset Securities Corp. Centex Home Equity Company, LLC
000 Xxxxxxxxx Xxxx 0000 X. Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000 Xxxxxx, Xxxxx 00000
Re: Pooling and Servicing Agreement, dated as of July 1, 2004, among
Financial Asset Securities Corp., Centex Home Equity Company, LLC
and JPMorgan Chase Bank, Asset-Backed Certificates, Series 2004-1
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.
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 hereto), (i) all documents required to be
delivered to it pursuant Section 2.01 (other than Section 2.01(vi)) of this
Agreement and if actually delivered to it, the documents required to be
delivered to it pursuant to Section 2.01(vi) of this Agreement are in its
possession, (ii) such documents have been reviewed by it and appear regular on
their face and relate to such Mortgage Loan and (iii) based on its examination
of the foregoing documents, the information set forth in the Mortgage Loan
Schedule that corresponds to items (1), (3), (10), (11), (12), (18), (24) and
(25, but only as to Gross Margin, Maximum Mortgage Rate and Periodic Rate Cap)
of the Mortgage Loan Schedule accurately reflects information set forth in the
Mortgage File.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Pooling and Servicing Agreement. The Trustee makes no representations as to (i)
the validity, legality, sufficiency, recordability, 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 (vi) of Section 2.01 of the Pooling and Servicing Agreement.
F-1-1
JPMORGAN CHASE BANK
By:
------------------------------
Name:
Title:
F-1-2
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 July 1, 2004 among Financial Asset
Securities Corp., as Depositor, Centex Home Equity Company, LLC,
as Servicer and JPMorgan Chase Bank, as Trustee with respect to
CHEC Loan Trust 2004-1, Asset-Backed Certificates, Series 2004-1
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 item 1 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.
JPMORGAN CHASE BANK, 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: CHEC Loan Trust 2004-1,
Asset-Backed Certificates Series 2004-1
Ladies and Gentlemen:
X.X. Xxxxxx Trust Company, National Association, in its
capacity as custodian (the "Custodian") under the Pooling and Servicing
Agreement dated as of July 1, 2004, among Financial Asset Securities Corp. as
Depositor, Centex Home Equity Company, LLC, as Servicer and JPMorgan Chase Bank,
as Trustee, hereby acknowledges receipt (subject to review as required by
Section 2.01 of the Pooling and Servicing Agreement) of the items delivered to
it with respect to the Mortgage Loans pursuant to Section 2.01 of the Pooling
and Servicing Agreement.
The Schedule of Mortgage Loans is attached to this receipt as
Schedule I.
The Custodian hereby additionally acknowledges that it shall
review such items as required by Section 2.01 of the Pooling and Servicing
Agreement.
X.X. XXXXXX TRUST COMPANY,
NATIONAL ASSOCIATION, as
Custodian
By:
--------------------------------
Name:
Title:
F-3-1
EXHIBIT G
FORM OF ANNUAL STATEMENT AS TO COMPLIANCE
CHEC Loan Trust 2004-1
Asset-Backed Certificates, Series 2004-1
I, _____________________, hereby certify that I am a duly
appointed __________________________ of Centex Home Equity Company, LLC (the
"Servicer"), and further certify as follows:
1. This certification is being made pursuant to the terms of
the Pooling and Servicing Agreement, dated as of July 1, 2004, (the
"Agreement"), among Financial Asset Securities Corp., as depositor, Centex Home
Equity Company, LLC, as servicer and JPMorgan Chase Bank, as trustee.
2. I have reviewed the activities of the Servicer during the
preceding year and the Servicer's performance under the Agreement and to the
best of my knowledge, based on such review, the Servicer has fulfilled all of
its obligations under the Agreement throughout the year.
Capitalized terms not otherwise defined herein have the
meanings set forth in the Agreement.
Dated: _____________
G-1
IN WITNESS WHEREOF, the undersigned has executed this
Certificate as of _____________.
By:
--------------------------------
Name:
Title:
I, _________________________, a (an) __________________ of the
Servicer, hereby certify that _________________ is a duly elected, qualified,
and acting _______________________ of the Servicer and that the signature
appearing above is his/her genuine signature.
IN WITNESS WHEREOF, the undersigned has executed this
Certificate as of ______________.
By:
--------------------------------
Name:
Title:
G-2
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 JPMorgan
Chase Bank, as trustee on behalf of CHEC Loan Trust 2004-1, Asset-Backed
Certificates Series 2004-1, to accept the transfer of the above described loan
from Seller.
Seller agrees to indemnify JPMorgan Chase Bank, Financial Asset
Securities Corp. and Centex Home Equity Company, LLC. 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
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that JPMorgan Chase Bank, a
New York banking corporation, having a place of business at 0 Xxx Xxxx Xxxxx,
0xx Xxxxx, Xxx Xxxx, X.X. 00000, as Trustee (and in no personal or other
representative capacity), under the Pooling and Servicing Agreement, dated July
1, 2004, among Financial Asset Securities Corp., as depositor, Centex Home
Equity Company, LLC, as servicer and JPMorgan Chase Bank, as trustee (as
amended, restated, supplemented or otherwise modified from time to time, the
"Agreement"; capitalized terms not defined herein have the definitions assigned
to such terms in the Agreement), relating to CHEC Loan Trust 2004-1, hereby
appoints Centex Home Equity Company, LLC, in its capacity as the Servicer under
the Agreement as the Trustee's true and lawful Special Attorney-in-Fact, in the
Trustee's name, place and stead and for the Trustee's benefit, but only in its
capacity as Trustee aforesaid, to perform all acts and execute all documents as
may be customary, necessary and appropriate to effectuate the following
enumerated transactions in respect of any mortgage, deed of trust, promissory
note or real estate owned from time to time owned (beneficially or in title,
whether the Trustee is named therein as mortgagee or beneficiary or has become
mortgagee or beneficiary by virtue of endorsement, assignment or other
conveyance) or held by or registered to the Trustee (directly or through
custodians or nominees), or in respect of which the Trustee has a security
interest or other lien, all as provided under the Agreement and only to the
extent the respective Trustee has an interest therein under the Agreement, and
in respect of which the Servicer is acting as servicer pursuant to the Agreement
(collectively with respect to each PSA, the "Mortgage Documents").
This appointment shall apply to the following enumerated
transactions under the Agreement only:
1. The modification or re-recording of any Mortgage Document
for the purpose of correcting it to conform to the original intent of the
parties thereto or to correct title errors discovered after title insurance was
issued and where such modification or re-recording does not adversely affect the
lien under the Mortgage Document as insured.
2. The subordination of the lien under a Mortgage Document to
an easement in favor of a public utility company or a state or federal agency or
unit with powers of eminent domain including, without limitation, the execution
of partial satisfactions/releases, partial reconveyances and the execution of
requests to trustees to accomplish same.
3. The conveyance of the properties subject to a Mortgage
Document to the applicable mortgage insurer, or the closing of the title to the
property to be acquired as real estate so owned, or conveyance of title to real
estate so owned.
4. The completion of loan assumption and modification
agreements in respect of Mortgage Documents.
I-1
5. The full or partial satisfaction/release of a Mortgage
Document or full conveyance upon payment and discharge of all sums secured
thereby, including, without limitation, cancellation of the related note.
6. The assignment of any Mortgage Document, in connection with
the repurchase of the mortgage loan secured and evidenced thereby.
7. The full assignment of a Mortgage Document upon payment and
discharge of all sums secured thereby in conjunction with the refinancing
thereof, including, without limitation, the assignment of the related note.
8. With respect to a Mortgage Document, 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 Document or state
law to expeditiously complete said transactions in paragraphs
8(a) through 8(e), above.
9. Demand, xxx for, recover, collection and receive each and
every sum of money, debt, account and interest (which now is, or hereafter shall
become due and payable) belonging to or claimed by the Trustee under the
Mortgage Documents, and to use or take any lawful means for recovery thereof by
legal process or otherwise.
10. Endorse on behalf of the Trustee all checks, drafts and/or
negotiable instruments made payable to the Trustee in respect of the Mortgage
Documents.
The Trustee gives the Special 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 this Limited Power of Attorney, subject to the terms and conditions set forth
in the Agreement including the standard of care applicable to servicers in the
Agreement, and hereby does
I-2
ratify and confirm to what such Special Attorney-in-Fact shall lawfully do or
cause to be done by authority hereof.
I-3
IN WITNESS WHEREOF, the Trustee has caused its corporate name
and seal to be hereto signed and affixed and these presents to be acknowledged
by its duly elected and authorized officer this ______th day of ___ _________,
2004.
JPMORGAN CHASE BANK, as Trustee
By:______________________
Name:
Title: Senior Vice President
WITNESS:
By:_______________________________
Name:
Title:
WITNESS:
By:_______________________________
Name:
Title:
XXXXX XX XXX XXXX
XX
XXXXXX XX XXX XXXX
Xx ______________, 2004, before me, the undersigned, a Notary Public in
and for said state, personally appeared __________________, personally known to
me to be the person whose name is subscribed to the within instrument and to be
a duly authorized and acting Senior Vice President of JPMorgan Chase Bank, and
such person acknowledged to me that such person executed the within instrument
in such person's authorized capacity as a Senior Vice President of JPMorgan
Chase Bank, and that by such signature on the within instrument the entity upon
behalf of which such person acted executed the instrument.
WITNESS my hand and official seal.
______________________________
Notary Public
I-4
EXHIBIT J
FORM OF INVESTMENT LETTER [NON-RULE 144A]
[DATE]
Financial Asset Securities Corp.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
JPMorgan Chase Bank
0 Xxx Xxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Institutional Trust Services/Global Debt
Re: CHEC Loan Trust 2004-1,
Asset-Backed Certificates Series 2004-1
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.
J-1
Very truly yours,
[NAME OF TRANSFEREE]
By:
--------------------------------------
Authorized Officer
J-2
FORM OF RULE 144A INVESTMENT LETTER
[DATE]
Financial Asset Securities Corp.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
JPMorgan Chase Bank
0 Xxx Xxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Institutional Trust Services/Global Debt
Re: CHEC Loan Trust 2004-1,
Asset-Backed Certificates Series 2004-1
---------------------------------------
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.
J-3
Very truly yours,
[NAME OF TRANSFEREE]
By:
-------------------------------------
Authorized Officer
J-4
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-5
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-6
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.
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Print Name of Buyer
By:
-----------------------------------
Name:
Title:
Date:
--------------------------------
J-8
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-9
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-10
EXHIBIT K
AFFIDAVIT OF TRANSFER OF R CERTIFICATES
PURSUANT TO SECTION 5.02(d)
CHEC LOAN TRUST 2004-1
ASSET-BACKED CERTIFICATES, SERIES 2004-1
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 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, Centex Home Equity Company, LLC, as Servicer (the "Servicer") and
JPMorgan Chase Bank, 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
K-1
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).
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
JPMorgan Chase Bank
0 Xxx Xxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Institutional Trust Services/Global Debt
Re: CHEC Loan Trust 2004-1,
Asset-Backed Certificates Series 2004-1
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__
Centex Home Equity Company, LLC JPMorgan Chase Bank
0000 Xxxxx Xxxxxxx Xxxxxx 0 Xxx Xxxx Xxxxx, 0xx Xxxxx
Xxxxxx, Xxxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Attention: Institutional Trust
Services/Global Debt
Financial Asset Securities Corp.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Re: CHEC Loan Trust 2004-1,
Asset-Backed Certificates Series 2004-1
Dear Sirs:
_____________ (the "Transferee") intends to acquire from the
_______________________ ( "Transferor") $_________ Initial Certificate Principal
Balance CHEC Loan Trust 2004-1, Asset-Backed Certificates Series 2004-1, Class
[C][P][R][R-X] (the "Certificates"), issued pursuant to a Pooling and Servicing
Agreement (the "Pooling and Servicing Agreement") dated as of July 1, 2004 among
Financial Asset Securities Corp. as depositor (the "Depositor"), Centex Home
Equity Company, LLC as Servicer (the "Servicer") and JPMorgan Chase Bank 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
I, [_____], certify that:
l. I have reviewed this annual report on Form 10-K, and all
reports on Form 8-K containing distribution and servicing reports filed in
respect of periods included in the year covered by this annual report, of CHEC
Loan Trust 2004-1, Asset-Backed Certificates, Series 2004-1;
2. Based on my knowledge, the information in these reports,
taken as a whole, does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading as of
the last day of the period covered by this annual report;
3. Based on my knowledge, the distribution or servicing
information required to be provided to the trustee by the servicer under the
pooling and servicing, or similar, agreement, for inclusion in these reports is
included in these reports;
4. Based on my knowledge and upon the annual compliance
statement included in the report and required to be delivered to the trustee in
accordance with the terms of the pooling and servicing, or similar, agreement,
and except as disclosed in the reports, the servicer has fulfilled its
obligations under the servicing agreement; and
5. The reports disclose all significant deficiencies relating
to the servicer's compliance with the minimum servicing standards based upon the
report provided by an independent public accountant, after conducting a review
in compliance with the Uniform Single Attestation Program for Mortgage Bankers
or similar procedure, as set forth in the pooling and servicing, or similar,
agreement, that is included in these reports.
In giving the certifications above, I have reasonably relied
on information provided to me by the following unaffiliated parties: Centex Home
Equity Company, LLC and JPMorgan Chase Bank.
Date:_________
FINANCIAL ASSET SECURITIES CORP.
By:____________________________________
Name:
Title:
EXHIBIT N-2
FORM CERTIFICATION TO BE
PROVIDED TO DEPOSITOR BY THE TRUSTEE
Re: CHEC Loan Trust 2004-1 (the "Trust") Mortgage Pass-Through
Certificates, Series 2004-1
I, [identify the certifying individual], a [title] of JPMorgan
Chase Bank, 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 July 1,
2004 (the "Pooling and Servicing Agreement"), among the Depositor as depositor,
Centex Home Equity Company, LLC, as servicer and JPMorgan Chase Bank as trustee.
JPMORGAN CHASE BANK, as Trustee
By:__________________________________
Name:
Title:
Date:
EXHIBIT N-3
FORM CERTIFICATION TO BE
PROVIDED TO DEPOSITOR BY THE SERVICER
Re: CHEC Loan Trust 2004-1 (the "Trust"), Mortgage
Pass-Through Certificates, Series 2004-1
I, [identify the certifying individual], certify that:
l. I have reviewed the information required to be provided to
the Trustee by the Servicer pursuant to the Pooling and Servicing Agreement (the
"Servicing Information");
2. Based on my knowledge, the Servicing Information, taken as
a whole, does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in 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 has been provided as required
under the Pooling and Servicing Agreement;
4. I am responsible for reviewing the activities performed by
the Servicer under the Pooling and Servicing Agreement and based upon my
knowledge and the annual compliance review required under the Pooling and
Servicing Agreement, and except as disclosed by written notice to the Trustee or
in the annual compliance statement or certified public accountant's report
required to be delivered to the Trustee in accordance with the terms of the
Pooling and Servicing Agreement (which has been so delivered to the Trustee),
the Servicer has, for the period covered by the Form 10-K Annual Report,
fulfilled its obligations under the Pooling and Servicing Agreement; and
5. The Servicer has disclosed to its 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 procedure, 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 July 1,
2004 (the "Pooling and Servicing Agreement"), among the Depositor as depositor,
Centex Home Equity Company, LLC as servicer and JPMorgan Chase Bank as trustee.
CENTEX HOME EQUITY COMPANY, LLC
By:____________________________
Name:
Title:
Date:
EXHIBIT O
FORM OF CAP CONTRACT
[Available Upon Request]
SCHEDULE I
PREPAYMENT CHARGE SCHEDULE
(Available Upon Request)
