EXECUTION COPY
RESIDENTIAL ASSET SECURITIES CORPORATION,
Depositor,
RESIDENTIAL FUNDING CORPORATION,
Master Servicer,
and
JPMORGAN CHASE BANK, N.A.
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of November 1, 2004
Home Equity Mortgage Asset-Backed Pass-Through Certificates
Series 2004-KS11
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS..................................................................4
Section 1.01. Definitions.......................................................4
Section 1.02. Determination of LIBOR...........................................56
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES.............57
Section 2.01. Conveyance of Mortgage Loans.....................................57
Section 2.02. Acceptance by Trustee............................................60
Section 2.03. Representations, Warranties and Covenants of the Master
Servicer and the Depositor.......................................61
Section 2.04. Representations and Warranties of Sellers........................63
Section 2.05. Execution and Authentication of Certificates; Conveyance of
Uncertificated REMIC Regular Interests...........................65
Section 2.06. Purposes and Powers of the Trust.................................66
ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS..............................67
Section 3.01. Master Servicer to Act as Servicer...............................67
Section 3.02. Subservicing Agreements Between Master Servicer and
Subservicers; Enforcement of Subservicers' Obligations...........69
Section 3.03. Successor Subservicers...........................................70
Section 3.04. Liability of the Master Servicer.................................70
Section 3.05. No Contractual Relationship Between Subservicer and Trustee
or Certificateholders............................................71
Section 3.06. Assumption or Termination of Subservicing Agreements by
Trustee..........................................................71
Section 3.07. Collection of Certain Mortgage Loan Payments; Deposits to
Custodial Account................................................71
Section 3.08. Subservicing Accounts; Servicing Accounts........................73
Section 3.09. Access to Certain Documentation and Information Regarding
the Mortgage Loans...............................................75
Section 3.10. Permitted Withdrawals from the Custodial Account.................75
Section 3.11. Maintenance of Primary Insurance Coverage........................77
Section 3.12. Maintenance of Fire Insurance and Omissions and Fidelity
Coverage.........................................................77
Section 3.13. Enforcement of Due-on-Sale Clauses; Assumption and
Modification Agreements; Certain Assignments.....................78
Section 3.14. Realization Upon Defaulted Mortgage Loans........................80
Section 3.15. Trustee to Cooperate; Release of Mortgage Files..................82
Section 3.16. Servicing and Other Compensation; Compensating Interest..........83
Section 3.17. Reports to the Trustee and the Depositor.........................84
Section 3.18. Annual Statement as to Compliance................................84
Section 3.19. Annual Independent Public Accountants' Servicing Report..........85
Section 3.20. Right of the Depositor in Respect of the Master Servicer.........85
Section 3.21. [Reserved].......................................................86
Section 3.22. Advance Facility.................................................86
ARTICLE IV PAYMENTS TO CERTIFICATEHOLDERS..............................................90
Section 4.01. Certificate Account..............................................90
Section 4.02. Distributions....................................................90
Section 4.03. Statements to Certificateholders; Statements to Rating
Agencies; Exchange Act Reporting.................................95
Section 4.04. Distribution of Reports to the Trustee and the Depositor;
Advances by the Master Servicer..................................98
Section 4.05. Allocation of Realized Losses....................................99
Section 4.06. Reports of Foreclosures and Abandonment of Mortgaged Property...100
Section 4.07. Optional Purchase of Defaulted Mortgage Loans...................101
Section 4.08. [Reserved]......................................................101
Section 4.09. [Reserved]......................................................101
Section 4.10. Hedge Agreements................................................101
ARTICLE V THE CERTIFICATES...........................................................102
Section 5.01. The Certificates................................................102
Section 5.02. Registration of Transfer and Exchange of Certificates...........103
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates...............108
Section 5.04. Persons Deemed Owners...........................................108
Section 5.05. Appointment of Paying Agent.....................................108
ARTICLE VI THE DEPOSITOR AND THE MASTER SERVICER......................................110
Section 6.01. Respective Liabilities of the Depositor and the Master
Servicer........................................................110
Section 6.02. Merger or Consolidation of the Depositor or the Master
Servicer; Assignment of Rights and Delegation of Duties by
Master Servicer.................................................110
Section 6.03. Limitation on Liability of the Depositor, the Master
Servicer and Others.............................................111
Section 6.04. Depositor and Master Servicer Not to Resign.....................111
ARTICLE VII DEFAULT....................................................................112
Section 7.01. Events of Default...............................................112
Section 7.02. Trustee or Depositor to Act; Appointment of Successor...........113
Section 7.03. Notification to Certificateholders..............................114
Section 7.04. Waiver of Events of Default.....................................115
ARTICLE VIII CONCERNING THE TRUSTEE.....................................................116
Section 8.01. Duties of Trustee...............................................116
Section 8.02. Certain Matters Affecting the Trustee...........................117
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans...........118
Section 8.04. Trustee May Own Certificates....................................119
Section 8.05. Master Servicer to Pay Trustee's Fees and Expenses;
Indemnification.................................................119
Section 8.06. Eligibility Requirements for Trustee............................120
Section 8.07. Resignation and Removal of the Trustee..........................120
Section 8.08. Successor Trustee...............................................121
Section 8.09. Merger or Consolidation of Trustee..............................121
Section 8.10. Appointment of Co-Trustee or Separate Trustee...................121
Section 8.11. Appointment of Custodians.......................................122
Section 8.12. Appointment of Office or Agency.................................122
Section 8.13. DTC Letter of Representations...................................123
ARTICLE IX TERMINATION................................................................124
Section 9.01. Termination Upon Purchase or Liquidation of All Mortgage
Loans...........................................................124
Section 9.02. Additional Termination Requirements.............................127
ARTICLE X REMIC PROVISIONS...........................................................129
Section 10.01. REMIC Administration............................................129
Section 10.02. Master Servicer, REMIC Administrator and Trustee
Indemnification.................................................132
ARTICLE XI MISCELLANEOUS PROVISIONS...................................................133
Section 11.01. Amendment.......................................................133
Section 11.02. Recordation of Agreement; Counterparts..........................135
Section 11.03. Limitation on Rights of Certificateholders......................135
Section 11.04. Governing Law...................................................136
Section 11.05. Notices.........................................................136
Section 11.06. Notices to Rating Agencies......................................137
Section 11.07. Severability of Provisions......................................137
Section 11.08. Supplemental Provisions for Resecuritization....................137
Section 11.09. Third-Party Beneficiary.........................................138
Exhibit A Form of Class A Certificate................................................A-1
Exhibit B Form of Class M Certificate................................................B-1
Exhibit C Form of Class SB Certificate...............................................C-1
Exhibit D Form of Class R Certificate................................................D-1
Exhibit E Form of Custodial Agreement................................................E-1
Exhibit F-1 Group I Loan Schedule....................................................F-1-1
Exhibit F-2 Group II Loan Schedule...................................................F-2-1
Exhibit G Forms of Request for Release...............................................G-1
Exhibit H-1 Form of Transfer Affidavit and Agreement.................................H-1-1
Exhibit H-2 Form of Transferor Certificate...........................................H-2-1
Exhibit I Form of Investor Representation Letter.....................................I-1
Exhibit J Form of Transferor Representation Letter...................................J-1
Exhibit K Text of Amendment to Pooling and Servicing Agreement Pursuant to
Section 11.01(e) for a Limited Guaranty....................................K-1
Exhibit L Form of Limited Guaranty...................................................L-1
Exhibit M Form of Lender Certification for Assignment of Mortgage Loan...............M-1
Exhibit N Form of Rule 144A Investment Representation................................N-1
Exhibit O [Reserved].................................................................O-1
Exhibit P Form of ERISA Letter.......................................................P-1
Exhibit Q Reserved...................................................................Q-1
Exhibit R Assignment Agreement......................................................R-1
Exhibit S [Reserved].................................................................S-1
Exhibit T-1 Form of 10-K Certification...............................................T-1-1
Exhibit T-2 Form of Back-Up Certification............................................T-2-1
Exhibit U Information to be Provided by the Master Servicer to the Rating
Agencies Relating to Reportable Modified Mortgage Loans....................U-1
This Pooling and Servicing Agreement, effective as of November 1, 2004,
among RESIDENTIAL ASSET SECURITIES CORPORATION, as the depositor (together with
its permitted successors and assigns, the "Depositor"), RESIDENTIAL FUNDING
CORPORATION, as master servicer (together with its permitted successors and
assigns, the "Master Servicer"), and JPMORGAN CHASE BANK, N.A., a banking
association organized under the laws of the United States, as trustee (together
with its permitted successors and assigns, the "Trustee").
PRELIMINARY STATEMENT:
The Depositor intends to sell mortgage asset-backed pass-through
certificates (collectively, the "Certificates"), to be issued hereunder in
sixteen Classes, which in the aggregate will evidence the entire beneficial
ownership interest in the Mortgage Loans (as defined herein) and certain other
related assets.
REMIC I
As provided herein, the REMIC Administrator will make an election to
treat the segregated pool of assets consisting of the Mortgage Loans and certain
other related assets (exclusive of the Hedge Agreements) subject to this
Agreement as a real estate mortgage investment conduit (a "REMIC") for federal
income tax purposes, and such segregated pool of assets will be designated as
"REMIC I." The Class R-I Certificates will represent the sole Class of "residual
interests" in REMIC I for purposes of the REMIC Provisions (as defined herein)
under federal income tax law. The following table irrevocably sets forth the
designation, remittance rate (the "Uncertificated REMIC I Pass-Through Rate")
and initial Uncertificated Principal Balance for each of the "regular interests"
in REMIC I (the "REMIC I Regular Interests"). The "latest possible maturity
date" (determined solely for purposes of satisfying Treasury regulation Section
1.860G-1(a)(4)(iii)) for each REMIC I Regular Interest shall be the Maturity
Date. None of the REMIC I Regular Interests will be certificated.
UNCERTIFICATED
REMIC I INITIAL UNCERTIFICATED
------------------- REMIC I LATEST POSSIBLE
DESIGNATION PASS-THROUGH RATE PRINCIPAL BALANCE MATURITY DATE
Y-1 Variable(1) $ 175,000.03 December 25, 2034
Y-2 Variable(1) $ 174,999.98 December 25, 2034
Z-1 Variable(1) $349,825,059.02 December 25, 2034
Z-2 Variable(1) $349,825,041.68 December 25, 2034
---------------
(1) Calculated as provided in the definition of Uncertificated REMIC I
Pass-Through Rate.
1
REMIC II
As provided herein, the REMIC Administrator will make an election to
treat the segregated pool of assets consisting of the REMIC I Regular Interests
subject to this Agreement as a REMIC for federal income tax purposes, and such
segregated pool of assets will be designated as "REMIC II." The Class R-II
Certificates will represent the sole Class of "residual interests" in REMIC II
for purposes of the REMIC Provisions (as defined herein) under federal income
tax law. The following table irrevocably sets forth the designation, remittance
rate (the "Uncertificated REMIC II Pass-Through Rate") and initial
Uncertificated Principal Balance for each of the "regular interests" in REMIC II
(the "REMIC II Regular Interests"). The "latest possible maturity date"
(determined solely for purposes of satisfying Treasury regulation Section
1.860G-1(a)(4)(iii)) for each REMIC II Regular Interest shall be the Maturity
Date. None of the REMIC II Regular Interests will be certificated.
UNCERTIFICATED
REMIC II INITIAL UNCERTIFICATED
------------------- REMIC II LATEST POSSIBLE
DESIGNATION PASS-THROUGH RATE PRINCIPAL BALANCE MATURITY DATE
LT1 Variable(1) $349,761,632.27 December 25, 2034
LT2 Variable(1) $ 6,573.26 December 25, 2034
LT3 0.00% $ 28,426.75 December 25, 2034
LT4 Variable(1) $ 28,426.75 December 25, 2034
LT5 Variable(1) $349,761,722.93 December 25, 2034
LT6 Variable(1) $ 6,681.26 December 25, 2034
LT7 0.00% $ 28,318.75 December 25, 2034
LT8 Variable(1) $ 28,318.75 December 25, 2034
LT-Y1(2) Variable(1) $ 175,000.03 December 25, 2034
LT-Y2(2) Variable(1) $ 174,999.98 December 25, 2034
---------------
(1) Calculated as provided in the definition of Uncertificated REMIC II
Pass-Through Rate. (2) LT-Y1 will have the same interest rate, principal
balance, Principal Reduction Amount and allocation of Realized Losses as the
REMIC I Regular Interest Y-1. LT-Y2 will have the same interest rate, principal
balance, Principal Reduction Amount and allocation of Realized Losses as the
REMIC I Regular Interest Y-2.
REMIC III
As provided herein, the REMIC Administrator will elect to treat the
segregated pool of assets consisting of the REMIC II Regular Interests as a
REMIC for federal income tax purposes, and such segregated pool of assets will
be designated as REMIC III. The Class R-III Certificates will represent the sole
Class of "residual interests" in REMIC III for purposes of the REMIC Provisions
under federal income tax law. The following table irrevocably sets forth the
designation, Pass-Through Rate, aggregate Initial Certificate Principal Balance,
certain features, month of Final Scheduled Distribution Date and initial ratings
for each Class of Certificates comprising the interests representing "regular
interests" in REMIC III. The "latest possible maturity date" (determined solely
for purposes of satisfying Treasury Regulation Section 1.860G-1(a)(4)(iii)) for
each Class of REMIC III Regular Certificates shall be the Maturity Date.
2
Month of
Final
Aggregate Initial Scheduled
Pass-Through Certificate Distribution
Designation Type Rate Principal Balance Features Date Initial Ratings
S&P Xxxxx'x Fitch
Class A-I-1 Regular(1) Adjustable(2)(3) $140,690,000.00 Senior/Adjustable August 2025 AAA Aaa AAA
Rate
Class A-I-2 Regular(1) Adjustable(2)(3) $133,320,000.00 Senior/Adjustable January 2034 AAA Aaa AAA
Rate
Class A-I-3 Regular(1) Adjustable(2)(3) $ 14,740,000.00 Senior/Adjustable December 2034 AAA Aaa AAA
Rate
Class A-II-1 Regular Adjustable(2) $259,875,000.00 Senior/Adjustable December 2034 AAA Aaa AAA
Rate
Class A-II-2 Regular(1) Adjustable(2)(3) $ 28,875,000.00 Senior/Adjustable December 2034 AAA Aaa AAA
Rate
Class M-1 Regular(1) Adjustable(2)(3) $ 44,100,000.00 Mezzanine/Adjustable December 2034 AA Aa2 AA
Rate
Class M-2 Regular(1) Adjustable(2)(3) $ 36,750,000.00 Mezzanine/Adjustable December 2034 A+ A2 A
Rate
Class M-3 Regular(1) Adjustable(2)(3) $ 7,000,000.00 Mezzanine/Adjustable December 2034 A A3 A-
Rate
Class M-4 Regular(1) Adjustable(2)(3) $ 6,300,000.00 Mezzanine/Adjustable December 2034 A- Baa1 BBB+
Rate
Class M-5 Regular(1) Adjustable(2)(3) $ 7,000,000.00 Mezzanine/Adjustable December 2034 BBB+ Baa2 BBB
Rate
Class M-6 Regular(1) Adjustable(2)(3) $ 7,000,000.00 Mezzanine/Adjustable December 2034 BBB Baa3 BBB-
Rate
Class B Regular(1) Adjustable(2)(3) $ 7,000,000.00 Subordinate/Adjustable December 2034 BBB- Ba1 BB+
Rate
Class SB Regular (4) $ 7,350,101.71 Subordinate December 2034 N/R N/R N/R
(4)
---------------
(1) The Class A-I, Class A-II-2, Class M and Class B Certificates will represent
ownership of REMIC III Regular Interests together with certain rights to
payments to be made from amounts received under the related Hedge Agreement
which will be deemed made for federal income tax purposes outside of REMIC
III by the holder of the Class SB Certificates as the owner of the Hedge
Agreement.
(2) The REMIC III Regular Interests ownership of which is represented by the
Class A-I, Class A-II, Class M and Class B Certificates, will accrue
interest at a per annum rate equal to LIBOR plus the applicable Margin, each
subject to a payment cap as described in the definition of "Pass-Through
Rate" and the provisions for the payment of Basis Risk Shortfalls herein,
which payments will not be part of the entitlement of the REMIC III Regular
Interests related to such Certificates.
(3) The Class A-I, Class A-II-2, Class M and Class B Certificates will also
entitle their holders to certain payments from the Holder of the Class SB
Certificates from amounts to which the related REMIC III Regular Interest is
entitled and from amounts received under the Hedge Agreement, which will not
be a part of their ownership of the REMIC III Regular Interests.
(4) The Class SB Certificates will accrue interest as described in the
definition of Accrued Certificate Interest. The Class SB Certificates will
not accrue interest on their Certificate Principal Balance. The Class SB
Certificates will be comprised of two REMIC III regular interests, a
principal only regular interest designated SB-PO and an interest only
regular interest designated SB-IO, which will be entitled to distributions
as set forth herein. The rights of the Holder of the Class SB Certificates
to payments from the Hedge Agreements shall be outside and apart from its
rights under the REMIC III Regular Interests SB-IO and SB-PO.
In consideration of the mutual agreements herein contained, the
Depositor, the Master Servicer and the Trustee agree as follows:
ARTICLE I......
DEFINITIONS
Section 1.01...Definitions.
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the meanings specified in this
Article.
3
Accrued Certificate Interest: With respect to each Distribution Date and
each Class of Class A Certificates, Class M Certificates and Class B
Certificates, interest accrued during the related Interest Accrual Period on the
Certificate Principal Balance thereof immediately prior to such Distribution
Date at the related Pass-Through Rate for that Distribution Date.
The amount of Accrued Certificate Interest on each Class of Certificates
shall be reduced by the amount of Prepayment Interest Shortfalls on the related
Mortgage Loans during the prior calendar month to the extent not covered by
Compensating Interest pursuant to Section 3.16, and by Relief Act Shortfalls on
the related Mortgage Loans during the related Due Period. The portion of any
Prepayment Interest Shortfalls or Relief Act Shortfalls allocated to the Class A
Certificates will be based upon the related Senior Percentage of all such
reductions with respect to the related Mortgage Loans, such reductions to be
allocated among the related Class A Certificates, pro rata, on the basis of
Accrued Certificate Interest payable on such Distribution Date absent such
reductions, with the remainder of such reductions allocated among the Holders of
all Classes of Class M Certificates and Class B Certificates, pro rata, on the
basis of Accrued Certificate Interest payable on such Distribution Date absent
such reductions.
Accrued Certificate Interest on each Class of Class A-I Certificates,
the Class A-II-2 Certificates, each Class of Class M Certificates and the Class
B Certificates for any Distribution Date shall also be reduced by any interest
shortfalls resulting from the failure of the Hedge Agreements Provider to make
the related required Hedge Payment for such Distribution Date, with all such
reductions on the Class A-I Certificates allocated to the Class A-I Certificates
on a pro rata basis, based on the portion of the Class A-I Hedge Payment each
such Class was entitled to, but did not receive, on such Distribution Date, all
such reductions on the Class A-II-2 Certificates based on the portion of the
Class A-II-2 Hedge Payment the Class A-II-2 Certificates were entitled to, but
did not receive, on such Distribution Date and all such reductions on the Class
M Certificates and Class B Certificates allocated to the Class M Certificates
and Class B Certificates on a pro rata basis, based on the portion of the
Subordinate Hedge Payment each such Class was entitled to, but did not receive,
on such Distribution Date.
Accrued Certificate Interest for any Distribution Date shall further be
reduced by the interest portion of Realized Losses allocated to any Class of
Certificates pursuant to Section 4.05.
Accrued Certificate Interest shall accrue on the basis of a 360-day year
and the actual number of days in the related Interest Accrual Period.
With respect to each Distribution Date and the Class SB Certificates,
interest accrued during the preceding Interest Accrual Period at the
Pass-Through Rate on the notional amount as specified in the definition of
Pass-Through Rate, immediately prior to such Distribution Date, reduced by any
interest shortfalls with respect to the Mortgage Loans, including Prepayment
Interest Shortfalls to the extent not covered by Compensating Interest pursuant
to Section 3.16 or by Excess Cash Flow pursuant to Section 4.02(c)(v) and (vi).
Accrued Certificate Interest on the Class SB Certificates shall accrue on the
basis of a 360-day year and the actual number of days in the related Interest
Accrual Period.
Adjusted Mortgage Rate: With respect to any Mortgage Loan and any date
of determination, the Mortgage Rate borne by the related Mortgage Note, less the
rate at which the related Subservicing Fee accrues.
Adjustment Date: With respect to each adjustable-rate Mortgage Loan,
each date set forth in the related Mortgage Note on which an adjustment to the
interest rate on such Mortgage Loan becomes effective.
4
Advance: With respect to any Mortgage Loan, any advance made by the
Master Servicer, pursuant to Section 4.04.
Affiliate: With respect to any Person, any other Person controlling,
controlled by or under common control with such first Person. For purposes of
this definition, "control" means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Agreement: This Pooling and Servicing Agreement and all amendments hereof
and supplements hereto.
Amount Held for Future Distribution: With respect to any Distribution
Date, the total of the amounts held in the Custodial Account at the close of
business on the preceding Determination Date on account of (i) Liquidation
Proceeds, Subsequent Recoveries, Insurance Proceeds, REO Proceeds, Principal
Prepayments, Mortgage Loan purchases made pursuant to Section 2.02, 2.03, 2.04,
4.07 or 4.08 and Mortgage Loan substitutions made pursuant to Section 2.03 or
2.04 received or made in the month of such Distribution Date (other than such
Liquidation Proceeds, Insurance Proceeds, REO Proceeds and purchases of Mortgage
Loans that the Master Servicer has deemed to have been received in the preceding
month in accordance with Section 3.07(b)) and (ii) payments which represent
early receipt of scheduled payments of principal and interest due on a date or
dates subsequent to the Due Date in the related Due Period.
Appraised Value: With respect to any Mortgaged Property, the lesser of
(i) the appraised value of such Mortgaged Property based upon the appraisal made
at the time of the origination of the related Mortgage Loan, and (ii) the sales
price of the Mortgaged Property at such time of origination, except in the case
of a Mortgaged Property securing a refinanced or modified Mortgage Loan as to
which it is either the appraised value based upon the appraisal made at the time
of origination of the loan which was refinanced or modified or the appraised
value determined in an appraisal at the time of refinancing or modification, as
the case may be.
Assignment: An assignment of the Mortgage, notice of transfer or
equivalent instrument, in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale of the Mortgage Loan to the Trustee for the benefit of
Certificateholders, which assignment, notice of transfer or equivalent
instrument may be in the form of one or more blanket assignments covering
Mortgages secured by Mortgaged Properties located in the same county, if
permitted by law and accompanied by an Opinion of Counsel to that effect.
Assignment Agreement: The Assignment and Assumption Agreement, dated the
Closing Date, between Residential Funding and the Depositor relating to the
transfer and assignment of the Mortgage Loans, attached hereto as Exhibit R.
Available Distribution Amount: With respect to any Distribution Date, an
amount equal to (a) the sum of (i) the amount relating to the Mortgage Loans on
deposit in the Custodial Account as of the close of business on the immediately
preceding Determination Date, including any Subsequent Recoveries, and amounts
deposited in the Custodial Account in connection with the substitution of
Qualified Substitute Mortgage Loans, (ii) the amount of any Advance made on the
immediately preceding Certificate Account Deposit Date with respect to the
Mortgage Loans, (iii) any amount deposited in the Certificate Account on the
5
related Certificate Account Deposit Date pursuant to the second paragraph of
Section 3.12(a) in respect of the Mortgage Loans, (iv) any amount that the
Master Servicer is not permitted to withdraw from the Custodial Account pursuant
to Section 3.16(e) in respect of the Mortgage Loans, and (v) any amount
deposited in the Certificate Account pursuant to Section 4.07, 4.08 or 9.01 in
respect of the Mortgage, reduced by (b) the sum as of the close of business on
the immediately preceding Determination Date of (x) the Amount Held for Future
Distribution with respect to the Mortgage Loans, and (y) amounts permitted to be
withdrawn by the Master Servicer from the Custodial Account in respect of the
Mortgage Loans pursuant to clauses (ii)-(x), inclusive, of Section 3.10(a).
Balloon Loan: Each of the Mortgage Loans having an original term to
maturity that is shorter than the related amortization term.
Balloon Payment: With respect to any Balloon Loan, the related Monthly
Payment payable on the stated maturity date of such Balloon Loan.
Bankruptcy Code: The Bankruptcy Code of 1978, as amended.
Book-Entry Certificate: Any Certificate registered in the name of the
Depository or its nominee.
Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a
day on which banking institutions in the State of California, the State of
Minnesota, the State of Texas, the State of New York or the State of Illinois
(and such other state or states in which the Custodial Account or the
Certificate Account are at the time located) are required or authorized by law
or executive order to be closed.
Capitalization Reimbursement Amount: With respect to any Distribution
Date, the amount of Advances or Servicing Advances that were added to the Stated
Principal Balance of the Mortgage Loans during the prior calendar month and
reimbursed to the Master Servicer or Subservicer on or prior to such
Distribution Date pursuant to Section 3.10(a)(vii).
Cash Liquidation: With respect to any defaulted Mortgage Loan other than
a Mortgage Loan as to which an REO Acquisition occurred, a determination by the
Master Servicer that it has received all Insurance Proceeds, Liquidation
Proceeds and other payments or cash recoveries which the Master Servicer
reasonably and in good faith expects to be finally recoverable with respect to
such Mortgage Loan.
Certificate: Any Class A Certificate, Class M Certificate, Class B
Certificate, Class SB Certificate or Class R Certificate.
Certificate Account: The account or accounts created and maintained
pursuant to Section 4.01, which shall be entitled "JPMorgan Chase Bank, N.A., as
trustee, in trust for the registered holders of Residential Asset Securities
Corporation, Home Equity Mortgage Asset-Backed Pass-Through Certificates, Series
2004-KS11" and which account shall be held for the benefit of the
Certificateholders and which must be an Eligible Account.
Certificate Account Deposit Date: With respect to any Distribution Date,
the Business Day prior thereto.
Certificateholder or Holder: The Person in whose name a Certificate is
registered in the Certificate Register, except that neither a Disqualified
Organization nor a Non-United States Person shall be a holder of a Class R
Certificate for any purpose hereof. Solely for the purpose of giving any consent
or direction pursuant to this Agreement, any Certificate, other than a Class R
Certificate, registered in the name of the Depositor, the Master Servicer or any
Subservicer or any Affiliate thereof shall be deemed not to be outstanding and
the Percentage Interest or Voting Rights evidenced thereby shall not be taken
into account in determining whether the requisite amount of Percentage Interests
or Voting Rights necessary to effect any such consent or direction has been
obtained. All references herein to "Holders" or "Certificateholders" shall
6
reflect the rights of Certificate Owners as they may indirectly exercise such
rights through the Depository and participating members thereof, except as
otherwise specified herein; provided, however, that the Trustee shall be
required to recognize as a "Holder" or "Certificateholder" only the Person in
whose name a Certificate is registered in the Certificate Register. Unless
otherwise indicated in this Agreement, the Custodial Agreement or the Assignment
Agreement, whenever reference is made to the actions taken by the Trustee on
behalf of the Certificateholders.
Certificate Owner: With respect to a Book-Entry Certificate, the Person
who is the beneficial owner of such Certificate, as reflected on the books of an
indirect participating brokerage firm for which a Depository Participant acts as
agent, if any, and otherwise on the books of a Depository Participant, if any,
and otherwise on the books of the Depository.
Certificate Principal Balance: With respect to any Class A Certificate,
Class M Certificate or Class B Certificate, on any date of determination, an
amount equal to (i) the Initial Certificate Principal Balance of such
Certificate as specified on the face thereof, minus (ii) the sum of (x) the
aggregate of all amounts previously distributed with respect to such Certificate
(or any predecessor Certificate) and applied to reduce the Certificate Principal
Balance thereof pursuant to Section 4.02(c) and (y) the aggregate of all
reductions in Certificate Principal Balance deemed to have occurred in
connection with Realized Losses which were previously allocated to such
Certificate (or any predecessor Certificate) pursuant to Section 4.05. With
respect to any Class SB Certificate, on any date of determination, an amount
equal to the Percentage Interest evidenced by such Certificate multiplied by an
amount equal to (i) the excess, if any, of (A) the then aggregate Stated
Principal Balance of the Mortgage Loans over (B) the then aggregate Certificate
Principal Balance of the Class A Certificates, Class M Certificates and Class B
Certificates then outstanding, which represents the sum of (i) the Initial
Principal Balance of the REMIC III Regular Interest SB-PO, as reduced by
Realized Losses allocated thereto and payments deemed made thereon, and (ii)
accrued and unpaid interest on the REMIC III Regular Interest SB-IO, as reduced
by Realized Losses allocated thereto. The Class R Certificates will not have a
Certificate Principal Balance.
Certificate Register and Certificate Registrar: The register maintained
and the registrar appointed pursuant to Section 5.02.
Class: Collectively, all of the Certificates or uncertificated interests
bearing the same designation.
Class A-I-1 Certificate: Any one of the Class A-I-1 Certificates
executed by the Trustee and authenticated by the Certificate Registrar
substantially in the form annexed hereto as Exhibit A, senior to the Class M
Certificates, Class B Certificates, SB Certificates and Class R Certificates
with respect to distributions and the allocation of Realized Losses in respect
of Group I Loans as set forth in Section 4.05, and evidencing an interest
designated as a "regular interest" in REMIC III for purposes of the REMIC
Provisions.
Class A-I-1 Margin: Initially, 0.140% per annum, and on any Distribution
Date on or after the first Distribution Date after the second possible Optional
Termination Date, 0.280% per annum.
Class A-I-2 Certificate: Any one of the Class A-I-2 Certificates
executed by the Trustee and authenticated by the Certificate Registrar
substantially in the form annexed hereto as Exhibit A, senior to the Class M
Certificates, Class B Certificates, SB Certificates and Class R Certificates
with respect to distributions and the allocation of Realized Losses in respect
of Group I Loans as set forth in Section 4.05, and evidencing an interest
designated as a "regular interest" in REMIC III for purposes of the REMIC
Provisions.
7
Class A-I-2 Margin: Initially, 0.270% per annum, and on any Distribution
Date on or after the first Distribution Date after the second possible Optional
Termination Date, 0.540% per annum.
Class A-I-3 Certificate: Any one of the Class A-I-3 Certificates
executed by the Trustee and authenticated by the Certificate Registrar
substantially in the form annexed hereto as Exhibit A, senior to the Class M
Certificates, Class B Certificates, SB Certificates and Class R Certificates
with respect to distributions and the allocation of Realized Losses in respect
of Group I Loans as set forth in Section 4.05, and evidencing an interest
designated as a "regular interest" in REMIC III for purposes of the REMIC
Provisions.
Class A-I-3 Margin: Initially, 0.470% per annum, and on any Distribution
Date on or after the first Distribution Date after the second possible Optional
Termination Date, 0.940% per annum.
Class A-I Certificates: Collectively, the Class A-I-1 Certificates,
Class A-I-2 Certificates and Class A-I-3 Certificates.
Class A-I Hedge Agreement: The confirmation, dated as of the Closing
Date, between the Trustee, on behalf of the Trust Fund, and the Hedge Agreements
Provider, relating to the Class A-I Certificates or any replacement, substitute,
collateral or other arrangement in lieu thereof.
Class A-I Hedge Payment: For any Distribution Date, the payment, if any,
due under the Class A-I Hedge Agreement in respect of such Distribution Date.
Class A-I Interest Remittance Amount: With respect to any Distribution
Date, the portion of the Available Distribution Amount for that Distribution
Date attributable to interest received or advanced with respect to the Group I
Loans plus, with respect to payments on the Class A-I Certificates pursuant to
Section 4.02(c)(iii)(A) only, the amount necessary to make such payments paid
from amounts received on the Class A-I Hedge Agreement for such Distribution
Date.
Class A-II-1 Certificate: Any one of the Class A-II-1 Certificates
executed by the Trustee and authenticated by the Certificate Registrar
substantially in the form annexed hereto as Exhibit A, senior to the Class M
Certificates, Class B Certificates, SB Certificates and Class R Certificates
with respect to distributions and the allocation of Realized Losses in respect
of Group II Loans as set forth in Section 4.05, and evidencing an interest
designated as a "regular interest" in REMIC III for purposes of the REMIC
Provisions.
Class A-II-1 Margin: Initially, 0.310% per annum, and on any
Distribution Date on or after the first Distribution Date after the second
possible Optional Termination Date, 0.620% per annum.
Class A-II-2 Certificate: Any one of the Class A-II-2 Certificates
executed by the Trustee and authenticated by the Certificate Registrar
substantially in the form annexed hereto as Exhibit A, senior to the Class M
Certificates, Class B Certificates, SB Certificates and Class R Certificates
with respect to distributions and the allocation of Realized Losses in respect
of Group II Loans as set forth in Section 4.05, and evidencing (i) an interest
designated as a "regular interest" in REMIC III for purposes of the REMIC
Provisions and (ii) the right to receive payments under the Class A-II-2 Hedge
Agreement.
8
Class A-II-2 Hedge Agreement: The confirmation, dated as of the Closing
Date, between the Trustee, on behalf of the Trust Fund, and the Hedge Agreements
Provider, relating to the Class A-II-2 Certificates or any replacement,
substitute, collateral or other arrangement in lieu thereof.
Class A-II-2 Hedge Payment: For any Distribution Date, the payment, if
any, due under the Class A-II-2 Hedge Agreement in respect of such Distribution
Date.
Class A-II-2 Margin: Initially, 0.380% per annum, and on any
Distribution Date on or after the first Distribution Date after the second
possible Optional Termination Date, 0.760% per annum.
Class A-II-2 Net WAC Cap Rate: With respect to any Distribution Date,
the sum of (a) the Group II Net WAC Cap Rate for such Distribution Date and (b)
a per annum rate equal to (i) the amount, if any, required to be paid under the
Class A-II-2 Hedge Agreement with respect to such Distribution Date divided by
(ii) the Certificate Principal Balance of the Class A-II-2 Certificates
immediately prior to such Distribution Date, multiplied by a fraction, the
numerator of which is 30, and the denominator of which is the actual number of
days in the related Interest Accrual Period.
Class A-II Certificates: Collectively, the Class A-II-1 Certificates and
Class A-II-2 Certificates.
Class A-II Interest Remittance Amount: With respect to any Distribution
Date, the portion of the Available Distribution Amount for that Distribution
Date attributable to interest received or advanced with respect to the Group II
Loans plus, with respect to payments on the Class A-II-2 Certificates pursuant
to Section 4.02(c)(iii)(B) only, the amount necessary to make such payments paid
from amounts received on the Class A-II-2 Hedge Agreement for such Distribution
Date.
Class A Certificates: Collectively, the Class A-I Certificates and Class
A-II Certificates.
Class A Interest Distribution Priority: With respect to each Class of
Class A Certificates and any Distribution Date, the amount available for payment
of Accrued Certificate Interest thereon for that Distribution Date plus Accrued
Certificate Interest thereon remaining unpaid from any prior Distribution Date,
in the amounts and priority as follows:
o first, concurrently, to the Class A-I Certificates, pro rata,
from the Class A-I Interest Remittance Amount and to the Class
A-II Certificates, pro rata, from the Class A-II Interest
Remittance Amount;
o second, to the Class A-I Certificates, pro rata, from the
remaining Class A-II Interest Remittance Amount or to the Class
A-II Certificates, pro rata, from the remaining Class A-I
Interest Remittance Amount, as needed after taking into account
any distributions in respect of interest on the Class A
Certificates made in first above;
o third, concurrently, from the Principal Remittance Amount related
to Loan Group I to the Class A-I Certificates, pro rata, and from
the Principal Remittance Amount related to Loan Group II to the
Class A-II Certificates, pro rata, after taking into account any
distributions in respect of interest on the Class A Certificates
made in first and second above; and
o fourth, from the remaining Principal Remittance Amount related to
Loan Group II to the Class A-I Certificates, pro rata, or from
the remaining Principal Remittance Amount related to Loan Group I
to the Class A-II Certificates, pro rata, as needed after taking
into account any distributions in respect of interest on the
Class A Certificates made in first, second and third above.
9
Class A Principal Distribution Amount: With respect to any Distribution
Date (a) prior to the Stepdown Date or on or after the Stepdown Date if a
Trigger Event is in effect for that Distribution Date, the Principal
Distribution Amount for that Distribution Date or (b) on or after the Stepdown
Date if a Trigger Event is not in effect for that Distribution Date, the lesser
of:
(i) the Principal Distribution Amount for that Distribution Date; and
(ii) the excess, if any, of (A) the aggregate Certificate Principal Balance of
the Class A Certificates immediately prior to that Distribution Date over
(B) the lesser of (x) the product of (1) the applicable Subordination
Percentage and (2) the aggregate Stated Principal Balance of the Mortgage
Loans after giving effect to distributions to be made on that Distribution
Date and (y) the excess, if any, of the aggregate Stated Principal Balance
of the Mortgage Loans after giving effect to distributions to be made on
that Distribution Date, over the Overcollateralization Floor.
Class B Certificate: Any one of the Class B Certificates executed by the
Trustee and authenticated by the Certificate Registrar substantially in the form
annexed hereto as Exhibit B, senior to Class SB Certificates and Class R
Certificates with respect to distributions and the allocation of Realized Losses
as set forth in Section 4.05, and evidencing (i) an interest designated as a
"regular interest" in REMIC III for purposes of the REMIC Provisions and (ii)
the right to receive payments under the Subordinate Hedge Agreement.
Class B Margin: Initially, 3.500% per annum, and on any Distribution
Date on or after the first Distribution Date after the second possible Optional
Termination Date, 5.250% per annum.
Class B Principal Distribution Amount: With respect to any Distribution
Date (a) prior to the Stepdown Date or on or after the Stepdown Date if a
Trigger Event is in effect for that Distribution Date, the remaining Principal
Distribution Amount for that Distribution Date after distribution of the Class A
Principal Distribution Amount, the Class M-1 Principal Distribution Amount, the
Class M-2 Principal Distribution Amount, the Class M-3 Principal Distribution
Amount, the Class M-4 Principal Distribution Amount, the Class M-5 Principal
Distribution Amount and the Class M-6 Principal Distribution Amount or (b) on or
after the Stepdown Date if a Trigger Event is not in effect for that
Distribution Date, the lesser of:
(i) the remaining Principal Distribution Amount for that Distribution Date
after distribution of the Class A Principal Distribution Amount, the Class
M-1 Principal Distribution Amount, the Class M-2 Principal Distribution
Amount, the Class M-3 Principal Distribution Amount, the Class M-4
Principal Distribution Amount, the Class M-5 Principal Distribution Amount
and the Class M-6 Principal Distribution Amount; and
(ii) the excess, if any, of (A) the sum of (1) the aggregate Certificate
Principal Balance of the Class A Certificates, Class M-1 Certificates,
Class M-2 Certificates, Class M-3 Certificates, Class M-4 Certificates,
Class M-5 Certificates and Class M-6 Certificates (after taking into
account the payment of the Class A Principal Distribution Amount, the Class
M-1 Principal Distribution Amount, the Class M-2 Principal Distribution
Amount, the Class M-3 Principal Distribution Amount, the Class M-4
10
Principal Distribution Amount, the Class M-5 Principal Distribution Amount
and the Class M-6 Principal Distribution Amount for that Distribution Date)
and (2) the Certificate Principal Balance of the Class B Certificates
immediately prior to that Distribution Date over (B) the lesser of (x) the
product of (1) the applicable Subordination Percentage and (2) the
aggregate Stated Principal Balance of the Mortgage Loans after giving
effect to distributions to be made on that Distribution Date and (y) the
excess, if any, of the aggregate Stated Principal Balance of the Mortgage
Loans after giving effect to distributions to be made on that Distribution
Date, over the Overcollateralization Floor.
Class M-1 Certificate: Any one of the Class M-1 Certificates executed by
the Trustee and authenticated by the Certificate Registrar substantially in the
form annexed hereto as Exhibit B, senior to the Class M-2 Certificates, Class
M-3 Certificates, Class M-4 Certificates, Class M-5 Certificates, Class M-6
Certificates, Class B Certificates, Class SB Certificates and Class R
Certificates with respect to distributions and the allocation of Realized Losses
as set forth in Section 4.05, and evidencing (i) an interest designated as a
"regular interest" in REMIC III for purposes of the REMIC Provisions and (ii)
the right to receive payments under the Subordinate Hedge Agreement.
Class M-1 Margin: Initially, 0.560% per annum, and on any Distribution
Date on or after the first Distribution Date after the second possible Optional
Termination Date, 0.840% per annum.
Class M-1 Principal Distribution Amount: With respect to any
Distribution Date (a) prior to the Stepdown Date or on or after the Stepdown
Date if a Trigger Event is in effect for that Distribution Date, the remaining
Principal Distribution Amount for that Distribution Date after distribution of
the Class A Principal Distribution Amount or (b) on or after the Stepdown Date
if a Trigger Event is not in effect for that Distribution Date, the lesser of:
(i) the remaining Principal Distribution Amount for that Distribution Date
after distribution of the Class A Principal Distribution Amount; and
(ii) the excess, if any, of (A) the sum of (1) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account
the payment of the Class A Principal Distribution Amount for that
Distribution Date) and (2) the Certificate Principal Balance of the Class
M-1 Certificates immediately prior to that Distribution Date over (B) the
lesser of (x) the product of (1) the applicable Subordination Percentage
and (2) the aggregate Stated Principal Balance of the Mortgage Loans after
giving effect to distributions to be made on that Distribution Date and (y)
the excess, if any, of the aggregate Stated Principal Balance of the
Mortgage Loans after giving effect to distributions to be made on that
Distribution Date, over the Overcollateralization Floor.
Class M-2 Certificate: Any one of the Class M-2 Certificates executed by
the Trustee and authenticated by the Certificate Registrar substantially in the
form annexed hereto as Exhibit B, senior to the Class M-3 Certificates, Class
M-4 Certificates, Class M-5 Certificates, Class M-6 Certificates, Class B
Certificates, Class SB Certificates and Class R Certificates with respect to
distributions and the allocation of Realized Losses as set forth in Section
4.05, and evidencing (i) an interest designated as a "regular interest" in REMIC
III for purposes of the REMIC Provisions and (ii) the right to receive payments
under the Subordinate Hedge Agreement.
Class M-2 Margin: Initially, 1.000% per annum, and on any Distribution
Date on or after the first Distribution Date after the second possible Optional
Termination Date, 1.500% per annum.
Class M-2 Principal Distribution Amount: With respect to any
Distribution Date (a) prior to the Stepdown Date or on or after the Stepdown
Date if a Trigger Event is in effect for that Distribution Date, the remaining
Principal Distribution Amount for that Distribution Date after distribution of
the Class A Principal Distribution Amount and the Class M-1 Principal
Distribution Amount or (b) on or after the Stepdown Date if a Trigger Event is
not in effect for that Distribution Date, the lesser of:
11
(i) the remaining Principal Distribution Amount for that Distribution Date
after distribution of the Class A Principal Distribution Amount and the
Class M-1 Principal Distribution Amount; and
(ii) the excess, if any, of (A) the sum of (1) the aggregate Certificate
Principal Balance of the Class A Certificates and Class M-1 Certificates
(after taking into account the payment of the Class A Principal
Distribution Amount and the Class M-1 Principal Distribution Amount for
that Distribution Date) and (2) the Certificate Principal Balance of the
Class M-2 Certificates immediately prior to that Distribution Date over (B)
the lesser of (x) the product of (1) the applicable Subordination
Percentage and (2) the aggregate Stated Principal Balance of the Mortgage
Loans after giving effect to distributions to be made on that Distribution
Date and (y) the excess, if any, of the aggregate Stated Principal Balance
of the Mortgage Loans after giving effect to distributions to be made on
that Distribution Date, over the Overcollateralization Floor.
Class M-3 Certificate: Any one of the Class M-3 Certificates executed by
the Trustee and authenticated by the Certificate Registrar substantially in the
form annexed hereto as Exhibit B, senior to the Class M-4 Certificates, Class
M-5 Certificates, Class M-6 Certificates, Class B Certificates, Class SB
Certificates and Class R Certificates with respect to distributions and the
allocation of Realized Losses as set forth in Section 4.05, and evidencing (i)
an interest designated as a "regular interest" in REMIC III for purposes of the
REMIC Provisions and (ii) the right to receive payments under the Subordinate
Hedge Agreement.
Class M-3 Margin: Initially, 1.200% per annum, and on any Distribution
Date on or after the first Distribution Date after the second possible Optional
Termination Date, 1.800% per annum.
Class M-3 Principal Distribution Amount: With respect to any
Distribution Date (a) prior to the Stepdown Date or on or after the Stepdown
Date if a Trigger Event is in effect for that Distribution Date, the remaining
Principal Distribution Amount for that Distribution Date after distribution of
the Class A Principal Distribution Amount, the Class M-1 Principal Distribution
Amount and the Class M-2 Principal Distribution Amount or (b) on or after the
Stepdown Date if a Trigger Event is not in effect for that Distribution Date,
the lesser of:
(i) the remaining Principal Distribution Amount for that Distribution Date
after distribution of the Class A Principal Distribution Amount, the Class
M-1 Principal Distribution Amount and the Class M-2 Principal Distribution
Amount; and
(ii) the excess, if any, of (A) the sum of (1) the aggregate Certificate
Principal Balance of the Class A Certificates, Class M-1 Certificates and
Class M-2 Certificates (after taking into account the payment of the Class
A Principal Distribution Amount, the Class M-1 Principal Distribution
Amount and the Class M-2 Principal Distribution Amount for that
Distribution Date) and (2) the Certificate Principal Balance of the Class
M-3 Certificates immediately prior to that Distribution Date over (B) the
lesser of (x) the product of (1) the applicable Subordination Percentage
and (2) the aggregate Stated Principal Balance of the Mortgage Loans after
giving effect to distributions to be made on that Distribution Date and (y)
the excess, if any, of the aggregate Stated Principal Balance of the
Mortgage Loans after giving effect to distributions to be made on that
Distribution Date, over the Overcollateralization Floor.
12
Class M-4 Certificate: Any one of the Class M-4 Certificates executed by
the Trustee and authenticated by the Certificate Registrar substantially in the
form annexed hereto as Exhibit B, senior to the Class M-5 Certificates, Class
M-6 Certificates, Class B Certificates, Class SB Certificates and Class R
Certificates with respect to distributions and the allocation of Realized Losses
as set forth in Section 4.05, and evidencing (i) an interest designated as a
"regular interest" in REMIC III for purposes of the REMIC Provisions and (ii)
the right to receive payments under the Subordinate Hedge Agreement.
Class M-4 Margin: Initially, 1.650% per annum, and on any Distribution
Date on or after the first Distribution Date after the second possible Optional
Termination Date, 2.475% per annum.
Class M-4 Principal Distribution Amount: With respect to any
Distribution Date (a) prior to the Stepdown Date or on or after the Stepdown
Date if a Trigger Event is in effect for that Distribution Date, the remaining
Principal Distribution Amount for that Distribution Date after distribution of
the Class A Principal Distribution Amount, the Class M-1 Principal Distribution
Amount, the Class M-2 Principal Distribution Amount and the Class M-3 Principal
Distribution Amount or (b) on or after the Stepdown Date if a Trigger Event is
not in effect for that Distribution Date, the lesser of:
(i) the remaining Principal Distribution Amount for that Distribution Date
after distribution of the Class A Principal Distribution Amount, the Class
M-1 Principal Distribution Amount, the Class M-2 Principal Distribution
Amount and the Class M-3 Principal Distribution Amount; and
(ii) the excess, if any, of (A) the sum of (1) the aggregate Certificate
Principal Balance of the Class A Certificates, Class M-1 Certificates,
Class M-2 Certificates and Class M-3 Certificates (after taking into
account the payment of the Class A Principal Distribution Amount, the Class
M-1 Principal Distribution Amount, the Class M-2 Principal Distribution
Amount and the Class M-3 Principal Distribution Amount for that
Distribution Date) and (2) the Certificate Principal Balance of the Class
M-4 Certificates immediately prior to that Distribution Date over (B) the
lesser of (x) the product of (1) the applicable Subordination Percentage
and (2) the aggregate Stated Principal Balance of the Mortgage Loans after
giving effect to distributions to be made on that Distribution Date and (y)
the excess, if any, of the aggregate Stated Principal Balance of the
Mortgage Loans after giving effect to distributions to be made on that
Distribution Date, over the Overcollateralization Floor.
Class M-5 Certificate: Any one of the Class M-5 Certificates executed by
the Trustee and authenticated by the Certificate Registrar substantially in the
form annexed hereto as Exhibit B, senior to the Class M-6 Certificates, Class B
Certificates, Class SB Certificates and Class R Certificates with respect to
distributions and the allocation of Realized Losses as set forth in Section
4.05, and evidencing (i) an interest designated as a "regular interest" in REMIC
III for purposes of the REMIC Provisions and (ii) the right to receive payments
under the Subordinate Hedge Agreement.
Class M-5 Margin: Initially, 1.750% per annum, and on any Distribution
Date on or after the first Distribution Date after the second possible Optional
Termination Date, 2.625% per annum.
13
Class M-5 Principal Distribution Amount: With respect to any
Distribution Date (a) prior to the Stepdown Date or on or after the Stepdown
Date if a Trigger Event is in effect for that Distribution Date, the remaining
Principal Distribution Amount for that Distribution Date after distribution of
the Class A Principal Distribution Amount, the Class M-1 Principal Distribution
Amount, the Class M-2 Principal Distribution Amount, the Class M-3 Principal
Distribution Amount and the Class M-4 Principal Distribution Amount or (b) on or
after the Stepdown Date if a Trigger Event is not in effect for that
Distribution Date, the lesser of:
(i) the remaining Principal Distribution Amount for that Distribution Date
after distribution of the Class A Principal Distribution Amount, the Class
M-1 Principal Distribution Amount, the Class M-2 Principal Distribution
Amount, the Class M-3 Principal Distribution Amount and the Class M-4
Principal Distribution Amount; and
(ii) the excess, if any, of (A) the sum of (1) the aggregate Certificate
Principal Balance of the Class A Certificates, Class M-1 Certificates,
Class M-2 Certificates, Class M-3 Certificates and Class M-4 Certificates
(after taking into account the payment of the Class A Principal
Distribution Amount, the Class M-1 Principal Distribution Amount, the Class
M-2 Principal Distribution Amount, the Class M-3 Principal Distribution
Amount and the Class M-4 Principal Distribution Amount for that
Distribution Date) and (2) the Certificate Principal Balance of the Class
M-5 Certificates immediately prior to that Distribution Date over (B) the
lesser of (x) the product of (1) the applicable Subordination Percentage
and (2) the aggregate Stated Principal Balance of the Mortgage Loans after
giving effect to distributions to be made on that Distribution Date and (y)
the excess, if any, of the aggregate Stated Principal Balance of the
Mortgage Loans after giving effect to distributions to be made on that
Distribution Date, over the Overcollateralization Floor.
Class M-6 Certificate: Any one of the Class M-6 Certificates executed by
the Trustee and authenticated by the Certificate Registrar substantially in the
form annexed hereto as Exhibit B, senior to Class B Certificates, Class SB
Certificates and Class R Certificates with respect to distributions and the
allocation of Realized Losses as set forth in Section 4.05, and evidencing (i)
an interest designated as a "regular interest" in REMIC III for purposes of the
REMIC Provisions and (ii) the right to receive payments under the Subordinate
Hedge Agreement.
Class M-6 Margin: Initially, 2.900% per annum, and on any Distribution
Date on or after the first Distribution Date after the second possible Optional
Termination Date, 4.350% per annum.
Class M-6 Principal Distribution Amount: With respect to any
Distribution Date (a) prior to the Stepdown Date or on or after the Stepdown
Date if a Trigger Event is in effect for that Distribution Date, the remaining
Principal Distribution Amount for that Distribution Date after distribution of
the Class A Principal Distribution Amount, the Class M-1 Principal Distribution
Amount, the Class M-2 Principal Distribution Amount, the Class M-3 Principal
Distribution Amount, the Class M-4 Principal Distribution Amount and the Class
M-5 Principal Distribution Amount or (b) on or after the Stepdown Date if a
Trigger Event is not in effect for that Distribution Date, the lesser of:
(i) the remaining Principal Distribution Amount for that Distribution Date
after distribution of the Class A Principal Distribution Amount, the Class
M-1 Principal Distribution Amount, the Class M-2 Principal Distribution
Amount, the Class M-3 Principal Distribution Amount, the Class M-4
Principal Distribution Amount and the Class M-5 Principal Distribution
Amount; and
14
(ii) the excess, if any, of (A) the sum of (1) the aggregate Certificate
Principal Balance of the Class A Certificates, Class M-1 Certificates,
Class M-2 Certificates, Class M-3 Certificates, Class M-4 Certificates and
Class M-5 Certificates (after taking into account the payment of the Class
A Principal Distribution Amount, the Class M-1 Principal Distribution
Amount, the Class M-2 Principal Distribution Amount, the Class M-3
Principal Distribution Amount, the Class M-4 Principal Distribution Amount
and the Class M-5 Principal Distribution Amount for that Distribution Date)
and (2) the Certificate Principal Balance of the Class M-6 Certificates
immediately prior to that Distribution Date over (B) the lesser of (x) the
product of (1) the applicable Subordination Percentage and (2) the
aggregate Stated Principal Balance of the Mortgage Loans after giving
effect to distributions to be made on that Distribution Date and (y) the
excess, if any, of the aggregate Stated Principal Balance of the Mortgage
Loans after giving effect to distributions to be made on that Distribution
Date, over the Overcollateralization Floor.
Class M Certificates: Collectively, the Class M-1 Certificates, Class
M-2 Certificates, Class M-3 Certificates, Class M-4 Certificates, Class M-5
Certificates and Class M-6 Certificates.
Class R Certificate: Collectively, the Class R-I Certificates, Class
R-II Certificates and Class R-III Certificates.
Class R-I Certificate: Any one of the Class R-I Certificates executed by
the Trustee and authenticated by the Certificate Registrar substantially in the
form annexed hereto as Exhibit D and evidencing an interest designated as a
"residual interest" in REMIC I for purposes of the REMIC Provisions.
Class R-II Certificate: Any one of the Class R-II Certificates executed
by the Trustee and authenticated by the Certificate Registrar substantially in
the form annexed hereto as Exhibit D and evidencing an interest designated as a
"residual interest" in REMIC II for purposes of the REMIC Provisions.
Class R-III Certificate: Any one of the Class R-III Certificates
executed by the Trustee and authenticated by the Certificate Registrar
substantially in the form annexed hereto as Exhibit D and evidencing an interest
designated as a "residual interest" in REMIC III for purposes of the REMIC
Provisions.
Class SB Certificate: Any one of the Class SB Certificates executed by
the Trustee and authenticated by the Certificate Registrar substantially in the
form annexed hereto as Exhibit B, subordinate to the Class A Certificates, Class
M Certificates and Class B Certificates with respect to distributions and the
allocation of Realized Losses as set forth in Section 4.05, and evidencing an
interest comprised of "regular interests" in REMIC III together with certain
rights to payments under the Hedge Agreements for purposes of the REMIC
Provisions.
Closing Date: November 29, 2004.
Code: The Internal Revenue Code of 1986.
Commission: The Securities and Exchange Commission.
Compensating Interest: With respect to any Distribution Date, any amount
paid by the Master Servicer in accordance with Section 3.16(f).
15
Corporate Trust Office: The principal office of the Trustee at which at
any particular time its corporate trust business with respect to this Agreement
shall be administered, which office at the date of the execution of this
instrument is located at JPMorgan Chase Bank, N.A., 4 New York Plaza, 6th Floor,
New York, New York 10004, Attn: Institutional Trust Services/Global Debt, RASC
2004-KS11.
Credit Repository: Equifax, Transunion and Experian, or their successors in
interest.
Curtailment: Any Principal Prepayment made by a Mortgagor which is not a
Principal Prepayment in Full.
Custodial Account: The custodial account or accounts created and
maintained pursuant to Section 3.07 in the name of a depository institution, as
custodian for the holders of the Certificates, for the holders of certain other
interests in mortgage loans serviced or sold by the Master Servicer and for the
Master Servicer, into which the amounts set forth in Section 3.07 shall be
deposited directly. Any such account or accounts shall be an Eligible Account.
Custodial Agreement: An agreement that may be entered into among the
Depositor, the Master Servicer, the Trustee and a Custodian in substantially the
form of Exhibit E hereto.
Custodian: Xxxxx Fargo Bank, N.A., or any successor custodian appointed
pursuant to a Custodial Agreement.
Cut-off Date: November 1, 2004.
Cut-off Date Balance: $700,000,101.71.
Cut-off Date Principal Balance: With respect to any Mortgage Loan, the
unpaid principal balance thereof at the Cut-off Date after giving effect to all
installments of principal due on or prior thereto (or due in the month of the
Cut-off Date), whether or not received.
Debt Service Reduction: With respect to any Mortgage Loan, a reduction
in the scheduled Monthly Payment for such Mortgage Loan by a court of competent
jurisdiction in a proceeding under the Bankruptcy Code, except such a reduction
constituting a Deficient Valuation or any reduction that results in a permanent
forgiveness of principal.
Deficient Valuation: With respect to any Mortgage Loan, a valuation by a
court of competent jurisdiction of the Mortgaged Property in an amount less than
the then outstanding indebtedness under the Mortgage Loan, or any reduction in
the amount of principal to be paid in connection with any scheduled Monthly
Payment that constitutes a permanent forgiveness of principal, which valuation
or reduction results from a proceeding under the Bankruptcy Code.
Definitive Certificate: Any definitive, fully registered Certificate.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced with a
Qualified Substitute Mortgage Loan.
Delinquent: As used herein, a Mortgage Loan is considered to be: "30 to
59 days" or "30 or more days" delinquent when a payment due on any scheduled due
date remains unpaid as of the close of business on the next following monthly
scheduled due date; "60 to 89 days" or "60 or more days" delinquent when a
payment due on any scheduled due date remains unpaid as of the close of business
on the second following monthly scheduled due date; and so on. The determination
as to whether a Mortgage Loan falls into these categories is made as of the
close of business on the last business day of each month. For example, a
Mortgage Loan with a payment due on July 1 that remained unpaid as of the close
of business on August 31 would then be considered to be 30 to 59 days
delinquent. Delinquency information as of the Cut-off Date is determined and
prepared as of the close of business on the last business day immediately prior
to the Cut-off Date.
16
Depositor: As defined in the preamble hereto.
Depository: The Depository Trust Company, or any successor Depository
hereafter named. The nominee of the initial Depository for purposes of
registering those Certificates that are to be Book-Entry Certificates is Cede &
Co. The Depository shall at all times be a "clearing corporation" as defined in
Section 8-102(a)(5) of the Uniform Commercial Code of the State of New York and
a "clearing agency" registered pursuant to the provisions of Section 17A of the
Exchange Act.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Destroyed Mortgage Note: A Mortgage Note the original of which was
permanently lost or destroyed and has not been replaced.
Determination Date: With respect to any Distribution Date, the 20th day
(or if such 20th day is not a Business Day, the Business Day immediately
following such 20th day) of the month of the related Distribution Date.
Disqualified Organization: Any organization defined as a "disqualified
organization" under Section 860E(e)(5) of the Code, including, if not otherwise
included, any of the following: (i) the United States, any State or political
subdivision thereof, any possession of the United States, or any agency or
instrumentality of any of the foregoing (other than an instrumentality which is
a corporation if all of its activities are subject to tax and, except for
Xxxxxxx Mac, a majority of its board of directors is not selected by such
governmental unit), (ii) a foreign government, any international organization,
or any agency or instrumentality of any of the foregoing, (iii) any organization
(other than certain farmers' cooperatives described in Section 521 of the Code)
which is exempt from the tax imposed by Chapter 1 of the Code (including the tax
imposed by Section 511 of the Code on unrelated business taxable income) and
(iv) rural electric and telephone cooperatives described in Section
1381(a)(2)(C) of the Code. A Disqualified Organization also includes any
"electing large partnership," as defined in Section 775(a) of the Code and any
other Person so designated by the Trustee based upon an Opinion of Counsel that
the holding of an Ownership Interest in a Class R Certificate by such Person may
cause any REMIC or any Person having an Ownership Interest in any Class of
Certificates (other than such Person) to incur a liability for any federal tax
imposed under the Code that would not otherwise be imposed but for the Transfer
of an Ownership Interest in a Class R Certificate to such Person. The terms
"United States," "State" and "international organization" shall have the
meanings set forth in Section 7701 of the Code or successor provisions.
Distribution Date: The 25th day of any month beginning in November 2004
or, if such 25th day is not a Business Day, the Business Day immediately
following such 25th day.
DTC Letter: The Letter of Representations, dated November 24, 2004,
among the Trustee on behalf of the Trust Fund, JPMorgan Chase Bank, N.A., in its
individual capacity as agent thereunder and the Depository.
17
Due Date: With respect to any Distribution Date and any Mortgage Loan,
the day during the related Due Period on which the Monthly Payment is due.
Due Period: With respect to any Distribution Date, the calendar month of
such Distribution Date.
Eligible Account: An account that is any of the following: (i)
maintained with a depository institution the debt obligations of which have been
rated by each Rating Agency in its highest rating available, or (ii) an account
or accounts in a depository institution in which such accounts are fully insured
to the limits established by the FDIC, provided that any deposits not so insured
shall, to the extent acceptable to each Rating Agency, as evidenced in writing,
be maintained such that (as evidenced by an Opinion of Counsel delivered to the
Trustee and each Rating Agency) the registered Holders of Certificates have a
claim with respect to the funds in such account or a perfected first security
interest against any collateral (which shall be limited to Permitted
Investments) securing such funds that is superior to claims of any other
depositors or creditors of the depository institution with which such account is
maintained, or (iii) in the case of the Custodial Account, a trust account or
accounts maintained in the corporate trust department of U.S. Bank, National
Association, or (iv) in the case of the Certificate Account, a trust account or
accounts maintained in the corporate trust division of JPMorgan Chase Bank,
N.A., or (v) an account or accounts of a depository institution acceptable to
each Rating Agency (as evidenced in writing by each Rating Agency that use of
any such account as the Custodial Account or the Certificate Account will not
reduce the rating assigned to any Class of Certificates by such Rating Agency
below the lower of the then-current rating or the rating assigned to such
Certificates as of the Closing Date by such Rating Agency).
Eligible Master Servicing Compensation: With respect to any Distribution
Date and each Loan Group, the lesser of (a) one-twelfth of 0.125% of the Stated
Principal Balance of the related Mortgage Loans immediately preceding such
Distribution Date and (b) the sum of the Servicing Fee and all income and gain
on amounts held in the Custodial Account and the Certificate Account and payable
to the Certificateholders with respect to such Distribution Date, in each case
with respect to the related Loan Group; provided that for purposes of this
definition the amount of the Servicing Fee will not be reduced pursuant to
Section 7.02(a) except as may be required pursuant to the last sentence of such
Section.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
Event of Default: As defined in Section 7.01.
Excess Cash Flow: With respect to any Distribution Date, an amount equal
to the sum of (A) the excess of (i) the Available Distribution Amount for that
Distribution Date increased by the amount, if any, paid from the Hedge Payments
for that Distribution Date pursuant to Section 4.02(c)(iii) over (ii) the sum of
(a) the Interest Distribution Amount for that Distribution Date and (b) the
lesser of (1) the aggregate Certificate Principal Balance of Class A
Certificates, Class M Certificates and Class B Certificates immediately prior to
such Distribution Date and (2) the Principal Remittance Amount for that
Distribution Date to the extent not applied to pay interest on the Class A
Certificates, Class M Certificates and Class B Certificates on such Distribution
Date and (B) the Overcollateralization Reduction Amount, if any, for that
Distribution Date.
Excess Overcollateralization Amount: With respect to any Distribution
Date, the excess, if any, of (a) the Overcollateralization Amount on such
Distribution Date over (b) the Required Overcollateralization Amount for such
Distribution Date.
Exchange Act: The Securities Exchange Act of 1934, as amended.
18
Expense Fee Rate: With respect to any Mortgage Loan as of any date of
determination, the sum of the applicable Servicing Fee Rate and the per annum
rate at which the applicable Subservicing Fee accrues.
Xxxxxx Xxx: Xxxxxx Xxx, a federally chartered and privately owned
corporation organized and existing under the Federal National Mortgage
Association Charter Act, or any successor thereto.
FASIT: A "financial asset securitization investment trust" within the
meaning of Section 860L of the Code.
FDIC: Federal Deposit Insurance Corporation or any successor thereto.
----
Final Distribution Date: The Distribution Date on which the final
distribution in respect of the Certificates will be made pursuant to Section
9.01, which Final Distribution Date shall in no event be later than the end of
the 90-day liquidation period described in Section 9.02.
Final Scheduled Distribution Date: Solely for purposes of the face of
the Certificates, as follows: with respect to the Class A-I-1 Certificates, the
Distribution Date occurring in August 2025; with respect to the Class A-I-2
Certificates, the Distribution Date occurring in January 2034; and with respect
to the Class A-I-3 Certificates, Class A-II-1 Certificates, Class A-II-2
Certificates, Class M Certificates and Class B Certificates, the Distribution
Date occurring in December 2034. No event of default under this Agreement will
arise or become applicable solely by reason of the failure to retire the entire
Certificate Principal Balance of any Class of Class A Certificates or Class M
Certificates on or before its Final Scheduled Distribution Date.
Fitch: Fitch Ratings, or its successors in interest.
Foreclosure Profits: With respect to any Distribution Date or related
Determination Date and any Mortgage Loan, the excess, if any, of Liquidation
Proceeds, Insurance Proceeds and REO Proceeds (net of all amounts reimbursable
therefrom pursuant to Section 3.10(a)(ii)) in respect of each Mortgage Loan or
REO Property for which a Cash Liquidation or REO Disposition occurred in the
related Prepayment Period over the sum of the unpaid principal balance of such
Mortgage Loan or REO Property (determined, in the case of an REO Disposition, in
accordance with Section 3.14) plus accrued and unpaid interest at the Mortgage
Rate on such unpaid principal balance from the Due Date to which interest was
last paid by the Mortgagor to the first day of the month following the month in
which such Cash Liquidation or REO Disposition occurred.
Form 10-K Certification: As defined in Section 4.03(e).
Xxxxxxx Mac: Xxxxxxx Mac, a corporate instrumentality of the United
States created and existing under Title III of the Emergency Home Finance Act of
1970, as amended, or any successor thereto.
Gross Margin: With respect to each adjustable-rate Mortgage Loan, the
fixed percentage set forth in the related Mortgage Note and indicated on the
Mortgage Loan Schedule as the "NOTE MARGIN," which percentage is added to the
related Index on each Adjustment Date to determine (subject to rounding in
accordance with the related Mortgage Note, the Periodic Cap, the Maximum
Mortgage Rate and the Minimum Mortgage Rate) the interest rate to be borne by
such Mortgage Loan until the next Adjustment Date.
Group I Basis Risk Shortfalls: With respect to each Class of the Class
A-I Certificates and any Distribution Date, the sum of (a) with respect to any
Distribution Date on which the Group I Net WAC Cap Rate is used to determine the
Pass-Through Rate of such Class, an amount equal to the excess of (x) Accrued
Certificate Interest for such Class calculated at a per annum rate equal to the
lesser of (i) LIBOR plus the related Margin for such Distribution Date and (ii)
the Group I Weighted Average Maximum Net Mortgage Rate, over (y) Accrued
Certificate Interest for such Class calculated using the Group I Net WAC Cap
19
Rate plus, an amount equal to any reduction in the Accrued Certificate Interest
of such Class due to the failure of the Hedge Agreements Provider to make any
required Class A-I Hedge Payment with respect to such Distribution Date, (b) any
shortfalls for such Class calculated pursuant to clause (a) above remaining
unpaid from prior Distribution Dates, and (c) one month's interest on the amount
in clause (b) (based on the number of days in the preceding Interest Accrual
Period) at a per annum rate equal to LIBOR plus the related Margin for such
Distribution Date.
Group I Loans: The Mortgage Loans designated on the Mortgage Loan
Schedule attached hereto as Exhibit F-1. The Group I Loans relate to the Class
A-I Certificates, Class M Certificates, Class B Certificates and Class SB
Certificates.
Group I Net WAC Cap Rate: With respect to any Distribution Date, the sum
of (a) the product of (i) a per annum rate equal to the weighted average of the
Net Mortgage Rates (or, if applicable, the Modified Net Mortgage Rates) on the
Group I Loans using the Net Mortgage Rates in effect for the Monthly Payments
due on such Mortgage Loans during the related Due Period, weighted on the basis
of the respective Stated Principal Balances thereof for such Distribution Date
and (ii) a fraction equal to 30 divided by the actual number of days in the
related Interest Accrual Period, and (b) a per annum rate equal to (i) the
amount, if any, required to be paid under the Class A-I Hedge Agreement with
respect to such Distribution Date divided by (ii) the aggregate Certificate
Principal Balance of the Class A-I Certificates immediately prior to such
Distribution Date, multiplied by a fraction, the numerator of which is 30, and
the denominator of which is the actual number of days in the related Interest
Accrual Period.
Group I Principal Distribution Amount: For any Distribution Date, the
product of (x) the Class A Principal Distribution Amount for such Distribution
Date and (y) a fraction, the numerator of which is the Principal Allocation
Amount for the Group I Loans for such Distribution Date and the denominator of
which is the Principal Allocation Amount for all of the Mortgage Loans for such
Distribution Date.
Group I REMIC Net WAC Rate: For any Distribution Date, a per annum rate
equal to the weighted average of the Net Mortgage Rates (or, if applicable, the
Modified Net Mortgage Rates) on the Group I Loans using the Net Mortgage Rates
in effect for the Monthly Payments due on such Mortgage Loans during the related
Due Period, weighted on the basis of the respective Stated Principal Balances
thereof for such Distribution Date and (ii) a fraction equal to 30 divided by
the actual number of days in the related Interest Accrual Period.
Group I Weighted Average Maximum Net Mortgage Rate: For any Distribution
Date, the weighted average of the Maximum Net Mortgage Rates of the Group I
Loans, multiplied by a fraction equal to 30 divided by the actual number of days
in the related Interest Accrual Period.
Group II Basis Risk Shortfalls: With respect to each Class of the Class
A-II Certificates and any Distribution Date, the sum of (a) with respect to any
Distribution Date on which the Group II Net WAC Cap Rate, with respect to the
Class A-II-1 Certificates or Class A-II-2 Net WAC Cap Rate, with respect to the
Class A-II-2 Certificates, is used to determine the Pass-Through Rate of such
Class, an amount equal to the excess of (x) Accrued Certificate Interest for
such Class calculated at a per annum rate equal to the lesser of (i) LIBOR plus
the related Margin for such Distribution Date and (ii) the Group II Weighted
Average Maximum Net Mortgage Rate, over (y) Accrued Certificate Interest for
such Class calculated using the Group II Net WAC Cap Rate or Class X-XX-0 Xxx
00
XXX Xxx Rate, as applicable, plus, with respect to the Class A-II-2 Certificates
only, an amount equal to any reduction in the Accrued Certificate Interest of
the Class A-II-2 Certificates due to the failure of the Hedge Agreements
Provider to make any required Class A-II-2 Hedge Payment with respect to such
Distribution Date, (b) any shortfalls for such Class calculated pursuant to
clause (a) above remaining unpaid from prior Distribution Dates, and (c) one
month's interest on the amount in clause (b) (based on the number of days in the
preceding Interest Accrual Period) at a per annum rate equal to LIBOR plus the
related Margin for such Distribution Date.
Group II Loans: The Mortgage Loans designated on the Mortgage Loan
Schedule attached hereto as Exhibit F-2. The Group II Loans relate to the Class
A-II Certificates, Class M Certificates, Class B Certificates and Class SB
Certificates.
Group II Net WAC Cap Rate: With respect to any Distribution Date, the
product of (i) a per annum rate equal to the weighted average of the Net
Mortgage Rates (or, if applicable, the Modified Net Mortgage Rates) on the Group
II Loans using the Net Mortgage Rates in effect for the Monthly Payments due on
such Mortgage Loans during the related Due Period, weighted on the basis of the
respective Stated Principal Balances thereof for such Distribution Date and (ii)
a fraction equal to 30 divided by the actual number of days in the related
Interest Accrual Period.
Group II Principal Distribution Amount: For any Distribution Date, the
product of (x) the Class A Principal Distribution Amount for such Distribution
Date and (y) a fraction, the numerator of which is the Principal Allocation
Amount for the Group II Loans for such Distribution Date and the denominator of
which is the Principal Allocation Amount for all of the Mortgage Loans for such
Distribution Date.
Group II REMIC Net WAC Rate: With respect to any Distribution Date, the
Group II Net WAC Cap Rate for such Distribution Date.
Group II Weighted Average Maximum Net Mortgage Rate: For any
Distribution Date, the weighted average of the Maximum Net Mortgage Rates of the
Group II Loans, multiplied by a fraction equal to 30 divided by the actual
number of days in the related Interest Accrual Period.
Hedge Agreement: The Class A-I Hedge Agreement, Class A-II-2 Hedge
Agreement or Subordinate Hedge Agreement, as applicable.
Hedge Agreements Provider: HSBC Bank USA, National Association, and its
successors and assigns or any party to any replacement, substitute, collateral
or other arrangement in lieu thereof.
Hedge Payment: The Class A-I Hedge Payment, Class A-II-2 Hedge Payment or
Subordinate Hedge Payment, as applicable.
Hedge Shortfall Amount: For any Distribution Date, the amount, if any,
by which the payment on the Class A Certificates, Class M Certificates and Class
B Certificates pursuant to Section 4.02(c)(iii) is paid from the Hedge Payments
for such Distribution Date pursuant to the provisions thereof or would have been
so paid but for the failure of the Hedge Agreements Provider to make a payment
required under the Hedge Agreements.
Hedge Shortfall Carry-Forward Amount: For any Distribution Date, the
aggregate Hedge Shortfall Amounts for prior Distribution Dates to the extent not
reimbursed to the Class SB Certificates pursuant to Section 4.02(c)(xi).
HUD: The United States Department of Housing and Urban Development.
21
Independent: When used with respect to any specified Person, means such
a Person who (i) is in fact independent of the Depositor, the Master Servicer
and the Trustee, or any Affiliate thereof, (ii) does not have any direct
financial interest or any material indirect financial interest in the Depositor,
the Master Servicer or the Trustee or in an Affiliate thereof, and (iii) is not
connected with the Depositor, the Master Servicer or the Trustee as an officer,
employee, promoter, underwriter, trustee, partner, director or person performing
similar functions.
Index: With respect to any adjustable-rate Mortgage Loan and as to any
Adjustment Date therefor, the related index as stated in the related Mortgage
Note.
Initial Certificate Principal Balance: With respect to each Class of
Certificates (other than the Class R Certificates), the Certificate Principal
Balance of such Class of Certificates as of the Cut-off Date as set forth in the
Preliminary Statement hereto.
Insurance Proceeds: Proceeds paid in respect of the Mortgage Loans
pursuant to any Primary Insurance Policy or any other related insurance policy
covering a Mortgage Loan, to the extent such proceeds are payable to the
mortgagee under the Mortgage, any Subservicer, the Master Servicer or the
Trustee and are not applied to the restoration of the related Mortgaged Property
or released to the Mortgagor in accordance with the procedures that the Master
Servicer would follow in servicing mortgage loans held for its own account.
Interest Accrual Period: With respect to the Distribution Date in
December 2004, the period commencing the Closing Date and ending on the day
preceding the Distribution Date in December 2004, and with respect to any
Distribution Date after the Distribution Date in December 2004, the period
commencing on the Distribution Date in the month immediately preceding the month
in which such Distribution Date occurs and ending on the day preceding such
Distribution Date.
Interest Distribution Amount: For any Distribution Date, the amounts
payable pursuant to Section 4.02(c)(i)-(iii).
Interim Certification: As defined in Section 2.02.
Late Collections: With respect to any Mortgage Loan, all amounts
received during any Due Period, whether as late payments of Monthly Payments or
as Insurance Proceeds, Liquidation Proceeds or otherwise, which represent late
payments or collections of Monthly Payments due but delinquent for a previous
Due Period and not previously recovered.
LIBOR: With respect to any Distribution Date, the arithmetic mean of the
London interbank offered rate quotations for one-month U.S. Dollar deposits,
expressed on a per annum basis, determined in accordance with Section 1.02.
LIBOR Business Day: Any day other than (i) a Saturday or Sunday or (ii)
a day on which banking institutions in London, England are required or
authorized by law to be closed.
LIBOR Certificates: Collectively, the Class A Certificates, Class M
Certificates and Class B Certificates.
LIBOR Rate Adjustment Date: With respect to each Distribution Date, the
second LIBOR Business Day immediately preceding the commencement of the related
Interest Accrual Period.
22
Liquidation Proceeds: Amounts (other than Insurance Proceeds) received
by the Master Servicer in connection with the taking of an entire Mortgaged
Property by exercise of the power of eminent domain or condemnation or in
connection with the liquidation of a defaulted Mortgage Loan through trustee's
sale, foreclosure sale or otherwise, other than REO Proceeds and Subsequent
Recoveries.
Loan Group: Loan Group I or Loan Group II, as applicable.
Loan Group I: The Mortgage Loans designated on the Mortgage Loan
Schedule attached hereto as Exhibit F-1.
Loan Group II: The Mortgage Loans designated on the Mortgage Loan
Schedule attached hereto as Exhibit F-2.
Loan-to-Value Ratio: As of any date, the fraction, expressed as a
percentage, the numerator of which is the current principal balance of the
related Mortgage Loan at the date of determination and the denominator of which
is the Appraised Value of the related Mortgaged Property.
Margin: The Class A-I-1 Margin, Class A-I-2 Margin, Class A-I-3 Margin,
Class A-II-1 Margin, Class A-II-2 Margin, Class M-1 Margin, Class M-2 Margin,
Class M-3 Margin, Class M-4 Margin, Class M-5 Margin, Class M-6 Margin or Class
B Margin, as applicable.
Marker Rate: With respect to the Class SB Certificates or the SB-IO
REMIC III Regular Interest and any Distribution Date, in relation to the REMIC
II Regular Interests LT1, LT2, LT3, LT4 and LT-Y1, a per annum rate equal to two
(2) times the weighted average of the Uncertificated REMIC II Pass-Through Rates
for REMIC II Regular Interest LT2 and REMIC II Regular Interest LT3. With
respect to the Class SB Certificates or the SB-IO REMIC III Regular Interest and
any Distribution Date, in relation to the REMIC II Regular Interests LT5, LT6,
LT7, LT8 and LT-Y2, a per annum rate equal to two (2) times the weighted average
of the Uncertificated REMIC II Pass-Through Rates for REMIC II Regular Interest
LT6 and REMIC II Regular Interest LT7.
Master Servicer: As defined in the preamble hereto.
Maturity Date: With respect to each Class of Certificates representing
ownership of regular interests or Uncertificated Regular Interest issued by each
of REMIC I, REMIC II and REMIC III the latest possible maturity date, solely for
purposes of Section 1.860G-1(a)(4)(iii) of the Treasury Regulations, by which
the Certificate Principal Balance of each such Class of Certificates
representing a regular interest in the Trust Fund would be reduced to zero,
which is, for each such regular interest, December 25, 2034, which is the
Distribution Date occurring in the month following the last scheduled monthly
payment of the Mortgage Loans.
Maximum Mortgage Rate: With respect to any adjustable-rate Mortgage
Loan, the per annum rate indicated on the Mortgage Loan Schedule as the "NOTE
CEILING," which rate is the maximum interest rate that may be applicable to such
Mortgage Loan at any time during the life of such Mortgage Loan.
Maximum Net Mortgage Rate: With respect to any adjustable-rate Mortgage
Loan and any date of determination, the Maximum Mortgage Rate minus the Expense
Fee Rate.
MERS: Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.
23
MERS(R) System: The system of recording transfers of Mortgages
electronically maintained by MERS.
MIN: The Mortgage Identification Number for Mortgage Loans registered
with MERS on the MERS(R) System.
Minimum Mortgage Rate: With respect to any adjustable-rate Mortgage
Loan, a per annum rate equal to the greater of (i) the Note Margin and (ii) the
rate indicated on the Mortgage Loan Schedule as the "NOTE FLOOR," which rate may
be applicable to such Mortgage Loan at any time during the life of such Mortgage
Loan.
Modified Mortgage Loan: Any Mortgage Loan that has been the subject of a
Servicing Modification.
Modified Net Mortgage Rate: With respect to any Mortgage Loan that is
the subject of a Servicing Modification, the Net Mortgage Rate minus the rate
per annum by which the Mortgage Rate on such Mortgage Loan was reduced.
MOM Loan: With respect to any Mortgage Loan, MERS acting as the
mortgagee of such Mortgage Loan, solely as nominee for the originator of such
Mortgage Loan and its successors and assigns, at the origination thereof.
Monthly Payment: With respect to any Mortgage Loan (including any REO
Property) and the Due Date in any Due Period, the payment of principal and
interest due thereon in accordance with the amortization schedule at the time
applicable thereto (after adjustment, if any, for Curtailments and for Deficient
Valuations occurring prior to such Due Date but before any adjustment to such
amortization schedule by reason of any bankruptcy, other than a Deficient
Valuation, or similar proceeding or any moratorium or similar waiver or grace
period and before any Servicing Modification that constitutes a reduction of the
interest rate on such Mortgage Loan).
Moody's: Xxxxx'x Investors Service, Inc., or its successors in interest.
Mortgage: With respect to each Mortgage Note, the mortgage, deed of
trust or other comparable instrument creating a first or junior lien on an
estate in fee simple or leasehold interest in real property securing a Mortgage
Note.
Mortgage File: The mortgage documents listed in Section 2.01 pertaining
to a particular Mortgage Loan and any additional documents required to be added
to the Mortgage File pursuant to this Agreement.
Mortgage Loans: Such of the mortgage loans transferred and assigned to
the Trustee pursuant to Section 2.01 as from time to time are held or deemed to
be held as a part of the Trust Fund, the Mortgage Loans originally so held being
identified in the initial Mortgage Loan Schedule, and Qualified Substitute
Mortgage Loans held or deemed held as part of the Trust Fund including, without
limitation, each related Mortgage Note, Mortgage and Mortgage File and all
rights appertaining thereto.
Mortgage Loan Schedule: The lists of the Mortgage Loans attached hereto
as Exhibit F-1 and Exhibit F-2 (as amended from time to time to reflect the
addition of Qualified Substitute Mortgage Loans), which lists shall set forth at
a minimum the following information as to each Mortgage Loan:
(i) the Mortgage Loan identifying number ("RFC LOAN #");
24
(ii) [reserved];
(iii) the maturity of the Mortgage Note ("MATURITY DATE," or "MATURITY
DT");
(iv) for the adjustable-rate Mortgage Loans, the Mortgage Rate as of
origination ("ORIG RATE");
(v) the Mortgage Rate as of the Cut-off Date ("CURR RATE");
(vi) the Net Mortgage Rate as of the Cut-off Date ("CURR NET");
(vii) the scheduled monthly payment of principal, if any, and interest as
of the Cut-off Date ("ORIGINAL P & I" or "CURRENT P & I");
(viii) the Cut-off Date Principal Balance ("PRINCIPAL BAL");
(ix) the Loan-to-Value Ratio at origination ("LTV");
(x) a code "T," "BT" or "CT" under the column "LN FEATURE," indicating
that the Mortgage Loan is secured by a second or vacation residence
(the absence of any such code means the Mortgage Loan is secured by
a primary residence);
(xi) a code "N" under the column "OCCP CODE," indicating that the
Mortgage Loan is secured by a non-owner occupied residence (the
absence of any such code means the Mortgage Loan is secured by an
owner occupied residence);
(xii) for the adjustable-rate Mortgage Loans, the Maximum Mortgage Rate
("NOTE CEILING");
(xiii) for the adjustable-rate Mortgage Loans, the maximum Net Mortgage
Rate ("NET CEILING");
(xiv) for the adjustable-rate Mortgage Loans, the Note Margin ("NOTE
MARGIN");
(xv) for the adjustable-rate Mortgage Loans, the first Adjustment Date
after the Cut-off Date ("NXT INT CHG DT");
(xvi) for the adjustable-rate Mortgage Loans, the Periodic Cap ("PERIODIC
DECR" or "PERIODIC INCR");
(xvii) [reserved]; and
(xviii) for the adjustable-rate Mortgage Loans, the rounding of the
semi-annual or annual adjustment to the Mortgage Rate ("NOTE
METHOD").
Such schedules may consist of multiple reports that collectively set
forth all of the information required.
Mortgage Note: The originally executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan,
together with any modification thereto.
Mortgage Rate: With respect to any Mortgage Loan, the interest rate
borne by the related Mortgage Note, or any modification thereto other than a
Servicing Modification. The Mortgage Rate on the adjustable-rate Mortgage Loans
will adjust on each Adjustment Date to equal the sum (rounded to the nearest
multiple of one-eighth of one percent (0.125%) or up to the nearest one-eighth
of one percent, which are indicated by a "U" on the Mortgage Loan Schedule,
25
except in the case of the adjustable-rate Mortgage Loans indicated by an "X" on
the Mortgage Loan Schedule under the heading "NOTE METHOD"), of the related
Index plus the Note Margin, in each case subject to the applicable Periodic Cap,
Maximum Mortgage Rate and Minimum Mortgage Rate.
Mortgaged Property: The underlying real property securing a Mortgage Loan.
Mortgagor: The obligor on a Mortgage Note.
Net Mortgage Rate: With respect to any Mortgage Loan as of any date of
determination, a per annum rate equal to the Mortgage Rate for such Mortgage
Loan as of such date minus the related Expense Fee Rate.
Net WAC Cap Rate: The Group I Net WAC Cap Rate, Group II Net WAC Cap
Rate, Class A-II-2 Net WAC Cap Rate or Subordinate Net WAC Cap Rate, as
applicable.
Non-United States Person: Any Person other than a United States Person.
Nonrecoverable Advance: Any Advance previously made or proposed to be
made by the Master Servicer or Subservicer in respect of a Mortgage Loan (other
than a Deleted Mortgage Loan) which, in the good faith judgment of the Master
Servicer, will not, or, in the case of a proposed Advance, would not, be
ultimately recoverable by the Master Servicer from related Late Collections,
Insurance Proceeds, Liquidation Proceeds or REO Proceeds. To the extent that any
Mortgagor is not obligated under the related Mortgage documents to pay or
reimburse any portion of any Servicing Advances that are outstanding with
respect to the related Mortgage Loan as a result of a modification of such
Mortgage Loan by the Master Servicer, which forgives amounts which the Master
Servicer or Subservicer had previously advanced, and the Master Servicer
determines that no other source of payment or reimbursement for such advances is
available to it, such Servicing Advances shall be deemed to be Nonrecoverable
Advances. The determination by the Master Servicer that it has made a
Nonrecoverable Advance shall be evidenced by a certificate of a Servicing
Officer, Responsible Officer or Vice President or its equivalent or senior
officer of the Master Servicer, delivered to the Depositor, the Trustee, and the
Master Servicer setting forth such determination, which shall include any other
information or reports obtained by the Master Servicer such as property
operating statements, rent rolls, property inspection reports and engineering
reports, which may support such determinations. Notwithstanding the above, the
Trustee shall be entitled to rely upon any determination by the Master Servicer
that any Advance previously made is a Nonrecoverable Advance or that any
proposed Advance, if made, would constitute a Nonrecoverable Advance.
Nonsubserviced Mortgage Loan: Any Mortgage Loan that, at the time of
reference thereto, is not subject to a Subservicing Agreement.
Note Margin: With respect to each adjustable-rate Mortgage Loan, the
fixed percentage set forth in the related Mortgage Note and indicated on the
Mortgage Loan Schedule as the "NOTE MARGIN," which percentage is added to the
Index on each Adjustment Date to determine (subject to rounding in accordance
with the related Mortgage Note, the Periodic Cap, the Maximum Mortgage Rate and
the Minimum Mortgage Rate) the interest rate to be borne by such Mortgage Loan
until the next Adjustment Date.
Notice: As defined in Section 4.04.
26
Notional Amount: With respect to the Class SB Certificates or the REMIC
III Regular Interest SB-IO, immediately prior to any Distribution Date, the
aggregate of the Uncertificated Principal Balances of the REMIC I Regular
Interests.
Officers' Certificate: A certificate signed by the Chairman of the
Board, the President, a Vice President, Assistant Vice President, Director,
Managing Director, the Treasurer, the Secretary, an Assistant Treasurer or an
Assistant Secretary of the Depositor or the Master Servicer, as the case may be,
and delivered to the Trustee, as required by this Agreement.
Opinion of Counsel: A written opinion of counsel acceptable to the
Trustee, and the Master Servicer, who may be counsel for the Depositor or the
Master Servicer, provided that any opinion of counsel (i) referred to in the
definition of "Disqualified Organization" or (ii) relating to the qualification
of REMIC I, REMIC II or REMIC III as REMICs or compliance with the REMIC
Provisions must, unless otherwise specified, be an opinion of Independent
counsel.
Optional Termination Date: Any Distribution Date on or after which the
Stated Principal Balance (after giving effect to distributions to be made on
such Distribution Date) of the Mortgage Loans is less than 10.00% of the Cut-off
Date Balance.
Outstanding Mortgage Loan: With respect to the Due Date in any Due
Period, a Mortgage Loan (including an REO Property) that was not the subject of
a Principal Prepayment in Full, Cash Liquidation or REO Disposition and that was
not purchased, deleted or substituted for prior to such Due Date pursuant to
Section 2.02, 2.03, 2.04, 4.07 or 4.08.
Overcollateralization Amount: With respect to any Distribution Date, the
excess, if any, of (a) the aggregate Stated Principal Balance of the Mortgage
Loans before giving effect to distributions of principal to be made on such
Distribution Date over (b) the aggregate Certificate Principal Balance of the
Class A Certificates, Class M Certificates and Class B Certificates immediately
prior to such date.
Overcollateralization Floor: An amount equal to the product of 0.50% and
the Cut-off Date Balance.
Overcollateralization Increase Amount: With respect to any Distribution
Date, the lesser of (a) Excess Cash Flow for that Distribution Date (to the
extent not used to cover Realized Losses pursuant to clause (iv) of the
definition of Principal Distribution Amount as of such Distribution Date) and
(b) the excess of (1) the Required Overcollateralization Amount for such
Distribution Date over (2) the Overcollateralization Amount for such
Distribution Date.
Overcollateralization Reduction Amount: With respect to any Distribution
Date on which the Excess Overcollateralization Amount is, after taking into
account all other distributions to be made on such Distribution Date, greater
than zero, the Overcollateralization Reduction Amount shall be equal to the
lesser of (i) the Excess Overcollateralization Amount for that Distribution Date
and (ii) the Principal Remittance Amount on such Distribution Date.
Ownership Interest: With respect to any Certificate, any ownership or
security interest in such Certificate, including any interest in such
Certificate as the Holder thereof and any other interest therein, whether direct
or indirect, legal or beneficial, as owner or as pledgee.
Pass-Through Rate: With respect to each Class of Class A Certificates,
Class M Certificates and Class B Certificates and any Distribution Date, the
lesser of (i) LIBOR plus the related Margin and (ii) the related Net WAC Cap
Rate.
27
With respect to the Class SB Certificates and any Distribution Date or
the REMIC III Regular Interest SB-IO, a rate per annum equal to the percentage
equivalent of a fraction, the numerator of which is the sum of the amounts
calculated pursuant to clauses (i) through (viii) below, and the denominator of
which is the aggregate principal balance of the REMIC II Regular Interests. For
purposes of calculating the Pass-Through Rate for the Class SB Certificates or
the SB-IO REMIC III Regular Interest, the numerator is equal to the sum of the
following components:
(i) the Uncertificated Pass-Through Rate for REMIC II Regular
Interest LT1 minus the related Marker Rate, applied to a notional amount
equal to the Uncertificated Principal Balance of REMIC II Regular
Interest LT1;
(ii) the Uncertificated Pass-Through Rate for REMIC II Regular
Interest LT2 minus the related Marker Rate, applied to a notional amount
equal to the Uncertificated Principal Balance of REMIC II Regular
Interest LT2;
(iii) the Uncertificated Pass-Through Rate for REMIC II Regular
Interest LT4 minus twice the related Marker Rate, applied to a notional
amount equal to the Uncertificated Principal Balance of REMIC II Regular
Interest LT4;
(iv) the Uncertificated Pass-Through Rate for REMIC II Regular
Interest LT5 minus the related Marker Rate, applied to a notional amount
equal to the Uncertificated Principal Balance of REMIC II Regular
Interest LT5;
(v) the Uncertificated Pass-Through Rate for REMIC II Regular
Interest LT6 minus the related Marker Rate, applied to a notional amount
equal to the Uncertificated Principal Balance of REMIC II Regular
Interest LT6;
(vi) the Uncertificated Pass-Through Rate for REMIC II Regular
Interest LT8 minus twice the related Marker Rate, applied to a notional
amount equal to the Uncertificated Principal Balance of REMIC II Regular
Interest LT8;
(vii) the Uncertificated Pass-Through Rate for REMIC II Regular
Interest LT-Y1 minus the related Marker Rate, applied to a notional
amount equal to the Uncertificated Principal Balance of REMIC II Regular
Interest LT-Y1; and
(viii) the Uncertificated Pass-Through Rate for REMIC II Regular
Interest LT-Y2 minus the related Marker Rate, applied to a notional
amount equal to the Uncertificated Principal Balance of REMIC II Regular
Interest LT-Y2.
Paying Agent: JPMorgan Chase Bank, N.A. or any successor Paying Agent
appointed by the Trustee.
Percentage Interest: With respect to any Class A Certificate, Class M
Certificate or Class B Certificate, the undivided percentage ownership interest
in the related Class evidenced by such Certificate, which percentage ownership
interest shall be equal to the Initial Certificate Principal Balance thereof
divided by the aggregate Initial Certificate Principal Balance of all of the
Certificates of the same Class. The Percentage Interest with respect to a Class
SB Certificate or Class R Certificate shall be stated on the face thereof.
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Periodic Cap: With respect to each adjustable-rate Mortgage Loan, the
periodic rate cap that limits the increase or the decrease of the related
Mortgage Rate on any Adjustment Date pursuant to the terms of the related
Mortgage Note.
Permitted Investments: One or more of the following:
(i) obligations of or guaranteed as to principal and interest by the
United States or any agency or instrumentality thereof when such
obligations are backed by the full faith and credit of the United
States;
(ii) repurchase agreements on obligations specified in clause (i)
maturing not more than one month from the date of acquisition
thereof, provided that the unsecured obligations of the party
agreeing to repurchase such obligations are at the time rated by
each Rating Agency in its highest short-term rating available;
(iii) federal funds, certificates of deposit, demand deposits, time
deposits and bankers' acceptances (which shall each have an
original maturity of not more than 90 days and, in the case of
bankers' acceptances, shall in no event have an original maturity
of more than 365 days or a remaining maturity of more than 30
days) denominated in United States dollars of any U.S. depository
institution or trust company incorporated under the laws of the
United States or any state thereof or of any domestic branch of a
foreign depository institution or trust company; provided that
the debt obligations of such depository institution or trust
company at the date of acquisition thereof have been rated by
each Rating Agency in its highest short-term rating available;
and, provided further that, if the original maturity of such
short-term obligations of a domestic branch of a foreign
depository institution or trust company shall exceed 30 days, the
short-term rating of such institution shall be A-1+ in the case
of Standard & Poor's if Standard & Poor's is a Rating Agency;
(iv) commercial paper and demand notes (having original maturities of
not more than 365 days) of any corporation incorporated under the
laws of the United States or any state thereof which on the date
of acquisition has been rated by each Rating Agency in its
highest short term rating available; provided that such
commercial paper and demand notes shall have a remaining maturity
of not more than 30 days;
(v) a money market fund or a qualified investment fund rated by each
Rating Agency in its highest long-term rating available; and
(vi) other obligations or securities that are acceptable to each
Rating Agency as a Permitted Investment hereunder and will not
reduce the rating assigned to any Class of Certificates by such
Rating Agency below the lower of the then-current rating or the
rating assigned to such Certificates as of the Closing Date by
such Rating Agency, as evidenced in writing;
provided, however, that no instrument shall be a Permitted Investment if it
represents, either (1) the right to receive only interest payments with respect
to the underlying debt instrument or (2) the right to receive both principal and
interest payments derived from obligations underlying such instrument and the
principal and interest payments with respect to such instrument provide a yield
to maturity greater than 120% of the yield to maturity at par of such underlying
obligations. References herein to the highest rating available on unsecured
long-term debt shall mean AAA in the case of Standard & Poor's and Fitch and Aaa
in the case of Moody's, and for purposes of this Agreement, any references
herein to the highest rating available on unsecured commercial paper and
short-term debt obligations shall mean the following: A-1 in the case of
29
Standard & Poor's, P-1 in the case of Moody's and F-1 in the case of Fitch;
provided, however, that any Permitted Investment that is a short-term debt
obligation rated A-1 by Standard & Poor's must satisfy the following additional
conditions: (i) the total amount of debt from A-1 issuers must be limited to the
investment of monthly principal and interest payments (assuming fully amortizing
collateral); (ii) the total amount of A-1 investments must not represent more
than 20% of the aggregate outstanding Certificate Principal Balance of the
Certificates and each investment must not mature beyond 30 days; (iii) the terms
of the debt must have a predetermined fixed dollar amount of principal due at
maturity that cannot vary; and (iv) if the investments may be liquidated prior
to their maturity or are being relied on to meet a certain yield, interest must
be tied to a single interest rate index plus a single fixed spread (if any) and
must move proportionately with that index.
Permitted Transferee: Any Transferee of a Class R Certificate, other
than a Disqualified Organization or Non-United States Person.
Person: Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Prepayment Assumption: With respect to the Class A, Class M and Class B
Certificates, the prepayment assumption to be used for determining the accrual
of original issue discount and premium and market discount on such Certificates
for federal income tax purposes, which (a) with respect to the fixed-rate
Mortgage Loans, assumes a constant prepayment rate of one-tenth of 23% per annum
of the then outstanding Stated Principal Balance of the fixed-rate Mortgage
Loans in the first month of the life of such Mortgage Loans and an additional
one-tenth of 23% per annum in each month thereafter until the tenth month, and
beginning in the tenth month and in each month thereafter during the life of the
fixed-rate Mortgage Loans, a constant prepayment rate of 23% per annum each
month ("23% HEP") and (b) with respect to the adjustable-rate Mortgage Loans
assumes a prepayment assumption of 2% of the constant prepayment rate in month
one, increasing by approximately 2.545% from month 2 until month 12, a constant
prepayment rate of 30% from month 12 to month 22, a constant prepayment rate of
50% from month 23 to month 27, and a constant prepayment rate of 35% thereafter,
used for determining the accrual of original issue discount and premium and
market discount on the Class A, Class M and Class B Certificates for federal
income tax purposes. The constant prepayment rate assumes that the stated
percentage of the outstanding Stated Principal Balance of the adjustable-rate
Mortgage Loans is prepaid over the course of a year.
Prepayment Interest Shortfall: With respect to any Distribution Date and
any Mortgage Loan (other than a Mortgage Loan relating to an REO Property) that
was the subject of (a) a Principal Prepayment in Full during the related
Prepayment Period, an amount equal to the excess of one month's interest at the
related Net Mortgage Rate (or Modified Net Mortgage Rate in the case of a
Modified Mortgage Loan) on the Stated Principal Balance of such Mortgage Loan
over the amount of interest (adjusted to the related Net Mortgage Rate (or
Modified Net Mortgage Rate in the case of a Modified Mortgage Loan)) paid by the
Mortgagor for such Prepayment Period to the date of such Principal Prepayment in
Full or (b) a Curtailment during the prior calendar month, an amount equal to
one month's interest at the related Net Mortgage Rate (or Modified Net Mortgage
Rate in the case of a Modified Mortgage Loan) on the amount of such Curtailment.
Prepayment Period: With respect to any Distribution Date, the calendar
month preceding the month of distribution.
30
Primary Insurance Policy: Each primary policy of mortgage guaranty
insurance as indicated by a numeric code on the Mortgage Loan Schedule with the
exception of code "A23," "A34" or "A96" under the column "MI CO CODE."
Principal Allocation Amount: With respect to any Distribution Date, the
sum of (a) the Principal Remittance Amount for that Distribution Date and (b)
the principal portion of any Realized Losses incurred (or deemed to have been
incurred) on the Mortgage Loans in the calendar month preceding such
Distribution Date to the extent covered by Excess Cash Flow for such
Distribution Date; provided, that on any Distribution Date on which there is
insufficient Excess Cash Flow to cover all Realized Losses incurred (or deemed
to have been incurred) on the Mortgage Loans in the calendar month preceding
such Distribution Date, in determining the Group I Principal Distribution Amount
and Group II Principal Distribution Amount, the available Excess Cash Flow will
be allocated to the Class A-I Certificates and Class A-II Certificates, pro
rata, based on the principal portion of Realized Losses on the Group I Loans and
Group II Loans, respectively.
Principal Distribution Amount: With respect to any Distribution Date,
the lesser of (a) the sum of (i) the excess of (x) Available Distribution Amount
over (y) the Interest Distribution Amount, and (b) the sum of:
(i) the principal portion of each Monthly Payment received or Advanced
with respect to the related Due Period on each Outstanding Mortgage
Loan;
(ii) the Stated Principal Balance of any Mortgage Loan repurchased during
the related Prepayment Period (or deemed to have been so repurchased
in accordance with Section 3.07(b)) pursuant to Section 2.02, 2.03,
2.04, 4.07 or 4.08 and the amount of any shortfall deposited in the
Custodial Account in connection with the substitution of a Deleted
Mortgage Loan pursuant to Section 2.03 or 2.04 during the related
Prepayment Period;
(iii) the principal portion of all other unscheduled collections, other
than Subsequent Recoveries, on the Mortgage Loans (including, without
limitation, Principal Prepayments in Full, Curtailments, Insurance
Proceeds, Liquidation Proceeds and REO Proceeds) received during the
related Prepayment Period (or deemed to have been so received) to the
extent applied by the Master Servicer as recoveries of principal
pursuant to Section 3.14;
(iv) the lesser of (1) the Excess Cash Flow for such Distribution Date and
(2) the principal portion of any Realized Losses incurred (or deemed
to have been incurred) on any Mortgage Loans in the calendar month
preceding such Distribution; and
(v) the lesser of (1) the Excess Cash Flow for such Distribution Date (to
the extent not used to cover Realized Losses pursuant to clause (iv)
of this definition on such Distribution Date) and (2) the
Overcollateralization Increase Amount for such Distribution Date;
minus
(vi) (A) the amount of any Overcollateralization Reduction Amount for such
Distribution Date and (B) the amount of any Capitalization
Reimbursement Amount for such Distribution Date.
Principal Prepayment: Any payment of principal or other recovery on a
Mortgage Loan, including a recovery that takes the form of Liquidation Proceeds
or Insurance Proceeds, which is received in advance of its scheduled Due Date
and is not accompanied by an amount as to interest representing scheduled
interest on such payment due on any date or dates in any month or months
subsequent to the month of prepayment.
31
Principal Prepayment in Full: Any Principal Prepayment made by a
Mortgagor of the entire principal balance of a Mortgage Loan.
Principal Remittance Amount: With respect to any Distribution Date, all
amounts described in clauses (b)(i) through (iii) of the definition of Principal
Distribution Amount for that Distribution Date.
Program Guide: The AlterNet Seller Guide as incorporated into the
Residential Funding Seller Guide for mortgage collateral sellers that
participate in Residential Funding's AlterNet Mortgage Program, and Residential
Funding's Servicing Guide and any other subservicing arrangements which
Residential Funding has arranged to accommodate the servicing of the Mortgage
Loans and in each case all supplements and amendments thereto published by
Residential Funding.
Purchase Price: With respect to any Mortgage Loan (or REO Property)
required to be or otherwise purchased on any date pursuant to Section 2.02,
2.03, 2.04, 4.07 or 4.08, an amount equal to the sum of (i) (a) if such Mortgage
Loan (or REO Property) is being purchased pursuant to Sections 2.02, 2.03, 2.04
or 4.07 of this Agreement, 100% of the Stated Principal Balance thereof plus the
principal portion of any related unreimbursed Advances or (b) if such Mortgage
Loan (or REO Property) is being purchased pursuant to Section 4.08 of this
Agreement, the greater of (1) 100% of the Stated Principal Balance thereof plus
the principal portion of any related unreimbursed Advances of such Mortgage Loan
(or REO Property) and (2) the fair market value thereof plus the principal
portion of any related unreimbursed Advances and (ii) unpaid accrued interest at
either (a) the Adjusted Mortgage Rate (or Modified Net Mortgage Rate in the case
of a Modified Mortgage Loan) plus the rate per annum at which the Servicing Fee
is calculated, or (b) in the case of a purchase made by the Master Servicer, at
the Net Mortgage Rate (or Modified Net Mortgage Rate in the case of a Modified
Mortgage Loan), in each case on the Stated Principal Balance thereof to the
first day of the month following the month of purchase from the Due Date to
which interest was last paid by the Mortgagor.
Qualified Substitute Mortgage Loan: A Mortgage Loan substituted by
Residential Funding or the Depositor for a Deleted Mortgage Loan which must, on
the date of such substitution, as confirmed in an Officers' Certificate
delivered to the Trustee, (i) have an outstanding principal balance, after
deduction of the principal portion of the monthly payment due in the month of
substitution (or in the case of a substitution of more than one Mortgage Loan
for a Deleted Mortgage Loan, an aggregate outstanding principal balance, after
such deduction), not in excess of the Stated Principal Balance of the Deleted
Mortgage Loan (the amount of any shortfall to be deposited by Residential
Funding, in the Custodial Account in the month of substitution); (ii) have a
Mortgage Rate and a Net Mortgage Rate no lower than and not more than 1% per
annum higher than the Mortgage Rate and Net Mortgage Rate, respectively, of the
Deleted Mortgage Loan as of the date of substitution; (iii) have a Loan-to-Value
Ratio at the time of substitution no higher than that of the Deleted Mortgage
Loan at the time of substitution; (iv) have a remaining term to stated maturity
not greater than (and not more than one year less than) that of the Deleted
Mortgage Loan; (v) comply with each representation and warranty set forth in
Sections 2.03 and 2.04 hereof and Section 4 of the Assignment Agreement (other
than the representations and warranties set forth therein with respect to the
number of loans (including the related percentage) in excess of zero which meet
or do not meet a specified criteria); (vi) not be 30 days or more Delinquent;
(vii) not be subject to the requirements of HOEPA (as defined in the Assignment
32
Agreement); (viii) have a policy of title insurance, in the form and amount that
is in material compliance with the Program Guide, that was effective as of the
closing of such Mortgage Loan, is valid and binding, and remains in full force
and effect, unless the Mortgage Property is located in the State of Iowa where
an attorney's certificate has been provided as described in the Program Guide;
(ix) if the Deleted Loan is not a Balloon Loan, not be a Balloon Loan; (x) have
a Mortgage Rate that adjusts with the same frequency and based upon the same
Index as that of the Deleted Mortgage Loan; (xi) have a Note Margin not less
than that of the Deleted Mortgage Loan; (xii) have a Periodic Rate Cap that is
equal to that of the Deleted Mortgage Loan; and (xiii) have a next Adjustment
Date no later than that of the Deleted Mortgage Loan.
Rating Agency: Standard & Poor's, Fitch and Xxxxx'x. If any agency or a
successor is no longer in existence, "Rating Agency" shall be such statistical
credit rating agency, or other comparable Person, designated by the Depositor,
notice of which designation shall be given to the Trustee and the Master
Servicer.
Realized Loss: With respect to each Mortgage Loan (or REO Property) as
to which a Cash Liquidation or REO Disposition has occurred, an amount (not less
than zero) equal to (i) the Stated Principal Balance of the Mortgage Loan (or
REO Property) as of the date of Cash Liquidation or REO Disposition, plus (ii)
interest (and REO Imputed Interest, if any) at the Net Mortgage Rate from the
Due Date as to which interest was last paid or advanced to Certificateholders up
to the last day of the month in which the Cash Liquidation (or REO Disposition)
occurred on the Stated Principal Balance of such Mortgage Loan (or REO Property)
outstanding during each Due Period that such interest was not paid or advanced,
minus (iii) the proceeds, if any, received during the month in which such Cash
Liquidation (or REO Disposition) occurred, to the extent applied as recoveries
of interest at the Net Mortgage Rate and to principal of the Mortgage Loan, net
of the portion thereof reimbursable to the Master Servicer or any Subservicer
with respect to related Advances, Servicing Advances or other expenses as to
which the Master Servicer or Subservicer is entitled to reimbursement thereunder
but which have not been previously reimbursed. With respect to each Mortgage
Loan which is the subject of a Servicing Modification, (a) (1) the amount by
which the interest portion of a Monthly Payment or the principal balance of such
Mortgage Loan was reduced or (2) the sum of any other amounts owing under the
Mortgage Loan that were forgiven and that constitute Servicing Advances that are
reimbursable to the Master Servicer or a Subservicer, and (b) any such amount
with respect to a Monthly Payment that was or would have been due in the month
immediately following the month in which a Principal Prepayment or the Purchase
Price of such Mortgage Loan is received or is deemed to have been received. With
respect to each Mortgage Loan which has become the subject of a Deficient
Valuation, the difference between the principal balance of the Mortgage Loan
outstanding immediately prior to such Deficient Valuation and the principal
balance of the Mortgage Loan as reduced by the Deficient Valuation. With respect
to each Mortgage Loan which has become the object of a Debt Service Reduction,
the amount of such Debt Service Reduction. Notwithstanding the above, neither a
Deficient Valuation nor a Debt Service Reduction shall be deemed a Realized Loss
hereunder so long as the Master Servicer has notified the Trustee in writing
that the Master Servicer is diligently pursuing any remedies that may exist in
connection with the representations and warranties made regarding the related
Mortgage Loan and either (A) the related Mortgage Loan is not in default with
regard to payments due thereunder or (B) delinquent payments of principal and
interest under the related Mortgage Loan and any premiums on any applicable
primary hazard insurance policy and any related escrow payments in respect of
such Mortgage Loan are being advanced on a current basis by the Master Servicer
or a Subservicer, in either case without giving effect to any Debt Service
Reduction.
Realized Losses allocated to the Class SB Certificates shall be
allocated first to the REMIC III Regular Interest SB-IO in reduction of the
accrued but unpaid interest thereon until such accrued and unpaid interest shall
have been reduced to zero and then to the REMIC III Regular Interest SB-PO in
reduction of the Principal Balance thereof.
Record Date: With respect to each Distribution Date and the LIBOR
Certificates, the Business Day immediately preceding such Distribution Date.
With respect to each Distribution Date and the Certificates (other than the
LIBOR Certificates), the close of business on the last Business Day of the month
next preceding the month in which the related Distribution Date occurs, except
in the case of the first Record Date which shall be the Closing Date.
33
Regular Certificates: The Class A, Class M, Class B and Class SB
Certificates.
Regular Interest: Any one of the regular interests in the Trust Fund.
Relief Act: The Servicemembers Civil Relief Act, formerly known as the
Soldiers' and Sailors' Civil Relief Act of 1940.
Relief Act Shortfalls: Interest shortfalls on the Mortgage Loans resulting
from the Relief Act or similar legislation or regulations.
REMIC: A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code. As used herein, the term "REMIC" shall mean REMIC I,
REMIC II or REMIC III.
REMIC Administrator: Residential Funding Corporation. If Residential
Funding Corporation is found by a court of competent jurisdiction to no longer
be able to fulfill its obligations as REMIC Administrator under this Agreement
the Master Servicer or Trustee acting as successor Master Servicer shall appoint
a successor REMIC Administrator, subject to assumption of the REMIC
Administrator obligations under this Agreement.
REMIC Interest Amount: For any Distribution Date and each Class of Class
A-I Certificates, Class A-II-2 Certificates, Class M Certificates and Class B
Certificates, the Accrued Certificate Interest for such Class reduced by the
portion thereof attributable to the excess, if any, of the related Pass-Through
Rate for such Distribution Date over the related REMIC Net WAC Rate for such
Distribution Date.
REMIC Net WAC Rate: The Group I REMIC Net WAC Rate, Group II REMIC Net
WAC Rate or Subordinate REMIC Net WAC Rate, as applicable.
REMIC I: The segregated pool of assets subject hereto, constituting a
portion of the primary trust created hereby and to be administered hereunder,
with respect to which a separate REMIC election is to be made, consisting of:
(i) the Mortgage Loans and the related Mortgage Files;
(ii) all payments on and collections in respect of the Mortgage
Loans due after the Cut-off Date (other than Monthly Payments due in the
month of the Cut-off Date) as shall be on deposit in the Custodial
Account or in the Certificate Account and identified as belonging to the
Trust Fund;
(iii) property which secured a Mortgage Loan and which has been
acquired for the benefit of the Certificateholders by foreclosure or
deed in lieu of foreclosure;
(iv) the hazard insurance policies and Primary Insurance Policies
pertaining to the Mortgage Loans, if any; and
(v) all proceeds of clauses (i) through (iv) above.
34
REMIC I Available Distribution Amount: The Available Distribution Amount.
REMIC I Distribution Amount: For any Distribution Date, the REMIC I
Available Distribution Amount shall be distributed to the REMIC I Regular
Interests and the Class R-1 Residual Interest in the following amounts and
priority:
(a) To the extent of the portion of the REMIC I Available Distribution
Amount for related to Loan Group I:
(i) first, to REMIC I Y-1 and REMIC I Z-1 Regular Interests,
concurrently, the Uncertificated Accrued Interest for such Regular Interests
remaining unpaid from previous Distribution Dates, pro rata according to their
respective shares of such unpaid amounts;
(ii) second, to the REMIC I Y-1 and REMIC I Z-1 Regular
Interests, concurrently, the Uncertificated Accrued Interest for such Classes
for the current Distribution Date, pro rata according to their respective
Uncertificated Accrued Interest; and
(iii) third, to the REMIC I Y-1 and REMIC I Z-1 Regular
Interests, the REMIC I Y-1 Principal Distribution Amount and the REMIC I Z-1
Principal Distribution Amount, respectively.
(b) To the extent of the portion of the REMIC I Available Distribution
Amount related to Loan Group II:
(i) first, to the REMIC I Y-2 and REMIC I Z-2 Regular Interests,
concurrently, the Uncertificated Accrued Interest for such Classes remaining
unpaid from previous Distribution Dates, pro rata according to their respective
shares of such unpaid amounts;
(ii) second, to the REMIC I Y-2 and REMIC I Z-2 Regular
Interests, concurrently, the Uncertificated Accrued Interest for such Classes
for the current Distribution Date, pro rata according to their respective
Uncertificated Accrued Interest; and
(iii) third, to the REMIC I Y-2 and REMIC I Z-2 Regular
Interests, the REMIC I Y-2 Principal Distribution Amount and the REMIC I Z-2
Principal Distribution Amount, respectively.
(c) To the extent of the REMIC I Available Distribution Amounts for
Group I and Group II for such Distribution Date remaining after payment of the
amounts pursuant to paragraphs (a) and (b) of this definition of "REMIC I
Distribution Amount:"
(i) first, to each Class of REMIC I Y and REMIC I Z Regular
Interests, pro rata according to the amount of unreimbursed Realized Losses
allocable to principal previously allocated to each such Regular Interest, the
aggregate amount of any distributions to the Certificates as reimbursement of
such Realized Losses on such Distribution Date pursuant to clause (xiii) in
Section 4.02(c); provided, however, that any amounts distributed pursuant to
this paragraph (c)(i) of this definition of "REMIC I Distribution Amount" shall
not cause a reduction in the Uncertificated Principal Balances of any of the
REMIC I Y and REMIC I Z Regular Interests; and
(ii) second, to the Class R-I Certificates, any remaining amount.
REMIC I Interests: The REMIC I Regular Interests and the Class R I
Certificates.
35
REMIC I Y Principal Reduction Amounts: For any Distribution Date the
amounts by which the Uncertificated Principal Balances of the REMIC I Y-1
Regular Interest and REMIC I Y-2 Regular Interest respectively will be reduced
on such distribution date by the allocation of Realized Losses and the
distribution of principal, determined as follows:
First for each of Loan Group I and Loan Group II determine the related
Group REMIC Net WAC Cap Rate for distributions of interest that will be made on
the next succeeding Distribution Date (the "Group Interest Rate"). The REMIC I
Principal Reduction Amount for each of the REMIC I Y Regular Interests will be
determined pursuant to the "Generic solution for the REMIC I Y Regular
Interests" set forth below (the "Generic Solution") by making the following
identifications among the Loan Groups and their related REMIC I Y Regular
Interests and REMIC I Z Regular Interests:
A. Determine which Loan Group has the lower Group REMIC Net WAC
Cap Rate. That Loan Group will be identified with Loan Group AA and the REMIC I
Y Regular Interests and REMIC I Z Regular Interests related to that Loan Group
will be respectively identified with the REMIC I YAA and REMIC I ZAA Regular
Interests. The Group Interest Rate for that Loan Group will be identified with
J%. If the two Loan Groups have the same Group Interest Rate pick one for this
purpose, subject to the restriction that each Loan Group may be picked only once
in the course of any such selections pursuant to paragraphs A and B of this
definition.
B. Determine which Loan Group has the higher Group REMIC Net WAC
Cap Rate. That Loan Group will be identified with Loan Group BB and the REMIC I
Y Regular Interests and REMIC I Z Regular Interests related to that Group will
be respectively identified with the REMIC I YBB and REMIC I ZBB Regular
Interests. The Group Interest Rate for that Loan Group will be identified with
K%. If the two Loan Groups have the same Group Interest Rate the Loan Group not
selected pursuant to paragraph A, above, will be selected for purposes of this
paragraph B.
Second, apply the Generic Solution set forth below to determine the
REMIC I Y Principal Reduction Amounts for the Distribution Date using the
identifications made above.
GENERIC SOLUTION FOR THE REMIC I Y PRINCIPAL REDUCTION AMOUNTS: For any
Distribution Date, the amounts by which the Uncertificated Principal Balances of
REMIC I YAA and REMIC I ZAA Regular Interests respectively will be reduced on
such Distribution Date by the allocation of Realized Losses and the distribution
of principal, determined as follows:
J% and K% represent the interest rates on Loan Group AA and Loan
Group BB respectively. J% less than K%.
For purposes of the succeeding formulas the following symbols shall have
the meanings set forth below:
PJB = the Loan Group AA Subordinate Balance after the allocation
of Realized Losses and distributions of principal on such Distribution Date.
PKB = the Loan Group BB Subordinate Balance after the allocation
of Realized Losses and distributions of principal on such Distribution Date.
R = the Class CB Pass Through Rate = (J%PJB plus K%PKB)/(PJB plus PKB)
Yj = the REMIC I YAA Principal Balance after distributions on the
prior Distribution Date.
Yk = the REMIC I YBB Principal Balance after distributions on the
prior Distribution Date.
(DELTA)Yj = the REMIC I YAA Principal Reduction Amount.
36
(DELTA)Yk = the REMIC I YBB Principal Reduction Amount.
Zj = the REMIC I ZAA Principal Balance after distributions on the
prior Distribution Date.
Zk = the REMIC I ZBB Principal Balance after distributions on the
prior Distribution Date.
(DELTA)Zj = the REMIC I ZAA Principal Reduction Amount.
= (DELTA)Pj - (DELTA)Yj
(DELTA)Zk = the REMIC I ZBB Principal Reduction Amount.
= (DELTA)Pk - (DELTA)Yk
Pj = the aggregate Uncertificated Principal Balance of the REMIC
I YAA and REMIC I ZAA Regular Interests after distributions on the prior
Distribution Date, which is equal to the aggregate principal balance of the
Group AA Loans.
Pk = the aggregate Uncertificated Principal Balance of the REMIC
I YBB and REMIC I ZBB Regular Interests after distributions on the prior
Distribution Date, which is equal to the aggregate principal balance of the Loan
Group BB Mortgage Loans.
(DELTA)Pj = the aggregate principal reduction resulting on such
Distribution Date on the Loan Group AA Mortgage Loans as a result of principal
distributions (exclusive of any amounts distributed pursuant to clauses (c)(i)
or (c)(ii) of the definition of REMIC I Distribution Amount) to be made and
Realized Losses to be allocated on such Distribution Date, if applicable, which
is equal to the aggregate of the REMIC I YAA and REMIC I ZAA Principal Reduction
Amounts.
(DELTA)Pk= the aggregate principal reduction resulting on such
Distribution Date on the Loan Group BB Mortgage Loans as a result of principal
distributions (exclusive of any amounts distributed pursuant to clauses (c)(i)
or (c)(ii) of the definition of REMIC I Distribution Amount) to be made and
realized losses to be allocated on such Distribution Date, which is equal to the
aggregate of the REMIC I YBB and REMIC I ZBB Principal Reduction Amounts.
(alpha) = .0005
(gamma) = (R - J%)/(K% - R). (gamma) is a non-negative number
unless its denominator is zero, in which event it is undefined.
If (gamma) is zero, (DELTA)Yk = Yk and (DELTA)Yj =
(Yj/Pj)(DELTA)Pj.
If (gamma) is undefined, (DELTA)Yj = Yj, (DELTA)Yk =
(Yk/Pk)(DELTA)Pk. if denominator
In the remaining situations, (DELTA)Yk and (DELTA)Yj shall be
defined as follows:
37
1. If Yk - (alpha)(Pk - (DELTA)Pk) => 0, Yj- (alpha)(Pj - (DELTA)Pj) => 0, and
(gamma) (Pj - (DELTA)Pj) < (Pk - (DELTA)Pk), (DELTA)Yk = Yk - (alpha)(gamma)
(Pj - (DELTA)Pj) and (DELTA)Yj = Yj - (alpha)(Pj - (DELTA)Pj).
2. If Yk - (alpha)(Pk - (DELTA)Pk) => 0, Yj - (alpha)(Pj - (DELTA)Pj) => 0, and
(gamma) (Pj - (DELTA)Pj) => (Pk - (DELTA)Pk), (DELTA)Yk = Yk - (alpha)(Pk -
(DELTA)Pk) and (DELTA)Yj = Yj - ((alpha)/(gamma))(Pk - (DELTA)Pk).
3. If Yk - (alpha)(Pk - (DELTA)Pk) < 0, Yj - (alpha)(Pj - (DELTA)Pj) => 0, and
Yj - (alpha)(Pj - (DELTA)Pj) => Yj - (Yk/(gamma)), (DELTA)Yk = Yk -
(alpha)(gamma) (Pj - (DELTA)Pj) and (DELTA)Yj = Yj - (alpha)(Pj -
(DELTA)Pj).
4. If Yk - (alpha)(Pk - (DELTA)Pk) < 0, Yj - (Yk/(gamma)) => 0, and Yj -
(alpha)(Pj - (DELTA)Pj) <= Yj - (Yk/(gamma)), (DELTA)Yk = 0 and (DELTA)Yj =
Yj - (Yk/(gamma)).
5. If Yj - (alpha)(Pj - (DELTA)Pj) < 0, Yj - (Yk/(gamma)) < 0, and Yk -
(alpha)(Pk - (DELTA)Pk) <= Yk - ((gamma)Yj), (DELTA)Yk = Yk - ((gamma)Yj)
and (DELTA)Yj = 0.
6. If Yj - (alpha)(Pj - (DELTA)Pj) < 0, Yk - (alpha)(Pk - (DELTA)Pk) => 0, and
Yk - (alpha)(Pk - (DELTA)Pk) => Yk - ((gamma)Yj), (DELTA)Yk = Yk -
(alpha)(Pk - (DELTA)Pk) and (DELTA)Yj = Yj - ((alpha)/(gamma))(Pk -
(DELTA)Pk).
The purpose of the foregoing definitional provisions together with the
related provisions allocating Realized Losses and defining the REMIC I Y and
REMIC I Z Principal Distribution Amounts is to accomplish the following goals in
the following order of priority:
1. Making the ratio of Yk to Yj equal to (gamma) after taking account of the
allocation Realized Losses and the distributions that will be made through
end of the Distribution Date to which such provisions relate and assuring
that the Principal Reduction Amount for each of the REMIC I YAA, REMIC I
YBB, REMIC I ZAA and REMIC I ZBB Regular Interests is greater than or equal
to zero for such Distribution Date;
2. Making (i) the REMIC I YAA Principal Balance less than or equal to 0.0005 of
the sum of the REMIC I YAA and REMIC I ZAA principal balances and (ii) the
REMIC I YBB principal balances less than or equal to 0.0005 of the sum of
the REMIC I YBB and REMIC I ZBB Principal Balances in each case after giving
effect to allocations of Realized Losses and distributions to be made
through the end of the Distribution Date to which such provisions relate;
and
3. Making the larger of (a) the fraction whose numerator is Yk and whose
denominator is the sum of Yk and Zk and (b) the fraction whose numerator is
Yj and whose denominator is the sum of Yj, and Zj as large as possible while
remaining less than or equal to 0.0005.
In the event of a failure of the foregoing portion of the definition of
REMIC I Y Principal Reduction Amount to accomplish both of goals 1 and 2 above,
the amounts thereof should be adjusted to so as to accomplish such goals within
the requirement that each REMIC I Y Principal Reduction Amount must be less than
or equal to the sum of (a) the principal Realized Losses to be allocated on the
related Distribution Date for the related Pool and (b) the remainder of the
Available Distribution Amount for the related Pool or after reduction thereof by
the distributions to be made on such Distribution in respect of interest on the
related REMIC I Y and REMIC I Z Regular Interests, or, if both of such goals
cannot be accomplished within such requirement, such adjustment as is necessary
shall be made to accomplish goal 1 within such requirement. In the event of any
conflict among the provisions of the definition of the REMIC I Y Principal
Reduction Amounts, such conflict shall be resolved on the basis of the goals and
their priorities set forth above within the requirement set forth in the
preceding sentence.
38
REMIC I Realized Losses: Realized Losses on Group I Loans and Group II
Loans shall be allocated to the REMIC I Regular Interests as follows: (1) The
interest portion of Realized Losses on Group I Loans, if any, shall be allocated
among the REMIC I Y-1 and REMIC I Z-1 Regular Interests pro rata according to
the amount of interest accrued but unpaid thereon, in reduction thereof; and (2)
the interest portion of Realized Losses on Group II Loans, if any, shall be
allocated among the REMIC I Y-2 and REMIC I Z-2 Regular Interests pro rata
according to the amount of interest accrued but unpaid thereon, in reduction
thereof. Any interest portion of such Realized Losses in excess of the amount
allocated pursuant to the preceding sentence shall be treated as a principal
portion of Realized Losses not attributable to any specific Mortgage Loan in
such Loan Group and allocated pursuant to the succeeding sentences. The
principal portion of Realized Losses with respect to Loan Group I and Loan Group
II shall be allocated to the REMIC I Regular Interests as follows: (1) The
principal portion of Realized Losses on Group I Loans shall be allocated, first,
to the REMIC I Y-1 Regular Interest to the extent of the REMIC I Y-1 Principal
Reduction Amount in reduction of the Uncertificated Principal Balance of such
REMIC I Regular Interest and, second, the remainder, if any, of such principal
portion of such Realized Losses shall be allocated to the REMIC I Z-1 Regular
Interest in reduction of the Uncertificated Principal Balance thereof; and (2)
the principal portion of Realized Losses on Group II Loans shall be allocated,
first, to the REMIC I Y-2 Regular Interest to the extent of the REMIC I Y-2
Principal Reduction Amount in reduction of the Uncertificated Principal Balance
of such Regular Interest and, second, the remainder, if any, of such principal
portion of such Realized Losses shall be allocated to the REMIC I Z-2 Regular
Interest in reduction of the Uncertificated Principal Balance thereof.
REMIC I Regular Interests: REMIC I Regular Interest Y-1, Y-2, Z-1 and Z-2.
REMIC I Regular Interest Y-1: A regular interest in REMIC I that is held
as an asset of REMIC II, that has an initial principal balance equal to the
related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC I Pass-Through Rate, and that has such other terms as are
described herein.
REMIC I Regular Interest Y-1 Principal Distribution Amount: For any
Distribution Date, the excess, if any, of the REMIC I Regular Interest Y-1
Principal Reduction Amount for such Distribution Date over the Realized Losses
allocated to the REMIC I Regular Interest Y-1 on such Distribution Date.
REMIC I Regular Interest Y-2: A regular interest in REMIC I that is held
as an asset of REMIC II, that has an initial principal balance equal to the
related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC I Pass-Through Rate, and that has such other terms as are
described herein.
REMIC I Regular Interest Y-2 Principal Distribution Amount: For any
Distribution Date, the excess, if any, of the REMIC I Regular Interest Y-2
Principal Reduction Amount for such Distribution Date over the Realized Losses
allocated to the REMIC I Regular Interest Y-2 on such Distribution Date.
REMIC I Regular Interest Z-1: A regular interest in REMIC I that is held
as an asset of REMIC II, that has an initial principal balance equal to the
related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC I Pass-Through Rate, and that has such other terms as are
described herein.
39
REMIC I Regular Interest Z-1 Principal Distribution Amount: For any
Distribution Date, the excess, if any, of the REMIC I Regular Interest Z-1
Principal Reduction Amount for such Distribution Date over the Realized Losses
allocated to the REMIC I Regular Interest Z-1 on such Distribution Date.
REMIC I Regular Interest Z-2: A regular interest in REMIC I that is held
as an asset of REMIC II, that has an initial principal balance equal to the
related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC I Pass-Through Rate, and that has such other terms as are
described herein.
REMIC I Regular Interest Z-2 Principal Distribution Amount: For any
Distribution Date, the excess, if any, of the REMIC I Regular Interest Z-2
Principal Reduction Amount for such Distribution Date over the Realized Losses
allocated to the REMIC I Regular Interest Z-2 on such Distribution Date.
REMIC I Z Principal Reduction Amounts: For any Distribution Date, the
amounts by which the Uncertificated Principal Balances of the REMIC I Z-1 and
REMIC I Z-2 Regular Interests, respectively, will be reduced on such
Distribution Date by the allocation of Realized Losses and the distribution of
principal, which shall be in each case the excess of (A) the sum of (x) the
excess of the REMIC I Available Distribution Amount for the related Loan Group
(i.e. the "related Group" for the REMIC I Z-1 Regular Interest is Group I and
the "related Loan Group" for the REMIC I Z-2 Regular Interest is Loan Group II)
exclusive of any amount in respect of Subsequent Recoveries included therein
over the amount thereof distributable in respect of interest on such REMIC I Z
Regular Interest and the related REMIC I Y Regular Interest and (iv) to such
REMIC I Z Regular Interest and the related REMIC I Y Regular Interest pursuant
to the definition of "REMIC I Distribution Amount" and (y) the amount of
Realized Losses allocable to principal for the related Loan Group over (B) the
REMIC I Y Principal Reduction Amount for the related Loan Group.
REMIC II: The segregated pool of assets subject hereto, constituting a
portion of the primary trust created hereby and to be administered hereunder,
with respect to which a separate REMIC election is to be made, consisting of the
REMIC I Regular Interests.
REMIC II Available Distribution Amount: For any Distribution Date, the
amount distributed from REMIC I to REMIC II on such Distribution Date in respect
of the REMIC I Regular Interests.
REMIC II Distribution Amount:
(a) On each Distribution Date, the following amounts, in the following
order of priority, shall be distributed by REMIC II to REMIC III on account of
the REMIC II Regular Interests related to Loan Group I:
(i) to the extent of the portion of the REMIC II Available
Distribution Amount related to Group I, to REMIC III as the holder of REMIC II
Regular Interests LT1, LT2, LT3, LT4 and LT-Y1, pro rata, in an amount equal to
(A) their Uncertificated Accrued Interest for such Distribution Date, plus (B)
any amounts in respect thereof remaining unpaid from previous Distribution
Dates; and
(ii) on each Distribution Date, to REMIC III as the holder of the
REMIC II Regular Interests, in an amount equal to the remainder of such portion
of the REMIC II Available Distribution Amount after the distributions made
pursuant to clause (i) above, allocated as follows (except as provided below):
(A) in respect of the REMIC I Regular Interests LT2, LT3, LT4 and LT-Y1,
their respective Principal Distribution Amounts;
40
(B) in respect of the REMIC I Regular Interest LT1 any remainder until the
Uncertificated Principal Balance thereof is reduced to zero;
(C) any remainder in respect of the REMIC II Regular Interests LT2, LT3 and
LT4, pro rata according to their respective Uncertificated Principal Balances as
reduced by the distributions deemed made pursuant to (A) above, until their
respective Uncertificated Principal Balances are reduced to zero; and
(D) any remaining amounts to the Holders of the Class R-II Certificates.
(b) On each Distribution Date, the following amounts, in the following
order of priority, shall be distributed by REMIC II to REMIC III on account of
the REMIC II Regular Interests related to Loan Group II:
(i) to the extent of the portion of the REMIC II Available
Distribution Amount related to Group II, to REMIC III as the holder of REMIC II
Regular Interests LT5, LT6, LT7, LT8 and LT-Y2, pro rata, in an amount equal to
(A) their Uncertificated Accrued Interest for such Distribution Date, plus (B)
any amounts in respect thereof remaining unpaid from previous Distribution
Dates; and
(ii) on each Distribution Date, to REMIC III as the holder of the
REMIC II Regular Interests, in an amount equal to the remainder of such portion
of the REMIC II Available Distribution Amount after the distributions made
pursuant to clause (i) above, allocated as follows (except as provided below):
(A) in respect of the REMIC II Regular Interests LT6, LT7, LT8 and LT-Y2,
their respective Principal Distribution Amounts;
(B) in respect of the REMIC II Regular Interest LT5 any remainder until the
Uncertificated Principal Balance thereof is reduced to zero;
(C) any remainder in respect of the REMIC II Regular Interests LT6, LT7 and
LT8, pro rata according to their respective Uncertificated Principal Balances as
reduced by the distributions deemed made pursuant to (A) above, until their
respective Uncertificated Principal Balances are reduced to zero; and
(D) any remaining amounts to the Holders of the Class R-II Certificates.
REMIC II Principal Reduction Amounts: For any Distribution Date, the
amounts by which the principal balances of the REMIC II Regular Interests LT1,
LT2, LT3, LT4, LT5, LT6, LT7, LT8, LT-Y1 and LT-Y2, respectively, will be
reduced on such Distribution Date by the allocation of Realized Losses and the
distribution of principal, determined as follows:
For purposes of the succeeding formulas the following symbols shall have
the meanings set forth below:
Y1 = the aggregate principal balance of the REMIC II Regular Interests
LT1 and LT-Y1 after distributions on the prior Distribution Date.
Y2 = the principal balance of the REMIC II Regular Interest LT2 after
distributions on the prior Distribution Date.
41
Y3 = the principal balance of the REMIC II Regular Interest LT3 after
distributions on the prior Distribution Date.
Y4 = the principal balance of the REMIC II Regular Interest LT4 after
distributions on the prior Distribution Date (note: Y3 = Y4).
AY1 = the combined REMIC II Regular Interest LT1 and LT-Y1 Principal
Reduction Amount. Such amount shall be allocated first to LT-Y1 up to the Class
Y1 Principal Reduction Amount and thereafter the remainder shall be allocated to
LT1.
AY2 = the REMIC I Regular Interest LT2 Principal Reduction Amount.
AY3 = the REMIC I Regular Interest LT3 Principal Reduction Amount.
AY4 = the REMIC I Regular Interest LT4 Principal Reduction Amount.
P0 = the aggregate principal balance of the REMIC I Regular Interests
LT1, LT2, LT3, LT4 and LT-Y1 after distributions and the allocation of Realized
Losses on the prior Distribution Date.
P1 = the aggregate principal balance of the REMIC I Regular Interests
LT1, LT2, LT3, LT4 and LT-Y1 after distributions and the allocation of Realized
Losses to be made on such Distribution Date.
AP = P0 - P1 = the aggregate of the REMIC I Regular Interests LT1, LT2,
LT3, LT4 and LT-Y1 Principal Reduction Amounts.
=the aggregate of the principal portions of Realized Losses to be
allocated to, and the principal distributions to be made on, the Group I
Certificates on such Distribution Date (including distributions of accrued and
unpaid interest on the Class SB Certificates for prior Distribution Dates).
R0 = the Group I Net WAC Cap Rate (stated as a monthly rate) after
giving effect to amounts distributed and Realized Losses allocated on the prior
Distribution Date.
R1 = the Group I Net WAC Cap Rate (stated as a monthly rate) after
giving effect to amounts to be distributed and Realized Losses to be allocated
on such Distribution Date.
a = (Y2 + Y3)/P0. The initial value of a on the Closing Date for use on
the first Distribution Date shall be 0.0001.
a0 = the lesser of (A) the sum of (1) for all Classes of Class A-I
Certificates of the product for each Class of (i) the monthly interest rate (as
limited by the Net Rate Cap, if applicable) for such Class applicable for
distributions to be made on such Distribution Date and (ii) the aggregate
Certificate Principal Balance for such Class after distributions and the
allocation of Realized Losses on the prior Distribution Date, (2) for all
Classes of Class M Certificates of the product for each Class of (i) the monthly
interest rate (as limited by the Net Rate Cap, if applicable) for such Class
applicable for distributions to be made on such Distribution Date and (ii) the
aggregate Certificate Principal Balance for such Class multiplied by a fraction
whose numerator is the principal balance of the REMIC I Regular Interest Y-1 and
whose denominator is the sum of the principal balances of the REMIC I Regular
Interests Y-1 and Y-2 after distributions and the allocation of Realized Losses
on the prior Distribution Date and (3) the amount, if any, by which the sum of
the amounts in clauses (A)(1), (2) and (3) of the definition of A0 exceeds S0 *
Q0 and (B) R0*P0.
42
a1 = the lesser of (A) the sum of (1) for all Classes of Class A-I
Certificates of the product for each Class of (i) the monthly interest rate (as
limited by the Net Rate Cap, if applicable) for such Class applicable for
distributions to be made on the next succeeding Distribution Date and (ii) the
aggregate Certificate Principal Balance for such Class after distributions and
the allocation of Realized Losses to be made on such Distribution Date, (2) for
all Classes of Class M Certificates of the product for each Class of (i) the
monthly interest rate (as limited by the Net Rate Cap, if applicable) for such
Class applicable for distributions to be made on the next succeeding
Distribution Date and (ii) the aggregate Certificate Principal Balance for such
Class multiplied by a fraction whose numerator is the principal balance of the
REMIC I Regular Interest Y-1 and whose denominator is the sum of the principal
balances of the REMIC I Regular Interests Y-1 and Y-2 after distributions and
the allocation of Realized Losses to be made on such Distribution Date and (3)
the amount, if any, by which the sum of the amounts in clauses (A)(1), (2) and
(3) of the definition of A1 exceeds S1 * Q1 and (B) R1*P1.
Then, based on the foregoing definitions:
AY1 = AP - AY2 - AY3 - AY4;
AY2 = (a/2){( a0R1 - a1R0)/R0R1};
AY3 = aAP - AY2; and
AY4 = AY3.
if both AY2 and AY3, as so determined, are non-negative numbers. Otherwise:
(1) If AY2, as so determined, is negative, then
AY2 = 0;
AY3 = a{a1R0P0 - a0R1P1}/{a1R0};
AY4 = AY3; and
AY1 = XX - XX0 - XX0 - XX0.
(2) If AY3, as so determined, is negative, then
AY3 = 0;
AY2 = a{a1R0P0 - a0R1P1}/{2R1R0P1 - a1R0};
AY4 = AY3; and
AY1 = XX - XX0 - XX0 - XX0.
For purposes of the succeeding formulas the following symbols shall have
the meanings set forth below:
Y5 = the aggregate principal balance of the REMIC II Regular Interests
LT5 and LT-Y2 after distributions on the prior Distribution Date.
43
Y6 = the principal balance of the REMIC II Regular Interest LT6 after
distributions on the prior Distribution Date.
Y7 = the principal balance of the REMIC II Regular Interest LT7 after
distributions on the prior Distribution Date.
Y8 = the principal balance of the REMIC II Regular Interest LT8 after
distributions on the prior Distribution Date (note: Y7 = Y8).
AY5 = the aggregate of the REMIC II Regular Interest LT5 and LT-Y2
Principal Reduction Amounts. Such amount shall be allocated first to LT-Y2 up to
the Class Y2 Principal Reduction Amount and thereafter the remainder shall be
allocated to LT5.
AY6 = the REMIC II Regular Interest LT6 Principal Reduction Amount.
AY7 = the REMIC II Regular Interest LT7 Principal Reduction Amount.
AY8 = the REMIC II Regular Interest LT8 Principal Reduction Amount.
Q0 = the aggregate principal balance of the REMIC II Regular Interests
LT5, LT6, LT7, LT8 and LT-Y2 after distributions and the allocation of Realized
Losses on the prior Distribution Date.
Q1 = the aggregate principal balance of the REMIC II Regular Xxxxxxxxx
XX0, XX0, XX0, XX0, XX-X0 and LT-Y2 after distributions and the allocation of
Realized Losses to be made on such Distribution Date.
AQ = Q0 - Q1 = the aggregate of the REMIC II Regular Interests LT5, LT6,
LT7, LT8 and LT-Y2 Principal Reduction Amounts.
=the aggregate of the principal portions of Realized Losses to be
allocated to, and the principal distributions to be made on, the Group II
Certificates on such Distribution Date (including distributions of accrued and
unpaid interest on the Class SB Certificates for prior Distribution Dates).
S0 = the Group II Net WAC Rate (stated as a monthly rate) after giving
effect to amounts distributed and Realized Losses allocated on the prior
Distribution Date.
S1 = the Group II Net WAC Rate (stated as a monthly rate) after giving
effect to amounts to be distributed and Realized Losses to be allocated on such
Distribution Date.
a = (Y6 + Y7)/Q0. The initial value of a on the Closing Date for use on
the first Distribution Date shall be 0.0001.
A0 = the lesser of (A) the sum of (1) for all Classes of Class A-II
Certificates of the product for each Class of (i) the monthly interest rate (as
limited by the Net Rate Cap, if applicable) for such Class applicable for
distributions to be made on such Distribution Date and (ii) the aggregate
Certificate Principal Balance for such Class after distributions and the
allocation of Realized Losses on the prior Distribution Date, (2) for all
Classes of Class M Certificates of the product for each Class of (i) the monthly
interest rate (as limited by the Net Rate Cap, if applicable) for such Class
applicable for distributions to be made on such Distribution Date and (ii) the
aggregate Certificate Principal Balance for such Class multiplied by a fraction
whose numerator is the principal balance of the REMIC I Regular Interest Y-2 and
whose denominator is the sum of the principal balances of the REMIC I Regular
Interests Y-1 and Y-2 after distributions and the allocation of Realized Losses
on the prior Distribution Date and (3) the amount, if any, by which the sum of
the amounts in clauses (A)(1), (2) and (3) of the definition of a0 exceeds R0 *
P0 and (B) S0*Q0.
44
A1 = the lesser of (A) the sum of (1) for all Classes of Class A-II
Certificates of the product for each Class of (i) the monthly interest rate (as
limited by the Net Rate Cap, if applicable) for such Class applicable for
distributions to be made on the next succeeding Distribution Date and (ii) the
aggregate Certificate Principal Balance for such Class after distributions and
the allocation of Realized Losses to be made on such Distribution Date, (2) for
all Classes of Class M Certificates of the product for each Class of (i) the
monthly interest rate (as limited by the Net Rate Cap, if applicable) for such
Class applicable for distributions to be made on the next succeeding
Distribution Date and (ii) the aggregate Certificate Principal Balance for such
Class multiplied by a fraction whose numerator is the principal balance of the
REMIC I Regular Interest Y-2 and whose denominator is the sum of the principal
balances of the REMIC I Regular Interests Y-1 and Y-2 after distributions and
the allocation of Realized Losses to be made on such Distribution Date and (3)
the amount, if any, by which the sum of the amounts in clauses (A)(1), (2) and
(3) of the definition of a1 exceeds R1 * P1 and (B) S1*Q1.
Then, based on the foregoing definitions:
AY5 = AQ - AY6 - AY7 - AY8;
AY6 = (a/2){(A0S1 - A1S0)/S0S1};
AY7 = aAQ - AY6; and
AY8 = AY7.
if both AY6 and AY7, as so determined, are non-negative numbers. Otherwise:
(1) If AY6, as so determined, is negative, then
AY6 = 0;
AY7 = a{A1S0Q0 - A0S1Q1}/{A1S0};
AY8 = AY7; and
AY5 = AQ - AY6 - AY7 - AY8.
(2) If AY7, as so determined, is negative, then
AY7 = 0;
AY6 = a{A1S0Q0 - A0S1Q1}/{2S1S0Q1 - A1S0};
AY8 = AY7; and
AY5 = AQ - AY6 - AY7 - AY8.
REMIC II Realized Losses: Realized Losses on Group I Loans and Group II
Loans shall be allocated to the REMIC II Regular Interests as follows: (1) The
interest portion of Realized Losses on Group I Loans, if any, shall be allocated
among the LT1, LT2, LT4 and LT-Y1 REMIC II Regular Interests pro rata according
to the amount of interest accrued but unpaid thereon, in reduction thereof; and
(2) the interest portion of Realized Losses on Group II Loans, if any, shall be
allocated among the LT5, LT6, LT8 and LT-Y2 REMIC II Regular Interests pro rata
according to the amount of interest accrued but unpaid thereon, in reduction
thereof. Any interest portion of such Realized Losses in excess of the amount
allocated pursuant to the preceding sentence shall be treated as a principal
45
portion of Realized Losses not attributable to any specific Mortgage Loan in
such Loan Group and allocated pursuant to the succeeding sentences. The
principal portion of Realized Losses with respect to Loan Group I and Loan Group
II shall be allocated to the REMIC I Regular Interests as follows: (1) The
principal portion of Realized Losses on Group I Loans shall be allocated, first,
to the LT-Y1 REMIC II Regular Interest to the extent that such losses were
allocated to the Y-1 REMIC I Regular Interest in reduction of the Uncertificated
Principal Balance thereof, second, to the LT 2, LT3 and LT4 REMIC II Regular
Interests pro-rata according to their respective REMIC II Principal Reduction
Amounts to the extent thereof in reduction of the Uncertificated Principal
Balance of such REMIC II Regular Interests and, third, the remainder, if any, of
such principal portion of such Realized Losses shall be allocated to the LT1
REMIC II Regular Interest in reduction of the Uncertificated Principal Balance
thereof; and (2) the principal portion of Realized Losses on Group II Loans
shall be allocated, first, to the LT-Y2 REMIC II Regular Interest to the extent
that such losses were allocated to the Y-2 REMIC I Regular Interest in reduction
of the Uncertificated Principal Balance thereof, second, to the LT 6, LT7 and
LT8 REMIC II Regular Interests pro-rata according to their respective REMIC II
Principal Reduction Amounts to the extent thereof in reduction of the
Uncertificated Principal Balance of such REMIC II Regular Interests and, third,
the remainder, if any, of such principal portion of such Realized Losses shall
be allocated to the LT5 REMIC II Regular Interest in reduction of the
Uncertificated Principal Balance thereof.
REMIC II Regular Interests: REMIC II Regular Interest LT1, REMIC II
Regular Interest LT2, REMIC II Regular Interest LT3, REMIC II Regular Interest
LT4, REMIC II Regular Interest LT5, REMIC II Regular Interest LT6, REMIC II
Regular Interest LT7, REMIC II Regular Interest LT8, REMIC II Regular Interest
LT-Y1 and REMIC II Regular Interest LT-Y2.
REMIC II Regular Interest LT1: A regular interest in REMIC II that is
held as an asset of REMIC II, that has an initial principal balance equal to the
related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC II Pass-Through Rate, and that has such other terms as are
described herein.
REMIC II Regular Interest LT1 Principal Distribution Amount: For any
Distribution Date, the excess, if any, of the REMIC II Regular Interest LT1
Principal Reduction Amount for such Distribution Date over the Realized Losses
allocated to the REMIC II Regular Interest LT1 on such Distribution Date.
REMIC II Regular Interest LT2: A regular interest in REMIC II that is
held as an asset of REMIC II, that has an initial principal balance equal to the
related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC II Pass-Through Rate, and that has such other terms as are
described herein.
REMIC II Regular Interest LT2 Principal Distribution Amount: For any
Distribution Date, the excess, if any, of the REMIC II Regular Interest LT2
Principal Reduction Amount for such Distribution Date over the Realized Losses
allocated to the REMIC II Regular Interest LT2 on such Distribution Date.
REMIC II Regular Interest LT3: A regular interest in REMIC II that is
held as an asset of REMIC III, that has an initial principal balance equal to
the related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC II Pass-Through Rate, and that has such other terms as are
described herein.
46
REMIC II Regular Interest LT3 Principal Distribution Amount: For any
Distribution Date, the excess, if any, of the REMIC II Regular Interest LT3
Principal Reduction Amount for such Distribution Date over the Realized Losses
allocated to the REMIC II Regular Interest LT3 on such Distribution Date.
REMIC II Regular Interest LT4: A regular interest in REMIC II that is
held as an asset of REMIC III, that has an initial principal balance equal to
the related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC II Pass-Through Rate, and that has such other terms as are
described herein.
REMIC II Regular Interest LT4 Principal Distribution Amount: For any
Distribution Date, the excess, if any, of the REMIC II Regular Interest LT4
Principal Reduction Amount for such Distribution Date over the Realized Losses
allocated to the REMIC II Regular Interest LT4 on such Distribution Date.
REMIC II Regular Interest LT5: A regular interest in REMIC II that is
held as an asset of REMIC III, that has an initial principal balance equal to
the related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC II Pass-Through Rate, and that has such other terms as are
described herein.
REMIC II Regular Interest LT5 Principal Distribution Amount: For any
Distribution Date, the excess, if any, of the REMIC II Regular Interest LT5
Principal Reduction Amount for such Distribution Date over the Realized Losses
allocated to the REMIC II Regular Interest LT5 on such Distribution Date.
REMIC II Regular Interest LT6: A regular interest in REMIC II that is
held as an asset of REMIC III, that has an initial principal balance equal to
the related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC II Pass-Through Rate, and that has such other terms as are
described herein.
REMIC II Regular Interest LT6 Principal Distribution Amount: For any
Distribution Date, the excess, if any, of the REMIC II Regular Interest LT6
Principal Reduction Amount for such Distribution Date over the Realized Losses
allocated to the REMIC II Regular Interest LT6 on such Distribution Date.
REMIC II Regular Interest LT7: A regular interest in REMIC II that is
held as an asset of REMIC III, that has an initial principal balance equal to
the related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC II Pass-Through Rate, and that has such other terms as are
described herein.
REMIC II Regular Interest LT7 Principal Distribution Amount: For any
Distribution Date, the excess, if any, of the REMIC II Regular Interest LT7
Principal Reduction Amount for such Distribution Date over the Realized Losses
allocated to the REMIC II Regular Interest LT7 on such Distribution Date.
REMIC II Regular Interest LT8: A regular interest in REMIC II that is
held as an asset of REMIC III, that has an initial principal balance equal to
the related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC II Pass-Through Rate, and that has such other terms as are
described herein.
REMIC II Regular Interest LT8 Principal Distribution Amount: For any
Distribution Date, the excess, if any, of the REMIC II Regular Interest LT8
Principal Reduction Amount for such Distribution Date over the Realized Losses
allocated to the REMIC II Regular Interest LT8 on such Distribution Date.
REMIC II Regular Interest LT-Y1: A regular interest in REMIC II that is
held as an asset of REMIC III, that has an initial principal balance equal to
the related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC II Pass-Through Rate, and that has such other terms as are
described herein.
47
REMIC II Regular Interest LT-Y1 Principal Distribution Amount: For any
Distribution Date, the excess, if any, of the REMIC II Regular Interest LT-Y1
Principal Reduction Amount for such Distribution Date over the Realized Losses
allocated to the REMIC II Regular Interest LT-Y1 on such Distribution Date.
REMIC II Regular Interest LT-Y2: A regular interest in REMIC II that is
held as an asset of REMIC III, that has an initial principal balance equal to
the related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC II Pass-Through Rate, and that has such other terms as are
described herein.
REMIC II Regular Interest LT-Y2 Principal Distribution Amount: For any
Distribution Date, the excess, if any, of the REMIC II Regular Interest LT-Y2
Principal Reduction Amount for such Distribution Date over the Realized Losses
allocated to the REMIC II Regular Interest LT-Y2 on such Distribution Date.
REMIC III: The segregated pool of assets subject hereto, constituting a
portion of the primary trust created hereby and to be administered hereunder,
with respect to which a separate REMIC election is to be made, consisting of the
REMIC II Regular Interests.
REMIC III Regular Interest SB-PO: A separate non-certificated beneficial
ownership interests in REMIC III issued hereunder and designated as a Regular
Interest in REMIC III. REMIC III Regular Interest SB-PO shall have no
entitlement to interest, and shall be entitled to distributions of principal
subject to the terms and conditions hereof, in aggregate amount equal to the
initial Certificate Principal Balance of the Class SB Certificates as set forth
in the Preliminary Statement hereto.
REMIC III Regular Interest SB-IO:: A separate non-certificated
beneficial ownership interests in REMIC III issued hereunder and designated as a
Regular Interest in REMIC III. REMIC III Regular Interest SB-IO shall have no
entitlement to principal, and shall be entitled to distributions of interest
subject to the terms and conditions hereof, in aggregate amount equal to the
interest distributable with respect to the Class SB Certificates pursuant to the
terms and conditions hereof.
REMIC III Regular Interests: REMIC III Regular Interests SB-IO and
SB-PO, together with the Class A and Class M Certificates.
REMIC Provisions: Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at Sections 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
temporary and final regulations (or, to the extent not inconsistent with such
temporary or final regulations, proposed regulations) and published rulings,
notices and announcements promulgated thereunder, as the foregoing may be in
effect from time to time.
REO Acquisition: The acquisition by the Master Servicer on behalf of the
Trustee for the benefit of the Certificateholders of any REO Property pursuant
to Section 3.14.
REO Disposition: With respect to any REO Property, a determination by
the Master Servicer that it has received substantially all Insurance Proceeds,
Liquidation Proceeds, REO Proceeds and other payments and recoveries (including
proceeds of a final sale) which the Master Servicer expects to be finally
recoverable from the sale or other disposition of the REO Property.
48
REO Imputed Interest: With respect to any REO Property, for any period,
an amount equivalent to interest (at a rate equal to the Net Mortgage Rate that
would have been applicable to the related Mortgage Loan had it been outstanding)
on the unpaid principal balance of the Mortgage Loan as of the date of
acquisition thereof for such period.
REO Proceeds: Proceeds, net of expenses, received in respect of any REO
Property (including, without limitation, proceeds from the rental of the related
Mortgaged Property) which proceeds are required to be deposited into the
Custodial Account only upon the related REO Disposition.
REO Property: A Mortgaged Property acquired by the Master Servicer on
behalf of the Trustee for the benefit of the Certificateholders through
foreclosure or deed in lieu of foreclosure in connection with a defaulted
Mortgage Loan.
Reportable Modified Mortgage Loan: Any Mortgage Loan that (a) has been
subject to an interest rate reduction, (b) has been subject to a term extension
or (c) has had amounts owing on such Mortgage Loan capitalized by adding such
amount to the Stated Principal Balance of such Mortgage Loan; provided, however,
that a Mortgage Loan modified in accordance with (a) above for a temporary
period shall not be a Reportable Modified Mortgage Loan if such Mortgage Loan
has not been delinquent in payments of principal and interest for six months
since the date of such modification if that interest rate reduction is not made
permanent thereafter.
Repurchase Event: As defined in the Assignment Agreement.
----------------
Request for Release: A request for release, the forms of which are
attached as Exhibit G hereto, or an electronic request in a form acceptable to
the Custodian.
Required Insurance Policy: With respect to any Mortgage Loan, any
insurance policy which is required to be maintained from time to time under this
Agreement, the Program Guide or the related Subservicing Agreement in respect of
such Mortgage Loan.
Required Overcollateralization Amount: With respect to any Distribution
Date, (a) prior to the Stepdown Date, an amount equal to 1.05% of the aggregate
Stated Principal Balance of the Mortgage Loans as of the Cut-off Date, (b) on or
after the Stepdown Date if a Trigger Event is not in effect, the greater of (i)
an amount equal to 2.10% of the aggregate outstanding Stated Principal Balance
of the Mortgage Loans after giving effect to distributions made on that
Distribution Date and (ii) the Overcollateralization Floor and (c) on or after
the Stepdown Date if a Trigger Event is in effect, an amount equal to the
Required Overcollateralization Amount from the immediately preceding
Distribution Date. The Required Overcollateralization Amount may be reduced so
long as written confirmation is obtained from each Rating Agency that such
reduction shall not reduce the ratings assigned to the Certificates by such
Rating Agency below the lower of the then current rating or the rating assigned
to such Certificates as of the Closing Date by such Rating Agency.
Residential Funding: Residential Funding Corporation, a Delaware
corporation, in its capacity as seller of the Mortgage Loans to the Depositor
and any successor thereto.
Responsible Officer: When used with respect to the Trustee, any officer
of the Corporate Trust Department of the Trustee, including any Senior Vice
President, any Vice President, any Assistant Vice President, any Assistant
Secretary, any Trust Officer or Assistant Trust Officer, or any other officer of
the Trustee, in each case, with direct responsibility for the administration of
this Agreement.
RFC Exemption: As defined in Section 5.02(e)(ii).
49
Rule 144A: Rule 144A under the Securities Act of 1933, as in effect from
time to time.
Seller: With respect to any Mortgage Loan, a Person, including any
Subservicer, that executed a Seller's Agreement applicable to such Mortgage
Loan.
Seller's Agreement: An agreement for the origination and sale of
Mortgage Loans generally in the form of the seller contract referred to or
contained in the Program Guide, or in such other form as has been approved by
the Master Servicer and the Depositor, each containing representations and
warranties in respect of one or more Mortgage Loans.
Senior Enhancement Percentage: For any Distribution Date, the fraction,
expressed as a percentage, the numerator of which is the sum of (i) the
aggregate Certificate Principal Balance of the Class M-1, Class M-2, Class M-3,
Class M-4, Class M-5, Class M-6 and Class B Certificates and (ii) the
Overcollateralization Amount, in each case prior to the distribution of the
Principal Distribution Amount on such Distribution Date and the denominator of
which is the aggregate Stated Principal Balance of the Mortgage Loans after
giving effect to distributions to be made on that Distribution Date.
Senior Percentage: With respect to each Loan Group and any Distribution
Date, the percentage equal to the lesser of (x) the aggregate Certificate
Principal Balances of the related Class A Certificates immediately prior to such
Distribution Date divided by the aggregate Stated Principal Balance of the
Mortgage Loans in such Loan Group immediately prior to such Distribution Date
and (y) 100%.
Servicing Accounts: The account or accounts created and maintained pursuant
to Section 3.08.
Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses incurred in connection with a default, delinquency or
other unanticipated event by the Master Servicer or a Subservicer in the
performance of its servicing obligations, including, but not limited to, the
cost of (i) the preservation, restoration and protection of a Mortgaged Property
or, with respect to a cooperative loan, the related cooperative apartment, (ii)
any enforcement or judicial proceedings, including foreclosures, including any
expenses incurred in relation to any such proceedings that result from the
Mortgage Loan being registered on the MERS(R) System, (iii) the management and
liquidation of any REO Property, (iv) any mitigation procedures implemented in
accordance with Section 3.07, and (v) compliance with the obligations under
Sections 3.01, 3.08, 3.11, 3.12(a) and 3.14, including, if the Master Servicer
or any Affiliate of the Master Servicer provides services such as appraisals and
brokerage services that are customarily provided by Persons other than servicers
of mortgage loans, reasonable compensation for such services.
Servicing Fee: With respect to any Mortgage Loan and Distribution Date,
the fee payable monthly to the Master Servicer in respect of master servicing
compensation that accrues at an annual rate equal to the Servicing Fee Rate
multiplied by the Stated Principal Balance of such Mortgage Loan as of the
related Due Date in the related Due Period, as may be adjusted pursuant to
Section 3.16(e).
Servicing Fee Rate: With respect to any Mortgage Loan, the per annum
rate designated on the Mortgage Loan Schedule as the "MSTR SERV FEE," as may be
adjusted with respect to successor Master Servicers as provided in Section 7.02,
which rate shall never be greater than the Mortgage Rate of such Mortgage Loan.
Servicing Modification: Any reduction of the interest rate on or the
Stated Principal Balance of a Mortgage Loan, any extension of the final maturity
date of a Mortgage Loan, and any increase to the Stated Principal Balance of a
Mortgage Loan by adding to the Stated Principal Balance unpaid principal and
interest and other amounts owing under the Mortgage Loan, in each case pursuant
to a modification of a Mortgage Loan that is in default, or for which, in the
judgment of the Master Servicer, default is reasonably foreseeable in accordance
with Section 3.07(a).
50
Servicing Officer: Any officer of the Master Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished to
the Trustee by the Master Servicer on the Closing Date, as such list may from
time to time be amended.
Sixty-Plus Delinquency Percentage: With respect to any Distribution Date
and the Mortgage Loans, the arithmetic average, for each of the three
Distribution Dates ending with such Distribution Date, of the fraction,
expressed as a percentage, equal to (x) the aggregate Stated Principal Balance
of the Mortgage Loans that are 60 or more days delinquent in payment of
principal and interest for that Distribution Date, including Mortgage Loans in
foreclosure and REO, over (y) the aggregate Stated Principal Balance of all of
the Mortgage Loans immediately preceding that Distribution Date.
Standard & Poor's: Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc. or its successors in interest.
Startup Date: The day designated as such pursuant to Article X hereof.
Stated Principal Balance: With respect to any Mortgage Loan or related
REO Property, at any given time, (i) the sum of (a) the Cut-off Date Principal
Balance of the Mortgage Loan and (b) any amount by which the Stated Principal
Balance of the Mortgage Loan has been increased pursuant to a Servicing
Modification, minus (ii) the sum of (a) the principal portion of the Monthly
Payments due with respect to such Mortgage Loan or REO Property during each Due
Period ending with the Due Period relating to the most recent Distribution Date
which were received or with respect to which an Advance was made, (b) all
Principal Prepayments with respect to such Mortgage Loan or REO Property, and
all Insurance Proceeds, Liquidation Proceeds and REO Proceeds, to the extent
applied by the Master Servicer as recoveries of principal in accordance with
Section 3.14 with respect to such Mortgage Loan or REO Property, in each case
which were distributed pursuant to Section 4.02 on any previous Distribution
Date, and (c) any Realized Loss incurred with respect to such Mortgage Loan
allocated to Certificateholders with respect thereto for any previous
Distribution Date.
Stepdown Date: That Distribution Date which is the earlier to occur of
(a) the Distribution Date immediately succeeding the Distribution Date on which
the aggregate Certificate Principal balance of the Class A Certificates has been
reduced to zero and (b) the latest to occur of (i) the Distribution Date in
December 2007 and (ii) the first Distribution Date on which the Senior
Enhancement Percentage is equal to or greater than 35.00%.
Subordinate Basis Risk Shortfalls: With respect to each Class of the
Class M Certificates and Class B Certificates, and any Distribution Date, the
sum of (a) with respect to any Distribution Date on which the Subordinate Net
WAC Cap Rate is used to determine the Pass-Through Rate of such Class, an amount
equal to the excess of (x) Accrued Certificate Interest for such Class
calculated at a per annum rate equal to the lesser of (i) LIBOR plus the related
Margin for such Distribution Date and (ii) the weighted average of the Group I
Weighted Average Maximum Net Mortgage Rate and the Group II Weighted Average
Maximum Net Mortgage Rate, weighted on the basis of the related Subordinate
Component, over (y) Accrued Certificate Interest for such Class calculated using
the Subordinate Net WAC Cap Rate plus, an amount equal to any reduction in the
Accrued Certificate Interest of such Class due to the failure of the Hedge
Agreements Provider to make any required Subordinate Hedge Payment with respect
to such Distribution Date, (b) any shortfalls for such Class calculated pursuant
to clause (a) above remaining unpaid from prior Distribution Dates, and (c) one
month's interest on the amount in clause (b) (based on the number of days in the
preceding Interest Accrual Period) at a per annum rate equal to LIBOR plus the
related Margin for such Distribution Date.
51
Subordinate Component: With respect to each Loan Group and any
Distribution Date, the positive excess, if any, of the aggregate Stated
Principal Balance of the Mortgage Loans in that Loan Group, over the aggregate
Certificate Principal Balance of the related Class A Certificates, in each case
immediately prior to that Distribution Date.
Subordinate Hedge Agreement: The confirmation, dated as of the Closing
Date, between the Trustee, on behalf of the Trust Fund, and the Hedge Agreements
Provider, relating to the Class M Certificates and Class B Certificates or any
replacement, substitute, collateral or other arrangement in lieu thereof.
Subordinate Hedge Payment: For any Distribution Date, the payment, if any,
due under the Subordinate Hedge Agreement in respect of such Distribution Date
Subordinate Net WAC Cap Rate: With respect to any Distribution Date and
the Class M Certificates and Class B Certificates, the sum of (a) the
Subordinate REMIC Net WAC Rate for such Distribution Date and (b) a per annum
rate equal to (i) the amount, if any, required to be paid under the Subordinate
Hedge Agreement with respect to such Distribution Date divided by (ii) the
aggregate Certificate Principal Balance of the Class M Certificates and Class B
Certificates immediately prior to such Distribution Date, multiplied by a
fraction, the numerator of which is 30, and the denominator of which is the
actual number of days in the related Interest Accrual Period.
Subordinate REMIC Net WAC Rate: With respect to any Distribution Date
and the Class M Certificates and Class B Certificates, a per annum rate equal to
the weighted average of the Group I REMIC Net WAC Rate and Group II REMIC Net
WAC Rate, weighted on the basis of the related Subordinate Component, which for
tax purposes is equal to the weighted average of the interests rates on the Y-1
and Y-2 REMIC I Regular Interests.
Subordination: The provisions described in Section 4.05 relating to the
allocation of Realized Losses.
Subordination Percentage: With respect to the Class A Certificates and any
Class of Class M Certificates and the Class B Certificates, the respective
percentage set forth below.
Class Percentage
A 65.00%
M-1 77.60%
M-2 88.10%
M-3 90.10%
M-4 91.90%
M-5 93.90%
M-6 95.90%
B 97.90%
Subsequent Recoveries: As of any Distribution Date, amounts received by
the Master Servicer (net of any related expenses permitted to be reimbursed
pursuant to Section 3.10) or surplus amounts held by the Master Servicer to
cover estimated expenses (including, but not limited to, recoveries in respect
of the representations and warranties made by the related Seller pursuant to the
applicable Seller's Agreement and assigned to the Trustee pursuant to Section
2.04) specifically related to a Mortgage Loan that was the subject of a Cash
Liquidation or an REO Disposition prior to the related Prepayment Period and
that resulted in a Realized Loss.
52
Subserviced Mortgage Loan: Any Mortgage Loan that, at the time of
reference thereto, is subject to a Subservicing Agreement.
Subservicer: Any Person with whom the Master Servicer has entered into a
Subservicing Agreement and who generally satisfied the requirements set forth in
the Program Guide in respect of the qualification of a Subservicer as of the
date of its approval as a Subservicer by the Master Servicer.
Subservicer Advance: Any delinquent installment of principal and
interest on a Mortgage Loan which is advanced by the related Subservicer (net of
its Subservicing Fee) pursuant to the Subservicing Agreement.
Subservicing Account: An account established by a Subservicer in accordance
with Section 3.08.
Subservicing Agreement: The written contract between the Master Servicer
and any Subservicer relating to servicing and administration of certain Mortgage
Loans as provided in Section 3.02, generally in the form of the servicer
contract referred to or contained in the Program Guide or in such other form as
has been approved by the Master Servicer and the Depositor.
Subservicing Fee: With respect to any Mortgage Loan, the fee payable
monthly to the related Subservicer (or, in the case of a Nonsubserviced Mortgage
Loan, to the Master Servicer) in respect of subservicing and other compensation
that accrues with respect to each Distribution Date at an annual rate designated
as "SUBSERV FEE" on the Mortgage Loan Schedule.
Tax Returns: The federal income tax return on Internal Revenue Service
Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax Return,
including Schedule Q thereto, Quarterly Notice to Residual Interest Holders of
REMIC Taxable Income or Net Loss Allocation, or any successor forms, to be filed
on behalf of REMIC I, REMIC II and REMIC III due to their classification as
REMICs under the REMIC Provisions, together with any and all other information,
reports or returns that may be required to be furnished to the
Certificateholders or filed with the Internal Revenue Service or any other
governmental taxing authority under any applicable provisions of federal, state
or local tax laws.
Transfer: Any direct or indirect transfer, sale, pledge, hypothecation
or other form of assignment of any Ownership Interest in a Certificate.
Transferee: Any Person who is acquiring by Transfer any Ownership Interest
in a Certificate.
Transferor: Any Person who is disposing by Transfer of any Ownership
Interest in a Certificate.
53
Trigger Event: A Trigger Event is in effect with respect to any
Distribution Date on or after the Stepdown Date if either (a) the product of
2.00 and the Sixty-Plus Delinquency Percentage, as determined on that
Distribution Date, exceeds the Senior Enhancement Percentage for that
Distribution Date or (b) on or after the Distribution Date in December 2007, the
aggregate amount of Realized Losses on the Mortgage Loans as a percentage of the
Cut-Off Date Balance exceeds the applicable amount set forth below:
December 2007 to November 2008: 3.00% with
respect to December 2007, plus an
additional 1/12th of 1.75% for each
month thereafter.
December 2008 to November 2009: 4.75% with
respect to December 2008, plus an
additional 1/12th of 1.50% for each
month thereafter.
December 2009 to November 2010: 6.25% with
respect to December 2009, plus an
additional 1/12th of 0.50% for each
month thereafter.
December 2010 and thereafter: 6.75%.
Trustee: As defined in the preamble hereto.
Trust Fund: The segregated pool of assets subject hereto, consisting of:
(i) the Mortgage Loans and the related Mortgage Files; (ii) all payments on and
collections in respect of the Mortgage Loans due after the Cut-off Date (other
than Monthly Payments due in the month of the Cut-off Date) as shall be on
deposit in the Custodial Account or in the Certificate Account and identified as
belonging to the Trust Fund; (iii) property which secured a Mortgage Loan and
which has been acquired for the benefit of the Certificateholders by foreclosure
or deed in lieu of foreclosure; (iv) the hazard insurance policies and Primary
Insurance Policies pertaining to the Mortgage Loans, if any; and (v) all
proceeds of clauses (i) through (iv) above.
Uniform Single Attestation Program for Mortgage Bankers: The Uniform
Single Attestation Program for Mortgage Bankers, as published by the Mortgage
Bankers Association of America and effective with respect to fiscal periods
ending on or after December 15, 1995.
Uncertificated Accrued Interest: With respect to any Uncertificated
Regular Interest for any Distribution Date, one month's interest at the related
Uncertificated Pass-Through Rate for such Distribution Date, accrued on the
Uncertificated Principal Balance or Uncertificated Notional Amount, as
applicable, immediately prior to such Distribution Date. Uncertificated Accrued
Interest for the Uncertificated Regular Interests shall accrue on the basis of a
360-day year consisting of twelve 30-day months. For purposes of calculating the
amount of Uncertificated Accrued Interest for the REMIC I Regular Interests for
any Distribution Date, any Prepayment Interest Shortfalls and Relief Act
Shortfalls (to the extent not covered by Compensating Interest) (i) relating to
the Loan Group I Loans for any Distribution Date shall be allocated among REMIC
I Regular Interests Y-1 and Z-1 and (ii) relating to the Loan Group II Loans
shall be allocated among the REMIC I Regular Interests Y-2 and Z-2, pro rata,
based on, and to the extent of, Uncertificated Accrued Interest, as calculated
without application of this sentence. For purposes of calculating the amount of
Uncertificated Accrued Interest for the REMIC II Regular Interest for any
Distribution Date, any Prepayment Interest Shortfalls and Relief Act Shortfalls
(to the extent not covered by Compensating Interest) (i) relating to the Loan
Group I Loans for any Distribution Date shall be allocated among REMIC II
Regular Interests LT1, LT2, LT3, LT4 and LT-Y1 and (ii) relating to the Loan
Group II Loans for any Distribution Date shall be allocated among REMIC II
Regular Interests LT5, LT6, LT7, LT8 and LT-Y2, pro rata, based on, and to the
extent of, Uncertificated Accrued Interest, as calculated without application of
this sentence. Uncertificated Interest on REMIC III Regular Interest SB-PO shall
be zero. Uncertificated Interest on the REMIC III Regular Interest SB-IO for
each Distribution Date shall equal Accrued Certificate Interest for the Class SB
Certificates.
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Uncertificated Notional Amount: With respect to REMIC III Regular
Interest SB-IO, the Notional Amount for such Class.
Uncertificated Pass-Through Rate: The Uncertificated REMIC I
Pass-Through Rate or the Uncertificated REMIC II Pass-Through Rate, as
applicable.
Uncertificated Principal Balance: The principal amount of any
Uncertificated Regular Interest outstanding as of any date of determination. The
Uncertificated Principal Balance of each REMIC Regular Interest shall never be
less than zero. With respect to the REMIC III Regular Interest SB-PO the initial
amount set forth with respect thereto in the Preliminary Statement as reduced by
distributions deemed made in respect thereof pursuant to Section 4.02 and
Realized Losses allocated thereto pursuant to Section 4.05.
Uncertificated Regular Interests: The REMIC I Regular Interests and the
REMIC II Regular Interests.
Uncertificated REMIC I Pass-Through Rate: With respect to any
Distribution Date, the REMIC I Regular Interest Y-1 and the REMIC I Regular
Interest Z-1, the weighted average of the Net Mortgage Rates of the Mortgage
Loans in Loan Group I. With respect to any Distribution Date the REMIC I Regular
Interest Y-2 and the REMIC I Regular Interest Z-2, the weighted average of the
Net Mortgage Rates of the Mortgage Loans in Loan Group II.
Uncertificated REMIC II Pass-Through Rate: With respect to any
Distribution Date and (i) REMIC II Regular Interests LT1, LT2 and LT-Y1, the
weighted average of the Net Mortgage Rates of the Mortgage Loans in Loan Group
I, (ii) REMIC II Regular Interests LT5, LT6 and LT-Y2, the weighted average of
the Net Mortgage Rates of the Mortgage Loans in Loan Group II, (iii) REMIC II
Regular Interests LT3 and LT7, zero (0.00%), (iv) REMIC II Regular Interest LT4,
twice the weighted average of the Net Mortgage Rates of the Mortgage Loans in
Loan Group I and (v) REMIC II Regular Interest LT8, twice the weighted average
of the Net Mortgage Rates of the Mortgage Loans in Loan Group II.
Uninsured Cause: Any cause of damage to property subject to a Mortgage
such that the complete restoration of such property is not fully reimbursable by
the hazard insurance policies.
United States Person: A citizen or resident of the United States, a
corporation, partnership or other entity (treated as a corporation or
partnership for United States federal income tax purposes) created or organized
in, or under the laws of, the United States, any state thereof, or the District
of Columbia (except in the case of a partnership, to the extent provided in
Treasury regulations) provided that, for purposes solely of the restrictions on
the transfer of Class R Certificates, no partnership or other entity treated as
a partnership for United States federal income tax purposes shall be treated as
a United States Person unless all persons that own an interest in such
partnership either directly or through any entity that is not a corporation for
United States federal income tax purposes are required by the applicable
operative agreement to be United States Persons, or an estate that is described
in Section 7701(a)(30)(D) of the Code, or a trust that is described in Section
7701(a)(30)(E) of the Code.
Voting Rights: The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. 98.00% of all of the Voting
Rights shall be allocated among Holders of the Class A Certificates, Class M
Certificates and Class B Certificates, in proportion to the outstanding
Certificate Principal Balances of their respective Certificates; 1% of all of
the Voting Rights shall be allocated to the Holders of the Class SB
Certificates, and 0.33%, 0.33% and 0.34% of all of the Voting Rights shall be
allocated to the Holders of the Class R-I Certificates, Class R-II Certificates
and Class R-III Certificates, respectively; in each case to be allocated among
the Certificates of such Class in accordance with their respective Percentage
Interest.
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Section 1.02. Determination of LIBOR.
LIBOR applicable to the calculation of the Pass-Through Rate on the
LIBOR Certificates for any Interest Accrual Period will be determined as of each
LIBOR Rate Adjustment Date. On each LIBOR Rate Adjustment Date, or if such LIBOR
Rate Adjustment Date is not a Business Day, then on the next succeeding Business
Day, LIBOR shall be established by the Trustee and, as to any Interest Accrual
Period, will equal the rate for one month United States dollar deposits that
appears on the Telerate Screen Page 3750 as of 11:00 a.m., London time, on such
LIBOR Rate Adjustment Date. "Telerate Screen Page 3750" means the display
designated as page 3750 on the Bridge Telerate Service (or such other page as
may replace page 3750 on that service for the purpose of displaying London
interbank offered rates of major banks). If such rate does not appear on such
page (or such other page as may replace that page on that service, or if such
service is no longer offered, LIBOR shall be so established by use of such other
service for displaying LIBOR or comparable rates as may be selected by the
Trustee after consultation with the Master Servicer), the rate will be the
Reference Bank Rate. The "Reference Bank Rate" will be determined on the basis
of the rates at which deposits in U.S. Dollars are offered by the reference
banks (which shall be any three major banks that are engaged in transactions in
the London interbank market, selected by the Trustee after consultation with the
Master Servicer) as of 11:00 a.m., London time, on the LIBOR Rate Adjustment
Date to prime banks in the London interbank market for a period of one month in
amounts approximately equal to the aggregate Certificate Principal Balance of
the LIBOR Certificates then outstanding. The Trustee will request the principal
London office of each of the reference banks to provide a quotation of its rate.
If at least two such quotations are provided, the rate will be the arithmetic
mean of the quotations rounded up to the next multiple of 1/16%. If on such date
fewer than two quotations are provided as requested, the rate will be the
arithmetic mean of the rates quoted by one or more major banks in New York City,
selected by the Trustee after consultation with the Master Servicer, as of 11:00
a.m., New York City time, on such date for loans in U.S. Dollars to leading
European banks for a period of one month in amounts approximately equal to the
aggregate Certificate Principal Balance of the LIBOR Certificates then
outstanding. If no such quotations can be obtained, the rate will be LIBOR for
the prior Distribution Date; provided however, if, under the priorities
described above, LIBOR for a Distribution Date would be based on LIBOR for the
previous Distribution Date for the third consecutive Distribution Date, the
Trustee, shall select an alternative comparable index (over which the Trustee
has no control), used for determining one-month Eurodollar lending rates that is
calculated and published (or otherwise made available) by an independent party.
The establishment of LIBOR by the Trustee on any LIBOR Rate Adjustment Date and
the Trustee's subsequent calculation of the Pass-Through Rate applicable to the
LIBOR Certificates for the relevant Interest Accrual Period, in the absence of
manifest error, will be final and binding. Promptly following each LIBOR Rate
Adjustment Date the Trustee shall supply the Master Servicer with the results of
its determination of LIBOR on such date. Furthermore, the Trustee will supply to
any Certificateholder so requesting by calling the Bondholder Inquiry Line at
0-000-000-0000 the Pass-Through Rate on the LIBOR Certificates for the current
and the immediately preceding Interest Accrual Period.
ARTICLE II
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CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of Mortgage Loans.
(a) The Depositor, concurrently with the execution and delivery hereof, does
hereby assign to the Trustee in respect of the Trust Fund without recourse all
the right, title and interest of the Depositor in and to (i) the Mortgage Loans,
including all interest and principal on or with respect to the Mortgage Loans
due on or after the Cut-off Date (other than Monthly Payments due in the month
of the Cut-off Date); and (ii) all proceeds of the foregoing.
(b) In connection with such assignment, and contemporaneously with the delivery
of this Agreement, the Depositor delivered or caused to be delivered hereunder
to the Trustee, the Hedge Agreements (the delivery of which shall evidence that
the fixed payment for the Hedge Agreements have been paid and the Trustee and
the Trust Fund shall have no further payment obligation thereunder and that such
fixed payment has been authorized hereby), and except as set forth in Section
2.01(c) below and subject to Section 2.01(d) below, the Depositor does hereby
deliver to, and deposit with, the Trustee, or to and with one or more
Custodians, as the duly appointed agent or agents of the Trustee for such
purpose, the following documents or instruments (or copies thereof as permitted
by this Section) with respect to each Mortgage Loan so assigned:
(i) The original Mortgage Note, endorsed without recourse to the order of the
Trustee and showing an unbroken chain of endorsements from the originator
thereof to the Person endorsing it to the Trustee, or with respect to any
Destroyed Mortgage Note, an original lost note affidavit from the related Seller
or Residential Funding stating that the original Mortgage Note was lost,
misplaced or destroyed, together with a copy of the related Mortgage Note;
(ii) The original Mortgage, noting the presence of the MIN of the Mortgage Loan
and language indicating that the Mortgage Loan is a MOM Loan if the Mortgage
Loan is a MOM Loan, with evidence of recording indicated thereon or, if the
original Mortgage has not yet been returned from the public recording office, a
copy of the original Mortgage with evidence of recording indicated thereon;
(iii) Unless the Mortgage Loan is registered on the MERS(R) System, the
assignment (which may be included in one or more blanket assignments if
permitted by applicable law) of the Mortgage to the Trustee with evidence of
recording indicated thereon or a copy of such assignment with evidence of
recording indicated thereon;
(iv) The original recorded assignment or assignments of the Mortgage showing an
unbroken chain of title from the originator to the Person assigning it to the
Trustee (or to MERS, if the Mortgage Loan is registered on the MERS(R) System
and noting the presence of a MIN) with evidence of recordation noted thereon or
attached thereto, or a copy of such assignment or assignments of the Mortgage
with evidence of recording indicated thereon; and
(v) The original of each modification, assumption agreement or preferred loan
agreement, if any, relating to such Mortgage Loan, or a copy of each
modification, assumption agreement or preferred loan agreement.
The Depositor may, in lieu of delivering the original of the documents
set forth in Section 2.01(b)(ii), (iii), (iv) and (v) (or copies thereof as
permitted by Section 2.01(b)) to the Trustee or the Custodian or Custodians,
deliver such documents to the Master Servicer, and the Master Servicer shall
hold such documents in trust for the use and benefit of all present and future
Certificateholders until such time as is set forth in the next sentence. Within
thirty Business Days following the earlier of (i) the receipt of the original of
all of the documents or instruments set forth in Section 2.01(b)(ii), (iii),
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(iv) and (v) (or copies thereof as permitted by such Section) for any Mortgage
Loan and (ii) a written request by the Trustee to deliver those documents with
respect to any or all of the Mortgage Loans then being held by the Master
Servicer, the Master Servicer shall deliver a complete set of such documents to
the Trustee or the Custodian or Custodians that are the duly appointed agent or
agents of the Trustee.
The Depositor, the Master Servicer and the Trustee agree that it is not
intended that any mortgage loan be included in the Trust Fund that is (i) a
"High-Cost Home Loan" as defined in the New Jersey Home Ownership Act effective
November 27, 2003, (ii) a "High-Cost Home Loan" as defined in the New Mexico
Home Loan Protection Act effective January 1, 2004 or (iii) a "High Cost Home
Mortgage Loan" as defined in the Massachusetts Predatory Home Practices Act
effective November 7, 2004.
(c) Notwithstanding the provisions of Section 2.01(b), in the event that in
connection with any Mortgage Loan, if the Depositor cannot deliver the original
of the Mortgage, any assignment, modification, assumption agreement or preferred
loan agreement (or copy thereof as permitted by Section 2.01(b)) with evidence
of recording thereon concurrently with the execution and delivery of this
Agreement because of (i) a delay caused by the public recording office where
such Mortgage, assignment, modification, assumption agreement or preferred loan
agreement as the case may be, has been delivered for recordation, or (ii) a
delay in the receipt of certain information necessary to prepare the related
assignments, the Depositor shall deliver or cause to be delivered to the Trustee
or the respective Custodian a copy of such Mortgage, assignment, modification,
assumption agreement or preferred loan agreement.
The Depositor shall promptly cause to be recorded in the appropriate
public office for real property records the Assignment referred to in clause
(iii) of Section 2.01(b), except (a) in states where, in the opinion of counsel
acceptable to the Trustee and the Master Servicer, such recording is not
required to protect the Trustee's interests in the Mortgage Loan or (b) if MERS
is identified on the Mortgage or on a properly recorded assignment of the
Mortgage, as applicable, as the mortgagee of record solely as nominee for
Residential Funding and its successors and assigns. If any Assignment is lost or
returned unrecorded to the Depositor because of any defect therein, the
Depositor shall prepare a substitute Assignment or cure such defect, as the case
may be, and cause such Assignment to be recorded in accordance with this
paragraph. The Depositor shall promptly deliver or cause to be delivered to the
Trustee or the respective Custodian such Mortgage or Assignment, as applicable
(or copy thereof as permitted by Section 2.01(b)), with evidence of recording
indicated thereon upon receipt thereof from the public recording office or from
the related Subservicer or Seller.
If the Depositor delivers to the Trustee or Custodian any Mortgage Note
or Assignment of Mortgage in blank, the Depositor shall, or shall cause the
Custodian to, complete the endorsement of the Mortgage Note and the Assignment
of Mortgage in the name of the Trustee in conjunction with the Interim
Certification issued by the Custodian, as contemplated by Section 2.02.
Any of the items set forth in Sections 2.01(b)(ii), (iii), (iv) and (v)
and that may be delivered as a copy rather than the original may be delivered to
the Trustee or the Custodian.
In connection with the assignment of any Mortgage Loan registered on the
MERS(R) System, the Depositor further agrees that it will cause, at the
Depositor's own expense, within 30 Business Days after the Closing Date, the
MERS(R) System to indicate that such Mortgage Loans have been assigned by the
Depositor to the Trustee in accordance with this Agreement for the benefit of
the Certificateholders by including (or deleting, in the case of Mortgage Loans
which are repurchased in accordance with this Agreement) in such computer files
(a) the code in the field which identifies the specific Trustee and (b) the code
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in the field "Pool Field" which identifies the series of the Certificates issued
in connection with such Mortgage Loans. The Depositor further agrees that it
will not, and will not permit the Master Servicer to, and the Master Servicer
agrees that it will not, alter the codes referenced in this paragraph with
respect to any Mortgage Loan during the term of this Agreement unless and until
such Mortgage Loan is repurchased in accordance with the terms of this
Agreement.
(d) It is intended that the conveyances by the Depositor to the Trustee of the
Mortgage Loans as provided for in this Section 2.01 and the Uncertificated
Regular Interests be construed as a sale by the Depositor to the Trustee of the
Mortgage Loans and the Uncertificated Regular Interests for the benefit of the
Certificateholders. Further, it is not intended that any such conveyance be
deemed to be a pledge of the Mortgage Loans and the Uncertificated Regular
Interests by the Depositor to the Trustee to secure a debt or other obligation
of the Depositor. Nonetheless, (a) this Agreement is intended to be and hereby
is a security agreement within the meaning of Articles 8 and 9 of the New York
Uniform Commercial Code and the Uniform Commercial Code of any other applicable
jurisdiction; (b) the conveyances provided for in this Section 2.01 shall be
deemed to be (1) a grant by the Depositor to the Trustee of a security interest
in all of the Depositor's right (including the power to convey title thereto),
title and interest, whether now owned or hereafter acquired, in and to (A) the
Mortgage Loans, including the related Mortgage Note, the Mortgage, any insurance
policies and all other documents in the related Mortgage File, (B) all amounts
payable pursuant to the Mortgage Loans in accordance with the terms thereof, (C)
any Uncertificated Regular Interests and any and all general intangibles,
payment intangibles, accounts, chattel paper, instruments, documents, money,
deposit accounts, certificates of deposit, goods, letters of credit, advices of
credit and investment property and other property of whatever kind or
description now existing or hereafter acquired consisting of, arising from or
relating to any of the foregoing, and (D) all proceeds of the conversion,
voluntary or involuntary, of the foregoing into cash, instruments, securities or
other property, including without limitation all amounts from time to time held
or invested in the Certificate Account or the Custodial Account, whether in the
form of cash, instruments, securities or other property and (2) an assignment by
the Depositor to the Trustee of any security interest in any and all of
Residential Funding's right (including the power to convey title thereto), title
and interest, whether now owned or hereafter acquired, in and to the property
described in the foregoing clauses (1)(A), (B), (C) and (D) granted by
Residential Funding to the Depositor pursuant to the Assignment Agreement; (c)
the possession by the Trustee, the Custodian or any other agent of the Trustee
of Mortgage Notes or such other items of property as constitute instruments,
money, payment intangibles, negotiable documents, goods, deposit accounts,
letters of credit, advices of credit, investment property, certificated
securities or chattel paper shall be deemed to be "possession by the secured
party," or possession by a purchaser or a person designated by such secured
party, for purposes of perfecting the security interest pursuant to the
Minnesota Uniform Commercial Code and the Uniform Commercial Code of any other
applicable jurisdiction as in effect (including, without limitation, Sections
8-106, 9-313 and 9-106 thereof); and (d) notifications to persons holding such
property, and acknowledgments, receipts or confirmations from persons holding
such property, shall be deemed notifications to, or acknowledgments, receipts or
confirmations from, securities intermediaries, bailees or agents of, or persons
holding for, (as applicable) the Trustee for the purpose of perfecting such
security interest under applicable law.
The Depositor and, at the Depositor's direction, Residential Funding and
the Trustee shall, to the extent consistent with this Agreement, take such
reasonable actions as may be necessary to ensure that, if this Agreement were
deemed to create a security interest in the Mortgage Loans and the
Uncertificated Regular Interests and the other property described above, such
security interest would be deemed to be a perfected security interest of first
priority under applicable law and will be maintained as such throughout the term
of this Agreement. Without limiting the generality of the foregoing, the
Depositor shall prepare and deliver to the Trustee not less than 15 days prior
to any filing date and, the Trustee shall forward for filing, or shall cause to
be forwarded for filing, at the expense of the Depositor, all filings necessary
to maintain the effectiveness of any original filings necessary under the
Uniform Commercial Code as in effect in any jurisdiction to perfect the
Trustee's security interest in or lien on the Mortgage Loans and the
Uncertificated Regular Interests, as evidenced by an Officers Certificate of the
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Depositor, including without limitation (x) continuation statements, and (y)
such other statements as may be occasioned by (1) any change of name of
Residential Funding, the Depositor or the Trustee (such preparation and filing
shall be at the expense of the Trustee, if occasioned by a change in the
Trustee's name), (2) any change of location of the place of business or the
chief executive office of Residential Funding or the Depositor, (3) any transfer
of any interest of Residential Funding or the Depositor in any Mortgage Loan or
(4) any transfer of any interest of Residential Funding or the Depositor in any
Uncertificated Regular Interests.
Section 2.02. Acceptance by Trustee.
---------------------
The Trustee acknowledges receipt (or, with respect to Mortgage Loans
subject to a Custodial Agreement, and based solely upon a receipt or
certification executed by the Custodian, receipt by the respective Custodian as
the duly appointed agent of the Trustee) of the documents referred to in Section
2.01(b)(i) above (except that for purposes of such acknowledgement only, a
Mortgage Note may be endorsed in blank and an Assignment of Mortgage may be in
blank) and declares that it, or a Custodian as its agent, holds and will hold
such documents and the other documents constituting a part of the Mortgage Files
delivered to it, or a Custodian as its agent, in trust for the use and benefit
of all present and future Certificateholders. The Trustee or Custodian (such
Custodian being so obligated under a Custodial Agreement) agrees, for the
benefit of Certificateholders, to review each Mortgage File delivered to it
pursuant to Section 2.01(b) within 90 days after the Closing Date to ascertain
that all required documents (specifically as set forth in Section 2.01(b)), have
been executed and received, and that such documents relate to the Mortgage Loans
identified on the Mortgage Loan Schedule, as supplemented, that have been
conveyed to it, and to deliver to the Trustee a certificate (the "Interim
Certification") to the effect that all documents required to be delivered
pursuant to Section 2.01(b) above have been executed and received and that such
documents relate to the Mortgage Loans identified on the Mortgage Loan Schedule,
except for any exceptions listed on Schedule A attached to such Interim
Certification. Upon delivery of the Mortgage Files by the Depositor or the
Master Servicer, the Trustee shall acknowledge receipt (or, with respect to
Mortgage Loans subject to a Custodial Agreement, and based solely upon a receipt
or certification executed by the Custodian, receipt by the respective Custodian
as the duly appointed agent of the Trustee) of the documents referred to in
Section 2.01(b) above.
If the Custodian, as the Trustee's agent, finds any document or
documents constituting a part of a Mortgage File to be missing or defective,
upon receipt of notification from the Custodian as specified in the succeeding
sentence, the Trustee shall promptly so notify or cause the Custodian to notify
the Master Servicer and the Depositor. Pursuant to Section 2.03 of the Custodial
Agreement, the Custodian will notify the Master Servicer, the Depositor and the
Trustee of any such omission or defect found by it in respect of any Mortgage
File held by it in respect of the items received by it pursuant to the Custodial
Agreement. If such omission or defect materially and adversely affects the
interests in the related Mortgage Loan of the Certificateholders, the Master
Servicer shall promptly notify the related Subservicer or Seller of such
omission or defect and request that such Subservicer or Seller correct or cure
such omission or defect within 60 days from the date the Master Servicer was
notified of such omission or defect and, if such Subservicer or Seller does not
correct or cure such omission or defect within such period, that such
Subservicer or Seller purchase such Mortgage Loan from the Trust Fund at its
Purchase Price, in either case within 90 days from the date the Master Servicer
was notified of such omission or defect; provided that if the omission or defect
would cause the Mortgage Loan to be other than a "qualified mortgage" as defined
in Section 860G(a)(3) of the Code, any such cure or repurchase must occur within
90 days from the date such breach was discovered. The Purchase Price for any
such Mortgage Loan shall be deposited or caused to be deposited by the Master
Servicer in the Custodial Account maintained by it pursuant to Section 3.07 and,
upon receipt by the Trustee of written notification of such deposit signed by a
Servicing Officer, the Trustee or any Custodian, as the case may be, shall
release to the Master Servicer the related Mortgage File and the Trustee shall
execute and deliver such instruments of transfer or assignment prepared by the
Master Servicer, in each case without recourse, as shall be necessary to vest in
the Subservicer or Seller or its designee, as the case may be, any Mortgage Loan
released pursuant hereto and thereafter such Mortgage Loan shall not be part of
the Trust Fund. In furtherance of the foregoing and Section 2.04, if the
Subservicer or Seller or Residential Funding that repurchases the Mortgage Loan
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is not a member of MERS and the Mortgage is registered on the MERS(R) System,
the Master Servicer, at its own expense and without any right of reimbursement,
shall cause MERS to execute and deliver an assignment of the Mortgage in
recordable form to transfer the Mortgage from MERS to such Subservicer or Seller
or Residential Funding and shall cause such Mortgage to be removed from
registration on the MERS(R) System in accordance with MERS' rules and
regulations. It is understood and agreed that the obligation of the Subservicer
or Seller, to so cure or purchase any Mortgage Loan as to which a material and
adverse defect in or omission of a constituent document exists shall constitute
the sole remedy respecting such defect or omission available to
Certificateholders or the Trustee on behalf of Certificateholders.
Section 2.03. Representations, Warranties and Covenants of the Master Servicer
and the Depositor.
(a) The Master Servicer hereby represents and warrants to the Trustee for the
benefit of the Certificateholders that:
(i) The Master Servicer is a corporation duly organized, validly existing and in
good standing under the laws governing its creation and existence and is or will
be in compliance with the laws of each state in which any Mortgaged Property is
located to the extent necessary to ensure the enforceability of each Mortgage
Loan in accordance with the terms of this Agreement;
(ii) The execution and delivery of this Agreement by the Master Servicer and its
performance and compliance with the terms of this Agreement will not violate the
Master Servicer's Certificate of Incorporation or Bylaws or constitute a
material default (or an event which, with notice or lapse of time, or both,
would constitute a material default) under, or result in the material breach of,
any material contract, agreement or other instrument to which the Master
Servicer is a party or which may be applicable to the Master Servicer or any of
its assets;
(iii) This Agreement, assuming due authorization, execution and delivery by the
Trustee and the Depositor, constitutes a valid, legal and binding obligation of
the Master Servicer, enforceable against it in accordance with the terms hereof
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
other laws affecting the enforcement of creditors' rights generally and to
general principles of equity, regardless of whether such enforcement is
considered in a proceeding in equity or at law;
(iv) The Master Servicer is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or governmental agency, which default might have consequences that would
materially and adversely affect the condition (financial or other) or operations
of the Master Servicer or its properties or might have consequences that would
materially adversely affect its performance hereunder;
(v) No litigation is pending or, to the best of the Master Servicer's knowledge,
threatened against the Master Servicer which would prohibit its entering into
this Agreement or performing its obligations under this Agreement;
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(vi) The Master Servicer will comply in all material respects in the performance
of this Agreement with all reasonable rules and requirements of each insurer
under each Required Insurance Policy;
(vii) No information, certificate of an officer, statement furnished in writing
or report delivered to the Depositor, any Affiliate of the Depositor or the
Trustee by the Master Servicer will, to the knowledge of the Master Servicer,
contain any untrue statement of a material fact or omit a material fact
necessary to make the information, certificate, statement or report not
misleading;
(viii) The Master Servicer has examined each existing, and will examine each
new, Subservicing Agreement and is or will be familiar with the terms thereof.
The terms of each existing Subservicing Agreement and each designated
Subservicer are acceptable to the Master Servicer and any new Subservicing
Agreements will comply with the provisions of Section 3.02;
(ix) The Master Servicer is a member of MERS in good standing, and will comply
in all material respects with the rules and procedures of MERS in connection
with the servicing of the Mortgage Loans that are registered with MERS; and
(x) The Servicing Guide of the Master Servicer requires that the Subservicer for
each Mortgage Loan accurately and fully reports its borrower credit files to
each of the Credit Repositories in a timely manner.
It is understood and agreed that the representations and warranties set forth in
this Section 2.03(a) shall survive delivery of the respective Mortgage Files to
the Trustee or any Custodian. Upon discovery by either the Depositor, the Master
Servicer, the Trustee or any Custodian of a breach of any representation or
warranty set forth in this Section 2.03(a) which materially and adversely
affects the interests of the Certificateholders in any Mortgage Loan, the party
discovering such breach shall give prompt written notice to the other parties
(any Custodian being so obligated under a Custodial Agreement). Within 90 days
of its discovery or its receipt of notice of such breach, the Master Servicer
shall either (i) cure such breach in all material respects or (ii) to the extent
that such breach is with respect to a Mortgage Loan or a related document,
purchase such Mortgage Loan from the Trust Fund at the Purchase Price and in the
manner set forth in Section 2.02; provided that if the breach would cause the
Mortgage Loan to be other than a "qualified mortgage" as defined in Section
860G(a)(3) of the Code, any such cure or repurchase must occur within 90 days
from the date such breach was discovered. The obligation of the Master Servicer
to cure such breach or to so purchase such Mortgage Loan shall constitute the
sole remedy in respect of a breach of a representation and warranty set forth in
this Section 2.03(a) available to the Certificateholders or the Trustee on
behalf of the Certificateholders.
(b) The Depositor hereby represents and warrants to the Trustee for the benefit
of the Certificateholders that as of the Closing Date (or, if otherwise
specified below, as of the date so specified): (i) immediately prior to the
conveyance of the Mortgage Loans to the Trustee, the Depositor had good title
to, and was the sole owner of, each Mortgage Loan free and clear of any pledge,
lien, encumbrance or security interest (other than rights to servicing and
related compensation) and such conveyance validly transfers ownership of the
Mortgage Loans to the Trustee free and clear of any pledge, lien, encumbrance or
security interest; and (ii) each Mortgage Loan constitutes a qualified mortgage
under Section 860G(a)(3)(A) of the Code and Treasury Regulations Section
1.860G-2(a)(1).
It is understood and agreed that the representations and warranties set
forth in this Section 2.03(b) shall survive delivery of the respective Mortgage
Files to the Trustee or any Custodian.
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Upon discovery by any of the Depositor, the Master Servicer, the Trustee
or any Custodian of a breach of any of the representations and warranties set
forth in this Section 2.03(b) which materially and adversely affects the
interests of the Certificateholders in any Mortgage Loan, the party discovering
such breach shall give prompt written notice to the other parties(any Custodian
being so obligated under a Custodial Agreement); provided, however, that in the
event of a breach of the representation and warranty set forth in Section
2.03(b)(ii), the party discovering such breach shall give such notice within
five days of discovery. Within 90 days of its discovery or its receipt of notice
of breach, the Depositor shall either (i) cure such breach in all material
respects or (ii) purchase such Mortgage Loan from the Trust Fund at the Purchase
Price and in the manner set forth in Section 2.02; provided that the Depositor
shall have the option to substitute a Qualified Substitute Mortgage Loan or
Loans for such Mortgage Loan if such substitution occurs within two years
following the Closing Date; provided that if the omission or defect would cause
the Mortgage Loan to be other than a "qualified mortgage" as defined in Section
860G(a)(3) of the Code, any such cure, substitution or repurchase must occur
within 90 days from the date such breach was discovered. Any such substitution
shall be effected by the Depositor under the same terms and conditions as
provided in Section 2.04 for substitutions by Residential Funding. It is
understood and agreed that the obligation of the Depositor to cure such breach
or to so purchase or substitute for any Mortgage Loan as to which such a breach
has occurred and is continuing shall constitute the sole remedy respecting such
breach available to the Certificateholders or the Trustee on behalf of the
Certificateholders. Notwithstanding the foregoing, the Depositor shall not be
required to cure breaches or purchase or substitute for Mortgage Loans as
provided in this Section 2.03(b) if the substance of the breach of a
representation set forth above also constitutes fraud in the origination of the
Mortgage Loan.
Section 2.04. Representations and Warranties of Sellers.
-----------------------------------------
The Depositor, as assignee of Residential Funding under the Assignment
Agreement, hereby assigns to the Trustee for the benefit of the
Certificateholders all of its right, title and interest in respect of the
Assignment Agreement and each Seller's Agreement applicable to a Mortgage Loan
as and to the extent set forth in the Assignment Agreement. Insofar as the
Assignment Agreement or such Seller's Agreement relates to the representations
and warranties made by Residential Funding or the related Seller in respect of
such Mortgage Loan and any remedies provided thereunder for any breach of such
representations and warranties, such right, title and interest may be enforced
by the Master Servicer on behalf of the Trustee and the Certificateholders. Upon
the discovery by the Depositor, the Master Servicer, the Trustee or any
Custodian of a breach of any of the representations and warranties made in a
Seller's Agreement or the Assignment Agreement in respect of any Mortgage Loan
or of any Repurchase Event which materially and adversely affects the interests
of the Certificateholders in such Mortgage Loan, the party discovering such
breach shall give prompt written notice to the other parties(any Custodian being
so obligated under a Custodial Agreement). The Master Servicer shall promptly
notify the related Seller and Residential Funding of such breach or Repurchase
Event and request that such Seller or Residential Funding either (i) cure such
breach or Repurchase Event in all material respects within 90 days from the date
the Master Servicer was notified of such breach or Repurchase Event or (ii)
purchase such Mortgage Loan from the Trust Fund at the Purchase Price and in the
manner set forth in Section 2.02.
Upon the discovery by the Depositor, the Master Servicer, the Trustee,
or any Custodian of a breach of any of such representations and warranties set
forth in the Assignment Agreement in respect of any Mortgage Loan which
materially and adversely affects the interests of the Certificateholders in such
Mortgage Loan, the party discovering such breach shall give prompt written
notice to the other parties (any Custodian being so obligated under a Custodial
Agreement) at the same time as notice is given pursuant to the preceding
paragraph of any corresponding breach of representation or warranty made in
Seller's Agreement. The Master Servicer shall promptly notify Residential
Funding of such breach of a representation or warranty set forth in the
Assignment Agreement and request that Residential Funding either (i) cure such
breach in all material respects within 90 days from the date the Master Servicer
was notified of such breach or (ii) purchase such Mortgage Loan from the Trust
Fund within 90 days of the date of such written notice of such breach at the
Purchase Price and in the manner set forth in Section 2.02, but only if the
Mortgage Loan has not been purchased by the Seller due to a breach of
representation and warranty of the related Seller's Agreement as set forth in
the preceding paragraph; provided that Residential Funding shall have the option
to substitute a Qualified Substitute Mortgage Loan or Loans for such Mortgage
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Loan if such substitution occurs within two years following the Closing Date;
provided that if the breach would cause the Mortgage Loan to be other than a
"qualified mortgage" as defined in Section 860G(a)(3) of the Code, any such cure
or substitution must occur within 90 days from the date the breach was
discovered. If the breach of representation and warranty that gave rise to the
obligation to repurchase or substitute a Mortgage Loan pursuant to Section 4 of
the Assignment Agreement was the representation and warranty set forth in clause
(xlvii) of Section 4 thereof, then the Master Servicer shall request that
Residential Funding pay to the Trust Fund, concurrently with and in addition to
the remedies provided in the preceding sentence, an amount equal to any
liability, penalty or expense that was actually incurred and paid out of or on
behalf of the Trust Fund, and that directly resulted from such breach, or if
incurred and paid by the Trust Fund thereafter, concurrently with such payment.
In the event that Residential Funding elects to substitute a Qualified
Substitute Mortgage Loan or Loans for a Deleted Mortgage Loan pursuant to this
Section 2.04, Residential Funding shall deliver to the Trustee for the benefit
of the Certificateholders with respect to such Qualified Substitute Mortgage
Loan or Loans, the original Mortgage Note, the Mortgage, an Assignment of the
Mortgage in recordable form, and such other documents and agreements as are
required by Section 2.01, with the Mortgage Note endorsed as required by Section
2.01. No substitution will be made in any calendar month after the Determination
Date for such month. Monthly Payments due with respect to Qualified Substitute
Mortgage Loans in the month of substitution shall not be part of the Trust Fund
and will be retained by the Master Servicer and remitted by the Master Servicer
to Residential Funding on the next succeeding Distribution Date. For the month
of substitution, distributions to the Certificateholders will include the
Monthly Payment due on a Deleted Mortgage Loan for such month and thereafter
Residential Funding shall be entitled to retain all amounts received in respect
of such Deleted Mortgage Loan. The Master Servicer shall amend or cause to be
amended the Mortgage Loan Schedule for the benefit of the Certificateholders to
reflect the removal of such Deleted Mortgage Loan and the substitution of the
Qualified Substitute Mortgage Loan or Loans and the Master Servicer shall
deliver the amended Mortgage Loan Schedule to the Trustee. Upon such
substitution, the Qualified Substitute Mortgage Loan or Loans shall be subject
to the terms of this Agreement and the related Subservicing Agreement in all
respects, the related Seller shall be deemed to have made the representations
and warranties with respect to the Qualified Substitute Mortgage Loan made in
the related Seller Agreements as of the date of substitution, Residential
Funding shall be deemed to have made the representations and warranties with
respect to the Qualified Substitute Mortgage Loan (other than those of a
statistical nature) contained in the Assignment Agreement as of the date of
substitution, and the covenants, representations and warranties set forth in
this Section 2.04, and in Section 2.03(b) hereof.
In connection with the substitution of one or more Qualified Substitute
Mortgage Loans for one or more Deleted Mortgage Loans, the Master Servicer will
determine the amount (if any) by which the aggregate principal balance of all
such Qualified Substitute Mortgage Loans as of the date of substitution is less
than the aggregate Stated Principal Balance of all such Deleted Mortgage Loans
(in each case after application of the principal portion of the Monthly Payments
due in the month of substitution that are to be distributed to the
Certificateholders in the month of substitution). Residential Funding shall
deposit or cause the related Seller to deposit the amount of such shortfall into
the Custodial Account on the day of substitution, without any reimbursement
therefor. Residential Funding shall give notice in writing to the Trustee of
such event, which notice shall be accompanied by an Officers' Certificate as to
the calculation of such shortfall and (subject to Section 10.01(f) by an Opinion
of Counsel to the effect that such substitution will not cause (a) any federal
tax to be imposed on the Trust Fund, including without limitation, any federal
tax imposed on "prohibited transactions" under Section 860F(a)(1) of the Code or
on "contributions after the startup date" under Section 860G(d)(1) of the Code
or (b) any portion of any REMIC created hereunder to fail to qualify as a REMIC
at any time that any Certificate is outstanding.
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It is understood and agreed that the obligation of the Seller or
Residential Funding, as the case may be, to cure such breach or purchase (and in
the case of Residential Funding to substitute for) such Mortgage Loan as to
which such a breach has occurred and is continuing and to make any additional
payments required under the Assignment Agreement in connection with a breach of
the representation and warranty in clause (xlvii) of Section 4 thereof shall
constitute the sole remedy respecting such breach available to the
Certificateholders or the Trustee on behalf of the Certificateholders. If the
Master Servicer is Residential Funding, then the Trustee shall also have the
right to give the notification and require the purchase or substitution provided
for in the second preceding paragraph in the event of such a breach of a
representation or warranty made by Residential Funding in the Assignment
Agreement. In connection with the purchase of or substitution for any such
Mortgage Loan by Residential Funding, the Trustee shall assign to Residential
Funding all of the right, title and interest in respect of the Seller's
Agreement and the Assignment Agreement applicable to such Mortgage Loan.
Section 2.05. Execution and Authentication of Certificates; Conveyance of
Uncertificated REMIC Regular Interests.
(a) The Trustee acknowledges the assignment to it of the Mortgage Loans and the
delivery of the Mortgage Files to it, or any Custodian on its behalf, subject to
any exceptions noted, together with the assignment to it of all other assets
included in the Trust Fund, receipt of which is hereby acknowledged.
Concurrently with such delivery and in exchange therefor, the Trustee, pursuant
to the written request of the Depositor executed by an officer of the Depositor,
has executed and caused to be authenticated and delivered to or upon the order
of the Depositor the Certificates in authorized denominations which evidence
ownership of the entire Trust Fund.
(b) The Depositor, concurrently with the execution and delivery hereof, does
hereby transfer, assign, set over and otherwise convey in trust to the Trustee
without recourse all the right, title and interest of the Depositor in and to
the REMIC I Regular Interests and the REMIC II Regular Interests for the benefit
of the holders of the Regular Certificates and the Class R-III certificates. The
Trustee acknowledges receipt of the REMIC I Regular Interests and the REMIC II
Regular Interests (each of which are uncertificated) and declares that it holds
and will hold the same in trust for the exclusive use and benefit of the holders
of the Regular Certificates and the Class R-III Certificates. The interests
evidenced by the Class R-III Certificate, together with the Regular
Certificates, constitute the entire beneficial ownership interest in REMIC III.
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Section 2.06. Purposes and Powers of the Trust.
The purpose of the trust, as created hereunder, is to engage in the
following activities:
(a) to sell the Certificates to the Depositor in exchange for the
Mortgage Loans;
(b) to enter into and perform its obligations under this Agreement;
(c) to engage in those activities that are necessary, suitable or
convenient to accomplish the foregoing or are incidental thereto or connected
therewith; and
(d) subject to compliance with this Agreement, to engage in such other
activities as may be required in connection with conservation of the Trust Fund
and the making of distributions to the Certificateholders.
The trust is hereby authorized to engage in the foregoing activities.
Notwithstanding the provisions of Section 11.01, the trust shall not engage in
any activity other than in connection with the foregoing or other than as
required or authorized by the terms of this Agreement while any Certificate is
outstanding, and this Section 2.06 may not be amended, without the consent of
the Certificateholders evidencing a majority of the aggregate Voting Rights of
the Certificates.
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ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01. Master Servicer to Act as Servicer.
(a) The Master Servicer shall service and administer the Mortgage Loans in
accordance with the terms of this Agreement and the respective Mortgage Loans,
following such procedures as it would employ in its good faith business judgment
and which are normal and usual in its general mortgage servicing activities, and
shall have full power and authority, acting alone or through Subservicers as
provided in Section 3.02, to do any and all things which it may deem necessary
or desirable in connection with such servicing and administration. Without
limiting the generality of the foregoing, the Master Servicer in its own name or
in the name of a Subservicer is hereby authorized and empowered by the Trustee
when the Master Servicer or the Subservicer, as the case may be, believes it
appropriate in its best judgment, to execute and deliver, on behalf of the
Certificateholders and the Trustee or any of them, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge, or of
consent to assumption or modification in connection with a proposed conveyance,
or of assignment of any Mortgage and Mortgage Note in connection with the
repurchase of a Mortgage Loan and all other comparable instruments, or with
respect to the modification or re-recording of a Mortgage for the purpose of
correcting the Mortgage, the subordination of the lien of the Mortgage in favor
of a public utility company or government agency or unit with powers of eminent
domain, the taking of a deed in lieu of foreclosure, the completion of judicial
or non-judicial foreclosure, the conveyance of a Mortgaged Property to the
related insurer, the acquisition of any property acquired by foreclosure or deed
in lieu of foreclosure, or the management, marketing and conveyance of any
property acquired by foreclosure or deed in lieu of foreclosure with respect to
the Mortgage Loans and with respect to the Mortgaged Properties. The Master
Servicer further is authorized and empowered by the Trustee, on behalf of the
Certificateholders and the Trustee, in its own name or in the name of the
Subservicer, when the Master Servicer or the Subservicer, as the case may be,
believes it is appropriate in its best judgment to register any Mortgage Loan on
the MERS(R) System, or cause the removal from the registration of any Mortgage
Loan on the MERS(R) System, to execute and deliver, on behalf of the Trustee and
the Certificateholders or any of them, any and all instruments of assignment and
other comparable instruments with respect to such assignment or re-recording of
a Mortgage in the name of MERS, solely as nominee for the Trustee and its
successors and assigns. Any expenses incurred in connection with the actions
described in the preceding sentence shall be borne by the Master Servicer in
accordance with Section 3.16(c), with no right of reimbursement; provided, that
if, as a result of MERS discontinuing or becoming unable to continue operations
in connection with the MERS(R) System, it becomes necessary to remove any
Mortgage Loan from registration on the MERS(R) System and to arrange for the
assignment of the related Mortgages to the Trustee, then any related expenses
shall be reimbursable to the Master Servicer as set forth in Section
3.10(a)(ii). Notwithstanding the foregoing, subject to Section 3.07(a), the
Master Servicer shall not permit any modification with respect to any Mortgage
Loan that would both constitute a sale or exchange of such Mortgage Loan within
the meaning of Section 1001 of the Code and any proposed, temporary or final
regulations promulgated thereunder (other than in connection with a proposed
conveyance or assumption of such Mortgage Loan that is treated as a Principal
Prepayment in Full pursuant to Section 3.13(d) hereof) and cause any REMIC
created hereunder to fail to qualify as a REMIC under the Code. The Trustee
shall furnish the Master Servicer with any powers of attorney and other
documents necessary or appropriate to enable the Master Servicer to service and
administer the Mortgage Loans. The Trustee shall not be liable for any action
taken by the Master Servicer or any Subservicer pursuant to such powers of
attorney or other documents. In servicing and administering any Nonsubserviced
Mortgage Loan, the Master Servicer shall, to the extent not inconsistent with
this Agreement, comply with the Program Guide as if it were the originator of
such Mortgage Loan and had retained the servicing rights and obligations in
respect thereof.
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If the Mortgage relating to a Mortgage Loan did not have a lien senior
to the Mortgage Loan on the related Mortgaged Property as of the Cut-off Date,
then the Master Servicer, in such capacity, may not consent to the placing of a
lien senior to that of the Mortgage on the related Mortgaged Property. If the
Mortgage relating to a Mortgage Loan had a lien senior to the Mortgage Loan on
the related Mortgaged Property as of the Cut-off Date, then the Master Servicer,
in such capacity, may consent to the refinancing of the prior senior lien,
provided that the following requirements are met:
(i) (A) the Mortgagor's debt-to-income ratio resulting from such
refinancing is less than the original debt-to-income ratio as set forth on the
Mortgage Loan Schedule; provided, however, that in no instance shall the
resulting Combined Loan-to-Value Ratio ("Combined Loan-to-Value Ratio") of such
Mortgage Loan be higher than that permitted by the Program Guide; or
(B) the resulting Combined Loan-to-Value Ratio of such
Mortgage
Loan is no higher than the Combined Loan-to-Value Ratio prior to such
refinancing; provided, however, if such refinanced mortgage loan is a "rate and
term" mortgage loan (meaning, the Mortgagor does not receive any cash from the
refinancing), the Combined Loan-to-Value Ratio may increase to the extent of
either (x) the reasonable closing costs of such refinancing or (y) any decrease
in the value of the related Mortgaged Property, if the Mortgagor is in good
standing as defined by the Program Guide;
(ii) the interest rate, or, in the case of an adjustable rate
existing senior lien, the maximum interest rate, for the loan evidencing the
refinanced senior lien is no more than 2.0% higher than the interest rate or the
maximum interest rate, as the case may be, on the loan evidencing the existing
senior lien immediately prior to the date of such refinancing; provided, however
(A) if the loan evidencing the existing senior lien prior to the date of
refinancing has an adjustable rate and the loan evidencing the refinanced senior
lien has a fixed rate, then the current interest rate on the loan evidencing the
refinanced senior lien may be up to 2.0% higher than the then-current loan rate
of the loan evidencing the existing senior lien and (B) if the loan evidencing
the existing senior lien prior to the date of refinancing has a fixed rate and
the loan evidencing the refinanced senior lien has an adjustable rate, then the
maximum interest rate on the loan evidencing the refinanced senior lien shall be
less than or equal to (x) the interest rate on the loan evidencing the existing
senior lien prior to the date of refinancing plus (y) 2.0%; and
(iii) the loan evidencing the refinanced senior lien is not
subject to negative amortization.
(b) The Master Servicer shall, to the extent consistent with the servicing
standards set forth herein, take whatever actions as may be necessary to file a
claim under or enforce or allow the Trustee to file a claim under or enforce any
title insurance policy with respect to any Mortgage Loan including, without
limitation, joining in or causing any Seller or Subservicer (or any other party
in possession of any title insurance policy) to join in any claims process,
negotiations, actions or proceedings necessary to make a claim under or enforce
any title insurance policy. Notwithstanding anything in this Agreement to the
contrary, the Master Servicer shall not (unless the Mortgagor is in default with
respect to the Mortgage Loan or such default is, in the judgment of the Master
Servicer, reasonably foreseeable) make or permit any modification, waiver, or
amendment of any term of any Mortgage Loan that would both (i) effect an
exchange or reissuance of such Mortgage Loan under Section 1001 of the Code (or
final, temporary or proposed Treasury regulations promulgated thereunder) (other
than in connection with a proposed conveyance or assumption of such Mortgage
Loan that is treated as a Principal Prepayment in Full pursuant to Section
3.13(d) hereof) and (ii) cause any REMIC formed hereunder to fail to qualify as
a REMIC under the Code or the imposition of any tax on "prohibited transactions"
or "contributions" after the startup date under the REMIC Provisions.
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(c) In connection with servicing and administering the Mortgage Loans, the
Master Servicer and any Affiliate of the Master Servicer (i) may perform
services such as appraisals and brokerage services that are customarily provided
by Persons other than servicers of mortgage loans, and shall be entitled to
reasonable compensation therefor in accordance with Section 3.10 and (ii) may,
at its own discretion and on behalf of the Trustee, obtain credit information in
the form of a "credit score" from a credit repository.
(d) All costs incurred by the Master Servicer or by Subservicers in effecting
the timely payment of taxes and assessments on the properties subject to the
Mortgage Loans shall not, for the purpose of calculating monthly distributions
to the Certificateholders, be added to the amount owing under the related
Mortgage Loans, notwithstanding that the terms of such Mortgage Loan so permit,
and such costs shall be recoverable to the extent permitted by Section
3.10(a)(ii).
(e) The Master Servicer may enter into one or more agreements in connection with
the offering of pass-through certificates evidencing interests in one or more of
the Certificates providing for the payment by the Master Servicer of amounts
received by the Master Servicer as servicing compensation hereunder and required
to cover certain Prepayment Interest Shortfalls on the Mortgage Loans, which
payment obligation will thereafter be an obligation of the Master Servicer
hereunder.
(f) The relationship of the Master Servicer (and of any successor to the Master
Servicer) to the Depositor under this Agreement is intended by the parties to be
that of an independent contractor and not that of a joint venturer, partner or
agent.
(g) The Master Servicer shall comply with the terms of Section 9 of the
Assignment Agreement.
Section 3.02. Subservicing Agreements Between Master Servicer and
Subservicers; Enforcement of Subservicers' Obligations.
(a) The Master Servicer may continue in effect Subservicing Agreements entered
into by Residential Funding and Subservicers prior to the execution and delivery
of this Agreement, and may enter into new Subservicing Agreements with
Subservicers, for the servicing and administration of all or some of the
Mortgage Loans. Each Subservicer shall be either (i) an institution the accounts
of which are insured by the FDIC or (ii) another entity that engages in the
business of originating or servicing mortgage loans, and in either case shall be
authorized to transact business in the state or states in which the related
Mortgaged Properties it is to service are situated, if and to the extent
required by applicable law to enable the Subservicer to perform its obligations
hereunder and under the Subservicing Agreement, and in either case shall be a
Xxxxxxx Mac, Xxxxxx Xxx or HUD approved mortgage servicer. Each Subservicer of a
Mortgage Loan shall be entitled to receive and retain, as provided in the
related Subservicing Agreement and in Section 3.07, the related Subservicing Fee
from payments of interest received on such Mortgage Loan after payment of all
amounts required to be remitted to the Master Servicer in respect of such
Mortgage Loan. For any Mortgage Loan that is a Nonsubserviced Mortgage Loan, the
Master Servicer shall be entitled to receive and retain an amount equal to the
Subservicing Fee from payments of interest. Unless the context otherwise
requires, references in this Agreement to actions taken or to be taken by the
Master Servicer in servicing the Mortgage Loans include actions taken or to be
taken by a Subservicer on behalf of the Master Servicer. Each Subservicing
Agreement will be upon such terms and conditions as are generally required by,
permitted by or consistent with the Program Guide and are not inconsistent with
this Agreement and as the Master Servicer and the Subservicer have agreed. With
the approval of the Master Servicer, a Subservicer may delegate its servicing
obligations to third-party servicers, but such Subservicer will remain obligated
under the related Subservicing Agreement. The Master Servicer and a Subservicer
may enter into amendments thereto or a different form of Subservicing Agreement,
and the form referred to or included in the Program Guide is merely provided for
information and shall not be deemed to limit in any respect the discretion of
the Master Servicer to modify or enter into different Subservicing Agreements;
provided, however, that any such amendments or different forms shall be
69
consistent with and not violate the provisions of either this Agreement or the
Program Guide in a manner which would materially and adversely affect the
interests of the Certificateholders. The Program Guide and any other
Subservicing Agreement entered into between the Master Servicer and any
Subservicer shall require the Subservicer to accurately and fully report its
borrower credit files to each of the Credit Repositories in a timely manner.
(b) As part of its servicing activities hereunder, the Master Servicer, for the
benefit of the Trustee and the Certificateholders, shall use its best reasonable
efforts to enforce the obligations of each Subservicer under the related
Subservicing Agreement and of each Seller under the related Seller's Agreement,
to the extent that the non-performance of any such obligation would have a
material and adverse effect on a Mortgage Loan, including, without limitation,
the obligation to purchase a Mortgage Loan on account of defective
documentation, as described in Section 2.02, or on account of a breach of a
representation or warranty, as described in Section 2.04. Such enforcement,
including, without limitation, the legal prosecution of claims, termination of
Subservicing Agreements or Seller's Agreements, as appropriate, and the pursuit
of other appropriate remedies, shall be in such form and carried out to such an
extent and at such time as the Master Servicer would employ in its good faith
business judgment and which are normal and usual in its general mortgage
servicing activities. The Master Servicer shall pay the costs of such
enforcement at its own expense, and shall be reimbursed therefor only (i) from a
general recovery resulting from such enforcement to the extent, if any, that
such recovery exceeds all amounts due in respect of the related Mortgage Loan or
(ii) from a specific recovery of costs, expenses or attorneys fees against the
party against whom such enforcement is directed. For purposes of clarification
only, the parties agree that the foregoing is not intended to, and does not,
limit the ability of the Master Servicer to be reimbursed for expenses that are
incurred in connection with the enforcement of a Seller's obligations and are
reimbursable pursuant to Section 3.10(a)(vii).
Section 3.03. Successor Subservicers.
----------------------
The Master Servicer shall be entitled to terminate any Subservicing
Agreement that may exist in accordance with the terms and conditions of such
Subservicing Agreement and without any limitation by virtue of this Agreement;
provided, however, that in the event of termination of any Subservicing
Agreement by the Master Servicer or the Subservicer, the Master Servicer shall
either act as servicer of the related Mortgage Loan or enter into a Subservicing
Agreement with a successor Subservicer which will be bound by the terms of the
related Subservicing Agreement. If the Master Servicer or any Affiliate of
Residential Funding acts as servicer, it will not assume liability for the
representations and warranties of the Subservicer which it replaces. If the
Master Servicer enters into a Subservicing Agreement with a successor
Subservicer, the Master Servicer shall use reasonable efforts to have the
successor Subservicer assume liability for the representations and warranties
made by the terminated Subservicer in respect of the related Mortgage Loans and,
in the event of any such assumption by the successor Subservicer, the Master
Servicer may, in the exercise of its business judgment, release the terminated
Subservicer from liability for such representations and warranties.
Section 3.04. Liability of the Master Servicer.
--------------------------------
Notwithstanding any Subservicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Master
Servicer or a Subservicer or reference to actions taken through a Subservicer or
otherwise, the Master Servicer shall remain obligated and liable to the Trustee,
and Certificateholders for the servicing and administering of the Mortgage Loans
in accordance with the provisions of Section 3.01 without diminution of such
obligation or liability by virtue of such Subservicing Agreements or
arrangements or by virtue of indemnification from the Subservicer or the
Depositor and to the same extent and under the same terms and conditions as if
the Master Servicer alone were servicing and administering the Mortgage Loans.
The Master Servicer shall be entitled to enter into any agreement with a
Subservicer or Seller for indemnification of the Master Servicer and nothing
contained in this Agreement shall be deemed to limit or modify such
indemnification.
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Section 3.05. No Contractual Relationship Between Subservicer and Trustee or
---------------------------------------------------------------
Certificateholders.
------------------
Any Subservicing Agreement that may be entered into and any other
transactions or services relating to the Mortgage Loans involving a Subservicer
in its capacity as such and not as an originator shall be deemed to be between
the Subservicer and the Master Servicer alone and the Trustee and
Certificateholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to the Subservicer in
its capacity as such except as set forth in Section 3.06. The foregoing
provision shall not in any way limit a Subservicer's obligation to cure an
omission or defect or to repurchase a Mortgage Loan as referred to in Section
2.02 hereof.
Section 3.06. Assumption or Termination of Subservicing Agreements by Trustee.
---------------------------------------------------------------
(a) In the event the Master Servicer shall for any reason no longer be the
master servicer (including by reason of an Event of Default), the Trustee, as
successor Master Servicer, its designee or its successor shall thereupon assume
all of the rights and obligations of the Master Servicer under each Subservicing
Agreement that may have been entered into. The Trustee, its designee or the
successor servicer for the Trustee shall be deemed to have assumed all of the
Master Servicer's interest therein and to have replaced the Master Servicer as a
party to the Subservicing Agreement to the same extent as if the Subservicing
Agreement had been assigned to the assuming party except that the Master
Servicer shall not thereby be relieved of any liability or obligations under the
Subservicing Agreement.
(b) The Master Servicer shall, upon request of the Trustee but at the expense of
the Master Servicer, deliver to the assuming party all documents and records
relating to each Subservicing Agreement and the Mortgage Loans then being
serviced and an accounting of amounts collected and held by it and otherwise use
its best efforts to effect the orderly and efficient transfer of each
Subservicing Agreement to the assuming party.
Section 3.07. Collection of Certain Mortgage Loan Payments; Deposits to
Custodial Account.
(a) The Master Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Mortgage Loans, and shall, to
the extent such procedures shall be consistent with this Agreement and the terms
and provisions of any related Primary Insurance Policy, follow such collection
procedures as it would employ in its good faith business judgment and which are
normal and usual in its general mortgage servicing activities. Consistent with
the foregoing, the Master Servicer may in its discretion (subject to the terms
and conditions of the Assignment Agreement) (i) waive any late payment charge or
any prepayment charge or penalty interest in connection with the prepayment of a
Mortgage Loan and (ii) extend the Due Date for payments due on a Mortgage Loan
in accordance with the Program Guide, provided, however, that the Master
Servicer shall first determine that any such waiver or extension will not impair
the coverage of any related Primary Insurance Policy or materially adversely
affect the lien of the related Mortgage. Notwithstanding anything in this
Section to the contrary, the Master Servicer or any Subservicer shall not
enforce any prepayment charge to the extent that such enforcement would violate
any applicable law. In the event of any such arrangement, the Master Servicer
shall make timely advances on the related Mortgage Loan during the scheduled
period in accordance with the amortization schedule of such Mortgage Loan
without modification thereof by reason of such arrangements unless otherwise
agreed to by the Holders of the Classes of Certificates affected thereby;
provided, however, that no such extension shall be made if any advance would be
a Nonrecoverable Advance. Consistent with the terms of this Agreement, the
Master Servicer may also waive, modify or vary any term of any Mortgage Loan or
consent to the postponement of strict compliance with any such term or in any
manner grant indulgence to any Mortgagor if in the Master Servicer's
determination such waiver, modification, postponement or indulgence is not
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materially adverse to the interests of the Certificateholders(taking into
account any estimated Realized Loss that might result absent such action),
provided, however, that the Master Servicer may not modify materially or permit
any Subservicer to modify any Mortgage Loan, including without limitation any
modification that would change the Mortgage Rate, forgive the payment of any
principal or interest (unless in connection with the liquidation of the related
Mortgage Loan or except in connection with prepayments to the extent that such
reamortization is not inconsistent with the terms of the Mortgage Loan),
capitalize any amounts owing on the Mortgage Loan by adding such amount to the
outstanding principal balance of the Mortgage Loan, or extend the final maturity
date of such Mortgage Loan, unless such Mortgage Loan is in default or, in the
judgment of the Master Servicer, such default is reasonably foreseeable. No such
modification shall reduce the Mortgage Rate on a Mortgage Loan below the greater
of (A) one-half of the Mortgage Rate as in effect on the Cut-off Date and (B)
one-half of the Mortgage Rate as in effect on the date of such modification, but
not less than the sum of the Servicing Fee Rate and the per annum rate at which
the Subservicing Fee accrues. The final maturity date for any Mortgage Loan
shall not be extended beyond the Maturity Date. Also, the aggregate principal
balance of all Reportable Modified Mortgage Loans subject to Servicing
Modifications (measured at the time of the Servicing Modification and after
giving effect to any Servicing Modification) can be no more than five percent of
the aggregate principal balance of the Mortgage Loans as of the Cut-off Date,
provided, that such limit may be increased from time to time if each Rating
Agency provides written confirmation that an increase in excess of that limit
will not reduce the rating assigned to any Class of Certificates by such Rating
Agency below the lower of the then-current rating or the rating assigned to such
Certificates as of the Closing Date by such Rating Agency. In addition, any
amounts owing on a Mortgage Loan added to the outstanding principal balance of
such Mortgage Loan must be fully amortized over the term of such Mortgage Loan,
and such amounts may be added to the outstanding principal balance of a Mortgage
Loan only once during the life of such Mortgage Loan. Also, the addition of such
amounts described in the preceding sentence shall be implemented in accordance
with the Program Guide and may be implemented only by Subservicers that have
been approved by the Master Servicer for such purposes. In connection with any
Curtailment of a Mortgage Loan, the Master Servicer, to the extent not
inconsistent with the terms of the Mortgage Note and local law and practice, may
permit the Mortgage Loan to be re-amortized such that the Monthly Payment is
recalculated as an amount that will fully amortize the remaining principal
balance thereof by the original maturity date based on the original Mortgage
Rate; provided, that such reamortization shall not be permitted if it would
constitute a reissuance of the Mortgage Loan for federal income tax purposes.
(b) The Master Servicer shall establish and maintain a Custodial Account in
which the Master Servicer shall deposit or cause to be deposited on a daily
basis, except as otherwise specifically provided herein, the following payments
and collections remitted by Subservicers or received by it in respect of the
Mortgage Loans subsequent to the Cut-off Date (other than in respect of Monthly
Payments due before or in the month of the Cut-off Date):
(i) All payments on account of principal, including Principal Prepayments made
by Mortgagors on the Mortgage Loans and the principal component of any
Subservicer Advance or of any REO Proceeds received in connection with an REO
Property for which an REO Disposition has occurred;
(ii) All payments on account of interest at the Adjusted Mortgage Rate on the
Mortgage Loans, including the interest component of any Subservicer Advance or
of any REO Proceeds received in connection with an REO Property for which an REO
Disposition has occurred;
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(iii) Insurance Proceeds, Subsequent Recoveries and Liquidation Proceeds (net of
any related expenses of the Subservicer);
(iv) All proceeds of any Mortgage Loans purchased pursuant to Section 2.02,
2.03, 2.04, 4.07 or 4.08 (including amounts received from Residential Funding
pursuant to the last paragraph of Section 4 of the Assignment Agreement in
respect of any liability, penalty or expense that resulted from a breach of the
representation and warranty set forth in clause (xlvii) of Section 4 of the
Assignment Agreement) and all amounts required to be deposited in connection
with the substitution of a Qualified Substitute Mortgage Loan pursuant to
Section 2.03 or 2.04; and
(v) Any amounts required to be deposited pursuant to Section 3.07(c) and any
payments or collections received in the nature of prepayment charges.
The foregoing requirements for deposit in the Custodial Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments on the Mortgage Loans which are not part of the Trust
Fund (consisting of Monthly Payments due before or in the month of the Cut-off
Date) and payments or collections consisting of late payment charges or
assumption fees may but need not be deposited by the Master Servicer in the
Custodial Account. In the event any amount not required to be deposited in the
Custodial Account is so deposited, the Master Servicer may at any time withdraw
such amount from the Custodial Account, any provision herein to the contrary
notwithstanding. The Custodial Account may contain funds that belong to one or
more trust funds created for mortgage pass-through certificates of other series
and may contain other funds respecting payments on mortgage loans belonging to
the Master Servicer or serviced or master serviced by it on behalf of others.
Notwithstanding such commingling of funds, the Master Servicer shall keep
records that accurately reflect the funds on deposit in the Custodial Account
that have been identified by it as being attributable to the Mortgage Loans.
With respect to Insurance Proceeds, Liquidation Proceeds, REO Proceeds,
Subsequent Recoveries and the proceeds of the purchase of any Mortgage Loan
pursuant to Sections 2.02, 2.03, 2.04, 4.07 and 4.08 received in any calendar
month, the Master Servicer may elect to treat such amounts as included in the
Available Distribution Amount for the Distribution Date in the month of receipt,
but is not obligated to do so. If the Master Servicer so elects, such amounts
will be deemed to have been received (and any related Realized Loss shall be
deemed to have occurred) on the last day of the month prior to the receipt
thereof.
(c) The Master Servicer shall use its best efforts to cause the institution
maintaining the Custodial Account to invest the funds in the Custodial Account
attributable to the Mortgage Loans in Permitted Investments which shall mature
not later than the Certificate Account Deposit Date next following the date of
such investment (with the exception of the Amount Held for Future Distribution)
and which shall not be sold or disposed of prior to their maturities. All income
and gain realized from any such investment shall be for the benefit of the
Master Servicer as additional servicing compensation and shall be subject to its
withdrawal or order from time to time. The amount of any losses incurred in
respect of any such investments attributable to the investment of amounts in
respect of the Mortgage Loans shall be deposited in the Custodial Account by the
Master Servicer out of its own funds immediately as realized.
(d) The Master Servicer shall give notice to the Trustee and the Depositor of
any change in the location of the Custodial Account and the location of the
Certificate Account prior to the use thereof.
Section 3.08. Subservicing Accounts; Servicing Accounts.
-----------------------------------------
(a) In those cases where a Subservicer is servicing a Mortgage Loan pursuant to
a Subservicing Agreement, the Master Servicer shall cause the Subservicer,
pursuant to the Subservicing Agreement, to establish and maintain one or more
Subservicing Accounts which shall be an Eligible Account or, if such account is
not an Eligible Account, shall generally satisfy the requirements of the Program
Guide and be otherwise acceptable to the Master Servicer and each Rating Agency.
The Subservicer will be required thereby to deposit into the Subservicing
Account on a daily basis all proceeds of Mortgage Loans received by the
Subservicer, less its Subservicing Fees and unreimbursed advances and expenses,
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to the extent permitted by the Subservicing Agreement. If the Subservicing
Account is not an Eligible Account, the Master Servicer shall be deemed to have
received such monies upon receipt thereof by the Subservicer. The Subservicer
shall not be required to deposit in the Subservicing Account payments or
collections in the nature of late charges or assumption fees, or payments or
collections received in the nature of prepayment charges to the extent that the
Subservicer is entitled to retain such amounts pursuant to the Subservicing
Agreement. On or before the date specified in the Program Guide, but in no event
later than the Determination Date, the Master Servicer shall cause the
Subservicer, pursuant to the Subservicing Agreement, to remit to the Master
Servicer for deposit in the Custodial Account all funds held in the Subservicing
Account with respect to each Mortgage Loan serviced by such Subservicer that are
required to be remitted to the Master Servicer. The Subservicer will also be
required, pursuant to the Subservicing Agreement, to advance on such scheduled
date of remittance amounts equal to any scheduled monthly installments of
principal and interest less its Subservicing Fees on any Mortgage Loans for
which payment was not received by the Subservicer. This obligation to advance
with respect to each Mortgage Loan will continue up to and including the first
of the month following the date on which the related Mortgaged Property is sold
at a foreclosure sale or is acquired by the Trust Fund by deed in lieu of
foreclosure or otherwise. All such advances received by the Master Servicer
shall be deposited promptly by it in the Custodial Account.
(b) The Subservicer may also be required, pursuant to the Subservicing
Agreement, to remit to the Master Servicer for deposit in the Custodial Account
interest at the Adjusted Mortgage Rate (or Modified Net Mortgage Rate plus the
rate per annum at which the Servicing Fee accrues in the case of a Modified
Mortgage Loan) on any Curtailment received by such Subservicer in respect of a
Mortgage Loan from the related Mortgagor during any month that is to be applied
by the Subservicer to reduce the unpaid principal balance of the related
Mortgage Loan as of the first day of such month, from the date of application of
such Curtailment to the first day of the following month. Any amounts paid by a
Subservicer pursuant to the preceding sentence shall be for the benefit of the
Master Servicer as additional servicing compensation and shall be subject to its
withdrawal or order from time to time pursuant to Sections 3.10(a)(iv) and (v).
(c) In addition to the Custodial Account and the Certificate Account, the Master
Servicer shall for any Nonsubserviced Mortgage Loan, and shall cause the
Subservicers for Subserviced Mortgage Loans to, establish and maintain one or
more Servicing Accounts and deposit and retain therein all collections from the
Mortgagors (or advances from Subservicers) for the payment of taxes,
assessments, hazard insurance premiums, Primary Insurance Policy premiums, if
applicable, or comparable items for the account of the Mortgagors. Each
Servicing Account shall satisfy the requirements for a Subservicing Account and,
to the extent permitted by the Program Guide or as is otherwise acceptable to
the Master Servicer, may also function as a Subservicing Account. Withdrawals of
amounts related to the Mortgage Loans from the Servicing Accounts may be made
only to effect timely payment of taxes, assessments, hazard insurance premiums,
Primary Insurance Policy premiums, if applicable, or comparable items, to
reimburse the Master Servicer or Subservicer out of related collections for any
payments made pursuant to Sections 3.11 (with respect to the Primary Insurance
Policy) and 3.12(a) (with respect to hazard insurance), to refund to any
Mortgagors any sums as may be determined to be overages, to pay interest, if
required, to Mortgagors on balances in the Servicing Account or to clear and
terminate the Servicing Account at the termination of this Agreement in
accordance with Section 9.01 or in accordance with the Program Guide. As part of
its servicing duties, the Master Servicer shall, and the Subservicers will,
pursuant to the Subservicing Agreements, be required to pay to the Mortgagors
interest on funds in this account to the extent required by law.
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(d) The Master Servicer shall advance the payments referred to in the preceding
subsection that are not timely paid by the Mortgagors or advanced by the
Subservicers on the date when the tax, premium or other cost for which such
payment is intended is due, but the Master Servicer shall be required so to
advance only to the extent that such advances, in the good faith judgment of the
Master Servicer, will be recoverable by the Master Servicer out of Insurance
Proceeds, Liquidation Proceeds or otherwise.
Section 3.09. Access to Certain Documentation and Information Regarding the
Mortgage Loans.
In the event that compliance with this Section 3.09 shall make any Class
of Certificates legal for investment by federally insured savings and loan
associations, the Master Servicer shall provide, or cause the Subservicers to
provide, to the Trustee, the Office of Thrift Supervision or the FDIC and the
supervisory agents and examiners thereof access to the documentation regarding
the Mortgage Loans required by applicable regulations of the Office of Thrift
Supervision, such access being afforded without charge but only upon reasonable
request and during normal business hours at the offices designated by the Master
Servicer. The Master Servicer shall permit such representatives to photocopy any
such documentation and shall provide equipment for that purpose at a charge
reasonably approximating the cost of such photocopying to the Master Servicer.
Section 3.10. Permitted Withdrawals from the Custodial Account.
------------------------------------------------
(a) The Master Servicer may, from time to time as provided herein, make
withdrawals from the Custodial Account of amounts on deposit therein pursuant to
Section 3.07 that are attributable to the Mortgage Loans for the following
purposes:
(i) to make deposits into the Certificate Account in the amounts and in the
manner provided for in Section 4.01;
(ii) to reimburse itself or the related Subservicer for previously unreimbursed
Advances, Servicing Advances or other expenses made pursuant to Sections 3.01,
3.07(a), 3.08, 3.11, 3.12(a), 3.14 and 4.04 or otherwise reimbursable pursuant
to the terms of this Agreement, such withdrawal right being limited to amounts
received on the related Mortgage Loans (including, for this purpose, REO
Proceeds, Insurance Proceeds, Liquidation Proceeds and proceeds from the
purchase of a Mortgage Loan pursuant to Section 2.02, 2.03, 2.04, 4.07 or 4.08)
which represent (A) Late Collections of Monthly Payments for which any such
advance was made in the case of Subservicer Advances or Advances pursuant to
Section 4.04 and (B) recoveries of amounts in respect of which such advances
were made in the case of Servicing Advances;
(iii) to pay to itself or the related Subservicer (if not previously retained by
such Subservicer) out of each payment received by the Master Servicer on account
of interest on a Mortgage Loan as contemplated by Sections 3.14 and 3.16, an
amount equal to that remaining portion of any such payment as to interest (but
not in excess of the Servicing Fee and the Subservicing Fee, if not previously
retained) which, when deducted, will result in the remaining amount of such
interest being interest at a rate per annum equal to the Net Mortgage Rate (or
Modified Net Mortgage Rate in the case of a Modified Mortgage Loan) on the
amount specified in the amortization schedule of the related Mortgage Loan as
the principal balance thereof at the beginning of the period respecting which
such interest was paid after giving effect to any previous Curtailments;
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(iv) to pay to itself as additional servicing compensation any interest or
investment income earned on funds or other property deposited in or credited to
the Custodial Account that it is entitled to withdraw pursuant to Section
3.07(c);
(v) to pay to itself as additional servicing compensation any Foreclosure
Profits, and any amounts remitted by Subservicers as interest in respect of
Curtailments pursuant to Section 3.08(b);
(vi) to pay to itself, a Subservicer, a Seller, Residential Funding, the
Depositor or any other appropriate Person, as the case may be, with respect to
each Mortgage Loan or property acquired in respect thereof that has been
purchased or otherwise transferred pursuant to Section 2.02, 2.03, 2.04, 4.07,
4.08 or 9.01, all amounts received thereon and not required to be distributed to
Certificateholders as of the date on which the related Stated Principal Balance
or Purchase Price is determined;
(vii) to reimburse itself or the related Subservicer for any Nonrecoverable
Advance or Advances in the manner and to the extent provided in subsection (c)
below, and any Advance or Servicing Advance made in connection with a modified
Mortgage Loan that is in default or, in the judgment of the Master Servicer,
default is reasonably foreseeable pursuant to Section 3.07(a), to the extent the
amount of the Advance or Servicing Advance was added to the Stated Principal
Balance of the Mortgage Loan in a prior calendar month;
(viii) to reimburse itself or the Depositor for expenses incurred by and
reimbursable to it or the Depositor pursuant to Section 3.01(a), 3.11, 3.13,
3.14(c), 6.03, 10.01 or otherwise, or in connection with enforcing any
repurchase, substitution or indemnification obligation of any Seller (other than
the Depositor or an Affiliate of the Depositor) pursuant to the related Seller's
Agreement;
(ix) to reimburse itself for amounts expended by it (a) pursuant to Section 3.14
in good faith in connection with the restoration of property damaged by an
Uninsured Cause, and (b) in connection with the liquidation of a Mortgage Loan
or disposition of an REO Property to the extent not otherwise reimbursed
pursuant to clause (ii) or (viii) above; and
(x) to withdraw any amount deposited in the Custodial Account that was not
required to be deposited therein pursuant to Section 3.07, including any payoff
fees or penalties or any other additional amounts payable to the Master Servicer
or Subservicer pursuant to the terms of the Mortgage Note.
(b) Since, in connection with withdrawals pursuant to clauses (ii), (iii), (v)
and (vi), the Master Servicer's entitlement thereto is limited to collections or
other recoveries on the related Mortgage Loan, the Master Servicer shall keep
and maintain separate accounting, on a Mortgage Loan by Mortgage Loan basis, for
the purpose of justifying any withdrawal from the Custodial Account pursuant to
such clauses.
(c) The Master Servicer shall be entitled to reimburse itself or the related
Subservicer for any advance made in respect of a Mortgage Loan that the Master
Servicer determines to be a Nonrecoverable Advance by withdrawal from the
Custodial Account of amounts on deposit therein attributable to the Mortgage
Loans on any Certificate Account Deposit Date succeeding the date of such
determination. Such right of reimbursement in respect of a Nonrecoverable
Advance relating to an Advance made pursuant to Section 4.04 on any such
Certificate Account Deposit Date shall be limited to an amount not exceeding the
portion of such advance previously paid to Certificateholders (and not
theretofore reimbursed to the Master Servicer or the related Subservicer).
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Section 3.11. Maintenance of Primary Insurance Coverage.
-----------------------------------------
(a) The Master Servicer shall not take, or permit any Subservicer to take, any
action which would result in noncoverage under any applicable Primary Insurance
Policy of any loss which, but for the actions of the Master Servicer or
Subservicer, would have been covered thereunder. To the extent coverage is
available, the Master Servicer shall keep or cause to be kept in full force and
effect each such Primary Insurance Policy until the principal balance of the
related Mortgage Loan secured by a Mortgaged Property is reduced to 80% or less
of the Appraised Value at origination in the case of such a Mortgage Loan having
a Loan-to-Value Ratio at origination in excess of 80%, provided that such
Primary Insurance Policy was in place as of the Cut-off Date and the Master
Servicer had knowledge of such Primary Insurance Policy. The Master Servicer
shall not cancel or refuse to renew any such Primary Insurance Policy applicable
to a Nonsubserviced Mortgage Loan, or consent to any Subservicer canceling or
refusing to renew any such Primary Insurance Policy applicable to a Mortgage
Loan subserviced by it, that is in effect at the date of the initial issuance of
the Certificates and is required to be kept in force hereunder unless the
replacement Primary Insurance Policy for such canceled or non-renewed policy is
maintained with an insurer whose claims-paying ability is acceptable to each
Rating Agency for mortgage pass-through certificates having a rating equal to or
better than the lower of the then-current rating or the rating assigned to the
Certificates as of the Closing Date by such Rating Agency.
(b) In connection with its activities as administrator and servicer of the
Mortgage Loans, the Master Servicer agrees to present or to cause the related
Subservicer to present, on behalf of the Master Servicer, the Subservicer, if
any, the Trustee and Certificateholders, claims to the insurer under any Primary
Insurance Policies, in a timely manner in accordance with such policies, and, in
this regard, to take or cause to be taken such reasonable action as shall be
necessary to permit recovery under any Primary Insurance Policies respecting
defaulted Mortgage Loans. Pursuant to Section 3.07, any Insurance Proceeds
collected by or remitted to the Master Servicer under any Primary Insurance
Policies shall be deposited in the Custodial Account, subject to withdrawal
pursuant to Section 3.10.
Section 3.12. Maintenance of Fire Insurance and Omissions and Fidelity Coverage.
(a) The Master Servicer shall cause to be maintained for each Mortgage Loan fire
insurance with extended coverage in an amount which is equal to the lesser of
the principal balance owing on such Mortgage Loan (together with the principal
balance of any mortgage loan secured by a lien that is senior to the Mortgage
Loan) or 100% of the insurable value of the improvements; provided, however,
that such coverage may not be less than the minimum amount required to fully
compensate for any loss or damage on a replacement cost basis. To the extent it
may do so without breaching the related Subservicing Agreement, the Master
Servicer shall replace any Subservicer that does not cause such insurance, to
the extent it is available, to be maintained. The Master Servicer shall also
cause to be maintained on property acquired upon foreclosure, or deed in lieu of
foreclosure, of any Mortgage Loan, fire insurance with extended coverage in an
amount which is at least equal to the amount necessary to avoid the application
of any co-insurance clause contained in the related hazard insurance policy.
Pursuant to Section 3.07, any amounts collected by the Master Servicer under any
such policies (other than amounts to be applied to the restoration or repair of
the related Mortgaged Property or property thus acquired or amounts released to
the Mortgagor in accordance with the Master Servicer's normal servicing
procedures) shall be deposited in the Custodial Account, subject to withdrawal
pursuant to Section 3.10. Any cost incurred by the Master Servicer in
maintaining any such insurance shall not, for the purpose of calculating monthly
distributions to Certificateholders, be added to the amount owing under the
Mortgage Loan, notwithstanding that the terms of the Mortgage Loan so PERMIT.
Such costs shall be recoverable by the Master Servicer out of related late
payments by the Mortgagor or out of Insurance Proceeds and Liquidation Proceeds
to the extent permitted by Section 3.10. It is understood and agreed that no
earthquake or other additional insurance is to be required of any Mortgagor or
maintained on property acquired in respect of a Mortgage Loan other than
pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance. Whenever the improvements
securing a Mortgage Loan are located at the time of origination of such Mortgage
Loan in a federally designated special flood hazard area, the Master Servicer
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shall cause flood insurance (to the extent available) to be maintained in
respect thereof. Such flood insurance shall be in an amount equal to the lesser
of (i) the amount required to compensate for any loss or damage to the Mortgaged
Property on a replacement cost basis and (ii) the maximum amount of such
insurance available for the related Mortgaged Property under the national flood
insurance program (assuming that the area in which such Mortgaged Property is
located is participating in such program).
In the event that the Master Servicer shall obtain and maintain a
blanket fire insurance policy with extended coverage insuring against hazard
losses on all of the Mortgage Loans, it shall conclusively be deemed to have
satisfied its obligations as set forth in the first sentence of this Section
3.12(a), it being understood and agreed that such policy may contain a
deductible clause, in which case the Master Servicer shall, in the event that
there shall not have been maintained on the related Mortgaged Property a policy
complying with the first sentence of this Section 3.12(a) and there shall have
been a loss which would have been covered by such policy, deposit in the
Certificate Account the amount not otherwise payable under the blanket policy
because of such deductible clause. Any such deposit by the Master Servicer shall
be made on the Certificate Account Deposit Date next preceding the Distribution
Date which occurs in the month following the month in which payments under any
such policy would have been deposited in the Custodial Account. In connection
with its activities as administrator and servicer of the Mortgage Loans, the
Master Servicer agrees to present, on behalf of itself, the Trustee and
Certificateholders, claims under any such blanket policy.
(b) The Master Servicer shall obtain and maintain at its own expense and keep in
full force and effect throughout the term of this Agreement a blanket fidelity
bond and an errors and omissions insurance policy covering the Master Servicer's
officers and employees and other persons acting on behalf of the Master Servicer
in connection with its activities under this Agreement. The amount of coverage
shall be at least equal to the coverage that would be required by Xxxxxx Xxx or
Xxxxxxx Mac, whichever is greater, with respect to the Master Servicer if the
Master Servicer were servicing and administering the Mortgage Loans for Xxxxxx
Mae or Xxxxxxx Mac. In the event that any such bond or policy ceases to be in
effect, the Master Servicer shall obtain a comparable replacement bond or policy
from an issuer or insurer, as the case may be, meeting the requirements, if any,
of the Program Guide and acceptable to the Depositor. Coverage of the Master
Servicer under a policy or bond obtained by an Affiliate of the Master Servicer
and providing the coverage required by this Section 3.12(b) shall satisfy the
requirements of this Section 3.12(b).
Section 3.13. Enforcement of Due-on-Sale Clauses; Assumption and
Modification Agreements; Certain Assignments.
(a) When any Mortgaged Property is conveyed by the Mortgagor, the Master
Servicer or Subservicer, to the extent it has knowledge of such conveyance,
shall enforce any due-on-sale clause contained in any Mortgage Note or Mortgage,
to the extent permitted under applicable law and governmental regulations, but
only to the extent that such enforcement will not adversely affect or jeopardize
coverage under any Required Insurance Policy. Notwithstanding the foregoing: (i)
the Master Servicer shall not be deemed to be in default under this Section
3.13(a) by reason of any transfer or assumption which the Master Servicer is
restricted by law from preventing; and (ii) if the Master Servicer determines
that it is reasonably likely that any Mortgagor will bring, or if any Mortgagor
does bring, legal action to declare invalid or otherwise avoid enforcement of a
due-on-sale clause contained in any Mortgage Note or Mortgage, the Master
Servicer shall not be required to enforce the due-on-sale clause or to contest
such action.
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(b) Subject to the Master Servicer's duty to enforce any due-on-sale clause to
the extent set forth in Section 3.13(a), in any case in which a Mortgaged
Property is to be conveyed to a Person by a Mortgagor, and such Person is to
enter into an assumption or modification agreement or supplement to the Mortgage
Note or Mortgage which requires the signature of the Trustee, or if an
instrument of release signed by the Trustee is required releasing the Mortgagor
from liability on the Mortgage Loan, the Master Servicer is authorized, subject
to the requirements of the sentence next following, to execute and deliver, on
behalf of the Trustee, the assumption agreement with the Person to whom the
Mortgaged Property is to be conveyed and such modification agreement or
supplement to the Mortgage Note or Mortgage or other instruments as are
reasonable or necessary to carry out the terms of the Mortgage Note or Mortgage
or otherwise to comply with any applicable laws regarding assumptions or the
transfer of the Mortgaged Property to such Person; provided, however, none of
such terms and requirements shall both constitute a "significant modification"
effecting an exchange or reissuance of such Mortgage Loan under the Code (or
final, temporary or proposed Treasury regulations promulgated thereunder) and
cause any REMIC created hereunder to fail to qualify as a REMIC under the Code
or the imposition of any tax on "prohibited transactions" or "contributions"
after the Startup Date under the REMIC Provisions. The Master Servicer shall
execute and deliver such documents only if it reasonably determines that (i) its
execution and delivery thereof will not conflict with or violate any terms of
this Agreement or cause the unpaid balance and interest on the Mortgage Loan to
be uncollectible in whole or in part, (ii) any required consents of insurers
under any Required Insurance Policies have been obtained and (iii) subsequent to
the closing of the transaction involving the assumption or transfer (A) the
Mortgage Loan will continue to be secured by a first mortgage lien (or, with
respect to any junior lien, a junior lien of the same priority in relation to
any senior lien on such Mortgage Loan) pursuant to the terms of the Mortgage,
(B) such transaction will not adversely affect the coverage under any Required
Insurance Policies, (C) the Mortgage Loan will fully amortize over the remaining
term thereof, (D) no material term of the Mortgage Loan (including the interest
rate on the Mortgage Loan) will be altered nor will the term of the Mortgage
Loan be changed and (E) if the seller/transferor of the Mortgaged Property is to
be released from liability on the Mortgage Loan, the buyer/transferee of the
Mortgaged Property would be qualified to assume the Mortgage Loan based on
generally comparable credit quality and such release will not (based on the
Master Servicer's or Subservicer's good faith determination) adversely affect
the collectability of the Mortgage Loan. Upon receipt of appropriate
instructions from the Master Servicer in accordance with the foregoing, the
Trustee shall execute any necessary instruments for such assumption or
substitution of liability as directed by the Master Servicer. Upon the closing
of the transactions contemplated by such documents, the Master Servicer shall
cause the originals or true and correct copies of the assumption agreement, the
release (if any), or the modification or supplement to the Mortgage Note or
Mortgage to be delivered to the Trustee or the Custodian and deposited with the
Mortgage File for such Mortgage Loan. Any fee collected by the Master Servicer
or such related Subservicer for entering into an assumption or substitution of
liability agreement will be retained by the Master Servicer or such Subservicer
as additional servicing compensation.
(c) The Master Servicer or the related Subservicer, as the case may be, shall be
entitled to approve a request from a Mortgagor for a partial release of the
related Mortgaged Property, the granting of an easement thereon in favor of
another Person, any alteration or demolition of the related Mortgaged Property
or other similar matters if it has determined, exercising its good faith
business judgment in the same manner as it would if it were the owner of the
related Mortgage Loan, that the security for, and the timely and full
collectability of, such Mortgage Loan would not be adversely affected thereby
and that any REMIC created hereunder would not fail to continue to qualify as a
REMIC under the Code as a result thereof and (subject to Section 10.01(f)) that
no tax on "prohibited transactions" or "contributions" after the Startup Date
would be imposed on any REMIC created hereunder as a result thereof. Any fee
collected by the Master Servicer or the related Subservicer for processing such
a request will be retained by the Master Servicer or such Subservicer as
additional servicing compensation.
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(d) Subject to any other applicable terms and conditions of this Agreement, the
Trustee and Master Servicer shall be entitled to approve an assignment in lieu
of satisfaction with respect to any Mortgage Loan, provided the obligee with
respect to such Mortgage Loan following such proposed assignment provides the
Trustee and Master Servicer with a "Lender Certification for Assignment of
Mortgage Loan" in the form attached hereto as Exhibit M, in form and substance
satisfactory to the Trustee and Master Servicer, providing the following: (i)
that the Mortgage Loan is secured by Mortgaged Property located in a
jurisdiction in which an assignment in lieu of satisfaction is required to
preserve lien priority, minimize or avoid mortgage recording taxes or otherwise
comply with, or facilitate a refinancing under, the laws of such jurisdiction;
(ii) that the substance of the assignment is, and is intended to be, a
refinancing of such Mortgage Loan and that the form of the transaction is solely
to comply with, or facilitate the transaction under, such local laws; (iii) that
the Mortgage Loan following the proposed assignment will have a rate of interest
more than the greater of (A) 3% and (B) 5% of the annual yield of the unmodified
Mortgage Loan, below or above the rate of interest on such Mortgage Loan prior
to such proposed assignment; and (iv) that such assignment is at the request of
the borrower under the related Mortgage Loan. Upon approval of an assignment in
lieu of satisfaction with respect to any Mortgage Loan, the Master Servicer
shall receive cash in an amount equal to the unpaid principal balance of and
accrued interest on such Mortgage Loan and the Master Servicer shall treat such
amount as a Principal Prepayment in Full with respect to such Mortgage Loan for
all purposes hereof.
Section 3.14. Realization Upon Defaulted Mortgage Loans.
-----------------------------------------
(a) The Master Servicer shall foreclose upon or otherwise comparably convert
(which may include an REO Acquisition) the ownership of properties securing such
of the Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 3.07. Alternatively, the Master Servicer may take other
actions in respect of a defaulted Mortgage Loan, which may include (i) accepting
a short sale (a payoff of the Mortgage Loan for an amount less than the total
amount contractually owed in order to facilitate a sale of the Mortgaged
Property by the Mortgagor) or permitting a short refinancing (a payoff of the
Mortgage Loan for an amount less than the total amount contractually owed in
order to facilitate refinancing transactions by the Mortgagor not involving a
sale of the Mortgaged Property), (ii) arranging for a repayment plan or (iii)
agreeing to a modification in accordance with Section 3.07. In connection with
such foreclosure or other conversion or action, the Master Servicer shall,
consistent with Section 3.11, follow such practices and procedures as it shall
deem necessary or advisable, as shall be normal and usual in its general
mortgage servicing activities and as shall be required or permitted by the
Program Guide; provided that the Master Servicer shall not be liable in any
respect hereunder if the Master Servicer is acting in connection with any such
foreclosure or other conversion or action in a manner that is consistent with
the provisions of this Agreement. The Master Servicer, however, shall not be
required to expend its own funds or incur other reimbursable charges in
connection with any foreclosure, or attempted foreclosure which is not
completed, or towards the correction of any default on a related senior mortgage
loan, or towards the restoration of any property unless it shall determine (i)
that such restoration and/or foreclosure will increase the proceeds of
liquidation of the Mortgage Loan to Holders of Certificates of one or more
Classes after reimbursement to itself for such expenses or charges and (ii) that
such expenses and charges will be recoverable to it through Liquidation
Proceeds, Insurance Proceeds, or REO Proceeds (respecting which it shall have
priority for purposes of withdrawals from the Custodial Account pursuant to
Section 3.10, whether or not such expenses and charges are actually recoverable
from related Liquidation Proceeds, Insurance Proceeds or REO Proceeds). In the
event of such a determination by the Master Servicer pursuant to this Section
3.14(a), the Master Servicer shall be entitled to reimbursement of its funds so
expended pursuant to Section 3.10. In addition, the Master Servicer may pursue
any remedies that may be available in connection with a breach of a
representation and warranty with respect to any such Mortgage Loan in accordance
with Sections 2.03 and 2.04. However, the Master Servicer is not required to
continue to pursue both foreclosure (or similar remedies) with respect to the
Mortgage Loans and remedies in connection with a breach of a representation and
warranty if the Master Servicer determines in its reasonable discretion that one
such remedy is more likely to result in a greater recovery as to the Mortgage
Loan. Upon the occurrence of a Cash Liquidation or REO Disposition, following
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the deposit in the Custodial Account of all Insurance Proceeds, Liquidation
Proceeds and other payments and recoveries referred to in the definition of
"Cash Liquidation" or "REO Disposition," as applicable, upon receipt by the
Trustee of written notification of such deposit signed by a Servicing Officer,
the Trustee or any Custodian, as the case may be, shall release to the Master
Servicer the related Mortgage File and the Trustee shall execute and deliver
such instruments of transfer or assignment prepared by the Master Servicer, in
each case without recourse, as shall be necessary to vest in the Master Servicer
or its designee, as the case may be, the related Mortgage Loan, and thereafter
such Mortgage Loan shall not be part of the Trust Fund. Notwithstanding the
foregoing or any other provision of this Agreement, in the Master Servicer's
sole discretion with respect to any defaulted Mortgage Loan or REO Property as
to either of the following provisions, (i) a Cash Liquidation or REO Disposition
may be deemed to have occurred if substantially all amounts expected by the
Master Servicer to be received in connection with the related defaulted Mortgage
Loan or REO Property have been received, and (ii) for purposes of determining
the amount of any Liquidation Proceeds, Insurance Proceeds, REO Proceeds or
other unscheduled collections or the amount of any Realized Loss, the Master
Servicer may take into account minimal amounts of additional receipts expected
to be received or any estimated additional liquidation expenses expected to be
incurred in connection with the related defaulted Mortgage Loan or REO Property.
(b) In the event that title to any Mortgaged Property is acquired by the Trust
Fund as an REO Property by foreclosure or by deed in lieu of foreclosure, the
deed or certificate of sale shall be issued to the Trustee or to its nominee on
behalf of Certificateholders. Notwithstanding any such acquisition of title and
cancellation of the related Mortgage Loan, such REO Property shall (except as
otherwise expressly provided herein) be considered to be an Outstanding Mortgage
Loan held in the Trust Fund until such time as the REO Property shall be sold.
Consistent with the foregoing for purposes of all calculations hereunder so long
as such REO Property shall be considered to be an Outstanding Mortgage Loan it
shall be assumed that, notwithstanding that the indebtedness evidenced by the
related Mortgage Note shall have been discharged, such Mortgage Note and the
related amortization schedule in effect at the time of any such acquisition of
title (after giving effect to any previous Curtailments and before any
adjustment thereto by reason of any bankruptcy or similar proceeding or any
moratorium or similar waiver or grace period) remain in effect.
(c) In the event that the Trust Fund acquires any REO Property as aforesaid or
otherwise in connection with a default or imminent default on a Mortgage Loan,
the Master Servicer on behalf of the Trust Fund shall dispose of such REO
Property as soon as practicable, giving due consideration to the interests of
the Certificateholders, but in all cases, within three full years after the
taxable year of its acquisition by the Trust Fund for purposes of Section
860G(a)(8) of the Code (or such shorter period as may be necessary under
applicable state (including any state in which such property is located) law to
maintain the status of each REMIC created hereunder as a REMIC under applicable
state law and avoid taxes resulting from such property failing to be foreclosure
property under applicable state law) or, at the expense of the Trust Fund,
request, more than 60 days before the day on which such grace period would
otherwise expire, an extension of such grace period unless the Master Servicer
(subject to Section 10.01(f)) obtains for the Trustee an Opinion of Counsel,
addressed to the Trustee and the Master Servicer, to the effect that the holding
by the Trust Fund of such REO Property subsequent to such period will not result
in the imposition of taxes on "prohibited transactions" as defined in Section
860F of the Code or cause any REMIC created hereunder to fail to qualify as a
REMIC (for federal (or any applicable State or local) income tax purposes) at
any time that any Certificates are outstanding, in which case the Trust Fund may
continue to hold such REO Property (subject to any conditions contained in such
Opinion of Counsel). The Master Servicer shall be entitled to be reimbursed from
the Custodial Account for any costs incurred in obtaining such Opinion of
Counsel, as provided in Section 3.10. Notwithstanding any other provision of
this Agreement, no REO Property acquired by the Trust Fund shall be rented (or
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allowed to continue to be rented) or otherwise used by or on behalf of the Trust
Fund in such a manner or pursuant to any terms that would (i) cause such REO
Property to fail to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code or (ii) subject any REMIC created hereunder to
the imposition of any federal income taxes on the income earned from such REO
Property, including any taxes imposed by reason of Section 860G(c) of the Code,
unless the Master Servicer has agreed to indemnify and hold harmless the Trust
Fund with respect to the imposition of any such taxes.
(d) The proceeds of any Cash Liquidation, REO Disposition or purchase or
repurchase of any Mortgage Loan pursuant to the terms of this Agreement, as well
as any recovery (other than Subsequent Recoveries) resulting from a collection
of Liquidation Proceeds, Insurance Proceeds or REO Proceeds, will be applied in
the following order of priority: first, to reimburse the Master Servicer or the
related Subservicer in accordance with Section 3.10(a)(ii); second, to the
Certificateholders to the extent of accrued and unpaid interest on the Mortgage
Loan, and any related REO Imputed Interest, at the Net Mortgage Rate (or the
Modified Net Mortgage Rate in the case of a Modified Mortgage Loan), to the Due
Date in the related Due Period prior to the Distribution Date on which such
amounts are to be distributed; third, to the Certificateholders as a recovery of
principal on the Mortgage Loan (or REO Property); fourth, to all Servicing Fees
and Subservicing Fees payable therefrom (and the Master Servicer and the
Subservicer shall have no claims for any deficiencies with respect to such fees
which result from the foregoing allocation); and fifth, to Foreclosure Profits.
(e) In the event of a default on a Mortgage Loan one or more of whose obligors
is not a United States Person, in connection with any foreclosure or acquisition
of a deed in lieu of foreclosure (together, "foreclosure") in respect of such
Mortgage Loan, the Master Servicer will cause compliance with the provisions of
Treasury Regulation Section 1.1445-2(d)(3) (or any successor thereto) necessary
to assure that no withholding tax obligation arises with respect to the proceeds
of such foreclosure except to the extent, if any, that proceeds of such
foreclosure are required to be remitted to the obligors on such Mortgage Loan.
Section 3.15. Trustee to Cooperate; Release of Mortgage Files.
-----------------------------------------------
(a) Upon becoming aware of the payment in full of any Mortgage Loan, or upon the
receipt by the Master Servicer of a notification that payment in full will be
escrowed in a manner customary for such purposes, the Master Servicer will
immediately notify the Trustee (if it holds the related Mortgage File) or the
Custodian by a certification of a Servicing Officer (which certification shall
include a statement to the effect that all amounts received or to be received in
connection with such payment which are required to be deposited in the Custodial
Account pursuant to Section 3.07 have been or will be so deposited),
substantially in one of the forms attached hereto as Exhibit G, or, in the case
of a Custodian, an electronic request in a form acceptable to the Custodian,
requesting delivery to it of the Mortgage File. Upon receipt of such
certification and request, the Trustee shall promptly release, or cause the
Custodian to release, the related Mortgage File to the Master Servicer. The
Master Servicer is authorized to execute and deliver to the Mortgagor the
request for reconveyance, deed of reconveyance or release or satisfaction of
mortgage or such instrument releasing the lien of the Mortgage, together with
the Mortgage Note with, as appropriate, written evidence of cancellation thereon
and to cause the removal from the registration on the MERS(R) System of such
Mortgage and to execute and deliver, on behalf of the Trustee and the
Certificateholders or any of them, any and all instruments of satisfaction or
cancellation or of partial or full release, including any applicable UCC
termination statements. No expenses incurred in connection with any instrument
of satisfaction or deed of reconveyance shall be chargeable to the Custodial
Account or the Certificate Account.
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(b) From time to time as is appropriate for the servicing or foreclosure of any
Mortgage Loan, the Master Servicer shall deliver to the Custodian, with a copy
to the Trustee, a certificate of a Servicing Officer substantially in one of the
forms attached as Exhibit G hereto, or, in the case of a Custodian, an
electronic request in a form acceptable to the Custodian, requesting that
possession of all, or any document constituting part of, the Mortgage File be
released to the Master Servicer and certifying as to the reason for such release
and that such release will not invalidate any insurance coverage provided in
respect of the Mortgage Loan under any Required Insurance Policy. Upon receipt
of the foregoing, the Trustee shall deliver, or cause the Custodian to deliver,
the Mortgage File or any document therein to the Master Servicer. The Master
Servicer shall cause each Mortgage File or any document therein so released to
be returned to the Trustee, or the Custodian as agent for the Trustee when the
need therefor by the Master Servicer no longer exists, unless (i) the Mortgage
Loan has been liquidated and the Liquidation Proceeds relating to the Mortgage
Loan have been deposited in the Custodial Account or (ii) the Mortgage File or
such document has been delivered directly or through a Subservicer to an
attorney, or to a public trustee or other public official as required by law,
for purposes of initiating or pursuing legal action or other proceedings for the
foreclosure of the Mortgaged Property either judicially or non-judicially, and
the Master Servicer has delivered directly or through a Subservicer to the
Trustee a certificate of a Servicing Officer certifying as to the name and
address of the Person to which such Mortgage File or such document was delivered
and the purpose or purposes of such delivery. In the event of the liquidation of
a Mortgage Loan, the Trustee shall deliver the Request for Release with respect
thereto to the Master Servicer upon the Trustee's receipt of notification from
the Master Servicer of the deposit of the related Liquidation Proceeds in the
Custodial Account.
(c) The Trustee or the Master Servicer on the Trustee's behalf shall execute and
deliver to the Master Servicer, if necessary, any court pleadings, requests for
trustee's sale or other documents necessary to the foreclosure or trustee's sale
in respect of a Mortgaged Property or to any legal action brought to obtain
judgment against any Mortgagor on the Mortgage Note or Mortgage or to obtain a
deficiency judgment, or to enforce any other remedies or rights provided by the
Mortgage Note or Mortgage or otherwise available at law or in equity. Together
with such documents or pleadings (if signed by the Trustee), the Master Servicer
shall deliver to the Trustee a certificate of a Servicing Officer requesting
that such pleadings or documents be executed by the Trustee and certifying as to
the reason such documents or pleadings are required and that the execution and
delivery thereof by the Trustee will not invalidate any insurance coverage under
any Required Insurance Policy or invalidate or otherwise affect the lien of the
Mortgage, except for the termination of such a lien upon completion of the
foreclosure or trustee's sale.
Section 3.16. Servicing and Other Compensation; Compensating Interest.
-------------------------------------------------------
(a) The Master Servicer, as compensation for its activities hereunder, shall be
entitled to receive on each Distribution Date the amounts provided for by
clauses (iii), (iv), (v) and (vi) of Section 3.10(a), subject to clause (e)
below. The amount of servicing compensation provided for in such clauses shall
be accounted for on a Mortgage Loan-by-Mortgage Loan basis. In the event that
Liquidation Proceeds, Insurance Proceeds and REO Proceeds (net of amounts
reimbursable therefrom pursuant to Section 3.10(a)(ii)) in respect of a Cash
Liquidation or REO Disposition exceed the unpaid principal balance of such
Mortgage Loan plus unpaid interest accrued thereon (including REO Imputed
Interest) at a per annum rate equal to the related Net Mortgage Rate (or the
Modified Net Mortgage Rate in the case of a Modified Mortgage Loan), the Master
Servicer shall be entitled to retain therefrom and to pay to itself and/or the
related Subservicer, any Foreclosure Profits and any Servicing Fee or
Subservicing Fee considered to be accrued but unpaid.
(b) Additional servicing compensation in the form of assumption fees, late
payment charges, investment income on amounts in the Custodial Account or the
Certificate Account or otherwise shall be retained by the Master Servicer or the
Subservicer to the extent provided herein, subject to clause (e) below.
Prepayment charges shall be deposited into the Certificate Account and shall be
paid on each Distribution Date to the holders of the related Class SB
Certificates.
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(c) The Master Servicer shall be required to pay, or cause to be paid, all
expenses incurred by it in connection with its servicing activities hereunder
(including payment of premiums for the Primary Insurance Policies, if any, to
the extent such premiums are not required to be paid by the related Mortgagors,
and the fees and expenses of the Trustee and any Custodian) and shall not be
entitled to reimbursement therefor except as specifically provided in Sections
3.10 and 3.14.
(d) The Master Servicer's right to receive servicing compensation may not be
transferred in whole or in part except in connection with the transfer of all of
its responsibilities and obligations of the Master Servicer under this
Agreement.
(e) Notwithstanding clauses (a) and (b) above, the amount of servicing
compensation that the Master Servicer shall be entitled to receive for its
activities hereunder for the period ending on each Distribution Date shall be
reduced (but not below zero) by the amount of Compensating Interest (if any) for
such Distribution Date used to cover Prepayment Interest Shortfalls as provided
in Section 3.16(f) below. Such reduction shall be applied during such period as
follows: first, to any Servicing Fee or Subservicing Fee to which the Master
Servicer is entitled pursuant to Section 3.10(a)(iii); and second, to any income
or gain realized from any investment of funds held in the Custodial Account or
the Certificate Account to which the Master Servicer is entitled pursuant to
Sections 3.07(c) or 4.01(c), respectively. In making such reduction, the Master
Servicer shall not withdraw from the Custodial Account any such amount
representing all or a portion of the Servicing Fee to which it is entitled
pursuant to Section 3.10(a)(iii); and (ii) shall not withdraw from the Custodial
Account or Certificate Account any such amount to which it is entitled pursuant
to Section 3.07(c) or 4.01(c).
(f) With respect to any Distribution Date, Prepayment Interest Shortfalls on the
Mortgage Loans will be covered first, by the Master Servicer, but only to the
extent such Prepayment Interest Shortfalls do not exceed Eligible Master
Servicing Compensation.
(g) With respect to any Distribution Date, Compensating Interest derived from a
particular Loan Group shall be used on such Distribution Date to cover any
Prepayment Interest Shortfalls in such Loan Group and then to cover any
Prepayment Interest Shortfalls on the other Loan Group in the same manner and
priority as Excess Cash Flow would cover such shortfalls pursuant to Section
4.02.
Section 3.17. Reports to the Trustee and the Depositor.
----------------------------------------
Not later than fifteen days after each Distribution Date, the Master
Servicer shall forward to the Trustee and the Depositor a statement, certified
by a Servicing Officer, setting forth the status of the Custodial Account as of
the close of business on such Distribution Date as it relates to the Mortgage
Loans and showing, for the period covered by such statement, the aggregate of
deposits in or withdrawals from the Custodial Account in respect of the Mortgage
Loans for each category of deposit specified in Section 3.07 and each category
of withdrawal specified in Section 3.10.
Section 3.18. Annual Statement as to Compliance.
---------------------------------
The Master Servicer will deliver to the Depositor and the Trustee on or
before the earlier of (a) March 31 of each year, beginning with the first March
31 that occurs at least six months after the Cut-off Date or (b) with respect to
any calendar year during which the Depositor's annual report on Form 10-K is
required to be filed in accordance with the Exchange Act and the rules and
regulations of the Commission, on or before the date on which the annual report
on Form 10-K is required to be filed in accordance with the Exchange Act and the
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rules and regulations of the Commission, an Officers' Certificate stating, as to
each signer thereof, that (i) a review of the activities of the Master Servicer
during the preceding calendar year related to its servicing of mortgage loans
and of its performance under the pooling and servicing agreements, including
this Agreement, has been made under such officers' supervision, (ii) to the best
of such officers' knowledge, based on such review, the Master Servicer has
complied in all material respects with the minimum servicing standards set forth
in the Uniform Single Attestation Program for Mortgage Bankers and has fulfilled
all of its material obligations relating to this Agreement in all material
respects throughout such year, or, if there has been material noncompliance with
such servicing standards or a default in the fulfillment in all material
respects of any such obligation relating to this Agreement, such statement shall
include a description of such noncompliance or specify each such default, as the
case may be, known to such officer and the nature and status thereof and (iii)
to the best of such officers' knowledge, each Subservicer has complied in all
material respects with the minimum servicing standards set forth in the Uniform
Single Attestation Program for Mortgage Bankers and has fulfilled all of its
material obligations under its Subservicing Agreement in all material respects
throughout such year, or, if there has been material noncompliance with such
servicing standards or a material default in the fulfillment of such obligations
relating to this Agreement, such statement shall include a description of such
noncompliance or specify each such default, as the case may be, known to such
officer and the nature and status thereof.
Section 3.19. Annual Independent Public Accountants' Servicing Report.
-------------------------------------------------------
On or before the earlier of (a) March 31 of each year, beginning with
the first March 31 that occurs at least six months after the Cut-off Date, or
(b) with respect to any calendar year during which the Depositor's annual report
on Form 10-K is required to be filed in accordance with the Exchange Act and the
rules and regulations of the Commission, on or before the date on which the
annual report is required to be filed in accordance with the Exchange Act and
the rules and regulations of the Commission, the Master Servicer at its expense
shall cause a firm of independent public accountants, which shall be members of
the American Institute of Certified Public Accountants, to furnish a report to
the Depositor and the Trustee stating its opinion that, on the basis of an
examination conducted by such firm substantially in accordance with standards
established by the American Institute of Certified Public Accountants, the
assertions made pursuant to Section 3.18 regarding compliance with the minimum
servicing standards set forth in the Uniform Single Attestation Program for
Mortgage Bankers during the preceding calendar year are fairly stated in all
material respects, subject to such exceptions and other qualifications that, in
the opinion of such firm, such accounting standards require it to report. In
rendering such statement, such firm may rely, as to matters relating to the
direct servicing of mortgage loans by Subservicers, upon comparable statements
for examinations conducted by independent public accountants substantially in
accordance with standards established by the American Institute of Certified
Public Accountants (rendered within one year of such statement) with respect to
such Subservicers.
Section 3.20. Right of the Depositor in Respect of the Master Servicer.
--------------------------------------------------------
The Master Servicer shall afford the Depositor and the Trustee, upon
reasonable notice, during normal business hours access to all records maintained
by the Master Servicer in respect of its rights and obligations hereunder and
access to officers of the Master Servicer responsible for such obligations. Upon
request, the Master Servicer shall furnish the Depositor with its most recent
financial statements and such other information as the Master Servicer possesses
regarding its business, affairs, property and condition, financial or otherwise.
The Master Servicer shall also cooperate with all reasonable requests for
information including, but not limited to, notices, tapes and copies of files,
regarding itself, the Mortgage Loans or the Certificates from any Person or
Persons identified by the Depositor or Residential Funding. The Depositor may
enforce the obligation of the Master Servicer hereunder and may, but it is not
obligated to, perform or cause a designee to perform, any defaulted obligation
85
of the Master Servicer hereunder or exercise the rights of the Master Servicer
hereunder; provided that the Master Servicer shall not be relieved of any of its
obligations hereunder by virtue of such performance by the Depositor or its
designee. Neither the Depositor nor the Trustee shall have the responsibility or
liability for any action or failure to act by the Master Servicer and the
Depositor is not obligated to supervise the performance of the Master Servicer
under this Agreement or otherwise.
Section 3.21. [Reserved].
Section 3.22. Advance Facility.
----------------
(a) The Master Servicer is hereby authorized to enter into a financing
or other facility (any such arrangement, an "Advance Facility") under which (1)
the Master Servicer sells, assigns or pledges to another Person (an "Advancing
Person") the Master Servicer's rights under this Agreement to be reimbursed for
any Advances or Servicing Advances and/or (2) an Advancing Person agrees to fund
some or all Advances and/or Servicing Advances required to be made by the Master
Servicer pursuant to this Agreement. No consent of the Depositor, the Trustee,
the Certificateholders or any other party shall be required before the Master
Servicer may enter into an Advance Facility. Notwithstanding the existence of
any Advance Facility under which an Advancing Person agrees to fund Advances
and/or Servicing Advances on the Master Servicer's behalf, the Master Servicer
shall remain obligated pursuant to this Agreement to make Advances and Servicing
Advances pursuant to and as required by this Agreement. If the Master Servicer
enters into an Advance Facility, and for so long as an Advancing Person remains
entitled to receive reimbursement for any Advances including Nonrecoverable
Advances ("Advance Reimbursement Amounts") and/or Servicing Advances including
Nonrecoverable Advances ("Servicing Advance Reimbursement Amounts" and together
with Advance Reimbursement Amounts, "Reimbursement Amounts") (in each case to
the extent such type of Reimbursement Amount is included in the Advance
Facility), as applicable, pursuant to this Agreement, then the Master Servicer
shall identify such Reimbursement Amounts consistent with the reimbursement
rights set forth in Section 3.10(a)(ii) and (vii) and remit such Reimbursement
Amounts in accordance with this Section 3.22 or otherwise in accordance with the
documentation establishing the Advance Facility to such Advancing Person or to a
trustee, agent or custodian (an "Advance Facility Trustee") designated by such
Advancing Person in an Advance Facility Notice described below in Section
3.22(b). Notwithstanding the foregoing, if so required pursuant to the terms of
the Advance Facility, the Master Servicer may direct, and if so directed in
writing, the Trustee is hereby authorized to and shall pay to the Advance
Facility Trustee the Reimbursement Amounts identified pursuant to the preceding
sentence. An Advancing Person whose obligations hereunder are limited to the
funding of Advances and/or Servicing Advances shall not be required to meet the
qualifications of a Master Servicer or a Subservicer pursuant to Section 3.02(a)
or 6.02(c) hereof and shall not be deemed to be a Subservicer under this
Agreement. Notwithstanding anything to the contrary herein, in no event shall
Advance Reimbursement Amounts or Servicing Advance Reimbursement Amounts be
included in the Available Distribution Amount or distributed to
Certificateholders.
(b) If the Master Servicer enters into an Advance Facility and makes the
election set forth in Section 3.22(a), the Master Servicer and the related
Advancing Person shall deliver to the Trustee a written notice and payment
instruction (an "Advance Facility Notice"), providing the Trustee with written
payment instructions as to where to remit Advance Reimbursement Amounts and/or
Servicing Advance Reimbursement Amounts (each to the extent such type of
Reimbursement Amount is included within the Advance Facility) on subsequent
Distribution Dates. The payment instruction shall require the applicable
Reimbursement Amounts to be distributed to the Advancing Person or to an Advance
Facility Trustee designated in the Advance Facility Notice. An Advance Facility
Notice may only be terminated by the joint written direction of the Master
Servicer and the related Advancing Person (and any related Advance Facility
Trustee.
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(c) Reimbursement Amounts shall consist solely of amounts in
respect of Advances and/or Servicing Advances made with respect to the Mortgage
Loans for which the Master Servicer would be permitted to reimburse itself in
accordance with Section 3.10(a)(ii) and (vii) hereof, assuming the Master
Servicer or the Advancing Person had made the related Advance(s) and/or
Servicing Advance(s). Notwithstanding the foregoing, except with respect to
reimbursement of Nonrecoverable Advances as set forth in Section 3.10(c) of this
Agreement, no Person shall be entitled to reimbursement from funds held in the
Collection Account for future distribution to Certificateholders pursuant to
this Agreement. Neither the Depositor nor the Trustee shall have any duty or
liability with respect to the calculation of any Reimbursement Amount, nor shall
the Depositor or the Trustee have any responsibility to track or monitor the
administration of the Advance Facility and the Depositor shall not have any
responsibility to track, monitor or verify the payment of Reimbursement Amounts
to the related Advancing Person or Advance Facility Trustee. The Master Servicer
shall maintain and provide to any successor master servicer a detailed
accounting on a loan-by-loan basis as to amounts advanced by, sold, pledged or
assigned to, and reimbursed to any Advancing Person. The successor master
servicer shall be entitled to rely on any such information provided by the
Master Servicer and the successor master servicer shall not be liable for any
errors in such information.
(d) Upon the direction of and at the expense of the Master Servicer, the
Trustee agrees to execute such acknowledgments, certificates, and other
documents reasonably satisfactory to the Trustee provided by the Master Servicer
and reasonable satisfactory to the Trustee recognizing the interests of any
Advancing Person or Advance Facility Trustee in such Reimbursement Amounts as
the Master Servicer may cause to be made subject to Advance Facilities pursuant
to this Section 3.22, and such other documents in connection with such Advance
Facility as may be reasonably requested from time to time by any Advancing
Person or Advance Facility Trustee and reasonably satisfactory to the Trustee.
(e) Reimbursement Amounts collected with respect to each Mortgage Loan
shall be allocated to outstanding unreimbursed Advances or Servicing Advances
(as the case may be) made with respect to that Mortgage Loan on a "first-in,
first out" ("FIFO") basis, subject to the qualifications set forth below:
(i) Any successor Master Servicer to Residential Funding (a "Successor
Master Servicer") and the Advancing Person or Advance Facility Trustee shall be
required to apply all amounts available in accordance with this Section 3.22(e)
to the reimbursement of Advances and Servicing Advances in the manner provided
for herein; provided, however, that after the succession of a Successor Master
Servicer, (A) to the extent that any Advances or Servicing Advances with respect
to any particular Mortgage Loan are reimbursed from payments or recoveries, if
any, from the related Mortgagor, and Liquidation Proceeds or Insurance Proceeds,
if any, with respect to that Mortgage Loan, reimbursement shall be made, first,
to the Advancing Person or Advance Facility Trustee in respect of Advances
and/or Servicing Advances related to that Mortgage Loan to the extent of the
interest of the Advancing Person or Advance Facility Trustee in such Advances
and/or Servicing Advances, second to the Master Servicer in respect of Advances
and/or Servicing Advances related to that Mortgage Loan in excess of those in
which the Advancing Person or Advance Facility Trustee Person has an interest,
and third, to the Successor Master Servicer in respect of any other Advances
and/or Servicing Advances related to that Mortgage Loan, from such sources as
and when collected, and (B) reimbursements of Advances and Servicing Advances
that are Nonrecoverable Advances shall be made pro rata to the Advancing Person
or Advance Facility Trustee, on the one hand, and any such Successor Master
Servicer, on the other hand, on the basis of the respective aggregate
outstanding unreimbursed Advances and Servicing Advances that are Nonrecoverable
Advances owed to the Advancing Person, Advance Facility Trustee or Master
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Servicer pursuant to this Agreement, on the one hand, and any such Successor
Master Servicer, on the other hand, and without regard to the date on which any
such Advances or Servicing Advances shall have been made. In the event that, as
a result of the FIFO allocation made pursuant to this Section 3.22(e), some or
all of a Reimbursement Amount paid to the Advancing Person or Advance Facility
Trustee relates to Advances or Servicing Advances that were made by a Person
other than Residential Funding or the Advancing Person or Advance Facility
Trustee, then the Advancing Person or Advance Facility Trustee shall be required
to remit any portion of such Reimbursement Amount to the Person entitled to such
portion of such Reimbursement Amount. Without limiting the generality of the
foregoing, Residential Funding shall remain entitled to be reimbursed by the
Advancing Person or Advance Facility Trustee for all Advances and Servicing
Advances funded by Residential Funding to the extent the related Reimbursement
Amount(s) have not been assigned or pledged to an Advancing Person or Advance
Facility Trustee. The documentation establishing any Advance Facility shall
require Residential Funding to provide to the related Advancing Person or
Advance Facility Trustee loan by loan information with respect to each
Reimbursement Amount distributed to such Advancing Person or Advance Facility
Trustee on each date of remittance thereof to such Advancing Person or Advance
Facility Trustee, to enable the Advancing Person or Advance Facility Trustee to
make the FIFO allocation of each Reimbursement Amount with respect to each
Mortgage Loan.
(ii) By way of illustration, and not by way of limiting the generality
of the foregoing, if the Master Servicer resigns or is terminated at a time when
the Master Servicer is a party to an Advance Facility, and is replaced by a
Successor Master Servicer, and the Successor Master Servicer directly funds
Advances or Servicing Advances with respect to a Mortgage Loan and does not
assign or pledge the related Reimbursement Amounts to the related Advancing
Person or Advance Facility Trustee, then all payments and recoveries received
from the related Mortgagor or received in the form of Liquidation Proceeds with
respect to such Mortgage Loan (including Insurance Proceeds collected in
connection with a liquidation of such Mortgage Loan) will be allocated first to
the Advancing Person or Advance Facility Trustee until the related Reimbursement
Amounts attributable to such Mortgage Loan that are owed to the Master Servicer
and the Advancing Person, which were made prior to any Advances or Servicing
Advances made by the Successor Master Servicer, have been reimbursed in full, at
which point the Successor Master Servicer shall be entitled to retain all
related Reimbursement Amounts subsequently collected with respect to that
Mortgage Loan pursuant to Section 3.10 of this Agreement. To the extent that the
Advances or Servicing Advances are Nonrecoverable Advances to be reimbursed on
an aggregate basis pursuant to Section 3.10 of this Agreement, the reimbursement
paid in this manner will be made pro rata to the Advancing Person or Advance
Facility Trustee, on the one hand, and the Successor Master Servicer, on the
other hand, as described in clause (i)(B) above.
(f) The Master Servicer shall remain entitled to be reimbursed for all
Advances and Servicing Advances funded by the Master Servicer to the extent the
related rights to be reimbursed therefor have not been sold, assigned or pledged
to an Advancing Person.
(g) Any amendment to this Section 3.22 or to any other provision of this
Agreement that may be necessary or appropriate to effect the terms of an Advance
Facility as described generally in this Section 3.22, including amendments to
add provisions relating to a successor master servicer, may be entered into by
the Trustee, the Depositor and the Master Servicer without the consent of any
Certificateholder, with written confirmation from each Rating Agency that the
amendment will not result in the reduction of the ratings on any class of the
Certificates below the lesser of the then current or original ratings on such
Certificates and delivery of an Opinion of Counsel as required under Section
11.01(c), notwithstanding anything to the contrary in Section 11.01 of or
elsewhere in this Agreement.
(h) Any rights of set-off that the Trust Fund, the Trustee, the
Depositor, any Successor Master Servicer or any other Person might otherwise
have against the Master Servicer under this Agreement shall not attach to any
rights to be reimbursed for Advances or Servicing Advances that have been sold,
transferred, pledged, conveyed or assigned to any Advancing Person.
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(i) At any time when an Advancing Person shall have ceased funding
Advances and/or Servicing Advances (as the case may be) and the Advancing Person
or related Advance Facility Trustee shall have received Reimbursement Amounts
sufficient in the aggregate to reimburse all Advances and/or Servicing Advances
(as the case may be) the right to reimbursement for which were assigned to the
Advancing Person, then upon the delivery of a written notice signed by the
Advancing Person and the Master Servicer or its successor or assign) to the
Trustee terminating the Advance Facility Notice (the "Notice of Facility
Termination"), the Master Servicer or its Successor Master Servicer shall again
be entitled to withdraw and retain the related Reimbursement Amounts from the
Custodial Account pursuant to Section 3.10.
(j) After delivery of any Advance Facility Notice, and until any such
Advance Facility Notice has been terminated by a Notice of Facility Termination,
this Section 3.22 may not be amended or otherwise modified without the prior
written consent of the related Advancing Person.
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ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
Section 4.01. Certificate Account.
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(a) The Master Servicer acting as agent of the Trustee shall establish and
maintain a Certificate Account in which the Master Servicer shall cause to be
deposited on behalf of the Trustee on or before 2:00 P.M. New York time on each
Certificate Account Deposit Date by wire transfer of immediately available funds
an amount equal to the sum of (i) any Advance for the immediately succeeding
Distribution Date, (ii) any amount required to be deposited in the Certificate
Account pursuant to Section 3.12(a), (iii) any amount required to be deposited
in the Certificate Account pursuant to Section 3.16(e), 4.07 or 4.08, (iv) any
amount required to be paid pursuant to Section 9.01, and (v) other amounts
constituting the Available Distribution Amount for the immediately succeeding
Distribution Date.
(b) [Reserved].
(c) The Trustee shall, upon written request from the Master Servicer, invest or
cause the institution maintaining the Certificate Account to invest the funds in
the Certificate Account in Permitted Investments designated in the name of the
Trustee for the benefit of the Certificateholders, which shall mature not later
than the Business Day next preceding the Distribution Date next following the
date of such investment (except that (i) if such Permitted Investment is an
obligation of the institution that maintains such account or fund for which such
institution serves as custodian, then such Permitted Investment may mature on
such Distribution Date and (ii) any other investment may mature on such
Distribution Date if the Trustee shall advance funds on such Distribution Date
to the Certificate Account in the amount payable on such investment on such
Distribution Date, pending receipt thereof to the extent necessary to make
distributions on the Certificates) and shall not be sold or disposed of prior to
maturity. All income and gain realized from any such investment shall be for the
benefit of the Master Servicer and shall be subject to its withdrawal or order
from time to time. The amount of any losses incurred in respect of any such
investments shall be deposited in the Certificate Account by the Master Servicer
out of its own funds immediately as realized.
Section 4.02. Distributions.
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(a) On each Distribution Date, the Trustee (or the Paying Agent on behalf of
the Trustee) shall allocate and distribute the Available Distribution
Amount, if any, for such date to the interests issued in respect of REMIC
I, REMIC II and REMIC III as specified in this Section.
(b) (1) On each Distribution Date, the REMIC I Distribution Amount shall be
distributed by REMIC I to REMIC II on account of the REMIC I Regular
Interests in the amounts and with the priorities set forth in the
definition thereof.
(2) On each Distribution Date, the REMIC II Distribution Amount
shall be distributed by REMIC II to REMIC III on account of the REMIC II
Regular Interests in the amounts and with the priorities set forth in the
definition thereof.
(3) Notwithstanding the distributions on the REMIC Regular
Interests described in this Section 4.02(b), distribution of funds from the
Certificate Account shall be made only in accordance with Section 4.02(c).
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(c) On each Distribution Date (x) the Master Servicer on behalf of the Trustee
or (y) the Paying Agent appointed by the Trustee, shall distribute to each
Certificateholder of record on the next preceding Record Date (other than as
provided in Section 9.01 respecting the final distribution) either in
immediately available funds (by wire transfer or otherwise) to the account of
such Certificateholder at a bank or other entity having appropriate facilities
therefor, if such Certificateholder has so notified the Master Servicer or the
Paying Agent, as the case may be, or, if such Certificateholder has not so
notified the Master Servicer or the Paying Agent by the Record Date, by check
mailed to such Certificateholder at the address of such Holder appearing in the
Certificate Register such Certificateholder's share (which share with respect to
each Class of Certificates, shall be based on the aggregate of the Percentage
Interests represented by Certificates of the applicable Class held by such
Holder of the following amounts), in the following order of priority, in each
case to the extent of the Available Distribution Amount on deposit in the
Certificate Account (except, with respect to clause (i) below, to the extent of
and in the priority of the Class A Interest Distribution Priority, with respect
to clauses (iii), (vii) and (xi) below, to the extent of the remaining Available
Distribution Amount plus the remaining Hedge Payment or, with respect to clause
(xi)(B) below, to the extent of prepayment charges on deposit in the Certificate
Account):
(i) to the Class A Certificateholders, the REMIC Interest Amount payable on the
Class A Certificates with respect to such Distribution Date, plus any related
amounts accrued pursuant to this clause (i) but remaining unpaid from any prior
Distribution Date, which amount shall be allocated pursuant to the Class A
Interest Distribution Priority, being paid from and in reduction of the
Available Distribution Amount for such Distribution Date;
(ii) to the Class M Certificateholders and Class B Certificateholders, from the
amount, if any, of the Available Distribution Amount remaining after the
foregoing distributions, the REMIC Interest Amount payable on the Class M
Certificates and Class B Certificates with respect to such Distribution Date,
plus any related amounts accrued pursuant to this clause (ii) but remaining
unpaid from any prior Distribution Date, sequentially, to the Class M-1
Certificateholders, Class M-2 Certificateholders, Class M-3 Certificateholders,
Class M-4 Certificateholders, Class M-5 Certificateholders, Class M-6
Certificateholders and Class B Certificateholders, in that order, being paid
from and in reduction of the Available Distribution Amount for such Distribution
Date;
(iii) to the Class A Certificateholders (other than the Class A-II-1
Certificateholders), Class M Certificateholders and Class B Certificateholders,
the related Accrued Certificate Interest in excess of the REMIC Interest Amount,
if any, which amount shall be allocated as follows:
(A) to the Class A-I Certificateholders, pro rata, based
upon the amount of the related Accrued Certificate Interest in
excess of the REMIC Interest Amount due thereon, being paid from
and in reduction of the Class A-I Hedge Payment for such
Distribution Date;
(B) to the Class A-II-2 Certificateholders, being paid
from and in reduction of the Class A-II-2 Hedge Payment for such
Distribution Date; and
(C) to the Class M Certificateholders and Class B
Certificateholders, pro rata, based upon the amount of the
related Accrued Certificate Interest in excess of the REMIC
Interest Amount due thereon, being paid from and in reduction of
the Subordinate Hedge Payment for such Distribution Date.
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(iv) the Principal Distribution Amount shall be distributed as follows, in
each case to the extent of the remaining Principal Distribution Amount:
(A) first, concurrently, the Group I Principal
Distribution Amount, sequentially, to the Class A-I-1
Certificateholders, Class A-I-2 Certificateholders and Class
A-I-3 Certificateholders, in that order, until the aggregate
Certificate Principal Balance of the Group I Certificates has
been reduced to zero and the Group II Principal Distribution
Amount, to the Class A-II Certificateholders in the amounts and
priority as described in Section 4.02(d) below, until the
aggregate Certificate Principal Balance of the Class A-II
Certificates has been reduced to zero;
(B) second, after application of payments pursuant to
clause (A), concurrently, the Group II Principal Distribution
Amount, sequentially, to the Class A-I-1 Certificateholders,
Class A-I-2 Certificateholders and Class A-I-3
Certificateholders, in that order, until the aggregate
Certificate Principal Balance of the Group I Certificates has
been reduced to zero and the Group I Principal Distribution
Amount, to the Class A-II Certificateholders in the amounts and
priority as described in Section 4.02(d) below, until the
aggregate Certificate Principal Balance of the Class A-II
Certificates has been reduced to zero;
(C) third, to the Class M-1 Certificateholders, the Class
M-1 Principal Distribution Amount, until the Certificate
Principal Balance of the Class M-1 Certificates has been reduced
to zero;
(D) fourth, to the Class M-2 Certificateholders, the Class
M-2 Principal Distribution Amount, until the Certificate
Principal Balance of the Class M-2 Certificates has been reduced
to zero;
(E) fifth, to the Class M-3 Certificateholders, the Class
M-3 Principal Distribution Amount, until the Certificate
Principal Balance of the Class M-3 Certificates has been reduced
to zero;
(F) sixth, to the Class M-4 Certificateholders, the Class
M-4 Principal Distribution Amount, until the Certificate
Principal Balance of the Class M-4 Certificates has been reduced
to zero;
(G) seventh, to the Class M-5 Certificateholders, the
Class M-5 Principal Distribution Amount, until the Certificate
Principal Balance of the Class M-5 Certificates has been reduced
to zero;
(H) eighth, to the Class M-6 Certificateholders, the Class
M-6 Principal Distribution Amount, until the Certificate
Principal Balance of the Class M-6 Certificates has been reduced
to zero; and
(I) ninth, to the Class B Certificateholders, the Class B
Principal Distribution Amount, until the Certificate Principal
Balance of the Class B Certificates has been reduced to zero;
(v) to the Class A Certificateholders, Class M Certificateholders and Class
B Certificateholders, the amount of any Prepayment Interest Shortfalls
allocated thereto for such Distribution Date, on a pro rata basis based
on Prepayment Interest Shortfalls allocated thereto to the extent not
offset by Eligible Master Servicing Compensation on such Distribution
Date;
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(vi) to the Class A Certificateholders, Class M Certificateholders and Class
B Certificateholders, the amount of any Prepayment Interest Shortfalls
previously allocated thereto remaining unpaid from prior Distribution
Dates together with interest thereon at the related Pass-Through Rate,
on a pro rata basis based on unpaid Prepayment Interest Shortfalls
previously allocated thereto;
(vii)(A) concurrently, (1) from the Group I Hedge Payment remaining after the
distributions in clause (iii)(A) above, to the Class A-I
Certificateholders, the amount of any unpaid Group I Basis Risk Shortfalls
allocated thereto, on a pro rata basis based on the amount of unpaid Group
I Basis Risk Shortfalls allocated thereto, (2) from the Class A-II-2 Hedge
Payment remaining after the distributions in clause (iii)(B) above, to the
Class A-II-2 Certificateholders, the amount of any unpaid Group II Basis
Risk Shortfalls allocated thereto, and (3) from the Subordinate Hedge
Payment remaining after the distributions in clause (iii)(C) above,
sequentially, to the Class X-0, Xxxxx X-0, Class M-3, Class M-4, Class M-5,
Class M-6 and Class B Certificateholders, in that order, the related
Subordinate Basis Risk Shortfall, as applicable, for such Class and that
Distribution Date and (B) from the Excess Cash Flow remaining after making
the distributions in clause (vi) above, first, to the Class A
Certificateholders, the related Group I Basis Risk Shortfall or Group II
Basis Risk Shortfall, as applicable, for such Class and that Distribution
Date remaining unpaid after the distributions described in clause (vii)(A)
above, on a pro rata basis based on the amount of unpaid Group I Basis Risk
Shortfalls or Group II Basis Risk Shortfalls, as applicable, for such Class
and then, sequentially, to the Class X-0, Xxxxx X-0, Class M-3, Class M-4,
Class M-5, Class M-6 and Class B Certificateholders, in that order, the
related Subordinate Basis Risk Shortfall, as applicable, for such Class and
that Distribution Date remaining unpaid after the distributions described
in clause (vii)(A) above; provided, that the Class A-II-1 Certificates
shall be entitled to payment of Group II Basis Risk Shortfalls allocated
thereto before the Class A-II-2 Certificates are entitled to payment of
Group II Basis Risk Shortfalls allocated thereto;
(viii) to the Class A Certificateholders, Class M Certificateholders and Class
B Certificateholders, Relief Act Shortfalls allocated thereto for such
Distribution Date, on a pro rata basis based on Relief Act Shortfalls
allocated thereto for such Distribution Date,
(ix) first, to the Class A Certificateholders, the principal portion of any
Realized Losses previously allocated to those Certificates and remaining
unreimbursed, on a pro rata basis based on their respective principal
portion of any Realized Losses previously allocated to those
Certificates and remaining unreimbursed, and then, sequentially, to the
Class X-0, Xxxxx X-0, Class M-3, Class M-4, Class M-5, Class M-6 and
Class B Certificateholders, in that order, the principal portion of any
Realized Losses previously allocated to such Class and remaining
unreimbursed;
(x) to the Class SB Certificates, (A) from the amount, if any, of the Excess
Cash Flow remaining after the foregoing distributions, the sum of (I)
Accrued Certificate Interest thereon, (II) the amount of any
Overcollateralization Reduction Amount for such Distribution Date, (III)
the amount of any Hedge Shortfall Amount for such Distribution Date,
(IV) the amount of any Hedge Shortfall Carry-Forward Amount for such
Distribution Date and (V) for any Distribution Date after the
Certificate Principal Balance of each Class of Class A Certificates,
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Class M Certificates and Class B Certificates has been reduced to zero,
the Overcollateralization Amount, (B) from prepayment charges on deposit
in the Certificate Account, any prepayment charges received on the
Mortgage Loans during the related Prepayment Period and (C) from the
Hedge Payments, if any, the amount of such Hedge Payments remaining
after the foregoing distributions; and
(xi) to the Class R-III Certificateholders, the balance, if any, of the
Excess Cash Flow.
(d) On any Distribution Date, the portion of the Principal Distribution
Amount distributable to the Class A-II-1 Certificates and Class A-II-2
Certificates shall be paid pro rata, based on the Certificate Principal
Balances of such classes immediately prior to such Distribution Date, if
such distribution date is (a) prior to December 2007 and cumulative
Realized Losses on the Group II Loans for such Distribution Date as a
percentage of the aggregate Stated Principal Balance of the Group II
Loans as of the cut-off date are less than 3.0% or (b) on or after
December 2007 and no Trigger Event is in effect. If such conditions are
not satisfied on any Distribution Date, the portion of the Principal
Distribution Amount distributable to the Class A-II-1 Certificates and
Class A-II-2 Certificates shall be paid sequentially to the Class A-II-1
Certificates and Class A-II-2 Certificates, in that order, until their
respective Certificate Principal Balances are reduced to zero.
(e) Notwithstanding the foregoing clauses (c) and (d), upon the reduction of
the Certificate Principal Balance of a Class of Class A Certificates,
Class M Certificates or Class B Certificates to zero, such Class of
Certificates will not be entitled to further distributions pursuant to
Section 4.02.
(f) Each distribution with respect to a Book-Entry Certificate shall be paid
to the Depository, as Holder thereof, and the Depository shall be
responsible for crediting the amount of such distribution to the
accounts of its Depository Participants in accordance with its normal
procedures. Each Depository Participant shall be responsible for
disbursing such distribution to the Certificate Owners that it
represents and to each indirect participating brokerage firm (a
"brokerage firm" or "indirect participating firm") for which it acts as
agent. Each brokerage firm shall be responsible for disbursing funds to
the Certificate Owners that it represents. None of the Trustee, the
Certificate Registrar, the Depositor or the Master Servicer shall have
any responsibility therefor except as otherwise provided by this
Agreement or applicable law.
(g) Except as otherwise provided in Section 9.01, if the Master Servicer
anticipates that a final distribution with respect to any Class of
Certificates will be made on the next Distribution Date, the Master
Servicer shall, no later than the Determination Date in the month of
such final distribution, notify the Trustee and the Trustee shall, no
later than two (2) Business Days after such Determination Date, mail on
such date to each Holder of such Class of Certificates a notice to the
effect that: (i) the Trustee anticipates that the final distribution
with respect to such Class of Certificates will be made on such
Distribution Date but only upon presentation and surrender of such
Certificates at the office of the Trustee or as otherwise specified
therein, and (ii) no interest shall accrue on such Certificates from and
after the end of the prior calendar month. In the event that
Certificateholders required to surrender their Certificates pursuant to
Section 9.01(c) do not surrender their Certificates for final
cancellation, the Trustee shall cause funds distributable with respect
to such Certificates to be withdrawn from the Certificate Account and
credited to a separate escrow account for the benefit of such
Certificateholders as provided in Section 9.01(d).
Section 4.03. Statements to Certificateholders; Statements to
Rating Agencies; Exchange Act Reporting.
(a) Concurrently with each distribution charged to the Certificate Account and
with respect to each Distribution Date the Master Servicer shall forward to the
Trustee and the Trustee shall forward by mail or otherwise make available
electronically on its website (which may be obtained by any Certificateholder by
telephoning the Trustee at (000) 000-0000) to each Holder and the Depositor a
statement setting forth the following information as to each Class of
Certificates, in each case to the extent applicable:
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(i) (A) the amount of such distribution to the Certificateholders of such Class
applied to reduce the Certificate Principal Balance thereof, and (B) the
aggregate amount included therein representing Principal Prepayments;
(ii) the amount of such distribution to Holders of such Class of Certificates
allocable to interest;
(iii) if the distribution to the Holders of such Class of Certificates is less
than the full amount that would be distributable to such Holders if there were
sufficient funds available therefor, the amount of the shortfall;
(iv) the amount of any Advance by the Master Servicer with respect to the Group
I Loans and Group II Loans pursuant to Section 4.04;
(v) the number and aggregate Stated Principal Balance of the Group I Loans, the
Group II Loans and the Mortgage Loans in the aggregate after giving effect to
the distribution of principal on such Distribution Date;
(vi) the aggregate Certificate Principal Balance of each Class of the
Certificates, after giving effect to the amounts distributed on such
Distribution Date, separately identifying any reduction thereof due to Realized
Losses other than pursuant to an actual distribution of principal;
(vii) on the basis of the most recent reports furnished to it by Subservicers,
(A) the number and aggregate principal balances of Group I Loans and Group II
Loans that are Delinquent (1) 30-59 days, (2) 60-89 days and (3) 90 or more days
and the number and aggregate principal balance of Group I Loans and Group II
Loans that are in foreclosure, (B) the number and aggregate principal balances
of the Group I Loans, Group II Loans and the Mortgage Loans in the aggregate
that are Reportable Modified Mortgage Loans that are in foreclosure and are REO
Property, indicating in each case capitalized Mortgage Loans, other Servicing
Modifications and totals, and (C) for all Reportable Modified Mortgage Loans,
the number and aggregate principal balances of the Group I Loans, Group II Loans
and the Mortgage Loans in the aggregate that have been liquidated, the subject
of pay-offs and that have been repurchased by the Master Servicer or Seller;
(viii) the number, aggregate principal balance and book value of any REO
Properties with respect to the Group I Loans and Group II Loans;
(ix) the aggregate Accrued Certificate Interest remaining unpaid, if any, for
each Class of Certificates, after giving effect to the distribution made on such
Distribution Date;
(x) the aggregate amount of Realized Losses with respect to the Group I Loans
and Group II Loans for such Distribution Date and the aggregate amount of
Realized Losses with respect to the Group I Loans and Group II Loans incurred
since the Cut-off Date;
(xi) [reserved];
(xii) the Pass-Through Rate on each Class of Certificates, the Group I Net WAC
Cap Rate, the Group II Net WAC Cap Rate and the Subordinate Net WAC Cap Rate,
and the Group I Weighted Average Maximum Net Mortgage Rate and the Group II
Weighted Average Maximum Net Mortgage Rate;
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(xiii) the Group I Basis Risk Shortfalls, Group II Basis Risk Shortfalls,
Subordinate Basis Risk Shortfalls, Group I Prepayment Interest Shortfalls and
Group II Prepayment Interest Shortfalls;
(xiv) the Overcollateralization Amount and the Required Overcollateralization
Amount following such Distribution Date;
(xv) the number and aggregate principal balance of the Group I Loans and Group
II Loans repurchased under Section 4.07 or 4.08;
(xvi) the aggregate amount of any recoveries with respect to the Group I Loans
and Group II Loans on previously foreclosed loans from Residential Funding due
to a breach of representation or warranty;
(xvii) the weighted average remaining term to maturity of the Group I Loans or
Group II Loans after giving effect to the amounts distributed on such
Distribution Date;
(xviii) the weighted average Mortgage Rates of the Group I Loans or Group II
Loans after giving effect to the amounts distributed on such Distribution Date;
(xix) the amount, if any, required to be paid under the Hedge Agreements for
such Distribution Date and any shortfall in amounts previously required to be
paid under the Hedge Agreements for prior Distribution Dates; and
(xx) the occurrence of the Stepdown Date; and
(xxi) the aggregate amount of Realized Losses since the Cut-off Date for the
Group I Loans and the Group II Loans.
In the case of information furnished pursuant to clauses (i) and (ii)
above, the amounts shall be expressed as a dollar amount per Certificate with a
$1,000 denomination. In addition to the statement provided to the Trustee as set
forth in this Section 4.03(a), the Master Servicer shall provide to any manager
of a trust fund consisting of some or all of the Certificates, upon reasonable
request, such additional information as is reasonably obtainable by the Master
Servicer at no additional expense to the Master Servicer. Also, at the request
of a Rating Agency, the Master Servicer shall provide the information relating
to the Reportable Modified Mortgage Loans substantially in the form attached
hereto as Exhibit U to such Rating Agency within a reasonable period of time;
provided, however, that the Master Servicer shall not be required to provide
such information more than four times in a calendar year to any Rating Agency.
(b) Within a reasonable period of time after the end of each calendar year, the
Master Servicer shall prepare, or cause to be prepared, and the Trustee shall
forward, or cause to be forwarded, upon the Trustee's receipt thereof, to each
Person who at any time during the calendar year was the Holder of a Certificate,
other than a Class R Certificate, a statement containing the information set
forth in clauses (i) and (ii) of subsection (a) above aggregated for such
calendar year or applicable portion thereof during which such Person was a
Certificateholder. Such obligation of the Master Servicer and Trustee shall be
deemed to have been satisfied to the extent that substantially comparable
information shall be provided by the Master Servicer and Trustee pursuant to any
requirements of the Code.
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(c) Within a reasonable period of time after the end of each calendar year, the
Master Servicer shall prepare, or cause to be prepared, and the Trustee shall
forward, or cause to be forwarded, to each Person who at any time during the
calendar year was the Holder of a Class R Certificate, a statement containing
the applicable distribution information provided pursuant to this Section 4.03
aggregated for such calendar year or applicable portion thereof during which
such Person was the Holder of a Class R Certificate. Such obligation of the
Master Servicer shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Master Servicer
and forwarded by the Trustee pursuant to any requirements of the Code.
(d) As soon as reasonably practicable, upon the written request of any Class SB
Certificate or Class R Certificateholder, the Master Servicer shall provide the
requesting Certificateholder with such information as is necessary and
appropriate, in the Master Servicer's sole discretion, for purposes of
satisfying applicable reporting requirements under Rule 144A.
(e) The Master Servicer shall, on behalf of the Depositor and in respect of the
Trust Fund, sign and cause to be filed with the Commission any periodic reports
required to be filed under the provisions of the Exchange Act, and the rules and
regulations of the Commission thereunder. In connection with the preparation and
filing of such periodic reports, the Trustee shall timely provide to the Master
Servicer (I) a list of Certificateholders as shown on the Certificate Register
as of the end of each calendar year, (II) copies of all pleadings, other legal
process and any other documents relating to any claims, charges or complaints
involving the Trustee, as trustee hereunder, or the Trust Fund that are received
by the Trustee, (III) notice of all matters that, to the actual knowledge of a
Responsible Officer of the Trustee, have been submitted to a vote of the
Certificateholders, other than those matters that have been submitted to a vote
of the Certificateholders at the request of the Depositor or the Master
Servicer, and (IV) notice of any failure of the Trustee to make any distribution
to the Certificateholders as required pursuant to this Agreement. Neither the
Master Servicer nor the Trustee shall have any liability with respect to the
Master Servicer's failure to properly prepare or file such periodic reports
resulting from or relating to the Master Servicer's inability or failure to
obtain any information not resulting from the Master Servicer's own negligence
or willful misconduct. Any Form 10-K filed with the Commission in connection
with this clause (e) shall include a certification, signed by the senior officer
in charge of the servicing functions of the Master Servicer, in the form
attached as Exhibit T-1 hereto or such other form as may be required or
permitted by the Commission (the "Form 10-K Certification"), in compliance with
Rule 13a-14 and 15d-14 under the Exchange Act and any additional directives of
the Commission. This Section 4.03(e) may be amended in accordance with this
Agreement without the consent of the Certificateholders. In connection with the
Form 10-K Certification, the Trustee shall provide the Master Servicer with a
back-up certification substantially in the form attached hereto as Exhibit T-2.
Section 4.04. Distribution of Reports to the Trustee and the
Depositor; Advances by the Master Servicer.
(a) Prior to the close of business on the Business Day next succeeding each
Determination Date, the Master Servicer shall furnish a written statement (which
may be in a mutually agreeable electronic format) to the Trustee, any Paying
Agent and the Depositor (the information in such statement to be made available
to Certificateholders by the Master Servicer on request) (provided that the
Master Servicer will use its best efforts to deliver such written statement not
later than 12:00 p.m. New York time on the second Business Day prior to the
Distribution Date) setting forth (i) the Available Distribution Amount, (ii) the
amounts required to be withdrawn from the Custodial Account and deposited into
the Certificate Account on the immediately succeeding Certificate Account
Deposit Date pursuant to clause (iii) of Section 4.01(a), (iii) the amount of
Prepayment Interest Shortfalls, Group I Basis Risk Shortfalls, Group II Basis
Risk Shortfalls and Subordinate Basis Risk Shortfalls and (iv) the Hedge
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Payments, if any, for such Distribution Date. The determination by the Master
Servicer of such amounts shall, in the absence of obvious error, be
presumptively deemed to be correct for all purposes hereunder and the Trustee
shall be protected in relying upon the same without any independent check or
verification.
(b) On or before 2:00 P.M. New York time on each Certificate Account Deposit
Date, the Master Servicer shall either (i) remit to the Trustee for deposit in
the Certificate Account from its own funds, or funds received therefor from the
Subservicers, an amount equal to the Advances to be made by the Master Servicer
in respect of the related Distribution Date, which shall be in an aggregate
amount equal to the sum of (A) the aggregate amount of Monthly Payments other
than Balloon Payments (with each interest portion thereof adjusted to a per
annum rate equal to the Net Mortgage Rate), less the amount of any related
Servicing Modifications, Debt Service Reductions or Relief Act Shortfalls, on
the Outstanding Mortgage Loans as of the related Due Date in the related Due
Period, which Monthly Payments were due during the related Due Period and not
received as of the close of business as of the related Determination Date;
provided that no Advance shall be made if it would be a Nonrecoverable Advance
and (B) with respect to each Balloon Loan delinquent in respect of its Balloon
Payment as of the close of business on the related Determination Date, an amount
equal to the assumed Monthly Payment (with each interest portion thereof
adjusted to a per annum rate equal to the Net Mortgage Rate) that would have
been due on the related Due Date based on the original amortization schedule for
such Balloon Loan until such Balloon Loan is finally liquidated, over any
payments of interest or principal (with each interest portion thereof adjusted
to a per annum rate equal to the Net Mortgage Rate) received from the related
Mortgagor as of the close of business on the related Determination Date and
allocable to the Due Date during the related Due Period for each month until
such Balloon Loan is finally liquidated, (ii) withdraw from amounts on deposit
in the Custodial Account and remit to the Trustee for deposit in the Certificate
Account all or a portion of the Amount Held for Future Distribution in discharge
of any such Advance, or (iii) make advances in the form of any combination of
clauses (i) and (ii) aggregating the amount of such Advance. Any portion of the
Amount Held for Future Distribution so used shall be replaced by the Master
Servicer by deposit in the Certificate Account on or before 11:00 A.M. New York
time on any future Certificate Account Deposit Date to the extent that funds
attributable to the Mortgage Loans that are available in the Custodial Account
for deposit in the Certificate Account on such Certificate Account Deposit Date
shall be less than payments to Certificateholders required to be made on the
following Distribution Date. The Master Servicer shall be entitled to use any
Advance made by a Subservicer as described in Section 3.07(b) that has been
deposited in the Custodial Account on or before such Distribution Date as part
of the Advance made by the Master Servicer pursuant to this Section 4.04. The
determination by the Master Servicer that it has made a Nonrecoverable Advance
or that any proposed Advance, if made, would constitute a Nonrecoverable
Advance, shall be evidenced by a certificate of a Servicing Officer delivered to
the Depositor and the Trustee. In the event that the Master Servicer determines
as of the Business Day preceding any Certificate Account Deposit Date that it
will be unable to deposit in the Certificate Account an amount equal to the
Advance required to be made for the immediately succeeding Distribution Date, it
shall give notice to the Trustee of its inability to advance (such notice may be
given by telecopy), not later than 3:00 P.M., New York time, on such Business
Day, specifying the portion of such amount that it will be unable to deposit.
Not later than 3:00 P.M., New York time, on the Certificate Account Deposit Date
the Trustee shall, unless by 12:00 Noon, New York time, on such day the Trustee
shall have been notified in writing (by telecopy) that the Master Servicer shall
have directly or indirectly deposited in the Certificate Account such portion of
the amount of the Advance as to which the Master Servicer shall have given
notice pursuant to the preceding sentence, pursuant to Section 7.01, (a)
terminate all of the rights and obligations of the Master Servicer under this
Agreement in accordance with Section 7.01 and (b) assume the rights and
obligations of the Master Servicer hereunder, including the obligation to
deposit in the Certificate Account an amount equal to the Advance for the
immediately succeeding Distribution Date. The Trustee shall deposit all funds it
receives pursuant to this Section 4.04(b) into the Certificate Account.
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Section 4.05. Allocation of Realized Losses.
(a) Prior to each Distribution Date, the Master Servicer shall
determine the total amount of Realized Losses, if any, that
resulted from any Cash Liquidation, Servicing
Modifications, Debt Service Reduction, Deficient Valuation
or REO Disposition that occurred during the related
Prepayment Period or, in the case of a Servicing
Modification that constitutes a reduction of the interest
rate on a Mortgage Loan, the amount of the reduction in the
interest portion of the Monthly Payment due in the month in
which such Distribution Date occurs. The amount of each
Realized Loss shall be evidenced by an Officers'
Certificate.
(b) All Realized Losses on the Mortgage Loans shall be
allocated as follows:
(i) first, to Excess Cash Flow in the amounts and priority as
provided in Section 4.02;
(ii) second, in reduction of the Overcollateralization Amount,
until such amount has been reduced to zero;
(iii) third, to the Class B Certificates, until the aggregate
Certificate Principal Balance thereof has been reduced to
zero;
(iv) fourth, to the Class M-6 Certificates, until the aggregate
Certificate Principal Balance thereof has been reduced to
zero;
(v) fifth, to the Class M-5 Certificates, until the aggregate
Certificate Principal Balance thereof has been reduced to
zero;
(vi) sixth, to the Class M-4 Certificates, until the aggregate
Certificate Principal Balance thereof has been reduced to
zero;
(vii) seventh, to the Class M-3 Certificates, until the aggregate
Certificate Principal Balance thereof has been reduced to
zero;
(viii) eighth, to the Class M-2 Certificates, until the aggregate
Certificate Principal Balance thereof has been reduced to
zero;
(ix) ninth, to the Class M-1 Certificates, until the aggregate
Certificate Principal Balance thereof has been reduced to
zero; and
(x) tenth, for losses on the Group I Loans, to the Class A-I
Certificates on a pro rata basis, based on their then
outstanding Certificate Principal Balances prior to giving
effect to distributions to be made on such Distribution
Date, until the aggregate Certificate Principal Balance of
each such Class has been reduced to zero and for losses on
the Group II Loans, first, to the Class A-II-2 Certificates
and then to the Class A-II-1 Certificates, in each case
until the aggregate Certificate Principal Balance thereof
has been reduced to zero.
(c) An allocation of a Realized Loss on a "pro rata basis"
among two or more specified Classes of Certificates means
an allocation on a pro rata basis, among the various
Classes so specified, to each such Class of Certificates on
the basis of their then outstanding Certificate Principal
Balances prior to giving effect to distributions to be made
on such Distribution Date in the case of the principal
portion of a Realized Loss or based on the Accrued
Certificate Interest thereon payable on such Distribution
Date in the case of an interest portion of a Realized Loss.
Any allocation of the principal portion of Realized Losses
(other than Debt Service Reductions) to the Class A
Certificates, Class M Certificates or Class B Certificates
shall be made by reducing the Certificate Principal Balance
thereof by the amount so allocated, which allocation shall
be deemed to have occurred on such Distribution Date;
provided, that no such reduction shall reduce the aggregate
Certificate Principal Balance of the Certificates below the
aggregate Stated Principal Balance of the Mortgage Loans.
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Allocations of the interest portions of Realized Losses
(other than any interest rate reduction resulting from a
Servicing Modification) shall be made by operation of the
definition of "Accrued Certificate Interest" for each Class
for such Distribution Date. Allocations of the interest
portion of a Realized Loss resulting from an interest rate
reduction in connection with a Servicing Modification shall
be made by operation of the priority of payment provisions
of Section 4.02(c). Allocations of the principal portion of
Debt Service Reductions shall be made by operation of the
priority of payment provisions of Section 4.02(c). All
Realized Losses and all other losses allocated to a Class
of Certificates hereunder will be allocated among the
Certificates of such Class in proportion to the Percentage
Interests evidenced thereby.
(d) All Realized Losses on the Mortgage Loans shall be
allocated on each Distribution Date to the REMIC I Regular
Interests as provided in the definition of REMIC I Realized
Losses.
(e) All Realized Losses on the Mortgage Loans shall be
allocated on each Distribution Date to the REMIC II Regular
Interests as provided in the definition of REMIC II
Realized Losses
(f) Realized Losses allocated to the Excess Cash Flow or the
Overcollateralization Amount pursuant to paragraphs (a),
(b) or (c) of this Section, the definition of Accrued
Certificate Interest and the operation of Section 4.02(c)
shall be deemed allocated to the Class SB Certificates.
Realized Losses allocated to the Class SB Certificates
shall, to the extent such Realized Losses represent
Realized Losses on an interest portion, be allocated to the
REMIC III Regular Interest SB-IO. Realized Losses allocated
to the Excess Cash Flow pursuant to paragraph (b) of this
Section shall be deemed to reduce Accrued Certificate
Interest on the REMIC III Regular Interest SB-IO. Realized
Losses allocated to the Overcollateralization Amount
pursuant to paragraph (b) of this Section shall be deemed
first to reduce the principal balance of the REMIC III
Regular Interest SB-PO until such principal balance shall
have been reduced to zero and thereafter to reduce accrued
and unpaid interest on the REMIC III Regular Interest
SB-IO.
Section 4.06. Reports of Foreclosures and Abandonment of Mortgaged Property.
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The Master Servicer or the Subservicers shall file information returns
with respect to the receipt of mortgage interest received in a trade or
business, the reports of foreclosures and abandonments of any Mortgaged Property
and the informational returns relating to cancellation of indebtedness income
with respect to any Mortgaged Property required by Sections 6050H, 6050J and
6050P of the Code, respectively, and deliver to the Trustee an Officers'
Certificate on or before March 31 of each year stating that such reports have
been filed. Such reports shall be in form and substance sufficient to meet the
reporting requirements imposed by such Sections 6050H, 6050J and 6050P of the
Code.
Section 4.07. Optional Purchase of Defaulted Mortgage Loans.
---------------------------------------------
(a) With respect to any Mortgage Loan which is delinquent in payment by 90 days
or more, the Master Servicer may, at its option, purchase such Mortgage Loan
from the Trustee at the Purchase Price therefor; provided, that such Mortgage
Loan is 90 days or more delinquent at the time of repurchase.
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(b) If at any time the Master Servicer makes a payment to the Certificate
Account covering the amount of the Purchase Price for such a Mortgage Loan as
provided in clause (a) above, and the Master Servicer provides to the Trustee a
certification signed by a Servicing Officer stating that the amount of such
payment has been deposited in the Certificate Account, then the Trustee shall
execute the assignment of such Mortgage Loan at the request of the Master
Servicer without recourse to the Master Servicer which shall succeed to all the
Trustee's right, title and interest in and to such Mortgage Loan, and all
security and documents relative thereto. Such assignment shall be an assignment
outright and not for security. The Master Servicer will thereupon own such
Mortgage, and all such security and documents, free of any further obligation to
the Trustee or the Certificateholders with respect thereto.
Section 4.08. [Reserved].
Section 4.09. [Reserved].
Section 4.10. Hedge Agreements.
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(a) In the event that the Trustee does not receive by the Business Day preceding
a Distribution Date the amount as specified by the Master Servicer pursuant to
Section 4.04(a)(vi) hereof as the amount to be paid with respect to such
Distribution Date by the Hedge Agreements Provider under a Hedge Agreement, the
Trustee shall enforce the obligation of the Hedge Agreements Provider
thereunder. The parties hereto acknowledge that the Hedge Agreements Provider
shall be making all calculations, and determine the amounts to be paid, under
the Hedge Agreements. Absent manifest error, the Trustee may conclusively rely
on such calculations and determination and any notice received by it from the
Master Servicer pursuant to Section 4.04(a)(vi) hereof.
(b) The Trustee shall deposit or cause to be deposited any amount received under
the Hedge Agreements into the Certificate Account on the date such amount is
received from the Hedge Agreements Provider under the Hedge Agreements
(including termination payments, if any). All payments received under the Hedge
Agreements shall be distributed in accordance with the priorities set forth in
Section 4.02(c) hereof.
(c) In the event that a Hedge Agreement, or any replacement thereof, terminates
prior to the Distribution Date in September 2006, the Master Servicer, but at no
expense to the Master Servicer, on behalf of the Trustee, to the extent that the
termination value under such Hedge Agreement is sufficient therefor and only to
the extent of the termination payment received from the Hedge Agreements
Provider, shall (i) cause a new hedge counterparty to assume the obligations of
such terminated hedge counterparty or (ii) cause a new hedge counterparty to
enter into a new interest rate hedge agreement with the Trust Fund having
substantially similar terms as those set forth in the terminated Hedge
Agreement.
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ARTICLE V
THE CERTIFICATES
Section 5.01. The Certificates.
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(a) The Class A Certificates, Class M Certificates, Class B Certificates, Class
SB Certificates and Class R Certificates shall be substantially in the forms set
forth in Exhibits A, B, C, D and E, respectively, and shall, on original issue,
be executed and delivered by the Trustee to the Certificate Registrar for
authentication and delivery to or upon the order of the Depositor upon receipt
by the Trustee or one or more Custodians of the documents specified in Section
2.01. The Class A Certificates and Class M-1 Certificates shall be issuable in
minimum dollar denominations of $25,000 and integral multiples of $1 in excess
thereof. The Class M-2 Certificates, Class M-3 Certificates, Class M-4
Certificates, Class M-5 Certificates, Class M-6 Certificates and Class B
Certificates shall be issuable in minimum dollar denominations of $250,000 and
integral multiples of $1 in excess thereof. The Class SB Certificates shall be
issuable in registered, certificated form in minimum percentage interests of
5.00% and integral multiples of 0.01% in excess thereof. Each Class of Class R
Certificates shall be issued in registered, certificated form in minimum
percentage interests of 20.00% and integral multiples of 0.01% in excess
thereof; provided, however, that one Class R Certificate of each Class will be
issuable to the REMIC Administrator as "tax matters person" pursuant to Section
10.01(c) in a minimum denomination representing a Percentage Interest of not
less than 0.01%. The Certificates shall be executed by manual or facsimile
signature on behalf of an authorized officer of the TRUSTEE. Certificates
bearing the manual or facsimile signatures of individuals who were at any time
the proper officers of the Trustee shall bind the Trustee, notwithstanding that
such individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Certificate or did not hold such offices at
the date of such Certificates. No Certificate shall be entitled to any benefit
under this Agreement, or be valid for any purpose, unless there appears on such
Certificate a certificate of authentication substantially in the form provided
for herein executed by the Certificate Registrar by manual signature, and such
certificate upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication.
(b) The Class A Certificates, Class B Certificates and Class M Certificates
shall initially be issued as one or more Certificates registered in the name of
the Depository or its nominee and, except as provided below, registration of
such Certificates may not be transferred by the Trustee except to another
Depository that agrees to hold such Certificates for the respective Certificate
Owners with Ownership Interests therein. The Certificate Owners shall hold their
respective Ownership Interests in and to each Class A Certificate, Class B
Certificate and Class M Certificate through the book-entry facilities of the
Depository and, except as provided below, shall not be entitled to Definitive
Certificates in respect of such Ownership Interests. All transfers by
Certificate Owners of their respective Ownership Interests in the Book-Entry
Certificates shall be made in accordance with the procedures established by the
Depository Participant or brokerage firm representing such Certificate Owner.
Each Depository Participant shall transfer the Ownership Interests only in the
Book-Entry Certificates of Certificate Owners it represents or of brokerage
firms for which it acts as agent in accordance with the Depository's normal
procedures.
The Trustee, the Master Servicer and the Depositor may for all purposes
(including the making of payments due on the respective Classes of Book-Entry
Certificates) deal with the Depository as the authorized representative of the
Certificate Owners with respect to the respective Classes of Book-Entry
Certificates for the purposes of exercising the rights of Certificateholders
hereunder. The rights of Certificate Owners with respect to the respective
Classes of Book-Entry Certificates shall be limited to those established by law
and agreements between such Certificate Owners and the Depository Participants
and brokerage firms representing such Certificate Owners. Multiple requests and
directions from, and votes of, the Depository as Holder of any Class of
Book-Entry Certificates with respect to any particular matter shall not be
deemed inconsistent if they are made with respect to different Certificate
Owners. The Trustee may establish a reasonable record date in connection with
solicitations of consents from or voting by Certificateholders and shall give
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notice to the Depository of such record date. If (i)(A) the Depositor advises
the Trustee in writing that the Depository is no longer willing or able to
properly discharge its responsibilities as Depository and (B) the Depositor is
unable to locate a qualified successor or (ii) the Depositor at its option
advises the Trustee in writing that it elects to terminate the book-entry system
through the Depository, the Trustee shall notify all Certificate Owners, through
the Depository, of the occurrence of any such event and of the availability of
Definitive Certificates to Certificate Owners requesting the same. Upon
surrender to the Trustee of the Book-Entry Certificates by the Depository,
accompanied by registration instructions from the Depository for registration of
transfer, the Trustee shall issue the Definitive Certificates.
In addition, if an Event of Default has occurred and is continuing, each
Certificate Owner materially adversely affected thereby may at its option
request a Definitive Certificate evidencing such Certificate Owner's Percentage
Interest in the related Class of Certificates. In order to make such request,
such Certificate Owner shall, subject to the rules and procedures of the
Depository, provide the Depository or the related Depository Participant with
directions for the Certificate Registrar to exchange or cause the exchange of
the Certificate Owner's interest in such Class of Certificates for an equivalent
Percentage Interest in fully registered definitive form. Upon receipt by the
Certificate Registrar of instructions from the Depository directing the
Certificate Registrar to effect such exchange (such instructions to contain
information regarding the Class of Certificates and the Certificate Principal
Balance being exchanged, the Depository Participant account to be debited with
the decrease, the registered holder of and delivery instructions for the
Definitive Certificate, and any other information reasonably required by the
Certificate Registrar), (i) the Certificate Registrar shall instruct the
Depository to reduce the related Depository Participant's account by the
aggregate Certificate Principal Balance of the Definitive Certificate, (ii) the
Trustee shall execute and the Certificate Registrar shall authenticate and
deliver, in accordance with the registration and delivery instructions provided
by the Depository, a Definitive Certificate evidencing such Certificate Owner's
Percentage Interest in such Class of Certificates and (iii) the Trustee shall
execute and the Certificate Registrar shall authenticate a new Book-Entry
Certificate reflecting the reduction in the aggregate Certificate Principal
Balance of such Class of Certificates by the amount of the Definitive
Certificates.
Neither the Depositor, the Master Servicer nor the Trustee shall be
liable for any actions taken by the Depository or its nominee, including,
without limitation, any delay in delivery of any instructions required under
this section and may conclusively rely on, and shall be protected in relying on,
such instructions. Upon the issuance of Definitive Certificates, the Trustee and
the Master Servicer shall recognize the Holders of the Definitive Certificates
as Certificateholders hereunder.
(c) Each of the Certificates is intended to be a "security" governed by Article
8 of the Uniform Commercial Code as in effect in the State of New York and any
other applicable jurisdiction, to the extent that any of such laws may be
applicable.
Section 5.02. Registration of Transfer and Exchange of Certificates.
-----------------------------------------------------
(a) The Trustee shall cause to be kept at one of the offices or agencies to be
appointed by the Trustee in accordance with the provisions of Section 8.12 a
Certificate Register in which, subject to such reasonable regulations as it may
prescribe, the Trustee shall provide for the registration of Certificates and of
transfers and exchanges of Certificates as herein provided. The Trustee is
initially appointed Certificate Registrar for the purpose of registering
Certificates and transfers and exchanges of Certificates as herein provided. The
Certificate Registrar, or the Trustee, shall provide the Master Servicer with a
certified list of Certificateholders as of each Record Date prior to the related
Determination Date.
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(b) Upon surrender for registration of transfer of any Certificate at any office
or agency of the Trustee maintained for such purpose pursuant to Section 8.12
and, in the case of any Class SB Certificate or Class R Certificate, upon
satisfaction of the conditions set forth below, the Trustee shall execute and
the Certificate Registrar shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of a like
Class and aggregate Percentage Interest.
(c) At the option of the Certificateholders, Certificates may be exchanged for
other Certificates of authorized denominations of a like Class and aggregate
Percentage Interest, upon surrender of the Certificates to be exchanged at any
such office or agency. Whenever any Certificates are so surrendered for exchange
the Trustee shall execute and the Certificate Registrar shall authenticate and
deliver the Certificates of such Class which the Certificateholder making the
exchange is entitled to receive. Every Certificate presented or surrendered for
transfer or exchange shall (if so required by the Trustee or the Certificate
Registrar) be duly endorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by, the Holder thereof or his attorney duly authorized in writing.
(d) No transfer, sale, pledge or other disposition of a Class B, Class SB
Certificate or Class R Certificate shall be made unless such transfer, sale,
pledge or other disposition is exempt from the registration requirements of the
Securities Act of 1933, as amended (the "1933 Act"), and any applicable state
securities laws or is made in accordance with said Act and laws. Except as
otherwise provided in this Section 5.02(d), in the event that a transfer of a
Class B, Class SB Certificate or Class R Certificate is to be made, (i) unless
the Depositor directs the Trustee otherwise, the Trustee shall require a written
Opinion of Counsel acceptable to and in form and substance satisfactory to the
Trustee and the Depositor that such transfer may be made pursuant to an
exemption, describing the applicable exemption and the basis therefor, from said
Act and laws or is being made pursuant to said Act and laws, which Opinion of
Counsel shall not be an expense of the Trustee, the Trust Fund, the Depositor or
the Master Servicer, and (ii) the Trustee shall require the transferee to
execute a representation letter, substantially in the form of Exhibit I hereto,
and the Trustee shall require the transferor to execute a representation letter,
substantially in the form of Exhibit J hereto, each acceptable to and in form
and substance satisfactory to the Depositor and the Trustee certifying to the
Depositor and the Trustee the facts surrounding such transfer, which
representation letters shall not be an expense of the Trustee, the Trust Fund,
the Depositor or the Master Servicer. In lieu of the requirements set forth in
the preceding sentence, transfers of Class B, Class SB Certificates or Class R
Certificates may be made in accordance with this Section 5.02(d) if the
prospective transferee of such a Certificate provides the Trustee and the Master
Servicer with an investment letter substantially in the form of Exhibit N
attached hereto, which investment letter shall not be an expense of the Trustee,
the Depositor, or the Master Servicer, and which investment letter states that,
among other things, such transferee (i) is a "qualified institutional buyer" as
defined under Rule 144A, acting for its own account or the accounts of other
"qualified institutional buyers" as defined under Rule 144A, and (ii) is aware
that the proposed transferor intends to rely on the exemption from registration
requirements under the 1933 Act provided by Rule 144A. The Holder of a Class B,
Class SB Certificate or Class R Certificate desiring to effect any transfer,
sale, pledge or other disposition shall, and does hereby agree to, indemnify the
Trustee, the Depositor, the Master Servicer and the Certificate Registrar
against any liability that may result if the transfer, sale, pledge or other
disposition is not so exempt or is not made in accordance with such federal and
state laws and this Agreement. If any transfer of a Class B Certificate held by
a transferor and to be held by a transferee in book-entry form is to made
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without registration under the 1933 Act, the transferor shall be deemed to have
made each of the certifications set forth in Exhibit J hereto as of the transfer
date and the transferee shall be deemed to have made each of the certifications
set forth in Exhibit N hereto as of the transfer date, in each case as if such
Class B Certificate were in physical form.
(e) (i) In the case of any Class SB Certificate or Class R Certificate presented
for registration in the name of any Person, either (i) the Trustee shall require
an Opinion of Counsel acceptable to and in form and substance satisfactory to
the Trustee, the Depositor and the Master Servicer to the effect that the
purchase or holding of such Class SB Certificate or Class R Certificate is
permissible under applicable law, will not constitute or result in any
non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of
the Code (or comparable provisions of any subsequent enactments), and will not
subject the Trustee, the Depositor or the Master Servicer to any obligation or
liability (including obligations or liabilities under ERISA or Section 4975 of
the Code) in addition to those undertaken in this Agreement, which Opinion of
Counsel shall not be an expense of the Trustee, the Depositor or the Master
Servicer, or (ii) the prospective transferee shall be required to provide the
Trustee, the Depositor and the Master Servicer with a certification to the
effect set forth in Exhibit P (with respect to a Class SB Certificate) or in
paragraph fifteen of Exhibit H-1 (with respect to a Class R Certificate), which
the Trustee may rely upon without further inquiry or investigation, or such
other certifications as the Trustee may deem desirable or necessary in order to
establish that such transferee or the Person in whose name such registration is
requested is not an employee benefit plan or other plan or arrangement subject
to the prohibited transaction provisions of ERISA or Section 4975 of the Code,
or any Person (including an insurance company investing its general accounts, an
investment manager, a named fiduciary or a trustee of any such plan) who is
using "plan assets" of any such plan to effect such acquisition (each of the
foregoing, a "Plan Investor").
(ii) Any Transferee of a Class B or Class M 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
Investor, (b) it has acquired and is holding such Certificate in reliance on
U.S. Department of Labor Prohibited Transaction Exemption ("PTE") 94-29, as most
recently amended, 67 Fed. Reg. 54487 (Aug. 22, 2002) (the "RFC Exemption"), and
that it understands that there are certain conditions to the availability of the
RFC Exemption including that such Certificate must be rated, at the time of
purchase, not lower than "BBB-" (or its equivalent) by Fitch, Standard & Poor's
or Moody's or (c) (x) such Transferee is an insurance company, (y) the source of
funds used to purchase or hold such Certificate (or interest therein) is an
"insurance company general account" (as defined in Prohibited Transaction Classe
Exemption ("PTCE") 95-60), and (z) the conditions set forth in Sections I and
III of PTCE 95-60 have been satisfied (each entity that satisfies this clause
(c), a "Complying Insurance Company").
(iii) If any Class B or Class M Certificate (or any interest
therein) is acquired or held by any Person that does not satisfy the conditions
described in paragraph (ii) above, then the last preceding Transferee that
either (x) is not a Plan Investor, (y) acquired such Certificate in compliance
with the RFC Exemption or (z) is a Complying Insurance Company shall be
restored, to the extent permitted by law, to all rights and obligations as
Certificate Owner thereof retroactive to the date of such Transfer of such Class
B or Class M Certificate. The Trustee shall be under no liability to any Person
for making any payments due on such Certificate to such preceding Transferee.
(iv) Any purported Certificate Owner whose acquisition or holding
of any Class B or Class M Certificate (or interest therein) was effected in
violation of the restrictions in this Section 5.02(e) shall indemnify and hold
harmless the Depositor, the Trustee, the Master Service, any Subservicer, any
underwriter and the Trust Fund from and against any and all liabilities, claims,
costs or expenses incurred by such parties as a result of such acquisition or
holding.
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(f) (i) Each Person who has or who acquires any Ownership Interest in a Class R
Certificate shall be deemed by the acceptance or acquisition of such Ownership
Interest to have agreed to be bound by the following provisions and to have
irrevocably authorized the Trustee or its designee under clause (iii)(A) below
to deliver payments to a Person other than such Person and to negotiate the
terms of any mandatory sale under clause (iii)(B) below and to execute all
instruments of transfer and to do all other things necessary in connection with
any such sale. The rights of each Person acquiring any Ownership Interest in a
Class R Certificate are expressly subject to the following provisions:
(A) Each Person holding or acquiring any Ownership Interest in a Class R
Certificate shall be a Permitted Transferee and shall promptly notify the
Trustee of any change or impending change in its status as a Permitted
Transferee.
(B) In connection with any proposed Transfer of any Ownership Interest in a
Class R Certificate, the Trustee shall require delivery to it, and shall not
register the Transfer of any Class R Certificate until its receipt of,
(I) an affidavit and agreement (a "Transfer Affidavit and Agreement," in the
form attached hereto as Exhibit H-1) from the proposed Transferee, in form and
substance satisfactory to the Master Servicer, representing and warranting,
among other things, that it is a Permitted Transferee, that it is not acquiring
its Ownership Interest in the Class R Certificate that is the subject of the
proposed Transfer as a nominee, trustee or agent for any Person who is not a
Permitted Transferee, that for so long as it retains its Ownership Interest in a
Class R Certificate, it will endeavor to remain a Permitted Transferee, and that
it has reviewed the provisions of this Section 5.02(f) and agrees to be bound by
them, and
(II) a certificate, in the form attached hereto as Exhibit H-2, from the Holder
wishing to transfer the Class R Certificate, in form and substance satisfactory
to the Master Servicer, representing and warranting, among other things, that no
purpose of the proposed Transfer is to impede the assessment or collection of
tax.
(C) Notwithstanding the delivery of a Transfer Affidavit and Agreement by a
proposed Transferee under clause (B) above, if a Responsible Officer of the
Trustee who is assigned to this Agreement has actual knowledge that the proposed
Transferee is not a Permitted Transferee, no Transfer of an Ownership Interest
in a Class R Certificate to such proposed Transferee shall be effected.
(D) Each Person holding or acquiring any Ownership Interest in a Class R
Certificate shall agree (x) to require a Transfer Affidavit and Agreement from
any other Person to whom such Person attempts to transfer its Ownership Interest
in a Class R Certificate and (y) not to transfer its Ownership Interest unless
it provides a certificate to the Trustee in the form attached hereto as Exhibit
H-2.
(E) Each Person holding or acquiring an Ownership Interest in a Class R
Certificate, by purchasing an Ownership Interest in such Certificate, agrees to
give the Trustee written notice that it is a "pass-through interest holder"
within the meaning of Temporary Treasury Regulations Section 1.67-3T(a)(2)(i)(A)
immediately upon acquiring an Ownership Interest in a Class R Certificate, if it
is, or is holding an Ownership Interest in a Class R Certificate on behalf of, a
"pass-through interest holder."
(ii) The Trustee will register the Transfer of any Class R Certificate only if
it shall have received the Transfer Affidavit and Agreement, a certificate of
the Holder requesting such transfer in the form attached hereto as Exhibit H-2
and all of such other documents as shall have been reasonably required by the
Trustee as a condition to such registration. Transfers of the Class R
Certificates to Non-United States Persons and Disqualified Organizations (as
defined in Section 860E(e)(5) of the Code) are prohibited.
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(A) If any Disqualified Organization shall become a holder of a Class R
Certificate, then the last preceding Permitted Transferee shall be restored, to
the extent permitted by law, to all rights and obligations as Holder thereof
retroactive to the date of registration of such Transfer of such Class R
Certificate. If a Non-United States Person shall become a holder of a Class R
Certificate, then the last preceding United States Person shall be restored, to
the extent permitted by law, to all rights and obligations as Holder thereof
retroactive to the date of registration of such Transfer of such Class R
Certificate. If a transfer of a Class R Certificate is disregarded pursuant to
the provisions of Treasury Regulations Section 1.860E-1 or Section 1.860G-3,
then the last preceding Permitted Transferee shall be restored, to the extent
permitted by law, to all rights and obligations as Holder thereof retroactive to
the date of registration of such Transfer of such Class R Certificate. The
Trustee shall be under no liability to any Person for any registration of
Transfer of a Class R Certificate that is in fact not permitted by this Section
5.02(f) or for making any payments due on such Certificate to the holder thereof
or for taking any other action with respect to such holder under the provisions
of this Agreement.
(B) If any purported Transferee shall become a Holder of a Class R Certificate
in violation of the restrictions in this Section 5.02(f) and to the extent that
the retroactive restoration of the rights of the Holder of such Class R
Certificate as described in clause (iii)(A) above shall be invalid, illegal or
unenforceable, then the Master Servicer shall have the right, without notice to
the holder or any prior holder of such Class R Certificate, to sell such Class R
Certificate to a purchaser selected by the Master Servicer on such terms as the
Master Servicer may choose. Such purported Transferee shall promptly endorse and
deliver each Class R Certificate in accordance with the instructions of the
Master Servicer. Such purchaser may be the Master Servicer itself or any
Affiliate of the Master Servicer. The proceeds of such sale, net of the
commissions (which may include commissions payable to the Master Servicer or its
Affiliates), expenses and taxes due, if any, will be remitted by the Master
Servicer to such purported Transferee. The terms and conditions of any sale
under this clause (iii)(B) shall be determined in the sole discretion of the
Master Servicer, and the Master Servicer shall not be liable to any Person
having an Ownership Interest in a Class R Certificate as a result of its
exercise of such discretion.
(iii) The Master Servicer, on behalf of the Trustee, shall make available, upon
written request from the Trustee, all information necessary to compute any tax
imposed
(A) as a result of the Transfer of an Ownership Interest in a Class R
Certificate to any Person who is a Disqualified Organization, including the
information regarding "excess inclusions" of such Class R Certificates required
to be provided to the Internal Revenue Service and certain Persons as described
in Treasury Regulations Sections 1.860D-1(b)(5) and 1.860E-2(a)(5), and
(B) as a result of any regulated investment company, real estate investment
trust, common trust fund, partnership, trust, estate or organization described
in Section 1381 of the Code that holds an Ownership Interest in a Class R
Certificate having as among its record holders at any time any Person who is a
Disqualified Organization. Reasonable compensation for providing such
information may be required by the Master Servicer from such Person.
(iv) The provisions of this Section 5.02(f) set forth prior to this clause (v)
may be modified, added to or eliminated, provided that there shall have been
delivered to the Trustee the following:
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(A) Written notification from each Rating Agency to the effect that the
modification, addition to or elimination of such provisions will not cause such
Rating Agency to downgrade its then-current ratings, if any, of the Class A
Certificates or Class M Certificates below the lower of the then-current rating
or the rating assigned to such Certificates as of the Closing Date by such
Rating Agency; and
(B) a certificate of the Master Servicer stating that the Master Servicer has
received an Opinion of Counsel, in form and substance satisfactory to the Master
Servicer, to the effect that such modification, addition to or absence of such
provisions will not cause any REMIC created hereunder to cease to qualify as a
REMIC and will not cause (x) any REMIC created hereunder to be subject to an
entity-level tax caused by the Transfer of any Class R Certificate to a Person
that is a Disqualified Organization or (y) a Certificateholder or another Person
to be subject to a REMIC-related tax caused by the Transfer of a Class R
Certificate to a Person that is not a Permitted Transferee.
(g) No service charge shall be made for any transfer or exchange of Certificates
of any Class, but the Trustee may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
transfer or exchange of Certificates.
(h) All Certificates surrendered for transfer and exchange shall be destroyed by
the Certificate Registrar.
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
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If (i) any mutilated Certificate is surrendered to the Certificate
Registrar, or the Trustee and the Certificate Registrar receive evidence to
their satisfaction of the destruction, loss or theft of any Certificate, and
(ii) there is delivered to the Trustee and the Certificate Registrar such
security or indemnity as may be required by them to save each of them harmless,
then, in the absence of notice to the Trustee or the Certificate Registrar that
such Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute and the Certificate Registrar shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like tenor, Class and Percentage Interest but
bearing a number not contemporaneously outstanding. Upon the issuance of any new
Certificate under this Section, the Trustee may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the
Trustee and the Certificate Registrar) connected therewith. Any duplicate
Certificate issued pursuant to this Section shall constitute complete and
indefeasible evidence of ownership in the Trust Fund, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.
Section 5.04. Persons Deemed Owners.
---------------------
Prior to due presentation of a Certificate for registration of transfer,
the Depositor, the Master Servicer, the Trustee, the Certificate Registrar and
any agent of the Depositor, the Master Servicer, the Trustee or the Certificate
Registrar may treat the Person in whose name any Certificate is registered as
the owner of such Certificate for the purpose of receiving distributions
pursuant to Section 4.02 and for all other purposes whatsoever, except as and to
the extent provided in the definition of "Certificateholder" and in Section
4.09, and neither the Depositor, the Master Servicer, the Trustee, the
Certificate Registrar nor any agent of the Depositor, the Master Servicer, the
Trustee or the Certificate Registrar shall be affected by notice to the contrary
except as provided in Section 5.02(f).
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Section 5.05. Appointment of Paying Agent.
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The Trustee may appoint a Paying Agent for the purpose of making
distributions to Certificateholders pursuant to Section 4.02. In the event of
any such appointment, on or prior to each Distribution Date the Master Servicer
on behalf of the Trustee shall deposit or cause to be deposited with the Paying
Agent a sum sufficient to make the payments to Certificateholders in the amounts
and in the manner provided for in Section 4.02, such sum to be held in trust for
the benefit of Certificateholders. The Trustee shall cause each Paying Agent to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee that such Paying Agent will hold all sums held by
it for the payment to Certificateholders in trust for the benefit of the
Certificateholders entitled thereto until such sums shall be paid to such
Certificateholders. Any sums so held by such Paying Agent shall be held only in
Eligible Accounts to the extent such sums are not distributed to the
Certificateholders on the date of receipt by such Paying Agent.
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ARTICLE VI
THE DEPOSITOR AND THE MASTER SERVICER
Section 6.01. Respective Liabilities of the Depositor and the Master Servicer.
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The Depositor and the Master Servicer shall each be liable in accordance
herewith only to the extent of the obligations specifically and respectively
imposed upon and undertaken by the Depositor and the Master Servicer herein. By
way of illustration and not limitation, the Depositor is not liable for the
servicing and administration of the Mortgage Loans, nor is it obligated by
Section 7.01 or Section 10.01 to assume any obligations of the Master Servicer
or to appoint a designee to assume such obligations, nor is it liable for any
other obligation hereunder that it may, but is not obligated to, assume unless
it elects to assume such obligation in accordance herewith.
Section 6.02. Merger or Consolidation of the Depositor or the Master Servicer;
Assignment of Rights and Delegation of Duties by Master Servicer.
(a) The Depositor and the Master Servicer will each keep in full effect its
existence, rights and franchises as a corporation under the laws of the state of
its incorporation, and will each obtain and preserve its qualification to do
business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Certificates or any of the Mortgage Loans
and to perform its respective duties under this Agreement.
(b) Any Person into which the Depositor or the Master Servicer may be merged or
consolidated, or any corporation resulting from any merger or consolidation to
which the Depositor or the Master Servicer shall be a party, or any Person
succeeding to the business of the Depositor or the Master Servicer, shall be the
successor of the Depositor or the Master Servicer, as the case may be,
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the successor or surviving Person to
the Master Servicer shall be qualified to service mortgage loans on behalf of
Xxxxxx Xxx or Xxxxxxx Mac; and provided further that each Rating Agency's
ratings, if any, of the Class A Certificates and Class M Certificates in effect
immediately prior to such merger or consolidation will not be qualified, reduced
or withdrawn as a result thereof (as evidenced by a letter to such effect from
each Rating Agency).
(c) Notwithstanding anything else in this Section 6.02 and Section 6.04 to the
contrary, the Master Servicer may assign its rights and delegate its duties and
obligations under this Agreement; provided that the Person accepting such
assignment or delegation shall be a Person which is qualified to service
mortgage loans on behalf of Xxxxxx Mae or Xxxxxxx Mac, is reasonably
satisfactory to the Trustee and the Depositor, is willing to service the
Mortgage Loans and executes and delivers to the Depositor and the Trustee an
agreement, in form and substance reasonably satisfactory to the Depositor and
the Trustee, which contains an assumption by such Person of the due and punctual
performance and observance of each covenant and condition to be performed or
observed by the Master Servicer under this Agreement; provided further that each
Rating Agency's rating of the Classes of Certificates that have been rated in
effect immediately prior to such assignment and delegation will not be
qualified, reduced or withdrawn as a result of such assignment and delegation
(as evidenced by a letter to such effect from each Rating Agency). In the case
of any such assignment and delegation, the Master Servicer shall be released
from its obligations under this Agreement, except that the Master Servicer shall
remain liable for all liabilities and obligations incurred by it as Master
Servicer hereunder prior to the satisfaction of the conditions to such
assignment and delegation set forth in the next preceding sentence.
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Section 6.03. Limitation on Liability of the Depositor, the Master Servicer and
Others.
Neither the Depositor, the Master Servicer nor any of the directors,
officers, employees or agents of the Depositor or the Master Servicer shall be
under any liability to the Trust Fund or the Certificateholders for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Depositor, the Master Servicer or any such
Person against any breach of warranties or representations made herein or any
liability which would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. The Depositor, the Master
Servicer and any director, officer, employee or agent of the Depositor or the
Master Servicer may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. The Depositor, the Master Servicer and any director, officer,
employee or agent of the Depositor or the Master Servicer shall be indemnified
by the Trust Fund and held harmless against any loss, liability or expense
incurred in connection with any legal action relating to this Agreement or the
Certificates, other than any loss, liability or expense related to any specific
Mortgage Loan or Mortgage Loans (except as any such loss, liability or expense
shall be otherwise reimbursable pursuant to this Agreement) and any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
gross negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder. Neither the Depositor nor the
Master Servicer shall be under any obligation to appear in, prosecute or defend
any legal or administrative action, proceeding, hearing or examination that is
not incidental to its respective duties under this Agreement and which in its
opinion may involve it in any expense or liability; provided, however, that the
Depositor or the Master Servicer may in its discretion undertake any such
action, proceeding, hearing or examination that it may deem necessary or
desirable in respect to this Agreement and the rights and duties of the parties
hereto and the interests of the Certificateholders hereunder. In such event, the
legal expenses and costs of such action, proceeding, hearing or examination and
any liability resulting therefrom shall be expenses, costs and liabilities of
the Trust Fund, and the Depositor and the Master Servicer shall be entitled to
be reimbursed therefor out of amounts attributable to the Mortgage Loans on
deposit in the Custodial Account as provided by Section 3.10 and, on the
Distribution Date(s) following such reimbursement, the aggregate of such
expenses and costs shall be allocated in reduction of the Accrued Certificate
Interest on each Class entitled thereto in the same manner as if such expenses
and costs constituted a Prepayment Interest Shortfall.
Section 6.04. Depositor and Master Servicer Not to Resign.
-------------------------------------------
Subject to the provisions of Section 6.02, neither the Depositor nor the
Master Servicer shall resign from its respective obligations and duties hereby
imposed on it except upon determination that its duties hereunder are no longer
permissible under applicable LAW. Any such determination permitting the
resignation of the Depositor or the Master Servicer shall be evidenced by an
Opinion of Counsel (at the expense of the resigning party) to such effect
delivered to the Trustee. No such resignation by the Master Servicer shall
become effective until the Trustee or a successor servicer shall have assumed
the Master Servicer's responsibilities and obligations in accordance with
Section 7.02.
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ARTICLE VII
DEFAULT
Section 7.01. Events of Default.
-----------------
Event of Default, wherever used herein, means any one of the following
events (whatever reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) the Master Servicer shall fail to distribute or cause to be distributed to
Holders of Certificates of any Class any distribution required to be made
under the terms of the Certificates of such Class and this Agreement and,
in either case, such failure shall continue unremedied for a period of 5
days after the date upon which written notice of such failure, requiring
such failure to be remedied, shall have been given to the Master Servicer
by the Trustee or the Depositor or to the Master Servicer, the Depositor
and the Trustee by the Holders of Certificates of such Class evidencing
Percentage Interests aggregating not less than 25%; or
(ii) the Master Servicer shall fail to observe or perform in any material
respect any other of the covenants or agreements on the part of the Master
Servicer contained in the Certificates of any Class or in this Agreement
and such failure shall continue unremedied for a period of 30 days (except
that such number of days shall be 15 in the case of a failure to pay the
premium for any Required Insurance Policy) after the date on which written
notice of such failure, requiring the same to be remedied, shall have been
given to the Master Servicer by the Trustee or the Depositor, or to the
Master Servicer, the Depositor and the Trustee by the Holders of
Certificates of any Class evidencing, as to such Class, Percentage
Interests aggregating not less than 25%; or
(iii) a decree or order of a court or agency or supervisory authority having
jurisdiction in the premises in an involuntary case under any present or
future federal or state bankruptcy, insolvency or similar law or
appointing a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the Master Servicer and such decree or order
shall have remained in force undischarged or unstayed for a period of 60
days; or
(iv) the Master Servicer shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities, or similar proceedings of, or
relating to, the Master Servicer or of, or relating to, all or
substantially all of the property of the Master Servicer; or
(v) the Master Servicer shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage
of, or commence a voluntary case under, any applicable insolvency or
reorganization statute, make an assignment for the benefit of its
creditors, or voluntarily suspend payment of its obligations; or
(vi) the Master Servicer shall notify the Trustee pursuant to Section 4.04(b)
that it is unable to deposit in the Certificate Account an amount equal
to the Advance.
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If an Event of Default described in clauses (i)-(v) of this Section
shall occur, then, and in each and every such case, so long as such Event of
Default shall not have been remedied, either the Depositor or the Trustee shall
at the direction of Holders of Certificates entitled to at least 51% of the
Voting Rights by notice in writing to the Master Servicer (and to the
Depositor), terminate all of the rights and obligations of the Master Servicer
under this Agreement and in and to the Mortgage Loans and the proceeds thereof,
other than its rights as a Certificateholder hereunder; provided, however, that
a successor to the Master Servicer is appointed pursuant to Section 7.02 and
such successor Master Servicer shall have accepted the duties of Master Servicer
effective upon the resignation of the Master Servicer. If an Event of Default
described in clause (vi) hereof shall occur, the Trustee shall, by notice to the
Master Servicer and the Depositor, immediately terminate all of the rights and
obligations of the Master Servicer under this Agreement and in and to the
Mortgage Loans and the proceeds thereof, other than its rights as a
Certificateholder hereunder as provided in Section 4.04(b). On or after the
receipt by the Master Servicer of such written notice, all authority and power
of the Master Servicer under this Agreement, whether with respect to the
Certificates (other than as a Holder thereof) or the Mortgage Loans or
otherwise, shall subject to Section 7.02 pass to and be vested in the Trustee or
the Trustee's designee appointed pursuant to Section 7.02; and, without
limitation, the Trustee is hereby authorized and empowered to execute and
deliver, on behalf of the Master Servicer, as attorney-in-fact or otherwise, any
and all documents and other instruments, and to do or accomplish all other acts
or things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loans and related documents, or otherwise. The Master Servicer
agrees to cooperate with the Trustee in effecting the termination of the Master
Servicer's responsibilities and rights hereunder, including, without limitation,
the transfer to the Trustee or its designee for administration by it of all cash
amounts which shall at the time be credited to the Custodial Account or the
Certificate Account or thereafter be received with respect to the Mortgage
Loans. No such termination shall release the Master Servicer for any liability
that it would otherwise have hereunder for any act or omission prior to the
effective time of such termination. Notwithstanding any termination of the
activities of Residential Funding in its capacity as Master Servicer hereunder,
Residential Funding shall be entitled to receive, out of any late collection of
a Monthly Payment on a Mortgage Loan which was due prior to the notice
terminating Residential Funding's rights and obligations as Master Servicer
hereunder and received after such notice, that portion to which Residential
Funding would have been entitled pursuant to Sections 3.10(a)(ii), (vi) and
(vii) as well as its Servicing Fee in respect thereof, and any other amounts
payable to Residential Funding hereunder the entitlement to which arose prior to
the termination of its activities hereunder. Upon the termination of Residential
Funding as Master Servicer hereunder the Depositor shall deliver to the Trustee,
as successor Master Servicer, a copy of the Program Guide.
Section 7.02. Trustee or Depositor to Act; Appointment of Successor.
-----------------------------------------------------
(a) On and after the time the Master Servicer receives a notice of termination
pursuant to Section 7.01 or resigns in accordance with Section 6.04, the Trustee
or, upon notice to the Depositor and with the Depositor's consent (which shall
not be unreasonably withheld) a designee (which meets the standards set forth
below) of the Trustee, shall be the successor in all respects to the Master
Servicer in its capacity as servicer under this Agreement and the transactions
set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Master
Servicer (except for the responsibilities, duties and liabilities contained in
Sections 2.02 and 2.03(a), excluding the duty to notify related Subservicers as
set forth in such Sections, and its obligations to deposit amounts in respect of
losses incurred prior to such notice or termination on the investment of funds
in the Custodial Account or the Certificate Account pursuant to Sections 3.07(c)
and 4.01(c) by the terms and provisions hereof); provided, however, that any
failure to perform such duties or responsibilities caused by the preceding
Master Servicer's failure to provide information required by Section 4.04 shall
not be considered a default by the Trustee hereunder as successor Master
Servicer. As compensation therefor, the Trustee as successor Master Servicer
shall be entitled to all funds relating to the Mortgage Loans which the Master
Servicer would have been entitled to charge to the Custodial Account or the
Certificate Account if the Master Servicer had continued to act hereunder and,
in addition, shall be entitled to the income from any Permitted Investments made
with amounts attributable to the Mortgage Loans held in the Custodial Account or
the Certificate Account. If the Trustee has become the successor to the Master
Servicer in accordance with Section 6.04 or Section 7.01, then notwithstanding
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the above, the Trustee may, if it shall be unwilling to so act, or shall, if it
is unable to so act, appoint, or petition a court of competent jurisdiction to
appoint, any established housing and home finance institution, which is also a
Xxxxxx Xxx or Xxxxxxx Mac-approved mortgage servicing institution, having a net
worth of not less than $10,000,000 as the successor to the Master Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Master Servicer hereunder. Pending appointment of a
successor to the Master Servicer hereunder, the Trustee shall become successor
to the Master Servicer and shall act in such capacity as hereinabove provided.
In connection with such appointment and assumption, the Trustee may make such
arrangements for the compensation of such successor out of payments on Mortgage
Loans as it and such successor shall agree; provided, however, that no such
compensation shall be in excess of that permitted the initial Master Servicer
hereunder. The Depositor, the Trustee, the Custodian and such successor shall
take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession. The Servicing Fee for any successor Master
Servicer appointed pursuant to this Section 7.02 will be lowered with respect to
those Mortgage Loans, if any, where the Subservicing Fee accrues at a rate of
less than 0.50% per annum in the event that the successor Master Servicer is not
servicing such Mortgage Loans directly and it is necessary to raise the related
Subservicing Fee to a rate of 0.50% per annum in order to hire a Subservicer
with respect to such Mortgage Loans.
(b) In connection with the termination or resignation of the Master Servicer
hereunder, either (i) the successor Master Servicer, including the Trustee if
the Trustee is acting as successor Master Servicer, shall represent and warrant
that it is a member of MERS in good standing and shall agree to comply in all
material respects with the rules and procedures of MERS in connection with the
servicing of the Mortgage Loans that are registered with MERS, in which case the
predecessor Master Servicer shall cooperate with the successor Master Servicer
in causing MERS to revise its records to reflect the transfer of servicing to
the successor Master Servicer as necessary under MERS' rules and regulations, or
(ii) the predecessor Master Servicer shall cooperate with the successor Master
Servicer in causing MERS to execute and deliver an assignment of Mortgage in
recordable form to transfer the Mortgage from MERS to the Trustee and to execute
and deliver such other notices, documents and other instruments as may be
necessary or desirable to effect a transfer of such Mortgage Loan or servicing
of such Mortgage Loan on the MERS(R) System to the successor Master SERVICER.
The predecessor Master Servicer shall file or cause to be filed any such
assignment in the appropriate recording office. The predecessor Master Servicer
shall bear any and all fees of MERS, costs of preparing any assignments of
Mortgage, and fees and costs of filing any assignments of Mortgage that may be
required under this subsection (b). The successor Master Servicer shall cause
such assignment to be delivered to the Trustee or the Custodian promptly upon
receipt of the original with evidence of recording thereon or a copy certified
by the public recording office in which such assignment was recorded.
Section 7.03. Notification to Certificateholders.
----------------------------------
(a) Upon any such termination or appointment of a successor to the Master
Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders at their respective addresses appearing in the Certificate
Register.
(b) Within 60 days after the occurrence of any Event of Default, the Trustee
shall transmit by mail to all Holders of Certificates notice of each such Event
of Default hereunder known to the Trustee, unless such Event of Default shall
have been cured or waived as provided in Section 7.04 hereof.
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Section 7.04. Waiver of Events of Default.
---------------------------
The Holders representing at least 66% of the Voting Rights of
Certificates affected by a default or Event of Default hereunder may waive any
default or Event of Default; provided, however, that (a) a default or Event of
Default under clause (i) of Section 7.01 may be waived only by all of the
Holders of Certificates affected by such default or Event of Default and (b) no
waiver pursuant to this Section 7.04 shall affect the Holders of Certificates in
the manner set forth in Section 11.01(b)(i), (ii) or (iii). Upon any such waiver
of a default or Event of Default by the Holders representing the requisite
percentage of Voting Rights of Certificates affected by such default or Event of
Default, such default or Event of Default shall cease to exist and shall be
deemed to have been remedied for every purpose hereunder. No such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent thereon except to the extent expressly so waived.
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ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.01. Duties of Trustee.
-----------------
(a) The Trustee, prior to the occurrence of an Event of Default and after
the curing of all Events of Default which may have occurred, undertakes
to perform such duties and only such duties as are specifically set
forth in this Agreement. In case an Event of Default has occurred (which
has not been cured or waived), the Trustee shall exercise such of the
rights and powers vested in it by this Agreement, and use the same
degree of care and skill in their exercise as a prudent investor would
exercise or use under the circumstances in the conduct of such
investor's own affairs.
(b) The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to
the Trustee which are specifically required to be furnished pursuant to
any provision of this Agreement, shall examine them to determine whether
they conform to the requirements of this Agreement. The Trustee shall
notify the Certificateholders of any such documents which do not
materially conform to the requirements of this Agreement in the event
that the Trustee, after so requesting, does not receive satisfactorily
corrected documents. The Trustee shall forward or cause to be forwarded
in a timely fashion the notices, reports and statements required to be
forwarded by the Trustee pursuant to Sections 4.03, 7.03, and 10.01. The
Trustee shall furnish in a timely fashion to the Master Servicer such
information as the Master Servicer may reasonably request from time to
time for the Master Servicer to fulfill its duties as set forth in this
Agreement. The Trustee covenants and agrees that it shall perform its
obligations hereunder in a manner so as to maintain the status of each
REMIC created hereunder as a REMIC under the REMIC Provisions and to
(subject to Section 10.01(f)) prevent the imposition of any federal,
state or local income, prohibited transaction, contribution or other tax
on the Trust Fund to the extent that maintaining such status and
avoiding such taxes are reasonably within the control of the Trustee and
are reasonably within the scope of its duties under this Agreement.
(c) No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct; provided, however, that:
(i) Prior to the occurrence of an Event of Default, and after the curing or
waiver of all such Events of Default which may have occurred, the duties
and obligations of the Trustee shall be determined solely by the express
provisions of this Agreement, the Trustee shall not be liable except for
the performance of such duties and obligations as are specifically set
forth in this Agreement, no implied covenants or obligations shall be read
into this Agreement against the Trustee and, in the absence of bad faith on
the part of the Trustee, the Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed therein,
upon any certificates or opinions furnished to the Trustee by the Depositor
or the Master Servicer and which on their face, do not contradict the
requirements of this Agreement;
(ii) The Trustee shall not be personally liable for an error of judgment made
in good faith by a Responsible Officer or Responsible Officers of the
Trustee, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(iii) The Trustee shall not be personally liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in accordance
with the direction of the Certificateholders holding Certificates which
evidence, Percentage Interests aggregating not less than 25% of the
affected Classes as to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this Agreement;
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(iv) The Trustee shall not be charged with knowledge of any default (other
than a default in payment to the Trustee) specified in clauses (i) and
(ii) of Section 7.01 or an Event of Default under clauses (iii), (iv)
and (v) of Section 7.01 unless a Responsible Officer of the Trustee
assigned to and working in the Corporate Trust Office obtains actual
knowledge of such failure or event or the Trustee receives written
notice of such failure or event at its Corporate Trust Office from the
Master Servicer, the Depositor or any Certificateholder; and
(v) Except to the extent provided in Section 7.02, no provision in this
Agreement shall require the Trustee to expend or risk its own funds
(including, without limitation, the making of any Advance) or otherwise
incur any personal financial liability in the performance of any of its
duties as Trustee hereunder, or in the exercise of any of its rights or
powers, if the Trustee shall have reasonable grounds for believing that
repayment of funds or adequate indemnity against such risk or liability
is not reasonably assured to it.
(d) The Trustee shall timely pay, from its own funds, the amount of any and
all federal, state and local taxes imposed on the Trust Fund or its
assets or transactions including, without limitation, (A) "prohibited
transaction" penalty taxes as defined in Section 860F of the Code, if,
when and as the same shall be due and payable, (B) any tax on
contributions to a REMIC after the Closing Date imposed by Section
860G(d) of the Code and (C) any tax on "net income from foreclosure
property" as defined in Section 860G(c) of the Code, but only if such
taxes arise out of a breach by the Trustee of its obligations hereunder,
which breach constitutes negligence or willful misconduct of the
Trustee.
Section 8.02. Certain Matters Affecting the Trustee.
-------------------------------------
(a) Except as otherwise provided in Section 8.01:
(i) The Trustee may rely and shall be protected in acting or refraining from
acting upon any resolution, Officer's Certificate, certificate of
auditors or any other certificate, statement, instrument, opinion,
report, notice, request, consent, order, appraisal, bond or other paper
or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(ii) The Trustee may consult with counsel and any Opinion of Counsel shall be
full and complete authorization and protection in respect of any action
taken or suffered or omitted by it hereunder in good faith and in
accordance with such Opinion of Counsel;
(iii)The Trustee shall be under no obligation to exercise any of the trusts or
powers vested in it by this Agreement or to institute, conduct or defend
any litigation hereunder or in relation hereto at the request, order or
direction of any of the Certificateholders pursuant to the provisions of
this Agreement, unless such Certificateholders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby; nothing contained
herein shall, however, relieve the Trustee of the obligation, upon the
occurrence of an Event of Default (which has not been cured), to exercise
such of the rights and powers vested in it by this Agreement, and to use
the same degree of care and skill in their exercise as a prudent investor
would exercise or use under the circumstances in the conduct of such
investor's own affairs;
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(iv) The Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Agreement;
(v) Prior to the occurrence of an Event of Default hereunder and after the
curing of all Events of Default which may have occurred, the Trustee shall
not be bound to make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, bond or other paper or document,
unless requested in writing so to do by the Holders of Certificates of any
Class evidencing, as to such Class, Percentage Interests, aggregating not
less than 50%; provided, however, that if the payment within a reasonable
time to the Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the opinion of
the Trustee, not reasonably assured to the Trustee by the security afforded
to it by the terms of this Agreement, the Trustee may require reasonable
indemnity against such expense or liability as a condition to so
proceeding. The reasonable expense of every such examination shall be paid
by the Master Servicer, if an Event of Default shall have occurred and is
continuing, and otherwise by the Certificateholder requesting the
investigation;
(vi) The Trustee may execute any of the trusts or powers hereunder or perform
any duties hereunder either directly or by or through agents or
attorneys provided that the Trustee shall remain liable for any acts of
such agents or attorneys; and
(vii)To the extent authorized under the Code and the regulations promulgated
thereunder, each Holder of a Class R Certificate hereby irrevocably
appoints and authorizes the Trustee to be its attorney-in-fact for purposes
of signing any Tax Returns required to be filed on behalf of the Trust
Fund. The Trustee shall sign on behalf of the Trust Fund and deliver to the
Master Servicer in a timely manner any Tax Returns prepared by or on behalf
of the Master Servicer that the Trustee is required to sign as determined
by the Master Servicer pursuant to applicable federal, state or local tax
laws, provided that the Master Servicer shall indemnify the Trustee for
signing any such Tax Returns that contain errors or omissions.
(b) Following the issuance of the Certificates (and except as provided for
in Section 2.04), the Trustee shall not accept any contribution of
assets to the Trust Fund unless (subject to Section 10.01(f)) it shall
have obtained or been furnished with an Opinion of Counsel to the effect
that such contribution will not (i) cause any REMIC created hereunder to
fail to qualify as a REMIC at any time that any Certificates are
outstanding or (ii) cause the Trust Fund to be subject to any federal
tax as a result of such contribution (including the imposition of any
federal tax on "prohibited transactions" imposed under Section 860F(a)
of the Code).
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans.
-----------------------------------------------------
The recitals contained herein and in the Certificates (other than the
execution of the Certificates and relating to the acceptance and receipt of the
Mortgage Loans) shall be taken as the statements of the Depositor or the Master
Servicer as the case may be, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Agreement or of the Certificates (except that the
Certificates shall be duly and validly executed and authenticated by it as
Certificate Registrar) or of any Mortgage Loan or related document, or of MERS
or the MERS(R) System. Except as otherwise provided herein, the Trustee shall
not be accountable for the use or application by the Depositor or the Master
Servicer of any of the Certificates or of the proceeds of such Certificates, or
for the use or application of any funds paid to the Depositor or the Master
Servicer in respect of the Mortgage Loans or deposited in or withdrawn from the
Custodial Account or the Certificate Account by the Depositor or the Master
Servicer.
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Section 8.04. Trustee May Own Certificates.
----------------------------
The Trustee in its individual or any other capacity may become the owner
or pledgee of Certificates with the same rights it would have if it were not
Trustee.
Section 8.05. Master Servicer to Pay Trustee's Fees and Expenses;
Indemnification.
(a) The Master Servicer covenants and agrees to pay to the Trustee and any
co-trustee from time to time, and the Trustee and any co-trustee shall be
entitled to, reasonable compensation (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express trust)
for all services rendered by each of them in the execution of the trusts hereby
created and in the exercise and performance of any of the powers and duties
hereunder of the Trustee and any co-trustee, and the Master Servicer will pay or
reimburse the Trustee and any co-trustee upon request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee or any
co-trustee in accordance with any of the provisions of this Agreement (including
the reasonable compensation and the expenses and disbursements of its counsel
and of all persons not regularly in its employ, and the expenses incurred by the
Trustee or any co-trustee in connection with the appointment of an office or
agency pursuant to Section 8.12) except any such expense, disbursement or
advance as may arise from its negligence or bad faith.
(b) The Master Servicer agrees to indemnify the Trustee for, and to hold the
Trustee harmless against, any loss, liability or expense incurred without
negligence or willful misconduct on its part, arising out of, or in connection
with, the acceptance and administration of the Trust Fund, including its
obligation to execute the DTC Letter in its individual capacity, and including
the costs and expenses (including reasonable legal fees and expenses) of
defending itself against any claim in connection with the exercise or
performance of any of its powers or duties under this Agreement, and the Master
Servicer further agrees to indemnify the Trustee for, and to hold the Trustee
harmless against, any loss, liability or expense arising out of, or in
connection with, the provisions set forth in the third paragraph of Section
2.01(b) hereof, including without limitation, all costs, liabilities and
expenses (including reasonable legal fees and expenses) of investigating and
defending itself against any claim, action or proceeding, pending or threatened,
relating to the provisions of such paragraph, provided that:
(i) with respect to any such claim, the Trustee shall have given the Master
Servicer written notice thereof promptly after the Trustee shall have actual
knowledge thereof;
(ii) while maintaining control over its own defense, the Trustee shall cooperate
and consult fully with the Master Servicer in preparing such defense; and
(iii) notwithstanding anything in this Agreement to the contrary, the Master
Servicer shall not be liable for settlement of any claim by the Trustee entered
into without the prior consent of the Master Servicer which consent shall not be
unreasonably withheld. No termination of this Agreement shall affect the
obligations created by this Section 8.05(b) of the Master Servicer to indemnify
the Trustee under the conditions and to the extent set forth herein.
Notwithstanding the foregoing, the indemnification provided by the Master
Servicer in this Section 8.05(b) shall not pertain to any loss, liability or
expense of the Trustee, including the costs and expenses of defending itself
against any claim, incurred in connection with any actions taken by the Trustee
at the direction of Certificateholders pursuant to the terms of this Agreement.
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Section 8.06. Eligibility Requirements for Trustee.
------------------------------------
The Trustee hereunder shall at all times be a national banking
association or a New York banking corporation having its principal office in a
state and city acceptable to the Depositor and organized and doing business
under the laws of such state or the United States of America, authorized under
such laws to exercise corporate trust powers, having a combined capital and
surplus of at least $50,000,000 and subject to supervision or examination by
federal or state authority. If such corporation or national banking association
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for
purposes of this Section the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. In case at any time the Trustee shall
cease to be eligible in accordance with the provisions of this Section, the
Trustee shall resign immediately in the manner and with the effect specified in
Section 8.07.
Section 8.07. Resignation and Removal of the Trustee.
--------------------------------------
(a) The Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice thereof to the Depositor, the Master Servicer.
Upon receiving such notice of resignation, the Depositor shall promptly appoint
a successor trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the
successor trustee. If no successor trustee shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation then the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in accordance with the
provisions of Section 8.06 and shall fail to resign after written request
therefor by the Depositor, or if at any time the Trustee shall become incapable
of acting, or shall be adjudged bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation, then the Depositor may remove
the Trustee and appoint a successor trustee by written instrument, in duplicate,
one copy of which instrument shall be delivered to the Trustee so removed and
one copy to the successor trustee. In addition, in the event that the Depositor
determines that the Trustee has failed (i) to distribute or cause to be
distributed to Certificateholders any amount required to be distributed
hereunder, if such amount is held by the Trustee or its Paying Agent (other than
the Master Servicer or the Depositor) for distribution or (ii) to otherwise
observe or perform in any material respect any of its covenants, agreements or
obligations hereunder, and such failure shall continue unremedied for a period
of 5 days (in respect of clause (i) above) or 30 days (in respect of clause (ii)
above) after the date on which written notice of such failure, requiring that
the same be remedied, shall have been given to the Trustee by the Depositor,
then the Depositor may remove the Trustee and appoint a successor trustee by
written instrument delivered as provided in the preceding sentence. In
connection with the appointment of a successor trustee pursuant to the preceding
sentence, the Depositor shall, on or before the date on which any such
appointment becomes effective, obtain from each Rating Agency written
confirmation that the appointment of any such successor trustee will not result
in the reduction of the ratings on any Class of the Certificates below the
lesser of the then current or original ratings on such Certificates.
(c) The Holders of Certificates entitled to at least 51% of the Voting Rights
may at any time remove the Trustee and appoint a successor trustee by written
instrument or instruments, in triplicate, signed by such Holders or their
attorneys-in-fact duly authorized, one complete set of which instruments shall
be delivered to the Depositor, one complete set to the Trustee so removed and
one complete set to the successor so appointed.
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(d) Any resignation or removal of the Trustee and appointment of a successor
trustee pursuant to any of the provisions of this Section shall become effective
upon acceptance of appointment by the successor trustee as provided in Section
8.08.
Section 8.08. Successor Trustee.
-----------------
(a) Any successor trustee appointed as provided in Section 8.07 shall execute,
acknowledge and deliver to the Depositor and to its predecessor trustee an
instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the predecessor trustee shall become effective and such successor
trustee shall become effective and such successor trustee, without any further
act, deed or conveyance, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor hereunder, with the like effect as if
originally named as trustee herein. The predecessor trustee shall deliver to the
successor trustee all Mortgage Files and related documents and statements held
by it hereunder (other than any Mortgage Files at the time held by a Custodian,
which shall become the agent of any successor trustee hereunder), and the
Depositor, the Master Servicer and the predecessor trustee shall execute and
deliver such instruments and do such other things as may reasonably be required
for more fully and certainly vesting and confirming in the successor trustee all
such rights, powers, duties and obligations.
(b) No successor trustee shall accept appointment as provided in this Section
unless at the time of such acceptance such successor trustee shall be eligible
under the provisions of Section 8.06.
(c) Upon acceptance of appointment by a successor trustee as provided in this
Section, the Depositor shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates at their addresses as shown in the
Certificate Register. If the Depositor fails to mail such notice within 10 days
after acceptance of appointment by the successor trustee, the successor trustee
shall cause such notice to be mailed at the expense of the Depositor.
Section 8.09. Merger or Consolidation of Trustee.
----------------------------------
Any corporation or national banking association into which the Trustee
may be merged or converted or with which it may be consolidated or any
corporation or national banking association resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation or national banking association succeeding to the business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
corporation or national banking association shall be eligible under the
provisions of Section 8.06, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding. The Trustee shall mail notice of any such merger or
consolidation to the Certificateholders at their address as shown in the
Certificate Register.
Section 8.10. Appointment of Co-Trustee or Separate Trustee.
---------------------------------------------
(a) Notwithstanding any other provisions hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction in which any part of the
Trust Fund or property securing the same may at the time be located, the Master
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee to act as co-trustee or co-trustees, jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of the Trust Fund, and
to vest in such Person or Persons, in such capacity, such title to the Trust
Fund, or any part thereof, and, subject to the other provisions of this Section
8.10, such powers, duties, obligations, rights and trusts as the Master Servicer
and the Trustee may consider necessary or desirable. If the Master Servicer
121
shall not have joined in such appointment within 15 days after the receipt by it
of a request so to do, or in case an Event of Default shall have occurred and be
continuing, the Trustee alone shall have the power to make such appointment. No
co-trustee or separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 8.06 hereunder and no notice to
Holders of Certificates of the appointment of co-trustee(s) or separate
trustee(s) shall be required under Section 8.08 hereof.
(b) In the case of any appointment of a co-trustee or separate trustee pursuant
to this Section 8.10 all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee, and such separate trustee or co-trustee jointly,
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed (whether as Trustee hereunder or as
successor to the Master Servicer hereunder), the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to the Trust Fund or any
portion thereof in any such jurisdiction) shall be exercised and performed by
such separate trustee or co-trustee at the direction of the Trustee.
(c) Any notice, request or other writing given to the Trustee shall be deemed to
have been given to each of the then separate trustees and co-trustees, as
effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
(d) Any separate trustee or co-trustee may, at any time, constitute the Trustee,
its agent or attorney-in-fact, with full power and authority, to the extent not
prohibited by law, to do any lawful act under or in respect of this Agreement on
its behalf and in its name. If any separate trustee or co-trustee shall die,
become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 8.11. Appointment of Custodians.
-------------------------
The Trustee may, with the consent of the Master Servicer and the
Depositor, appoint one or more Custodians who are not Affiliates of the
Depositor or the Master Servicer to hold all or a portion of the Mortgage Files
as agent for the Trustee, by entering into a Custodial Agreement. Subject to
Article VIII, the Trustee agrees to comply with the terms of each Custodial
Agreement and to enforce the terms and provisions thereof against the Custodian
for the benefit of the Certificateholders. Each Custodian shall be a depository
institution subject to supervision by federal or state authority, shall have a
combined capital and surplus of at least $15,000,000 and shall be qualified to
do business in the jurisdiction in which it holds any Mortgage File. Each
Custodial Agreement may be amended only as provided in Section 11.01. The
Trustee shall notify the Certificateholders of the appointment of any Custodian
(other than the Custodian appointed as of the Closing Date) pursuant to this
Section 8.11.
Section 8.12. Appointment of Office or Agency.
-------------------------------
The Trustee shall maintain an office or agency in the City of New York
where Certificates may be surrendered for registration of transfer or exchange.
The Trustee initially designates its offices located at Xxx Xxxx Xxxxx, 0xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 for the purpose of keeping the Certificate
Register. The Trustee shall maintain an office at the address stated in Section
11.05(c) hereof where notices and demands to or upon the Trustee in respect of
this Agreement may be served.
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Section 8.13. DTC Letter of Representations.
-----------------------------
The Trustee is hereby authorized and directed to, and agrees that it
shall, enter into the DTC Letter on behalf of the Trust Fund and in its
individual capacity as agent thereunder.
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ARTICLE IX
TERMINATION
Section 9.01. Termination Upon Purchase or Liquidation of All Mortgage Loans.
--------------------------------------------------------------
(a) Subject to Section 9.02, the respective obligations and responsibilities
of the Depositor, the Master Servicer and the Trustee created hereby in
respect of the Certificates (other than the obligation of the Trustee to
make certain payments after the Final Distribution Date to
Certificateholders and the obligation of the Depositor to send certain
notices as hereinafter set forth) shall terminate upon the last action
required to be taken by the Trustee on the Final Distribution Date
pursuant to this Article IX following the earlier of:
(i) the later of the final payment or other liquidation (or any Advance with
respect thereto) of the last Mortgage Loan remaining in the Trust Fund
or the disposition of all property acquired upon foreclosure or deed in
lieu of foreclosure of any Mortgage Loan, or
(ii) the purchase by the Holder of the Class SB Certificates, or on any
Distribution Date following the first possible Optional Termination Date if
the Holder of the Class SB Certificates has not exercised its option to
purchase, the purchase by the Master Servicer, of all Mortgage Loans and
all property acquired in respect of any Mortgage Loan remaining in the
Trust Fund, at a price equal to 100% of the unpaid principal balance of
each Mortgage Loan (or, if less than such unpaid principal balance, the
fair market value of the related underlying property of such Mortgage Loan
with respect to Mortgage Loans as to which title has been acquired if such
fair market value is less than such unpaid principal balance) (and if such
purchase is made by the Master Servicer only, net of any unreimbursed
Advances attributable to principal) on the day of repurchase, plus accrued
interest thereon at the Net Mortgage Rate (or Modified Net Mortgage Rate in
the case of any Modified Mortgage Loan), to, but not including, the first
day of the month in which such repurchase price is distributed;
provided, however, that in no event shall the trust created hereby continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants of Xxxxxx X. Xxxxxxx, the late ambassador of the United States to
the Court of St. Xxxxx, living on the date hereof; and provided further, that
the purchase price set forth above shall be increased as is necessary, as
determined by the Master Servicer, to avoid disqualification of any REMIC
created hereunder as a REMIC.
The purchase price paid by the Holder of the Class SB Certificates or
the Master Servicer, as applicable, pursuant to Section 9.01(a)(ii) shall also
include any amounts owed by Residential Funding pursuant to the last paragraph
of Section 4 of the Assignment Agreement in respect of any liability, penalty or
expense that resulted from a breach of the representation and warranty set forth
in clause (xlvii) of Section 4 of the Assignment Agreement that remain unpaid on
the date of such purchase.
The right of the Holder of the Class SB Certificates or the Master
Servicer, as applicable, to purchase all of the Mortgage Loans pursuant to
clause (ii) above is conditioned upon the date of such purchase occurring on or
after the Optional Termination Date. If such right is exercised by the Master
Servicer, the Master Servicer shall be deemed to have been reimbursed for the
full amount of any unreimbursed Advances theretofore made by it with respect to
the Mortgage Loans being purchased. In addition, the Master Servicer shall
provide to the Trustee the certification required by Section 3.15 and the
Trustee and any Custodian shall, promptly following payment of the purchase
price, release to the Holder of the Class SB Certificates or the Master
Servicer, as applicable, the Mortgage Files pertaining to the Mortgage Loans
being purchased.
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In addition to the foregoing, on any Distribution Date on or after the
Optional Termination Date, the Holder of the Class SB Certificates, or on any
Distribution Date following the first possible Optional Termination Date if the
Holder of the Class SB Certificates has not exercised its option to purchase,
the Master Servicer, shall have the right, at its option, to purchase the Class
A Certificates, Class M Certificates, Class B Certificates and Class SB
Certificates in whole, but not in part, at a price equal to the sum of the
outstanding Certificate Principal Balance of such Certificates plus the sum of
one month's Accrued Certificate Interest thereon, any previously unpaid Accrued
Certificate Interest, and any unpaid Prepayment Interest Shortfall previously
allocated thereto and, in the case of Prepayment Interest Shortfalls, accrued
interest thereon at the applicable Pass-Through Rate. If the Holder of the Class
SB Certificates or the Master Servicer, as applicable, exercises this right to
purchase the outstanding Class A Certificates, Class M Certificates, Class B
Certificates and Class SB Certificates, the Holder of the Class SB Certificates
or the Master Servicer, as applicable, will promptly terminate the respective
obligations and responsibilities created hereby in respect of these Certificates
pursuant to this Article IX.
(b) The Holder of the Class SB Certificates or the Master Servicer, as
applicable, shall give the Trustee (and the Master Servicer if the Holder of the
Class SB Certificates is exercising its option) not less than 60 days' prior
notice of the Distribution Date on which the Holder of the Class SB Certificates
or the Master Servicer, as applicable, anticipates that the final distribution
will be made to Certificateholders as a result of the exercise by the Holder of
the Class SB Certificates or the Master Servicer, as applicable, of its right to
purchase the Mortgage Loans or on which the Holder of the Class SB Certificates
or the Master Servicer, as applicable, anticipates that the Certificates will be
purchased as a result of the exercise by the Holder of the Class SB Certificates
or the Master Servicer, as applicable, to purchase the outstanding Certificates.
Notice of any termination, specifying the anticipated Final Distribution Date
(which shall be a date that would otherwise be a Distribution Date) upon which
the Certificateholders may surrender their Certificates to the Trustee (if so
required by the terms hereof) for payment of the final distribution and
cancellation or notice of any purchase of the outstanding Certificates,
specifying the Distribution Date upon which the Holders may surrender their
Certificates to the Trustee for payment, shall be given promptly by the Master
Servicer (if it is exercising the right to purchase the Mortgage Loans or to
purchase the outstanding Certificates), or by the Trustee (in any other case) by
letter to the Certificateholders (with a copy to the Certificate Registrar)
mailed not earlier than the 15th day and not later than the 25th day of the
month next preceding the month of such final distribution specifying:
(i) the anticipated Final Distribution Date upon which final payment of the
Certificates is anticipated to be made upon presentation and surrender of
Certificates at the office or agency of the Trustee therein designated where
required pursuant to this Agreement or, in the case of the purchase by the
Holder of the Class SB Certificates or the Master Servicer, as applicable, of
the outstanding Certificates, the Distribution Date on which such purchase is
made,
(ii) the amount of any such final payment or, in the case of the purchase of the
outstanding Certificates, the purchase price, in either case, if known, and
(iii) that the Record Date otherwise applicable to such Distribution Date is not
applicable, and that payment will be made only upon presentation and surrender
of the Certificates at the office or agency of the Trustee therein specified.
If the Master Servicer or the Trustee is obligated to give notice to
Certificateholders as required above, it shall give such notice to the
Certificate Registrar at the time such notice is given to Certificateholders. In
the event of a purchase of the Mortgage Loans by the Holder of the Class SB
Certificates or the Master Servicer, as applicable, the Holder of the Class SB
Certificates or the Master Servicer, as applicable, shall deposit in the
Certificate Account before the Final Distribution Date in immediately available
funds an amount equal to the purchase price computed as provided above. As a
result of the exercise by the Holder of the Class SB Certificates or the Master
Servicer, as applicable, of its right to purchase the outstanding Certificates,
the Holder of the Class SB Certificates or the Master Servicer, as applicable,
shall deposit in an Eligible Account, established by the Master Servicer on
behalf of the Trustee and separate from the Certificate Account, in the name of
the Trustee in trust for the registered holders of the Certificates, before the
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Distribution Date on which such purchase is to occur, in immediately available
funds, an amount equal to the purchase price for the Certificates computed as
provided above, and provide notice of such deposit to the Trustee. The Trustee
shall withdraw from such account the amount specified in subsection (c) below
and distribute such amount to the Certificateholders as specified in subsection
(c) below. The Holder of the Class SB Certificates or the Master Servicer, as
applicable, shall provide to the Trustee written notification of any change to
the anticipated Final Distribution Date as soon as practicable. If the Trust
Fund is not terminated on the anticipated Final Distribution Date, for any
reason, the Trustee shall promptly mail notice thereof to each affected
Certificateholder.
(c) Upon presentation and surrender of the Class A Certificates, Class M
Certificates, Class B Certificates and Class SB Certificates by the
Certificateholders thereof, the Trustee shall distribute to such
Certificateholders (i) the amount otherwise distributable on such Distribution
Date, if not in connection with the Holder's of the Class SB Certificates or the
Master Servicer's, as applicable, election to repurchase the Mortgage Loans or
the outstanding Class A Certificates, Class M Certificates, Class B Certificates
and Class SB Certificates, or (ii) if the Holder of the Class SB Certificates or
the Master Servicer, as applicable, elected to so repurchase the Mortgage Loans
or the outstanding Class A Certificates, Class M Certificates, Class B
Certificates and Class SB Certificates, an amount equal to the price paid
pursuant to Section 9.01(a) as follows: first, with respect to the Class A
Certificates, pari passu, the outstanding Certificate Principal Balance thereof,
plus Accrued Certificate Interest thereon for the related Interest Accrual
Period and any previously unpaid Accrued Certificate Interest, second, with
respect to the Class M-1 Certificates, the outstanding Certificate Principal
Balance thereof, plus Accrued Certificate Interest thereon for the related
Interest Accrual Period and any previously unpaid Accrued Certificate Interest,
third, with respect to the Class M-2 Certificates, the outstanding Certificate
Principal Balance thereof, plus Accrued Certificate Interest thereon for the
related Interest Accrual Period and any previously unpaid Accrued Certificate
Interest, fourth, with respect to the Class M-3 Certificates, the outstanding
Certificate Principal Balance thereof, plus Accrued Certificate Interest thereon
for the related Interest Accrual Period and any previously unpaid Accrued
Certificate Interest, fifth, with respect to the Class M-4 Certificates, the
outstanding Certificate Principal Balance thereof, plus Accrued Certificate
Interest thereon for the related Interest Accrual Period and any previously
unpaid Accrued Certificate Interest, sixth, with respect to the Class M-5
Certificates, the outstanding Certificate Principal Balance thereof, plus
Accrued Certificate Interest thereon for the related Interest Accrual Period and
any previously unpaid Accrued Certificate Interest, seventh, with respect to the
Class M-6 Certificates, the outstanding Certificate Principal Balance thereof,
plus Accrued Certificate Interest thereon for the related Interest Accrual
Period and any previously unpaid Accrued Certificate Interest, eighth, with
respect to the Class B Certificates, the outstanding Certificate Principal
Balance thereof, plus Accrued Certificate Interest thereon for the related
Interest Accrual Period and any previously unpaid Accrued Certificate Interest,
ninth, to the Class A Certificates, Class M Certificates and Class B
Certificates, the amount of any Prepayment Interest Shortfalls allocated thereto
for such Distribution Date or remaining unpaid from prior Distribution Dates and
accrued interest thereon at the applicable Pass-Through Rate, on a pro rata
basis based on Prepayment Interest Shortfalls allocated thereto for such
Distribution Date or remaining unpaid from prior Distribution Dates, and tenth,
to the Class SB Certificates.
(d) In the event that any Certificateholders shall not surrender their
Certificates for final payment and cancellation on or before the Final
Distribution Date, the Trustee shall on such date cause all funds in the
Certificate 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 escrow account for the benefit of such
Certificateholders, and the Holder of the Class SB Certificates or the Master
Servicer, as applicable, (if it exercised its right to purchase the Mortgage
Loans), or the Trustee (in any other case) shall give a second written notice to
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the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
six months after the second notice any Certificate shall not have been
surrendered for cancellation, the Trustee shall take appropriate steps as
directed by the Master Servicer to contact the remaining Certificateholders
concerning surrender of their Certificates. The costs and expenses of
maintaining the escrow account and of contacting Certificateholders shall be
paid out of the assets which remain in the escrow account. If within nine months
after the second notice any Certificates shall not have been surrendered for
cancellation, the Trustee shall pay to the Master Servicer all amounts
distributable to the holders thereof and the Master Servicer shall thereafter
hold such amounts until distributed to such Holders. No interest shall accrue or
be payable to any Certificateholder on any amount held in the escrow account or
by the Master Servicer as a result of such Certificateholder's failure to
surrender its Certificate(s) for final payment thereof in accordance with this
Section 9.01 and the Certificateholders shall look only to the Master Servicer
for such payment.
(e) If any Certificateholders do not surrender their Certificates on or before
the Distribution Date on which a purchase of the outstanding Certificates is to
be made, the Trustee shall on such date cause all funds in the Eligible Account
established by the Master Servicer deposited therein by the Master Servicer
pursuant to Section 9.01(b) to be withdrawn therefrom and deposited in a
separate escrow account for the benefit of such Certificateholders, and the
Master Servicer shall give a second written notice to such Certificateholders to
surrender their Certificates for payment of the purchase price therefor. If
within six months after the second notice any Certificate shall not have been
surrendered for cancellation, the Trustee shall take appropriate steps as
directed by the Master Servicer to contact the Holders of such Certificates
concerning surrender of their Certificates. The costs and expenses of
maintaining the escrow account and of contacting Certificateholders shall be
paid out of the assets which remain in the escrow account. If within nine months
after the second notice any Certificates shall not have been surrendered for
cancellation in accordance with this Section 9.01, the Trustee shall pay to the
Master Servicer all amounts distributable to the Holders thereof and shall have
no further obligation or liability therefor and the Master Servicer shall
thereafter hold such amounts until distributed to such Holders. No interest
shall accrue or be payable to any Certificateholder on any amount held in the
escrow account or by the Master Servicer as a result of such Certificateholder's
failure to surrender its Certificate(s) for payment in accordance with this
Section 9.01. Any Certificate that is not surrendered on the Distribution Date
on which a purchase pursuant to this Section 9.01 occurs as provided above will
be deemed to have been purchased and the Holder as of such date will have no
rights with respect thereto except to receive the purchase price therefor minus
any costs and expenses associated with such escrow account and notices allocated
thereto. Any Certificates so purchased or deemed to have been purchased on such
Distribution Date shall remain outstanding hereunder. The Master Servicer shall
be for all purposes the Holder thereof as of such date.
Section 9.02. Additional Termination Requirements.
-----------------------------------
(a) Each of REMIC I, REMIC II and REMIC III as the case may be, shall be
terminated in accordance with the following additional requirements,
unless the Trustee and the Master Servicer have received an Opinion of
Counsel (which Opinion of Counsel shall not be an expense of the
Trustee) to the effect that the failure of any REMIC created hereunder
to comply with the requirements of this Section 9.02 will not (i) result
in the imposition on the Trust Fund of taxes on "prohibited
transactions," as described in Section 860F of the Code, or (ii) cause
any REMIC created hereunder to fail to qualify as a REMIC at any time
that any Certificate is outstanding:
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(i) The Master Servicer shall establish a 90-day liquidation period for each
of REMIC I, REMIC II and REMIC III, and specify the first day of such
period in a statement attached to the Trust Fund's final Tax Return
pursuant to Treasury regulations ss.1.860F-1. The Master Servicer also
shall satisfy all of the requirements of a qualified liquidation for
each of REMIC I, REMIC II and REMIC III, under Section 860F of the Code
and the regulations thereunder;
(ii) The Master Servicer shall notify the Trustee at the commencement of such
90-day liquidation period and, at or prior to the time of making of the
final payment on the Certificates, the Trustee shall sell or otherwise
dispose of all of the remaining assets of the Trust Fund in accordance
with the terms hereof; and
(iii) If the Master Servicer is exercising its right to purchase the assets of
the Trust Fund, the Master Servicer shall, during the 90-day liquidation
period and at or prior to the Final Distribution Date, purchase all of
the assets of the Trust Fund for cash;
(b) Each Holder of a Certificate and the Trustee hereby irrevocably approves
and appoints the Master Servicer as its attorney-in-fact to adopt a plan
of complete liquidation for each of REMIC I, REMIC II and REMIC III at
the expense of the Trust Fund in accordance with the terms and
conditions of this Agreement.
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ARTICLE X
REMIC PROVISIONS
Section 10.01. REMIC Administration.
--------------------
(a) The REMIC Administrator shall make an election to treat each of REMIC I,
REMIC II and REMIC III as a REMIC under the Code and, if necessary, under
applicable state law. Such election will be made on Form 1066 or other
appropriate federal tax or information return (including Form 8811) or any
appropriate state return for the taxable year ending on the last day of the
calendar year in which the Certificates are issued. The REMIC I Regular
Interests shall be designated as the "regular interests" and the Class R-I
Certificates shall be designated as the sole Class of "residual interests" in
REMIC I. The REMIC II Regular Interests shall be designated as the "regular
interests" and the Class R-II Certificates shall be designated as the sole Class
of "residual interests" in REMIC II. The Class A, Class M, Class B and Class SB
Certificates shall be designated as the "regular interests" in REMIC III and the
Class R-III Certificates shall be designated the sole Class of "residual
interests" in REMIC III. The REMIC Administrator and the Trustee shall not
permit the creation of any "interests" (within the meaning of Section 860G of
the Code) in the REMIC other than the Certificates.
(b) The Closing Date is hereby designated as the "startup day" of each of REMIC
I, REMIC II and REMIC III within the meaning of Section 860G(a)(9) of the Code
(the "Startup Date").
(c) The REMIC Administrator shall hold a Class R Certificate in each REMIC
representing a 0.01% Percentage Interest of the Class R Certificates in each
REMIC and shall be designated as the "tax matters person" with respect to each
of REMIC I, REMIC II and REMIC III in the manner provided under Treasury
regulations Section 1.860F-4(d) and Treasury regulations Section
301.6231(a)(7)-1. The REMIC Administrator, as tax matters person, shall (i) act
on behalf of each of REMIC I, REMIC II and REMIC III in relation to any tax
matter or controversy involving the Trust Fund and (ii) represent the Trust Fund
in any administrative or judicial proceeding relating to an examination or audit
by any governmental taxing authority with respect thereto. The legal expenses,
including without limitation attorneys' or accountants' fees, and costs of any
such proceeding and any liability resulting therefrom shall be expenses of the
Trust Fund and the REMIC Administrator shall be entitled to reimbursement
therefor out of amounts attributable to the Mortgage Loans on deposit in the
Custodial Account as provided by Section 3.10 unless such legal expenses and
costs are incurred by reason of the REMIC Administrator's willful misfeasance,
bad faith or gross negligence. If the REMIC Administrator is no longer the
Master Servicer hereunder, at its option the REMIC Administrator may continue
its duties as REMIC Administrator and shall be paid reasonable compensation not
to exceed $3,000 per year by any successor Master Servicer hereunder for so
acting as the REMIC Administrator.
(d) The REMIC Administrator shall prepare or cause to be prepared all of the Tax
Returns that it determines are required with respect to the REMICs created
hereunder and deliver such Tax Returns in a timely manner to the Trustee and the
Trustee shall sign and file such Tax Returns in a timely manner. The expenses of
preparing such returns shall be borne by the REMIC Administrator without any
right of reimbursement therefor. The REMIC Administrator agrees to indemnify and
hold harmless the Trustee with respect to any tax or liability arising from the
Trustee's signing of Tax Returns that contain errors or OMISSIONS. The Trustee
and Master Servicer shall promptly provide the REMIC Administrator with such
information as the REMIC Administrator may from time to time request for the
purpose of enabling the REMIC Administrator to prepare Tax Returns.
(e) The REMIC Administrator shall provide (i) to any Transferor of a Class R
Certificate such information as is necessary for the application of any tax
relating to the transfer of a Class R Certificate to any Person who is not a
Permitted Transferee, (ii) to the Trustee and the Trustee shall forward to the
Certificateholders such information or reports as are required by the Code or
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the REMIC Provisions including reports relating to interest, original issue
discount, if any, and market discount or premium (using the Prepayment
Assumption) and (iii) to the Internal Revenue Service the name, title, address
and telephone number of the person who will serve as the representative of each
REMIC created hereunder.
(f) The Master Servicer and the REMIC Administrator shall take such actions and
shall cause each REMIC created hereunder to take such actions as are reasonably
within the Master Servicer's or the REMIC Administrator's control and the scope
of its duties more specifically set forth herein as shall be necessary or
desirable to maintain the status thereof as a REMIC under the REMIC Provisions
(and the Trustee shall assist the Master Servicer and the REMIC Administrator,
to the extent reasonably requested by the Master Servicer and the REMIC
Administrator to do so). In performing their duties as more specifically set
forth herein, the Master Servicer and the REMIC Administrator shall not
knowingly or intentionally take any action, cause the Trust Fund to take any
action or fail to take (or fail to cause to be taken) any action reasonably
within their respective control and the scope of duties more specifically set
forth herein, that, under the REMIC Provisions, if taken or not taken, as the
case may be, could (i) endanger the status of any REMIC created hereunder as a
REMIC or (ii) result in the imposition of a tax upon any REMIC created hereunder
(including but not limited to the tax on prohibited transactions as defined in
Section 860F(a)(2) of the Code (except as provided in Section 2.04) and the tax
on contributions to a REMIC set forth in Section 860G(d) of the Code) (either
such event, in the absence of an Opinion of Counsel or the indemnification
referred to in this sentence, an "Adverse REMIC Event") unless the Master
Servicer or the REMIC Administrator, as applicable, has received an Opinion of
Counsel (at the expense of the party seeking to take such action or, if such
party fails to pay such expense, and the Master Servicer or the REMIC
Administrator, as applicable, determines that taking such action is in the best
interest of the Trust Fund and the Certificateholders, at the expense of the
Trust Fund, but in no event at the expense of the Master Servicer, the REMIC
Administrator or the Trustee) to the effect that the contemplated action will
not, with respect to the Trust Fund created hereunder, endanger such status or,
unless the Master Servicer or the REMIC Administrator or both, as applicable,
determine in its or their sole discretion to indemnify the Trust Fund against
the imposition of such a tax, result in the imposition of such a tax. Wherever
in this Agreement a contemplated action may not be taken because the timing of
such action might result in the imposition of a tax on the Trust Fund, or may
only be taken pursuant to an Opinion of Counsel that such action would not
impose a tax on the Trust Fund, such action may nonetheless be taken provided
that the indemnity given in the preceding sentence with respect to any taxes
that might be imposed on the Trust Fund has been given and that all other
preconditions to the taking of such action have been satisfied. The Trustee
shall not take or fail to take any action (whether or not authorized hereunder)
as to which the Master Servicer or the REMIC Administrator, as applicable, has
advised it in writing that it has received an Opinion of Counsel to the effect
that an Adverse REMIC Event could occur with respect to such action or inaction,
as the case may be. In addition, prior to taking any action with respect to the
Trust Fund or its assets, or causing the Trust Fund to take any action, which is
not expressly permitted under the terms of this Agreement, the Trustee will
consult with the Master Servicer or the REMIC Administrator, as applicable, or
its designee, in writing, with respect to whether such action could cause an
Adverse REMIC Event to occur with respect to the Trust Fund and the Trustee
shall not take any such action or cause the Trust Fund to take any such action
as to which the Master Servicer or the REMIC Administrator, as applicable, has
advised it in writing that an Adverse REMIC Event could occur. The Master
Servicer or the REMIC Administrator, as applicable, may consult with counsel to
make such written advice, and the cost of same shall be borne by the party
seeking to take the action not expressly permitted by this Agreement, but in no
event at the expense of the Master Servicer or the REMIC Administrator. At all
times as may be required by the Code, the Master Servicer or the REMIC
Administrator, as applicable, will to the extent within its control and the
scope of its duties more specifically set forth herein, maintain substantially
all of the assets of the REMIC as "qualified mortgages" as defined in Section
860G(a)(3) of the Code and "permitted investments" as defined in Section
860G(a)(5) of the Code.
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(g) In the event that any tax is imposed on "prohibited transactions" of any
REMIC created hereunder as defined in Section 860F(a)(2) of the Code, on "net
income from foreclosure property" of any REMIC as defined in Section 860G(c) of
the Code, on any contributions to any REMIC after the Startup Date therefor
pursuant to Section 860G(d) of the Code, or any other tax imposed by the Code or
any applicable provisions of state or local tax laws, such tax shall be charged
(i) to the Master Servicer, if such tax arises out of or results from a breach
by the Master Servicer of any of its obligations under this Agreement or the
Master Servicer in its role as Master Servicer or REMIC Administrator has in its
sole discretion determined to indemnify the Trust Fund against such tax, (ii) to
the Trustee, if such tax arises out of or results from a breach by the Trustee
of any of its obligations under this Article X, or (iii) otherwise against
amounts on deposit in the Custodial Account as provided by Section 3.10 and on
the Distribution Date(s) following such reimbursement the aggregate of such
taxes shall be allocated in reduction of the Accrued Certificate Interest on
each Class entitled thereto in the same manner as if such taxes constituted a
Prepayment Interest Shortfall.
(h) The Trustee and the Master Servicer shall, for federal income tax purposes,
maintain books and records with respect to each REMIC on a calendar year and on
an accrual basis or as otherwise may be required by the REMIC Provisions.
(i) Following the Startup Date, neither the Master Servicer nor the Trustee
shall accept any contributions of assets to any REMIC unless (subject to Section
10.01(f)) the Master Servicer and the Trustee shall have received an Opinion of
Counsel (at the expense of the party seeking to make such contribution) to the
effect that the inclusion of such assets in any REMIC will not cause any REMIC
created hereunder to fail to qualify as a REMIC at any time that any
Certificates are outstanding or subject any such REMIC to any tax under the
REMIC Provisions or other applicable provisions of federal, state and local law
or ordinances.
(j) Neither the Master Servicer nor the Trustee shall (subject to Section
10.01(f)) enter into any arrangement by which any REMIC created hereunder will
receive a fee or other compensation for services nor permit any REMIC created
hereunder to receive any income from assets other than "qualified mortgages" as
defined in Section 860G(a)(3) of the Code or "permitted investments" as defined
in Section 860G(a)(5) of the Code.
(k) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
Regulations, the "latest possible maturity date" by which the principal balance
of each regular interest in each REMIC would be reduced to zero is December 25,
2034, which is the Distribution Date in the month following the last scheduled
payment on any Mortgage Loan.
(l) Within 30 days after the Closing Date, the REMIC Administrator shall prepare
and file with the Internal Revenue Service Form 8811, "Information Return for
Real Estate Mortgage Investment Conduits (REMIC) and Issuers of Collateralized
Debt Obligations" for the Trust Fund.
(m) Neither the Trustee nor the Master Servicer shall sell, dispose of or
substitute for any of the Mortgage Loans (except in connection with (i) the
default, imminent default or foreclosure of a Mortgage Loan, including but not
limited to, the acquisition or sale of a Mortgaged Property acquired by deed in
lieu of foreclosure, (ii) the bankruptcy of the Trust Fund, (iii) the
termination of any REMIC pursuant to Article IX of this Agreement or (iv) a
purchase of Mortgage Loans pursuant to Article II or III of this Agreement) or
acquire any assets for any REMIC or sell or dispose of any investments in the
Custodial Account or the Certificate Account for gain, or accept any
contributions to any REMIC after the Closing Date unless it has received an
Opinion of Counsel that such sale, disposition, substitution or acquisition will
not (a) affect adversely the status any REMIC created hereunder as a REMIC or
(b) unless the Master Servicer has determined in its sole discretion to
indemnify the Trust Fund against such tax, cause any REMIC to be subject to a
tax on "prohibited transactions" or "contributions" pursuant to the REMIC
Provisions.
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Section 10.02. Master Servicer, REMIC Administrator and Trustee Indemnification.
----------------------------------------------------------------
(a) The Trustee agrees to indemnify the Trust Fund, the Depositor, the REMIC
Administrator and the Master Servicer for any taxes and costs including, without
limitation, any reasonable attorneys fees imposed on or incurred by the Trust
Fund, the Depositor or the Master Servicer, as a result of a breach of the
Trustee's covenants set forth in Article VIII or this Article X. In the event
that Residential Funding is no longer the Master Servicer, the Trustee shall
indemnify Residential Funding for any taxes and costs including, without
limitation, any reasonable attorneys fees imposed on or incurred by Residential
Funding as a result of a breach of the Trustee's covenants set forth in Article
VIII or this Article X.
(b) The REMIC Administrator agrees to indemnify the Trust Fund, the Depositor,
the Master Servicer and the Trustee for any taxes and costs (including, without
limitation, any reasonable attorneys' fees) imposed on or incurred by the Trust
Fund, the Depositor, the Master Servicer or the Trustee, as a result of a breach
of the REMIC Administrator's covenants set forth in this Article X with respect
to compliance with the REMIC Provisions, including without limitation, any
penalties arising from the Trustee's execution of Tax Returns prepared by the
REMIC Administrator that contain errors or omissions; provided, however, that
such liability will not be imposed to the extent such breach is a result of an
error or omission in information provided to the REMIC Administrator by the
Master Servicer in which case Section 10.02(c) will apply.
(c) The Master Servicer agrees to indemnify the Trust Fund, the Depositor, the
REMIC Administrator and the Trustee for any taxes and costs (including, without
limitation, any reasonable attorneys' fees) imposed on or incurred by the Trust
Fund, the Depositor, the REMIC Administrator or the Trustee, as a result of a
breach of the Master Servicer's covenants set forth in this Article X or in
Article III with respect to compliance with the REMIC Provisions, including
without limitation, any penalties arising from the Trustee's execution of Tax
Returns prepared by the Master Servicer that contain errors or omissions.
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ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment.
---------
(a) This Agreement or any Custodial Agreement may be amended from time to
time by the Depositor, the Master Servicer and the Trustee, without the
consent of any of the Certificateholders:
(i) to cure any ambiguity,
(ii) to correct or supplement any provisions herein or therein, which may be
inconsistent with any other provisions herein or therein or to correct
any error,
(iii)to modify, eliminate or add to any of its provisions to such extent as
shall be necessary or desirable to maintain the qualification of any REMIC
created hereunder as a REMIC at all times that any Certificate is
outstanding or to avoid or minimize the risk of the imposition of any tax
on the Trust Fund pursuant to the Code that would be a claim against the
Trust Fund, provided that the Trustee has received an Opinion of Counsel to
the effect that (A) such action is necessary or desirable to maintain such
qualification or to avoid or minimize the risk of the imposition of any
such tax and (B) such action will not adversely affect in any material
respect the interests of any Certificateholder,
(iv) to change the timing and/or nature of deposits into the Custodial Account
or the Certificate Account or to change the name in which the Custodial
Account is maintained, provided that (A) the Certificate Account Deposit
Date shall in no event be later than the related Distribution Date, (B)
such change shall not, as evidenced by an Opinion of Counsel, adversely
affect in any material respect the interests of any Certificateholder and
(C) such change shall not result in a reduction of the rating assigned to
any Class of Certificates below the lower of the then-current rating or the
rating assigned to such Certificates as of the Closing Date, as evidenced
by a letter from each Rating Agency to such effect,
(v) to modify, eliminate or add to the provisions of Section 5.02(f) or any
other provision hereof restricting transfer of the Class R Certificates by
virtue of their being the "residual interests" in the Trust Fund provided
that (A) such change shall not result in reduction of the rating assigned
to any such Class of Certificates below the lower of the then-current
rating or the rating assigned to such Certificates as of the Closing Date,
as evidenced by a letter from each Rating Agency to such effect, and (B)
such change shall not (subject to Section 10.01(f)), as evidenced by an
Opinion of Counsel (at the expense of the party seeking so to modify,
eliminate or add such provisions), cause the Trust Fund or any of the
Certificateholders (other than the transferor) to be subject to a federal
tax caused by a transfer to a Person that is not a Permitted Transferee, or
(vi) to make any other provisions with respect to matters or questions
arising under this Agreement or such Custodial Agreement which shall not
be materially inconsistent with the provisions of this Agreement,
provided that such action shall not, as evidenced by an Opinion of
Counsel, adversely affect in any material respect the interests of any
Certificateholder and is authorized or permitted under Section 11.01.
(b) This Agreement or any Custodial Agreement may also be amended from time
to time by the Depositor, the Master Servicer, the Trustee and the
Holders of Certificates evidencing in the aggregate not less than 66% of
the Percentage Interests of each Class of Certificates affected thereby
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or such Custodial
Agreement or of modifying in any manner the rights of the Holders of
Certificates of such Class; provided, however, that no such amendment
shall:
133
(i) reduce in any manner the amount of, or delay the timing of, payments
which are required to be distributed on any Certificate without the
consent of the Holder of such Certificate,
(ii) adversely affect in any material respect the interest of the Holders of
Certificates of any Class in a manner other than as described in clause
(i) hereof without the consent of Holders of Certificates of such Class
evidencing, as to such Class, Percentage Interests aggregating not less
than 66%, or
(iii) reduce the aforesaid percentage of Certificates of any Class the Holders
of which are required to consent to any such amendment, in any such case
without the consent of the Holders of all Certificates of such Class
then outstanding.
(c) Notwithstanding any contrary provision of this Agreement, the Trustee
shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel (at the expense of the party
seeking such amendment) to the effect that such amendment or the
exercise of any power granted to the Master Servicer, the Depositor or
the Trustee in accordance with such amendment will not result in the
imposition of a federal tax on the Trust Fund or cause any REMIC created
hereunder to fail to qualify as a REMIC at any time that any Certificate
is outstanding; provided, that if the indemnity described in Section
10.01(f) with respect to any taxes that might be imposed on the Trust
Fund has been given, the Trustee shall not require the delivery to it of
the Opinion of Counsel described in this Section 11.01(c). The Trustee
may but shall not be obligated to enter into any amendment pursuant to
this Section that affects its rights, duties and immunities and this
Agreement or otherwise; provided, however, such consent shall not be
unreasonably withheld.
(d) Promptly after the execution of any such amendment the Trustee shall
furnish written notification of the substance of such amendment to each
Certificateholder. It shall not be necessary for the consent of
Certificateholders under this Section 11.01 to approve the particular
form of any proposed amendment, but it shall be sufficient if such
consent shall approve the substance thereof. The manner of obtaining
such consents and of evidencing the authorization of the execution
thereof by Certificateholders shall be subject to such reasonable
regulations as the Trustee may prescribe.
(e) The Depositor shall have the option, in its sole discretion, to obtain
and deliver to the Trustee any corporate guaranty, payment obligation,
irrevocable letter of credit, surety bond, insurance policy or similar
instrument or a reserve fund, or any combination of the foregoing, for
the purpose of protecting the Holders of the Class R Certificates
against any or all Realized Losses or other shortfalls. Any such
instrument or fund shall be held by the Trustee for the benefit of the
Class R Certificateholders, but shall not be and shall not be deemed to
be under any circumstances included in the REMIC. To the extent that any
such instrument or fund constitutes a reserve fund for federal income
tax purposes, (i) any reserve fund so established shall be an outside
reserve fund and not an asset of the REMIC, (ii) any such reserve fund
shall be owned by the Depositor, and (iii) amounts transferred by the
REMIC to any such reserve fund shall be treated as amounts distributed
by the REMIC to the Depositor or any successor, all within the meaning
of Treasury regulations Section 1.860G-2(h) in effect as of the Cut-off
Date. In connection with the provision of any such instrument or fund,
this Agreement and any provision hereof may be modified, added to,
deleted or otherwise amended in any manner that is related or incidental
to such instrument or fund or the establishment or administration
thereof, such amendment to be made by written instrument executed or
consented to by the Depositor and such related insurer but without the
consent of any Certificateholder and without the consent of the Master
Servicer or the Trustee being required unless any such amendment would
impose any additional obligation on, or otherwise adversely affect the
interests of the Certificateholders, the Master Servicer or the Trustee,
as applicable; provided that the Depositor obtains an Opinion of Counsel
(which need not be an opinion of Independent counsel) to the effect that
any such amendment will not cause (a) any federal tax to be imposed on
the Trust Fund, including without limitation, any federal tax imposed on
134
"prohibited transactions" under Section 860F(a)(1) of the Code or on
"contributions after the startup date" under Section 860G(d)(1) of the
Code and (b) any REMIC created hereunder to fail to qualify as a REMIC
at any time that any Certificate is outstanding. In the event that the
Depositor elects to provide such coverage in the form of a limited
guaranty provided by General Motors Acceptance Corporation, the
Depositor may elect that the text of such amendment to this Agreement
shall be substantially in the form attached hereto as Exhibit K (in
which case Residential Funding's Subordinate Certificate Loss Obligation
as described in such exhibit shall be established by Residential
Funding's consent to such amendment) and that the limited guaranty shall
be executed in the form attached hereto as Exhibit L, with such changes
as the Depositor shall deem to be appropriate; it being understood that
the Trustee has reviewed and approved the content of such forms and that
the Trustee's consent or approval to the use thereof is not required.
Section 11.02. Recordation of Agreement; Counterparts.
--------------------------------------
(a) To the extent permitted by applicable law, this Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Master Servicer and at its expense on direction by the Trustee (pursuant to the
request of the Holders of Certificates entitled to at least 25% of the Voting
Rights), but only upon direction accompanied by an Opinion of Counsel to the
effect that such recordation materially and beneficially affects the interests
of the Certificateholders.
(b) For the purpose of facilitating the recordation of this Agreement as herein
provided and for other purposes, this Agreement may be executed simultaneously
in any number of counterparts, each of which counterparts shall be deemed to be
an original, and such counterparts shall constitute but one and the same
instrument.
Section 11.03. Limitation on Rights of Certificateholders.
------------------------------------------
(a) The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust Fund, nor entitle such Certificateholder's
legal representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust Fund, nor
otherwise affect the rights, obligations and liabilities of any of the parties
hereto.
(b) No Certificateholder shall have any right to vote (except as expressly
provided herein) or in any manner otherwise control the operation and management
of the Trust Fund, or the obligations of the parties hereto, nor shall anything
herein set forth, or contained in the terms of the Certificates, be construed so
as to constitute the Certificateholders from time to time as partners or members
of an association; nor shall any Certificateholder be under any liability to any
third person by reason of any action taken by the parties to this Agreement
pursuant to any provision hereof.
(c) No Certificateholder shall have any right by virtue of any provision of this
Agreement to institute any suit, action or proceeding in equity or at law upon
or under or with respect to this Agreement, unless such Holder previously shall
have given to the Trustee a written notice of default and of the continuance
thereof, as hereinbefore provided, and unless also the Holders of Certificates
of any Class evidencing in the aggregate not less than 25% of the related
Percentage Interests of such Class, shall have made written request upon the
Trustee to institute such action, suit or proceeding in its own name as Trustee
hereunder and shall have offered to the Trustee such reasonable indemnity as it
may require against the costs, expenses and liabilities to be incurred therein
or thereby, and the Trustee, for 60 days after its receipt of such notice,
request and offer of indemnity, shall have neglected or refused to institute any
135
such action, suit or proceeding it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
of any Class shall have any right in any manner whatever by virtue of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such Certificates of such Class or any other Class, or
to obtain or seek to obtain priority over or preference to any other such
Holder, or to enforce any right under this Agreement, except in the manner
herein provided and for the common benefit of Certificateholders of such Class
or all Classes, as the case may be. For the protection and enforcement of the
provisions of this Section 11.03, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
Section 11.04. Governing Law.
-------------
This agreement and the Certificates shall be governed by and construed
in accordance with the laws of the State of New York and the obligations, rights
and remedies of the parties hereunder shall be determined in accordance with
such laws.
Section 11.05. Notices.
-------
All demands and notices hereunder shall be in writing and shall be
deemed to have been duly given if personally delivered at or mailed by
registered mail, postage prepaid (except for notices to the Trustee which shall
be deemed to have been duly given only when received), to (a) in the case of the
Depositor, 0000 Xxxxxxxxxx Xxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxxxxx, Xxxxxxxxx
00000, Attention: President (RASC), or such other address as may hereafter be
furnished to the Master Servicer and the Trustee in writing by the Depositor;
(b) in the case of the Master Servicer, 0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxxxx 00000-0000, Attention: Bond Administration or such other address as
may be hereafter furnished to the Depositor and the Trustee by the Master
Servicer in writing; (c) in the case of the Trustee, the Corporate Trust Office
or such other address as may hereafter be furnished to the Depositor and the
Master Servicer in writing by the Trustee; (d) in the case of Standard & Poor's,
00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; Attention: Mortgage Surveillance or
such other address as may be hereafter furnished to the Depositor, Trustee and
Master Servicer by Standard & Poor's; (e) in the case of Moody's, 00 Xxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: ABS Monitoring Department, or such
other address as may be hereafter furnished to the Depositor, the Trustee and
the Master Servicer in writing by Moody's, and (f) in the case of the Hedge
Agreements Provider, HSBC Bank USA, National Association, 000 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, or such other address as may be hereafter furnished to the
Depositor, the Trustee and the Master Servicer in writing by the Hedge
Agreements Provider. Any notice required or permitted to be mailed to a
Certificateholder shall be given by first class mail, postage prepaid, at the
address of such holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder receives
such notice.
Section 11.06. Notices to Rating Agencies.
--------------------------
The Depositor, the Master Servicer or the Trustee, as applicable, shall
notify each Rating Agency and each Subservicer at such time as it is otherwise
required pursuant to this Agreement to give notice of the occurrence of, any of
the events described in clause (a), (b), (c), (d), (g), (h), (i) or (j) below or
provide a copy to each Rating Agency and each Subservicer at such time as
otherwise required to be delivered pursuant to this Agreement of any of the
statements described in clauses (e) and (f) below:
136
(a) a material change or amendment to this Agreement,
(b) the occurrence of an Event of Default,
(c) the termination or appointment of a successor Master Servicer or Trustee or
a change in the majority ownership of the Trustee,
(d) the filing of any claim under the Master Servicer's blanket fidelity bond
and the errors and omissions insurance policy required by Section 3.12 or the
cancellation or modification of coverage under any such instrument,
(e) the statement required to be delivered to the Holders of each Class of
Certificates pursuant to Section 4.03,
(f) the statements required to be delivered pursuant to Sections 3.18 and 3.19,
(g) a change in the location of the Custodial Account or the Certificate
Account,
(h) the occurrence of any monthly cash flow shortfall to the Holders of any
Class of Certificates resulting from the failure by the Master Servicer to make
an Advance pursuant to Section 4.04,
(i) the occurrence of the Final Distribution Date, and
(j) the repurchase of or substitution for any Mortgage Loan, provided, however,
that with respect to notice of the occurrence of the events described in clauses
(d), (g) or (h) above, the Master Servicer shall provide prompt written notice
to each Rating Agency and each Subservicer of any such event known to the Master
Servicer.
Section 11.07. Severability of Provisions.
--------------------------
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
Section 11.08. Supplemental Provisions for Resecuritization.
--------------------------------------------
(a) This Agreement may be supplemented by means of the addition of a separate
Article hereto (a "Supplemental Article") for the purpose of resecuritizing any
of the Certificates issued hereunder, under the following circumstances. With
respect to any Class or Classes of Certificates issued hereunder, or any portion
of any such Class, as to which the Depositor or any of its Affiliates (or any
designee thereof) is the registered Holder (the "Resecuritized Certificates"),
the Depositor may deposit such Resecuritized Certificates into a new REMIC,
grantor trust, FASIT or custodial arrangement (a "Restructuring Vehicle") to be
held by the Trustee pursuant to a Supplemental Article. The instrument adopting
such Supplemental Article shall be executed by the Depositor, the Master
Servicer and the Trustee; provided, that neither the Master Servicer nor the
Trustee shall withhold their consent thereto if their respective interests would
not be materially adversely affected thereby. To the extent that the terms of
the Supplemental Article do not in any way affect any provisions of this
Agreement as to any of the Certificates initially issued hereunder, the adoption
of the Supplemental Article shall not constitute an "amendment" of this
Agreement. Each Supplemental Article shall set forth all necessary provisions
137
relating to the holding of the Resecuritized Certificates by the Trustee, the
establishment of the Restructuring Vehicle, the issuing of various classes of
new certificates by the Restructuring Vehicle and the distributions to be made
thereon, and any other provisions necessary to the purposes thereof. In
connection with each Supplemental Article, the Depositor shall deliver to the
Trustee an Opinion of Counsel to the effect that (i) the Restructuring Vehicle
will qualify as a REMIC, grantor trust, FASIT or other entity not subject to
taxation for federal income tax purposes and (ii) the adoption of the
Supplemental Article will not endanger the status of any REMIC created hereunder
as a REMIC or result in the imposition of a tax upon the Trust Fund (including
but not limited to the tax on prohibited transaction as defined in Section
860F(a)(2) of the Code and the tax on contributions to a REMIC as set forth in
Section 860G(d) of the Code.
138
IN WITNESS WHEREOF, the Depositor, the Master Servicer and the Trustee
have caused their names to be signed hereto by their respective officers
thereunto duly authorized as of the day and year first above written.
RESIDENTIAL ASSET SECURITIES CORPORATION
By:______________________________
Name: Xxxxxx Xxxxxx
Title: Vice President
RESIDENTIAL FUNDING CORPORATION
By:_____________________________
Name: Xxxx Xxxxx
Title: Associate
JPMORGAN CHASE BANK, N.A.
as Trustee
By:_____________________________
Name:
Title:
STATE OF MINNESOTA )
) ss.:
COUNTY OF HENNEPIN )
On the ____ day of November 2004 before me, a notary public in and for
said State, personally appeared Xxxxxx Xxxxxx, known to me to be a Vice
President of Residential Asset Securities Corporation, one of the corporations
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
Notary Public
----------------------------------
[Notarial Seal]
STATE OF MINNESOTA )
) ss.:
COUNTY OF HENNEPIN )
On the ____ day of November 2004 before me, a notary public in and for
said State, personally appeared Xxxx Xxxxx, known to me to be an Associate of
Residential Funding Corporation, one of the corporations that executed the
within instrument, and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
Notary Public
--------------------------------
[Notarial Seal]
STATE OF )
) ss.:
COUNTY OF )
On the ____ day of November 2004 before me, a notary public in and for
said State, personally appeared ___________________________, known to me to be a
_____________________________ of JPMorgan Chase Bank, N.A., a banking
association organized under the laws of the United States that executed the
within instrument, and also known to me to be the person who executed it on
behalf of said banking corporation and acknowledged to me that such banking
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
Notary Public
------------------------------------
[Notarial Seal]
FORM OF CLASS A-[_] CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 [COUPLED WITH THE RIGHT TO RECEIVE PAYMENTS UNDER THE YIELD
MAINTENANCE AGREEMENT].
THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DECREASED
BY THE PRINCIPAL PAYMENTS HEREON AND REALIZED LOSSES ALLOCABLE HERETO.
ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE CERTIFICATE
PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DIFFERENT FROM THE DENOMINATION
SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CERTIFICATE
PRINCIPAL BALANCE BY INQUIRY OF THE TRUSTEE NAMED HEREIN.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE &
CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
CUSIP: _____________________ Certificate No. A-[__]-__
Date of Pooling and Servicing Agreement [Adjustable Pass-Through Rate]
and Cut-off Date: November 1, 2004 [Fixed Pass-Through Rate]
First Distribution Date: December 27, 2004 Aggregate Initial Certificate Principal
Balance of the Class A-[_] Certificates:
$---------------------------
Master Servicer: Initial Certificate Principal Balance of this
Residential Funding Corporation Class A-[_] Certificate:
$---------------------------
Final Scheduled Distribution Date:
__________ __, 20__
HOME EQUITY MORTGAGE ASSET-BACKED PASS-THROUGH CERTIFICATES
SERIES 2004-KS11
evidencing a percentage interest in the distributions
allocable to the Class A-[_] Certificates with respect to a
Trust Fund consisting primarily of a pool of [fixed]
[adjustable] interest rate, first [and junior] lien mortgage
loans on one- to four-family residential properties sold by
RESIDENTIAL ASSET SECURITIES CORPORATION
This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in Residential Asset
Securities Corporation, the Master Servicer, the Trustee referred to below or
GMAC Mortgage Group, Inc. or any of their affiliates. Neither this Certificate
nor the underlying Mortgage Loans are guaranteed or insured by any governmental
agency or instrumentality or by Residential Asset Securities Corporation, the
Master Servicer, the Trustee or GMAC Mortgage Group, Inc. or any of their
affiliates. None of the Depositor, the Master Servicer, GMAC Mortgage Group,
Inc. or any of their affiliates will have any obligation with respect to any
certificate or other obligation secured by or payable from payments on the
Certificates.
This certifies that [Cede & Co.] is the registered owner of the
Percentage Interest evidenced by this Certificate in certain distributions with
respect to the Trust Fund consisting primarily of an interest in a pool of
[fixed] [adjustable] interest rate, first lien mortgage loans on one- to four-
family residential properties (the "Group [_] Loans"), sold by Residential Asset
Securities Corporation (hereinafter called the "Depositor," which term includes
any successor entity under the Agreement referred to below). The Trust Fund was
created pursuant to a Pooling and Servicing Agreement dated as specified above
(the "Agreement") among the Depositor, the Master Servicer and JPMorgan Chase
Bank, N.A., as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing as
described in the Agreement, to the Person in whose name this Certificate is
registered at the close of business on the Business Day immediately preceding
that Distribution Date (the "Record Date"), from the related Available
Distribution Amount in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount of interest and principal, if any,
required to be distributed to Holders of Class A-[_] Certificates on such
Distribution Date.
Distributions on this Certificate will be made either by the Master
Servicer acting on behalf of the Trustee or by a Paying Agent appointed by the
Trustee in immediately available funds (by wire transfer or otherwise) for the
account of the Person entitled thereto if such Person shall have so notified the
Master Servicer or such Paying Agent, or by check mailed to the address of the
Person entitled thereto, as such name and address shall appear on the
Certificate Register.
Notwithstanding the above, the final distribution on this Certificate
will be made after due notice of the pendency of such distribution and only upon
presentation and surrender of, this Certificate at the office or agency
appointed by the Trustee for that purpose in the City and State of New York. The
Initial Certificate Principal Balance of this Certificate is set forth above.
The Certificate Principal Balance hereof will be reduced [to the extent of
distributions allocable to principal and any Realized Losses allocable hereto]
[from time to time pursuant to the Agreement].
This Certificate is one of a duly authorized issue of Certificates
issued in several Classes designated as Home Equity Mortgage Asset-Backed
Pass-Through Certificates of the Series specified hereon (herein collectively
called the "Certificates").
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set forth
herein and in the Agreement. In the event Master Servicer funds are advanced
with respect to any Mortgage Loan, such advance is reimbursable to the Master
Servicer, to the extent provided in the Agreement, from related recoveries on
such Mortgage Loan or from other cash that would have been distributable to
Certificateholders.
As provided in the Agreement, withdrawals from the Custodial Account
and/or the Certificate Account created for the benefit of Certificateholders may
be made by the Master Servicer from time to time for purposes other than
distributions to Certificateholders, such purposes including without limitation
reimbursement to the Depositor and the Master Servicer of advances made, or
certain expenses incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations of
the Depositor, the Master Servicer and the Trustee and the rights of the
Certificateholders under the Agreement from time to time by the Depositor, the
Master Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66% of the Percentage Interests of
each Class of Certificates affected thereby. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon the Certificate. The Agreement also permits the
amendment thereof in certain circumstances without the consent of the Holders of
any of the Certificates and, in certain additional circumstances, without the
consent of the Holders of certain Classes of Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee in the City and State of New York,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and there upon one or more new Certificates
of authorized denominations evidencing the same Class and aggregate Percentage
Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Trustee, and the Certificate
Registrar and any agent of the Depositor, the Master Servicer, the Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Master Servicer, the Trustee nor any such agent shall be affected by notice to
the contrary.
This Certificate shall be governed by and construed in accordance with
the laws of the State of New York.
The obligations created by the Agreement in respect of the Certificates
and the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the maturity or other liquidation of the last Mortgage Loan subject thereto
or the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan, and (ii) the purchase by the Holder of the
Class SB Certificates, or if such option is not exercised by the Holder of the
Class SB Certificates, the Master Servicer, from the Trust Fund of all remaining
Mortgage Loans and all property acquired in respect of such Mortgage Loans or
the Certificates, in either case thereby effecting early retirement of the
Certificates. The Agreement permits, but does not require, the Holder of the
Class SB Certificates, or if such option is not exercised by the Holder of the
Class SB Certificates, the Master Servicer, (i) to purchase, at a price
determined as provided in the Agreement, all remaining Mortgage Loans and all
property acquired in respect of any Mortgage Loan or (ii) to purchase in whole,
but not in part, all of the Certificates from the Holders thereof, provided,
that any such option may only be exercised if the Stated Principal Balance
before giving effect to the distributions to be made on such Distribution Date
of the Mortgage Loans, as of the Distribution Date upon which the proceeds of
any such purchase are distributed is less than ten percent of the Cut-off Date
Balance.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
JPMORGAN CHASE BANK, N.A.,
as Trustee
By: ________________________________
Authorized Signatory
Dated:_____________________
Certificate of Authentication
This is one of the Class A-[_] Certificates referred to in the
within-mentioned Agreement.
JPMORGAN CHASE BANK, N.A.,
as Certificate Registrar
By: _______________________________
Authorized Signatory
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto __________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee) the beneficial interest evidenced by the within Trust Certificate and
hereby authorizes the transfer of registration of such interest to assignee on
the Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
Dated:_____________________ ____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available fund to______________________________________________ for the account
of ______________________________ account number
________________________________ or, if mailed by check, to
_____________________________.
Applicable statements should be mailed to:_________________________.
This information is provided by ____________________, the assignee named
above, or ____________________, as its agent.
Exhibit B-1 EXHIBIT B-1
FORM OF CLASS M-[_] CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A-[_]
CERTIFICATES AS DESCRIBED IN THE AGREEMENT (AS DEFINED HEREIN).
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").
ANY TRANSFEREE OF THIS CERTIFICATE WILL BE DEEMED TO HAVE REPRESENTED
BY VIRTUE OF ITS PURCHASE OR HOLDING OF THIS CERTIFICATE (OR INTEREST THEREIN)
THAT EITHER (A) SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN OR OTHER PLAN OR
ARRANGEMENT SUBJECT TO THE PROHIBITED TRANSACTION PROVISIONS OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF
THE CODE OR A PERSON (INCLUDING AN INSURANCE COMPANY INVESTING ITS GENERAL
ACCOUNT, AN INVESTMENT MANAGER, A NAMED FIDUCIARY OR A TRUSTEE OF ANY SUCH PLAN)
WHO IS USING "PLAN ASSETS" OF ANY SUCH PLAN TO EFFECT SUCH ACQUISITION (EACH OF
THE FOREGOING, A "PLAN INVESTOR"), (B) IT HAS ACQUIRED AND IS HOLDING THIS
CERTIFICATE IN RELIANCE ON U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION
EXEMPTION ("PTE") 94-29, 59 FED. REG. 14674 (MARCH 29, 1994), AS AMENDED BY PTE
97-34, 62 FED. REG. 39021 (JULY 21, 1997), PTE 2000-58, 65 FED. REG. 67765
(NOVEMBER 13, 2000) AND PTE 2002-41, 67 FED. REG. 54487 (AUGUST 22, 2002) (THE
"RFC EXEMPTION"), AND THAT IT UNDERSTANDS THAT THERE ARE CERTAIN CONDITIONS TO
THE AVAILABILITY OF THE RFC EXEMPTION INCLUDING THAT THIS CERTIFICATE MUST BE
RATED, AT THE TIME OF PURCHASE, NOT LOWER THAN "BBB-" (OR ITS EQUIVALENT) BY
STANDARD & POOR'S, FITCH OR XXXXX'X OR (C) (I) THE TRANSFEREE IS AN INSURANCE
COMPANY, (II) THE SOURCE OF FUNDS USED TO PURCHASE OR HOLD THIS CERTIFICATE IS
AN "INSURANCE COMPANY GENERAL ACCOUNT" (AS DEFINED IN U.S. DEPARTMENT OF LABOR
PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE") 95-60), AND (III) THE CONDITIONS
SET FORTH IN SECTIONS I AND III OF PTCE 95-60 HAVE BEEN SATISFIED (EACH ENTITY
THAT SATISFIES THIS CLAUSE (C), A "COMPLYING INSURANCE COMPANY").
IF THIS CERTIFICATE (OR ANY INTEREST THEREIN) IS ACQUIRED OR HELD BY
ANY PERSON THAT DOES NOT SATISFY THE CONDITIONS DESCRIBED IN THE PRECEDING
PARAGRAPH, THEN THE LAST PRECEDING TRANSFEREE THAT EITHER (I) IS NOT A PLAN
INVESTOR, (II) ACQUIRED SUCH CERTIFICATE IN COMPLIANCE WITH THE RFC EXEMPTION,
OR (III) IS A COMPLYING INSURANCE COMPANY SHALL BE RESTORED, TO THE EXTENT
PERMITTED BY LAW, TO ALL RIGHTS AND OBLIGATIONS AS CERTIFICATE OWNER THEREOF
RETROACTIVE TO THE DATE OF SUCH TRANSFER OF THIS CERTIFICATE. THE TRUSTEE SHALL
BE UNDER NO LIABILITY TO ANY PERSON FOR MAKING ANY PAYMENTS DUE ON THIS
CERTIFICATE TO SUCH PRECEDING TRANSFEREE.
ANY PURPORTED CERTIFICATE OWNER WHOSE ACQUISITION OR HOLDING OF THIS
CERTIFICATE (OR INTEREST THEREIN) WAS EFFECTED IN VIOLATION OF THE RESTRICTIONS
IN SECTION 5.02(e)(ii) OF THE POOLING AND SERVICING AGREEMENT SHALL INDEMNIFY
AND HOLD HARMLESS THE DEPOSITOR, THE TRUSTEE, THE MASTER SERVICER, ANY
SUBSERVICER, AND THE TRUST FUND FROM AND AGAINST ANY AND ALL LIABILITIES,
CLAIMS, COSTS OR EXPENSES INCURRED BY SUCH PARTIES AS A RESULT OF SUCH
ACQUISITION OR HOLDING.
CUSIP: _____________________ Certificate No. M-[__]-__
Date of Pooling and Servicing Agreement [Adjustable Pass-Through Rate]
and Cut-off Date: November 1, 2004 [Fixed Pass-Through Rate]
First Distribution Date: December 27, 2004 Aggregate Initial Certificate Principal
Balance of the Class M-[_] Certificates:
$---------------------------
Master Servicer: Initial Certificate Principal Balance of this
Residential Funding Corporation Class M-[_] Certificate:
$---------------------------
Final Scheduled Distribution Date:
__________ __, 20__
HOME EQUITY MORTGAGE ASSET-BACKED PASS-THROUGH CERTIFICATES
SERIES 2004-KS11
evidencing a percentage interest in the distributions
allocable to the Class M-[_] Certificates with respect to a
Trust Fund consisting primarily of a pool of [fixed]
[adjustable] interest rate, first [and junior] lien mortgage
loans on one- to four-family residential properties sold by
RESIDENTIAL ASSET SECURITIES CORPORATION
This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in Residential Asset
Securities Corporation, the Master Servicer, the Trustee referred to below or
GMAC Mortgage Group, Inc. or any of their affiliates. Neither this Certificate
nor the underlying Mortgage Loans are guaranteed or insured by any governmental
agency or instrumentality or by Residential Asset Securities Corporation, the
Master Servicer, the Trustee or GMAC Mortgage Group, Inc. or any of their
affiliates. None of the Depositor, the Master Servicer, GMAC Mortgage Group,
Inc. or any of their affiliates will have any obligation with respect to any
certificate or other obligation secured by or payable from payments on the
Certificates.
This certifies that [Cede & Co.] is the registered owner of the
Percentage Interest evidenced by this Certificate in certain distributions with
respect to the Trust Fund consisting primarily of an interest in a pool of
[fixed] [adjustable] interest rate, first lien mortgage loans on one- to four-
family residential properties (the "Mortgage Loans"), sold by Residential Asset
Securities Corporation (hereinafter called the "Depositor," which term includes
any successor entity under the Agreement referred to below). The Trust Fund was
created pursuant to a Pooling and Servicing Agreement dated as specified above
(the "Agreement") among the Depositor, the Master Servicer and JPMorgan Chase
Bank, N.A., as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing as
described in the Agreement, to the Person in whose name this Certificate is
registered at the close of business on the Business Day immediately preceding
that Distribution Date (the "Record Date"), from the related Available
Distribution Amount in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount of interest and principal, if any,
required to be distributed to Holders of Class M-[_] Certificates on such
Distribution Date.
Distributions on this Certificate will be made either by the Master
Servicer acting on behalf of the Trustee or by a Paying Agent appointed by the
Trustee in immediately available funds (by wire transfer or otherwise) for the
account of the Person entitled thereto if such Person shall have so notified the
Master Servicer or such Paying Agent, or by check mailed to the address of the
Person entitled thereto, as such name and address shall appear on the
Certificate Register.
Notwithstanding the above, the final distribution on this Certificate
will be made after due notice of the pendency of such distribution and only upon
presentation and surrender of, this Certificate at the office or agency
appointed by the Trustee for that purpose in the City and State of New York. The
Initial Certificate Principal Balance of this Certificate is set forth above.
The Certificate Principal Balance hereof will be reduced to the extent of
distributions allocable to principal and any Realized Losses allocable hereto.
Any Transferee of this Class M Certificate will be deemed to have made
representations relating to the permissibility of such transfer under ERISA and
Section 4975 of the Code, as described in Section 5.02(e)(ii) of the Agreement.
In addition, any purported Certificate Owner whose acquisition or holding of
this Certificate (or interest therein) was effected in violation of the
restrictions in Section 5.02(e)(ii) of the Agreement shall indemnify and hold
harmless the Depositor, the Trustee, the Master Servicer, any Subservicer, any
underwriter and the Trust Fund from and against any and all liabilities, claims,
costs or expenses incurred by such parties as a result of such acquisition or
holding.
This Certificate is one of a duly authorized issue of Certificates
issued in several Classes designated as Home Equity Mortgage Asset-Backed
Pass-Through Certificates of the Series specified hereon (herein collectively
called the "Certificates").
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set forth
herein and in the Agreement. In the event Master Servicer funds are advanced
with respect to any Mortgage Loan, such advance is reimbursable to the Master
Servicer, to the extent provided in the Agreement, from related recoveries on
such Mortgage Loan or from other cash that would have been distributable to
Certificateholders.
As provided in the Agreement, withdrawals from the Custodial Account
and/or the Certificate Account created for the benefit of Certificateholders may
be made by the Master Servicer from time to time for purposes other than
distributions to Certificateholders, such purposes including without limitation
reimbursement to the Depositor and the Master Servicer of advances made, or
certain expenses incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations of
the Depositor, the Master Servicer and the Trustee and the rights of the
Certificateholders under the Agreement from time to time by the Depositor, the
Master Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66% of the Percentage Interests of
each Class of Certificates affected thereby. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon the Certificate. The Agreement also permits the
amendment thereof in certain circumstances without the consent of the Holders of
any of the Certificates and, in certain additional circumstances, without the
consent of the Holders of certain Classes of Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee in the City and State of New York,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and there upon one or more new Certificates
of authorized denominations evidencing the same Class and aggregate Percentage
Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Trustee, and the Certificate
Registrar and any agent of the Depositor, the Master Servicer, the Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Master Servicer, the Trustee nor any such agent shall be affected by notice to
the contrary.
This Certificate shall be governed by and construed in accordance with
the laws of the State of New York.
The obligations created by the Agreement in respect of the Certificates
and the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the maturity or other liquidation of the last Mortgage Loan subject thereto
or the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan, and (ii) the purchase by the Holder of the
Class SB Certificates, or if such option is not exercised by the Holder of the
Class SB Certificates, the Master Servicer, from the Trust Fund of all remaining
Mortgage Loans and all property acquired in respect of such Mortgage Loans or
the Certificates, in either case thereby effecting early retirement of the
Certificates. The Agreement permits, but does not require, the Holder of the
Class SB Certificates, or if such option is not exercised by the Holder of the
Class SB Certificates, the Master Servicer, (i) to purchase, at a price
determined as provided in the Agreement, all remaining Mortgage Loans and all
property acquired in respect of any Mortgage Loan or (ii) to purchase in whole,
but not in part, all of the Certificates from the Holders thereof, provided,
that any such option may only be exercised if the Stated Principal Balance
before giving effect to the distributions to be made on such Distribution Date
of the Mortgage Loans, as of the Distribution Date upon which the proceeds of
any such purchase are distributed is less than ten percent of the Cut-off Date
Balance.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
JPMORGAN CHASE BANK, N.A.,
as Trustee
By: ________________________________
Authorized Signatory
Dated:_____________________
Certificate of Authentication
This is one of the Class A-[_] Certificates referred to in the
within-mentioned Agreement.
JPMORGAN CHASE BANK, N.A.,
as Certificate Registrar
By: _______________________________
Authorized Signatory
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto __________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee) the beneficial interest evidenced by the within Trust Certificate and
hereby authorizes the transfer of registration of such interest to assignee on
the Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
Dated:_____________________ ____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available fund to______________________________________________ for the account
of ______________________________ account number
________________________________ or, if mailed by check, to
_____________________________.
Applicable statements should be mailed to:_________________________.
This information is provided by ____________________, the assignee named
above, or ____________________, as its agent.
EXHIBIT B-2
FORM OF CLASS B-[_] CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A AND
CLASS M CERTIFICATES AS DESCRIBED IN THE AGREEMENT (AS DEFINED HEREIN).
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").
ANY TRANSFEREE OF THIS CERTIFICATE WILL BE DEEMED TO HAVE REPRESENTED
BY VIRTUE OF ITS PURCHASE OR HOLDING OF THIS CERTIFICATE (OR INTEREST THEREIN)
THAT EITHER (A) SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN OR OTHER PLAN OR
ARRANGEMENT SUBJECT TO THE PROHIBITED TRANSACTION PROVISIONS OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF
THE CODE OR A PERSON (INCLUDING AN INSURANCE COMPANY INVESTING ITS GENERAL
ACCOUNT, AN INVESTMENT MANAGER, A NAMED FIDUCIARY OR A TRUSTEE OF ANY SUCH PLAN)
WHO IS USING "PLAN ASSETS" OF ANY SUCH PLAN TO EFFECT SUCH ACQUISITION (EACH OF
THE FOREGOING, A "PLAN INVESTOR"), (B) IT HAS ACQUIRED AND IS HOLDING THIS
CERTIFICATE IN RELIANCE ON U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION
EXEMPTION ("PTE") 94-29, 59 FED. REG. 14674 (MARCH 29, 1994), AS AMENDED BY PTE
97-34, 62 FED. REG. 39021 (JULY 21, 1997), PTE 2000-58, 65 FED. REG. 67765
(NOVEMBER 13, 2000) AND PTE 2002-41, 67 FED. REG. 54487 (AUGUST 22, 2002) (THE
"RFC EXEMPTION"), AND THAT IT UNDERSTANDS THAT THERE ARE CERTAIN CONDITIONS TO
THE AVAILABILITY OF THE RFC EXEMPTION INCLUDING THAT THIS CERTIFICATE MUST BE
RATED, AT THE TIME OF PURCHASE, NOT LOWER THAN "BBB-" (OR ITS EQUIVALENT) BY
STANDARD & POOR'S, FITCH OR XXXXX'X OR (C) (I) THE TRANSFEREE IS AN INSURANCE
COMPANY, (II) THE SOURCE OF FUNDS USED TO PURCHASE OR HOLD THIS CERTIFICATE IS
AN "INSURANCE COMPANY GENERAL ACCOUNT" (AS DEFINED IN U.S. DEPARTMENT OF LABOR
PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE") 95-60), AND (III) THE CONDITIONS
SET FORTH IN SECTIONS I AND III OF PTCE 95-60 HAVE BEEN SATISFIED (EACH ENTITY
THAT SATISFIES THIS CLAUSE (C), A "COMPLYING INSURANCE COMPANY").
IF THIS CERTIFICATE (OR ANY INTEREST THEREIN) IS ACQUIRED OR HELD BY
ANY PERSON THAT DOES NOT SATISFY THE CONDITIONS DESCRIBED IN THE PRECEDING
PARAGRAPH, THEN THE LAST PRECEDING TRANSFEREE THAT EITHER (I) IS NOT A PLAN
INVESTOR, (II) ACQUIRED SUCH CERTIFICATE IN COMPLIANCE WITH THE RFC EXEMPTION,
OR (III) IS A COMPLYING INSURANCE COMPANY SHALL BE RESTORED, TO THE EXTENT
PERMITTED BY LAW, TO ALL RIGHTS AND OBLIGATIONS AS CERTIFICATE OWNER THEREOF
RETROACTIVE TO THE DATE OF SUCH TRANSFER OF THIS CERTIFICATE. THE TRUSTEE SHALL
BE UNDER NO LIABILITY TO ANY PERSON FOR MAKING ANY PAYMENTS DUE ON THIS
CERTIFICATE TO SUCH PRECEDING TRANSFEREE.
ANY PURPORTED CERTIFICATE OWNER WHOSE ACQUISITION OR HOLDING OF THIS
CERTIFICATE (OR INTEREST THEREIN) WAS EFFECTED IN VIOLATION OF THE RESTRICTIONS
IN SECTION 5.02(e)(ii) OF THE POOLING AND SERVICING AGREEMENT SHALL INDEMNIFY
AND HOLD HARMLESS THE DEPOSITOR, THE TRUSTEE, THE MASTER SERVICER, ANY
SUBSERVICER, AND THE TRUST FUND FROM AND AGAINST ANY AND ALL LIABILITIES,
CLAIMS, COSTS OR EXPENSES INCURRED BY SUCH PARTIES AS A RESULT OF SUCH
ACQUISITION OR HOLDING.
CUSIP: _____________________ Certificate No. B-[__]-__
Date of Pooling and Servicing Agreement [Adjustable Pass-Through Rate]
and Cut-off Date: November 1, 2004 [Fixed Pass-Through Rate]
First Distribution Date: December 27, 2004 Aggregate Initial Certificate Principal
Balance of the Class B-[_] Certificates:
$---------------------------
Master Servicer: Initial Certificate Principal Balance of this
Residential Funding Corporation Class B-[_] Certificate:
$---------------------------
Final Scheduled Distribution Date:
__________ __, 20__
CUSIP: Certificate No. B-1
Date of Pooling and Servicing Agreement Adjustable Pass-Through Rate
and Cut-off Date:
November 1, 2004
HOME EQUITY MORTGAGE ASSET-BACKED PASS-THROUGH CERTIFICATES
SERIES 2004-KS11
evidencing a percentage interest in the distributions
allocable to the Class B Certificates with respect to a Trust
Fund consisting primarily of a pool of fixed interest rate,
first lien and junior lien mortgage loans on one- to
four-family residential properties sold by RESIDENTIAL ASSET
SECURITIES CORPORATION
This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in Residential Asset
Securities Corporation, the Master Servicer, the Trustee referred to below or
GMAC Mortgage Group, Inc. or any of their affiliates. Neither this Certificate
nor the underlying Mortgage Loans are guaranteed or insured by any governmental
agency or instrumentality or by Residential Asset Securities Corporation, the
Master Servicer, the Trustee or GMAC Mortgage Group, Inc. or any of their
affiliates. None of the Depositor, the Master Servicer, GMAC Mortgage Group,
Inc. or any of their affiliates will have any obligation with respect to any
certificate or other obligation secured by or payable from payments on the
Certificates.
This certifies that [Cede & Co.] is the registered owner of the
Percentage Interest evidenced by this Certificate in certain distributions with
respect to the Trust Fund consisting primarily of an interest in a pool of fixed
interest rate, first and junior lien mortgage loans on one- to four- family
residential properties (the "Group I Loans"), sold by Residential Asset
Securities Corporation (hereinafter called the "Depositor," which term includes
any successor entity under the Agreement referred to below). The Trust Fund was
created pursuant to a Pooling and Servicing Agreement dated as specified above
(the "Agreement") among the Depositor, the Master Servicer and JPMorgan Chase
Bank, N.A., as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing as
described in the Agreement, to the Person in whose name this Certificate is
registered at the close of business on the last Business Day of the month next
preceding the month in which the related Distribution Date occurs, except in the
case of the first Record Date which shall be the Closing Date (the "Record
Date"), from the related Available Distribution Amount in an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the amount
of interest and principal, if any, required to be distributed to Holders of
Class B Certificates on such Distribution Date.
Distributions on this Certificate will be made either by the Master
Servicer acting on behalf of the Trustee or by a Paying Agent appointed by the
Trustee in immediately available funds (by wire transfer or otherwise) for the
account of the Person entitled thereto if such Person shall have so notified the
Master Servicer or such Paying Agent, or by check mailed to the address of the
Person entitled thereto, as such name and address shall appear on the
Certificate Register.
Notwithstanding the above, the final distribution on this Certificate
will be made after due notice of the pendency of such distribution and only upon
presentation and surrender of, this Certificate at the office or agency
appointed by the Trustee for that purpose in the City and State of New York. The
Initial Certificate Principal Balance of this Certificate is set forth above.
The Certificate Principal Balance hereof will be reduced to the extent of
distributions allocable to principal and any Realized Losses allocable hereto.
Any Transferee of this Class B Certificate will be deemed to have made
representations relating to the permissibility of such transfer under ERISA and
Section 4975 of the Code, as described in Section 5.02(e)(ii) of the Agreement.
In addition, any purported Certificate Owner whose acquisition or holding of
this Certificate (or interest therein) was effected in violation of the
restrictions in Section 5.02(e)(ii) of the Agreement shall indemnify and hold
harmless the Depositor, the Trustee, the Master Servicer, any Subservicer, any
underwriter and the Trust Fund from and against any and all liabilities, claims,
costs or expenses incurred by such parties as a result of such acquisition or
holding.
This Certificate is one of a duly authorized issue of Certificates
issued in several Classes designated as Home Equity Mortgage Asset-Backed
Pass-Through Certificates of the Series specified hereon (herein collectively
called the "Certificates").
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set forth
herein and in the Agreement. In the event Master Servicer funds are advanced
with respect to any Mortgage Loan, such advance is reimbursable to the Master
Servicer, to the extent provided in the Agreement, from related recoveries on
such Mortgage Loan or from other cash that would have been distributable to
Certificateholders.
As provided in the Agreement, withdrawals from the Custodial Account
and/or the Certificate Account created for the benefit of Certificateholders may
be made by the Master Servicer from time to time for purposes other than
distributions to Certificateholders, such purposes including without limitation
reimbursement to the Depositor and the Master Servicer of advances made, or
certain expenses incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations of
the Depositor, the Master Servicer and the Trustee and the rights of the
Certificateholders under the Agreement from time to time by the Depositor, the
Master Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66% of the Percentage Interests of
each Class of Certificates affected thereby. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon the Certificate. The Agreement also permits the
amendment thereof in certain circumstances without the consent of the Holders of
any of the Certificates and, in certain additional circumstances, without the
consent of the Holders of certain Classes of Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee in the City and State of New York,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and there upon one or more new Certificates
of authorized denominations evidencing the same Class and aggregate Percentage
Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Trustee, and the Certificate
Registrar and any agent of the Depositor, the Master Servicer, the Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Master Servicer, the Trustee nor any such agent shall be affected by notice to
the contrary.
This Certificate shall be governed by and construed in accordance with
the laws of the State of New York.
The obligations created by the Agreement in respect of the Certificates
and the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the maturity or other liquidation of the last Mortgage Loan subject thereto
or the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan, and (ii) the purchase by the Holder of the
Class SB Certificates, or if such option is not exercised by the Holder of the
Class SB Certificates, the Master Servicer, from the Trust Fund of all remaining
Mortgage Loans and all property acquired in respect of such Mortgage Loans or
the Certificates, in either case thereby effecting early retirement of the
Certificates. The Agreement permits, but does not require, the Holder of the
Class SB Certificates, or if such option is not exercised by the Holder of the
Class SB Certificates, the Master Servicer, (i) to purchase, at a price
determined as provided in the Agreement, all remaining Mortgage Loans and all
property acquired in respect of any Mortgage Loan or (ii) to purchase in whole,
but not in part, all of the Certificates from the Holders thereof, provided,
that any such option may only be exercised if the Stated Principal Balance
before giving effect to the distributions to be made on such Distribution Date
of the Mortgage Loans, as of the Distribution Date upon which the proceeds of
any such purchase are distributed is less than ten percent of the Cut-off Date
Balance.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
JPMORGAN CHASE BANK, N.A.,
as Trustee
By: ________________________________
Authorized Signatory
Dated:_____________________
Certificate of Authentication
This is one of the Class A-[_] Certificates referred to in the
within-mentioned Agreement.
JPMORGAN CHASE BANK, N.A.,
as Certificate Registrar
By: _______________________________
Authorized Signatory
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto __________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee) the beneficial interest evidenced by the within Trust Certificate and
hereby authorizes the transfer of registration of such interest to assignee on
the Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
Dated:_____________________ ____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available fund to______________________________________________ for the account
of ______________________________ account number
________________________________ or, if mailed by check, to
_____________________________.
Applicable statements should be mailed to:_________________________.
This information is provided by ____________________, the assignee named
above, or ____________________, as its agent.
EXHIBIT C
FORM OF CLASS SB-[_] CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A-[_]
AND CLASS M-[_] CERTIFICATES AS DESCRIBED IN THE AGREEMENT (AS DEFINED HEREIN).
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE") [COUPLED WITH THE RIGHT TO RECEIVE PAYMENTS
UNDER THE YIELD MAINTENANCE AGREEMENT].
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING
AGREEMENT (THE "AGREEMENT").
NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST THEREIN SHALL BE MADE
TO ANY EMPLOYEE BENEFIT PLAN OR OTHER PLAN OR ARRANGEMENT SUBJECT TO THE
PROHIBITED TRANSACTION PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT
OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE, OR ANY PERSON
(INCLUDING AN INSURANCE COMPANY INVESTING ITS GENERAL ACCOUNT, AN INVESTMENT
MANAGER, A NAMED FIDUCIARY OR A TRUSTEE OF ANY SUCH PLAN) WHO IS USING "PLAN
ASSETS" OF ANY SUCH PLAN TO EFFECT SUCH ACQUISITION (EACH OF THE FOREGOING, A
"PLAN INVESTOR") UNLESS THE TRUSTEE, THE DEPOSITOR AND THE MASTER SERVICER ARE
PROVIDED WITH EITHER (I) A CERTIFICATION PURSUANT TO SECTION 5.02(e)(i) OF THE
AGREEMENT OR (II) AN OPINION OF COUNSEL ACCEPTABLE TO AND IN FORM AND SUBSTANCE
SATISFACTORY TO THE TRUSTEE, THE DEPOSITOR AND THE MASTER SERVICER TO THE EFFECT
THAT THE PURCHASE OR HOLDING OF THIS CERTIFICATE IS PERMISSIBLE UNDER APPLICABLE
LAW, WILL NOT CONSTITUTE OR RESULT IN ANY NON-EXEMPT PROHIBITED TRANSACTION
UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE (OR COMPARABLE PROVISIONS
OF ANY SUBSEQUENT ENACTMENTS), AND WILL NOT SUBJECT THE TRUSTEE, THE DEPOSITOR
OR THE MASTER SERVICER TO ANY OBLIGATION OR LIABILITY (INCLUDING OBLIGATIONS OR
LIABILITIES UNDER ERISA OR SECTION 4975 OF THE CODE) IN ADDITION TO THOSE
UNDERTAKEN IN THE AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF
THE TRUSTEE, THE DEPOSITOR OR THE MASTER SERVICER.
CUSIP: _____________________ Certificate No. SB-[__]-1
Date of Pooling and Servicing Agreement Percentage Interest: 100.00%
and Cut-off Date: November 1, 2004
First Distribution Date: December 27, 2004 Aggregate Initial Notional Balance
of the Class SB-[_] Certificates:
$---------------------------
Master Servicer: Initial Notional Balance
Residential Funding Corporation of this Class SB-[_] Certificate:
$---------------------------
Maturity Date:
__________ __, 20__
HOME EQUITY MORTGAGE ASSET-BACKED PASS-THROUGH CERTIFICATES
SERIES 2004-KS11
evidencing a percentage interest in the distributions
allocable to the Class SB-[_] Certificates with respect to a
Trust Fund consisting primarily of a pool of adjustable
interest rate, first [and junior] lien mortgage loans on one-
to four-family residential properties sold by RESIDENTIAL
ASSET SECURITIES CORPORATION
This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in Residential Asset
Securities Corporation, the Master Servicer, the Trustee referred to below or
any of their affiliates. Neither this Certificate nor the underlying Mortgage
Loans are guaranteed or insured by any governmental agency or instrumentality or
by Residential Asset Securities Corporation, the Master Servicer, the Trustee or
any of their affiliates. None of the Depositor, the Master Servicer or any of
their affiliates will have any obligation with respect to any certificate or
other obligation secured by or payable from payments on the Certificates.
This certifies that [__________] is the registered owner of the
Percentage Interest evidenced by this Certificate in certain distributions with
respect to the Trust Fund consisting primarily of an interest in a pool of
adjustable interest rate, first lien mortgage loans on one- to four-family
residential properties (the "Group [_] Loans"), sold by Residential Asset
Securities Corporation (hereinafter called the "Depositor," which term includes
any successor entity under the Agreement referred to below). The Trust Fund was
created pursuant to a Pooling and Servicing Agreement dated as specified above
(the "Agreement") among the Depositor, the Master Servicer and JPMorgan Chase
Bank, N.A., as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof, assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing as
described in the Agreement, to the Person in whose name this Certificate is
registered at the close of business on the last Business Day of the month
immediately preceding the month of such distribution (the "Record Date"), from
the Available Distribution Amount in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount of interest and
principal, if any, required to be distributed to Holders of Class SB-[_]
Certificates on such Distribution Date.
Distributions on this Certificate will be made either by the Master
Servicer acting on behalf of the Trustee or by a Paying Agent appointed by the
Trustee in immediately available funds (by wire transfer or otherwise) for the
account of the Person entitled thereto if such Person shall have so notified the
Master Servicer or such Paying Agent, or by check mailed to the address of the
Person entitled thereto, as such name and address shall appear on the
Certificate Register.
Notwithstanding the above, the final distribution on this Certificate
will be made after due notice of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose in the City and State of New York. The Notional
Amount of this Class SB-[_] Certificate as of any date of determination will be
calculated as described in the Agreement. This Class SB-[_] Certificate will
accrue interest at the Pass-Through Rate on the Notional Amount as indicated in
the definition of Accrued Certificate Interest in the Agreement. This Class
SB-[_] Certificate will not accrue interest on its Certificate Principal
Balance.
No transfer of this Certificate will be made unless such transfer is
exempt from the registration requirements of the Securities Act of 1933, as
amended, and any applicable state securities laws or is made in accordance with
said Act and laws. In the event that such a transfer is to be made, (i) the
Trustee or the Depositor may require an opinion of counsel acceptable to and in
form and substance satisfactory to the Trustee and the Depositor that such
transfer is exempt (describing the applicable exemption and the basis therefor)
from or is being made pursuant to the registration requirements of the
Securities Act of 1933, as amended, and of any applicable statute of any state
and (ii) the transferee shall execute an investment letter in the form described
by the Agreement. The Holder hereof desiring to effect such transfer shall, and
does hereby agree to, indemnify the Trustee, the Depositor, the Master Servicer
and the Certificate Registrar acting on behalf of the Trustee against any
liability that may result if the transfer is not so exempt or is not made in
accordance with such Federal and state laws.
No transfer of this Certificate or any interest therein shall be made
to any employee benefit plan or other plan or arrangement subject to the
prohibited transaction provisions of ERISA or Section 4975 of the Code, or any
person (including an insurance company investing its general account, an
investment manager, a named fiduciary or a trustee of any such plan) who is
using "plan assets" of any such plan to effect such acquisition (each of the
foregoing, a "Plan Investor") unless the Trustee, the Depositor and the Master
Servicer are provided with either (i) a certification pursuant to Section
5.02(e)(i) of the Agreement or (ii) an Opinion of Counsel acceptable to and in
form and substance satisfactory to the Trustee, the Depositor and the Master
Servicer to the effect that the purchase or holding of this Certificate is
permissible under applicable law, will not constitute or result in any
non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of
the Code (or comparable provisions of any subsequent enactments), and will not
subject the Trustee, the Depositor or the Master Servicer to any obligation or
liability (including obligations or liabilities under ERISA or Section 4975 of
the Code) in addition to those undertaken in the Agreement, which Opinion of
Counsel shall not be an expense of the Trustee, the Depositor or the Master
Servicer.
This Certificate is one of a duly authorized issue of Certificates
issued in several Classes designated as Home Equity Mortgage Asset-Backed
Pass-Through Certificates of the Series specified hereon (herein collectively
called the "Certificates").
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set forth
herein and in the Agreement. In the event Master Servicer funds are advanced
with respect to any Mortgage Loan, such advance is reimbursable to the Master
Servicer, to the extent provided in the Agreement, from related recoveries on
such Mortgage Loan or from other cash that would have been distributable to
Certificateholders.
As provided in the Agreement, withdrawals from the Custodial Account
and/or the Certificate Account created for the benefit of Certificateholders may
be made by the Master Servicer from time to time for purposes other than
distributions to Certificateholders, such purposes including without limitation
reimbursement to the Depositor and the Master Servicer of advances made, or
certain expenses incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations of
the Depositor, the Master Servicer and the Trustee and the rights of the
Certificateholders under the Agreement from time to time by the Depositor, the
Master Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66% of the Percentage Interests of
each Class of Certificates affected thereby. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon the Certificate. The Agreement also permits the
amendment thereof in certain circumstances without the consent of the Holders of
any of the Certificates and, in certain additional circumstances, without the
consent of the Holders of certain Classes of Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee in the City and State of New York,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of authorized denominations evidencing the same Class and aggregate Percentage
Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Trustee, the Certificate
Registrar and any agent of the Depositor, the Master Servicer, the Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Master Servicer, the Trustee nor any such agent shall be affected by notice to
the contrary.
This Certificate shall be governed by and construed in accordance with
the laws of the State of New York.
The obligations created by the Agreement in respect of the Certificates
and the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the maturity or other liquidation of the last Mortgage Loan subject thereto
or the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan, and (ii) the purchase by the Holder of the
Class SB Certificates, or if such option is not exercised by the Holder of the
Class SB Certificates, the Master Servicer, from the Trust Fund of all remaining
Mortgage Loans and all property acquired in respect of such Mortgage Loans or
the Certificates, in either case thereby effecting early retirement of the
Certificates. The Agreement permits, but does not require, the Holder of the
Class SB Certificates, or if such option is not exercised by the Holder of the
Class SB Certificates, the Master Servicer, (i) to purchase, at a price
determined as provided in the Agreement, all remaining Mortgage Loans and all
property acquired in respect of any Mortgage Loan or (ii) to purchase in whole,
but not in part, all of the Certificates from the Holders thereof, provided,
that any such option may only be exercised if the Stated Principal Balance
before giving effect to the distributions to be made on such Distribution Date
of the Mortgage Loans, as of the Distribution Date upon which the proceeds of
any such purchase are distributed is less than ten percent of the Cut-off Date
Balance.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
JPMORGAN CHASE BANK, N.A.,
as Trustee
By: ________________________________
Authorized Signatory
Dated:_____________________
Certificate of Authentication
This is one of the Class A-[_] Certificates referred to in the
within-mentioned Agreement.
JPMORGAN CHASE BANK, N.A.,
as Certificate Registrar
By: _______________________________
Authorized Signatory
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto __________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee) the beneficial interest evidenced by the within Trust Certificate and
hereby authorizes the transfer of registration of such interest to assignee on
the Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
Dated:_____________________ ____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available fund to______________________________________________ for the account
of ______________________________ account number
________________________________ or, if mailed by check, to
_____________________________.
Applicable statements should be mailed to:_________________________.
This information is provided by ____________________, the assignee named
above, or ____________________, as its agent.
EXHIBIT D
FORM OF CLASS R-[_] CERTIFICATE
THE CLASS R-[_] CERTIFICATE WILL NOT BE ENTITLED TO PAYMENTS
CONSTITUTING THE AVAILABLE DISTRIBUTION AMOUNT UNTIL SUCH TIME AS DESCRIBED IN
THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN (THE "AGREEMENT").
THIS CLASS R-[_] CERTIFICATE IS SUBORDINATE TO THE CLASS A, CLASS M AND
CLASS SB CERTIFICATES, TO THE EXTENT DESCRIBED HEREIN AND IN THE AGREEMENT.
THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A NON-UNITED
STATES PERSON OR A DISQUALIFIED ORGANIZATION (AS DEFINED BELOW).
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING
AGREEMENT (THE "AGREEMENT").
NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST THEREIN SHALL BE MADE
TO ANY EMPLOYEE BENEFIT PLAN OR OTHER PLAN OR ARRANGEMENT SUBJECT TO THE
PROHIBITED TRANSACTION PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT
OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE, OR ANY PERSON
(INCLUDING AN INSURANCE COMPANY INVESTING ITS GENERAL ACCOUNT, AN INVESTMENT
MANAGER, A NAMED FIDUCIARY OR A TRUSTEE OF ANY SUCH PLAN) WHO IS USING "PLAN
ASSETS" OF ANY SUCH PLAN TO EFFECT SUCH ACQUISITION (EACH OF THE FOREGOING, A
"PLAN INVESTOR") UNLESS THE TRUSTEE, THE DEPOSITOR AND THE MASTER SERVICER ARE
PROVIDED WITH EITHER (I) A CERTIFICATION PURSUANT TO SECTION 5.02(e)(i) OF THE
AGREEMENT OR (II) AN OPINION OF COUNSEL ACCEPTABLE TO AND IN FORM AND SUBSTANCE
SATISFACTORY TO THE TRUSTEE, THE DEPOSITOR AND THE MASTER SERVICER TO THE EFFECT
THAT THE PURCHASE OR HOLDING OF THIS CERTIFICATE IS PERMISSIBLE UNDER APPLICABLE
LAW, WILL NOT CONSTITUTE OR RESULT IN ANY NON-EXEMPT PROHIBITED TRANSACTION
UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE (OR COMPARABLE PROVISIONS
OF ANY SUBSEQUENT ENACTMENTS), AND WILL NOT SUBJECT THE TRUSTEE, THE DEPOSITOR
OR THE MASTER SERVICER TO ANY OBLIGATION OR LIABILITY (INCLUDING OBLIGATIONS OR
LIABILITIES UNDER ERISA OR SECTION 4975 OF THE CODE) IN ADDITION TO THOSE
UNDERTAKEN IN THE AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF
THE TRUSTEE, THE DEPOSITOR OR THE MASTER SERVICER.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE
MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE MASTER
SERVICER AND THE TRUSTEE THAT (1) SUCH TRANSFEREE IS NOT (A) THE UNITED STATES,
ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY POSSESSION OF THE UNITED STATES,
OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE FOREGOING (OTHER THAN AN
INSTRUMENTALITY WHICH IS A CORPORATION IF ALL OF ITS ACTIVITIES ARE SUBJECT TO
TAX AND EXCEPT FOR XXXXXXX MAC, A MAJORITY OF ITS BOARD OF DIRECTORS IS NOT
SELECTED BY SUCH GOVERNMENTAL UNIT), (B) A FOREIGN GOVERNMENT, ANY INTERNATIONAL
ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF EITHER OF THE FOREGOING, (C)
ANY ORGANIZATION (OTHER THAN CERTAIN FARMERS' COOPERATIVES DESCRIBED IN SECTION
521 OF THE CODE) WHICH IS EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE
UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE
CODE (INCLUDING THE TAX IMPOSED BY SECTION 511 OF THE CODE ON UNRELATED BUSINESS
TAXABLE INCOME), (D) RURAL ELECTRIC AND TELEPHONE COOPERATIVES DESCRIBED IN
SECTION 1381(a)(2)(C) OF THE CODE, (E) AN ELECTING LARGE PARTNERSHIP UNDER
SECTION 775(a) OF THE CODE (ANY SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES
(A), (B), (C), (D) OR (E) BEING HEREIN REFERRED TO AS A "DISQUALIFIED
ORGANIZATION"), OR (F) AN AGENT OF A DISQUALIFIED ORGANIZATION, (2) NO PURPOSE
OF SUCH TRANSFER IS TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX AND (3) SUCH
TRANSFEREE SATISFIES CERTAIN ADDITIONAL CONDITIONS RELATING TO THE FINANCIAL
CONDITION OF THE PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE
CERTIFICATE REGISTER OR ANY TRANSFER, SALE OR OTHER DISPOSITION OF THIS
CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR AN AGENT OF A DISQUALIFIED
ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR
EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER
FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF
DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF THIS CERTIFICATE BY ACCEPTANCE
OF THIS CERTIFICATE SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS
PARAGRAPH.
Certificate No. R-[__]-1 Percentage Interest: 100.00%
Date of Pooling and Servicing Agreement Master Servicer:
and Cut-off Date: November 1, 2004 Residential Funding Corporation
HOME EQUITY MORTGAGE ASSET-BACKED PASS-THROUGH CERTIFICATES
SERIES 2004-KS11
evidencing a percentage interest in the distributions
allocable to the Class R-[_] Certificates with respect to a
Trust Fund consisting primarily of mortgage loans on one- to
four-family residential properties sold by RESIDENTIAL ASSET
SECURITIES CORPORATION
This Certificate is payable solely from the assets of the Trust Fund
and does not represent an obligation of or interest in Residential Asset
Securities Corporation, the Master Servicer, the Trustee referred to below or
any of their affiliates. Neither this Certificate nor the underlying Mortgage
Loans are guaranteed or insured by any governmental agency or instrumentality or
by Residential Asset Securities Corporation, the Master Servicer, the Trustee or
any of their affiliates. None of the Depositor, the Master Servicer or any of
their affiliates will have any obligation with respect to any certificate or
other obligation secured by or payable from payments on the Certificates.
This certifies that [Residential Funding Corporation] is the registered
owner of the Percentage Interest evidenced by this Certificate in certain
distributions with respect to the Trust Fund consisting primarily of a pool of
adjustable rate, first lien mortgage loans on one- to four-family residential
properties (the "Mortgage Loans"), sold by Residential Asset Securities
Corporation (hereinafter called the "Depositor," which term includes any
successor entity under the Agreement referred to below). The Trust Fund was
created pursuant to a Pooling and Servicing Agreement dated as specified above
(the "Agreement) among the Depositor, the Master Servicer and JPMorgan Chase
Bank, N.A., as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing as
described in the Agreement, to the Person in whose name this Certificate is
registered at the close of business on the last Business Day of the month
immediately preceding the month of such distribution (the "Record Date"), from
the related Available Distribution Amount in an amount equal to the product of
the Percentage Interest evidenced by this Certificate and, the amount of
interest and principal, if any, required to be distributed to the Holders of
Class R-[_] Certificates on such Distribution Date.
Each Holder of this Certificate will be deemed to have agreed to be
bound by the restrictions set forth in the Agreement to the effect that (i) each
person holding or acquiring any Ownership Interest in this Certificate must be a
United States Person and a Permitted Transferee, (ii) the transfer of any
Ownership Interest in this Certificate will be conditioned upon the delivery to
the Trustee of, among other things, an affidavit to the effect that it is a
United States Person and Permitted Transferee, (ii) any attempted or purported
transfer of any Ownership Interest in this Certificate in violation of such
restrictions will be absolutely null and void and will vest no rights in the
purported transferee, and (iv) if any person other than a United States Person
and a Permitted Transferee acquires any Ownership Interest in this Certificate
in violation of such restrictions, then the Master Servicer will have the right,
in its sole discretion and without notice to the Holder of this Certificate, to
sell this Certificate to a purchaser selected by the Master Servicer, which
purchaser may be the Master Servicer, or any affiliate of the Master Servicer,
on such terms and conditions as the Master Servicer may choose.
Notwithstanding the above, the final distribution on this Certificate
will be made after due notice of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose in the City and State of New York. The Holder of
this Certificate may have additional obligations with respect to this
Certificate, including tax liabilities.
No transfer of this Class R-[_] Certificate will be made unless such
transfer is exempt from the registration requirements of the Securities Act of
1933, as amended, and any applicable state securities laws or is made in
accordance with said Act and laws. In the event that such a transfer is to be
made, (i) the Trustee or the Depositor may require an opinion of counsel
acceptable to and in form and substance satisfactory to the Trustee and the
Depositor that such transfer is exempt (describing the applicable exemption and
the basis therefor) from or is being made pursuant to the registration
requirements of the Securities Act of 1933, as amended, and of any applicable
statute of any state and (ii) the transferee shall execute an investment letter
in the form described by the Agreement. The Holder hereof desiring to effect
such transfer shall, and does hereby agree to, indemnify the Trustee, the
Depositor, the Master Servicer and the Certificate Registrar acting on behalf of
the Trustee against any liability that may result if the transfer is not so
exempt or is not made in accordance with such Federal and state laws.
No transfer of this Certificate or any interest therein shall be made
to any employee benefit plan or other plan or arrangement subject to the
prohibited transaction provisions of ERISA or Section 4975 of the Code, or any
person (including an insurance company investing its general account, an
investment manager, a named fiduciary or a trustee of any such plan) who is
using "plan assets" of any such plan to effect such acquisition (each of the
foregoing, a "Plan Investor") unless the Trustee, the Depositor and the Master
Servicer are provided with either (i) a certification pursuant to Section
5.02(e)(i) of the Agreement or (ii) an Opinion of Counsel acceptable to and in
form and substance satisfactory to the Trustee, the Depositor and the Master
Servicer to the effect that the purchase or holding of this Certificate is
permissible under applicable law, will not constitute or result in any
non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of
the Code (or comparable provisions of any subsequent enactments), and will not
subject the Trustee, the Depositor or the Master Servicer to any obligation or
liability (including obligations or liabilities under ERISA or Section 4975 of
the Code) in addition to those undertaken in the Agreement, which Opinion of
Counsel shall not be an expense of the Trustee, the Depositor or the Master
Servicer.
This Certificate is one of a duly authorized issue of Certificates
issued in several Classes designated as Home Equity Mortgage Asset-Backed
Pass-Through Certificates of the Series specified hereon (herein collectively
called the "Certificates").
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set forth
herein and in the Agreement. In the event Master Servicer funds are advanced
with respect to any Mortgage Loan, such advance is reimbursable to the Master
Servicer, to the extent provided in the Agreement, from related recoveries on
such Mortgage Loan or from other cash that would have been distributable to
Certificateholders.
As provided in the Agreement, withdrawals from the Custodial Account
and/or the Certificate Account created for the benefit of Certificateholders may
be made by the Master Servicer from time to time for purposes other than
distributions to Certificateholders, such purposes including without limitation
reimbursement to the Depositor and the Master Servicer of advances made, or
certain expenses incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations of
the Depositor, the Master Servicer and the Trustee and the rights of the
Certificateholders under the Agreement from time to time by the Depositor, the
Master Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66% of the Percentage Interests of
each Class of Certificates affected thereby. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon the Certificate. The Agreement also permits the
amendment thereof in certain circumstances without the consent of the Holders of
any of the Certificates and, in certain additional circumstances, without the
consent of the Holders of certain Classes of Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee in the City and State of New York,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of authorized denominations evidencing the same Class and aggregate Percentage
Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Trustee, the Certificate
Registrar and any agent of the Depositor, the Master Servicer, the Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Master Servicer, the Trustee nor any such agent shall be affected by notice to
the contrary.
This Certificate shall be governed by and construed in accordance with
the laws of the State of New York.
The obligations created by the Agreement in respect of the Certificates
and the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
JPMORGAN CHASE BANK, N.A.,
as Trustee
By: ________________________________
Authorized Signatory
Dated:_____________________
Certificate of Authentication
This is one of the Class A-[_] Certificates referred to in the
within-mentioned Agreement.
JPMORGAN CHASE BANK, N.A.,
as Certificate Registrar
By: _______________________________
Authorized Signatory
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto __________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee) the beneficial interest evidenced by the within Trust Certificate and
hereby authorizes the transfer of registration of such interest to assignee on
the Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
Dated:_____________________ ____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available fund to______________________________________________ for the account
of ______________________________ account number
________________________________ or, if mailed by check, to
_____________________________.
Applicable statements should be mailed to:_________________________.
This information is provided by ____________________, the assignee named
above, or ____________________, as its agent.
EXHIBIT E
FORM OF CUSTODIAL AGREEMENT
THIS CUSTODIAL AGREEMENT (as amended and supplemented from
time to time, the "Agreement"), dated as of November 1, 2004, by and among
JPMORGAN CHASE BANK, N.A., as trustee (including its successors under the
Pooling Agreement defined below, the "Trustee"), RESIDENTIAL ASSET SECURITIES
CORPORATION, as company (together with any successor in interest, the
"Company"), RESIDENTIAL FUNDING CORPORATION, as master servicer (together with
any successor in interest or successor under the Pooling Agreement referred to
below, the "Master Servicer") and XXXXX FARGO BANK, NATIONAL ASSOCIATION, as
custodian (together with any successor in interest or any successor appointed
hereunder, the "Custodian").
W I T N E S S E T H T H A T:
WHEREAS, the Company, the Master Servicer, and the Trustee
have entered into a Pooling and Servicing Agreement, dated as of November 1,
2004, relating to the issuance of Residential Asset Securities Corporation, Home
Equity Mortgage Asset-Backed Pass-Through Certificates, Series 2004-KS11 (as in
effect on the date of this Agreement, the "Original Pooling Agreement," and as
amended and supplemented from time to time, the "Pooling Agreement"); and
WHEREAS, the Custodian has agreed to act as agent for the
Trustee for the purposes of receiving and holding certain documents and other
instruments delivered by the Company and the Master Servicer under the Pooling
Agreement, all upon the terms and conditions and subject to the limitations
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements hereinafter set forth, the Trustee, the Company,
the Master Servicer and the Custodian hereby agree as follows:
ARTICLE I
Definitions
Capitalized terms used in this Agreement and not defined
herein shall have the meanings assigned in the Original Pooling Agreement,
unless otherwise required by the context herein.
ARTICLE II
Custody of Mortgage Documents
Section 2.1 Custodian to Act as Agent: Acceptance of Mortgage Files. The
Custodian, as the duly appointed agent of the Trustee for these purposes,
acknowledges receipt of the Mortgage Files relating to the Mortgage Loans
identified on the schedule attached hereto (the "Mortgage Files") and declares
that it holds and will hold the Mortgage Files as agent for the Trustee, in
trust, for the use and benefit of all present and future Certificateholders.
Section 2.2 Recordation of Assignments. If any Mortgage File includes one
or more assignments of the related Mortgage Loans to the Trustee that have not
been recorded, each such assignment shall be delivered by the Custodian to the
Company for the purpose of recording it in the appropriate public office for
real property records, and the Company, at no expense to the Custodian, shall
promptly cause to be recorded in the appropriate public office for real property
records each such assignment and, upon receipt thereof from such public office,
shall return each such assignment to the Custodian.
Section 2.3 Review of Mortgage Files.
(a) On or prior to the Closing Date, the Custodian shall deliver to the Trustee
an Initial Certification in the form annexed hereto as Annex I evidencing
receipt of a Mortgage File for each Mortgage Loan listed on the Schedule
attached hereto (the "Mortgage Loan Schedule"). The parties hereto acknowledge
that certain documents referred to in Subsection 2.01(b)(i) of the Pooling
Agreement may be missing on or prior to the Closing Date and such missing
documents shall be listed on Schedule A to Annex I.
(b) Within 90 days after the closing date, the Custodian agrees, for the benefit
of Certificateholders, to review in accordance with the provisions of Section
2.02 of the Pooling Agreement each Mortgage File and to deliver to the Trustee
an Interim Certification in the form annexed hereto as Annex II to the effect
that all documents required to be delivered pursuant to Section 2.01 (b) of the
Pooling Agreement have been executed and received and that such documents relate
to the Mortgage Loans identified on the Mortgage Loan Schedule, except for any
exceptions listed on Schedule A attached to such Interim Certification. For
purposes of such review, the Custodian shall compare the following information
in each Mortgage File to the corresponding information in the Mortgage Loan
Schedule: (i) the loan number, (ii) the borrower name and (iii) the original
principal balance. In the event that any Mortgage Note or Assignment of Mortgage
has been delivered to the Custodian by the Company in blank, the Custodian, upon
the direction of the Company, shall cause each such Mortgage Note to be endorsed
to the Trustee and each such Assignment of Mortgage to be completed in the name
of the Trustee prior to the date on which such Interim Certification is
delivered to the Trustee. Within 45 days of receipt of the documents required to
be delivered pursuant to Section 2.01(c) of the Pooling Agreement, the Custodian
agrees, for the benefit of the Certificateholders, to review each document, and
upon the written request of the Trustee to deliver to the Trustee an updated
Schedule A to the Interim Certification. The Custodian shall be under no duty or
obligation to inspect, review or examine said documents, instruments,
certificates or other papers to determine that the same are genuine,
enforceable, or appropriate for the represented purpose or that they have
actually been recorded or that they are other than what they purport to be on
their face, or that the MIN is accurate. If in performing the review required by
this Section 2.3 the Custodian finds any document or documents constituting a
part of a Mortgage File to be missing or defective in respect of the items
reviewed as described in this Section 2.3(b), the Custodian shall promptly so
notify the Company, the Master Servicer and the Trustee.
(c) Upon receipt of all documents required to be in the Mortgage Files the
Custodian shall deliver to the Trustee a Final Certification in the form annexed
hereto as Annex III evidencing the completeness of the Mortgage Files.
Upon receipt of written request from the Trustee, the Company
or the Master Servicer, the Custodian shall as soon as practicable supply the
Trustee with a list of all of the documents relating to the Mortgage Loans
required to be delivered pursuant to Section 2.01 (b) of the Pooling Agreement
not then contained in the Mortgage Files.
Section 2.4_______Notification of Breaches of Representations and Warranties. If
the Custodian discovers, in the course of performing its custodial functions, a
breach of a representation or warranty made by the Master Servicer or the
Company as set forth in the Pooling Agreement with respect to a Mortgage Loan
relating to a Mortgage File, the Custodian shall give prompt written notice to
the Company, the Master Servicer and the Trustee.
Section 2.5_______Custodian to Cooperate: Release of Mortgage Files. Upon the
repurchase or substitution of any Mortgage Loan pursuant to Article II of the
Pooling Agreement or payment in full of any Mortgage Loan, or the receipt by the
Master Servicer of a notification that payment in full will be escrowed in a
manner customary for such purposes, the Master Servicer shall immediately notify
the Custodian by delivering to the Custodian a Request for Release (in the form
of Annex IV attached hereto or a mutually acceptable electronic form) and shall
request delivery to it of the Mortgage File. The Custodian agrees, upon receipt
of such Request for Release, promptly to release to the Master Servicer the
related Mortgage File. Upon receipt of a Request for Release from the Master
Servicer, signed by a Servicing Officer, that (i) the Master Servicer or a
Subservicer, as the case may be, has made a deposit into the Certificate Account
in payment for the purchase of the related Mortgage Loan in an amount equal to
the Purchase Price for such Mortgage Loan or (ii) the Company has chosen to
substitute a Qualified Substitute Mortgage Loan for such Mortgage Loan, the
Custodian shall release to the Master Servicer the related Mortgage File. Upon
written notification of a substitution, the Master Servicer shall deliver to the
Custodian and the Custodian agrees to accept the Mortgage Note and other
documents constituting the Mortgage File with respect to any Qualified
Substitute Mortgage Loan, upon receiving written notification from the Master
Servicer of such substitution.
From time to time as is appropriate for the servicing or
foreclosures of any Mortgage Loan, including, for this purpose, collection under
any Primary Insurance Policy or any Mortgage Pool Insurance Policy, the Master
Servicer shall deliver to the Custodian a Request for Release certifying as to
the reason for such release. Upon receipt of the foregoing, the Custodian shall
deliver the Mortgage File or such document to the Master Servicer. The Master
Servicer shall cause each Mortgage File or any document therein so released to
be returned to the Custodian when the need therefor by the Master Servicer no
longer exists, unless (i) the Mortgage Loan has been liquidated and the
Liquidation Proceeds relating to the Mortgage Loan have been deposited in the
Custodial Account or (ii) the 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 Master Servicer has delivered to the Custodian an
updated Request for Release signed by a Servicing Officer certifying as to the
name and address of the Person to which such Mortgage File or such document was
delivered and the purpose or purposes of such delivery. Immediately upon receipt
of any Mortgage File returned to the Custodian by the Master Servicer, the
Custodian shall deliver a signed acknowledgment to the Master Servicer,
confirming receipt of such Mortgage File.
Upon the request of the Master Servicer, the Custodian will
send to the Master Servicer copies of any documents contained in the Mortgage
File.
Section 2.6_______Assumption Agreements. In the event that any assumption
agreement or substitution of liability agreement is entered into with respect to
any Mortgage Loan subject to this Agreement in accordance with the terms and
provisions of the Pooling Agreement, the Master Servicer shall notify the
Custodian that such assumption or substitution agreement has been completed by
forwarding to the Custodian the original of such assumption or substitution
agreement, which shall be added to the related Mortgage File and, for all
purposes, shall be considered a part of such Mortgage File to the same extent as
all other documents and instruments constituting parts thereof.
ARTICLE III_______
Concerning the Custodian
Section 3.1_______Custodian a Bailee and Agent of the Trustee. With respect to
each Mortgage Note, Mortgage and other documents constituting each Mortgage File
which are delivered to the Custodian, the Custodian is exclusively the bailee
and agent of the Trustee and has no instructions to hold any Mortgage Note or
Mortgage for the benefit of any person other than the Trustee and the
Certificateholders and undertakes to perform such duties and only such duties as
are specifically set forth in this Agreement. Except upon compliance with the
applicable provisions of Article II of this Agreement, no Mortgage Note,
Mortgage or other document constituting a part of a Mortgage File shall be
delivered by the Custodian to the Company or the Master Servicer or otherwise
released from the possession of the Custodian.
The Master Servicer shall promptly notify the Custodian in
writing if it shall no longer be a member of MERS, or if it otherwise shall no
longer be capable of registering and recording Mortgage Loans using MERS. In
addition, the Master Servicer shall (i) promptly notify the Custodian in writing
when a MERS Mortgage Loan is no longer registered with and recorded under MERS
and (ii) concurrently with any such deregistration of a MERS Mortgage Loan,
prepare, execute and record an original assignment from MERS to the Trustee and
deliver such assignment to the Custodian.
Section 3.2_______Indemnification. The Company hereby agrees to indemnify and
hold the Custodian harmless from and against all claims, liabilities, losses,
actions, suits or proceedings at law or in equity, or any other expenses, fees
or charges of any character or nature, which the Custodian may incur or with
which the Custodian may be threatened by reason of its acting as custodian under
this Agreement, including indemnification of the Custodian against any and all
expenses, including attorney's fees if counsel for the Custodian has been
approved by the Company, and the cost of defending any action, suit or
proceedings or resisting any claim. Notwithstanding the foregoing, it is
specifically understood and agreed that in the event any such claim, liability,
loss, action, suit or proceeding or other expense, fee or charge shall have been
caused by reason of any negligent act, negligent failure to act or willful
misconduct on the part of the Custodian, or which shall constitute a willful
breach of its duties hereunder, the indemnification provisions of this Agreement
shall not apply.
Section 3.3_______Custodian May Own Certificates. The Custodian in its
individual or any other capacity may become the owner or pledgee of Certificates
with the same rights it would have if it were not Custodian.
Section 3.4_______Master Servicer to Pay Custodian's Fees and Expenses. The
Master Servicer covenants and agrees to pay to the Custodian from time to time,
and the Custodian shall be entitled to, reasonable compensation for all services
rendered by it in the exercise and performance of any of the powers and duties
hereunder of the Custodian, and the Master Servicer will pay or reimburse the
Custodian upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Custodian in accordance with any of the
provisions of this Agreement (including the reasonable compensation and the
expenses and disbursements of its counsel and of all persons not regularly in
its employ), except any such expense, disbursement or advance as may arise from
its negligence or bad faith.
Section 3.5_______Custodian May Resign: Trustee May Remove Custodian. The
Custodian may resign from the obligations and duties hereby imposed upon it as
such obligations and duties relate to its acting as Custodian of the Mortgage
Loans. Upon receiving such notice of resignation, the Trustee shall either take
custody of the Mortgage Files itself and give prompt notice thereof to the
Company, the Master Servicer and the Custodian, or promptly appoint a successor
Custodian by written instrument, in duplicate, one copy of which instrument
shall be delivered to the resigning Custodian and one copy to the successor
Custodian. If the Trustee shall not have taken custody of the Mortgage Files and
no successor Custodian shall have been so appointed and have accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning Custodian may petition any court of competent jurisdiction for the
appointment of a successor Custodian.
The Trustee may remove the Custodian at any time. In such
event, the Trustee shall appoint, or petition a court of competent jurisdiction
to appoint, a successor Custodian hereunder. Any successor Custodian shall be a
depository institution subject to supervision or examination by federal or state
authority and shall be able to satisfy the other requirements contained in
Section 3.7 and shall be unaffiliated with the Master Servicer or the Company.
Any resignation or removal of the Custodian and appointment of
a successor Custodian pursuant to any of the provisions of this Section 3.5
shall become effective upon acceptance of appointment by the successor
Custodian. The Trustee shall give prompt notice to the Company and the Master
Servicer of the appointment of any successor Custodian. No successor Custodian
shall be appointed by the Trustee without the prior approval of the Company and
the Master Servicer.
Section 3.6_______Merger or Consolidation of Custodian. Any Person into which
the Custodian may be merged or converted or with which it may be consolidated,
or any Person resulting from any merger, conversion or consolidation to which
the Custodian shall be a party, or any Person succeeding to the business of the
Custodian, shall be the successor of the Custodian hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
Section 3.7_______Representations of the Custodian. The Custodian hereby
represents that it is a depository institution subject to supervision or
examination by a federal or state authority, has a combined capital and surplus
of at least $15,000,000 and is qualified to do business in the jurisdictions in
which it will hold any Mortgage File.
ARTICLE IV________
Miscellaneous Provisions
Section 4.1_______Notices. All notices, requests, consents and demands and other
communications required under this Agreement or pursuant to any other instrument
or document delivered hereunder shall be in writing and, unless otherwise
specifically provided, may be delivered personally, by telegram or telex, or by
registered or certified mail, postage prepaid, return receipt requested, at the
addresses specified on the signature page hereof (unless changed by the
particular party whose address is stated herein by similar notice in writing),
in which case the notice will be deemed delivered when received.
Section 4.2_______Amendments. No modification or amendment of or supplement to
this Agreement shall be valid or effective unless the same is in writing and
signed by all parties hereto, and neither the Company, the Master Servicer nor
the Trustee shall enter into any amendment hereof except as permitted by the
Pooling Agreement. The Trustee shall give prompt notice to the Custodian of any
amendment or supplement to the Pooling Agreement and furnish the Custodian with
written copies thereof.
Section 4.3_______GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED A CONTRACT MADE
UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
Section 4.4_______Recordation of Agreement. To the extent permitted by
applicable law, this Agreement is subject to recordation in all appropriate
public offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the properties subject to the Mortgages are
situated, and in any other appropriate public recording office or elsewhere,
such recordation to be effected by the Master Servicer and at its expense on
direction by the Trustee (pursuant to the request of holders of Certificates
evidencing undivided interests in the aggregate of not less than 25% of the
Trust Fund), but only upon direction accompanied by an Opinion of Counsel
reasonably satisfactory to the Master Servicer to the effect that the failure to
effect such recordation is likely to materially and adversely affect the
interests of the Certificateholders.
For the purpose of facilitating the recordation of this
Agreement as herein provided and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts shall
constitute but one and the same instrument.
Section 4.5_______Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the holders thereof.
[Signatures begin on following page.]
IN WITNESS WHEREOF, this Agreement is executed as of the date first
above written.
Address: JPMORGAN CHASE BANK, N.A.
as Trustee
0 Xxx Xxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Residential Asset Securities By:_____________________________________________________
Corporation, Series 2004-KS11 Name:
Title:
Address: RESIDENTIAL ASSET SECURITIES CORPORATION
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx
By:_____________________________________________________
Name:
Title:
Address: RESIDENTIAL FUNDING CORPORATION, as Master Servicer
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx
By:_____________________________________________________
Name:
Title:
Address: XXXXX FARGO BANK, NATIONAL ASSOCIATION
Mortgage Document Custody
One Meridian Crossings - 3rd Floor
Xxxxxxxxx, Xxxxxxxxx 00000
By:_____________________________________________________
Name:
Title:
STATE OF )
)ss.:
COUNTY OF )
On the ____ day of August, 2004, before me, a notary public in
and for said State, personally appeared ___________________, known to me to be a
______________ of JPMorgan Chase Bank, N.A., a national banking association that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
------------------------------
Notary Public
[Notarial Seal]
STATE OF MINNESOTA )
)ss.:
COUNTY OF HENNEPIN )
On the ____ day of August, 2004, before me, a notary public in
and for said State, personally appeared ___________________, known to me to be a
______________ of Residential Asset Securities Corporation., one of the
corporations that executed the within instrument, and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
----------------------
Notary Public
[Notarial Seal]
STATE OF MINNESOTA )
)ss.:
COUNTY OF HENNEPIN )
On the ____ day of August, 2004, before me, a notary public in
and for said State, personally appeared ___________________, known to me to be a
______________ of Residential Funding Corporation, one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
---------------------
Notary Public
[Notarial Seal]
STATE OF )
)ss.:
COUNTY OF )
On the ____ day of August, 2004, before me, a notary public in
and for said State, personally appeared ______________________, known to me to
be a ______________________________ Xxxxx Fargo Bank, National Association, one
of the corporations that executed the within instrument, and also known to me to
be the person who executed it on behalf of said national banking association,
and acknowledged to me that such national banking association executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
-----------------------
Notary Public
[Notarial Seal]
ANNEX I TO EXHIBIT E
FORM OF CUSTODIAN
INITIAL CERTIFICATION
August ___, 2004
JPMorgan Chase Bank, N.A.
0 Xxx Xxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Residential Asset Securities Corporation Series 2004-KS11
Re: Custodial Agreement, dated as of November 1, 2004, by and among JPMorgan
Chase Bank, N.A., Residential Asset Securities Corporation, Residential
Funding Corporation and Xxxxx Fargo Bank, National Association, relating to
Home Equity Mortgage Asset-Backed Pass-Through Certificates, Series
2004-KS11
Ladies and Gentlemen:
In accordance with Section 2.3 of the above-captioned
Custodial Agreement, and subject to Section 2.02 of the Pooling Agreement, the
undersigned, as Custodian, hereby certifies that it has received a Mortgage File
(which contains an original Mortgage Note or an original Lost Note Affidavit
with a copy of the related Mortgage Note) to the extent required in Section
2.01(b) of the Pooling Agreement with respect to each Mortgage Loan listed in
the Mortgage Loan Schedule, with any exceptions listed on Schedule A attached
hereto.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Custodial Agreement.
XXXXX FARGO BANK,
NATIONAL ASSOCIATION
By:________________________________
Name:______________________________
Title:_______________________________
ANNEX II TO EXHIBIT E
FORM OF CUSTODIAN
INTERIM CERTIFICATION
______________, 20__
JPMorgan Chase Bank, N.A.
0 Xxx Xxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Residential Asset Securities Corporation., Series 2004-KS11
Re: Custodial Agreement, dated as of November 1, 2004, by and among JPMorgan
Chase Bank, N.A., Residential Asset Securities Corporation, Residential
Funding Corporation and Xxxxx Fargo Bank, National Association, relating to
Home Equity Mortgage Asset-Backed Pass-Through Certificates, Series
2004-KS11
Ladies and Gentlemen:
In accordance with Section 2.3 of the above-captioned
Custodial Agreement, the undersigned, as Custodian, hereby certifies that it has
received a Mortgage File to the extent required pursuant to Section 2.01(b) of
the Pooling Agreement with respect to each Mortgage Loan listed in the Mortgage
Loan Schedule, and it has reviewed the Mortgage File and the Mortgage Loan
Schedule and has determined that: all required documents have been executed and
received and that such documents relate to the Mortgage Loans identified on the
Mortgage Loan Schedule, with any exceptions listed on Schedule A attached
hereto.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Custodial Agreement.
XXXXX FARGO BANK,
NATIONAL ASSOCIATION
By:________________________________
Name:______________________________
Title:_______________________________
ANNEX III TO EXHIBIT E
FORM OF CUSTODIAN
FINAL CERTIFICATION
______________, 20__
JPMorgan Chase Bank, N.A.
0 Xxx Xxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Residential Asset Securities Corporation, Series 2004-KS11
Re: Custodial Agreement, dated as of November 1, 2004, by and among JPMorgan
Chase Bank, N.A., Residential Asset Securities Corporation, Residential
Funding Corporation and Xxxxx Fargo Bank, National Association, relating to
Home Equity Mortgage Asset-Backed Pass-Through Certificates, Series
2004-KS11
Ladies and Gentlemen:
In accordance with Section 2.3 of the above-captioned
Custodial Agreement, the undersigned, as Custodian, hereby certifies that it has
received a Mortgage File with respect to each Mortgage Loan listed in the
Mortgage Loan Schedule and it has reviewed the Mortgage File and the Mortgage
Loan Schedule and has determined that: all required documents referred to in
Section 2.01(b) of the Pooling Agreement have been executed and received and
that such documents relate to the Mortgage Loans identified on the Mortgage Loan
Schedule.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Custodial Agreement.
XXXXX FARGO BANK,
NATIONAL ASSOCIATION
By:________________________________
Name:______________________________
Title:_______________________________
ANNEX IV TO EXHIBIT E
FORM OF REQUEST FOR RELEASE
DATE:
TO:
RE: REQUEST FOR RELEASE OF DOCUMENTS
In connection with the administration of the pool of Mortgage Loans held by you
for the referenced pool, we request the release of the Mortgage Loan File
described below.
Pooling and Servicing Agreement, Dated:
Series#:
Account#:
Pool#:
Loan#:
MIN#:
Borrower Name(s):
Reason for Document Request: (circle one) Mortgage Loan Prepaid in Full
Mortgage Loan Repurchased
"We hereby certify that all amounts received or to be received in connection
with such payments which are required to be deposited have been or will be so
deposited as provided in the Pooling and Servicing Agreement."
------------------------------
Residential Funding Corporation
Authorized Signature
****************************************************************
TO CUSTODIAN/TRUSTEE: Please acknowledge this request, and check off documents
being enclosed with a copy of this form. You should retain this form for your
files in accordance with the terms of the Pooling and Servicing Agreement.
Enclosed Documents: [ ] Promissory Note
[ ] Primary Insurance Policy
[ ] Mortgage or Deed of Trust
[ ] Assignment(s) of Mortgage or Deed of Trust
[ ] Title Insurance Policy
[ ] Other: ________________________
---------------------------
Name
---------------------------
Title
---------------------------
Date
EXHIBIT F-1
GROUP I LOAN SCHEDULE
(a copy may be obtained from the Trustee)
EXHIBIT F-2
GROUP II LOAN SCHEDULE
(a copy may be obtained from the Trustee)
EXHIBIT G
FORM OF REQUEST FOR RELEASE
DATE:
TO:
RE: REQUEST FOR RELEASE OF DOCUMENTS
In connection with the administration of the pool of Mortgage Loans held by you
for the referenced pool, we request the release of the Mortgage Loan File
described below.
Pooling and Servicing Agreement, Dated:
Series#:
Account#:
Pool#:
Loan#:
MIN#:
Borrower Name(s):
Reason for Document Request: (circle one) Mortgage Loan Prepaid in Full
Mortgage Loan Repurchased
"We hereby certify that all amounts received or to be received in connection
with such payments which are required to be deposited have been or will be so
deposited as provided in the Pooling and Servicing Agreement."
------------------------------
Residential Funding Corporation
Authorized Signature
****************************************************************
TO CUSTODIAN/TRUSTEE: Please acknowledge this request, and check off documents
being enclosed with a copy of this form. You should retain this form for your
files in accordance with the terms of the Pooling and Servicing Agreement.
Enclosed Documents: [ ] Promissory Note
[ ] Primary Insurance Policy
[ ] Mortgage or Deed of Trust
[ ] Assignment(s) of Mortgage or Deed of Trust
[ ] Title Insurance Policy
[ ] Other: ________________________
---------------------------
Name
---------------------------
Title
---------------------------
Date
FORM OF TRANSFER AFFIDAVIT AND AGREEMENT
STATE OF )
)ss.:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Owner] (record or beneficial owner
of the Home Equity Mortgage Asset-Backed Pass-Through Certificates, Series
2004-KS11, Class R-__ (the "Owner")), a [savings institution] [corporation] duly
organized and existing under the laws of [the State of ________________] [the
United States], on behalf of which he makes this affidavit and agreement.
2. That the Owner (i) is not and will not be a "disqualified organization" or an
electing large partnership as of [date of transfer] within the meaning of
Section 860E(e)(5) and 775, respectively, of the Internal Revenue Code of 1986,
as amended (the "Code") or an electing large partnership under Section 775(a) of
the Code, (ii) will endeavor to remain other than a disqualified organization
for so long as it retains its ownership interest in the Class R-__ Certificates,
and (iii) is acquiring the Class R-__ Certificates for its own account or for
the account of another Owner from which it has received an affidavit and
agreement in substantially the same form as this affidavit and agreement. (For
this purpose, a "disqualified organization" means an electing large partnership
under Section 775 of the Code, the United States, any state or political
subdivision thereof, any agency or instrumentality of any of the foregoing
(other than an instrumentality all of the activities of which are subject to tax
and, except for the Federal Home Loan Mortgage Corporation, a majority of whose
board of directors is not selected by any such governmental entity) or any
foreign government, international organization or any agency or instrumentality
of such foreign government or organization, any rural electric or telephone
cooperative, or any organization (other than certain farmers' cooperatives) that
is generally exempt from federal income tax unless such organization is subject
to the tax on unrelated business taxable income).
3. That the Owner is aware (i) of the tax that would be imposed on transfers of
Class R-__ Certificates to disqualified organizations or an electing large
partnership under the Code, that applies to all transfers of Class R-__
Certificates after March 31, 1988; (ii) that such tax would be on the transferor
(or, with respect to transfers to electing large partnerships, on each such
partnership), or, if such transfer is through an agent (which person includes a
broker, nominee or middleman) for a disqualified organization, on the agent;
(iii) that the person (other than with respect to transfers to electing large
partnerships) otherwise liable for the tax shall be relieved of liability for
the tax if the transferee furnishes to such person an affidavit that the
transferee is not a disqualified organization and, at the time of transfer, such
person does not have actual knowledge that the affidavit is false; and (iv) that
the Class R-__ Certificates may be "noneconomic residual interests" within the
meaning of Treasury regulations promulgated pursuant to the Code and that the
transferor of a noneconomic residual interest will remain liable for any taxes
due with respect to the income on such residual interest, unless no significant
purpose of the transfer was to impede the assessment or collection of tax.
4. That the Owner is aware of the tax imposed on a "pass-through entity" holding
Class R-__ Certificates if either the pass-through entity is an electing large
partnership under Section 775 of the Code or if at any time during the taxable
year of the pass-through entity a disqualified organization is the record holder
of an interest in such entity. (For this purpose, a "pass through entity"
includes a regulated investment company, a real estate investment trust or
common trust fund, a partnership, trust or estate, and certain cooperatives.)
5. That the Owner is aware that the Trustee will not register the transfer of
any Class R-__ Certificates unless the transferee, or the transferee's agent,
delivers to it an affidavit and agreement, among other things, in substantially
the same form as this affidavit and agreement. The Owner expressly agrees that
it will not consummate any such transfer if it knows or believes that any of the
representations contained in such affidavit and agreement are false.
6. That the Owner has reviewed the restrictions set forth on the face of the
Class R -__ Certificates and the provisions of Section 5.02(f) of the Pooling
and Servicing Agreement under which the Class R-__ Certificates were issued (in
particular, clause (iii)(A) and (iii)(B) of Section 5.02(f) which authorize the
Trustee to deliver payments to a person other than the Owner and negotiate a
mandatory sale by the Trustee in the event the Owner holds such Certificates in
violation of Section 5.02(f)). The Owner expressly agrees to be bound by and to
comply with such restrictions and provisions.
7. That the Owner consents to any additional restrictions or arrangements that
shall be deemed necessary upon advice of counsel to constitute a reasonable
arrangement to ensure that the Class R-__ Certificates will only be owned,
directly or indirectly, by an Owner that is not a disqualified organization.
8. The Owner's Taxpayer Identification Number is ____________________.
9. This affidavit and agreement relates only to the Class R-__ Certificates held
by the Owner and not to any other holder of the Class R-__ Certificates. The
Owner understands that the liabilities described herein relate only to the Class
R-__ Certificates.
10. That no purpose of the Owner relating to the transfer of any of the Class
R-__ Certificates by the Owner is or will be to impede the assessment or
collection of any tax; in making this representation, the Owner warrants that
the Owner is familiar with (i) Treasury Regulation 1.860E-1(c) and recent
amendments thereto, effective as of July 19, 2002, and (ii) the preamble
describing the adoption of the amendments to such regulation, which is attached
hereto as Annex I.
11. That the Owner has no present knowledge or expectation that it will be
unable to pay any United States taxes owed by it so long as any of the
Certificates remain outstanding. In this regard, the Owner hereby represents to
and for the benefit of the person from whom it acquired the Class R-__
Certificate that the Owner intends to pay taxes associated with holding such
Class R-__ Certificate as they become due, fully understanding that it may incur
tax liabilities in excess of any cash flows generated by the Class R-__
Certificate.
12. That the Owner has no present knowledge or expectation that it will become
insolvent or subject to a bankruptcy proceeding for so long as any of the Class
R-__ Certificates remain outstanding.
13. The Owner is either (i) a citizen or resident of the United States, (ii) a
corporation, partnership or other entity treated as a corporation or a
partnership for U.S. federal income tax purposes and created or organized in, or
under the laws of, the United States, any state thereof or the District of
Columbia (other than a partnership that is not treated as a United States person
under any applicable Treasury regulations), (iii) an estate that is described in
Section 7701(a)(30)(D) of the Code, or (iv) a trust that is described in Section
7701(a)(30)(E) of the Code.
14. The Owner hereby agrees that it will not cause income from the Class R-__
Certificates to be attributable to a foreign permanent establishment or fixed
base (within the meaning of an applicable income tax treaty) of the Owner or
another United States taxpayer.
15. The Owner hereby certifies, represents and warrants to, and covenants with
the Depositor, the Trustee and the Master Servicer that the following statements
in (a) or (b) are accurate:
(a) The Certificates are not being acquired by, and will not
be transferred to, any employee benefit plan or other plan or arrangement
subject to the prohibited transaction provisions of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or Section 4975 of the
Internal Revenue Code of 1986, as amended (the "Code"), or any person
(including an insurance company investing its general account, an
investment manager, a named fiduciary or a trustee of any such plan) who is
using "plan assets" of any such plan to effect such acquisition (each of
the foregoing, a "Plan Investor").; or
(b) The Owner has provided the Trustee, the Depositor and the
Master Servicer with an Opinion of Counsel acceptable to and in form and
substance satisfactory to the Trustee, the Depositor and the Master
Servicer to the effect that the purchase or holding of Certificates is
permissible under applicable law, will not constitute or result in any
non-exempt prohibited transaction under Section 406 of ERISA or Section
4975 of the Code (or comparable provisions of any subsequent enactments),
and will not subject the Trustee, the Depositor, or the Master Servicer to
any obligation or liability (including obligations or liabilities under
ERISA or Section 4975 of the Code) in addition to those undertaken in the
Pooling and Servicing Agreement, which Opinion of Counsel shall not be at
the expense of the Trustee, the Depositor or the Master Servicer.
In addition, the Owner hereby certifies, represents and warrants to,
and covenants with, the Depositor, the Trustee and the Master Servicer that the
Owner will not transfer such Certificates to any Plan Investor or person unless
either such Plan Investor or person meets the requirements set forth in either
(a) or (b) above.
Capitalized terms used but not defined herein shall have the meanings
assigned in the Pooling and Servicing Agreement.
IN WITNESS WHEREOF, the Owner has caused this instrument to be executed on
its behalf, pursuant to the authority of its Board of Directors, by its [Title
of Officer] and its corporate seal to be hereunto attached, attested by its
[Assistant] Secretary, this ____ day of ______________ 200__.
[NAME OF OWNER]
By: ___________________________________
[Name of Officer]
[Title of Officer]
[Corporate Seal]
ATTEST:
------------------------------
[Assistant] Secretary
Personally appeared before me the above-named [Name of
Officer], known or proved to me to be the same person who executed the foregoing
instrument and to be the [Title of Officer] of the Owner, and acknowledged to me
that he executed the same as his free act and deed and the free act and deed of
the Owner.
Subscribed and sworn before me
this ___________day of __________, 200_.
------------------------------------------
NOTARY PUBLIC
COUNTY OF ______________________________
STATE OF ________________________________
My Commission expires the ___ day of __________, 20__
ANNEX I TO EXHIBIT H-1
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 1 and 602
[TD 9004]
RIN 1545-AW98
Real Estate Mortgage Investment Conduits
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations.
-----------------------------------------------------------------------
SUMMARY: This document contains final regulations relating to safe harbor
transfers of noneconomic residual interests in real estate mortgage investment
conduits (REMICs). The final regulations provide additional limitations on the
circumstances under which transferors may claim safe harbor treatment.
DATES: Effective Date: These regulations are effective July 19, 2002.
Applicability Date: For dates of applicability, see Sec. 1.860E-(1)(c)(10).
FOR FURTHER INFORMATION CONTACT: Xxxxxxxx Xxxxxxxxxx at (000) 000-0000 (not a
toll-free number).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information in this final rule has been reviewed and,
pending receipt and evaluation of public comments, approved by the Office of
Management and Budget (OMB) under 44 U.S.C. 3507 and assigned control number
1545-1675.
The collection of information in this regulation is in Sec.
1.860E-1(c)(5)(ii). This information is required to enable the IRS to verify
that a taxpayer is complying with the conditions of this regulation. The
collection of information is mandatory and is required. Otherwise, the taxpayer
will not receive the benefit of safe harbor treatment as provided in the
regulation. The likely respondents are businesses and other for-profit
institutions.
Comments on the collection of information should be sent to the Office
of Management and Budget, Attn: Desk Officer for the Department of the Treasury,
Office of Information and Regulatory Affairs, Xxxxxxxxxx, XX, 00000, with copies
to the Internal Revenue Service, Attn: IRS Reports Clearance Officer,
W:CAR:MP:FP:S, Xxxxxxxxxx, XX 00000. Comments on the collection of information
should be received by September 17, 2002. Comments are specifically requested
concerning:
o Whether the collection of information is necessary for the proper
performance of the functions of the Internal Revenue Service, including
whether the information will have practical utility;
o The accuracy of the estimated burden associated with the collection of
information (see below);
o How the quality, utility, and clarity of the information to be collected
may be enhanced;
o How the burden of complying with the collection of information may be
minimized, including through the application of automated collection
techniques or other forms of information technology; and
o Estimates of capital or start-up costs and costs of operation, maintenance,
and purchase of service to provide information.
An agency may not conduct or sponsor, and a person is not required to
respond to, a collection of information unless it displays a valid control
number assigned by the Office of Management and Budget.
The estimated total annual reporting burden is 470 hours, based on an
estimated number of respondents of 470 and an estimated average annual burden
hours per respondent of one hour.
Books or records relating to a collection of information must be
retained as long as their contents may become material in the administration of
any internal revenue law. Generally, tax returns and tax return information are
confidential, as required by 26 U.S.C. 6103.
Background
This document contains final regulations regarding the proposed
amendments to 26 CFR part 1 under section 860E of the Internal Revenue Code
(Code). The regulations provide the circumstances under which a transferor of a
noneconomic REMIC residual interest meeting the investigation and representation
requirements may avail itself of the safe harbor by satisfying either the
formula test or the asset test.
Final regulations governing REMICs, issued in 1992, contain rules
governing the transfer of noneconomic REMIC residual interests. In general, a
transfer of a noneconomic residual interest is disregarded for all tax purposes
if a significant purpose of the transfer is to enable the transferor to impede
the assessment or collection of tax. A purpose to impede the assessment or
collection of tax (a wrongful purpose) exists if the transferor, at the time of
the transfer, either knew or should have known that the transferee would be
unwilling or unable to pay taxes due on its share of the REMIC's taxable income.
Under a safe harbor, the transferor of a REMIC noneconomic residual interest is
presumed not to have a wrongful purpose if two requirements are satisfied: (1)
the transferor conducts a reasonable investigation of the transferee's financial
condition (the investigation requirement); and (2) the transferor secures a
representation from the transferee to the effect that the transferee understands
the tax obligations associated with holding a residual interest and intends to
pay those taxes (the representation requirement).
The IRS and Treasury have been concerned that some transferors of
noneconomic residual interests claim they satisfy the safe harbor even in
situations where the economics of the transfer clearly indicate the transferee
is unwilling or unable to pay the tax associated with holding the interest. For
this reason, on February 7, 2000, the IRS published in the Federal Register (65
FR 5807) a notice of proposed rulemaking (REG-100276-97; REG-122450-98) designed
to clarify the safe harbor by adding the "formula test," an economic test. The
proposed regulation provides that the safe harbor is unavailable unless the
present value of the anticipated tax liabilities associated with holding the
residual interest does not exceed the sum of: (1) The present value of any
consideration given to the transferee to acquire the interest; (2) the present
value of the expected future distributions on the interest; and (3) the present
value of the anticipated tax savings associated with holding the interest as the
REMIC generates losses.
The notice of proposed rulemaking also contained rules for FASITs.
Section 1.860H-6(g) of the proposed regulations provides requirements for
transfers of FASIT ownership interests and adopts a safe harbor by reference to
the safe harbor provisions of the REMIC regulations. In January 2001, the IRS
published Rev. Proc. 2001-12 (2001-3 I.R.B. 335) to set forth an alternative
safe harbor that taxpayers could use while the IRS and the Treasury considered
comments on the proposed regulations. Under the alternative safe harbor, if a
transferor meets the investigation requirement and the representation
requirement but the transfer fails to meet the formula test, the transferor may
invoke the safe harbor if the transferee meets a two-prong test (the asset
test). A transferee generally meets the first prong of this test if, at the time
of the transfer, and in each of the two years preceding the year of transfer,
the transferee's gross assets exceed $100 million and its net assets exceed $10
million. A transferee generally meets the second prong of this test if it is a
domestic, taxable corporation and agrees in writing not to transfer the interest
to any person other than another domestic, taxable corporation that also
satisfies the requirements of the asset test. A transferor cannot rely on the
asset test if the transferor knows, or has reason to know, that the transferee
will not comply with its written agreement to limit the restrictions on
subsequent transfers of the residual interest.
Rev. Proc. 2001-12 provides that the asset test fails to be satisfied
in the case of a transfer or assignment of a noneconomic residual interest to a
foreign branch of an otherwise eligible transferee. If such a transfer or
assignment were permitted, a corporate taxpayer might seek to claim that the
provisions of an applicable income tax treaty would resource excess inclusion
income as foreign source income, and that, as a consequence, any U.S. tax
liability attributable to the excess inclusion income could be offset by foreign
tax credits. Such a claim would impede the assessment or collection of U.S. tax
on excess inclusion income, contrary to the congressional purpose of assuring
that such income will be taxable in all events. See, e.g., sections 860E(a)(1),
(b), (e) and 860G(b) of the Code.
The Treasury and the IRS have learned that certain taxpayers
transferring noneconomic residual interests to foreign branches have attempted
to rely on the formula test to obtain safe harbor treatment in an effort to
impede the assessment or collection of U.S. tax on excess inclusion income.
Accordingly, the final regulations provide that if a noneconomic residual
interest is transferred to a foreign permanent establishment or fixed base of a
U.S. taxpayer, the transfer is not eligible for safe harbor treatment under
either the asset test or the formula test. The final regulations also require a
transferee to represent that it will not cause income from the noneconomic
residual interest to be attributable to a foreign permanent establishment or
fixed base.
Section 1.860E-1(c)(8) provides computational rules that a taxpayer may
use to qualify for safe harbor status under the formula test. Section
1.860E-1(c)(8)(i) provides that the transferee is presumed to pay tax at a rate
equal to the highest rate of tax specified in section 11(b). Some commentators
were concerned that this presumed rate of taxation was too high because it does
not take into consideration taxpayers subject to the alternative minimum tax
rate. In light of the comments received, this provision has been amended in the
final regulations to allow certain transferees that compute their taxable income
using the alternative minimum tax rate to use the alternative minimum tax rate
applicable to corporations.
Additionally, Sec. 1.860E-1(c)(8)(iii) provides that the present values
in the formula test are to be computed using a discount rate equal to the
applicable Federal short-term rate prescribed by section 1274(d). This is a
change from the proposed regulation and Rev. Proc. 2001-12. In those
publications the provision stated that "present values are computed using a
discount rate equal to the applicable Federal rate prescribed in section 1274(d)
compounded semiannually" and that "[a] lower discount rate may be used if the
transferee can demonstrate that it regularly borrows, in the course of its trade
or business, substantial funds at such lower rate from an unrelated third
party." The IRS and the Treasury Department have learned that, based on this
provision, certain taxpayers have been attempting to use unrealistically low or
zero interest rates to satisfy the formula test, frustrating the intent of the
test. Furthermore, the Treasury Department and the IRS believe that a rule
allowing for a rate other than a rate based on an objective index would add
unnecessary complexity to the safe harbor. As a result, the rule in the proposed
regulations that permits a transferee to use a lower discount rate, if the
transferee can demonstrate that it regularly borrows substantial funds at such
lower rate, is not included in the final regulations; and the Federal short-term
rate has been substituted for the applicable Federal rate. To simplify
taxpayers' computations, the final regulations allow use of any of the published
short-term rates, provided that the present values are computed with a
corresponding period of compounding. With the exception of the provisions
relating to transfers to foreign branches, these changes generally have the
proposed applicability date of February 4, 2000, but taxpayers may choose to
apply the interest rate formula set forth in the proposed regulation and Rev.
Proc. 2001-12 for transfers occurring before November 19, 2002.
It is anticipated that when final regulations are adopted with respect
to FASITs, Sec. 1.860H-6(g) of the proposed regulations will be adopted in
substantially its present form, with the result that the final regulations
contained in this document will also govern transfers of FASIT ownership
interests with substantially the same applicability date as is contained in this
document.
Effect on Other Documents
Rev. Proc. 2001-12 (2001-3 I.R.B. 335) is obsolete for transfers of
noneconomic residual interests in REMICs occurring on or after November 19,
2002.
Special Analyses
It is hereby certified that these regulations will not have a
significant economic impact on a substantial number of small entities. This
certification is based on the fact that it is unlikely that a substantial number
of small entities will hold REMIC residual interests. Therefore, a Regulatory
Flexibility Analysis under the Regulatory Flexibility Act (5 U.S.C. chapter 6)
is not required. It has been determined that this Treasury decision is not a
significant regulatory action as defined in Executive Order 12866. Therefore, a
regulatory assessment is not required. It also has been determined that sections
553(b) and 553(d) of the Administrative Procedure Act (5 U.S.C. chapter 5) do
not apply to these regulations.
Drafting Information
The principal author of these regulations is Xxxxxxxx Xxxxxxxxxx.
However, other personnel from the IRS and Treasury Department participated in
their development.
List of Subjects
26 CFR Part 1
Income taxes, Reporting and record keeping requirements.
26 CFR Part 602
Reporting and record keeping requirements.
Adoption of Amendments to the Regulations
Accordingly, 26 CFR parts 1 and 602 are amended as follows:
PART 1--INCOME TAXES
Paragraph 1. The authority citation for part 1 continues to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *
EXHIBIT H-2
FORM OF TRANSFEROR CERTIFICATE
______________, 20__
JPMorgan Chase Bank, N.A.
0 Xxx Xxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Residential Asset Securities Corporation, Series 2004-KS11
Re: Mortgage Asset-Backed Pass-Through Certificates, Series 2004-KS11
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by
________________________ (the "Seller") to ______________________ (the
"Purchaser") of $___________ Initial Certificate Principal Balance of Mortgage
Asset-Backed Pass-Through Certificates, Series 2004-KS11, Class R-__ (the
"Certificates"), pursuant to Section 5.02 of the Pooling and Servicing Agreement
(the "Pooling and Servicing Agreement"), dated as of November 1, 2004 among
Residential Asset Securities Corporation, as depositor (the "Depositor"),
Residential Funding Corporation, as master servicer, and JPMorgan Chase Bank,
N.A., as trustee (the "Trustee"). All terms used herein and not otherwise
defined shall have the meanings set forth in the Pooling and Servicing
Agreement. The Seller hereby certifies, represents and warrants to, and
covenants with, the Depositor and the Trustee that:
1. No purpose of the Seller relating to the transfer of the Certificate by the
Seller to the Purchaser is or will be to impede the assessment or collection of
any tax.
2. The Seller understands that the Purchaser has delivered to the Trustee and
the Master Servicer a transfer affidavit and agreement in the form attached to
the Pooling and Servicing Agreement as Exhibit H-1. The Seller does not know or
believe that any representation contained therein is false.
3. The Seller has at the time of the transfer conducted a reasonable
investigation of the financial condition of the Purchaser as contemplated by
Treasury Regulations Section 1.860E-1(c)(4)(i) and, as a result of that
investigation, the Seller has determined that the Purchaser has historically
paid its debts as they become due and has found no significant evidence to
indicate that the Purchaser will not continue to pay its debts as they become
due in the future. The Seller understands that the transfer of a Class R-__
Certificate may not be respected for United States income tax purposes (and the
Seller may continue to be liable for United States income taxes associated
therewith) unless the Seller has conducted such an investigation.
4. The Seller has no actual knowledge that the proposed Transferee is not both a
United States Person and a Permitted Transferee.
Very truly yours,
---------------------------------------
(Seller)
By: ____________________________________
Name: __________________________________
Title: ___________________________________
EXHIBIT I
FORM OF INVESTOR REPRESENTATION LETTER
______________, 20__
Residential Asset Securities Corporation
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, XX 00000
JPMorgan Chase Bank, N.A.
0 Xxx Xxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Residential Funding Corporation
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, XX 00000
Attention: Residential Funding Corporation Series 2004-KS11
Re: Home Equity Mortgage Asset-Backed Pass-Through Certificates,
Series 2004-KS11, Class [B] [SB] [R-[__]]
Ladies and Gentlemen:
_________________________ (the "Purchaser") intends to purchase from
___________________________ (the "Seller") $_____________ Initial Certificate
Principal Balance of Home Equity Mortgage Asset-Backed Pass-Through
Certificates, Series 2004-KS11, Class [B] [SB] [R-[__]] (the "Certificates"),
issued pursuant to the Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"), dated as of November 1, 2004 among Residential Asset
Securities Corporation, as depositor (the "Depositor"), Residential Funding
Corporation, as master servicer (the "Master Servicer"), and JPMorgan Chase
Bank, N.A., as trustee (the "Trustee"). All terms used herein and not otherwise
defined shall have the meanings set forth in the Pooling and Servicing
Agreement. The Purchaser hereby certifies, represents and warrants to, and
covenants with, the Depositor, the Trustee and the Master Servicer that:
1. The Purchaser understands that (a) the Certificates have not been and will
not be registered or qualified under the Securities Act of 1933, as amended
(the "Act") or any state securities law, (b) the Depositor is not required
to so register or qualify the Certificates, (c) the Certificates may be
resold only if registered and qualified pursuant to the provisions of the
Act or any state securities law, or if an exemption from such registration
and qualification is available, (d) the Pooling and Servicing Agreement
contains restrictions regarding the transfer of the Certificates and (e)
the Certificates will bear a legend to the foregoing effect.
2. The Purchaser is acquiring the Certificates for its own account for
investment only and not with a view to or for sale in connection with any
distribution thereof in any manner that would violate the Act or any
applicable state securities laws.
3. The Purchaser is (a) a substantial, sophisticated institutional investor
having such knowledge and experience in financial and business matters,
and, in particular, in such matters related to securities similar to the
Certificates, such that it is capable of evaluating the merits and risks of
investment in the Certificates, (b) able to bear the economic risks of such
an investment and (c) an "accredited investor" within the meaning of Rule
501(a) promulgated pursuant to the Act.
4. The Purchaser has been furnished with, and has had an opportunity to review
(a) [a copy of the Private Placement Memorandum, dated ___________________,
20__, relating to the Certificates (b)] a copy of the Pooling and Servicing
Agreement and [b] [c] such other information concerning the Certificates,
the Mortgage Loans and the Depositor as has been requested by the Purchaser
from the Depositor or the Seller and is relevant to the Purchaser's
decision to purchase the Certificates. The Purchaser has had any questions
arising from such review answered by the Depositor or the Seller to the
satisfaction of the Purchaser. [If the Purchaser did not purchase the
Certificates from the Seller in connection with the initial distribution of
the Certificates and was provided with a copy of the Private Placement
Memorandum (the "Memorandum") relating to the original sale (the "Original
Sale") of the Certificates by the Depositor, the Purchaser acknowledges
that such Memorandum was provided to it by the Seller, that the Memorandum
was prepared by the Depositor solely for use in connection with the
Original Sale and the Depositor did not participate in or facilitate in any
way the purchase of the Certificates by the Purchaser from the Seller, and
the Purchaser agrees that it will look solely to the Seller and not to the
Depositor with respect to any damage, liability, claim or expense arising
out of, resulting from or in connection with (a) error or omission, or
alleged error or omission, contained in the Memorandum, or (b) any
information, development or event arising after the date of the
Memorandum.]
5. The Purchaser has not and will not nor has it authorized or will it
authorize any person to (a) offer, pledge, sell, dispose of or otherwise
transfer any Certificate, any interest in any Certificate or any other
similar security to any person in any manner, (b) solicit any offer to buy
or to accept a pledge, disposition of other transfer of any Certificate,
any interest in any Certificate or any other similar security from any
person in any manner, (c) otherwise approach or negotiate with respect to
any Certificate, any interest in any Certificate or any other similar
security with any person in any manner, (d) make any general solicitation
by means of general advertising or in any other manner or (e) take any
other action, that (as to any of (a) through (e) above) would constitute a
distribution of any Certificate under the Act, that would render the
disposition of any Certificate a violation of Section 5 of the Act or any
state securities law, or that would require registration or qualification
pursuant thereto. The Purchaser will not sell or otherwise transfer any of
the Certificates, except in compliance with the provisions of the Pooling
and Servicing Agreement.
6. The Purchaser hereby certifies, represents and warrants to, and covenants
with the Depositor, the Trustee and the Master Servicer that the following
statements in (a) or (b) are correct:
(a) The Purchaser is not an employee benefit
plan or other plan or arrangement subject to the
prohibited transaction provisions of the Employee
Retirement Income Security Act of 1974, as amended
("ERISA"), or Section 4975 of the Internal Revenue
Code of 1986, as amended (the "Code"), or any person
(including an insurance company investing its general
account, an investment manager, a named fiduciary or
a trustee of any such plan) who is using "plan
assets" of any such plan to effect such acquisition
(each of the foregoing, a "Plan Investor"); or
(b) the Purchaser has provided the Trustee,
the Depositor and the Master Servicer with an Opinion
of Counsel acceptable to and in form and substance
satisfactory to the Trustee, the Depositor and the
Master Servicer to the effect that the purchase or
holding of Certificates is permissible under
applicable law, will not constitute or result in any
non-exempt prohibited transaction under Section 406
of ERISA or Section 4975 of the Code (or comparable
provisions of any subsequent enactments), and will
not subject the Trustee, the Depositor or the Master
Servicer to any obligation or liability (including
obligations or liabilities under ERISA or Section
4975 of the Code) in addition to those undertaken in
the Pooling and Servicing Agreement, which Opinion of
Counsel shall not be an expense of the Trustee, the
Depositor or the Master Servicer.
In addition, the Purchaser hereby certifies, represents and warrants
to, and covenants with, the Depositor, the Trustee and the Master Servicer that
the Purchaser will not transfer such Certificates to any Plan or person unless
either such Plan or person meets the requirements set forth in either (a), (b)
or (c) above.
Very truly yours,
(Purchaser)
By:_______________________________
Name:_____________________________
Title:____________________________
EXHIBIT J
FORM OF TRANSFEROR REPRESENTATION LETTER
______________, 20__
Residential Asset Securities Corporation
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
JPMorgan Chase Bank, N.A.
4 New York Plaza, 6th Floor
New York, New York 10004
Attention: Residential Funding Corporation Series 2004-KS11
Re: Home Equity Mortgage Asset-Backed Pass-Through Certificates,
Series 2004-KS11, Class [B] [SB] [R-[__]]
Ladies and Gentlemen:
In connection with the sale by __________ (the "Seller") to
__________ (the "Purchaser") of $__________ Initial Certificate Principal
Balance of Home Equity Mortgage Asset- Backed Pass-Through Certificates, Series
2004-KS11, Class [B] [SB] [R-[__]] (the "Certificates"), issued pursuant to the
Pooling and Servicing Agreement (the "Pooling and Servicing Agreement"), dated
as of November 1, 2004 among Residential Asset Securities Corporation, as
depositor (the "Depositor"), Residential Funding Corporation, as master
servicer, and JPMorgan Chase Bank, N.A., as trustee (the "Trustee"). The Seller
hereby certifies, represents and warrants to, and covenants with, the Depositor
and the Trustee that:
Neither the Seller nor anyone acting on its behalf has (a)
offered, pledged, sold, disposed of or otherwise transferred any Certificate,
any interest in any Certificate or any other similar security to any person in
any manner, (b) has solicited any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c) has
otherwise approached or negotiated with respect to any Certificate, any interest
in any Certificate or any other similar security with any person in any manner,
(d) has made any general solicitation by means of general advertising or in any
other manner, or (e) has taken any other action, that (as to any of (a) through
(e) above) would constitute a distribution of the Certificates under the
Securities Act of 1933 (the "Act"), that would render the disposition of any
Certificate a violation of Section 5 of the Act or any state securities law, or
that would require registration or qualification pursuant thereto. The Seller
will not act, in any manner set forth in the foregoing sentence with respect to
any Certificate. The Seller has not and will not sell or otherwise transfer any
of the Certificates, except in compliance with the provisions of the Pooling and
Servicing Agreement.
Very truly yours,
(Purchaser)
By:________________________________
Name:______________________________
Title:_____________________________
EXHIBIT K
TEXT OF AMENDMENT TO POOLING AND SERVICING
AGREEMENT PURSUANT TO SECTION 11.01(E) FOR A
LIMITED GUARANTY
ARTICLE XII
Subordinate Certificate Loss Coverage; Limited Guaranty
Section 12.01. Subordinate Certificate Loss Coverage; Limited Guaranty.
(a) Subject to subsection (c) below, prior to the later of the third Business
Day prior to each Distribution Date or the related Determination Date, the
Master Servicer shall determine whether it or any Subservicer will be entitled
to any reimbursement pursuant to Section 4.02(a) on such Distribution Date for
Advances or Subservicer Advances previously made, (which will not be Advances or
Subservicer Advances that were made with respect to delinquencies which were
subsequently determined to be Excess Special Hazard Losses, Excess Fraud Losses,
Excess Bankruptcy Losses or Extraordinary Losses) and, if so, the Master
Servicer shall demand payment from Residential Funding of an amount equal to the
amount of any Advances or Subservicer Advances reimbursed pursuant to Section
4.02(a), to the extent such Advances or Subservicer Advances have not been
included in the amount of the Realized Loss in the related Mortgage Loan, and
shall distribute the same to the Class SB Certificateholders in the same manner
as if such amount were to be distributed pursuant to Section 4.02(a).
(b) Subject to subsection (c) below, prior to the later of the
third Business Day prior to each Distribution Date or the related Determination
Date, the Master Servicer shall determine whether any Realized Losses (other
than Excess Special Hazard Losses, Excess Bankruptcy Losses, Excess Fraud Losses
and Extraordinary Losses) will be allocated to the Class SB Certificates on such
Distribution Date pursuant to Section 4.05, and, if so, the Master Servicer
shall demand payment from Residential Funding of the amount of such Realized
Loss and shall distribute the same to the Class SB Certificateholders in the
same manner as if such amount were to be distributed pursuant to Section
4.02(a); provided, however, that the amount of such demand in respect of any
Distribution Date shall in no event be greater than the sum of (i) the
additional amount of Accrued Certificate Interest that would have been paid for
the Class SB Certificateholders on such Distribution Date had such Realized Loss
or Losses not occurred plus (ii) the amount of the reduction in the Certificate
Principal Balances of the Class SB Certificates on such Distribution Date due to
such Realized Loss or Losses. Notwithstanding such payment, such Realized Losses
shall be deemed to have been borne by the Certificateholders for purposes of
Section 4.05. Excess Special Hazard Losses, Excess Fraud Losses, Excess
Bankruptcy Losses and Extraordinary Losses allocated to the Class SB
Certificates will not be covered by the Subordinate Certificate Loss Obligation.
(c) Demands for payments pursuant to this Section shall be
made prior to the later of the third Business Day prior to each Distribution
Date or the related Determination Date by the Master Servicer with written
notice thereof to the Trustee. The maximum amount that Residential Funding shall
be required to pay pursuant to this Section on any Distribution Date (the
"Amount Available") shall be equal to the lesser of (X) ________ minus the sum
of (i) all previous payments made under subsections (a) and (b) hereof and (ii)
all draws under the Limited Guaranty made in lieu of such payments as described
below in subsection (d) and (Y) the then outstanding Certificate Principal
Balances of the Class SB Certificates, or such lower amount as may be
established pursuant to Section 12.02. Residential Funding's obligations as
described in this Section are referred to herein as the "Subordinate Certificate
Loss Obligation."
(d) The Trustee will promptly notify General Motors Acceptance
Corporation of any failure of Residential Funding to make any payments hereunder
and shall demand payment pursuant to the limited guaranty (the "Limited
Guaranty"), executed by General Motors Acceptance Corporation, of Residential
Funding's obligation to make payments pursuant to this Section, in an amount
equal to the lesser of (i) the Amount Available and (ii) such required payments,
by delivering to General Motors Acceptance Corporation a written demand for
payment by wire transfer, not later than the second Business Day prior to the
Distribution Date for such month, with a copy to the Master Servicer.
(e) All payments made by Residential Funding pursuant to this
Section or amounts paid under the Limited Guaranty shall be deposited directly
in the Certificate Account, for distribution on the Distribution Date for such
month to the Class SB Certificateholders.
(f) The Depositor shall have the option, in its sole
discretion, to substitute for either or both of the Limited Guaranty or the
Subordinate Certificate Loss Obligation another instrument in the form of a
corporate guaranty, an irrevocable letter of credit, a surety bond, insurance
policy or similar instrument or a reserve fund; provided that (i) the Depositor
obtains (subject to the provisions of Section 10.01(f) as if the Depositor was
substituted for the Master Servicer solely for the purposes of such provision)
an Opinion of Counsel (which need not be an opinion of Independent counsel) to
the effect that obtaining such substitute corporate guaranty, irrevocable letter
of credit, surety bond, insurance policy or similar instrument or reserve fund
will not cause either (a) any federal tax to be imposed on the Trust Fund,
including without limitation, any federal tax imposed on "prohibited
transactions" under Section 860(F)(a)(1) of the Code or on "contributions after
the startup date" under Section 860(G)(d)(1) of the Code or (b) the Trust Fund
to fail to qualify as a REMIC at any time that any Certificate is outstanding,
and (ii) no such substitution shall be made unless (A) the substitute Limited
Guaranty or Subordinate Certificate Loss Obligation is for an initial amount not
less than the then current Amount Available and contains provisions that are in
all material respects equivalent to the original Limited Guaranty or Subordinate
Certificate Loss Obligation (including that no portion of the fees,
reimbursements or other obligations under any such instrument will be borne by
the Trust Fund), (B) the long term debt obligations of any obligor of any
substitute Limited Guaranty or Subordinate Certificate Loss Obligation (if not
supported by the Limited Guaranty) shall be rated at least the lesser of (a) the
rating of the long term debt obligations of General Motors Acceptance
Corporation as of the date of issuance of the Limited Guaranty and (b) the
rating of the long term debt obligations of General Motors Acceptance
Corporation at the date of such substitution and (C) the Depositor obtains
written confirmation from each nationally recognized credit rating agency that
rated the Class SB Certificates at the request of the Depositor that such
substitution shall not lower the rating on the Class SB Certificates below the
lesser of (a) the then-current rating assigned to the Class SB Certificates by
such rating agency and (b) the original rating assigned to the Class SB
Certificates by such rating agency. Any replacement of the Limited Guaranty or
Subordinate Certificate Loss Obligation pursuant to this Section shall be
accompanied by a written Opinion of Counsel to the substitute guarantor or
obligor, addressed to the Master Servicer and the Trustee, that such substitute
instrument constitutes a legal, valid and binding obligation of the substitute
guarantor or obligor, enforceable in accordance with its terms, and concerning
such other matters as the Master Servicer and the Trustee shall reasonably
request. Neither the Depositor, the Master Servicer nor the Trustee shall be
obligated to substitute for or replace the Limited Guaranty or Subordinate
Certificate Loss Obligation under any circumstance.
Section 12.02. Amendments Relating to the Limited Guaranty.
Notwithstanding Sections 11.01 or 12.01: (i) the provisions of this Article XII
may be amended, superseded or deleted, (ii) the Limited Guaranty or Subordinate
Certificate Loss Obligation may be amended, reduced or canceled, and (iii) any
other provision of this Agreement which is related or incidental to the matters
described in this Article XII may be amended in any manner; in each case by
written instrument executed or consented to by the Depositor and Residential
Funding but without the consent of any Certificateholder and without the consent
of the Master Servicer or the Trustee being required unless any such amendment
would impose any additional obligation on, or otherwise adversely affect the
interests of, the Master Servicer or the Trustee, as applicable; provided that
the Depositor shall also obtain a letter from each nationally recognized credit
rating agency that rated the Class SB Certificates at the request of the
Depositor to the effect that such amendment, reduction, deletion or cancellation
will not lower the rating on the Class SB Certificates below the lesser of (a)
the then-current rating assigned to the Class SB Certificates by such rating
agency and (b) the original rating assigned to the Class SB Certificates by such
rating agency, unless (A) the Holder of 100% of the Class SB Certificates is
Residential Funding or an Affiliate of Residential Funding, or (B) such
amendment, reduction, deletion or cancellation is made in accordance with
Section 11.01(e) and, provided further that the Depositor obtains (subject to
the provisions of Section 10.01(f) as if the Depositor was substituted for the
Master Servicer solely for the purposes of such provision), in the case of a
material amendment or supersession (but not a reduction, cancellation or
deletion of the Limited Guaranty or the Subordinate Certificate Loss
Obligation), an Opinion of Counsel (which need not be an opinion of Independent
counsel) to the effect that any such amendment or supersession will not cause
either (a) any federal tax to be imposed on the Trust Fund, including without
limitation, any federal tax imposed on "prohibited transactions" under Section
860F(a)(1) of the Code or on "contributions after the startup date" under
Section 860G(d)(1) of the Code or (b) the Trust Fund to fail to qualify as a
REMIC at any time that any Certificate is outstanding. A copy of any such
instrument shall be provided to the Trustee and the Master Servicer together
with an Opinion of Counsel that such amendment complies with this Section 12.02.
EXHIBIT L
FORM OF LIMITED GUARANTY
RESIDENTIAL ASSET SECURITIES CORPORATION
Home Equity Mortgage Asset-Backed Pass-Through Certificates
Series 2004-KS11
__________, 20__
JPMorgan Chase Bank, N.A.
0 Xxx Xxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Residential Funding Corporation Series 2004-KS11
Ladies and Gentlemen:
WHEREAS, Residential Funding Corporation, a Delaware
corporation ("Residential Funding"), an indirect wholly-owned subsidiary of
General Motors Acceptance Corporation, a New York corporation ("GMAC"), plans to
incur certain obligations as described under Section 12.01 of the Pooling and
Servicing Agreement dated as of November 1, 2004 (the "Servicing Agreement"),
among Residential Asset Securities Corporation (the "Depositor"), Residential
Funding and JPMorgan Chase Bank, N.A. (the "Trustee") as amended by Amendment
No. ___ thereto, dated as of ________, with respect to the Home Equity Mortgage
Asset-Backed Pass-Through Certificates, Series 2004-KS11 (the "Certificates");
and
WHEREAS, pursuant to Section 12.01 of the Servicing Agreement,
Residential Funding agrees to make payments to the Holders of the Class SB
Certificates with respect to certain losses on the Mortgage Loans as described
in the Servicing Agreement; and
WHEREAS, GMAC desires to provide certain assurances with
respect to the ability of Residential Funding to secure sufficient funds and
faithfully to perform its Subordinate Certificate Loss Obligation;
NOW THEREFORE, in consideration of the premises herein
contained and certain other good and valuable consideration, the receipt of
which is hereby acknowledged, GMAC agrees as follows:
2. Provision of Funds. (a) GMAC agrees to contribute and deposit in the
Certificate Account on behalf of Residential Funding (or otherwise provide to
Residential Funding, or to cause to be made available to Residential Funding),
either directly or through a subsidiary, in any case prior to the related
Distribution Date, such moneys as may be required by Residential Funding to
perform its Subordinate Certificate Loss Obligation when and as the same arises
from time to time upon the demand of the Trustee in accordance with Section
12.01 of the Servicing Agreement.
(b) The agreement set forth in the preceding clause (a) shall
be absolute, irrevocable and unconditional and shall not be affected by the
transfer by GMAC or any other person of all or any part of its or their interest
in Residential Funding, by any insolvency, bankruptcy, dissolution or other
proceeding affecting Residential Funding or any other person, by any defense or
right of counterclaim, set-off or recoupment that GMAC may have against
Residential Funding or any other person or by any other fact or circumstance.
Notwithstanding the foregoing, GMAC's obligations under clause (a) shall
terminate upon the earlier of (x) substitution for this Limited Guaranty
pursuant to Section 12.01(f) of the Servicing Agreement, or (y) the termination
of the Trust Fund pursuant to the Servicing Agreement.
3. Waiver. GMAC hereby waives any failure or delay on the part of Residential
Funding, the Trustee or any other person in asserting or enforcing any rights or
in making any claims or demands hereunder. Any defective or partial exercise of
any such rights shall not preclude any other or further exercise of that or any
other such right. GMAC further waives demand, presentment, notice of default,
protest, notice of acceptance and any other notices with respect to this Limited
Guaranty, including, without limitation, those of action or non-action on the
part of Residential Funding or the Trustee.
4. Modification, Amendment and Termination. This Limited Guaranty may be
modified, amended or terminated only by the written agreement of GMAC and the
Trustee and only if such modification, amendment or termination is permitted
under Section 12.02 of the Servicing Agreement. The obligations of GMAC under
this Limited Guaranty shall continue and remain in effect so long as the
Servicing Agreement is not modified or amended in any way that might affect the
obligations of GMAC under this Limited Guaranty without the prior written
consent of GMAC.
5. Successor. Except as otherwise expressly provided herein, the guarantee
herein set forth shall be binding upon GMAC and its respective successors.
6. Governing Law. This Limited Guaranty shall be governed by the laws of the
State of New York.
7. Authorization and Reliance. GMAC understands that a copy of this Limited
Guaranty shall be delivered to the Trustee in connection with the execution of
Amendment No. 1 to the Servicing Agreement and GMAC hereby authorizes the
Depositor and the Trustee to rely on the covenants and agreements set forth
herein.
8. Definitions. Capitalized terms used but not otherwise defined herein shall
have the meaning given them in the Servicing Agreement.
9. Counterparts. This Limited Guaranty may be executed in any number of
counterparts, each of which shall be deemed to be an original and such
counterparts shall constitute but one and the same instrument.
IN WITNESS WHEREOF, GMAC has caused this Limited Guaranty to
be executed and delivered by its respective officers thereunto duly authorized
as of the day and year first above written.
GENERAL MOTORS ACCEPTANCE
CORPORATION
By:____________________________
Name:__________________________
Title:_________________________
Acknowledged by:
JPMORGAN CHASE BANK, N.A.,
as Trustee
By:________________________________
Name:______________________________
Title:_____________________________
RESIDENTIAL ASSET SECURITIES
CORPORATION
By:________________________________
Name:______________________________
Title:_____________________________
EXHIBIT M
FORM OF LENDER CERTIFICATION FOR ASSIGNMENT OF MORTGAGE LOAN
__________, 20__
Residential Asset Securities Corporation
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
JPMorgan Chase Bank, N.A.
4 New York Plaza, 6th Floor
New York, New York 10004
Attention: Residential Funding Corporation Series 2004-KS11
Re: Home Equity Mortgage Asset-Backed Pass-Through Certificates,
Series 2004-KS11 Assignment of Mortgage Loan
Ladies and Gentlemen:
This letter is delivered to you in connection with the assignment by
_________________ (the "Trustee") to _______________________ (the "Lender") of
_______________ (the "Mortgage Loan") pursuant to Section 3.13(d) of the Pooling
and Servicing Agreement (the "Pooling and Servicing Agreement"), dated as of
November 1, 2004 among Residential Asset Securities Corporation, as depositor
(the "Depositor"), Residential Funding Corporation, as master servicer, and the
Trustee. All terms used herein and not otherwise defined shall have the meanings
set forth in the Pooling and Servicing Agreement. The Lender hereby certifies,
represents and warrants to, and covenants with, the Master Servicer and the
Trustee that:
(ii) the Mortgage Loan is secured by Mortgaged Property located in a
jurisdiction in which an assignment in lieu of satisfaction is required to
preserve lien priority, minimize or avoid mortgage recording taxes or otherwise
comply with, or facilitate a refinancing under, the laws of such jurisdiction;
(iii) the substance of the assignment is, and is intended to be, a refinancing
of such Mortgage Loan and the form of the transaction is solely to comply with,
or facilitate the transaction under, such local laws;
(iv) the Mortgage Loan following the proposed assignment will be modified to
have a rate of interest at least 0.25 percent below or above the rate of
interest on such Mortgage Loan prior to such proposed assignment; and
(v) such assignment is at the request of the borrower under the related Mortgage
Loan.
Very truly yours,
(Lender)
By:_____________________________
Name:___________________________
Title:__________________________
EXHIBIT N
FORM OF RULE 144A INVESTMENT REPRESENTATION
Description of Rule 144A Securities, including numbers:
===============================================
===============================================
The undersigned seller, as registered holder (the "Seller"),
intends to transfer the Rule 144A Securities described above to the undersigned
buyer (the "Buyer").
1. In connection with such transfer and in accordance with the agreements
pursuant to which the Rule 144A Securities were issued, the Seller
hereby certifies the following facts: Neither the Seller nor anyone
acting on its behalf has offered, transferred, pledged, sold or
otherwise disposed of the Rule 144A Securities, any interest in the
Rule 144A Securities or any other similar security to, or solicited any
offer to buy or accept a transfer, pledge or other disposition of the
Rule 144A Securities, any interest in the Rule 144A Securities or any
other similar security from, or otherwise approached or negotiated with
respect to the Rule 144A Securities, any interest in the Rule 144A
Securities or any other similar security with, any person in any
manner, or made any general solicitation by means of general
advertising or in any other manner, or taken any other action, that
would constitute a distribution of the Rule 144A Securities under the
Securities Act of 1933, as amended (the "1933 Act"), or that would
render the disposition of the Rule 144A Securities a violation of
Section 5 of the 1933 Act or require registration pursuant thereto, and
that the Seller has not offered the Rule 144A Securities to any person
other than the Buyer or another "qualified institutional buyer" as
defined in Rule 144A under the 0000 Xxx.
2. The Buyer, pursuant to Section 5.02 of the Pooling and Servicing
Agreement (the "Agreement"), dated as of November 1, 2004 among
Residential Funding Corporation, as master servicer (the "Master
Servicer"), Residential Asset Securities Corporation, as depositor (the
"Depositor"), and JPMorgan Chase Bank, N.A., as trustee (the "Trustee")
warrants and represents to, and covenants with, the Seller, the Trustee
and the Master Servicer as follows:
a. The Buyer understands that the Rule 144A Securities have not been
registered under the 1933 Act or the securities laws of any state.
b. The Buyer considers itself a substantial, sophisticated institutional
investor having such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of
investment in the Rule 144A Securities.
c. The Buyer has been furnished with all information regarding the Rule
144A Securities that it has requested from the Seller, the Trustee or
the Servicer.
d. Neither the Buyer nor anyone acting on its behalf has offered, transferred,
pledged, sold or otherwise disposed of the Rule 144A Securities, any
interest in the Rule 144A Securities or any other similar security to, or
solicited any offer to buy or accept a transfer, pledge or other
disposition of the Rule 144A Securities, any interest in the Rule 144A
Securities or any other similar security from, or otherwise approached or
negotiated with respect to the Rule 144A Securities, any interest in the
Rule 144A Securities or any other similar security with, any person in any
manner, or made any general solicitation by means of general advertising or
in any other manner, or taken any other action, that would constitute a
distribution of the Rule 144A Securities under the 1933 Act or that would
render the disposition of the Rule 144A Securities a violation of Section 5
of the 1933 Act or require registration pursuant thereto, nor will it act,
nor has it authorized or will it authorize any person to act, in such
manner with respect to the Rule 144A Securities.
e. The Buyer is a "qualified institutional buyer" as that term is defined
in Rule 144A under the 1933 Act and has completed either of the forms
of certification to that effect attached hereto as Annex I or Annex II.
The Buyer is aware that the sale to it is being made in reliance on
Rule 144A. The Buyer is acquiring the Rule 144A Securities for its own
account or the accounts of other qualified institutional buyers,
understands that such Rule 144A Securities may be resold, pledged or
transferred only (i) to a person reasonably believed to be a qualified
institutional buyer that purchases for its own account or for the
account of a qualified institutional buyer to whom notice is given that
the resale, pledge or transfer is being made in reliance on Rule 144A,
or (ii) pursuant to another exemption from registration under the 1933
Act.
3. The Buyer of Class B Certificates represents by virtue of its purchase
or holding of such Certificate (or interest therein) that either
a. it is not an employee benefit plan or other plan or arrangement subject
to the prohibited transaction provisions of ERISA or Section 4975 of
the Code, or any person (including an insurance company investing its
general account, an investment manager, a named fiduciary or a trustee
of any such plan) who is using "plan assets" of any such plan to effect
such acquisition (each of the foregoing, a "Plan Investor");
b. it has acquired and is holding such Certificate in reliance on U.S.
Department of Labor Prohibited Transaction Exemption ("PTE") 94-29, as
most recently amended, 67 Fed. Reg. 54487 (Aug. 22, 2002) (the "RFC
Exemption"), and that it understands that there are certain conditions
to the availability of the RFC Exemption including that such
Certificate must be rated, at the time of purchase, not lower than
"BBB-" (or its equivalent) by Fitch, Standard & Poor's or Xxxxx'x; or
c. (i) such Buyer 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 Prohibited
Transaction Class Exemption ("PTCE") 95-60), and (iii) the conditions
set forth in Sections I and III of PTCE 95-60 have been satisfied.
4. The Buyer of Class SB Certificates or Class R Certificates
a. is not a Plan Investor; or
b. has provided the Trustee, the Depositor and the Master Servicer with an
Opinion of Counsel acceptable to and in form and substance satisfactory
to the Trustee, the Depositor, and the Master Servicer to the effect
that the purchase or holding of this Certificate is permissible under
applicable law, will not constitute or result in any non-exempt
prohibited transaction under Section 406 of ERISA or Section 4975 of
the Code (or comparable provisions of any subsequent enactments), and
will not subject the Trustee, the Depositor, or the Master Servicer to
any obligation or liability (including obligations or liabilities under
ERISA or Section 4975 of the Code) in addition to those undertaken in
the Agreement, which Opinion of Counsel shall not be an expense of the
Trustee, the Depositor or the Master Servicer.
5. This document may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when
so executed, shall be deemed to be an original; such counterparts,
together, shall constitute one and the same document.
IN WITNESS WHEREOF, each of the parties has executed this document as
of the date set forth below.
------------------------------ ------------------------------
Print Name of Seller Print Name of Purchaser
By: ________________________________ By: _____________________________
Name: Name:
Title: Title:
Taxpayer Identification: Taxpayer Identification:
No.__________________________________ No._______________________________
Date:________________________________ Date:_____________________________
ANNEX I TO EXHIBIT N
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers Other Than Registered Investment Companies]
The undersigned hereby certifies as follows in connection with the Rule
144A Investment Representation to which this Certification is attached:
1._______As indicated below, the undersigned is the President, Chief Financial
Officer, Senior Vice President or other executive officer of the Buyer.
2. In connection with purchases by the Buyer, the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933 ("Rule 144A") because (i) the Buyer owned and/or invested on a
discretionary basis $______________________ in securities (except for the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule 144A) and (ii)
the Buyer satisfies the criteria in the category marked below.
___ Corporation, etc. The Buyer is a corporation (other than a
bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or
charitable organization described in Section 501(c)(3) of the
Internal Revenue Code.
___ Bank. The Buyer (a) is a national bank or banking institution
organized under the laws of any State, territory or the
District of Columbia, the business of which is substantially
confined to banking and is supervised by the State or
territorial banking commission or similar official or is a
foreign bank or equivalent institution, and (b) has an audited
net worth of at least $25,000,000 as demonstrated in its
latest annual financial statements, a copy of which is
attached hereto.
___ Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is
supervised and examined by a State or Federal authority having
supervision over any such institutions or is a foreign savings
and loan association or equivalent institution and (b) has an
audited net worth of at least $25,000,000 as demonstrated in
its latest annual financial statements.
___ Broker-Dealer. The Buyer is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934.
___ Insurance Company. The Buyer is an insurance company whose
primary and predominant business activity is the writing of
insurance or the reinsuring of risks underwritten by insurance
companies and which is subject to supervision by the insurance
commissioner or a similar official or agency of a State or
territory or the District of Columbia.
___ State or Local Plan. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any
agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA").
___ Investment Adviser. The Buyer is an investment adviser registered
under the Investment Advisers Act of 1940.
___ SBIC. The Buyer is a Small Business Investment Company licensed
by the U.S. Small Business Administration under Section 301(c) or
(d) of the Small Business Investment Act of 1958.
___ Business Development Company. The Buyer is a business development
company as defined in Section 202(a)(22) of the Investment
Advisers Act of 1940.
___ Trust Fund. The Buyer is a trust fund whose trustee is a bank
or trust company and whose participants are exclusively (a)
plans established and maintained by a State, its political
subdivisions, or any agency or instrumentality of the State or
its political subdivisions, for the benefit of its employees,
or (b) employee benefit plans within the meaning of Title I of
the Employee Retirement Income Security Act of 1974, but is
not a trust fund that includes as participants individual
retirement accounts or H.R. 10 plans.
3. The term "securities" as used herein does not include (i) securities of
issuers that are affiliated with the Buyer, (ii) securities that are part of an
unsold allotment to or subscription by the Buyer, if the Buyer is a dealer,
(iii) bank deposit notes and certificates of deposit, (iv) loan participations,
(v) repurchase agreements, (vi) securities owned but subject to a repurchase
agreement and (vii) currency, interest rate and commodity swaps.
4. For purposes of determining the aggregate amount of securities owned and/or
invested on a discretionary basis by the Buyer, the Buyer used the cost of such
securities to the Buyer and did not include any of the securities referred to in
the preceding paragraph. Further, in determining such aggregate amount, the
Buyer may have included securities owned by subsidiaries of the Buyer, but only
if such subsidiaries are consolidated with the Buyer in its financial statements
prepared in accordance with generally accepted accounting principles and if the
investments of such subsidiaries are managed under the Buyer's direction.
However, such securities were not included if the Buyer is a majority-owned,
consolidated subsidiary of another enterprise and the Buyer is not itself a
reporting company under the Securities Exchange Act of 1934.
5. The Buyer acknowledges that it is familiar with Rule 144A and understands
that the seller to it and other parties related to the Certificates are relying
and will continue to rely on the statements made herein because one or more
sales to the Buyer may be in reliance on Rule 144A.
____ ___ Will the Buyer be purchasing the Rule 144A
Yes No Securities for the Buyer's own account?
6. If the answer to the foregoing question is "no", the Buyer agrees that, in
connection with any purchase of securities sold to the Buyer for the account of
a third party (including any separate account) in reliance on Rule 144A, the
Buyer will only purchase for the account of a third party that at the time is a
"qualified institutional buyer" within the meaning of Rule 144A. In addition,
the Buyer agrees that the Buyer will not purchase securities for a third party
unless the Buyer has obtained a current representation letter from such third
party or taken other appropriate steps contemplated by Rule 144A to conclude
that such third party independently meets the definition of "qualified
institutional buyer" set forth in Rule 144A.
7. The Buyer will notify each of the parties to which this certification is made
of any changes in the information and conclusions herein. Until such notice is
given, the Buyer's purchase of Rule 144A Securities will constitute a
reaffirmation of this certification as of the date of such purchase.
Print Name of Buyer
By: _____________________________
Name:
Title:
Date: _____________________________
ANNEX II TO EXHIBIT N
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers That Are Registered Investment Companies]
The undersigned hereby certifies as follows in connection with the Rule
144A Investment Representation to which this Certification is attached:
8. As indicated below, the undersigned is the President, Chief Financial Officer
or Senior Vice President of the Buyer or, if the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933 ("Rule 144A") because Buyer is part of a Family of Investment
Companies (as defined below), is such an officer of the Adviser.
9. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, and (ii)
as marked below, the Buyer alone, or the Buyer's Family of Investment Companies,
owned at least $100,000,000 in securities (other than the excluded securities
referred to below) as of the end of the Buyer's most recent fiscal year. For
purposes of determining the amount of securities owned by the Buyer or the
Buyer's Family of Investment Companies, the cost of such securities was used.
____ The Buyer owned $___________________ in securities (other than
the excluded securities referred to below) as of the end of
the Buyer's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
____ The Buyer is part of a Family of Investment Companies which
owned in the aggregate $______________ in securities (other
than the excluded securities referred to below) as of the end
of the Buyer's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
10. The term "Family of Investment Companies" as used herein means two or more
registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
11. The term "securities" as used herein does not include (i) securities of
issuers that are affiliated with the Buyer or are part of the Buyer's Family of
Investment Companies, (ii) bank deposit notes and certificates of deposit, (iii)
loan participations, (iv) repurchase agreements, (v) securities owned but
subject to a repurchase agreement and (vi) currency, interest rate and commodity
swaps.
12. The Buyer is familiar with Rule 144A and understands that each of the
parties to which this certification is made are relying and will continue to
rely on the statements made herein because one or more sales to the Buyer will
be in reliance on Rule 144A. In addition, the Buyer will only purchase for the
Buyer's own account.
13. The undersigned will notify each of the parties to which this certification
is made of any changes in the information and conclusions herein. Until such
notice, the Buyer's purchase of Rule 144A Securities will constitute a
reaffirmation of this certification by the undersigned as of the date of such
purchase.
Print Name of Buyer
By: ____________________________
Name:
Title:
IF AN ADVISER:
Print Name of Buyer
Date: ____________________________
EXHIBIT O
[RESERVED]
FORM OF ERISA REPRESENTATION LETTER
__________, 20__
Residential Asset Securities Corporation
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
JPMorgan Chase Bank, N.A.
0 Xxx Xxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Residential Funding Corporation
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Residential Asset Securities Corporation Series 2004-KS11
Re: Home Equity Mortgage Asset-Backed Pass-Through Certificates,
Series 2004-KS11, Class SB
Ladies and Gentlemen:
[____________________________________] (the "Purchaser") intends to
purchase from [______________________________] (the "Seller") $[____________]
Initial Certificate Principal Balance of Home Equity Mortgage Asset-Backed
Pass-Through Certificates, Series 2004-KS11, Class ____ (the "Certificates"),
issued pursuant to the Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"), dated as of November 1, 2004 among Residential Asset
Securities Corporation, as the depositor (the "Depositor"), Residential Funding
Corporation, as master servicer (the "Master Servicer") and JPMorgan Chase Bank,
N.A., as trustee (the "Trustee"). All terms used herein and not otherwise
defined shall have the meanings set forth in the Pooling and Servicing
Agreement. The Purchaser hereby certifies, represents and warrants to, and
covenants with, the Depositor, the Trustee and the Master Servicer that:
(a) The Purchaser is not an employee benefit plan or other
plan or arrangement subject to the prohibited transaction provisions of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or Section 4975 of the Internal Revenue Code of 1986, as
amended (the "Code"), or any person (including an insurance company
investing its general account, an investment manager, a named fiduciary
or a trustee of any such plan) who is using "plan assets" of any such
plan to effect such acquisition (each of the foregoing, a "Plan
Investor"); or
(b) The Purchaser has provided the Trustee, the Depositor and
the Master Servicer with an Opinion of Counsel acceptable to and in
form and substance satisfactory to the Trustee, the Depositor and the
Master Servicer to the effect that the purchase or holding of
Certificates is permissible under applicable law, will not constitute
or result in any non-exempt prohibited transaction under Section 406 of
ERISA or Section 4975 of the Code (or comparable provisions of any
subsequent enactments), and will not subject the Trustee, the Depositor
or the Master Servicer to any obligation or liability (including
obligations or liabilities under ERISA or Section 4975 of the Code) in
addition to those undertaken in the Pooling and Servicing Agreement,
which Opinion of Counsel shall not be at the expense of the Trustee,
the Depositor or the Master Servicer.
In addition, the Purchaser hereby certifies, represents and warrants
to, and covenants with, the Depositor, the Trustee and the Master Servicer that
the Purchaser will not transfer such Certificates to any Plan or person unless
such Plan or person meets the requirements set forth in either (a) or (b) above.
Very truly yours,
-------------------------------
(Purchaser)
By: ___________________________
Name: _________________________
Title: ________________________
EXHIBIT Q
[RESERVED]
EXHIBIT R
ASSIGNMENT AGREEMENT
(a copy can be obtained from the Trustee)
EXHIBIT S
[RESERVED]
EXHIBIT T-1
FORM OF FORM 10-K CERTIFICATION
I, [identify the certifying individual], certify that:
1. I have reviewed the annual report on Form 10-K for the fiscal year [____],
and all reports on Form 8-K containing distribution or servicing reports filed
in respect of periods included in the year covered by that annual report, of the
trust (the "Trust") created pursuant to the Pooling and Servicing Agreement
dated as of November 1, 2004 (the "P&S Agreement") among Residential Asset
Securities Corporation (the "Depositor"), Residential Funding Corporation (the
"Master Servicer") and JPMorgan Chase Bank, N.A.
(the "Trustee");
2. Based on my knowledge, the information in these reports, taken as a whole,
does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading as of the
last day of the period covered by this annual report;
3. Based on my knowledge, the servicing information required to be provided to
the Trustee by the Master Servicer under the P&S Agreement for inclusion in
these reports is included in these reports;
4. I am responsible for reviewing the activities performed by the Master
Servicer under the P&S Agreement and based upon my knowledge and the annual
compliance review required under the P&S Agreement, and, except as disclosed in
the reports, the Master Servicer has fulfilled its obligations under the P&S
Agreement; and
5. The reports disclose all significant deficiencies relating to the Master
Servicer's compliance with the minimum servicing standards based upon the report
provided by an independent public accountant, after conducting a review in
compliance with the Uniform Single Attestation Program for Mortgage Bankers as
set forth in the P&S Agreement, that is included in these reports.
In giving the certifications above, I have reasonably relied on the
information provided to me by the following unaffiliated parties: [the Trustee].
IN WITNESS WHEREOF, I have duly executed this certificate as of _________,
20__.
----------------------------
Name:
Title:
* to be signed by the senior officer in charge of the servicing
functions of the Master Servicer
EXHIBIT T-2
FORM OF BACK-UP CERTIFICATE TO FORM 10-K CERTIFICATION
The undersigned, a Responsible Officer of [______________] (the "Trustee")
certifies that:
1. The Trustee has performed all of the duties specifically required to be
performed by it pursuant to the provisions of the Pooling and Servicing
Agreement dated as of November 1, 2004 (the "Agreement") by and among
Residential Asset Securities Corporation, as depositor, Residential
Funding Corporation, as master servicer, and the Trustee in accordance
with the standards set forth therein.
2. Based on my knowledge, the list of Certificateholders as shown on the
Certificate Register as of the end of each calendar year that is
provided by the Trustee pursuant to Section 4.03(e)(I) of the Agreement
is accurate as of the last day of the 20[ ] calendar year.
Capitalized terms used and not defined herein shall have the meanings
given such terms in the Agreement.
IN WITNESS WHEREOF, I have duly executed this certificate as of _________,
20__.
----------------------------
Name:
Title:
EXHIBIT U
INFORMATION TO BE PROVIDED BY THE MASTER SERVICER TO THE RATING AGENCIES
RELATING TO REPORTABLE MODIFIED MORTGAGE LOANS
Account number
Transaction Identifier
Unpaid Principal Balance prior to Modification
Next Due Date
Monthly Principal and Interest Payment
Total Servicing Advances
Current Interest Rate
Original Maturity Date
Original Term to Maturity (Months)
Remaining Term to Maturity (Months)
Trial Modification Indicator
Mortgagor Equity Contribution
Total Servicer Advances
Trial Modification Term (Months)
Trial Modification Start Date
Trial Modification End Date
Trial Modification Period Principal and Interest Payment
Trial Modification Interest Rate
Trial Modification Term
Rate Reduction Indicator
Interest Rate Post Modification
Rate Reduction Start Date
Rate Reduction End Date
Rate Reduction Term
Term Modified Indicator
Modified Amortization Period
Modified Final Maturity Date
Total Advances Written Off
Unpaid Principal Balance Written Off
Other Past Due Amounts Written Off
Write Off Date
Unpaid Principal Balance Post Write Off
Capitalization Indicator
Mortgagor Contribution
Total Capitalized Amount
Modification Close Date
Unpaid Principal Balance Post Capitalization Modification
Next Payment Due Date per Modification Plan
Principal and Interest Payment Post Modification
Interest Rate Post Modification
Payment Made Post Capitalization
Delinquency Status to Modification Plan
