NOMURA ASSET ACCEPTANCE CORPORATION,
Depositor
NOMURA CREDIT & CAPITAL, INC.,
Seller
OPTION ONE MORTGAGE CORPORATION,
Servicer
and
JPMORGAN CHASE BANK,
Trustee and Custodian
--------------------
POOLING AND SERVICING AGREEMENT
Dated as of July 1, 2003
----------------------------------------
NOMURA ASSET ACCEPTANCE CORPORATION
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2003-A2
TABLE OF CONTENTS
PAGE
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ARTICLE I
Section 1.01 DEFINED TERMS....................................................................................9
Section 1.02 ALLOCATION OF CERTAIN INTEREST SHORTFALLS.......................................................42
ARTICLE II
Section 2.01 CONVEYANCE OF TRUST FUND........................................................................44
Section 2.02 ACCEPTANCE OF THE MORTGAGE LOANS................................................................45
Section 2.03 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SERVICER AND THE SELLER........................47
Section 2.04 Representations and Warranties of the Depositor.................................................52
Section 2.05 DELIVERY OF OPINION OF COUNSEL IN CONNECTION WITH SUBSTITUTIONS AND REPURCHASES.................53
Section 2.06 ISSUANCE OF THE REMIC I REGULAR INTERESTS AND THE CLASS R-1 INTEREST............................54
Section 2.07 CONVEYANCE OF THE REMIC I REGULAR INTERESTS; ACCEPTANCE OF REMIC II BY THE TRUSTEE..............54
Section 2.08 CONVEYANCE OF THE REMIC II REGULAR INTERESTS; ACCEPTANCE OF REMIC III BY THE TRUSTEE............55
Section 2.09 ISSUANCE OF CLASS R CERTIFICATES................................................................55
Section 2.10 ESTABLISHMENT OF TRUST..........................................................................55
ARTICLE III
Section 3.01 The Servicer....................................................................................56
Section 3.02 DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS......................................................58
Section 3.03 SUBSERVICERS....................................................................................59
Section 3.04 DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF SERVICER TO BE HELD FOR TRUSTEE...................60
Section 3.05 MAINTENANCE OF HAZARD INSURANCE.................................................................60
Section 3.06 PRESENTMENT OF CLAIMS AND COLLECTION OF PROCEEDS................................................61
Section 3.07 MAINTENANCE OF INSURANCE POLICIES...............................................................62
Section 3.08 RESERVED........................................................................................62
Section 3.09 REALIZATION UPON DEFAULTED MORTGAGE LOANS; DETERMINATION OF EXCESS LIQUIDATION PROCEEDS AND
REALIZED LOSSES; REPURCHASES OF CERTAIN MORTGAGE LOANS..........................................62
Section 3.10 SERVICING COMPENSATION..........................................................................64
Section 3.11 REO PROPERTY....................................................................................65
Section 3.12 LIQUIDATION REPORTS.............................................................................65
Section 3.13 ANNUAL CERTIFICATE AS TO COMPLIANCE.............................................................65
Section 3.14 ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' SERVICING REPORT...............................66
Section 3.15 BOOKS AND RECORDS...............................................................................67
Section 3.16 TRUSTEE.........................................................................................67
Section 3.17 REMIC-Related Covenants.........................................................................68
Section 3.18 Enforcing Obligations of the Servicer...........................................................68
Section 3.19 Release of Mortgage Files.......................................................................68
Section 3.20 Documents, Records and Funds in Possession of a Servicer to Be Held for Trustee.................69
Section 3.21 Possession of Certain Insurance Policies and Documents..........................................69
Section 3.22 ANNUAL CERTIFICATE AS TO COMPLIANCE.............................................................70
Section 3.23 UCC.............................................................................................71
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Section 3.24 Optional Purchase of Defaulted Mortgage Loans...................................................71
ARTICLE IV
Section 4.01 COLLECTION OF MORTGAGE LOAN PAYMENTS; CUSTODIAL ACCOUNT.........................................72
Section 4.02 PERMITTED WITHDRAWALS FROM THE CUSTODIAL ACCOUNT................................................74
Section 4.03 REPORTS TO TRUSTEE..............................................................................75
Section 4.04 COLLECTION OF TAXES; ASSESSMENTS AND SIMILAR ITEMS; ESCROW ACCOUNTS.............................76
Section 4.05 Reserved........................................................................................76
Section 4.06 Distribution Account............................................................................77
Section 4.07 PERMITTED WITHDRAWALS AND TRANSFERS FROM THE DISTRIBUTION ACCOUNT...............................77
Section 4.08 DUTIES OF THE CREDIT RISK MANAGER; TERMINATION..................................................79
Section 4.09 LIMITATION UPON LIABILITY OF THE CREDIT RISK MANAGER............................................80
ARTICLE V
Section 5.01 ADVANCES; ADVANCE FACILITY......................................................................81
Section 5.02 COMPENSATING INTEREST PAYMENTS..................................................................84
Section 5.03 REMIC DISTRIBUTIONS.............................................................................84
Section 5.04 DISTRIBUTIONS...................................................................................84
Section 5.05 ALLOCATION OF REALIZED LOSSES...................................................................88
Section 5.06 MONTHLY STATEMENTS TO CERTIFICATEHOLDERS........................................................90
Section 5.07 REMIC DESIGNATIONS AND REMIC I ALLOCATIONS.....................................................92
Section 5.08 Class AIO-1 Certificate Account.................................................................94
ARTICLE VI
Section 6.01 THE CERTIFICATES................................................................................95
Section 6.02 CERTIFICATE REGISTER; REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.....................96
Section 6.03 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES...............................................99
Section 6.04 PERSONS DEEMED OWNERS..........................................................................100
Section 6.05 ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND ADDRESSES......................................100
Section 6.06 BOOK-ENTRY CERTIFICATES........................................................................100
Section 6.07 NOTICES TO DEPOSITORY..........................................................................101
Section 6.08 DEFINITIVE CERTIFICATES........................................................................101
Section 6.09 MAINTENANCE OF OFFICE OR AGENCY................................................................102
ARTICLE VII
Section 7.01 LIABILITIES OF THE DEPOSITOR AND THE SERVICER..................................................103
Section 7.02 Merger or Consolidation of the Depositor or the Servicer.......................................103
Section 7.03 Indemnification Depositor......................................................................103
Section 7.04 Limitations on Liability of the Depositor, the Servicer and Others.............................104
Section 7.05 Servicer Not to Resign.........................................................................105
Section 7.06 Termination of the Servicer Without Cause......................................................106
ARTICLE VIII
Section 8.01 SERVICER DEFAULT...............................................................................107
Section 8.02 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.......................................................108
Section 8.03 NOTIFICATION TO CERTIFICATEHOLDERS.............................................................110
Section 8.04 WAIVER OF SERVICER DEFAULTS....................................................................110
ARTICLE IX
Section 9.01 DUTIES OF TRUSTEE..............................................................................111
Section 9.02 CERTAIN MATTERS AFFECTING THE TRUSTEE..........................................................112
Section 9.03 TRUSTEE NOT LIABLE FOR CERTIFICATES OR MORTGAGE LOANS..........................................114
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Section 9.04 TRUSTEE MAY OWN CERTIFICATES...................................................................115
Section 9.05 TRUSTEE'S FEES AND EXPENSES; INDEMNIFICATION...................................................115
Section 9.06 ELIGIBILITY REQUIREMENTS FOR TRUSTEE...........................................................115
Section 9.07 INSURANCE......................................................................................116
Section 9.08 RESIGNATION AND REMOVAL OF TRUSTEE.............................................................116
Section 9.09 SUCCESSOR TRUSTEE..............................................................................117
Section 9.10 MERGER OR CONSOLIDATION OF TRUSTEE.............................................................117
Section 9.11 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE..................................................117
Section 9.12 TAX MATTERS....................................................................................119
Section 9.13 CUSTODIAN'S FEES AND EXPENSES..................................................................121
Section 9.14 INDEMNIFICATION OF CUSTODIAN...................................................................121
Section 9.15 RELIANCE OF CUSTODIAN..........................................................................121
ARTICLE X
Section 10.01 TERMINATION UPON LIQUIDATION OR REPURCHASE OF ALL MORTGAGE LOANS...............................124
Section 10.02 FINAL DISTRIBUTION ON THE CERTIFICATES.........................................................124
Section 10.03 ADDITIONAL TERMINATION REQUIREMENTS............................................................125
ARTICLE XI
Section 11.01 AMENDMENT......................................................................................127
Section 11.02 RECORDATION OF AGREEMENT; COUNTERPARTS.........................................................128
Section 11.03 GOVERNING LAW..................................................................................128
Section 11.04 INTENTION OF PARTIES...........................................................................128
Section 11.05 NOTICES........................................................................................129
Section 11.06 SEVERABILITY OF PROVISIONS.....................................................................130
Section 11.07 ASSIGNMENT.....................................................................................130
Section 11.08 LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS.....................................................130
Section 11.09 CERTIFICATES NONASSESSABLE AND FULLY PAID......................................................131
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EXHIBITS
Exhibit A-1 Form of Class A[1][2][3] Certificates
Exhibit A-2 Form of Class AIO-[1][2] Certificates
Exhibit A-3 Form of Class M[1][2] Certificates
Exhibit A-4 Form of Class B[1][2][3][4][5][6][7] Certificates
Exhibit A-5 Form of Class R Certificates
Exhibit B Mortgage Loan Schedule
Exhibit C-1 Form of Initial Certification
Exhibit C-2 Form of Interim Certification
Exhibit C-3 Form of Final Certification
Exhibit D Form of Transfer Affidavit
Exhibit E Form of Transferor Certificate
Exhibit F Form of Investment Letter (Non-Rule 144A)
Exhibit G Form of Rule 144A Investment Letter
Exhibit H Form of Request for Release
Exhibit I DTC Letter of Representations
Exhibit J Schedule of Mortgage Loans with Lost Notes
Exhibit K Prepayment Charge Schedule
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POOLING AND SERVICING AGREEMENT, dated as of July 1, 2003, among NOMURA
ASSET ACCEPTANCE CORPORATION, a Delaware corporation, as depositor (the
"Depositor"), NOMURA CREDIT & CAPITAL, INC., a Delaware corporation, as seller
(in such capacity, the "Seller"), OPTION ONE MORTGAGE CORPORATION, a California
corporation, as a servicer and JPMORGAN CHASE BANK, a New York banking
corporation, not in its individual capacity, but solely as trustee (the
"Trustee") and as custodian (the "Custodian").
PRELIMINARY STATEMENT
The Depositor is the owner of the Trust Fund that is hereby conveyed to
the Trustee in return for the Certificates.
REMIC I
As provided herein, the Trustee will make an election to treat the
segregated pool of assets consisting of the Mortgage Loans and certain other
related assets subject to this Agreement 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-1 Interest 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, the Uncertificated REMIC I Pass-Through
Rate, the initial Uncertificated Principal Balance, and solely for purposes of
satisfying Treasury regulation Section 1.860G-1(a)(4)(iii), the "latest possible
maturity date" for each of the REMIC I Regular Interests. None of the REMIC I
Regular Interests will be certificated.
Initial Uncertificated Uncertificated REMIC I Assumed Final Maturity
Designation Principal Balance Pass-Through Rate Date(1)
------------------------- -------------------------- -------------------------- --------------------------
LTI-1GRP $17,051.51 Variable(2) May 25, 2033
LTI-1SUB $2,813.51 Xxxxxxxx(0) Xxx 00, 0000
XXX-0XXX $6,002.92 Variable(2) May 25, 2033
LTI-2SUB $990.52 Variable(2) May 25, 2033
LTI-ZZZ $230,517,432.95 Variable(2) May 25, 2033
LTI-AIO1 $100.00 (3) May 25, 2033
-------------------
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date in the month following the maturity date
for the Mortgage Loan with the latest maturity date has been designated as
the "latest possible maturity date" for each Class of Certificates that
represents one or more of the "regular interests" in REMIC I.
(2) Calculated in accordance with the definition of "Uncertificated REMIC I
Pass-Through Rate" herein.
(3) REMIC I Regular Interest LTI-AIO1 will not be entitled to distribution of
interest.
REMIC II
As provided herein, the Trustee will elect to treat the segregated pool
of assets consisting of the REMIC I Regular Interests as a REMIC for federal
income tax purposes, and such
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segregated pool of assets will be designated as "REMIC II". The Class R-2
Interest will be the sole class of "residual interests" in REMIC II for purposes
of the REMIC Provisions. The following table irrevocably sets forth the
designation, the Uncertificated REMIC II Remittance Rate, the Initial
Uncertificated Principal Balance and, solely for purposes of satisfying Treasury
regulation Section 1.860G-1(a)(4)(iii), the "latest possible maturity date" for
each of the REMIC II Regular Interests (as defined herein). None of the REMIC II
Regular Interests will be certificated.
Initial
Uncertificated Uncertificated REMIC I Pass- Assumed Final Maturity
Designation Principal Balance Through Rate Date(1)
LTII- A1 $142,380,000.00 Variable(2) May 25, 2033
-------------- ---------------------- ---------------------------------- ------------------------
LTII-A2 $34,368,000.00 Xxxxxxxx(0) Xxx 00, 0000
XXXX-X0 $15,756,000.00 Variable(2) May 25, 2033
LTII-AIO1 $100.00(3) Xxxxxxxx(0) Xxx 00, 0000
XXXX-X0 $9,222,000.00 Xxxxxxxx(0) Xxx 00, 0000
XXXX-X0 $4,611,000.00 Variable(2) May 25, 2033
LTII-B1 $7,492,000.00 Xxxxxxxx(0) Xxx 00, 0000
XXXX-X0 $3,619,000.00 Xxxxxxxx(0) Xxx 00, 0000
XXXX-X0 $1,567,000.00 Xxxxxxxx(0) Xxx 00, 0000
XXXX-X0 $1,198,000.00 Xxxxxxxx(0) Xxx 00, 0000
XXXX-X0 $2,605,000.00 Xxxxxxxx(0) Xxx 00, 0000
XXXX-X0 $2,074,000.00 Xxxxxxxx(0) Xxx 00, 0000
XXXX-X0 $5,653,291.40 Variable(2) May 25, 2033
-------------------
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date in the month following the maturity date
for the Mortgage Loan with the latest maturity date has been designated as
the "latest possible maturity date" for each REMIC II Regular Interest.
(2) Calculated in accordance with the definition of "Uncertificated REMIC II
Pass-Through Rate" herein.
(3) REMIC II Regular Interest LTII-AIO1 will not accrue interest
REMIC III
As provided herein, the Trustee will make an election 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-3 Interest will represent the sole
class of "residual interests" in REMIC III for purposes of the REMIC Provisions.
The following table irrevocably sets forth the Class designation, Pass-Through
Rate and Initial Certificate Principal Balance for each Class of Certificates
that represents one or more of the "regular interests" in REMIC III created
hereunder:
Initial Certificate Assumed Final
Class Designation Principal Balance Pass-Through Rate Maturity Date(1)
-------------------------- ------------------------- --------------------------- -------------------------
Class A1 $142,380,000.00 Class A1 Pass-Through Rate May 25, 2033
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Class A2 $34,368,000.00 Class A2 Pass-Through Rate May 25, 2033
Class A3 $15,756,000.00 Class A3 Pass-Through Rate May 25, 2033
Class AIO-1 $100.00 (2) Class AIO-1 Pass-Through Rate May 25, 2033
Class AIO-2 N/A(3) Class AIO-2 Pass-Through Rate May 25, 2033
Class M1 $9,222,000.00 Class M1 Pass-Through Rate May 25, 2033
Class M2 $4,611,000.00 Class M2 Pass-Through Rate May 25, 2033
Class B1 $7,492,000.00 Class B1 Pass-Through Rate May 25, 2033
Class B2 $3,619,000.00 Class B2 Pass-Through Rate May 25, 2033
Class B3 $1,567,000.00 Class B3 Pass Through Rate May 25, 2033
Class B4 $1,198,000.00 Class B4 Pass-Through Rate May 25, 2033
Class B5 $2,605,000.00 Class B5 Pass Through Rate May 25, 2033
Class B6 $2,074,000.00 Class B6 Pass-Through Rate May 25, 2033
Class B7 $5,653,291.40 Class B7 Pass-Through Rate May 25, 2033
-------------------
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date in the month following the maturity date
for the Mortgage Loan with the latest maturity date has been designated as
the "latest possible maturity date" for each Class of Certificates.
(2) The Class AIO-1 Certificates will not accrue interest on its Principal
Balance, but will accrue interest on the Certificate Notional Balance
thereof calculated in accordance with the definition of "Notional Balance"
herein. The Class AIO-1 Certificates will be entitled to all Prepayment
Charges and a distribution of principal in reduction of the Certificate
Principal Balance thereof as described herein.
(3) The Class AIO-2 Certificates will accrue interest on the Notional Balance
of the Class AIO-2 Certificates calculated in accordance with the
definition of "Notional Balance" herein. The Class AIO-2 Certificates will
not be entitled to distributions in respect of principal.
In consideration of the mutual agreements herein contained, the
Depositor, the Servicer, the Seller and the Trustee agree as follows:
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ARTICLE I
DEFINITIONS
Section 1.01 DEFINED TERMS.
In addition to those terms defined in Section 1.02, whenever used in
this Agreement, the following words and phrases, unless the context otherwise
requires, shall have the following meanings:
ACCOUNT: Either the Distribution Account or any Custodial Account.
ACCRUED CERTIFICATE INTEREST: With respect to the Certificates for any
Distribution Date, means an amount equal to the interest accrued during the
related Interest Accrual Period at the applicable Pass-Through Rate on the
Certificate Principal Balance (or Notional Balance) of such Certificate
immediately prior to such Distribution Date less such Certificate's share of any
Net Interest Shortfall and the interest portion of any Realized Losses on the
related Mortgage Loans allocated to such Certificate pursuant to Section 1.02.
Accrued Certificate Interest is calculated on the basis of a 360-day year
consisting of twelve 30-day months. No Accrued Certificate Interest will be
payable with respect to any Class of Certificates after the Distribution Date on
which the outstanding Certificate Principal Balance of such Certificate has been
reduced to zero.
ADJUSTMENT AMOUNT: With respect to each anniversary of the Cut-Off
Date, the amount, if any, by which the Special Hazard Loss Coverage Amount
(without giving effect to the deduction of the Adjustment Amount for such
anniversary) exceeds the greatest of (x) the product of 1% and the Stated
Principal Balance of the Mortgage Loans on the Distribution Date immediately
preceding such anniversary, (y) the outstanding principal balance of the
Mortgage Loans secured by Mortgaged Properties in the highest California zip
code concentration on the Distribution Date immediately preceding such
anniversary, and (z) twice the Stated Principal Balance of the Mortgage Loan
which has the largest Stated Principal Balance on the Distribution Date
immediately preceding such anniversary.
ADVANCE: An advance of delinquent payments of principal or interest in
respect of a Mortgage Loan required to be made by the Servicer pursuant to
Section 5.01 or by the Trustee in its capacity as Successor Servicer pursuant to
Section 5.01.
ADVANCE FACILITY: As defined in Section 5.01(b)(i).
ADVANCE FACILITY NOTICE: As defined in Section 5.01(b)(ii).
ADVANCE FINANCING PERSON: As defined in Section 5.01(b)(i).
ADVANCE REIMBURSEMENT AMOUNT: As defined in Section 5.01(b)(ii).
AGGREGATE SUBORDINATE PERCENTAGE: With respect to any Distribution
Date, the sum of the Certificate Principal Balances of the Subordinated
Certificates divided by the aggregate of the Stated Principal Balances of the
Mortgage Loans.
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AGREEMENT: This Pooling and Servicing Agreement and any and all
amendments or supplements hereto made in accordance with the terms herein.
ALLOCABLE SHARE: With respect to each Class of Subordinated
Certificates and any Distribution Date, an amount equal to such Class's pro rata
share (based on the Certificate Principal Balance of each Class entitled
thereto) of the sum of each of the components of the definition of Subordinate
Optimal Principal Amount; provided that no class of Subordinated Certificates
shall be entitled on any Distribution Date to receive distributions pursuant to
clauses (ii), (iii) and (v) of the definition of Subordinate Optimal Principal
Amount unless the Class Prepayment Distribution Trigger for the related Class is
satisfied for such Distribution Date.
AMOUNT HELD FOR FUTURE DISTRIBUTION: As to any Distribution Date, the
aggregate amount held in the Servicer's Custodial Account at the close of
business on the immediately preceding Determination Date on account of (i) all
Scheduled Payments or portions thereof received in respect of the Mortgage Loans
due after the related Due Period and (ii) Principal Prepayments and Liquidation
Proceeds received in respect of such Mortgage Loans after the last day of the
related Prepayment Period.
APPORTIONED SUBORDINATE PRINCIPAL DISTRIBUTION AMOUNT: With respect to
a Class of Subordinated Certificates and any Distribution Date, the product of
(i) the aggregate Subordinate Principal Distribution Amount for the Subordinated
Certificates and (ii) the applicable Apportionment Fraction.
APPORTIONMENT FRACTION: With respect to each Class of Subordinated
Certificates, and in the event that the Senior Certificates related to a Loan
Group have been reduced to zero, a fraction the numerator of which is equal to
the Subordinate Optimal Principal Amount for Loan Group and the denominator of
which is equal to the Subordinate Optimal Principal Amount with respect to both
Loan Groups in the aggregate.
APPRAISED VALUE: With respect to any Mortgage Loan originated in
connection with a refinancing, the appraised value of the Mortgaged Property
based upon the appraisal made at the time of such refinancing or, with respect
to any other Mortgage Loan, the lesser of (x) the appraised value of the
Mortgaged Property based upon the appraisal made by a fee appraiser at the time
of the origination of the related Mortgage Loan, and (y) the sales price of the
Mortgaged Property at the time of such origination.
BANKRUPTCY CODE: Title 11 of the United States Code.
BANKRUPTCY LOSS COVERAGE AMOUNT: With respect to any Distribution Date,
an amount equal to $113,000 (approximately 0.05% of the aggregate Stated
Principal Balance of the Mortgage Loans as of the Cut-Off Date), minus the
aggregate amount of previous Deficient Valuations and Debt Service Reductions.
As of any Distribution Date on or after the Cross-Over Date, the Bankruptcy Loss
Coverage Amount will be zero. The Bankruptcy Loss Coverage Amount may be further
reduced by the Trustee (including accelerating the manner in which such coverage
is reduced) provided that prior to any such reduction, the Trustee shall obtain
written confirmation from each Rating Agency that such reduction shall not
reduce the rating assigned to
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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.
BOOK-ENTRY CERTIFICATES: Any of the Certificates that shall be
registered in the name of the Depository or its nominee, the ownership of which
is reflected on the books of the Depository or on the books of a person
maintaining an account with the Depository (directly, as a "Depository
Participant", or indirectly, as an indirect participant in accordance with the
rules of the Depository and as described in Section 6.06). As of the Closing
Date, each Class of Publicly Offered Certificates constitutes a Class of
Book-Entry Certificates.
BUSINESS DAY: Any day other than (i) a Saturday or a Sunday, or (ii) a
day on which banking institutions in The City of New York, New York, the
Commonwealth of Pennsylvania, the States of California, Florida and Delaware or
the city in which the Corporate Trust Office of the Trustee is located are
authorized or obligated by law or executive order to be closed.
CERTIFICATE: Any one of the certificates of any Class executed and
authenticated by the Trustee in substantially the forms attached hereto as
Exhibits A-1 through A-5.
CERTIFICATE OWNER: With respect to a Book-Entry Certificate, the Person
that is the beneficial owner of such Book-Entry Certificate.
CERTIFICATE PRINCIPAL BALANCE: As to any Certificate (other than any
Class AIO-2 Certificate) and as of any Distribution Date, the Initial
Certificate Principal Balance of such Certificate less the sum of (i) all
amounts distributed with respect to such Certificate in reduction of the
Certificate Principal Balance thereof on previous Distribution Dates pursuant to
Section 5.04, and (ii) any Realized Losses and Subordinate Certificate Writedown
Amounts allocated to such Certificate on previous Distribution Dates. References
herein to the Certificate Principal Balance of a Class of Certificates shall
mean the Certificate Principal Balances of all Certificates in such Class;
provided, however that the Certificate Principal Balance of a Certificate will
be adjusted, in reverse order of priority, on each Distribution Date by the
amount of any Subsequent Recoveries received during the related Due Period as
provided in Section 5.05(i).
CERTIFICATE REGISTER: The register maintained pursuant to Section 6.02.
CERTIFICATEHOLDER OR HOLDER: The person in whose name a Certificate is
registered in the Certificate Register (initially, Cede & Co., as nominee for
the Depository, in the case of any Book-Entry Certificates).
CLASS: All Certificates bearing the same Class designation as set forth
in Section 6.01.
CLASS A1 CERTIFICATE: Any Certificate designated as a "Class A1
Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to the Percentage Interest of distributions provided for
the Class A1 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.
CLASS A1 PASS-THROUGH RATE: On any Distribution Date, a rate per annum
equal to the weighted average Net Mortgage Rate of the Group I Mortgage Loans.
For federal income tax purposes, such rate shall be expressed as the weighted
average of the Uncertificated REMIC II
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Pass-Through Rate on REMIC II Regular Interest LTII-A1, weighted on the basis of
the Uncertificated Principal Balance of such REMIC II Regular Interest.
CLASS A2 CERTIFICATE: Any Certificate designated as a "Class A2
Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class A2 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.
CLASS A2 PASS-THROUGH RATE: On any Distribution Date, 2.420% per annum.
CLASS A3 CERTIFICATE: Any Certificate designated as a "Class A3
Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class A3 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.
CLASS A3 PASS-THROUGH RATE: On any Distribution Date, 3.380% per annum.
CLASS AIO-1 CERTIFICATE: Any Certificate designated as a "Class AIO-1
Certificate" on the face thereof, in the form of Exhibit A-2 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class AIO-1 Certificates as set forth herein and evidencing a Regular
Interest in REMIC III.
CLASS AIO-1 CERTIFICATE ACCOUNT: The account established and maintained
by the Trustee pursuant to Section 5.08.
CLASS AIO-1 PASS-THROUGH RATE: On any Distribution Date, a rate per
annum equal to the excess of (i) the weighted average Net Mortgage Rate of the
Group II Mortgage Loans over (ii) the weighted average of the Pass-Through Rates
on the Class A2 Certificates and Class A3 Certificates. For federal income tax
purposes, the Class AIO-1 Certificates will have a Pass-Through Rate equal to
the sum of the following components: (a) the excess of (i) the weighted average
of the Uncertificated REMIC II Pass-Through Rate on REMIC II Regular Interest
LTII-A2, weighted on the basis of the Uncertificated Principal Balance of such
REMIC II Regular Interest over (ii) 2.420% per annum and (b) the excess of (i)
the weighted average of the Uncertificated REMIC II Pass-Through Rate on REMIC
II Regular Interest LTII-A3, weighted on the basis of the Uncertificated
Principal Balance of such REMIC II Regular Interest over (ii) 3.380% per annum.
CLASS AIO-2 CERTIFICATE: Any Certificate designated as a "Class AIO-2
Certificate" on the face thereof, in the form of Exhibit A-2 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class AIO-2 Certificates as set forth herein and evidencing a Regular
Interest in REMIC III.
CLASS AIO-2 PASS-THROUGH RATE: On any Distribution Date, a rate per
annum equal to the excess of (i) the weighted average Net Mortgage Rate of Loan
Group I and Loan Group II, weighted by the Group Subordinate Amount with respect
to the such Loan Group over (ii) the weighted average of the Pass-Through Rates
on the Class M1, Class M2, Class B1, Class B2, Class B3, Class B4, Class B5,
Class B6 and Class B7 Certificates. For federal income tax purposes, the Class
AIO-2 Certificates will have a Pass-Through Rate equal to the sum of the
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following components: (a) the excess of (i) the weighted average of the
Uncertificated REMIC II Pass-Through Rate on REMIC II Regular Interest LTII-M1,
weighted on the basis of the Uncertificated Principal Balance of such REMIC II
Regular Interest over (ii) 5.50% per annum, (b) the excess of (i) the weighted
average of the Uncertificated REMIC II Pass-Through Rate on REMIC II Regular
Interest LTII-M2, weighted on the basis of the Uncertificated Principal Balance
of such REMIC II Regular Interest over (ii) 5.50% per annum, (c) the excess of
(i) the weighted average of the Uncertificated REMIC II Pass-Through Rate on
REMIC II Regular Interest LTII-B1, weighted on the basis of the Uncertificated
Principal Balance of such REMIC II Regular Interest over (ii) 5.50% per annum,
(d) the excess of (i) the weighted average of the Uncertificated REMIC II
Pass-Through Rate on REMIC II Regular Interest LTII-B2, weighted on the basis of
the Uncertificated Principal Balance of such REMIC II Regular Interest over (ii)
5.50% per annum, (e) the excess of (i) the weighted average of the
Uncertificated REMIC II Pass-Through Rate on REMIC II Regular Interest LTII-B3,
weighted on the basis of the Uncertificated Principal Balance of such REMIC II
Regular Interest over (ii) 5.00% per annum, (f) the excess of (i) the weighted
average of the Uncertificated REMIC II Pass-Through Rate on REMIC II Regular
Interest LTII-B4, weighted on the basis of the Uncertificated Principal Balance
of such REMIC II Regular Interest over (ii) 5.50% per annum, (g) the excess of
(i) the weighted average of the Uncertificated REMIC II Pass-Through Rate on
REMIC II Regular Interest LTII-B5, weighted on the basis of the Uncertificated
Principal Balance of such REMIC II Regular Interest over (ii) 5.00% per annum,
(h) the excess of (i) the weighted average of the Uncertificated REMIC II
Pass-Through Rate on REMIC II Regular Interest LTII-B6, weighted on the basis of
the Uncertificated Principal Balance of such REMIC II Regular Interest over (ii)
5.00% per annum and (i) the excess of (i) the weighted average of the
Uncertificated REMIC II Pass-Through Rate on REMIC II Regular Interest LTII-B7,
weighted on the basis of the Uncertificated Principal Balance of such REMIC II
Regular Interest over (ii) 5.00% per annum.
CLASS B1 CERTIFICATE: Any Certificate designated as a "Class B1
Certificate" on the face thereof, in the form of Exhibit A-4 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class B1 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.
CLASS B1 PASS-THROUGH RATE: On any Distribution Date, 5.500% per annum.
CLASS B2 CERTIFICATE: Any Certificate designated as a "Class B2
Certificate" on the face thereof, in the form of Exhibit A-4 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class B2 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.
CLASS B2 PASS-THROUGH RATE: On any Distribution Date, 5.50% per annum.
CLASS B3 CERTIFICATE: Any Certificate designated as a "Class B3
Certificate" on the face thereof, in the form of Exhibit A-4 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class B3 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.
CLASS B3 PASS-THROUGH RATE: On any Distribution Date, 5.00% per annum.
- 13 -
CLASS B4 CERTIFICATE: Any Certificate designated as a "Class B4
Certificate" on the face thereof, in the form of Exhibit A-4 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class B4 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.
CLASS B4 PASS-THROUGH RATE: On any Distribution Date, 5.500% per annum.
CLASS B5 CERTIFICATE: Any Certificate designated as a "Class B5
Certificate" on the face thereof, in the form of Exhibit A-4 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class B5 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.
CLASS B5 PASS-THROUGH RATE: On any Distribution Date, 5.00% per annum.
CLASS B6 CERTIFICATE: Any Certificate designated as a "Class B6
Certificate" on the face thereof, in the form of Exhibit A-4 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class B6 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.
CLASS B6 PASS-THROUGH RATE: On any Distribution Date, 5.00% per annum.
CLASS B7 CERTIFICATE: Any Certificate designated as a "Class B7
Certificate" on the face thereof, in the form of Exhibit A-4 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class B7 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.
CLASS B7 PASS-THROUGH RATE: On any Distribution Date, 5.00% per annum.
CLASS M1 CERTIFICATE: Any Certificate designated as a "Class M
Certificate" on the face thereof, in the form of Exhibit A-3 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class M1 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.
CLASS M1 PASS-THROUGH RATE: On any Distribution Date, 5.500% per annum.
CLASS M2 CERTIFICATE: Any Certificate designated as a "Class M2
Certificate" on the face thereof, in the form of Exhibit A-3 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class M2 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.
CLASS M2 PASS-THROUGH RATE: On any Distribution Date, 5.500% per annum.
CLASS PREPAYMENT DISTRIBUTION TRIGGER: With respect to any Class of
Subordinated Certificates shall be satisfied on the Distribution Date on which
the fraction (expressed as a percentage), the numerator of which is the
aggregate Certificate Principal Balance of such Class and each Class subordinate
to such Class, if any, and the denominator of which is the aggregate Scheduled
Principal Balance of the Mortgage Loans as of the related Due Date, equals or
exceeds such percentage calculated as of the Closing Date.
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CLASS R CERTIFICATE: Any Certificate designated a "Class R Certificate"
on the face thereof, in substantially the form set forth in Exhibit A-5 hereto,
evidencing the Class R-1 Interest, Class R-2 Interest and Class R-3 Interest.
CLASS R-1 INTEREST: The uncertificated residual interest in REMIC I.
CLASS R-2 INTEREST: The uncertificated residual interest in REMIC II.
CLASS R-3 INTEREST: The uncertificated residual interest in REMIC III.
CLOSING DATE: July 30, 2003.
CODE: The Internal Revenue Code of 1986, including any successor or
amendatory provisions.
COMPENSATING INTEREST: An amount, not to exceed the Servicing Fee, to
be deposited in the Distribution Account by the Servicer to offset a Prepayment
Interest Shortfall on a Mortgage Loan subject to this Agreement.
CORPORATE TRUST OFFICE: The designated office of the Trustee where at
any particular time its corporate trust business with respect to this Agreement
shall be administered, which office at the date of the execution of this
Agreement is located at 0 Xxx Xxxx Xxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Institutional Trust Services/Structured Finance Services, Nomura
Asset Acceptance Corporation, Alternative Loan Trust, Series 2003-A2, or at such
other address as the Trustee may designate from time to time.
CREDIT RISK MANAGEMENT AGREEMENT: The agreement between the Credit Risk
Manager and the Servicer, dated July 30, 2003.
CREDIT RISK MANAGEMENT FEE: As to each Mortgage Loan and any
Distribution Date, an amount equal to 1/12th of the Credit Risk Management Fee
Rate multiplied by the Stated Principal Balance of such Mortgage Loan as of the
last day of the related Due Period. The Credit Risk Management Fee shall be
payable to the Credit Risk Manager and/or the Seller pursuant to Section
4.07(a)(vii) and 4.08(b).
CREDIT RISK MANAGEMENT FEE RATE: 0.015% per annum.
CREDIT RISK MANAGER: The Murrayhill Company, a Colorado corporation.
CROSS-OVER DATE: The first Distribution Date on which the aggregate
Certificate Principal Balance of the Subordinated Certificates has been reduced
to zero (giving effect to all distributions on such Distribution Date).
CUSTODIAL ACCOUNT: Each account established and maintained by the
Servicer with respect to receipts on the Mortgage Loans and related REO Property
in accordance with Section 4.01.
CUSTODIAN: JPMorgan Chase Bank, a New York banking corporation.
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CUT-OFF DATE: July 1, 2003.
CUT-OFF DATE PRINCIPAL BALANCE: As to any Mortgage Loan, the unpaid
principal balance thereof as of the close of business on the Cut-off Date after
application of all Principal Prepayments received prior to the Cut-off Date and
scheduled payments of principal due on or before the Cut-off Date, whether or
not received, but without giving effect to any installments of principal
received in respect of Due Dates after the Cut-off Date.
DEBT SERVICE REDUCTION: With respect to any Mortgage Loan, a reduction
by a court of competent jurisdiction in a proceeding under the Bankruptcy Code
in the Scheduled Payment for such Mortgage Loan that became final and
non-appealable, except such a reduction resulting from a Deficient Valuation or
any other 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 such Mortgage Loan, or any
reduction in the amount of principal to be paid in connection with any Scheduled
Payment that results in a permanent forgiveness of principal, which valuation or
reduction results from an order of such court that is final and non-appealable
in a proceeding under the Bankruptcy Code.
DEFINITIVE CERTIFICATES: As defined in Section 6.06.
DELETED MORTGAGE LOAN: A Mortgage Loan replaced or to be replaced by a
Replacement Mortgage Loan.
DELINQUENT: A Mortgage Loan is "delinquent" if any payment due thereon
is not made pursuant to the terms of such Mortgage Loan by the close of business
on the day such payment is scheduled to be due. A Mortgage Loan is "30 days
delinquent" if such payment has not been received by the close of business on
the corresponding day of the month immediately succeeding the month in which
such payment was due, or, if there is no such corresponding day (e.g., as when a
30-day month follows a 31-day month in which a payment was due on the 31st day
of such month), then on the last day of such immediately succeeding month.
Similarly for "60 days delinquent," "90 days delinquent" and so on.
DENOMINATION: With respect to each Certificate, the amount set forth on
the face thereof as the "Initial Principal Balance of this Certificate".
DEPOSITOR: Nomura Asset Acceptance Corporation, a Delaware corporation,
or its successor in interest.
DEPOSITORY: The initial Depository shall be The Depository Trust
Company ("DTC"), the nominee of which is Cede & Co., or any other organization
registered as a "clearing agency" pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended. The Depository shall initially be the
registered Holder of the Book-Entry Certificates. The Depository shall at all
times be a "clearing corporation" as defined in Section 8-102(a)(5) of the
Uniform Commercial Code of the State of New York.
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DEPOSITORY AGREEMENT: With respect to the Class of Book-Entry
Certificates, the agreement among the Depositor, the Trustee and the initial
Depository, dated as of the Closing Date, substantially in the form of Exhibit
I.
DEPOSITORY PARTICIPANT: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
DETERMINATION DATE: With respect to any Distribution Date, the 15th day
of the month of such Distribution Date or, if such 15th day is not a Business
Day, the immediately preceding Business Day.
DISTRIBUTION ACCOUNT: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 4.06 in the name of the Trustee
for the benefit of the Certificateholders and designated "JPMorgan Chase Bank,
in trust for registered holders of Nomura Asset Acceptance Corp., Mortgage
Pass-Through Certificates, Series 2003-A2". Funds in the Distribution Account
shall be held in trust for the Certificateholders for the uses and purposes set
forth in this Agreement.
DISTRIBUTION DATE: The 25th day of each calendar month after the
initial issuance of the Certificates, or if such 25th day is not a Business Day,
the next succeeding Business Day, commencing in August 2003.
DUE DATE: As to any Mortgage Loan, the date in each month on which the
related Scheduled Payment is due, as set forth in the related Mortgage Note.
DUE PERIOD: With respect to any Distribution Date, the period from the
second day of the calendar month preceding the calendar month in which such
Distribution Date occurs through close of business on the first day of the
calendar month in which such Distribution Date occurs.
ELIGIBLE ACCOUNT: Any of (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company, the
long-term unsecured debt obligations and short-term unsecured debt obligations
of which are rated by each Rating Agency in one of its two highest long-term and
its highest short-term rating categories respectively, at the time any amounts
are held on deposit therein, or (ii) an account or accounts in a depository
institution or trust company in which such accounts are insured by the FDIC (to
the limits established by the FDIC) and the uninsured deposits in which accounts
are otherwise secured such that, as evidenced by an Opinion of Counsel delivered
to the Trustee and to each Rating Agency, the Certificateholders have a claim
with respect to the funds in such account or a perfected first priority 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 or trust company in which
such account is maintained, or (iii) a segregated, non-interest bearing trust
account or accounts maintained with the corporate trust department of a federal
or state chartered depository institution or trust company having capital and
surplus of not less than $50,000,000, acting in its fiduciary capacity or (iv)
any other account acceptable to the Rating Agencies. Eligible Accounts may bear
interest, and may include, if otherwise qualified under this definition,
accounts maintained with the Trustee.
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ESCROW ACCOUNT: Shall mean the account maintained by the Servicer
pursuant to Section 4.04. The Escrow Account shall be an Eligible Account.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
ERISA RESTRICTED CERTIFICATE: Each of the Class B5, Class B6, Class B7
and Residual Certificates.
EXCESS LIQUIDATION PROCEEDS: To the extent not required by law to be
paid to the related Mortgagor, the excess, if any, of any Liquidation Proceeds
with respect to a Mortgage Loan over the Stated Principal Balance of such
Mortgage Loan and accrued and unpaid interest at the related Mortgage Rate
through the last day of the month in which the Mortgage Loan has been
liquidated.
EXCESS LOSS: A Deficient Valuation, Fraud Loss or Special Hazard Loss
or any part thereof, occurring after the Bankruptcy Loss Coverage Amount, Fraud
Loss Coverage Amount or Special Hazard Loss Coverage Amount, respectively, has
been reduced to zero.
EXEMPTION: Prohibited Transaction Exemption 93-32, as amended from time
to time.
XXXXXX XXX: Xxxxxx Xxx (formerly, Federal National Mortgage
Association), or any successor thereto.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
FINAL CERTIFICATION: The certification of the Custodian in the form
attached hereto as Exhibit C-3.
FINAL RECOVERY DETERMINATION: With respect to any defaulted Mortgage
Loan or any REO Property (other than a Mortgage Loan or REO Property purchased
by the Seller or the Depositor pursuant to or as contemplated by Section 2.03(c)
or Section 10.01), a determination made by the Servicer that all Insurance
Proceeds, Liquidation Proceeds and other payments or recoveries which the
Servicer, in its reasonable good faith judgment, expects to be finally
recoverable in respect thereof have been so recovered. The Trustee shall
maintain records, based solely on information provided by the Servicer, of each
Final Recovery Determination made thereby.
FRAUD LOSS: A Loss on a Mortgage Loan as to which there was fraud in
the origination thereof.
FRAUD LOSS COVERAGE AMOUNT: With respect to the period beginning (i) on
the Closing Date and ending on December 31, 2003, $6,916,329, (ii) on January 1,
2004 and ending on December 31, 2005, $4,610,886 minus the aggregate amount of
Fraud Losses that would have been allocated to the Subordinated Certificates in
the absence of the Loss Allocation Limitation since the Cut-Off Date, (iii) on
January 1, 2005 and ending on December 31, 2007, $2,305,443 minus the aggregate
amount of Fraud Losses that would have been allocated to the Subordinated
Certificates in the absence of the Loss Allocation Limitation since the Cut-Off
Date and (iv) after the earlier to occur of January 1, 2008 and the Cross-Over
Date, $0.
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FIRREA: The Financial Institutions Reform, Recovery, and Enforcement
Act of 1989.
FITCH: Fitch Ratings, or its successor in interest.
XXXXXXX MAC: Federal Home Loan Mortgage Corporation, or any successor
thereto.
GROUP I AVAILABLE FUNDS: Shall mean the sum of Interest Funds and
Principal Funds relating to Loan Group I.
GROUP II AVAILABLE FUNDS: Shall mean the sum of Interest Funds and
Principal Funds relating to Loan Group II.
GROUP SUBORDINATE AMOUNT: As to any Distribution Date, with respect to
any Loan Group, the amount equal to the excess of the aggregate Stated Principal
Balance of the Mortgage Loans in such Loan Group over the aggregate Certificate
Principal Balance of the related Senior Certificates (other than the Class AIO-1
Certificates).
INDEMNIFIED PERSONS: The Trustee, the Servicer (including any Successor
Servicer), the Custodian, the Trust Fund and their officers, directors, agents
and employees and, with respect to the Trustee, any separate co-trustee and its
officers, directors, agents and employees.
INITIAL CERTIFICATE PRINCIPAL BALANCE: With respect to any Certificate,
the Certificate Principal Balance of such Certificate or any predecessor
Certificate on the Closing Date.
INITIAL CERTIFICATION: The certification of the Custodian in the form
attached hereto as Exhibit C-1.
INSURANCE POLICY: With respect to any Mortgage Loan included in the
Trust Fund, any insurance policy, including all riders and endorsements thereto
in effect with respect to such Mortgage Loan, including any replacement policy
or policies for any Insurance Policies.
INSURANCE PROCEEDS: Proceeds paid in respect of the Mortgage Loans
pursuant to any Insurance Policy or any other insurance policy covering a
Mortgage Loan, to the extent such proceeds are payable to the mortgagee under
the Mortgage, the Servicer or the trustee under the deed of trust and are not
applied to the restoration of the related Mortgaged Property or released to the
Mortgagor in accordance with the servicing standard set forth in Section 3.01
hereof other than any amount included in such Insurance Proceeds in respect of
Insured Expenses.
INSURED EXPENSES: Expenses covered by any Insurance Policy with respect
to the Mortgage Loans.
INTEREST ACCRUAL PERIOD: With respect to the Certificates and any
Distribution Date, the calendar month immediately preceding such Distribution
Date. All calculations of interest on the Certificates will be made on the basis
of a 360-day year consisting of twelve 30-day months.
INTEREST FUNDS: For any Distribution Date with respect to each Loan
Group, (i) the sum, without duplication, of (a) all scheduled interest during
the related Due Period with respect to the related Mortgage Loans less the
Servicing Fee and the Credit Risk Management Fee, (b) all
- 19 -
Advances relating to interest with respect to the related Mortgage Loans made on
or prior to the related Remittance Date, (c) all Compensating Interest with
respect to the related Mortgage Loans and required to be remitted by the
Servicer pursuant to this Agreement with respect to such Distribution Date, (d)
Liquidation Proceeds with respect to the related Mortgage Loans collected during
the related Prepayment Period (to the extent such Liquidation Proceeds relate to
interest), (e) all amounts relating to interest with respect to each Mortgage
Loan repurchased by the Seller pursuant to Sections 2.02 and 2.03 and (f) all
amounts in respect of interest paid by the Depositor pursuant to Section 10.01
to the extent remitted by the Servicer to the Distribution Account pursuant to
this Agreement minus (ii) all amounts relating to interest required to be
reimbursed pursuant to Sections 4.02, 4.04, 4.06, 4.07 and 9.05 or as otherwise
set forth in this Agreement.
INTEREST SHORTFALL: With respect to any Distribution Date, means the
aggregate shortfall, if any, in collections of interest (adjusted to the related
Net Mortgage Rates) on Mortgage Loans in the related Loan Group resulting from
(a) Principal Prepayments in full received during the related Prepayment Period,
(b) the partial Principal Prepayments received during the related Prepayment
Period to the extent applied prior to the Due Date in the month of the
Distribution Date and (c) interest payments on certain of the Mortgage Loans
being limited pursuant to the provisions of the Relief Act.
INTERIM CERTIFICATION: The certification of the Custodian in the form
attached hereto as Exhibit C-3.
LAST SCHEDULED DISTRIBUTION DATE: With respect to (i) the Class A2
Certificates, August 25, 2028 and (ii) with respect to all other Classes of
Certificates, July 25, 2033.
LATEST POSSIBLE MATURITY DATE: The Distribution Date following the
final scheduled maturity date of the Mortgage Loan in the Trust Fund having the
latest scheduled maturity date as of the Cut-off Date. For purposes of the
Treasury Regulations under Code section 860A through 860G, the latest possible
maturity date of each regular interest issued by REMIC I, REMIC II and REMIC III
shall be the Latest Possible Maturity Date.
LIQUIDATED LOAN: With respect to any Distribution Date, a defaulted
Mortgage Loan that has been liquidated through deed-in-lieu of foreclosure,
foreclosure sale, trustee's sale or other realization as provided by applicable
law governing the real property subject to the related Mortgage and any security
agreements and as to which the Servicer has certified in the related Prepayment
Period that it has received all amounts it expects to receive in connection with
such liquidation.
LIQUIDATION PROCEEDS: Amounts, other than Insurance Proceeds, received
in connection with the partial or complete liquidation of a Mortgage Loan,
whether through trustee's sale, foreclosure sale or otherwise, or in connection
with any condemnation or partial release of a Mortgaged Property and any other
proceeds received with respect to an REO Property, less the sum of related
unreimbursed Advances, Servicing Fees and Servicing Advances and all expenses of
liquidation, including property protection expenses and foreclosure and sale
costs, including court and reasonable attorneys fees.
- 20 -
LOAN GROUP: Either of Loan Group I or Loan Group II.
LOAN GROUP I: The Mortgage Loans identified as such on the Mortgage
Loan Schedule.
LOAN GROUP II: The Mortgage Loans identified as such on the Mortgage
Loan Schedule.
LOAN-TO-VALUE RATIO: The fraction, expressed as a percentage, the
numerator of which is the original principal balance of the related Mortgage
Loan and the denominator of which is the Appraised Value of the related
Mortgaged Property.
LOSS ALLOCATION LIMITATION: The meaning specified in Section 5.05(c)
hereof.
MERS: Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.
MERS(R) SYSTEM: The system of recording transfers of Mortgages
electronically maintained by MERS.
MIN: The Mortgage Identification Number for Mortgage Loans registered
with MERS on the MERS(R) System.
MOM LOAN: Any Mortgage Loan as to which MERS is 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 STATEMENT: The statement delivered to the Certificateholders
pursuant to Section 5.06.
MOODY'S: Xxxxx'x Investors Service, Inc. or its successor in interest.
MORTGAGE: The mortgage, deed of trust or other instrument creating a
first lien on or first priority ownership interest in an estate in fee simple 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 delivered to the
Trustee to be added to the Mortgage File pursuant to this Agreement.
MORTGAGE LOANS: Such of the Mortgage Loans transferred and assigned to
the Trustee pursuant to the provisions hereof, as from time to time are held as
a part of the Trust Fund (including any REO Property), the mortgage loans so
held being identified in the Mortgage Loan Schedule, notwithstanding foreclosure
or other acquisition of title of the related Mortgaged Property.
MORTGAGE LOAN PURCHASE AGREEMENT: The Mortgage Loan Purchase Agreement
dated as of July 30, 2003, between the Seller, as seller and the Depositor, as
purchaser.
MORTGAGE LOAN PURCHASE PRICE: The price, calculated as set forth in
Section 10.01, to be paid in connection with the repurchase of the Mortgage
Loans pursuant to Section 10.01.
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MORTGAGE LOAN SCHEDULE: The list of Mortgage Loans (as from time to
time amended by the Servicer to reflect the deletion of Deleted Mortgage Loans
and the addition of Replacement Mortgage Loans pursuant to the provisions of
this Agreement) transferred to the Trustee as part of the Trust Fund and from
time to time subject to this Agreement, the initial Mortgage Loan Schedule being
attached hereto as Exhibit B-1, setting forth the following information with
respect to each Mortgage Loan and divided into Loan Groups:
(i) the loan number;
(ii) the Mortgage Rate in effect as of the Cut-off Date;
(iii) the Servicing Fee Rate;
(iv) the Net Mortgage Rate in effect as of the Cut-off
Date;
(v) the maturity date;
(vi) the original principal balance;
(vii) the Cut-off Date Principal Balance;
(viii) the original term;
(ix) the remaining term;
(x) the property type;
(xi) with respect to each MOM Loan, the related MIN;
(xii) the Loan Group;
(xiii) the Servicer; and
(xiv) a code indicating whether the Mortgage Loan is
subject to a Prepayment Charge, the term of such
Prepayment Charge and the amount of such Prepayment
Charge.
Such schedule shall also set forth the aggregate Cut-off Date Principal Balance
for all of the Mortgage Loans and such aggregate amount for all Mortgage Loans
for each Loan Group.
MORTGAGE NOTE: The original executed note or other evidence of
indebtedness of a Mortgagor under a Mortgage Loan.
MORTGAGE RATE: The annual rate of interest borne by a Mortgage Note.
MORTGAGED PROPERTY: The underlying property securing a Mortgage Loan.
MORTGAGOR: The obligors on a Mortgage Note.
- 22 -
NET INTEREST SHORTFALLS: Shall mean Interest Shortfalls net of payments
by the Servicer in respect of Compensating Interest.
NET MORTGAGE RATE: As to each Mortgage Loan, and at any time, the per
annum rate equal to the related Mortgage Rate less the sum of (i) the Servicing
Fee Rate and (ii) the Credit Risk Management Fee Rate.
NON-BOOK-ENTRY CERTIFICATE: Any Certificate other than a Book-Entry
Certificate.
NON-EXCESS LOSS: Any Realized Loss other than an Excess Loss.
NONRECOVERABLE ADVANCE: Any portion of an Advance or Servicing Advance
previously made or proposed to be made by the Servicer or the Trustee as
Successor Servicer, that, in the good faith judgment of the Servicer or the
Trustee as Successor Servicer, will not or, in the case of a proposed Advance or
Servicing Advance, would not, be ultimately recoverable by it from the related
Mortgagor, related Liquidation Proceeds, Insurance Proceeds or otherwise.
NOTIONAL BALANCE: As to any Distribution Date, (i) with respect to the
Class AIO-1 Certificates, the aggregate Certificate Principal Balance of the
Class A2 Certificates and Class A3 Certificates and (ii) with respect to the
Class AIO-2 Certificates, the aggregate Certificate Principal Balance of the
Class M1, Class M2, Class B1, Class B2, Class B3, Class B4, Class B5, Class B6
and Class B7 Certificates. For federal income tax purposes, the Notional Balance
of (a) the Class A-IO1 Certificates will be equal to the sum of the following
components: (i) the Uncertificated Principal Balance of REMIC II Regular
Interest LTII-A2 and (ii) the Uncertificated Principal Balance of REMIC II
Regular Interest LTII-A3 and (b) the Class AIO-2 Certificates will be equal to
the aggregate Uncertificated Principal Balance of REMIC II Regular Interests
LTII-M1, LTII-M2, LTII-B1, LTII-B2, LTII-B3, LTII-B4, LTII-B5, LTII-B6 and
LTII-B7.
OFFICER'S CERTIFICATE: A certificate (i) signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, a Vice President (however
denominated), an Assistant Vice President, the Treasurer, the Secretary, or one
of the assistant treasurers or assistant secretaries of the Depositor or the
Trustee (or any other officer customarily performing functions similar to those
performed by any of the above designated officers and also to whom, with respect
to a particular matter, such matter is referred because of such officer's
knowledge of and familiarity with a particular subject) or (ii), if provided for
in this Agreement, signed by a Servicing Officer, as the case may be, and
delivered to the Depositor, the Seller and/or the Trustee, as the case may be,
as required by this Agreement.
OPINION OF COUNSEL: A written opinion of counsel, who may be counsel
for the Seller, the Depositor or the Servicer, reasonably acceptable to each
addressee of such opinion; provided that with respect to Section 2.05, 7.05 or
11.01, or the interpretation or application of the REMIC Provisions, such
counsel must (i) in fact be independent of the Seller, Depositor and the
Servicer, (ii) not have any direct financial interest in the Seller, Depositor
or the Servicer or in any affiliate of either, and (iii) not be connected with
the Seller, Depositor or the Servicer as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions.
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OPTIONAL TERMINATION: The termination of the Trust Fund created
hereunder as a result of the purchase of all of the Mortgage Loans and any REO
Property pursuant to the last sentence of Section 10.01 hereof.
OTS: The Office of Thrift Supervision.
OUTSTANDING: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and authenticated under
this Agreement except:
(a) Certificates theretofore canceled by the Trustee or
delivered to the Trustee for cancellation; and
(b) Certificates in exchange for which or in lieu of which
other Certificates have been executed and delivered by the Trustee pursuant to
this Agreement.
OUTSTANDING MORTGAGE LOAN: As of any date of determination, a Mortgage
Loan with a Stated Principal Balance greater than zero that was not the subject
of a Principal Prepayment in full, and that did not become a Liquidated Loan,
prior to the end of the related Prepayment Period.
OWNERSHIP INTEREST: As to any Certificate, any ownership interest in
such Certificate including any interest in such Certificate as the Holder
thereof and any other interest therein, whether direct or indirect, legal or
beneficial.
PASS-THROUGH RATE: With respect to each Class of Certificates, the
applicable Pass-Through Rate for each Class as set forth in the Preliminary
Statement.
PERCENTAGE INTEREST: With respect to any Certificate of a specified
Class, the Percentage Interest set forth on the face thereof or the percentage
obtained by dividing the Denomination of such Certificate by the aggregate of
the Denominations of all Certificates of such Class.
PERMITTED INVESTMENTS: At any time, any one or more of the following
obligations and securities:
(i) direct obligations of, or obligations fully guaranteed as
to timely payment of principal and interest by, the United States or
any agency thereof, provided such obligations are backed by the full
faith and credit of the United States;
(ii) general obligations of or obligations guaranteed by any
state of the United States or the District of Columbia receiving the
highest long-term debt rating of each Rating Agency, or such lower
rating as will not result in the downgrading or withdrawal of the
ratings then assigned to the Certificates by each Rating Agency;
(iii) [Reserved];
(iv) commercial or finance company paper which is then
receiving the highest commercial or finance company paper rating of
each Rating Agency, or such lower rating
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as will not result in the downgrading or withdrawal of the ratings then
assigned to the Certificates by each Rating Agency;
(v) certificates of deposit, demand or time deposits, or
bankers' acceptances issued by any depository institution or trust
company incorporated under the laws of the United States or of any
state thereof and subject to supervision and examination by federal
and/or state banking authorities (including the Trustee in its
commercial banking capacity), provided that the commercial paper and/or
long term unsecured debt obligations of such depository institution or
trust company are then rated one of the two highest long-term and the
highest short-term ratings of each such Rating Agency for such
securities, or such lower ratings as will not result in the downgrading
or withdrawal of the rating then assigned to the Certificates by any
Rating Agency;
(vi) demand or time deposits or certificates of deposit issued
by any bank or trust company or savings institution to the extent that
such deposits are fully insured by the FDIC;
(vii) guaranteed reinvestment agreements issued by any bank,
insurance company or other corporation containing, at the time of the
issuance of such agreements, such terms and conditions as will not
result in the downgrading or withdrawal of the rating then assigned to
the Certificates by any such Rating Agency;
(viii) repurchase obligations with respect to any security
described in clauses (i) and (ii) above, in either case entered into
with a depository institution or trust company (acting as principal)
described in clause (v) above;
(ix) securities (other than stripped bonds, stripped coupons
or instruments sold at a purchase price in excess of 115% of the face
amount thereof) bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States or any
state thereof which, at the time of such investment, have one of the
two highest long term ratings of each Rating Agency, or such lower
rating as will not result in the downgrading or withdrawal of the
rating then assigned to the Certificates by any Rating Agency, as
evidenced by a signed writing delivered by each Rating Agency;
(x) units of money market funds registered under the
Investment Company Act of 1940 including funds managed or advised by
the Trustee or an affiliate thereof having a rating by S&P of AAA-G,
AAA-m, or AA-m, and if rated by Moody's, rated Aaa, Aa1 or Aa2;
(xi) short term investment funds sponsored by any trust
company or banking association incorporated under the laws of the
United States or any state thereof (including any such fund managed or
advised by the Trustee or any affiliate thereof) which on the date of
acquisition has been rated by each Rating Agency in their respective
highest applicable rating category or such lower rating as will not
result in the downgrading or withdrawal of the ratings then assigned to
the Certificates by each Rating Agency; and
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(xii) such other investments having a specified stated
maturity and bearing interest or sold at a discount acceptable to each
Rating Agency as will not result in the downgrading or withdrawal of
the rating then assigned to the Certificates by any Rating Agency, as
evidenced by a signed writing delivered by each Rating Agency;
provided, that no such instrument shall be a Permitted Investment if such
instrument (i) evidences the right to receive interest only payments with
respect to the obligations underlying such instrument, (ii) is purchased at a
premium or (iii) is purchased at a deep discount; provided further that no such
instrument shall be a Permitted Investment (A) if such instrument evidences
principal and interest payments derived from obligations underlying such
instrument and the interest payments with respect to such instrument provide a
yield to maturity of greater than 120% of the yield to maturity at par of such
underlying obligations, or (B) if it may be redeemed at a price below the
purchase price (the foregoing clause (B) not to apply to investments in units of
money market funds pursuant to clause (vii) above); provided further that no
amount beneficially owned by any REMIC may be invested in investments (other
than money market funds) treated as equity interests for federal income tax
purposes, unless the Servicer or the Trustee, as applicable, shall receive an
Opinion of Counsel, at the expense of the Servicer or the Trustee, as
applicable, to the effect that such investment will not adversely affect the
status of any such REMIC as a REMIC under the Code or result in imposition of a
tax on any such REMIC. Permitted Investments that are subject to prepayment or
call may not be purchased at a price in excess of par.
PERMITTED TRANSFEREE: Any person other than (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, (ii) a foreign
government, International Organization or any agency or instrumentality of
either of the foregoing, (iii) an organization (except certain farmers'
cooperatives described in section 521 of the Code) that is exempt from tax
imposed by Chapter 1 of the Code (including the tax imposed by section 511 of
the Code on unrelated business taxable income) on any excess inclusions (as
defined in section 860E(c)(1) of the Code) with respect to any Residual
Certificate, (iv) rural electric and telephone cooperatives described in section
1381(a)(2)(C) of the Code, (v) a Person that is not a citizen or resident of the
United States, a corporation, partnership (other than a partnership that has any
direct or indirect foreign partners) or other entity (treated as a corporation
or a partnership for federal income tax purposes), created or organized in or
under the laws of the United States, any state thereof or the District of
Columbia, an estate whose income from sources without the United States is
includible in gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or business within the
United States, or a trust if a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more United States persons have authority to control all substantial decisions
of the trustor and (vi) any other Person based upon an Opinion of Counsel (which
shall not be an expense of the Trustee) that states that the Transfer of an
Ownership Interest in a Residual Certificate to such Person may cause REMIC I,
REMIC II or REMIC III to fail to qualify as a REMIC at any time that any
Certificates are Outstanding. The terms "United States," "State" and
"International Organization" shall have the meanings set forth in section 7701
of the Code or successor provisions. A corporation will not be treated as an
instrumentality of the United States or of any State or political subdivision
thereof for these purposes if all of its activities are subject to tax
- 26 -
and, with the exception of Xxxxxxx Mac, a majority of its board of directors is
not selected by such government unit.
PERSON: Any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated organization or government, or any agency or political
subdivision thereof.
PREPAYMENT ASSUMPTION: The assumed rate of prepayment, as described in
the Prospectus Supplement relating to each Class of Publicly Offered
Certificates.
PREPAYMENT CHARGE: With respect to any Principal Prepayment, any
prepayment premium, penalty or charge payable by a Mortgagor in connection with
any Principal Prepayment on a Mortgage Loan pursuant to the terms of the related
Mortgage Note (other than any Servicer Prepayment Charge Payment Amount).
PREPAYMENT CHARGE SCHEDULE: As of any date, the list of Mortgage Loans
providing for a Prepayment Charge included in the Trust Fund on such date,
attached hereto as Exhibit K (including the prepayment charge summary attached
thereto). The Depositor shall deliver or cause the delivery of the Prepayment
Charge Schedule to the Servicer and the Trustee on the Closing Date. The
Prepayment Charge Schedule shall set forth the following information with
respect to each Prepayment Charge:
(i) the Mortgage Loan identifying number;
(ii) a code indicating the type of Prepayment Charge;
(iii) the date on which the first Monthly Payment was due on
the related Mortgage Loan;
(iv) the term of the related Prepayment Charge;
(v) the original Stated Principal Balance of the related
Mortgage Loan; and
(vi) the Stated Principal Balance of the related Mortgage Loan
as of the Cut- off Date.
PREPAYMENT INTEREST SHORTFALL: With respect to any Distribution Date,
for each Mortgage Loan that was the subject of a Principal Prepayment in full
during the related Prepayment Period, (other than a Principal Prepayment in full
resulting from the purchase of a Mortgage Loan pursuant to Section 2.02, 2.03,
3.26 or 10.01 hereof), the amount, if any, by which (i) one month's interest at
the applicable Net Mortgage Rate on the Stated Principal Balance of such
Mortgage Loan immediately prior to such prepayment exceeds (ii) the amount of
interest paid or collected in connection with such Principal Prepayment less the
sum of (a) the related Servicing Fee, (b) the LPMI Fee, if any and (c) the
Credit Risk Management Fee.
PREPAYMENT PERIOD: As to any Distribution Date, the calendar month
immediately preceding the month in which such Distribution Date occurs.
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PRINCIPAL FUNDS: With respect to any Distribution Date, (i) the sum,
without duplication, of (a) all scheduled principal collected during the related
Due Period, (b) all Advances relating to principal made on or prior to the
Distribution Account Deposit Date or, with respect to the Trustee on the
Distribution Date, (c) Principal Prepayments exclusive of prepayment charges or
penalties collected during the related Prepayment Period, (iii) the Stated
Principal Balance of each Mortgage Loan that was repurchased by the Seller
pursuant to Sections 2.02, 2.03 and 3.26, (d) the aggregate of all Substitution
Adjustment Amounts for the related Determination Date in connection with the
substitution of Mortgage Loans pursuant to Section 2.03(b), (e) amounts in
respect of principal paid by the Trustee pursuant to Section 10.01, (f) all
Liquidation Proceeds collected during the related Prepayment Period (to the
extent such Liquidation Proceeds relate to principal), in each case to the
extent remitted by the Servicer to the Distribution Account pursuant to this
Agreement and (g) all Subsequent Recoveries minus (ii) all amounts required to
be reimbursed pursuant to Sections 4.02, 4.05 and 4.07 and 5.08 or as otherwise
set forth in this Agreement.
PRINCIPAL PREPAYMENT: Any Mortgagor payment or other recovery of (or
proceeds with respect to) principal on a Mortgage Loan (including loans
purchased or repurchased under Sections 2.02, 2.03, 3.26 and 10.01 hereof) that
is received in advance of its scheduled Due Date and is not accompanied by an
amount as to interest representing scheduled interest due on any Due Date in any
month or months subsequent to the month of prepayment. Partial Principal
Prepayments shall be applied by the Servicer in accordance with the terms of the
related Mortgage Note.
PRIVATE CERTIFICATE: Each of the Class A1, Class AIO-1, Class AIO-2,
Class B5, Class B6, Class B7 and Class R Certificates.
PROSPECTUS SUPPLEMENT: The Prospectus Supplement dated July 28, 2003
relating to the offering of the Publicly Offered Certificates.
PUBLICLY OFFERED CERTIFICATES: The Class A2, Class A3, Class M1, Class
M2, Class B1, Class B2, Class B3 and Class B4 Certificates.
PUD: A Planned Unit Development.
PURCHASE PRICE: With respect to any Mortgage Loan required to be
repurchased by the Seller pursuant to Section 2.02 or 2.03 hereof and as
confirmed by an Officer's Certificate from the Seller to the Trustee, an amount
equal to the sum of (i) 100% of the outstanding principal balance of the
Mortgage Loan as of the date of such purchase plus (ii) accrued interest thereon
at the applicable Mortgage Rate through the first day of the month in which the
Purchase Price is to be distributed to Certificateholders, reduced by any
portion of the Servicing Fee, Servicing Advances and Advances payable to the
purchaser of the Mortgage Loan plus (iii) any costs and damages of the Trust
Fund in connection with any violation by such Mortgage Loan of any abusive or
predatory lending law, including any expenses incurred by the Trustee with
respect to such Mortgage Loan prior to the purchase thereof.
RATING AGENCY: Each of Fitch, S&P and Moody's. If any such organization
or its successor is no longer in existence, "Rating Agency" shall be a
nationally recognized statistical
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rating organization, or other comparable Person, designated by the Depositor,
notice of which designation shall be given to the Trustee. References herein to
a given rating category of a Rating Agency shall mean such rating category
without giving effect to any modifiers.
REALIZED LOSS: With respect to each Mortgage Loan as to which a Final
Recovery Determination has been made, an amount (not less than zero) equal to
(i) the Stated Principal Balance of such Mortgage Loan as of the commencement of
the calendar month in which the Final Recovery Determination was made, plus (ii)
accrued interest from the Due Date as to which interest was last paid by the
Mortgagor through the end of the calendar month in which such Final Recovery
Determination was made, calculated in the case of each calendar month during
such period (A) at an annual rate equal to the annual rate at which interest was
then accruing on such Mortgage Loan and (B) on a principal amount equal to the
Stated Principal Balance of such Mortgage Loan as of the close of business on
the Distribution Date during such calendar month, minus (v) the proceeds, if
any, received in respect of such Mortgage Loan during the calendar month in
which such Final Recovery Determination was made, net of amounts that are
payable therefrom to the Servicer pursuant to this Agreement.
With respect to any REO Property as to which a Final Recovery
Determination has been made, an amount (not less than zero) equal to (i) the
Stated Principal Balance of the related Mortgage Loan as of the date of
acquisition of such REO Property on behalf of REMIC I, plus (ii) accrued
interest from the Due Date as to which interest was last paid by the Mortgagor
in respect of the related Mortgage Loan through the end of the calendar month
immediately preceding the calendar month in which such REO Property was
acquired, calculated in the case of each calendar month during such period (A)
at an annual rate equal to the annual rate at which interest was then accruing
on the related Mortgage Loan and (B) on a principal amount equal to the Stated
Principal Balance of the related Mortgage Loan as of the close of business on
the Distribution Date during such calendar month, minus (iii) the aggregate of
all unreimbursed Advances and Servicing Advances.
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 subject of a
Debt Service Reduction, the portion, if any, of the reduction in each affected
Monthly Payment attributable to a reduction in the Mortgage Rate imposed by a
court of competent jurisdiction. Each such Realized Loss shall be deemed to have
been incurred on the Due Date for each affected Monthly Payment.
Realized Loss shall also include any Excess Loss.
RECORD DATE: With respect to the Certificates and any Distribution
Date, the close of business on the last Business Day of the month preceding the
month in which such Distribution Date occurs.
REGULAR CERTIFICATE: Any Certificate other than a Residual Certificate.
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RELIEF ACT: The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended, or any similar state law.
REMIC: A "real estate mortgage investment conduit" within the meaning
of section 860D of the Code.
REMIC I: The segregated pool of assets subject hereto, constituting the
primary trust created hereby and to be administered hereunder, with respect to
which a REMIC election is to be made, consisting of (i) the Mortgage Loans and
all interest accruing and principal due with respect thereto after the Cut-off
Date to the extent not applied in computing the Cut-off Date Principal Balance
thereof and all Prepayment Charges; (ii) the Mortgage Files, (iii) the Custodial
Account (other than any amounts representing any Servicer Prepayment Charge
Payment Amount), the Distribution Account and the Class AIO-1 Certificate
Account, and such assets that are deposited therein from time to time, together
with any and all income, proceeds and payments with respect thereto; (iv)
property that secured a Mortgage Loan and has been acquired by foreclosure, deed
in lieu of foreclosure or otherwise; (v) the mortgagee's rights under the
Insurance Policies with respect to the Mortgage Loans; (vi) the rights under the
Mortgage Loan Purchase Agreement, and (vii) all proceeds of the foregoing,
including proceeds of conversion, voluntary or involuntary, of any of the
foregoing into cash or other liquid property. Notwithstanding the foregoing,
however, REMIC I specifically excludes all payments and other collections of
principal and interest due on the Mortgage Loans on or before the Cut-off Date
and all Prepayment Charges payable in connection with Principal Prepayments made
before the Cut-off Date.
REMIC I REGULAR INTEREST LTI-AIO1: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTI-AIO1 shall be entitled
to all Prepayment Charges collected by the Servicer, and shall be entitled to a
distribution of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.
REMIC I REGULAR INTEREST LTI-1GRP: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTI-1GRP shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I REGULAR INTEREST LTI-1SUB: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTI-1SUB shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I REGULAR INTEREST LTI-2GRP: One of the separate non-certificated
beneficial ownership interests in REMIC
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I issued hereunder and designated as a Regular Interest in REMIC I. REMIC I
Regular Interest LTI-2GRP shall accrue interest at the related Uncertificated
REMIC I Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.
REMIC I REGULAR INTEREST LTI-2SUB: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTI-2SUB shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I REGULAR INTEREST LTI-1ZZZ: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTI-1ZZZ shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I REGULAR INTERESTS: REMIC I Regular Interest LTI-AIO1, REMIC I
Regular Interest LTI-1GRP, REMIC I Regular Interest LTI-1SUB, REMIC I Regular
Interest LTI-2GRP, REMIC I Regular Interest LTI-2SUB and REMIC I Regular
Interest LTI-ZZZ.
REMIC I SUBORDINATED BALANCE RATIO: The ratio among the Uncertificated
Principal Balances of each of the REMIC I Regular Interests ending with the
designation "SUB," equal to the ratio among:
(1) the excess of (x) the aggregate Scheduled Principal Balance of the
Mortgage Loans in Loan Group I over (y) the Certificate Principal Balance of the
related Senior Certificates;
(2) the excess of (x) the aggregate Scheduled Principal Balance of the
Mortgage Loans in Loan Group II over (y) the Certificate Principal Balance of
the related Senior Certificates.
REMIC II: The segregated pool of assets consisting of all of the REMIC
I Regular Interests conveyed in trust to the Trustee, for the benefit of REMIC
III, as holder of the REMIC II Regular Interests, and the Class R-II Interest
pursuant to Section 2.07, and all amounts deposited therein, with respect to
which a separate REMIC election is to be made.
REMIC II REGULAR INTEREST LTII-A1: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest LTII-A1 shall accrue
interest at the related Uncertificated REMIC II Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
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REMIC II REGULAR INTEREST LTII-A2: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest LTII-A2 shall accrue
interest at the related Uncertificated REMIC II Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC II REGULAR INTEREST LTII-A3: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest LTII-A3 shall accrue
interest at the related Uncertificated REMIC II Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC II REGULAR INTEREST LTII-AIO1: One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest
LTII-AIO1 shall be entitled to all Prepayment Charges collected on by the
Servicer, and shall be entitled to a distribution of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC II REGULAR INTEREST LTII-B1: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest LTII-B1 shall accrue
interest at the related Uncertificated REMIC II Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC II REGULAR INTEREST LTII-B2: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest LTII-B2 shall accrue
interest at the related Uncertificated REMIC II Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC II REGULAR INTEREST LTII-B3: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest LTII-B3 shall accrue
interest at the related Uncertificated REMIC II Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC II REGULAR INTEREST LTII-B4: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest LTII-B4 shall accrue
interest at the related Uncertificated REMIC II Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of
- 32 -
principal, subject to the terms and conditions hereof, in an aggregate amount
equal to its initial Uncertificated Principal Balance as set forth in the
Preliminary Statement hereto.
REMIC II REGULAR INTEREST LTII-B5: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest LTII-B5 shall accrue
interest at the related Uncertificated REMIC II Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC II REGULAR INTEREST LTII-B6: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest LTII-B6 shall accrue
interest at the related Uncertificated REMIC II Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC II REGULAR INTEREST LTII-B7: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest LTII-B7 shall accrue
interest at the related Uncertificated REMIC II Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC II REGULAR INTEREST LTII-M1: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest LTII-M1 shall accrue
interest at the related Uncertificated REMIC II Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC II REGULAR INTEREST LTII-M2: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest LTII-M2 shall accrue
interest at the related Uncertificated REMIC II Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC II REGULAR INTERESTS: REMIC II Regular Interest LTII-A1, REMIC II
Regular Interest LTII-A2, REMIC II Regular Interest LTII-AIO1, REMIC II Regular
Interest LTII-B1, REMIC II Regular Interest LTII-B2, REMIC II Regular Interest
LTII-B3, REMIC II Regular Interest LTII-B4, REMIC II Regular Interest LTII-B5,
REMIC II Regular Interest LTII-B6, REMIC II Regular Interest LTII-B7, REMIC II
Regular Interest LTII-M1 and REMIC II Regular Interest LTII-M2.
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REMIC III: The segregated pool of assets consisting of all of the REMIC
II Regular Interests conveyed in trust to the Trustee, for the benefit of the
REMIC III Certificateholders pursuant to Section 2.09, and all amounts deposited
therein, with respect to which a separate REMIC election is to be made.
REMIC III CERTIFICATE: Any Regular Certificate or Class R Certificate.
REMIC III CERTIFICATEHOLDER: The Holder of any REMIC III Certificate.
REMIC OPINION: Shall mean an Opinion of Counsel to the effect that the
proposed action will not have an adverse affect on any REMIC created hereunder.
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
proposed, temporary and final regulations and published rulings, notices and
announcements promulgated thereunder, as the foregoing may be in effect from
time to time as well as provisions of applicable state laws.
REMIC REGULAR INTEREST: A REMIC I Regular Interest, REMIC II Regular
Interest or a Regular Certificate.
REMITTANCE DATE: Shall mean the 18th day of the month and if such day
is not a Business Day, the immediately succeeding Business Day.
REO PROPERTY: A Mortgaged Property acquired by the Servicer through
foreclosure or deed-in-lieu of foreclosure in connection with a defaulted
Mortgage Loan.
REPLACEMENT MORTGAGE LOAN: A Mortgage Loan or Mortgage Loans in the
aggregate substituted by the Seller for a Deleted Mortgage Loan, which must, on
the date of such substitution, as confirmed in a Request for Release, (i) have a
Stated Principal Balance, after deduction of the principal portion of the
Scheduled Payment due in the month of substitution, not in excess of, and not
less than 90% of, the Stated Principal Balance of the Deleted Mortgage Loan;
(ii) have a fixed Mortgage Rate not less than or more than 1% per annum higher
than the Mortgage Rate of the Deleted Mortgage Loan; (iii) have the same or
higher credit quality characteristics than that of the Deleted Mortgage Loan;
(iv) have a Loan-to-Value Ratio no higher than that of the Deleted Mortgage
Loan; (v) have a remaining term to maturity no greater than (and not more than
one year less than) that of the Deleted Mortgage Loan; (vi) not permit
conversion of the Mortgage Rate from a fixed rate to a variable rate; (vii) be
secured by a first lien on the related Mortgaged Property; (viii) constitute the
same occupancy type as the Deleted Mortgage Loan or be owner occupied; and (ix)
comply with each representation and warranty set forth in the Mortgage Loan
Purchase Agreement.
REQUEST FOR RELEASE: The Request for Release to be submitted by the
Seller or the Servicer to the Custodian substantially in the form of Exhibit H.
Each Request for Release furnished to the Custodian by the Seller or the
Servicer shall be in duplicate and shall be executed by an officer of such
Person or a Servicing Officer (or, if furnished electronically to the
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Custodian, shall be deemed to have been sent and executed by an officer of such
Person or a Servicing Officer) of the Servicer.
REQUIRED INSURANCE POLICY: With respect to any Mortgage Loan, any
insurance policy that is required to be maintained from time to time under this
Agreement.
RESIDUAL CERTIFICATES: Any one of the Class R Certificates.
RESPONSIBLE OFFICER: With respect to the Trustee, any Vice President,
any Assistant Vice President, the Secretary, any Assistant Secretary, any Trust
Officer, any other officer customarily performing functions similar to those
performed by any of the above designated officers or other officers of the
Trustee specified by the Trustee having direct responsibility over this
Agreement and customarily performing functions similar to those performed by any
one of the designated officers, as to whom, with respect to a particular matter,
such matter is referred because of such officer's knowledge of and familiarity
with the particular subject.
S&P: Standard & Poor's, a division of The XxXxxx-Xxxx Companies, Inc.
or its successor in interest.
SCHEDULED PAYMENT: The scheduled monthly payment on a Mortgage Loan due
on any Due Date allocable to principal and/or interest on such Mortgage Loan.
SECURITIES ACT: The Securities Act of 1933, as amended.
SELLER: Nomura Credit & Capital, Inc., a Delaware corporation, and its
successors and assigns, in its capacity as seller of the Mortgage Loans to the
Depositor.
SENIOR CERTIFICATES: The Class A1, Class A2, Class A3, Class AIO-1 and
Class AIO-2 Certificates.
SENIOR OPTIMAL PRINCIPAL DISTRIBUTION AMOUNT: With respect to each
Distribution Date and the related Loan Group, means an amount equal to the sum
of the following (but in no event greater than the aggregate Certificate
Principal Balance of the related Senior Certificates (other than the Class AIO-1
Certificates), entitled to distributions of principal immediately prior to such
Distribution Date):
(i) the applicable Senior Percentage of the
principal portion of all Monthly Payments due on the Mortgage Loans in the
related Loan Group on the related Due Date, as specified in the amortization
schedule at the time applicable thereto (after adjustment for previous principal
prepayments but before giving effect to any Deficient Valuation or Debt Service
Reduction that occurred prior to the reduction of the Bankruptcy Loss Coverage
Amount to zero);
(ii) the applicable Senior Prepayment
Percentage of the Stated Principal Balance of each Mortgage Loan in the related
Loan Group which was the subject of a prepayment in full received by the
Servicer during the applicable Prepayment Period;
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(iii) the applicable Senior Prepayment
Percentage of all partial prepayments allocated to principal received during the
applicable Prepayment Period with respect to any Mortgage Loan in the related
Loan Group;
(iv) the lesser of (a) the applicable Senior
Prepayment Percentage of the sum of (A) all Net Liquidation Proceeds allocable
to principal received in respect of each Mortgage Loan in the related Loan Group
which became a defaulted Mortgage Loan during the related Prepayment Period
(other than Mortgage Loans described in the immediately following clause (B))
and (B) the Stated Principal Balance of each such Mortgage Loan in the related
Loan Group purchased by an insurer from the Trustee during the related
Prepayment Period pursuant to the related primary mortgage insurance policy, if
any, or otherwise; and (b) the applicable Senior Percentage of the sum of (A)
the Stated Principal Balance of each Mortgage Loan in the related Loan Group
which became a defaulted Mortgage Loan during the related Prepayment Period
(other than the Mortgage Loans described in the immediately following clause
(B)) and (B) the Stated Principal Balance of each such Mortgage Loan in the
related Loan Group that was purchased by an insurer from the trustee during the
related Prepayment Period pursuant to the related primary mortgage insurance
policy, if any or otherwise; and
(v) the applicable Senior Prepayment
Percentage of the sum of (a) the Stated Principal Balance of each Mortgage Loan
in the related Loan Group which was repurchased by the Seller or the Servicer in
connection with such Distribution Date and (b) the excess, if any, of the Stated
Principal Balance of a Mortgage Loan in the related Loan Group that has been
replaced by the Seller or the Servicer with a Replacement Mortgage Loan pursuant
to this Agreement in connection with such Distribution Date over the Stated
Principal Balance of such Replacement Mortgage Loan; provided, however that if a
Deficient Valuation or Debt Service Reduction is sustained with respect to a
Mortgage Loan in the related Loan Group that is not a Liquidated Loan after the
Bankruptcy Loss Coverage Amount has been reduced to zero, the Senior Optimal
Principal Amount for such Loan Group will be reduced on the related Distribution
Date by the Senior Percentage related to such Loan Group of the principal
portion of such Deficient Valuation or Debt Service Reduction.
SENIOR PERCENTAGE: For the Senior Certificates of each Loan Group on
any Distribution Date will equal the lesser of (i) 100% and (ii) the percentage
obtained by dividing the aggregate Certificate Principal Balance of the Senior
Certificates of a Loan Group (other than the Class AIO-1 Certificates)
immediately preceding such Distribution Date by the aggregate Stated Principal
Balance of the Mortgage Loans in such related Loan Group as of the beginning of
the related Due Period. The initial Senior Percentages for the Group I Mortgage
Loans and the Group II Mortgage Loans will be equal to approximately 83.50% and
83.50%, respectively.
SENIOR PREPAYMENT PERCENTAGE: For the Senior Certificates on any
Distribution Date occurring during the periods set forth below will be as
follows:
PERIOD (DATES INCLUSIVE) SENIOR PREPAYMENT PERCENTAGE
August 25, 2003 - July 25, 2008 100%
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August 25, 2008 - July 25, 2009 Senior Percentage for the related Senior
Certificates plus 70% of the related
Subordinate Percentage.
August 25, 2009 - July 25, 2010 Senior Percentage for the related Senior
Certificates plus 60% of the related
Subordinate Percentage.
August 25, 2010 - July 25, 2011 Senior Percentage for the related Senior
Certificates plus 40% of the related
Subordinate Percentage.
August 25, 2011 - July 25, 2012 Senior Percentage for the related Senior
Certificates plus 20% of the related
Subordinate Percentage.
May 25, 2012 and thereafter Senior Percentage for the related Senior
Certificates.
Notwithstanding the foregoing, however, no reduction of the Senior Prepayment
Percentage for any Loan Group shall occur on any Distribution Date unless, as of
the last day of the month preceding such Distribution Date, (A) the aggregate
Stated Principal Balance of the Mortgage Loans delinquent 60 days or more
(including for this purpose any such Mortgage Loans in foreclosure and Mortgage
Loans with respect to which the related Mortgaged Property has been acquired by
the trust) as a percentage of the sum of the aggregate Certificate Principal
Balance of the Subordinated Certificates does not exceed 50%; and (B) cumulative
Realized Losses on the Mortgage Loans do not exceed (a) 30% of the aggregate
Certificate Principal Balances of the Subordinated Certificates as of the
Cut-off Date (the "Original Subordinate Principal Balance") if such Distribution
Date occurs between and including August 2008 and July 2009, (b) 35% of the
Original Subordinate Principal Balance if such Distribution Date occurs between
and including August 2009 and July 2010, (c) 40% of the Original Subordinate
Principal Balance if such distribution date occurs between and including August
2010 and July 2011, (d) 45% of the Original Subordinate Principal Balance if
such Distribution Date occurs between and including August 2011 and July 2012,
and (e) 50% of the Original Subordinate Principal Balance if such Distribution
Date occurs during or after August 2012.
Notwithstanding the foregoing, if on any Distribution Date, the percentage, the
numerator of which is the aggregate Certificate Principal Balance of the Senior
Certificates (other than the Class AIO-1 Certificates) immediately preceding
such Distribution Date, and the denominator of which is the aggregate Stated
Principal Balance of the Mortgage Loans as of the beginning of the related Due
Period, exceeds such percentage as of the Cut-off Date, then the Senior
Prepayment Percentage with respect to the related Class of Senior Certificates
for such Distribution Date will equal 100%.
SERVICER: Option One Mortgage Corporation or any successor appointed
hereunder.
SERVICER'S ASSIGNEE: As defined in Section 5.01(b)(ii).
SERVICER DEFAULT: As defined in Section 8.01.
SERVICER PREPAYMENT CHARGE PAYMENT AMOUNT: The amount payable by the
Servicer in respect of any waived Prepayment Charges pursuant to Section 3.01.
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SERVICING ADVANCES: All customary, reasonable and necessary "out of
pocket" costs and expenses (including reasonable legal fees) incurred in the
performance by the Servicer of its servicing obligations hereunder, including,
but not limited to, the cost of (i) the preservation, restoration, inspection
and protection of a Mortgaged Property, (ii) any enforcement or judicial
proceedings, including foreclosures, and including any expenses incurred in
relation to any such proceedings that result from the Mortgage Loan being
registered in the MERS(R) System, (iii) the management and liquidation of any
REO Property (including, without limitation, realtor's commissions) and (iv)
compliance with any obligations under Section 3.07 hereof to cause insurance to
be maintained.
SERVICING FEE: As to each Mortgage Loan and any Distribution Date, an
amount equal to 1/12th of the Servicing Fee Rate multiplied by the Stated
Principal Balance of such Mortgage Loan as of the last day of the related Due
Period or, in the event of any payment of interest that accompanies a Principal
Prepayment in full during the related Due Period made by the Mortgagor
immediately prior to such prepayment, interest at the Servicing Fee Rate on the
same Stated Principal Balance of such Mortgage Loan used to calculate the
payment of interest on such Mortgage Loan.
SERVICING FEE RATE: 0.50% per annum.
SERVICING OFFICER: Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and facsimile signature appear on a list of servicing officers furnished to
the Trustee by the Servicer on the Closing Date pursuant to this Agreement, as
such list may from time to time be amended.
SERVICING RIGHTS PLEDGEE: One or more lenders, selected by the
Servicer, to which the Servicer may pledge and assign all of its right, title
and interest in, to and under this Agreement, including Wachovia Bank, National
Association, as the representative of certain lenders.
SPECIAL HAZARD LOSS: A Realized Loss, as reported by the Servicer to
the Trustee, attributable to damage or a direct physical loss suffered by a
Mortgaged Property, including any Realized Loss due to the presence or suspected
presence of hazardous wastes or substances on a Mortgaged Property other than
any such damage or loss covered by a hazard policy or a flood insurance policy
required to be maintained in respect of the Mortgaged Property under this
Agreement or any loss due to normal wear and tear or certain other causes.
SPECIAL HAZARD LOSS COVERAGE AMOUNT: $2,305,443 (approximately 1.00% of
the aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off
Date) less, on each Distribution Date, the sum of (1) the aggregate amount of
Special Hazard Losses that would have been previously allocated to the
Subordinated Certificates in the absence of the Loss Allocation Limitation and
(2) the Adjustment Amount. As of any Distribution Date on or after the
Cross-Over Date, the Special Hazard Loss Coverage Amount will be zero.
STARTUP DAY: The Startup Day for each REMIC formed hereunder shall be
the Closing Date.
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STATED PRINCIPAL BALANCE: With respect to any Mortgage Loan or related
REO Property and any Distribution Date, the Cut-off Date Principal Balance
thereof minus the sum of (i) the principal portion of the Scheduled Payments due
with respect to such Mortgage Loan during each Due Period ending prior to such
Distribution Date (and irrespective of any delinquency in their payment), (ii)
all Principal Prepayments with respect to such Mortgage Loan received prior to
or during the related Prepayment Period, and all Liquidation Proceeds to the
extent applied by the Servicer as recoveries of principal in accordance with
Section 3.09 of this Agreement with respect to such Mortgage Loan, that were
received by the Servicer as of the close of business on the last day of the
Prepayment Period related to such Distribution Date and (iii) any Realized
Losses on such Mortgage Loan incurred during the related Prepayment Period. The
Stated Principal Balance of a Liquidated Loan equals zero. References herein to
the Stated Principal Balance of a Loan Group at any time shall mean the
aggregate Stated Principal Balance of all Mortgage Loans in such Loan Group.
SUBORDINATE CERTIFICATE WRITEDOWN AMOUNT: For any Distribution Date,
with respect to the Subordinated Certificates, the amount by which: (a) the sum
of the Certificate Principal Balances of all of the Certificates, after giving
effect to the distribution of principal and the allocation of Realized Losses in
reduction of the Certificate Principal Balances of the Certificates on that
Distribution Date, exceeds (b) the aggregate principal balance of all the
Mortgage Loans as of the following Distribution Date, less any Deficient
Valuations occurring before the Bankruptcy Loss Coverage Amount has been reduced
to zero.
SUBORDINATE OPTIMAL PRINCIPAL AMOUNT: For the Subordinated Certificates
with respect to each Distribution Date and each Loan Group means an amount equal
to the sum of the following (but in no event greater than the aggregate
Certificate Principal Balances of the Subordinated Certificates immediately
prior to such Distribution Date):
(i) the applicable Subordinate Percentage of the principal portion
of all Monthly Payments due on each Mortgage Loan in the
related Loan Group on the related Due Date, as specified in
the amortization schedule at the time applicable thereto
(after adjustment for previous principal prepayments but
before giving effect to any Deficient Valuation or Debt
Service Reduction that occurred prior to the reduction of the
Bankruptcy Loss Coverage Amount to zero);
(ii) the applicable Subordinate Prepayment Percentage of the Stated
Principal Balance of each Mortgage Loan in the related Loan
Group which was the subject of a prepayment in full received
by the Servicer during the applicable Prepayment Period;
(iii) the applicable Subordinate Prepayment Percentage of all
partial prepayments of principal received during the
applicable Prepayment Period for each Mortgage Loan in the
related Loan Group;
(iv) the excess, if any, of (a) the Net Liquidation Proceeds
allocable to principal received during the related Prepayment
Period in respect of each defaulted Mortgage Loan in the
related Loan Group over (b) the sum of the amounts
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distributable to the related Senior Certificateholders
pursuant to clause (iv) of the definition of "Senior Optimal
Principal Amount" on such Distribution Date;
(v) the applicable Subordinate Prepayment Percentage of the sum of
(a) the Stated Principal Balance of each Mortgage Loan in the
related Loan Group which was repurchased by the Seller or the
Servicer in connection with such Distribution Date and (b) the
difference, if any, between the Stated Principal Balance of a
Mortgage Loan in the related Loan Group that has been replaced
by the Seller or the Servicer with a Replacement Mortgage Loan
pursuant to this Agreement in connection with such
Distribution Date and the Stated Principal Balance of such
substitute Mortgage Loan; and
(vi) on the Distribution Date on which the Certificate Principal
Balances of the related Senior Certificates (other than the
Class AIO-1 Certificates) have all been reduced to zero, 100%
of any applicable Senior Optimal Principal Amount; provided,
however that if a Deficient Valuation or Debt Service
Reduction is sustained with respect to a Mortgage Loan in the
related Loan Group that is not a Liquidated Loan after the
Bankruptcy Loss Coverage Amount has been reduced to zero, the
Subordinate Optimal Principal Amount for such Loan Group will
be reduced on the related Distribution Date by the Subordinate
Percentage related to such Loan Group of the principal portion
of such Deficient Valuation or Debt Service Reduction.
SUBORDINATE PERCENTAGE: For the Subordinated Certificates with respect
to each Loan Group related to the Mortgage Loans on any Distribution Date, means
100% minus the related Senior Percentage for the Senior Certificates related to
such Loan Group. The initial Subordinate Percentages for Loan Group I and Loan
Group II will be equal to approximately 16.50% and 16.50%, respectively.
SUBORDINATE PREPAYMENT PERCENTAGE: For the Subordinated Certificates
with respect to each Loan Group related to the Mortgage Loans on any
Distribution Date will equal 100% minus the related Senior Prepayment Percentage
for the Senior Certificates related to such Loan Group, except that on any
Distribution Date after the Certificate Principal Balances of any Senior
Certificates have been reduced to zero, the Subordinate Prepayment Percentage
for the Subordinated Certificates with respect to such Loan Group will equal
100%.
SUBORDINATED CERTIFICATES: The Class M1, Class M2, Class B1, Class B2,
Class B3, Class B4, Class B5, Class B6 and Class B7 Certificates.
SUBSEQUENT RECOVERIES: Shall mean all amounts in respect of principal
received by the Servicer on a Mortgage Loan for which a Realized Loss was
previously incurred.
SUBSERVICING AGREEMENT: Any agreement entered into between the Servicer
and a subservicer with respect to the subservicing of any Mortgage Loan subject
to this Agreement by such subservicer.
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SUBSTITUTION ADJUSTMENT AMOUNT: The meaning ascribed to such term
pursuant to Section 2.03(c).
SUCCESSOR SERVICER: The Trustee or any successor to a Servicer
appointed pursuant to Section 8.02 after the occurrence of a Servicer Default.
TAX MATTERS PERSON: The person designated as "tax matters person" in
the manner provided under Treasury regulation ss. 1.860F-4(d) and temporary
Treasury regulation ss. 301.6231(a)(7)-1T. The holder of the greatest Percentage
Interest in a Class of Residual Certificates shall be the Tax Matters Person for
the related REMIC. The Trustee, or any successor thereto or assignee thereof
shall serve as tax administrator hereunder and as agent for the related Tax
Matters Person.
TRANSFER AFFIDAVIT: As defined in Section 6.02(c).
TRANSFER: Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate.
TRUST FUND: Collectively, the assets of REMIC I, REMIC II and REMIC
III.
TRUSTEE: JPMorgan Chase Bank, a New York banking corporation, not in
its individual capacity, but solely in its capacity as trustee for the benefit
of the Certificateholders under this Agreement, and any successor thereto, and
any corporation or national banking association resulting from or surviving any
consolidation or merger to which it or its successors may be a party and any
successor trustee as may from time to time be serving as successor trustee
hereunder.
UNCERTIFICATED ACCRUED INTEREST: With respect to each Uncertificated
REMIC Regular Interest on each Distribution Date, an amount equal to one month's
interest at the related Uncertificated Pass-Through Rate on the Uncertificated
Principal Balance or Uncertificated Notional Amount, as applicable, of such
REMIC Regular Interest. In each case, Uncertificated Accrued Interest will be
reduced by any Prepayment Interest Shortfalls and shortfalls resulting from
application of the Relief Act (allocated to such REMIC Regular Interests as set
forth in Sections 1.02 and 5.07).
UNCERTIFICATED PRINCIPAL BALANCE: With respect to each REMIC Regular
Interest, the principal amount of such REMIC Regular Interest outstanding as of
any date of determination. As of the Closing Date, the Uncertificated Principal
Balance of each REMIC Regular Interest shall equal the amount set forth in the
Preliminary Statement hereto as its initial Uncertificated Principal Balance. On
each Distribution Date, the Uncertificated Principal Balance of each REMIC
Regular Interest shall be reduced by all distributions of principal made on such
REMIC Regular Interest on such Distribution Date pursuant to Section 5.07 and,
if and to the extent necessary and appropriate, shall be further reduced on such
Distribution Date by Realized Losses as provided in Section and 5.07. The
Uncertificated Principal Balance of each REMIC Regular Interest shall never be
less than zero.
Uncertificated REMIC I Pass-Through Rate: With respect to REMIC I
Regular Interest LTI-1SUB, REMIC I Regular
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Interest LTI-2SUB and REMIC I Regular Interest LTI-ZZZ, the weighted average net
Mortgage Rates on the Mortgage Loans. With respect to REMIC I Regular Interest
LTI-1GRP, the weighted average net Mortgage Rates on the Group I Mortgage Loans.
With respect to REMIC I Regular Interest LTI-2GRP, the weighted average net
Mortgage Rates on the Group II Mortgage Loans. REMIC I Regular Interest LTI-AIO1
will not be entitled to distributions of interest.
Uncertificated REMIC II Pass-Through Rate: With respect to REMIC II
Regular Interest LTII-A1, the weighted average of the Uncertificated REMIC I
Pass-Through Rate on REMIC I Regular Interest LTI-1GRP, weighted on the basis of
the Uncertificated Principal Balance of such REMIC I Regular Interest. With
respect to REMIC II Regular Interest LTII-A2 and REMIC II Regular Interest
LTII-A3, the weighted average of the Uncertificated REMIC I Pass-Through Rate on
REMIC I Regular Interest LTI-2GRP, weighted on the basis of the Uncertificated
Principal Balance of such REMIC I Regular Interest. With respect to REMIC II
Regular Interest LTII-M1, REMIC II Regular Interest LTII-M2, REMIC II Regular
Interest LTII-B1, REMIC II Regular Interest LTII-B2, REMIC II Regular Interest
LTII-B3, REMIC II Regular Interest LTII-B4, REMIC II Regular Interest LTII-B5,
REMIC II Regular Interest LTII-B6 and REMIC II Regular Interest LTII-B7, the
weighted average of the Uncertificated REMIC I Pass-Through Rates on REMIC I
Regular Interests LTI-1SUB, subject to a cap and a floor equal to the
Uncertificated REMIC I Pass-Through Rate on REMIC I Regular Interest LTI-1 GRP
and LTI-2SUB, subject to a cap and a floor equal to the Uncertificated REMIC I
Pass-Through Rate on REMIC I Regular Interest LTI-2 GRP weighted, in each case,
on the basis of the Uncertificated Principal Balance of each such REMIC I
Regular Interest. REMIC II Regular Interest LTII-AIO1 will not be entitled to
distributions of interest.
Uncertificated REMIC Regular Interest: A REMIC I Regular Interest or a
REMIC II Regular Interest.
UNDERCOLLATERALIZED GROUP: With respect to any Distribution Date shall
mean a Loan Group for which the aggregate Certificate Principal Balance of the
Senior Certificates relating to such Loan Group (after giving effect to
distributions to be made on such Distribution Date) is greater than the Stated
Principal Balance of the Mortgage Loans in the such Loan Group as of such
Distribution Date.
VOTING RIGHTS: The portion of the voting rights of all the Certificates
that is allocated to any Certificate for purposes of the voting provisions
hereunder. Voting Rights shall be allocated (i) 97.00% to the Certificates
(other than the Class AIO-1, Class AIO-2 and Class R Certificates and (ii) 1% to
each of the Class AIO-1, Class AIO-2 and Class R Certificates. Voting Rights
will be allocated among the Certificates of each such Class in accordance with
their respective Percentage Interests.
Section 1.02 ALLOCATION OF CERTAIN INTEREST SHORTFALLS.
For purposes of calculating the amount of the Accrued Certificate
Interest for the Certificates (other than the Residual Certificates) for any
Distribution Date, the aggregate amount of any Prepayment Interest Shortfalls
(to the extent not covered by payments by the Servicer pursuant to this
Agreement) and any shortfalls resulting from application of the Relief Act in
respect of the Mortgage Loans for any Distribution Date shall be allocated among
the
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Classes of Certificates in proportion to the respective amounts of Accrued
Certificate Interest that would have been allocated thereto in the absence of
such interest shortfalls.
For purposes of calculating the amount of Uncertificated Accrued
Interest for the REMIC I Regular Interests for any Distribution Date, the
aggregate amount of any Prepayment Interest Shortfalls to the extent not covered
by payments pursuant to Section 5.02 and any shortfalls resulting from the
application of the Relief Act incurred in respect of the Mortgage Loans for any
Distribution Date shall be allocated among REMIC I Regular Interest LTI-1SUB,
REMIC I Regular Interest LTI-1GRP, REMIC I Regular Interest LTI-2SUB, REMIC I
Regular Interest LTI-2GRP and REMIC I Regular Interest LTI-ZZZ, pro rata based
on, and to the extent of, one month's interest at the then applicable respective
Uncertificated REMIC I Pass-Through Rate on the respective Uncertificated
Principal Balance of each such REMIC I Regular Interest.
For purposes of calculating the amount of Uncertificated Accrued
Interest for the REMIC II Regular Interests for any Distribution Date, the
aggregate amount of any Prepayment Interest Shortfalls to the extent not covered
by payments pursuant to Section 5.02 and any shortfalls resulting from the
application of the Relief Act incurred in respect of the Mortgage Loans for any
Distribution Date shall be allocated among REMIC I Regular Interest LTII-A1,
REMIC II Regular Interest LTII-A2, REMIC II Regular Interest LTII-A3, REMIC II
Regular Interest LTII-M1, REMIC II Regular Interest LTII-M2, REMIC II Regular
Interest LTII-B1, REMIC II Regular Interest LTII-B2, REMIC II Regular Interest
LTII-B3, REMIC II Regular Interest LTII-B4, REMIC II Regular Interest LTII-B5,
REMIC II Regular Interest LTII-B6 and REMIC II Regular Interest LTII-B7, pro
rata based on, and to the extent of, one month's interest at the then applicable
respective Uncertificated REMIC II Pass-Through Rate on the respective
Uncertificated Principal Balance of each such REMIC II Regular Interest.
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ARTICLE II
CONVEYANCE OF TRUST FUND
REPRESENTATIONS AND WARRANTIES
Section 2.01 CONVEYANCE OF TRUST FUND.
The Seller hereby sells, transfers, assigns, sets over and
otherwise conveys to the Depositor, without recourse, all the right, title and
interest of the Seller in and to the assets in the Trust Fund.
The Seller has entered into this Agreement in consideration
for the purchase of the Mortgage Loans by the Depositor and has agreed to take
the actions specified herein.
The Depositor, concurrently with the execution and delivery
hereof, hereby sells, transfers, assigns, sets over and otherwise conveys to the
Trustee for the use and benefit of the Certificateholders, without recourse, all
the right, title and interest of the Depositor in and to the Trust Fund.
In connection with such sale, the Depositor has delivered to,
and deposited with, the Trustee or the Custodian, as its agent, the following
documents or instruments with respect to each Mortgage Loan so assigned: (i) the
original Mortgage Note, including any riders thereto, endorsed without recourse
to the order of "JPMorgan Chase Bank, as Trustee for certificateholders of
Nomura Asset Acceptance Corporation Mortgage Pass-Through Certificates, Series
2003-A2," and showing to the extent available to the Seller an unbroken chain of
endorsements from the original payee thereof to the Person endorsing it to the
Trustee, (ii) the original Mortgage and, if the related Mortgage Loan is a MOM
Loan, noting the presence of the MIN and language indicating that such Mortgage
Loan is a MOM Loan, which shall have been recorded (or if the original is not
available, a copy), with evidence of such recording indicated thereon (or if
clause (x) in the proviso below applies, shall be in recordable form), (iii)
unless the Mortgage Loan is a MOM Loan, the assignment (either an original or a
copy, which may be in the form of a blanket assignment if permitted in the
jurisdiction in which the Mortgaged Property is located) to the Trustee of the
Mortgage with respect to each Mortgage Loan in the name of "JPMorgan Chase Bank,
as Trustee for certificateholders of Nomura Asset Acceptance Corporation
Mortgage Pass-Through Certificates, Series 2003-A2," which shall have been
recorded (or if clause (x) in the proviso below applies, shall be in recordable
form) (iv) an original or a copy of all intervening assignments of the Mortgage,
if any, to the extent available to the Seller, with evidence of recording
thereon, (v) the original policy of title insurance or mortgagee's certificate
of title insurance or commitment or binder for title insurance, if available, or
a copy thereof, or, in the event that such original title insurance policy is
unavailable, a photocopy thereof, or in lieu thereof, a current lien search on
the related Mortgaged Property and (vi) originals or copies of all available
assumption, modification or substitution agreements, if any; provided, however,
that in lieu of the foregoing, the Seller may deliver the following documents,
under the circumstances set forth below: (x) if any Mortgage, assignment thereof
to the Trustee or intervening assignments thereof have been delivered or are
being delivered to recording offices for recording and have not been returned in
time to permit their delivery as
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specified above, the Depositor may deliver a true copy thereof with a
certification by the Seller or the title company issuing the commitment for
title insurance, on the face of such copy, substantially as follows: "Certified
to be a true and correct copy of the original, which has been transmitted for
recording"; and (y) in lieu of the Mortgage Notes relating to the Mortgage Loans
identified in the list set forth in Exhibit J, the Depositor may deliver a lost
note affidavit and indemnity and a copy of the original note, if available; and
provided, further, that in the case of Mortgage Loans which have been prepaid in
full after the Cut-Off Date and prior to the Closing Date, the Depositor, in
lieu of delivering the above documents, may deliver to the Trustee a
certification of a Servicing Officer to such effect and in such case shall
deposit all amounts paid in respect of such Mortgage Loans, in the Distribution
Account on the Closing Date. In the case of the documents referred to in clause
(x) above, the Depositor shall deliver such documents to the Trustee promptly
after they are received. The Seller shall cause, at its expense, the Mortgage
and intervening assignments, if any, and to the extent required in accordance
with the foregoing, the assignment of the Mortgage to the Trustee to be
submitted for recording promptly after the Closing Date; provided that the
Seller need not cause to be recorded any assignment (a) in any jurisdiction
under the laws of which, as evidenced by an Opinion of Counsel delivered by the
Seller to the Trustee and the Rating Agencies, the recordation of such
assignment is not necessary to protect the Trustee's interest in the related
Mortgage Loan or (b) if MERS is identified on the Mortgage or on a properly
recorded assignment of the Mortgage as mortgagee of record solely as nominee for
Seller and its successors and assigns. In the event that the Seller or the
Depositor gives written notice to the Trustee that a court has recharacterized
the sale of the Mortgage Loans as a financing, the Seller shall submit or cause
to be submitted for recording as specified above or, should the Seller fail to
perform such obligations, the Trustee shall cause each such previously
unrecorded assignment to be submitted for recording as specified above at the
expense of the Trust pursuant to Section 9.05. In the event a Mortgage File is
released to the Servicer as a result of such Person having completed a Request
for Release, the Trustee shall, if not so completed, complete the assignment of
the related Mortgage in the manner specified in clause (iii) above.
In connection with the assignment of any Mortgage Loan
registered on the MERS(R) System, the Seller further agrees that it will cause,
at the Seller's own expense, within 30 days after the Closing Date, the MERS(R)
System to indicate that such Mortgage Loans have been assigned by the Seller to
the Depositor and by the Depositor to the Trustee in accordance with this
Agreement for the benefit of the Certificateholders by including (or deleting,
in the case of Mortgage Loans which are repurchased in accordance with this
Agreement) in such computer files (a) the code in the field which identifies the
specific Trustee and (b) the code in the field "Pool Field" which identifies the
series of the Certificates issued in connection with such Mortgage Loans. The
Seller further agrees that it will not, and will not permit any Servicer to
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.
Section 2.02 ACCEPTANCE OF THE MORTGAGE LOANS.
(a) Based on the Initial Certification received by it from the
Custodian, the Trustee acknowledges receipt of, subject to the further review
and exceptions reported by the Custodian pursuant to the procedures described
below, the documents (or certified copies
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thereof) delivered to the Trustee or the Custodian on its behalf pursuant to
Section 2.01 and declares that it holds and will continue to hold directly or
through a custodian those documents and any amendments, replacements or
supplements thereto and all other assets of the Trust Fund delivered to it in
trust for the use and benefit of all present and future Holders of the
Certificates. On the Closing Date, the Custodian on the Trustee's behalf will
deliver an Initial Certification in the form annexed hereto as Exhibit C-1,
confirming whether or not it has received the Mortgage File for each Mortgage
Loan, but without review of such Mortgage File, except to the extent necessary
to confirm whether such Mortgage File contains the original Mortgage Note or a
lost note affidavit and indemnity in lieu thereof. No later than 90 days after
the Closing Date, the Custodian on the Trustee's behalf shall, for the benefit
of the Certificateholders, review each Mortgage File delivered to it and execute
and deliver to the Seller and the Trustee an Interim Certification substantially
in the form annexed hereto as Exhibit C-2. In conducting such review, the
Custodian on the Trustee's behalf will ascertain whether all required documents
have been executed and received and whether those documents relate, determined
on the basis of the Mortgagor name, original principal balance and loan number,
to the Mortgage Loans identified in Exhibit B to this Agreement, as supplemented
(provided, however, that with respect to those documents described in subclauses
(iv) and (vi) of Section 2.01, such obligations shall extend only to documents
actually delivered pursuant to such subclauses). In performing any such review,
the Custodian may conclusively rely on the purported due execution and
genuineness of any such document and on the purported genuineness of any
signature thereon. If the Custodian finds any document constituting part of the
Mortgage File not to have been executed or received, or to be unrelated to the
Mortgage Loans identified in Exhibit B, determined on the basis of the
Mortgagor's name, the original principal balance and the Mortgage Loan number,
or to appear to be defective on its face, the Custodian shall include such
information in the exception report attached to the Interim Certification. The
Seller shall correct or cure any such defect or, if prior to the end of the
second anniversary of the Closing Date, the Seller may substitute for the
related Mortgage Loan a Replacement Mortgage Loan, which substitution shall be
accomplished in the manner and subject to the conditions set forth in Section
2.03 or shall deliver to the Trustee an Opinion of Counsel to the effect that
such defect does not materially or adversely affect the interests of the
Certificateholders in such Mortgage Loan within 60 days from the date of notice
from the Trustee of the defect and if the Seller fails to correct or cure the
defect or deliver such opinion within such period, the Seller will, subject to
Section 2.03, within 90 days from the notification of the Trustee purchase such
Mortgage Loan at the Purchase Price; provided, however, that if such defect
relates solely to the inability of the Seller to deliver the Mortgage,
assignment thereof to the Trustee, or intervening assignments thereof with
evidence of recording thereon because such documents have been submitted for
recording and have not been returned by the applicable jurisdiction, the Seller
shall not be required to purchase such Mortgage Loan if the Seller delivers such
documents promptly upon receipt, but in no event later than 360 days after the
Closing Date.
(b) No later than 180 days after the Closing Date, the
Custodian on the Trustee's behalf will review, for the benefit of the
Certificateholders, the Mortgage Files and will execute and deliver or cause to
be executed and delivered to the Seller and the Trustee, a Final Certification
substantially in the form annexed hereto as Exhibit C-3. In conducting such
review, the Custodian on the Trustee's behalf will ascertain whether each
document required to be recorded has been returned from the recording office
with evidence of recording thereon and the Custodian on the Trustee's behalf has
received either an original or a copy thereof, as required in
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Section 2.01 (provided, however, that with respect to those documents described
in subclauses (iv) and (vi) of Section 2.01, such obligations shall extend only
to documents actually delivered pursuant to such subclauses). If the Custodian
finds any document with respect to a Mortgage Loan has not been received, or to
be unrelated, determined on the basis of the Mortgagor name, original principal
balance and loan number, to the Mortgage Loans identified in Exhibit B or to
appear defective on its face, the Custodian shall note such defect in the
exception report attached to the Final Certification and the Trustee shall
promptly notify the Seller. The Seller shall correct or cure any such defect or,
if prior to the end of the second anniversary of the Closing Date, the Seller
may substitute for the related Mortgage Loan a Replacement Mortgage Loan, which
substitution shall be accomplished in the manner and subject to the conditions
set forth in Section 2.03 or shall deliver to the Trustee an Opinion of Counsel
to the effect that such defect does not materially or adversely affect the
interests of Certificateholders in such Mortgage Loan within 60 days from the
date of notice from the Trustee of the defect and if the Seller is unable within
such period to correct or cure such defect, or to substitute the related
Mortgage Loan with a Replacement Mortgage Loan or to deliver such opinion, the
Seller shall, subject to Section 2.03, within 90 days from the notification of
the Trustee, purchase such Mortgage Loan at the Purchase Price; provided,
however, that if such defect relates solely to the inability of the Seller to
deliver the Mortgage, assignment thereof to the Trustee or intervening
assignments thereof with evidence of recording thereon, because such documents
have not been returned by the applicable jurisdiction, the Seller shall not be
required to purchase such Mortgage Loan, if the Seller delivers such documents
promptly upon receipt, but in no event later than 360 days after the Closing
Date.
(c) In the event that a Mortgage Loan is purchased by the
Seller in accordance with subsections 2.02(a) or (b) above or Section 2.03, the
Seller shall remit the applicable Purchase Price to the Trustee for deposit in
the Distribution Account and shall provide written notice to the Trustee
detailing the components of the Purchase Price, signed by an authorized officer.
Upon deposit of the Purchase Price in the Distribution Account and upon receipt
of a Request for Release with respect to such Mortgage Loan, the Trustee will
release to the Seller the related Mortgage File and the Trustee shall execute
and deliver all instruments of transfer or assignment, without recourse,
furnished to it by the Seller, as are necessary to vest in the Seller title to
and rights under the Mortgage Loan. Such purchase shall be deemed to have
occurred on the date on which the deposit into the Distribution Account was
made. The Trustee shall promptly notify the Rating Agencies of such repurchase.
The obligation of the Seller to cure, repurchase or substitute for any Mortgage
Loan as to which a defect in a constituent document exists shall be the sole
remedies respecting such defect available to the Certificateholders or to the
Trustee on their behalf. The Seller shall promptly reimburse the Trustee for any
expenses incurred by the Trustee in respect of enforcing the remedies for such
breach.
(d) The Seller shall deliver to the Trustee, and Trustee
agrees to accept the Mortgage Note and other documents constituting the Mortgage
File with respect to any Replacement Mortgage Loan, which the Custodian will
review as provided in subsections 2.02(a) and 2.02(b), provided, that the
Closing Date referred to therein shall instead be the date of delivery of the
Mortgage File with respect to each Replacement Mortgage Loan.
Section 2.03 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SERVICER
AND THE SELLER.
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(a) The Servicer hereby represents and warrants to, and
covenants with, the Seller, the Depositor and the Trustee as follows, as of the
Closing Date:
(i) It is duly organized and is validly existing and in good
standing under the laws of the State of California and is duly
authorized and qualified to transact any and all business contemplated
by this Agreement to be conducted by it in any state in which a
Mortgaged Property relating to a Mortgage Loan is located or is
otherwise not required under applicable law to effect such
qualification and, in any event, is in compliance with the doing
business laws of any such state, to the extent necessary to ensure its
ability to enforce each Mortgage Loan, to service the Mortgage Loans in
accordance with the terms of this Agreement and to perform any of its
other obligations under this Agreement in accordance with the terms
hereof.
(ii) It has the full corporate power and authority to service
each Mortgage Loan, and to execute, deliver and perform, and to enter
into and consummate the transactions contemplated by this Agreement and
has duly authorized by all necessary corporate action on its part the
execution, delivery and performance of this Agreement; and this
Agreement, assuming the due authorization, execution and delivery
hereof by the other parties hereto, constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its
terms, except that (a) the enforceability hereof may be limited by
bankruptcy, insolvency, moratorium, receivership and other similar laws
relating to creditors' rights generally and (b) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
(iii) The execution and delivery of this Agreement by it, the
servicing of the Mortgage Loans by it under this Agreement, the
consummation of any other of the transactions contemplated by this
Agreement, and the fulfillment of or compliance with the terms hereof
are in its ordinary course of business and will not (A) result in a
material breach of any term or provision of its charter or by-laws or
(B) materially conflict with, result in a material breach, violation or
acceleration of, or result in a material default under, the terms of
any other material agreement or instrument to which it is a party or by
which it may be bound, or (C) constitute a material violation of any
statute, order or regulation applicable to it of any court, regulatory
body, administrative agency or governmental body having jurisdiction
over it; and it is not in breach or violation of any material indenture
or other material agreement or instrument, or in violation of any
statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over it
which breach or violation may materially impair its ability to perform
or meet any of its obligations under this Agreement.
(iv) It is an approved servicer of conventional mortgage loans
for Xxxxxx Xxx or Xxxxxxx Mac and is a mortgagee approved by the
Secretary of Housing and Urban Development pursuant to sections 203 and
211 of the National Housing Act.
(v) No litigation is pending or, to the best of its knowledge,
threatened, against it that would materially and adversely affect the
execution, delivery or enforceability of this Agreement or its ability
to service the Mortgage Loans or
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to perform any of its other obligations under this Agreement in
accordance with the terms hereof.
(vi) No consent, approval, authorization or order of any court
or governmental agency or body is required for its execution, delivery
and performance of, or compliance with, this Agreement or the
consummation of the transactions contemplated hereby, or if any such
consent, approval, authorization or order is required, it has obtained
the same.
(vii) The Servicer has accurately and fully reported, and will
continue to accurately and fully report its borrower credit files to
each of the credit repositories in a timely manner in accordance with
the Fair Credit Reporting Act and its implementing legislation.
(viii) The 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.
(ix) The Servicer will not waive any Prepayment Charge unless
it is waived in accordance with the standard set forth in Section 3.01.
Notwithstanding anything to the contrary contained in this Agreement, if the
covenant of the Servicer set forth in Section 2.03(a)(ix) above is breached, the
Servicer will pay the amount of such waived Prepayment Charge, for the benefit
of the Holders of the Class AIO-1 Certificates, by depositing such amount into
the Custodial Account within 90 days of the earlier of discovery by the Servicer
or receipt of notice by the Servicer of such breach.
(b) The Seller hereby represents and warrants to and covenants
with, the Depositor, the Servicer and the Trustee as follows, as of the
Closing Date:
(i) The Seller is duly organized, validly existing and in good
standing under the laws of the State of Delaware and is duly authorized
and qualified to transact any and all business contemplated by this
Agreement to be conducted by the Seller in any state in which a
Mortgaged Property is located or is otherwise not required under
applicable law to effect such qualification and, in any event, is in
compliance with the doing business laws of any such state, to the
extent necessary to ensure its ability to enforce each Mortgage Loan,
to sell the Mortgage Loans in accordance with the terms of this
Agreement and to perform any of its other obligations under this
Agreement in accordance with the terms hereof.
(ii) The Seller has the full corporate power and authority to
sell each Mortgage Loan, and to execute, deliver and perform, and to
enter into and consummate the transactions contemplated by this
Agreement and has duly authorized by all necessary corporate action on
the part of the Seller the execution, delivery and performance of this
Agreement; and this Agreement, assuming the due authorization,
execution and delivery hereof by the other parties hereto, constitutes
a legal, valid and binding obligation of the Seller, enforceable
against the Seller in accordance with its terms, except that (a) the
enforceability hereof may be limited by bankruptcy, insolvency,
moratorium,
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receivership and other similar laws relating to creditors' rights
generally and (b) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses
and to the discretion of the court before which any proceeding therefor
may be brought.
(iii) The execution and delivery of this Agreement by the
Seller, the sale of the Mortgage Loans by the Seller under this
Agreement, the consummation of any other of the transactions
contemplated by this Agreement, and the fulfillment of or compliance
with the terms hereof are in the ordinary course of business of the
Seller and will not (A) result in a material breach of any term or
provision of the charter or by-laws of the Seller or (B) materially
conflict with, result in a material breach, violation or acceleration
of, or result in a material default under, the terms of any other
material agreement or instrument to which the Seller is a party or by
which it may be bound, or (C) constitute a material violation of any
statute, order or regulation applicable to the Seller of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over the Seller; and the Seller is not in breach or
violation of any material indenture or other material agreement or
instrument, or in violation of any statute, order or regulation of any
court, regulatory body, administrative agency or governmental body
having jurisdiction over it which breach or violation may materially
impair the Seller's ability to perform or meet any of its obligations
under this Agreement.
(iv) The Seller is an approved seller of conventional mortgage
loans for Xxxxxx Mae or Xxxxxxx Mac and is a mortgagee approved by the
Secretary of Housing and Urban Development pursuant to sections 203 and
211 of the National Housing Act.
(v) No litigation is pending or, to the best of the Seller's
knowledge, threatened, against the Seller that would materially and
adversely affect the execution, delivery or enforceability of this
Agreement or the ability of the Seller to sell the Mortgage Loans or to
perform any of its other obligations under this Agreement in accordance
with the terms hereof.
(vi) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by the Seller of, or compliance by the Seller with,
this Agreement or the consummation of the transactions contemplated
hereby, or if any such consent, approval, authorization or order is
required, the Seller has obtained the same.
(vii) The representations and warranties set forth in Section
8 of the Mortgage Loan Purchase Agreement are true and correct as of
the Closing Date.
(c) Upon discovery by any of the parties hereto of a breach of
a representation or warranty set forth in Section 8 of the Mortgage
Loan Purchase Agreement that materially and adversely affects the
interests of the Certificateholders in any Mortgage Loan, the party
discovering such breach shall give prompt written notice thereof to the
other parties. The Seller hereby covenants with respect to the
representations and warranties set forth in Section 8 of the Mortgage
Loan Purchase Agreement, that within 90 days of the discovery of a
breach of any representation or warranty set forth therein that
materially and adversely affects the interests of
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the Certificateholders in any Mortgage Loan, it shall cure such breach
in all material respects and, if such breach is not so cured, (i) prior
to the second anniversary of the Closing Date, remove such Mortgage
Loan (a "Deleted Mortgage Loan") from the Trust Fund and substitute in
its place a Replacement Mortgage Loan, in the manner and subject to the
conditions set forth in this Section; or (ii) repurchase the affected
Mortgage Loan or Mortgage Loans from the Trustee at the Purchase Price
in the manner set forth below; provided that any such substitution
pursuant to (i) above or repurchase pursuant to (ii) above shall not be
effected prior to the delivery to the Trustee of an Opinion of Counsel
if required by Section 2.05 and any such substitution pursuant to (i)
above shall not be effected prior to the additional delivery to the
Trustee of a Request for Release. The Seller shall promptly reimburse
the Trustee for any expenses reasonably incurred by the Trustee in
respect of enforcing the remedies for such breach. To enable the
Servicer to amend the Mortgage Loan Schedule, the Seller shall, unless
it cures such breach in a timely fashion pursuant to this Section 2.03,
promptly notify the Trustee whether it intends either to repurchase, or
to substitute for, the Mortgage Loan affected by such breach. With
respect to the representations and warranties in Section 8 of the
Mortgage Loan Purchase Agreement that are made to the best of the
Seller's knowledge, if it is discovered by any of the Depositor, the
Seller or the Trustee that the substance of such representation and
warranty is inaccurate and such inaccuracy materially and adversely
affects the value of the related Mortgage Loan, notwithstanding the
Seller's lack of knowledge with respect to the substance of such
representation or warranty, the Seller shall nevertheless be required
to cure, substitute for or repurchase the affected Mortgage Loan in
accordance with the foregoing.
With respect to any Replacement Mortgage Loan or Loans, the
Seller shall deliver to the Trustee for the benefit of the Certificateholders
such documents and agreements as are required by Section 2.01. No substitution
will be made in any calendar month after the Determination Date for such month.
Scheduled Payments due with respect to Replacement Mortgage Loans in the Due
Period related to the Distribution Date on which such proceeds are to be
distributed shall not be part of the Trust Fund and will be retained by the
Seller. For the month of substitution, distributions to Certificateholders will
include the Scheduled Payment due on any Deleted Mortgage Loan for the related
Due Period and thereafter the Seller shall be entitled to retain all amounts
received in respect of such Deleted Mortgage Loan. The Servicer shall amend the
Mortgage Loan Schedule for the benefit of the Certificateholders to reflect the
removal of such Deleted Mortgage Loan and the substitution of the Replacement
Mortgage Loan or Loans and shall deliver the amended Mortgage Loan Schedule to
the Trustee. Upon such substitution, the Replacement Mortgage Loan or Loans
shall be subject to the terms of this Agreement in all respects, and the Seller
shall be deemed to have made with respect to such Replacement Mortgage Loan or
Loans, as of the date of substitution, the representations and warranties set
forth in Section 8 of the Mortgage Loan Purchase Agreement with respect to such
Mortgage Loan. Upon any such substitution and the deposit into the Distribution
Account of the amount required to be deposited therein in connection with such
substitution as described in the following paragraph and receipt by the Trustee
of a Request for Release for such Mortgage Loan, the Trustee shall release to
the Seller the Mortgage File relating to such Deleted Mortgage Loan and held for
the benefit of the Certificateholders and shall execute and deliver at the
Seller's direction such instruments of transfer or assignment as have been
prepared by the Seller, in each case without recourse, as shall be necessary to
vest in the Seller, or its respective designee, title to the Trustee's interest
in any Deleted Mortgage Loan substituted for pursuant to this Section 2.03. The
Trustee shall not have any further responsibility with regard to such Mortgage
File.
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For any month in which the Seller substitutes one or more
Replacement Mortgage Loans for a Deleted Mortgage Loan, the Trustee will
determine the amount (if any) by which the aggregate principal balance of all
the Replacement Mortgage Loans as of the date of substitution is less than the
Stated Principal Balance (after application of the principal portion of the
Scheduled Payment due in the month of substitution) of such Deleted Mortgage
Loan. An amount equal to the aggregate of such deficiencies, described in the
preceding sentence for any Distribution Date (such amount, the "Substitution
Adjustment Amount") shall be deposited into the Distribution Account, by the
Seller delivering such Replacement Mortgage Loan on the Determination Date for
the Distribution Date relating to the Prepayment Period during which the related
Mortgage Loan became required to be purchased or replaced hereunder.
In the event that the Seller shall have repurchased a Mortgage
Loan, the Purchase Price therefor shall be deposited into the Distribution
Account maintained by the Trustee, on the Determination Date for the
Distribution Date in the month following the month during which the Seller
became obligated to repurchase or replace such Mortgage Loan and upon such
deposit of the Purchase Price, the delivery of an Opinion of Counsel if required
by Section 2.05 and the receipt of a Request for Release, the Trustee shall
release the related Mortgage File held for the benefit of the Certificateholders
to the Seller, and the Trustee shall execute and deliver at such Person's
direction the related instruments of transfer or assignment prepared by the
Seller, in each case without recourse, as shall be necessary to transfer title
from the Trustee for the benefit of the Certificateholders and transfer the
Trustee's interest to the Seller to any Mortgage Loan purchased pursuant to this
Section 2.03. It is understood and agreed that the obligation under this
Agreement of the Seller to cure, repurchase or replace any Mortgage Loan as to
which a breach has occurred and is continuing shall constitute the sole remedies
against the Seller respecting such breach available to Certificateholders, the
Depositor or the Trustee.
(d) The representations and warranties set forth in Section
2.03 shall survive delivery of the respective Mortgage Loans and Mortgage Files
to the Trustee or the Custodian for the benefit of the Certificateholders.
Section 2.04 REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.
The Depositor hereby represents and warrants to, and
covenants, with the Servicer, the Seller and the Trustee as follows, as of the
date hereof and as of the Closing Date:
(i) The Depositor is duly organized and is validly existing as
a corporation in good standing under the laws of the State of Delaware
and has full power and authority (corporate and other) necessary to own
or hold its properties and to conduct its business as now conducted by
it and to enter into and perform its obligations under this Agreement.
(ii) The Depositor has the full corporate power and authority
to execute, deliver and perform, and to enter into and consummate the
transactions contemplated by, this Agreement and has duly authorized,
by all necessary corporate action on its part, the execution, delivery
and performance of this Agreement; and this Agreement, assuming the due
authorization, execution and delivery hereof by the other parties
hereto, constitutes a legal, valid and binding obligation of the
Depositor, enforceable against the
- 52 -
Depositor in accordance with its terms, subject, as to enforceability,
to (i) bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting creditors' rights generally and (ii) general
principles of equity, regardless of whether enforcement is sought in a
proceeding in equity or at law.
(iii) The execution and delivery of this Agreement by the
Depositor, the consummation of the transactions contemplated by this
Agreement, and the fulfillment of or compliance with the terms hereof
are in the ordinary course of business of the Depositor and will not
(A) result in a material breach of any term or provision of the charter
or by-laws of the Depositor or (B) materially conflict with, result in
a material breach, violation or acceleration of, or result in a
material default under, the terms of any other material agreement or
instrument to which the Depositor is a party or by which it may be
bound or (C) constitute a material violation of any statute, order or
regulation applicable to the Depositor of any court, regulatory body,
administrative agency or governmental body having jurisdiction over the
Depositor; and the Depositor is not in breach or violation of any
material indenture or other material agreement or instrument, or in
violation of any statute, order or regulation of any court, regulatory
body, administrative agency or governmental body having jurisdiction
over it which breach or violation may materially impair the Depositor's
ability to perform or meet any of its obligations under this Agreement.
(iv) No litigation is pending, or, to the best of the
Depositor's knowledge, threatened, against the Depositor that would
materially and adversely affect the execution, delivery or
enforceability of this Agreement or the ability of the Depositor to
perform its obligations under this Agreement in accordance with the
terms hereof.
(v) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by the Depositor of, or compliance by the Depositor
with, this Agreement or the consummation of the transactions
contemplated hereby, or if any such consent, approval, authorization or
order is required, the Depositor has obtained the same.
The Depositor hereby represents and warrants to the Trustee as
of the Closing Date, following the transfer of the Mortgage Loans to it by the
Seller, the Depositor had good title to the Mortgage Loans and the related
Mortgage Notes were subject to no offsets, claims, defenses or counterclaims.
It is understood and agreed that the representations and
warranties set forth in this Section 2.04 shall survive delivery of the Mortgage
Files to the Trustee or the Custodian for the benefit of the Certificateholders.
Upon discovery by the Depositor, the Servicers or the Trustee of a breach of
such representations and warranties, the party discovering such breach shall
give prompt written notice to the others and to each Rating Agency.
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Section 2.05 DELIVERY OF OPINION OF COUNSEL IN CONNECTION WITH
SUBSTITUTIONS AND REPURCHASES.
(a) Notwithstanding any contrary provision of this Agreement,
with respect to any Mortgage Loan that is not in default or as to which default
is not imminent, no repurchase or substitution pursuant to Sections 2.02 or 2.03
shall be made unless the Seller delivers to the Trustee an Opinion of Counsel,
addressed to the Trustee, to the effect that such repurchase or substitution
would not (i) result in the imposition of the tax on "prohibited transactions"
of REMIC I, REMIC II or REMIC III or contributions after the Closing Date, as
defined in sections 860F(a)(2) and 860G(d) of the Code, respectively or (ii)
cause any of REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC at any
time that any Certificates are outstanding. Any Mortgage Loan as to which
repurchase or substitution was delayed pursuant to this paragraph shall be
repurchased or the substitution therefor shall occur (subject to compliance with
Sections 2.02 or 2.03) upon the earlier of (a) the occurrence of a default or
imminent default with respect to such Mortgage Loan and (b) receipt by the
Trustee of an Opinion of Counsel to the effect that such repurchase or
substitution, as applicable, will not result in the events described in clause
(i) or clause (ii) of the preceding sentence.
(b) Upon discovery by the Depositor or the Seller that any
Mortgage Loan does not constitute a "qualified mortgage" within the meaning of
section 860G(a)(3) of the Code, the party discovering such fact shall promptly
(and in any event within 5 Business Days of discovery) give written notice
thereof to the other parties and the Trustee. In connection therewith, the
Seller, at the its option, shall either (i) substitute, if the conditions in
Section 2.03(c) with respect to substitutions are satisfied, a Replacement
Mortgage Loan for the affected Mortgage Loan, or (ii) repurchase the affected
Mortgage Loan within 90 days of such discovery in the same manner as it would a
Mortgage Loan for a breach of representation or warranty contained in Section
2.03. The Trustee shall reconvey to the Seller the Mortgage Loan to be released
pursuant hereto in the same manner, and on the same terms and conditions, as it
would a Mortgage Loan repurchased for breach of a representation or warranty
contained in Section 2.03.
Section 2.06 ISSUANCE OF THE REMIC I REGULAR INTERESTS AND THE CLASS
R-1 INTEREST.
The Trustee acknowledges the assignment to it of the Mortgage
Loans and the delivery to the Custodian on its behalf of the Mortgage Files,
subject to the provisions of Section 2.01 and Section 2.02, together with the
assignment to it of all other assets included in REMIC I, the receipt of which
is hereby acknowledged. The interests evidenced by the Class R-1 Interest,
together with the REMIC I Regular Interests, constitute the entire beneficial
ownership interest in REMIC I. The rights of the Holders of the Class R-1
Interest and REMIC I (as holder of the REMIC I Regular Interests) to receive
distributions from the proceeds of REMIC I in respect of the Class R-1 Interest
and the REMIC I Regular Interests, respectively, and all ownership interests
evidenced or constituted by the Class R-1 Interest and the REMIC I Regular
Interests, shall be as set forth in this Agreement.
Section 2.07 CONVEYANCE OF THE REMIC I REGULAR INTERESTS; ACCEPTANCE OF
REMIC II BY THE TRUSTEE.
The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee, without recourse all the right, title and interest of the Depositor in
and to the REMIC I Regular Interests for the benefit of the Class R-2 Interest
and REMIC II (as holder of the REMIC I Regular Interests). The Trustee
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acknowledges receipt of the REMIC I Regular Interests and declares that it holds
and will hold the same in trust for the exclusive use and benefit of all present
and future Holders of the Class R-2 Interest and REMIC II (as holder of the
REMIC I Regular Interests). The rights of the Holders of the Class R-2 Interest
and REMIC II (as holder of the REMIC I Regular Interests) to receive
distributions from the proceeds of REMIC II in respect of the Class R-2 Interest
and REMIC II Regular Interests, respectively, and all ownership interests
evidenced or constituted by the Class R-2 Interest and the REMIC II Regular
Interests, shall be as set forth in this Agreement.
Section 2.08 CONVEYANCE OF THE REMIC II REGULAR INTERESTS; ACCEPTANCE
OF REMIC III BY THE TRUSTEE.
The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee, without recourse all the right, title and interest of the Depositor in
and to the REMIC II Regular Interests for the benefit of the Class R-3 Interest
and REMIC III (as holder of the REMIC II Regular Interests). The Trustee
acknowledges receipt of the REMIC II Regular Interests and declares that it
holds and will hold the same in trust for the exclusive use and benefit of all
present and future Holders of the Class R-3 Interest and REMIC III (as holder of
the REMIC II Regular Interests). The rights of the Holder of the Class R-3
Interest and REMIC III (as holder of the REMIC II Regular Interests) to receive
distributions from the proceeds of REMIC III in respect of the Class R-3
Interest and REMIC III Regular Interests, respectively, and all ownership
interests evidenced or constituted by the Class R-3 Interest and the REMIC III
Regular Interests, shall be as set forth in this Agreement. The Class R-3
Interest and the REMIC III Regular Interests shall constitute the entire
beneficial ownership interest in REMIC III.
Section 2.09 ISSUANCE OF CLASS R CERTIFICATES.
The Trustee acknowledges the assignment to it of the REMIC I
Regular Interests and the REMIC II Regular Interests and, concurrently therewith
and in exchange therefor, pursuant to the written request of the Depositor
executed by an officer of the Depositor, the Trustee has executed, authenticated
and delivered to or upon the order of the Depositor, the Class R Certificates in
authorized denominations. The Class R Certificates evidence ownership in the
Class R-1 Interest, the Class R-2 Interest and the Class R-3 Interest.
Section 2.10 ESTABLISHMENT OF TRUST.
The Depositor does hereby establish, pursuant to the further
provisions of this Agreement and the laws of the State of New York, an express
trust to be known, for convenience, as "Nomura Asset Acceptance Corporation,
Alternative Loan Trust, Series 2003-A2" and does hereby appoint JPMorgan Chase
Bank, as Trustee in accordance with the provisions of this Agreement.
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ARTICLE III
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 3.01 THE SERVICER .
The Servicer shall service and administer the Mortgage Loans
on behalf of the Trust and in the best interests of and for the benefit of the
Certificateholders (as determined by the Servicer in its reasonable judgment) in
accordance with the terms of this Agreement and the Mortgage Loans and, to the
extent consistent with such terms, in the same manner in which it services and
administers similar mortgage loans for its own portfolio, giving due
consideration to customary and usual standards of practice of mortgage lenders
and loan servicers administering similar mortgage loans but without regard to:
(A) any relationship that the Servicer, any subservicer or any
Affiliate of the Servicer or any subservicer may have with the related
Mortgagor;
(B) the ownership or non-ownership of any Certificate by the
Servicer or any Affiliate of the Servicer;
(C) the Servicer's obligation to make Advances or Servicing
Advances; or
(D) the Servicer's or any subservicer's right to receive
compensation for its services hereunder or with respect to any
particular transaction.
To the extent consistent with the foregoing, the Servicer shall seek the timely
and complete recovery of principal and interest on the Mortgage Notes related to
Mortgage Loans and shall waive a Prepayment Charge only under the following
circumstances: (i) such waiver is standard and customary in servicing similar
Mortgage Loans and (ii) either (A) such waiver is related to a default or
reasonably foreseeable default and would, in the reasonable judgement of the
Servicer, maximize recovery of total proceeds taking into account the value of
such Prepayment Charge and the related Mortgage Loan and, if such waiver is made
in connection with a refinancing of the related Mortgage Loan, such refinancing
is related to a default or a reasonably foreseeable default or (B) such waiver
is made in connection with a refinancing of the related Mortgage Loan unrelated
to a default or a reasonably foreseeable default where (x) the related Mortgagor
has stated to the Servicer an intention to refinance the related Mortgage Loan
and (y) the Servicer has concluded in its reasonable judgement that the waiver
of such Prepayment Charge would induce such Mortgagor to refinance with the
Servicer or (iii) such Prepayment Charge is unenforceable in accordance with
applicable law or the collection of such related Prepayment Charge would
otherwise violate applicable law. If a Prepayment Charge is waived as permitted
by meeting both of the standards described in clauses (i) and (ii)(B) above,
then the Servicer is required to pay the amount of such waived Prepayment Charge
(the "Servicer Prepayment Charge Payment Amount"), for the benefit of the
Holders of the Class AIO-1 Certificates, by depositing such amount into the
Custodial Account within 90 days of notice or discovery of such waiver meeting
the standard set forth in both clauses (i) and (ii)(B) above; provided, however,
that the Servicer shall waive no more than 5% of the Prepayment Charges (by
number of
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Prepayment Charges) set forth on the Prepayment Charge Schedule in accordance
with clauses (i) and (ii)(B) above. Notwithstanding any other provisions of this
Agreement, any payments made by the Servicer in respect of any waived Prepayment
Charges pursuant to clauses (i) and (ii)(B) above and the preceding sentence
shall be deemed to be paid outside of the Trust Fund.
Subject only to the above-described servicing standards (the
"Accepted Servicing Practices") and the terms of this Agreement and of the
respective Mortgage Loans, the Servicer shall have full power and authority,
acting alone and/or through subservicers as provided in Section 3.03, to do or
cause to be done any and all things that it may deem necessary or desirable in
connection with such servicing and administration, including but not limited to,
the power and authority, subject to the terms hereof (i) to execute and deliver,
on behalf of the Certificateholders and the Trustee, customary consents or
waivers and other instruments and documents, (ii) to consent to transfers of any
related Mortgaged Property and assumptions of the Mortgage Notes and related
Mortgages (but only in the manner provided herein), (iii) to collect any
Insurance Proceeds and other Liquidation Proceeds, and (iv) subject to Section
3.09, to effectuate foreclosure or other conversion of the ownership of the
Mortgaged Property securing any Mortgage Loan; provided that the Servicer shall
take no action that is inconsistent with or prejudices the interests of the
Trust Fund or the Certificateholders in any Mortgage Loan or the rights and
interests of the Depositor and the Trustee under this Agreement.
Without limiting the generality of the foregoing, the
Servicer, in its own name or in the name of the Trust, the Depositor or the
Trustee, is hereby authorized and empowered by the Trust, the Depositor and the
Trustee, when the Servicer believes it appropriate in its reasonable judgment,
to execute and deliver, on behalf of the Trustee, the Depositor, the
Certificateholders or any of them, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge and all other
comparable instruments, with respect to the Mortgage Loans, and with respect to
the related Mortgaged Properties held for the benefit of the Certificateholders.
The Servicer shall prepare and deliver to the Depositor and/or the Trustee such
documents requiring execution and delivery by any or all of them as are
necessary or appropriate to enable the Servicer to service and administer the
Mortgage Loans. Upon receipt of such documents, the Depositor and/or the Trustee
shall execute such documents and deliver them to the Servicer. In addition, the
Trustee shall execute, at the written request of the Servicer, and furnish to
the Servicer any special or limited powers of attorney agreeable to the Trustee
and its counsel for each county in which a Mortgaged Property is located and
other documents necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties hereunder, provided such limited powers of
attorney or other documents shall be prepared by the Servicer and submitted to
the Trustee for review prior to execution.
In accordance with the standards of the first paragraph of
this Section 3.01, the Servicer shall advance or cause to be advanced funds as
necessary for the purpose of effecting the payment of taxes and assessments on
the Mortgaged Properties relating to the Mortgage Loans in order to preserve the
lien on the Mortgaged Property, which advances shall be reimbursable in the
first instance from related collections from the Mortgagors pursuant to Section
4.04, and further as provided in Section 4.02. All costs incurred by the
Servicer, if any, in effecting the payments of such taxes and assessments on the
Mortgaged Properties relating to the Mortgage Loans and related insurance
premiums shall not, for the purpose of calculating
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monthly distributions to the Certificateholders, be added to the Stated
Principal Balance under the related Mortgage Loans, notwithstanding that the
terms of such Mortgage Loans so permit.
Section 3.02 DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS.
(a) Except as otherwise provided in this Section 3.02, when
any Mortgaged Property has been or is about to be conveyed by the Mortgagor, the
Servicer shall to the extent that it has knowledge of such conveyance, 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, the Servicer
is not required to exercise such rights with respect to a Mortgage Loan if the
Person to whom the related Mortgaged Property has been conveyed or is proposed
to be conveyed satisfies the terms and conditions contained in the Mortgage Note
and Mortgage related thereto and the consent of the mortgagee under such
Mortgage Note or Mortgage is not otherwise so required under such Mortgage Note
or Mortgage as a condition to such transfer. In the event that the Servicer is
prohibited by law from enforcing any such due-on-sale clause, or if coverage
under any Required Insurance Policy would be adversely affected, or if
nonenforcement is otherwise permitted hereunder, the Servicer is authorized,
subject to Section 3.02(b), to take or enter into an assumption and modification
agreement from or with the person to whom such property has been or is about to
be conveyed, pursuant to which such person becomes liable under the Mortgage
Note and, unless prohibited by applicable state law, the Mortgagor remains
liable thereon, provided that the Mortgage Loan shall continue to be covered (if
so covered before the Servicer enters such agreement) by the applicable Required
Insurance Policies. The Servicer, subject to Section 3.02(b), is also authorized
with the prior approval of the insurers under any Required Insurance Policies to
enter into a substitution of liability agreement with such Person, pursuant to
which the original Mortgagor is released from liability and such Person is
substituted as Mortgagor and becomes liable under the Mortgage Note.
Notwithstanding the foregoing, the Servicer shall not be deemed to be in default
under this Section 3.02(a) by reason of any transfer or assumption that the
Servicer reasonably believes it is restricted by law from preventing.
(b) Subject to the Servicer's duty to enforce any due-on-sale
clause to the extent set forth in Section 3.02(a), in any case in which a
Mortgaged Property has been conveyed to a Person by a Mortgagor, and such Person
is to enter into an assumption agreement or modification agreement or supplement
to the Mortgage Note or Mortgage that requires the signature of the Trustee, or
if an instrument of release signed by the Trustee is required releasing the
Mortgagor from liability on the related Mortgage Loan, the Servicer shall
prepare and deliver or cause to be prepared and delivered to the Trustee for
signature and shall direct, in writing, the Trustee to execute the assumption
agreement with the Person to whom the Mortgaged Property is to be conveyed and
such modification agreement or supplement to the Mortgage Note or Mortgage or
other instruments as are reasonable or necessary to carry out the terms of the
Mortgage Note or Mortgage or otherwise to comply with any applicable laws
regarding assumptions or the transfer of the Mortgaged Property to such Person.
In connection with any such assumption, no material term of the Mortgage Note
(including, but not limited to, the Mortgage Rate, the amount of the Scheduled
Payment and any other term affecting the amount or timing of payment on the
Mortgage Loan) may be changed. In addition, the substitute Mortgagor and the
Mortgaged Property must be acceptable to the Servicer in accordance with the
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servicing standard set forth in Section 3.01. The Servicer shall notify the
Trustee that any such substitution or assumption agreement has been completed by
forwarding to the Trustee the original of such substitution or assumption
agreement, which in the case of the original shall be added to the related
Mortgage File and shall, for all purposes, be considered a part of such Mortgage
File to the same extent as all other documents and instruments constituting a
part thereof. Any fee collected by the Servicer for entering into an assumption
or substitution of liability agreement will be retained by the Servicer as
additional servicing compensation.
Section 3.03 SUBSERVICERS.
The Servicer shall perform all of its servicing
responsibilities hereunder or may cause a subservicer to perform any such
servicing responsibilities on its behalf, but the use by the Servicer of a
subservicer shall not release the Servicer from any of its obligations hereunder
with respect to the Mortgage Loans and the Servicer shall remain responsible
hereunder with respect to the Mortgage Loans for all acts and omissions of each
subservicer under the related subservicing agreement as fully as if such acts
and omissions were those of the Servicer. The Servicer shall pay all fees of
each subservicer from its own funds, and a subservicer's fee shall not exceed
the Servicing Fee payable to the Servicer hereunder.
At the cost and expense of the Servicer, without any right of
reimbursement from its Custodial Account, the Servicer shall be entitled to
terminate the rights and responsibilities of a subservicer and arrange for any
servicing responsibilities to be performed by a successor subservicer; provided,
however, that nothing contained herein shall be deemed to prevent or prohibit
the Servicer, at the Servicer's option, from electing to service the related
Mortgage Loans itself. In the event that the Servicer's responsibilities and
duties under this Agreement are terminated pursuant to Section 8.03, the
Servicer shall at its own cost and expense terminate the rights and
responsibilities of each subservicer effective as of the date of termination of
the Servicer. The Servicer shall pay all fees, expenses or penalties necessary
in order to terminate the rights and responsibilities of each subservicer from
the Servicer's own funds without reimbursement from the Trust Fund.
Notwithstanding the foregoing, the Servicer shall not be
relieved of its obligations hereunder with respect to the Mortgage Loans and
shall be obligated to the same extent and under the same terms and conditions as
if it alone were servicing and administering the Mortgage Loans. The Servicer
shall be entitled to enter into an agreement with a subservicer for
indemnification of the Servicer by the subservicer and nothing contained in this
Agreement shall be deemed to limit or modify such indemnification.
Any subservicing agreement and any other transactions or
services relating to the Mortgage Loans involving a subservicer shall be deemed
to be between such subservicer and the Servicer alone, and the Trustee shall not
have any obligations, duties or liabilities with respect to such subservicer
including any obligation, duty or liability of the Trustee to pay such
subservicer's fees and expenses or any differential in the amount of the
servicing fee paid hereunder and the amount necessary to induce any successor
servicer to act as successor servicer under this Agreement and the transactions
provided for in this Agreement. For purposes of remittances to the Trustee
pursuant to this Agreement, the Servicer shall be deemed to have received a
payment on a Mortgage Loan when a subservicer has received such payment.
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Section 3.04 DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF SERVICER
TO BE HELD FOR TRUSTEE.
Notwithstanding any other provisions of this Agreement, the
Servicer shall transmit to the Trustee as required by this Agreement all
documents and instruments in respect of a Mortgage Loan coming into the
possession of the Servicer from time to time and shall account fully to the
Trustee for any funds received by the Servicer or that otherwise are collected
by the Servicer as Liquidation Proceeds or Insurance Proceeds in respect of any
such Mortgage Loan. All Mortgage Files and funds collected or held by, or under
the control of, the Servicer in respect of any Mortgage Loans, whether from the
collection of principal and interest payments or from Liquidation Proceeds,
including but not limited to, any funds on deposit in the Custodial Account
maintained by the Servicer, shall be held by the Servicer for and on behalf of
the Trustee and shall be and remain the sole and exclusive property of the
Trustee, subject to the applicable provisions of this Agreement. The Servicer
also agrees that it shall not create, incur or subject any Mortgage File or any
funds that are deposited in the Custodial Account, Distribution Account or in
any Escrow Account, or any funds that otherwise are or may become due or payable
to the Trustee for the benefit of the Certificateholders, to any claim, lien,
security interest, judgment, levy, writ of attachment or other encumbrance, or
assert by legal action or otherwise any claim or right of set off against any
Mortgage File or any funds collected on, or in connection with, a Mortgage Loan,
except, however, that the Servicer shall be entitled to set off against and
deduct from any such funds any amounts that are properly due and payable to the
Servicer under this Agreement.
Section 3.05 MAINTENANCE OF HAZARD INSURANCE.
(a) The Servicer shall cause to be maintained for each
Mortgage Loan hazard insurance with extended coverage on the Mortgaged Property
in an amount which is at least equal to the lesser of (i) the Stated Principal
Balance of such Mortgage Loan and (ii) the amount necessary to fully compensate
for any damage or loss to the improvements that are a part of such property on a
replacement cost basis, in each case in an amount not less than such amount as
is necessary to avoid the application of any coinsurance clause contained in the
related hazard insurance policy. The Servicer shall also cause to be maintained
hazard insurance with extended coverage on each REO Property in an amount which
is at least equal to the lesser of (i) the maximum insurable value of the
improvements which are a part of such REO Property and (ii) the Stated Principal
Balance of the related Mortgage Loan at the time it became an REO Property. The
Servicer will comply in the performance of this Agreement with all reasonable
rules and requirements of each insurer under any such hazard policies. Any
amounts collected by the Servicer under any such policies (other than amounts to
be applied to the restoration or repair of the property subject to the related
Mortgage or amounts to be released to the Mortgagor in accordance with the
procedures that the Servicer would follow in servicing loans held for its own
account, subject to the terms and conditions of the related Mortgage and
Mortgage Note and in accordance with the servicing standard set forth in Section
3.01) shall be deposited in the Custodial Account, subject to withdrawal
pursuant to Section 4.02. Any cost incurred by the Servicer in maintaining any
such insurance shall not, for the purpose of calculating distributions to
Certificateholders, be added to the Stated Principal Balance of the related
Mortgage Loan, notwithstanding that the terms of such Mortgage Loan so permit.
It is understood and agreed that no earthquake or other additional insurance is
to be required of any Mortgagor other than
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pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance. If the Mortgaged Property
or REO Property is at any time in an area identified in the Federal Register by
the Federal Emergency Management Agency as having special flood hazards and
flood insurance has been made available, the Servicer shall cause to be
maintained a flood insurance policy in respect thereof. Such flood insurance
shall be in an amount equal to the lesser of (i) the Stated Principal Balance of
the related Mortgage Loan and (ii) the maximum amount of such insurance
available for the related Mortgaged Property under the national flood insurance
program (assuming that the area in which such Mortgaged Property is located is
participating in such program).
In the event that the Servicer shall obtain and maintain a
blanket policy with an insurer having a General Policy Rating of B:VI or better
in Best's Key Rating Guide (or such other rating that is comparable to such
rating) insuring against hazard losses on all of the Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations as set forth in the
first two sentences of this Section 3.05, it being understood and agreed that
such policy may contain a deductible clause, in which case the Servicer shall,
in the event that there shall not have been maintained on the related Mortgaged
Property or REO Property a policy complying with the first two sentences of this
Section 3.05, and there shall have been one or more losses which would have been
covered by such policy, deposit to the Custodial Account from its own funds the
amount not otherwise payable under the blanket policy because of such deductible
clause. In connection with its activities as administrator and servicer of the
Mortgage Loans, the Servicer agrees to prepare and present, on behalf of itself,
the Trustee and Certificateholders, claims under any such blanket policy in a
timely fashion in accordance with the terms of such policy.
(b) The Servicer shall keep in force during the term of this
Agreement a policy or policies of insurance covering errors and omissions for
failure in the performance of the Servicer's obligations under this Agreement,
which policy or policies shall be in such form and amount that would meet the
requirements of Xxxxxx Xxx or Xxxxxxx Mac if it were the purchaser of the
Mortgage Loans, unless the Servicer has obtained a waiver of such requirements
from Xxxxxx Mae or Xxxxxxx Mac. The Servicer shall provide the Trustee, upon
request, with copies of such insurance policies and fidelity bond. The Servicer
shall also maintain a fidelity bond in the form and amount that would meet the
requirements of Xxxxxx Mae or Xxxxxxx Mac, unless the Servicer has obtained a
waiver of such requirements from Xxxxxx Mae or Xxxxxxx Mac. The Servicer shall
be deemed to have complied with this provision if an Affiliate of the Servicer
has such errors and omissions and fidelity bond coverage and, by the terms of
such insurance policy or fidelity bond, the coverage afforded thereunder extends
to the Servicer. Any such errors and omissions policy and fidelity bond shall by
its terms not be cancelable without thirty days' prior written notice to the
Trustee. The Servicer shall also cause each subservicer to maintain a policy of
insurance covering errors and omissions and a fidelity bond which would meet
such requirements.
Section 3.06 PRESENTMENT OF CLAIMS AND COLLECTION OF PROCEEDS.
The Servicer shall prepare and present on behalf of the
Trustee and the Certificateholders all claims under the Insurance Policies and
take such actions (including the negotiation, settlement, compromise or
enforcement of the insured's claim) as shall be necessary to realize recovery
under such Insurance Policies. Any proceeds disbursed to the Servicer in
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respect of such Insurance Policies shall be promptly deposited in the Custodial
Account maintained by the Servicer upon receipt, except that any amounts
realized that are to be applied to the repair or restoration of the related
Mortgaged Property as a condition precedent to the presentation of claims on the
related Mortgage Loan to the insurer under any applicable Insurance Policy need
not be so deposited (or remitted).
Section 3.07 MAINTENANCE OF INSURANCE POLICIES.
(a) The Servicer shall not take any action that would result
in noncoverage under any applicable Insurance Policy of any loss which, but for
the actions of the Servicer would have been covered thereunder. The Servicer
shall use its best efforts to keep in force and effect (to the extent that the
Mortgage Loan requires the Mortgagor to maintain such insurance), any Insurance
Policy applicable to each Mortgage Loan. The Servicer shall not cancel or refuse
to renew any Insurance Policy that is in effect at the date of the initial
issuance of the Mortgage Note and is required to be kept in force hereunder.
(b) The Servicer agrees to prepare and file on a timely basis,
on behalf of the Trustee and the Certificateholders, claims to the insurer under
any Insurance Policies related to the Mortgage Loans and, in this regard, to
take such reasonable action as shall be necessary to permit recovery under any
such Insurance Policies respecting defaulted Mortgage Loans. Pursuant to Section
4.01, any amounts collected by the Servicer under any Insurance Policies shall
be deposited in the Custodial Account, subject to withdrawal pursuant to Section
4.02.
Section 3.08 RESERVED.
Section 3.09 REALIZATION UPON DEFAULTED MORTGAGE LOANS;
DETERMINATION OF EXCESS LIQUIDATION PROCEEDS AND
REALIZED LOSSES; REPURCHASES OF CERTAIN MORTGAGE
LOANS.
(a) The Servicer shall use reasonable efforts to foreclose
upon or otherwise comparably convert the ownership of properties securing such
of the Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments. In
connection with such foreclosure or other conversion, the Servicer shall follow
such practices and procedures as it shall deem necessary or advisable and as
shall be normal and usual in its general mortgage servicing activities and the
requirements of the insurer under any Required Insurance Policy; provided that
the Servicer shall not be required to expend its own funds in connection with
any foreclosure or towards the restoration of any property unless it shall
determine (i) that such restoration and/or foreclosure will increase the
proceeds of liquidation of the Mortgage Loan after reimbursement to itself of
such expenses and (ii) that such expenses will be recoverable to it through
Liquidation Proceeds (respecting which it shall have priority for purposes of
withdrawals from the Custodial Account pursuant to Section 4.02). If the
Servicer reasonably believes that Liquidation Proceeds with respect to any such
Mortgage Loan would not be increased as a result of such foreclosure or other
action, such Mortgage Loan will be charged-off and will become a Liquidated
Loan. The Servicer will give notice of any such charge-off to the Trustee. The
Servicer shall be responsible for all other costs and expenses incurred by it in
any such proceedings; provided that such costs and expenses shall be Servicing
Advances and that it shall be entitled to reimbursement thereof from the
proceeds of
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liquidation of the related Mortgaged Property, as contemplated in Section 4.02.
If the Servicer has knowledge that a Mortgaged Property that the Servicer is
contemplating acquiring in foreclosure or by deed-in-lieu of foreclosure is
located within a one-mile radius of any site with environmental or hazardous
waste risks known to the Servicer, the Servicer shall, prior to acquiring the
Mortgaged Property, consider such risks and only take action in accordance with
its established environmental review procedures.
With respect to any REO Property, the deed or certificate of
sale shall be taken in the name of the Trustee for the benefit of the
Certificateholders (or the Trustee's nominee on behalf of the
Certificateholders). The Trustee's name shall be placed on the title to such REO
Property solely as the Trustee hereunder and not in its individual capacity. The
Servicer shall ensure that the title to such REO Property references this
Agreement and the Trustee's capacity hereunder. Pursuant to its efforts to sell
such REO Property, the Servicer shall either itself or through an agent selected
by the Servicer protect and conserve such REO Property in the same manner and to
such extent as is customary in the locality where such REO Property is located
and may, incident to its conservation and protection of the interests of the
Certificateholders, rent the same, or any part thereof, as the Servicer deems to
be in the best interest of the Servicer and the Certificateholders for the
period prior to the sale of such REO Property. The Servicer shall prepare for
and deliver to the Trustee a statement with respect to each REO Property that
has been rented showing the aggregate rental income received and all expenses
incurred in connection with the management and maintenance of such REO Property
at such times as is necessary to enable the Trustee to comply with the reporting
requirements of the REMIC Provisions. The net monthly rental income, if any,
from such REO Property shall be deposited in the Custodial Account no later than
the close of business on each Determination Date. The Servicer shall perform the
tax reporting and withholding related to foreclosures, abandonments and
cancellation of indebtedness income as specified by Sections 1445, 6050J and
6050P of the Code by preparing and filing such tax and information returns, as
may be required.
In the event that the Trust Fund acquires any Mortgaged
Property as aforesaid or otherwise in connection with a default or imminent
default on a Mortgage Loan, the Servicer shall dispose of such Mortgaged
Property prior to three years after its acquisition by the Trust Fund or, at the
expense of the Trust Fund, request from the Internal Revenue Service more than
60 days prior to the day on which such three-year period would otherwise expire,
an extension of the three-year grace period. The Trustee shall be supplied with
an Opinion of Counsel (such opinion not to be an expense of the Trustee or the
Trust Fund) to the effect that the holding by the Trust Fund of such Mortgaged
Property subsequent to such three-year period will not result in the imposition
of taxes on "prohibited transactions" of REMIC I, REMIC II or REMIC III as
defined in section 860F of the Code or cause either REMIC I, REMIC II or REMIC
III to fail to qualify as a REMIC at any time that any Certificates are
outstanding, in which case the Trust Fund may continue to hold such Mortgaged
Property (subject to any conditions contained in such Opinion of Counsel).
Notwithstanding any other provision of this Agreement, no Mortgaged Property
acquired by the Trust Fund shall be rented (or allowed to continue to be rented)
or otherwise used for the production of income by or on behalf of the Trust Fund
in such a manner or pursuant to any terms that would (i) cause such Mortgaged
Property to fail to qualify as "foreclosure property" within the meaning of
section 860G(a)(8) of the Code or (ii) subject any of REMIC I, REMIC II or REMIC
III to the imposition of any federal, state or local income taxes on the income
earned from such Mortgaged Property under section 860G(c) of the Code or
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otherwise, unless the Servicer has agreed to indemnify and hold harmless the
Trust Fund with respect to the imposition of any such taxes.
The decision of the Servicer to foreclose on a defaulted
Mortgage Loan shall be subject to a determination by the Servicer that the
proceeds of such foreclosure would exceed the costs and expenses of bringing
such a proceeding. The income earned from the management of any Mortgaged
Properties acquired through foreclosure or other judicial proceeding, net of
reimbursement to the Servicer for expenses incurred (including any property or
other taxes) in connection with such management and net of unreimbursed
Servicing Fees, Advances, Servicing Advances and any management fee paid or to
be paid with respect to the management of such Mortgaged Property, shall be
applied to the payment of principal of, and interest on, the related defaulted
Mortgage Loans (with interest accruing as though such Mortgage Loans were still
current) and all such income shall be deemed, for all purposes in the Agreement,
to be payments on account of principal and interest on the related Mortgage
Notes and shall be deposited into the Custodial Account. To the extent the
income received during a Prepayment Period is in excess of the amount
attributable to amortizing principal and accrued interest at the related
Mortgage Rate on the related Mortgage Loan, such excess shall be considered to
be a partial Principal Prepayment for all purposes hereof.
The Liquidation Proceeds from any liquidation of a Mortgage
Loan, net of any payment to the Servicer as provided above, shall be deposited
in the Custodial Account on the next succeeding Determination Date following
receipt thereof for distribution on the related Distribution Date, except that
any Excess Liquidation Proceeds shall be retained by the Servicer as additional
servicing compensation.
The proceeds of any Liquidated Loan, as well as any recovery
resulting from a partial collection of Liquidation Proceeds or any income from
an REO Property, shall be applied in the following order of priority: first, to
reimburse the Servicer for any related unreimbursed Servicing Advances and
Servicing Fees, pursuant to Section 4.02 or this Section 3.09; second, to
reimburse the Servicer for any unreimbursed Advances, pursuant to Section 4.02
or this Section 3.09; third, to accrued and unpaid interest (to the extent no
Advance has been made for such amount) on the Mortgage Loan or related REO
Property, at the Net Mortgage Rate to the first day of the month in which such
amounts are required to be distributed; and fourth, as a recovery of principal
of the Mortgage Loan.
(b) On each Determination Date, the Servicer shall determine
the respective aggregate amounts of Excess Liquidation Proceeds and Realized
Losses, if any, for the related Prepayment Period.
(c) The Servicer has no intent to foreclose on any Mortgage
Loan based on the delinquency characteristics as of the Closing Date; provided,
however, that the foregoing does not prevent the Servicer from initiating
foreclosure proceedings on any date hereafter if the facts and circumstances of
such Mortgage Loans including delinquency characteristics in the Servicer's
discretion so warrant such action.
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Section 3.10 SERVICING COMPENSATION.
As compensation for its activities hereunder, the Servicer
shall be entitled to retain or withdraw from its Custodial Account out of each
payment of interest on each Mortgage Loan included in the Trust Fund an amount
equal to the Servicing Fee. In addition, the Servicer shall be entitled to
recover unpaid Servicing Fees out of Insurance Proceeds or condemnation proceeds
to the extent permitted by Section 4.02.
Additional servicing compensation with respect to Mortgage
Loans in the form of any Excess Liquidation Proceeds, assumption fees, late
payment charges, insufficient funds charges and ancillary income to the extent
such fees or charges are received by the Servicer, all income and gain net of
any losses realized from Permitted Investments with respect to funds in or
credited to the Custodial Account shall be retained by the Servicer to the
extent not required to be deposited in the Custodial Account pursuant to Section
4.02. The Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder (including payment of any
premiums for hazard insurance, as required by Section 3.05 and maintenance of
the other forms of insurance coverage required by Section 3.07) and shall not be
entitled to reimbursement therefor except as specifically provided in Section
4.02.
Section 3.11 REO PROPERTY.
(a) In the event the Trust Fund acquires ownership of any REO
Property in respect of any related Mortgage Loan, the deed or certificate of
sale shall be issued to the Trustee, or to its nominee, on behalf of the related
Certificateholders. The Servicer shall sell any REO Property as expeditiously as
possible and in accordance with the provisions of this Agreement. Pursuant to
its efforts to sell such REO Property, the Servicer shall protect and conserve
such REO Property in the manner and to the extent required herein, in accordance
with the REMIC Provisions.
(b) The Servicer shall deposit all funds collected and
received in connection with the operation of any REO Property into the Custodial
Account.
(c) The Servicer, upon the final disposition of any REO
Property, shall be entitled to reimbursement for any related unreimbursed
Advances, unreimbursed Servicing Advances or Servicing Fees from Liquidation
Proceeds received in connection with the final disposition of such REO Property;
provided, that any such unreimbursed Advances or Servicing Fees as well as any
unpaid Servicing Fees may be reimbursed or paid, as the case may be, prior to
final disposition, out of any net rental income or other net amounts derived
from such REO Property.
Section 3.12 LIQUIDATION REPORTS.
Upon the foreclosure of any Mortgaged Property relating to a
Mortgage Loan or the acquisition thereof by the Trust Fund pursuant to a
deed-in-lieu of foreclosure, the Servicer shall submit a liquidation report to
the Trustee containing such information as shall be mutually acceptable to the
Servicer and the Trustee with respect to such Mortgaged Property.
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Section 3.13 ANNUAL CERTIFICATE AS TO COMPLIANCE.
(A) The Servicer shall deliver to the Depositor and the
Trustee not later than March 1, 2004 and thereafter, not later than March 15th
of each year (or, in each case, if such day is not a Business Day, the
immediately preceding Business Day), a certificate of a Servicing Officer
stating, as to each signatory thereof, that (i) a review of the activities of
the Servicer during the preceding calendar year and of performance under this
Agreement has been made under such officers' supervision, and (ii) to the best
of such officers' knowledge, based on such review, the Servicer has fulfilled
all of its obligations under this Agreement throughout such year, or, if there
has been a default in the fulfillment of any such obligation, specifying each
such default known to such officers and the nature and status thereof except for
such defaults as such officer in its good faith judgment believe to be
immaterial.
(B) (i) The Servicer shall deliver to the Depositor and the
Trustee, on or before March 1, 2004, and for each year thereafter, not later
than March 15th or on any alternative date specified by the Depositor or the
Trustee upon thirty (30) days written request, a certification containing the
information set forth in Exhibit L. Such certification shall be signed by the
senior officer in charge of servicing of the Servicer. In addition, the Servicer
shall provide such other information with respect to the Mortgage Loans and the
servicing and administration thereof within the control of the Servicer which
shall be required to enable the Depositor and the Trustee to comply with the
reporting requirements of the Securities and Exchange Act of 1934, as amended
(the "Exchange Act").
(ii) The Servicer shall indemnify and hold
harmless the Depositor, the
Trustee and their respective officers, directors, agents and affiliates from and
against any losses, damages, penalties, fines, forfeitures, reasonable legal
fees and related costs, judgments and other costs and expenses arising out of or
based upon a breach by the Servicer or any of its officers, directors, agents or
affiliates of its obligations under this Section 3.13(b), or a breach in any of
the representations in the certification delivered pursuant to clause (b)(i)
above, or the Servicer's negligence, bad faith or willful misconduct in
connection therewith. If the indemnification provided for herein is unavailable
or insufficient to hold harmless the Depositor and the Trustee, then the
Servicer agrees that it shall contribute to the amount paid or payable by the
Depositor and the Trustee as a result of the losses, claims, damages or
liabilities of the Depositor or the Trustee in such proportion as is appropriate
to reflect the relative fault of the Trustee or the Depositor on the one hand
and the Servicer on the other in connection with a breach of the Servicer's
obligations under this Section 3.13(b) or the Servicer's negligence, bad faith
or wilful misconduct in connection therewith or a breach of any of the
representations in the certification delivered pursuant to clause (b)(i) above.
Section 3.14 ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS'
SERVICING REPORT.
Not later than February 28th of each year, commencing in 2004,
the Servicer, at its expense, shall cause a nationally recognized firm of
independent certified public accountants to furnish to the Servicer a report
stating that (i) it has obtained a letter of representation regarding certain
matters from the management of the Servicer which includes an assertion that the
Servicer has complied with certain minimum residential mortgage loan servicing
standards, identified in the Uniform Single Attestation Program for Mortgage
Bankers established by the Mortgage Bankers Association of America, with respect
to the servicing of residential mortgage loans during the most recently
completed fiscal year and (ii) on the basis of an examination
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conducted by such firm in accordance with standards established by the American
Institute of Certified Public Accountants, such representation is fairly stated
in all material respects, subject to such exceptions and other qualifications
that may be appropriate. In rendering its report such firm may rely, as to
matters relating to the direct servicing of residential mortgage loans by
subservicers, upon comparable reports of firms of independent certified public
accountants rendered on the basis of examinations conducted in accordance with
the same standards (rendered within one year of such report) with respect to
those subservicers. Promptly upon receipt of such report, the Servicer shall
furnish a copy of such report to the Depositor, the Trustee and each Rating
Agency. Copies of such statement shall be provided by the Trustee to any
Certificateholder upon request at the Servicer's expense, provided that such
statement is delivered by the Servicer to the Trustee.
Section 3.15 BOOKS AND RECORDS.
The Servicer shall be responsible for maintaining, and shall
maintain, a complete set of books and records for the Mortgage Loans which shall
be appropriately identified in the Servicer's computer system to clearly reflect
the ownership of the Mortgage Loans by the Trust. In particular, the Servicer
shall maintain in its possession, available for inspection by the Trustee and
shall deliver to the Trustee upon reasonable prior request and during normal
business hours, evidence of compliance with all federal, state and local laws,
rules and regulations. To the extent that original documents are not required
for purposes of realization of Liquidation Proceeds or Insurance Proceeds,
documents maintained by the Servicer may be in the form of microfilm or
microfiche or such other reliable means of recreating original documents,
including, but not limited to, optical imagery techniques so long as the
Servicer complies with the requirements of Accepted Servicing Practices.
The Servicer shall maintain with respect to each Mortgage Loan
and shall upon reasonable prior request and during normal business hours make
available for inspection by the Trustee the related servicing file during the
time such Mortgage Loan is subject to this Agreement and thereafter in
accordance with applicable law.
Section 3.16 THE TRUSTEE.
The Trustee shall furnish the Servicer with any powers of
attorney and other documents in form as mutually agreed upon and necessary or
appropriate to enable the Servicer to service and administer the Mortgage Loans
and REO Properties.
The Trustee shall provide access to the records and
documentation in possession of the Trustee regarding the related Mortgage Loans
and REO Property and the servicing thereof to the Certificateholders, the FDIC,
and the supervisory agents and examiners of the FDIC, such access being afforded
only upon reasonable prior written request and during normal business hours at
the office of the Trustee; provided, however, that, unless otherwise required by
law, the Trustee shall not be required to provide access to such records and
documentation if the provision thereof would violate the legal right to privacy
of any Mortgagor. The Trustee shall allow representatives of the above entities
to photocopy any of the records and documentation and shall provide equipment
for that purpose at a charge that covers the Trustee's actual costs.
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The Trustee shall execute and deliver as directed in writing
by the Servicer any court pleadings, requests for trustee's sale or other
documents necessary or desirable to (i) the foreclosure or trustee's sale with
respect to a Mortgaged Property; (ii) any legal action brought to obtain
judgment against any Mortgagor on the Mortgage Note or Security Instrument;
(iii) obtain a deficiency judgment against the Mortgagor; or (iv) enforce any
other rights or remedies provided by the Mortgage Note or Security Instrument or
otherwise available at law or equity.
Section 3.17 REMIC-RELATED COVENANTS.
For as long as each REMIC shall exist, the Trustee shall act
in accordance herewith to assure continuing treatment of such REMIC as a REMIC,
and the Trustee shall comply with any directions of the Seller or the Servicer
to assure such continuing treatment. In particular, the Trustee shall not (a)
knowingly sell or permit the sale of all or any portion of the Mortgage Loans or
of any investment of deposits in an Account unless such sale is as a result of a
repurchase of the Mortgage Loans pursuant to this Agreement or the Trustee has
received a REMIC Opinion prepared at the expense of the Trust Fund; and (b)
other than with respect to a substitution pursuant to the Mortgage Loan Purchase
Agreement or Section 2.04 of this Agreement, as applicable, accept any
contribution to any REMIC after the Startup Day without receipt of a REMIC
Opinion.
Section 3.18 ENFORCING OBLIGATIONS OF THE SERVICER.
(a) Notwithstanding anything in this Agreement or the Credit
Risk Management Agreement to the contrary, the Trustee shall not have any duty
or obligation to enforce the Credit Risk Management Agreement or to supervise,
monitor or oversee the activities of the Credit Risk Manager or the Servicer
under the Credit Risk Management Agreement with respect to any action taken or
not taken by the Servicer pursuant to a recommendation of the Credit Risk
Manager. To the extent that the costs and expenses of the Trustee related to any
termination of the Servicer, appointment of a Successor Servicer or the transfer
and assumption of servicing by the Trustee with respect to this Agreement
(including, without limitation, (i) all legal costs and expenses and all due
diligence costs and expenses associated with an evaluation of the potential
termination of the Servicer as a result of an event of default by such Person
and (ii) all costs and expenses associated with the complete transfer of
servicing, including all servicing files and all servicing data and the
completion, correction or manipulation of such servicing data as may be required
by the Successor Servicer to correct any errors or insufficiencies in the
servicing data or otherwise to enable the successor service to service the
Mortgage Loans in accordance with this Agreement) are not fully and timely
reimbursed by the Servicer, the Trustee shall be entitled to reimbursement of
such costs and expenses from the Distribution Account.
(b) If the Trustee acts as a Successor Servicer to the
Servicer, it will not assume liability for the representations and warranties of
the Servicer contained herein.
Section 3.19 RELEASE OF MORTGAGE FILES.
(a) Upon becoming aware of the payment in full of any Mortgage
Loan, or the receipt by the Servicer of a notification that payment in full has
been escrowed in a manner
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customary for such purposes for payment to Certificateholders on the next
Distribution Date, the Servicer will promptly furnish to the Trustee and the
Custodian, on behalf of the Trustee, two copies of a certification substantially
in the form of Exhibit H hereto signed by a Servicing Officer or in a mutually
agreeable electronic format which will, in lieu of a signature on its face,
originate from a Servicing Officer (which certification shall include a
statement to the effect that all amounts received in connection with such
payment that are required to be deposited in the Custodial Account pursuant to
Article V have been or will be so deposited) and shall request that the
Custodian, on behalf of the Trustee, deliver to the Servicer the related
Mortgage File. Upon receipt of such certification and request, the Custodian, on
behalf of the Trustee, shall promptly release the related Mortgage File to the
Servicer and the Trustee and Custodian shall have no further responsibility with
regard to such Mortgage File. Upon any such payment in full, the Servicer is
authorized, to give, as agent for the Trustee, as the mortgagee under the
Mortgage that secured the Mortgage Loan, an instrument of satisfaction (or
assignment of mortgage without recourse) regarding the Mortgaged Property
subject to the Mortgage, which instrument of satisfaction or assignment, as the
case may be, shall be delivered to the Person or Persons entitled thereto
against receipt therefor of such payment, it being understood and agreed that no
expenses incurred in connection with such instrument of satisfaction or
assignment, as the case may be, shall be chargeable to the Custodial Account.(I)
a
(b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan and in accordance with this Agreement, the
Trustee shall execute such documents as shall be prepared and furnished to the
Trustee by the Servicer (in form reasonably acceptable to the Trustee) and as
are necessary to the prosecution of any such proceedings. The Custodian, on
behalf of the Trustee, shall, upon the written request of the Servicer, and
delivery to the Custodian, on behalf of the Trustee, of two copies of a request
for release signed by a Servicing Officer substantially in the form of Exhibit H
(or in a mutually agreeable electronic format which will, in lieu of a signature
on its face, originate from a Servicing Officer), release the related Mortgage
File held in its possession or control to the Servicer. Such request for release
shall obligate the Servicer to return the Mortgage File to the Custodian on
behalf of the Trustee, when the need therefor by such Person no longer exists
unless the Mortgage Loan shall be liquidated, in which case, upon receipt of a
certificate of a Servicing Officer similar to that hereinabove specified, the
Mortgage File shall be released by the Custodian, on behalf of the Trustee, to
the Servicer.
Section 3.20 DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF A
SERVICER TO BE HELD FOR TRUSTEE.
(a) The Servicer (to the extent required by this) shall
transmit to the Trustee or to Custodian such documents and instruments coming
into the possession of such Person from time to time as are required by the
terms hereof to be delivered to the Trustee or the Custodian. Any funds received
by the Servicer in respect of any Mortgage Loan or which otherwise are collected
by the Servicer as Liquidation Proceeds or Insurance Proceeds in respect of any
Mortgage Loan shall be held for the benefit of the Trustee and the
Certificateholders subject to the right of the Servicer to retain its Servicing
Fee and other amounts as provided in this Agreement.
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Section 3.21 POSSESSION OF CERTAIN INSURANCE POLICIES AND DOCUMENTS.
The Servicer shall retain possession and custody of the
originals (to the extent available) of any Insurance Policies, or certificate of
insurance if applicable, and any certificates of renewal as to the foregoing as
may be issued from time to time as contemplated by this Agreement. Until all
amounts distributable in respect of the Certificates have been distributed in
full, the Trustee (or the Custodian, as directed by the Trustee) shall retain
possession and custody of each Mortgage File in accordance with and subject to
the terms and conditions of this Agreement.
Section 3.22 ANNUAL CERTIFICATE AS TO COMPLIANCE.
(a) The Depositor shall prepare and file or caused to be
prepared and filed the initial Form 8-K. Within 15 days after each Distribution
Date, the Trustee shall, in accordance with industry standards, file with the
Commission via the Electronic Data Gathering and Retrieval System ("XXXXX"), a
Form 8-K with a copy of the statement to be furnished by the Trustee to the
Certificateholders for such Distribution Date as an exhibit thereto. Prior to
January 30, 2004, the Trustee shall, in accordance with industry standards, file
a Form 15 Suspension Notice with respect to the Trust Fund. Prior to March 30,
2004 and annually thereafter, if required, the Trustee shall, subject to
subsection (d) below, file a Form 10-K, in substance conforming to industry
standards, with respect to the Trust Fund. Such Form 10K shall be signed by the
Depositor and shall include, to the extent available, as exhibits (i) each
Servicer's annual statement of compliance described under Section 3.13 hereof,
(ii) the Servicer's accountants report described under Section 3.14 and (iii)
the Form 10-K certification signed by the Depositor. If items (i), (ii) and
(iii) in the preceding sentence are not timely delivered, the Trustee shall file
an amended Form 10-K including such documents as exhibits reasonably promptly
after they are delivered to the Trustee. The Depositor hereby grants to the
Trustee a limited power of attorney to execute and file each Form 8-K and the
Form 15 on behalf of the Depositor. Such power of attorney shall continue until
either the earlier of (i) receipt by the Trustee from the Depositor of written
termination of such power of attorney and (ii) the termination of the Trust
Fund. The Depositor agrees to promptly furnish to the Trustee, from time to time
upon request, such further information, reports and financial statements within
its control related to this Agreement and the Mortgage Loans as the Trustee
reasonably deems appropriate to prepare and file a Form 8-K and the Form 15 with
the Commission. The Trustee will reasonably cooperate with the Depositor in
connection with any additional filings with respect to the Trust Fund as the
Depositor deems necessary under the Exchange Act. Copies of all reports filed by
the Trustee under the Exchange Act shall be sent to the Depositor.
(b) In connection with the filing of any 10-K hereunder, the
Trustee shall sign a certification (in the form attached hereto as Exhibit M)
for the Depositor regarding certain aspects of the Form 10-K certification
signed by the Depositor, provided, however, that the Trustee shall not be
required to undertake an analysis of any accountant's report attached as an
exhibit to the Form 10-K.
(c) (i) The Trustee shall indemnify and hold harmless the
Depositor and its officers, directors and Affiliates from and against any
losses, damages, penalties, fines, forfeitures, reasonable and necessary legal
fees and related costs, judgments and other costs and expenses arising out of or
based upon a breach of the Trustee's obligations under this Section 3.22 or the
Trustee's negligence, bad faith or willful misconduct in connection therewith.
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(ii) The Depositor shall indemnify and hold harmless
the Trustee and its officers,
directors and Affiliates from and against any losses, damages, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs, judgments
and other costs and expenses arising out of or based upon a breach of the
obligations of the Depositor under this Section 3.22 or the Depositor's
negligence, bad faith or willful misconduct in connection therewith.
(iii) If the indemnification provided for herein is
unavailable or insufficient to
hold harmless the Depositor or the Trustee, as applicable, then the other party,
in connection with a breach of its respective obligations under this Section
3.22 or its respective negligence, bad faith or willful misconduct in connection
therewith, agrees that it shall contribute to the amount paid or payable by the
other party as a result of the losses, claims, damages or liabilities of the
other party in such proportion as is appropriate to reflect the relative fault
and the relative benefit of the Depositor on the one hand and the Trustee on the
other.
(d) Nothing shall be construed from the foregoing subsections
(a), (b) and (c) to require the Trustee or any officer, director or Affiliate
thereof to sign any Form 10-K or any certification contained therein.
Furthermore, the inability of the Trustee to file a Form 10-K as a result of the
lack of required information as set forth in Section 3.22(a) or required
signatures on such Form 10-K or any certification contained therein shall not be
regarded as a breach by the Trustee of any obligation under this Agreement.
(e) Notwithstanding the provisions of Section 11.01, this
Section 3.22 may be amended without the consent of the Certificateholders.
Section 3.23 UCC.
The Seller agrees to execute continuation statements for any
Uniform Commercial Code financing statements which the Seller has informed the
Trustee were filed on the Closing Date in connection with the Trust. The Seller
shall file any financing statements or amendments and continuation statements
thereto required by any change in the Uniform Commercial Code.
Section 3.24 OPTIONAL PURCHASE OF DEFAULTED MORTGAGE LOANS.
With respect to any Mortgage Loans which as of the first day
of a Calendar Quarter is delinquent in payment by 91 days or more or is an REO
Property, the Seller shall have the right to purchase such Mortgage Loan or REO
Property from the Trust at a price equal to the Purchase Price.
If at any time the Seller remits to the Trustee a payment for
deposit in the Distribution Account covering the amount of the Purchase Price
for such a Mortgage Loan, then the Trustee shall execute the assignment of such
Mortgage Loan at the request of the Seller without recourse to the Seller 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 Seller 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.
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ARTICLE IV
ACCOUNTS
Section 4.01 COLLECTION OF MORTGAGE LOAN PAYMENTS; CUSTODIAL ACCOUNT.
(a) The Servicer shall make reasonable efforts in accordance
with customary and usual standards of practice of prudent mortgage
lenders in the respective states in which the Mortgaged Properties are
located to collect all payments called for under the terms and
provisions of the Mortgage Loans to the extent such procedures shall be
consistent with this Agreement and the terms and provisions of any
related Required Insurance Policy. Consistent with the foregoing, the
Servicer may in its discretion (i) waive any late payment charge and
(ii) extend the due dates for payments due on a Mortgage Note for a
Mortgage Loan for a period not greater than 125 days. In the event of
any such arrangement, the Servicer shall make 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, and shall be entitled to
reimbursement therefor in accordance with Section 5.01. The Servicer
shall not be required to institute or join in litigation with respect
to collection of any payment (whether under a Mortgage, Mortgage Note
or otherwise or against any public or governmental authority with
respect to a taking or condemnation) if it reasonably believes that
enforcing the provision of the Mortgage or other instrument pursuant to
which such payment is required is prohibited by applicable law. In
addition, if (x) a Mortgage Loan is in default or default is imminent
or (y) the Servicer delivers to the Trustee a certification, based on
the advice of counsel or certified public accountants, in either case,
that have a national reputation with respect to taxation of REMICs,
that a modification of such Mortgage Loan will not result in the
imposition of taxes on or disqualify any of REMIC I, REMIC II or REMIC
III, the Servicer may, (A) amend the related Mortgage Note to reduce
the Mortgage Rate applicable thereto, provided that such reduced
Mortgage Rate shall in no event be lower than 5.00% with respect to any
Mortgage Loan and (B) amend any Mortgage Note for an Mortgage Loan to
extend to the maturity thereof.
(b) The Servicer shall establish and maintain a segregated
Custodial Account (which shall at all times be an Eligible Account)
with a depository institution in the name of the Servicer for the
benefit of the Trustee on behalf of the Certificateholders and
designated "JPMorgan Chase Bank, as trustee for registered holders of
Nomura Asset Acceptance Corporation, Mortgage Pass-Through
Certificates, Series 0000-X0". Xx behalf of the Trust Fund, the
Servicer shall deposit or cause to be deposited in the clearing account
in which it customarily deposits payments and collection on mortgage
loans in connection with its mortgage loan servicing activities on a
daily basis and in no event more than one Business Day after the
Servicer's receipt thereof, and shall thereafter deposit in the
Custodial Account, in no event more than two Business Days after the
Servicer's receipt thereof, 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 principal and interest due on
the Mortgage Loans on or before the Cut-off Date) and the following
amounts required to be deposited hereunder:
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(i) all payments on account of principal, including Principal
Prepayments and Subsequent Recoveries, on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans
net of the related Servicing Fee permitted under Section 3.10 and LPMI
Fees, if any;
(iii) all Liquidation Proceeds, Insurance Proceeds and
condemnation proceeds with respect to the Mortgage Loans, other than
proceeds to be applied to the restoration or repair of the related
Mortgaged Property or released to the Mortgagor in accordance with the
Servicer's normal servicing procedures;
(iv) any amount required to be deposited by the Servicer
pursuant to Section 4.01(c) in connection with any losses on Permitted
Investments;
(v) any amounts required to be deposited by the Servicer
pursuant to Section 3.05;
(vi) without duplication, all payments of claims under the PMI
Policy;
(vii) any amounts paid by an Advance Financing Person in
respect of Advances or Servicing Advances;
(viii) any Prepayment Charges collected by the Servicer in
connection with the Principal Prepayment of any of the Mortgage Loans
and amounts required to be deposited by the Servicer in connection with
a breach of its obligations under Section 3.01; and
(ix) any other amounts required to be deposited hereunder.
The foregoing requirements for remittance by the Servicer into
the Custodial Account shall be exclusive, it being understood and agreed that,
without limiting the generality of the foregoing, payments in the nature of late
payment charges or assumption fees, if collected, need not be remitted by the
Servicer. In the event that the Servicer shall remit any amount not required to
be remitted and not otherwise subject to withdrawal pursuant to Section 4.02, it
may at any time withdraw or direct the institution maintaining the Custodial
Account, to withdraw such amount from the Custodial Account, any provision
herein to the contrary notwithstanding. Such withdrawal or direction may be
accomplished by delivering written notice thereof to the institution maintaining
the Custodial Account, that describes the amounts deposited in error in the
Custodial Account. The Servicer shall maintain adequate records with respect to
all withdrawals made pursuant to this Section. All funds deposited in the
Custodial Account shall be held in trust for the Certificateholders until
withdrawn in accordance with Section 4.02.
(c) The institution that maintains the Custodial Account or
other authorized entity shall invest the funds in the Custodial Account, in the
manner directed by the Servicer, in Permitted Investments which shall mature not
later than the next succeeding Remittance Date and shall not be sold or disposed
of prior to its maturity. All such Permitted Investments shall be made in the
name of the Trustee, for the benefit of the Certificateholders. All income and
gain net of any losses realized from any such investment shall be for the
benefit of the Servicer as
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servicing compensation and shall be remitted to it monthly as provided herein.
The amount of any losses incurred in the Custodial Account in respect of any
such investments shall be deposited by the Servicer into the Custodial Account,
out of the Servicer's own funds.
(d) The Servicer shall give at least 30 days advance notice to
the Trustee, the Seller, each Rating Agency and the Depositor of any proposed
change of location of the Custodial Account prior to any change thereof.
Section 4.02 PERMITTED WITHDRAWALS FROM THE CUSTODIAL ACCOUNT.
(a) The Servicer may from time to time make withdrawals from
the Custodial Account for the following purposes:
(i) to pay itself (to the extent not previously paid to or
withheld by the Servicer), as servicing compensation in accordance with
Section 3.10, that portion of any payment of interest that equals the
Servicing Fee for the period with respect to which such interest
payment was made, and, as additional servicing compensation, those
other amounts set forth in Section 3.10;
(ii) to reimburse the Servicer or an Advance Financing Person
for (A) any unreimbursed Advances to the extent of amounts received
which represent late recoveries of payments of principal and/or
interest (net of the related Servicing Fees), Liquidation Proceeds and
Insurance Proceeds on Mortgage Loans with respect to which such
Advances were made in accordance with the provisions of Section 5.01;
and (B) any unreimbursed Advances with respect to the final liquidation
of a Mortgage Loan that are Nonrecoverable Advances, but only to the
extent that late recoveries of payments of principal and/or interest,
Liquidation Proceeds and Insurance Proceeds received with respect to
such Mortgage Loan are insufficient to reimburse the Servicer or an
Advance Financing Person for such unreimbursed Advances or (C) subject
to Section 4.02(b), any unreimbursed Advances to the extent of Amounts
Held For Future Distribution funds held in the Custodial Account that
were not included in Group Available Funds for the preceding
Distribution Date;
(iii) to reimburse the Servicer or an Advance Financing Person
for any Nonrecoverable Advances;
(iv) to reimburse the Servicer from Insurance Proceeds for
Insured Expenses covered by the related Insurance Policy;
(v) to pay the Servicer any unpaid Servicing Fees and to
reimburse it or any Advance Financing Person for any unreimbursed
Servicing Advances, provided, however, that the Servicer's or such
Advance Financing Person's right to reimbursement for Servicing
Advances pursuant to this subclause (v) with respect to any Mortgage
Loan shall be limited to amounts received on particular Mortgage
Loan(s) (including, for this purpose, late recoveries of payments of
principal and/or interest, Liquidation Proceeds, Insurance Proceeds,
condemnation proceeds and purchase and repurchase proceeds) that
represent late recoveries of the payments for which such Servicing
Advances were made;
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(vi) to pay to the Seller or the Depositor with respect to
each Mortgage Loan or property acquired in respect thereof that has
been purchased pursuant to Section 2.02, 2.03 or 3.24, all amounts
received thereon and not taken into account in determining the related
Stated Principal Balance of such repurchased Mortgage Loan;
(vii) to pay any expenses recoverable by the Servicer pursuant
to Section 7.04;
(viii) to withdraw any amount deposited in the Custodial
Account and not required to be deposited therein; and
(ix) to clear and terminate the Custodial Account upon
termination of this Agreement pursuant to Section 10.01 hereof.
In addition, no later than 3:00 p.m. Eastern time on the
Remittance Date, the Servicer shall withdraw from the Custodial Account and
remit to the Trustee the amount required to be withdrawn therefrom pursuant to
Section 4.05. In addition, on or before the Remittance Date, the Servicer shall
remit to the Trustee for deposit in the Distribution Account any Advances or any
payments of Compensating Interest required to be made by the Servicer with
respect to the Mortgage Loans.
The Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis with respect to the Mortgage Loans, for the
purpose of justifying any withdrawal from the Custodial Account pursuant to
subclauses (i), (ii), (iv), (v) and (vi) above. Prior to making any withdrawal
from the Custodial Account pursuant to subclause (iii), the Servicer shall
deliver to the Trustee an Officer's Certificate of a Servicing Officer
indicating the amount of any previous Advance or Servicing Advance determined by
the Servicer to be a Nonrecoverable Advance and identifying the related Mortgage
Loan(s), and their respective portions of such Nonrecoverable Advance.
(b) Notwithstanding the foregoing, any Amounts Held For Future
Distribution withdrawn by the Servicer as permitted in Section 4.02(a)(ii) in
reimbursement of Advances previously made shall be appropriately reflected in
the Servicer's records and replaced by the Servicer by deposit in the Custodial
Account, no later than the close of business on any future Remittance Date on
which the funds on deposit in the Custodial Account shall be less than the
amount required to be remitted to the Trust on such Remittance Date; provided,
however that if the rating of the Servicer (including any Successor Servicer) is
less than "BBB", the Servicer shall be required to replace such funds by deposit
to the Distribution Account, no later than the close of business on the
Remittance Date immediately following the Due Period or Prepayment Period for
which such amounts relate.
Section 4.03 REPORTS TO TRUSTEE.
On or before the tenth calendar day of each month, the Servicer shall
furnish to the Trustee electronically in a format acceptable to the Trustee loan
accounting reports in the investor's assigned loan number order to document the
payment activity on each Mortgage Loan on an individual mortgage loan basis.
With respect to each month, such loan accounting reports shall contain the
following:
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(i) With respect to each Scheduled Payment (on both an actual
and scheduled basis with respect to mortgage loan balances and on an
actual basis with respect to paid-through dates), the amount of such
remittance allocable to principal (including a separate breakdown of
any Principal Prepayment, including the amount of any Prepayment
Interest Shortfall);
(ii) with respect to each Monthly Payment, the amount of such
remittance allocable to scheduled interest;
(iii) the amount of any Prepayment Charges collected by the
Servicer;
(iv) the amount of servicing compensation received by the
Servicer during the prior calendar month;
(v) the aggregate Stated Principal Balance of the Mortgage
Loans;
(vi) the aggregate amount of Advances made by the Servicer
pursuant to Section 5.01;
(vii) the aggregate of any expenses reimbursed to the Servicer
during the prior calender month pursuant to Section 4.02; and
(viii) the number and aggregate outstanding principal balances
of Mortgage Loans (a) delinquent (1) 30 to 59 days, (2) 60 to 89 days,
(3) 90 days or more; (b) as to which foreclosure has commenced; and (c)
as to which REO Property has been acquired.
Section 4.04 COLLECTION OF TAXES; ASSESSMENTS AND SIMILAR ITEMS;
ESCROW ACCOUNTS.
With respect to each Mortgage Loan, to the extent required by
the related Mortgage Note, the Servicer shall establish and maintain one or more
accounts (each, an "Escrow Account") and deposit and retain therein all
collections from the Mortgagors (or advances by the Servicer) for the payment of
taxes, assessments, hazard insurance premiums or comparable items for the
account of the Mortgagors. Nothing herein shall require the Servicer to compel a
Mortgagor to establish an Escrow Account in violation of applicable law.
Withdrawals of amounts so collected from the Escrow Accounts
may be made only to effect timely payment of taxes, assessments, hazard
insurance premiums, condominium or PUD association dues, or comparable items, to
reimburse the Servicer out of related collections for any payments made with
respect to each Mortgage Loan pursuant to Section 3.01 (with respect to taxes
and assessments and insurance premiums) and Section 3.05 (with respect to hazard
insurance), to refund to any Mortgagors for any Mortgage Loans any sums as may
be determined to be overages, to pay interest, if required by law or the terms
of the related Mortgage or Mortgage Note, to such Mortgagors on balances in the
Escrow Account, to remove amounts deposited in error or to clear and terminate
the Escrow Account at the termination of this Agreement in accordance with
Section 10.01 thereof. The Escrow Account shall not be a part of the Trust Fund.
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Section 4.05 RESERVED.
Section 4.06 DISTRIBUTION ACCOUNT.
(a) The Trustee shall establish and maintain in the name of
the Trustee, for the benefit of the Certificateholders, the Distribution Account
as a segregated non-interest bearing trust account or accounts. The Trustee will
deposit in the Distribution Account as identified by the Trustee and as received
by the Trustee, the following amounts:
(i) Any amounts withdrawn from a Custodial Account by
the Servicer and remitted to the Trustee;
(ii) Any Advance and any Compensating Interest
Payments;
(iii) Any Prepayment Charges collected by the
Servicer in connection with the Principal Prepayment of any of the Mortgage
Loans (including any Servicer Prepayment Charge Payment Amounts);
(iv) Any Insurance Proceeds or Liquidation Proceeds
received by or on behalf of the Trustee or which were not deposited in a
Custodial Account;
(v) The Repurchase Price with respect to any Mortgage
Loans purchased by the Seller or Section 2.02 or 2.03, any amounts which are to
be treated pursuant to Section 2.04 of this Agreement as the payment of such a
Repurchase Price, the Repurchase Price with respect to any Mortgage Loans
purchased by the Depositor pursuant to Section 3.26, and all proceeds of any
Mortgage Loans or property acquired with respect thereto repurchased by the
Depositor or its designee pursuant to Section 10.01;
(vi) Any amounts required to be deposited with
respect to losses on investments of deposits in an Account; and
(vii) Any other amounts received by or on behalf of
the Trustee and required to be deposited in the Distribution Account pursuant to
this Agreement.(Ii)a
(b) All amounts deposited to the Distribution Account shall be
held by the Trustee in the name of the Trustee in trust for the benefit of the
Certificateholders in accordance with the terms and provisions of this
Agreement. The requirements for crediting the Distribution Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of late payment charges or assumption,
tax service, statement account or payoff, substitution, satisfaction, release
and other like fees and charges, need not be credited by the Servicer to the
Distribution Account.
(c) The amount at any time credited to the Distribution
Account shall be held uninvested.
Section 4.07 PERMITTED WITHDRAWALS AND TRANSFERS FROM THE
DISTRIBUTION ACCOUNT.
(a) The Trustee will, from time to time make or cause to be
made such withdrawals or transfers from the Distribution Account pursuant to
this Agreement for the following purposes:
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(i) On an ongoing basis, Trustee to pay any expenses
recoverable by the Trustee pursuant to this Agreement.
(ii) to reimburse the Trustee as Successor Servicer
or the Servicer for any Advance or Servicing Advance of its own funds, the right
of the Trustee as Successor Servicer or the Servicer to reimbursement pursuant
to this subclause (ii) being limited to amounts received on a particular
Mortgage Loan (including, for this purpose, the Purchase Price therefor,
Insurance Proceeds, Liquidation Proceeds and condemnation proceeds) which
represent late payments or recoveries of the principal of or interest on such
Mortgage Loan respecting which such Advance or Servicing Advance was made;
(iii) to reimburse the Trustee or the Servicer from
Insurance Proceeds or Liquidation Proceeds relating to a particular Mortgage
Loan for amounts expended by the Trustee as Successor Servicer or the Servicer
in good faith in connection with the restoration of the related Mortgaged
Property which was damaged by an uninsured cause or in connection with the
liquidation of such Mortgage Loan;
(iv) to reimburse the Trustee as Successor Servicer
or the Servicer from Insurance Proceeds relating to a particular Mortgage Loan
for insured expenses incurred with respect to such Mortgage Loan and to
reimburse the Trustee as Successor Servicer or the Servicer from Liquidation
Proceeds from a particular Mortgage Loan for Liquidation Expenses incurred with
respect to such Mortgage Loan;
(v) to reimburse the Trustee as Successor Servicer or
the Servicer for advances of funds pursuant to this Agreement, and the right to
reimbursement pursuant to this subclause being limited to amounts received on
the related Mortgage Loan (including, for this purpose, the Purchase Price
therefor, Insurance Proceeds, Liquidation Proceeds and condemnation proceeds)
which represent late recoveries of the payments for which such advances were
made;
(vi) to reimburse the Trustee as Successor Servicer
or the Servicer for any Advance or advance, after a Realized Loss has been
allocated with respect to the related Mortgage Loan if the Advance or advance
has not been reimbursed pursuant to clauses (ii) and (v);
(vii) to pay the Credit Risk Management Fee to the
Credit Risk Manager; provided, however, that upon the termination of the Credit
Risk Manager pursuant to Section 4.08(b) hereof, the amount of the Credit Risk
Management Fee (or any portion thereof) with respect to the Mortgage Loans
previously payable to the Credit Risk Manager as described herein shall be paid
to the Seller;
(viii) to reimburse the Trustee for expenses, costs
and liabilities incurred by and reimbursable to it pursuant to this Agreement
(including the expenses of the Trustee in connection with a tax audit in
connection with the performance of its obligations pursuant to Section 9.12);
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(ix) to pay to the Trust Fund, as additional
servicing compensation, any Excess Liquidation Proceeds to the extent not
retained by the Servicer;
(x) to reimburse or pay the Servicer any such amounts
as are due thereto under this Agreement and have not been retained by or paid to
the Servicer, to the extent provided herein;
(xi) to reimburse the Trustee for expenses incurred
in the transfer of servicing responsibilities of a Servicer after the occurrence
and continuance of a Servicer Default to the extent not paid by the terminated
Servicer;
(xii) after the occurrence of an event of default
under the Advance Facility, to reimburse any Advance Financing Person for any
Advances or Servicing Advances made by such Advance Financing Person pursuant to
Section 5.01(b) and not reimbursed to such Advance Financing Person pursuant to
Section 4.02;
(xiii) to reimburse the Custodian for expenses, costs
and liabilities incurred or
reimbursable to it pursuant to this Agreement;
(xiv) to remove amounts deposited in error; and
(xv) to clear and terminate the Distribution Account
pursuant to Section 10.01.
(b) The Trustee shall keep and maintain separate accounting,
on a Mortgage Loan by Mortgage Loan basis, for the purpose of accounting for any
reimbursement from the Distribution Account pursuant to subclauses (ii) through
(v), inclusive, and (vii) or with respect to any such amounts which would have
been covered by such subclauses had the amounts not been retained by the Trustee
without being deposited in the Distribution Account under Section 4.07.
(c) On each Distribution Date, the Trustee shall distribute
Group I Available Funds and Group II Available Funds in the Distribution Account
to the holders of the Certificates in accordance with Section 5.04.
Section 4.08 DUTIES OF THE CREDIT RISK MANAGER; TERMINATION.
(a) The Depositor appoints The Murrayhill Company as Credit
Risk Manager. For and on behalf of the Depositor, the Credit Risk Manager will
provide reports and recommendations concerning the Mortgage Loans that are past
due, as to which there has been commencement of foreclosure, as to which there
has been forbearance in exercise of remedies which are in default, as to which a
Mortgagor is the subject of bankruptcy, receivership, or an arrangement of
creditors, or as to which have become REO Properties. Such reports and
recommendations will be based upon information provided to the Credit Risk
Manager pursuant to the Credit Risk Management Agreement and the Credit Risk
Manager shall look solely to the Servicer for all information and data
(including loss and delinquency information and data) and loan level information
and data relating to the servicing of the Mortgage Loans. If the Credit Risk
Manager is no longer able to perform its duties hereunder, the Credit Risk
Manager may be
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terminated by the Depositor at the direction of Certificateholders evidencing
not less than 66 2/3% of the Voting Rights. The Depositor may, at its option,
cause the appointment of a successor Credit Risk Manager. Upon any termination
of the Credit Risk Manager or the appointment of a successor Credit Risk
Manager, the Depositor shall give written notice thereof to the Servicer, the
Trustee, each Rating Agency and the Credit Risk Manager. Notwithstanding the
foregoing, the termination of the Credit Risk Manager pursuant to this Section
4.08(a) shall not become effective until the appointment of a successor Credit
Risk Manager.
(b) Within six months of the Closing Date, the Seller may, at
its option, terminate the Credit Risk Manager if, in its reasonable judgement,
(i) the value of the servicing rights with respect to the Mortgage Loans is
adversely affected as a result of the presence of the Credit Risk Manager or
(ii) the presence of the Credit Risk Manager impairs the ability of the Seller
to transfer the Servicing Rights with respect to the Mortgage Loans as permitted
by this Agreement. Upon the termination of the Credit Risk Manager, the Seller
may, at its option, cause the Depositor to appoint a successor Credit Risk
Manager. Notice of such termination shall be provided by the Seller to the
Rating Agencies, the Trustee, the Depositor and the Credit Risk Manager. Upon
the appointment of a successor Credit Risk Manager, the Depositor shall provide
written notice thereof to each Rating Agency, the Trustee and the Credit Risk
Manager.
If the Credit Risk Manager is terminated pursuant to this
Section 4.08(b), the Credit Risk Manager shall only be entitled to a fee equal
to 0.0050% with respect to each Mortgage Loan for the one year period following
such termination. After the expiration of such one year period, the Credit Risk
Manager shall not be entitled to the Credit Risk Management Fee or any portion
thereof with respect to any Mortgage Loan. The excess of the Credit Risk
Management Fee with respect to each Mortgage Loan over the amount payable to the
Credit Risk Manager as described in this paragraph shall be paid to the Seller
pursuant to Section 4.07(vii).
Section 4.09 LIMITATION UPON LIABILITY OF THE CREDIT RISK MANAGER.
Neither the Credit Risk Manager, nor any of the directors,
officers, employees or agents of the Credit Risk Manager, shall be under any
liability to the Trustee, the Certificateholders or the Depositor for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Agreement, in reliance upon information provided by the Servicer under the
Credit Risk Management Agreement or of errors in judgment; provided, however,
that this provision shall not protect the Credit Risk Manager or any such person
against liability that would otherwise be imposed by reason of willful
malfeasance, bad faith or gross negligence in its performance of its duties
under this Agreement or the Credit Risk Management Agreement. The Credit Risk
Manager and any director, officer, employee or agent of the Credit Risk Manager
may rely in good faith on any document of any kind prima facie properly executed
and submitted by any Person respecting any matters arising hereunder, and may
rely in good faith upon the accuracy of information furnished by the Servicer
pursuant to the Credit Risk Management Agreement in the performance of its
duties thereunder and hereunder.
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ARTICLE V
ADVANCES AND DISTRIBUTIONS
Section 5.01 ADVANCES; ADVANCE FACILITY.
(a) The Servicer shall make an Advance with respect to any
Mortgage Loan and deposit such Advance in the Distribution Account no later than
3:00 p.m. Eastern time on the Remittance Date in immediately available funds.
The Servicer shall be obligated to make any such Advance only to the extent that
such advance would not be a Nonrecoverable Advance. If the Servicer shall have
determined that it has made a Nonrecoverable Advance or that a proposed Advance
or a lesser portion of such Advance would constitute a Nonrecoverable Advance,
the Servicer shall deliver (i) to the Trustee for the benefit of the
Certificateholders funds constituting the remaining portion of such Advance, if
applicable, and (ii) to the Depositor, each Rating Agency and the Trustee an
Officer's Certificate setting forth the basis for such determination.
In lieu of making all or a portion of such Advance from its
own funds, the Servicer, pursuant to this Agreement may (i) cause to be made an
appropriate entry in its records relating to the Custodial Account that any
Amounts Held for Future Distribution has been used by the Servicer in discharge
of its obligation to make any such Advance and (ii) transfer such funds from the
Custodial Account to the Distribution Account. Any funds so applied and
transferred shall be replaced by the Servicer by deposit in the Distribution
Account, no later than the close of business on any future Remittance Date on
which the funds on deposit in the Custodial Account shall be less than the
amount required to be remitted to the Trust on such Remittance Date; provided,
however that if the rating of the Servicer (including any Successor Servicer) is
less than "BBB", the Servicer shall be required to replace such funds by deposit
to the Distribution Account, no later than the close of business on the
Remittance Date immediately following the Due Period or Prepayment Period for
which such amounts relate.
The Servicer shall be entitled to be reimbursed from the
related Custodial Account for all Advances of its own funds made pursuant to
this Section as provided in Section 4.02. The obligation to make Advances with
respect to any Mortgage Loan shall continue until such Mortgage Loan is paid in
full or the related Mortgaged Property or related REO Property has been
liquidated or until the purchase or repurchase thereof (or substitution
therefor) from the Trust Fund pursuant to any applicable provision of this
Agreement, except as otherwise provided in this Section 5.01.
Subject to and in accordance with the provisions of Article
VIII hereof, in the event that the Servicer fails to make such Advance, then the
Trustee, as Successor Servicer, shall be obligated to make such Advance only to
the extent such Advance, if made, would not constitute a Nonrecoverable Advance,
subject to the provisions of Sections 5.01 and 8.02.
(b)(i) The Servicer is hereby authorized to enter into a
financing or other facility (any such arrangement, an "Advance Facility"), the
documentation for which complies with Section 5.01(b)(v) below, under which (1)
the Servicer assigns or pledges its rights under this
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Agreement to be reimbursed for any or all Advances and/or Servicing Advances to
(i) a Person, which may be a special-purpose bankruptcy-remote entity (an
"SPV"), (ii) a Person, which may simultaneously assign or pledge such rights to
an SPV or (iii) a lender (a "Lender"), which, in the case of any Person or SPV
of the type described in either of the preceding clauses (i) or (ii), may
directly or through other assignees and/or pledgees, assign or pledge such
rights to a Person, which may include a trustee acting on behalf of holders of
debt instruments (any such Person or any such Lender, an "Advance Financing
Person"), and/or (2) an Advance Financing Person agrees to fund all the Advances
and/or Servicing Advances required to be made by the Servicer pursuant to this
Agreement. No consent of the Trustee, Certificateholders or any other party
shall be required before the Servicer may enter into an Advance Facility nor
shall the Trustee or the Certificateholders be a third party beneficiary of any
obligation of an Advance Financing Person to the Servicer. Notwithstanding the
existence of any Advance Facility under which an Advance Financing Person agrees
to fund Advances and/or Servicing Advances, (A) the Servicer (i) shall remain
obligated pursuant to this Agreement to make Advances and/or Servicing Advances
pursuant to and as required by this Agreement and (ii) shall not be relieved of
such obligations by virtue of such Advance Facility and (B) neither the Advance
Financing Person nor any Servicer's Assignee (as hereinafter defined) shall have
any right to proceed against or otherwise contact any Mortgagor for the purpose
of collecting any payment that may be due with respect to any related Mortgage
Loan or enforcing any covenant of such Mortgagor under the related Mortgage Loan
documents.
(ii) If the Servicer enters into an Advance Facility, the
Servicer and the related Advance Financing Person shall deliver to the Trustee
at the address set forth in Section 11.05 hereof a written notice (an "Advance
Facility Notice"), stating (a) the identity of the Advance Financing Person and
(b) the identity of the Person (the "Servicer's Assignee") that will, subject to
Section 5.01(b)(iii) hereof, have the right to make withdrawals from the
Custodial Account pursuant to Section 4.02 hereof to reimburse previously
unreimbursed Advances and/or Servicing Advances ("Advance Reimbursement
Amounts"). Advance Reimbursement Amounts (i) shall consist solely of amounts in
respect of Advances and/or Servicing Advances for which the Servicer would be
permitted to reimburse itself in accordance with Section 4.02 hereof, assuming
the Servicer had made the related Advance(s) and/or Servicing Advance(s) and
(ii) shall not consist of amounts payable to a successor Servicer in accordance
with Section 4.02 hereof to the extent permitted under Section 5.01(b)(v) below.
(iii) Notwithstanding the existence of an Advance Facility,
the Servicer, on behalf of the Advance Financing Person and the Servicer's
Assignee, shall be entitled to receive reimbursements of Advances and/or
Servicing Advances in accordance with Section 4.02 hereof, which entitlement may
be terminated by the Advance Financing Person pursuant to a written notice to
the Trustee in the manner set forth in Section 11.05 hereof. Upon receipt of
such written notice, the Servicer shall no longer be entitled to receive
reimbursement for any Advance Reimbursement Amounts and the Servicer's Assignee
shall immediately have the right to receive from the Custodial Account all
Advance Reimbursement Amounts. Notwithstanding the foregoing, and for the
avoidance of doubt, (i) the Servicer and/or the Servicer's Assignee shall only
be entitled to reimbursement of Advance Reimbursement Amounts hereunder from
withdrawals from the Custodial Account pursuant to Section 4.02 of this
Agreement and shall not otherwise be entitled to make withdrawals or receive
amounts that shall be deposited in the
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Distribution Account pursuant to Section 4.06 hereof, and (ii) none of the
Trustee or the Certificateholders shall have any right to, or otherwise be
entitled to, receive any Advance Reimbursement Amounts to which the Servicer or
Servicer's Assignee, as applicable, shall be entitled pursuant to Section 4.02
hereof. An Advance Facility may be terminated by the joint written direction of
the Servicer and the related Advance Financing Person. Written notice of such
termination shall be delivered to the Trustee in the manner set forth in Section
11.05 hereof. None of the Depositor or the Trustee shall, as a result of the
existence of any Advance Facility, have any additional duty or liability with
respect to the calculation or payment of any Advance Reimbursement Amount, nor,
as a result of the existence of any Advance Facility, shall the Depositor or the
Trustee have any additional responsibility to track or monitor the
administration of the Advance Facility or the payment of Advance Reimbursement
Amounts to the Servicer's Assignee. The Servicer shall indemnify the Depositor,
the Trustee, any successor Servicer and the Trust Fund for any claim, loss,
liability or damage resulting from any claim by the related Advancing Financing
Person, except to the extent that such claim, loss, liability or damage resulted
from or arose out of negligence, recklessness or willful misconduct on the part
of the Depositor, the Trustee or any successor Servicer, as the case may be, or
failure by the successor Servicer or the Trustee, as the case may be, to remit
funds as required by this Agreement or the commission of an act or omission to
act by the successor Servicer or the Trustee, as the case may be, and the
passage of any applicable cure or grace period, such that an Event of Default
under this Agreement occurs or such entity is subject to termination for cause
under this Agreement. The Servicer shall maintain and provide to any successor
Servicer and, upon request, the Trustee a detailed accounting on a loan-by-loan
basis as to amounts advanced by, pledged or assigned to, and reimbursed to any
Advancing Financing Person. The successor Servicer shall be entitled to rely on
any such information provided by the predecessor Servicer, and the successor
Servicer shall not be liable for any errors in such information.
(iv) An Advance Financing Person who receives an assignment or
pledge of rights to receive Advance Reimbursement Amounts and/or whose
obligations are limited to the funding of Advances and/or Servicing Advances
pursuant to an Advance Facility shall not be required to meet the criteria for
qualification as a Servicer.
(v) As between a predecessor Servicer and its Advance
Financing Person, on the one hand, and a successor Servicer and its Advance
Financing Person, if any, on the other hand, Advance Reimbursement Amounts on a
loan-by-loan basis with respect to each Mortgage Loan as to which an Advance
and/or Servicing Advance shall have been made and be outstanding shall be
allocated on a "first-in, first out" basis. In the event the Servicer's Assignee
shall have received some or all of an Advance Reimbursement Amount related to
Advances and/or Servicing Advances that were made by a Person other than such
predecessor Servicer or its related Advance Financing Person in error, then such
Servicer's Assignee shall be required to remit any portion of such Advance
Reimbursement Amount to each Person entitled to such portion of such Advance
Reimbursement Amount. Without limiting the generality of the foregoing, the
Servicer shall remain entitled to be reimbursed by the Advance Financing Person
for all Advances and/or Servicing Advances funded by the Servicer to the extent
the related Advance Reimbursement Amounts have not been assigned or pledged to
such Advance Financing Person or Servicer's Assignee.
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(vi) For purposes of any Officer's Certificate of the Servicer
made pursuant to Section 5.01(a), any Nonrecoverable Advance referred to therein
may have been made by such Servicer or any predecessor Servicer. In making its
determination that any Advance or Servicing Advance theretofore made has become
a Nonrecoverable Advance, the Servicer shall apply the same criteria in making
such determination regardless of whether such Advance or Servicing Advance shall
have been made by the Servicer or any predecessor Servicer.
(vii) Any amendment to this Section 5.01(b) 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 5.01(b),
including amendments to add provisions relating to a successor Servicer, may be
entered into by the Trustee, the Depositor and the Servicer without the consent
of any Certificateholder, provided such amendment complies with Section 11.01
hereof. All reasonable costs and expenses (including attorneys' fees) of each
party hereto of any such amendment shall be borne solely by the Servicer. The
parties hereto hereby acknowledge and agree that: (a) the Advances and/or
Servicing Advances financed by and/or pledged to an Advance Financing Person
under any Advance Facility are obligations owed to the Servicer payable only
from the cash flows and proceeds received under this Agreement for reimbursement
of Advances and/or Servicing Advances only to the extent provided herein, and
the Trustee and the Trust are not, as a result of the existence of any Advance
Facility, obligated or liable to repay any Advances and/or Servicing Advances
financed by the Advance Financing Person; (b) the Servicer will be responsible
for remitting to the Advance Financing Person the applicable amounts collected
by it as reimbursement for Advances and/or Servicing Advances funded by the
Advance Financing Person, subject to the provisions of this Agreement; and (c)
the Trustee shall not have any responsibility to track or monitor the
administration of the financing arrangement between the Servicer and any Advance
Financing Person.
Section 5.02 COMPENSATING INTEREST PAYMENTS.
In the event that there is a Prepayment Interest Shortfall arising from
a voluntary Principal Prepayment in part or in full by the Mortgagor with
respect to any Mortgage Loan, the Servicer shall, to the extent of the Servicing
Fee for such Distribution Date, deposit into the Distribution Account, as a
reduction of and to the extent of, the Servicing Fee for such Distribution Date,
no later than the close of business on the Remittance Date immediately preceding
such Distribution Date, an amount equal to the Prepayment Interest Shortfall;
and in case of such deposit, the Servicer shall not be entitled to any recovery
or reimbursement from the Depositor, the Trustee, the Seller, the Trust Fund or
the Certificateholders.
Section 5.03 REMIC DISTRIBUTIONS.
On each Distribution Date the Trustee, shall be deemed to
allocate distributions to the REMIC I Regular Interests and the REMIC II Regular
Interests in accordance with Section 5.07 hereof.
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Section 5.04 DISTRIBUTIONS.
(a) On each Distribution Date, an amount equal to the Group I
Available Funds and the Group II Available Funds for such Distribution Date
shall be withdrawn by the Trustee from the Distribution Account and distributed
as directed in accordance with the Remittance Report for such Distribution Date,
in the following order of priority:
(i) on each Distribution Date, the Group I Available Funds
will be distributed as follows:
FIRST, to the Class A1 Certificates and the Class AIO-1
Certificates, on a pro rata basis, the Accrued Certificate Interest on each such
Class for such Distribution Date; provided, however that the Accrued Certificate
Interest to be distributed to the Class AIO-2 Certificates pursuant to this
clause FIRST shall be equal to the product of (x) the Group Subordinate Amount
for Loan Group I multiplied by (y) a fraction, the numerator of which is the
weighted average Net Mortgage Rate of the Mortgage Loans in Loan Group I minus
the weighted average of the Pass-Through Rates of the Class M1, Class M2, Class
B1, Class B2, Class B3, Class B4, Class B5, Class B6 and Class B7 Certificates
and the denominator of which is 12;
SECOND, to the Class A1 Certificates and Class AIO-2
Certificates, on a pro rata basis, any Accrued Certificate Interest thereon
remaining undistributed from previous Distribution Dates, to the extent of
remaining Group I Available Funds; and
THIRD, to the Class A1 Certificates, in reduction of the
Certificate Principal Balance thereof, the Senior Optimal Principal Amount for
Loan Group I for such Distribution Date, until the Certificate Principal Balance
of the Class A1 Certificates has been reduced to zero.
(ii) On each Distribution Date, the Group II Available Funds
will be distributed as follows:
FIRST, to the Class A2, Class A3, Class AIO-1 and Class AIO-2
Certificates, on a pro rata basis, the Accrued Certificate Interest on each such
Class for such Distribution Date; provided, however that the Accrued Certificate
Interest to be distributed to the Class AIO-2 Certificates pursuant to this
clause FIRST shall be equal to the product of (x) the Group Subordinate Amount
for Loan Group II multiplied by (y) a fraction, the numerator of which is the
weighted average Net Mortgage Rate of the Mortgage Loans in Loan Group II minus
the weighted average of the Pass-Through Rates of the Class M1, Class M2, Class
B1, Class B2, Class B3, Class B4, Class B5, Class B6 and Class B7 Certificates
and the denominator of which is 12;
SECOND, to the Class A2, Class A3, Class AIO-1 and Class AIO-2
Certificates, on a pro rata basis, any Accrued Certificate Interest thereon
remaining undistributed from previous Distribution Dates, to the extent of
remaining Group II Available Funds;
THIRD, sequentially, in the following order, to the Class A2
Certificates and the Class A3 Certificates, in reduction of the Certificate
Principal Balance thereof, the Senior Optimal Principal Amount for Group II for
such Distribution Date, to the extent of remaining
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Group II Available Funds, until the Certificate Principal Balance of each such
Class has been reduced to zero.
(b) Except as provided in paragraph (d) below, on each
Distribution Date on or prior to the Cross-Over Date, an amount equal to the sum
of the remaining Group Available Funds after the distributions in clauses (a)(i)
and (a)(ii) above will be distributed sequentially, in the following order, to
the Class M1, Class M2, Class B1, Class B2, Class B3, Class B4, Class B5, Class
B6 and Class B7 Certificates, in each case up to an amount equal to and in the
following order: (a) the Accrued Certificate Interest thereon for such
Distribution Date, (b) any Accrued Certificate Interest thereon remaining
undistributed from previous Distribution Dates and (c) such Class's Allocable
Share, if any, for such Distribution Date, in each case, to the extent of the
sum of the remaining Group Available Funds for both Loan Groups.
(c) If on any Distribution Date on which the aggregate
Certificate Principal Balance of any Class or Classes of Senior Certificates
(other than Class AIO-1Certificates) would be greater than the aggregate Stated
Principal Balance of the Mortgage Loans in its related Loan Group and any
Subordinated Certificates are still outstanding in each case after giving effect
to distributions to be made on such Distribution Date, (i) 100% of amounts
otherwise allocable to the Subordinated Certificates in respect of principal
will be distributed to such Class or Classes of Senior Certificates in reduction
of the Certificate Principal balance thereof, until the aggregate Certificate
Principal Balance of such Class or Classes of Senior Certificates is an amount
equal to the aggregate Stated Principal Balance of the Mortgage Loans in its
related Loan Group, and (ii) the Accrued Certificate Interest otherwise
allocable to the Subordinated Certificates on such Distribution Date will be
reduced, if necessary, and distributed to such Class or Classes of Senior
Certificates in an amount equal to the Accrued Certificate Interest for such
Distribution Date on the excess of (x) the aggregate Certificate Principal
Balance of such Class or Classes of Senior Certificates over (y) the aggregate
Stated Principal Balance of the Mortgage Loans in the related Loan Group. Any
such reduction in the Accrued Certificate Interest on the Subordinated
Certificates will be allocated first to the certificates having the lowest
payment priority, in this case commencing with the Class B7 Certificates.
(d) On each Distribution Date prior to the Cross-Over Date,
funds otherwise payable to the Subordinated Certificates shall be applied to the
payment of the Senior Certificates (i) first, to pay any Accrued Certificate
Interest on the Senior Certificates remaining unpaid, (ii) second, to pay
principal of an Undercollateralized Group of Senior Certificates and (iii)
third, to maintain subordination levels under limited circumstances where one or
more classes of Senior Certificates have been paid in full.
To the extent any Accrued Certificate Interest with respect to any
Class of Senior Certificates remains unpaid, the Group Available Funds remaining
after payments of principal and interest on the Senior Certificates related to
such Loan Groups will be applied to cover such unpaid Accrued Certificate
Interest, and, to the extent payable to more than one Class of Senior
Certificates, will be applied pro rata based on the amounts of such unpaid
Accrued Certificate Interest to the extent there are insufficient funds to pay
such amounts in full. Such amounts will be paid to the Senior Certificates in
accordance with the priorities set forth in this Section 5.04.
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If on any Distribution Date there exist an Undercollateralized Group,
then all amounts otherwise distributable as principal on the Subordinated
Certificates as the Subordinate Principal Distribution Amount will be paid to
such Undercollateralized Group as principal to the related Senior Certificates
in accordance with the priorities set forth in this Section 5.04 until the
aggregate Certificate Principal Balance of such Senior Certificates equals the
aggregate principal balance of the related Loan Group as of the following
Distribution Date.
On or after the date on which the Certificate Principal Balances of the
Senior Certificates of a Loan Group have been reduced to zero, amounts otherwise
distributable as principal on the Subordinated Certificates, up to the
applicable Apportioned Subordinate Principal Distribution Amount (representing
generally the portion of the Subordinate Principal Distribution Amount
attributable to Mortgage Loans in the Loan Group with respect to which the
Senior Certificates have been paid in full) will be paid as principal to the
Senior Certificates of the other Loan Group in accordance with the priorities
set forth in this Section 5.04 for the such Loan Group, provided that on such
Distribution Date (a) the Aggregate Subordinate Percentage for such Distribution
Date is less than twice the initial Aggregate Subordinate Percentage or (b) the
aggregate Stated Principal Balance of the Mortgage Loans delinquent 60 days or
more as a percentage of the aggregate Group Subordinate Amount is greater than
or equal to 50%.
Any application of the Subordinate Principal Distribution Amount
pursuant to the preceding three paragraphs will reduce distributions of such
amount in reverse order of priority pursuant to priorities set forth in this
Section 5.04.
On each Distribution Date, any available funds remaining after payment
of interest and principal to the Classes of Certificates entitled thereto, as
described above, will be distributed to the Class R Certificates; provided that
if on any Distribution Date there are any Group Available Funds remaining after
payment of interest and principal to a Class or Classes of Certificates entitled
thereto, such amounts will be distributed to the other Classes of Certificates
(other than the Class AIO-1 Certificates and the Class AIO-2 Certificates),
based upon their Certificate Principal Balances, until all amounts due to all
Classes of Certificates have been paid in full, before any amounts are
distributed to the Class R Certificates. It is not anticipated that there will
be any significant amounts remaining for such distribution.
(e) On each Distribution Date, all amounts representing
Prepayment Charges in respect of the Mortgage Loans received during the related
Prepayment Period and deposited in the Distribution Account will be withdrawn
from the Distribution Account and distributed by the Trustee in accordance with
the Remittance Report to the Class AIO-1 Certificates and shall not be available
for distribution to the holders of any other Class of Certificates. The payment
of such Prepayment Charges shall not reduce the Certificate Principal Balance of
the Class AIO-1 Certificates.
(f) Subject to Section 10.02 hereof respecting the final
distribution, on each Distribution Date the Trustee shall make distributions to
each Certificateholder of record on the preceding Record Date either by wire
transfer in immediately available funds to the account of such holder at a bank
or other entity having appropriate facilities therefor, if (i) such Holder has
so notified the Trustee at least 5 Business Days prior to the related Record
Date and (ii) such Holder shall hold Regular Certificates with aggregate
principal denominations of not less than
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$1,000,000 or evidencing a Percentage Interest aggregating 10% or more with
respect to such Class or, if not, by check mailed by first class mail to such
Certificateholder at the address of such holder appearing in the Certificate
Register. Notwithstanding the foregoing, but subject to Section 10.02 hereof
respecting the final distribution, distributions with respect to Certificates
registered in the name of a Depository shall be made to such Depository in
immediately available funds.
(g) On each Distribution Date, the Trustee shall prepare the
Monthly Statement to Certificateholders for the related Distribution Date (the
"Monthly Statement").
Section 5.05 ALLOCATION OF REALIZED LOSSES.
(a) On or prior to each Determination Date, the Trustee shall
determine the amount of any Realized Loss in respect of each Mortgage Loan that
occurred during the immediately preceding calendar month.
(b) With respect to any Certificates on any Distribution Date,
the principal portion of each Realized Loss on a Mortgage Loan in a Loan Group
shall be allocated as follows:
FIRST, to the Class B7 Certificates until the
Certificate Principal Balance thereof has been
reduced to zero;
SECOND, to the Class B5 Certificates until the
Certificate Principal Balance thereof has been
reduced to zero;
THIRD, to the Class B4 Certificates until the
Certificate Principal Balance thereof has been
reduced to zero;
FOURTH, to the Class B3 Certificates until the
Certificate Principal Balance thereof has been
reduced to zero;
FIFTH, to the Class B2 Certificates until the
Certificate Principal Balance thereof has been
reduced to zero;
SIXTH, to the Class B1 Certificates until the
Certificate Principal Balance thereof has been
reduced to zero;
SEVENTH, to the Class M2 Certificates until the
Certificate Principal Balance thereof has been
reduced to zero;
EIGHTH, to the Class M1 Certificates until the
Certificate Principal Balance thereof has been
reduced to zero;
NINTH, to the Classes of related Senior Certificates,
pro rata, in accordance with their Certificate
Principal Balances;
(c) Notwithstanding the foregoing clause (b), no such
allocation of any Realized Loss shall be made on a Distribution Date to any
Class of Certificates to the extent that
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such allocation would result in the reduction of the aggregate Certificate
Principal Balances of all the Certificates as of such Distribution Date, after
giving effect to all distributions and prior allocations of Realized Losses on
such date, to an amount less than the aggregate Stated Principal Balance of all
of the Mortgage Loans as of the first day of the month of such Distribution Date
(such limitation, the "Loss Allocation Limitation").
(d) Any Realized Losses allocated to a Class of Certificates
shall be allocated among the Certificates of such Class in proportion to their
respective Certificate Principal Balances. Any allocation of Realized Losses
shall be accomplished by reducing the Certificate Principal Balances of the
related Certificates on the related Distribution Date.
(e) Realized Losses shall be allocated on the Distribution
Date in the month following the month in which such loss was incurred and, in
the case of the principal portion thereof, after giving effect to distributions
made on such Distribution Date.
(f) On each Distribution Date, the Trustee shall determine the
Subordinate Certificate Writedown Amount. Any such Subordinate Certificate
Writedown Amount shall effect a corresponding reduction in the Certificate
Principal Balance of the Subordinated Certificates, in the reverse order of
their which reduction shall occur on such Distribution Date after giving effect
to distributions made on such Distribution Date.
(g) Any Net Interest Shortfall shall be allocated among the
Classes of Certificates in proportion to the respective amounts of Accrued
Certificate Interest that would have been allocated thereto in the absence of
such Net Interest Shortfall for such Distribution Date. The interest portion of
any Realized Losses with respect to the Mortgage Loans occurring on or prior to
the Cross-Over Date will not be allocated among any Certificates, but will
reduce the amount of Available Funds on the related Distribution Date. As a
result of the subordination of the Subordinated Certificates in right of
distribution, such Realized Losses will be borne by the Subordinated
Certificates in reverse order of their payment priority. Following the
Cross-Over Date, the interest portion of Realized Losses on the Mortgage Loans
in any Loan Group will be allocated to the related Senior Certificates (other
than the Class AIO-1 Certificates and Class AIO-2 Certificates).
(h) Notwithstanding anything to the contrary contained herein,
if on any Distribution Date the Trustee discovers, based solely on the reports
delivered by the Servicer under this Agreement, that any Subsequent Recoveries
have been collected by the Servicer with respect to the Mortgage Loans, the
Trustee shall reinstate the amount of the Certificate Principal Balance of the
Outstanding Class of Certificates with the lowest payment priority which was
reduced as a result of the allocation of Realized Losses on such Distribution
Date or any prior Distribution Date. To the extent that the amount of the
Subsequent Recoveries collected by the Servicer exceeds the amount of Realized
Losses allocated to the Outstanding Class of Certificates since the Closing
Date, the Trustee shall (i) reinstate and reissue any retired Private
Certificate, beginning with the retired Class of Private Certificates having the
most senior payment priority, for which Realized Losses were allocated on any
Distribution Date since the Closing Date and (ii) use reasonable efforts to, to
the extent permitted by the Depository, reinstate and reissue any retired
Book-Entry Certificate, beginning with the retired Class of
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Book-Entry Certificates having the most senior payment priority, for which
Realized Losses were allocated on any Distribution Date since the Closing Date.
Section 5.06 MONTHLY STATEMENTS TO CERTIFICATEHOLDERS.
(a) Not later than each Distribution Date, the Trustee shall
prepare and make available to each Holder of Certificates and the Depositor a
statement setting forth for the Certificates:
(i) the amount of the related distribution to Holders of each
Class allocable to principal, separately identifying (A) the aggregate
amount of any Principal Prepayments included therein and (B) the
aggregate of all scheduled payments of principal included therein and
the amount of Prepayment Charges distributed to the Class AIO-1
Certificates;
(ii) the amount of such distribution to Holders of each Class
allocable to interest;
(iii) the Certificate Principal Balance or Certificate
Notional Balance of each Class after giving effect (i) to all
distributions allocable to principal on such Distribution Date and (ii)
the allocation of any Applied Realized Loss Amounts for such
Distribution Date;
(iv) the aggregate of the Stated Principal Balances of all of
the Mortgage Loans and of the Mortgage Loans in each Loan Group for the
following Distribution Date;
(v) the amount of the Servicing Fees paid to or retained by
the Servicer for the related Due Period;
(vi) the Pass-Through Rate for each Class of Certificates with
respect to the current Interest Accrual Period;
(vii) reserved;
(viii) the number and aggregate principal amounts of Mortgage
Loans in each Loan Group for each such Loan Group and the mortgage pool
(A) Delinquent (exclusive of Mortgage Loans in foreclosure and
bankruptcy) (1) 31 to 60 days, (2) 61 to 90 days and (3) 91 or more
days, (B) in foreclosure and delinquent (1) 31 to 60 days, (2) 61 to 90
days and (3) 91 or more days and (C) in bankruptcy and delinquent (1)
31 to 60 days, (2) 61 to 90 days and (3) 91 or more days, in each case
as of the close of business on the last day of the calendar month
preceding such Distribution Date;
(ix) with respect to any Mortgage Loan that was liquidated
during the preceding calendar month in each Loan Group and the mortgage
pool, the loan number and Stated Principal Balance of, and Realized
Loss on, such Mortgage Loan as of the close of business on the
Determination Date preceding such Distribution Date;
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(x) the total number and principal balance of any real estate
owned or REO Properties in each Loan Group as of the close of business
on the Determination Date preceding such Distribution Date;
(xi) the three month rolling average of the percent equivalent
of a fraction, the numerator of which is the aggregate stated Principal
Balance of the Mortgage Loans that are 60 days or more delinquent or
are in bankruptcy or foreclosure or are REO Properties, and the
denominator of which is the aggregate Stated Principal Balance of all
of the Mortgage Loans as of the last day of such Distribution Date; and
(xii) the Realized Losses for each Loan Group during the
related Prepayment Period and the cumulative Realized Losses for each
Loan Group and the mortgage pool through the end of the preceding
month.
The Trustee may make the foregoing monthly statement (and, at
its option, any additional files containing the same information in an
alternative format) available each month to Certificateholders via the Trustee's
internet website. The Trustee's internet website shall initially be located at
"xxx.xxxxxxxxxxxxx.xxx/xxxxxx". Assistance in using the website can be obtained
by calling the Securities Administrator's customer service desk at (877)
722-1095. Parties that are unable to use the above distribution options are
entitled to have a paper copy mailed to them via first class mail by calling the
customer service desk and indicating such. The Securities Administrator may
change the way monthly statements are distributed in order to make such
distributions more convenient or more accessible to the above parties.
(b) The Trustee's responsibility for making the above
information available to the Certificateholders is limited to the
availability, timeliness and accuracy of the information derived from
the Depositor, the Servicer and the Credit Risk Manager. The Trustee
will make available a copy of each statement provided pursuant to this
Section 5.06 to each Rating Agency.
(c) Within a reasonable period of time after the end of each
calendar year, the Trustee shall cause to be furnished upon request to
each Person who at any time during the calendar year was a
Certificateholder, a statement containing the information set forth in
clauses (a)(i) and (a)(ii) of this Section 5.06 aggregated for such
calendar year or applicable portion thereof during which such Person
was a Certificateholder. Such obligation of the Trustee shall be deemed
to have been satisfied to the extent that substantially comparable
information shall be provided by the Trustee pursuant to any
requirements of the Code as from time to time in effect.
(d) Upon filing with the Internal Revenue Service, the Trustee
shall furnish to the Holders of the Residual Certificates the
applicable Form 1066 and each applicable Form 1066Q and shall respond
promptly to written requests made not more frequently than quarterly by
any Holder of a Residual Certificate with respect to the following
matters:
(i) The original projected principal and interest cash flows
on the Closing Date on each Class of regular and residual interests
created hereunder and on the Mortgage Loans, based on the Prepayment
Assumption;
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(ii) The projected remaining principal and interest cash flows
as of the end of any calendar quarter with respect to each Class of
regular and residual interests created hereunder and the Mortgage
Loans, based on the Prepayment Assumption;
(iii) The applicable Prepayment Assumption and any interest
rate assumptions used in determining the projected principal and
interest cash flows described above;
(iv) The original issue discount (or, in the case of the
Mortgage Loans, market discount) or premium accrued or amortized
through the end of such calendar quarter with respect to each Class of
regular or residual interests created hereunder and to the Mortgage
Loans, together with each constant yield to maturity used in computing
the same;
(v) The treatment of losses realized with respect to the
Mortgage Loans or the regular interests created hereunder, including
the timing and amount of any cancellation of indebtedness income of a
REMIC with respect to such regular interests or bad debt deductions
claimed with respect to the Mortgage Loans;
(vi) The amount and timing of any non-interest expenses of a
REMIC; and
(vii) Any taxes (including penalties and interest) imposed on
the REMIC, including, without limitation, taxes on "prohibited
transactions," "contributions" or "net income from foreclosure
property" or state or local income or franchise taxes.
The information pursuant to clauses (i), (ii), (iii) and (iv)
above shall be provided by the Depositor pursuant to Section 9.12.
Section 5.07 REMIC DESIGNATIONS AND REMIC I ALLOCATIONS.
(a) The Trustee shall elect that each of REMIC I, REMIC II and
REMIC III and shall be treated as a REMIC under Section 860D of the Code. Any
inconsistencies or ambiguities in this Agreement or in the administration of
this Agreement shall be resolved in a manner that preserves the validity of such
REMIC elections. The REMIC I Regular Interests shall constitute the assets of
REMIC II and the REMIC II Regular Interests shall constitute the assets of REMIC
III.
(b) On each Distribution Date, the Trustee shall cause the
Group I Available Funds and the Group II Available Funds, in the following order
of priority and in accordance with the Remittance Report, to be distributed by
REMIC I to REMIC II on account of the REMIC I Regular Interests or withdrawn
from the Distribution Account and distributed to the Holders of the Class R
Certificates, as the case may be:
(i) Uncertificated Accrued Interest on the Uncertificated
REMIC I Regular Interests for such Distribution Date, plus any
Uncertificated Accrued Interest thereon remaining unpaid from
any previous Distribution Date; and
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(ii) In accordance with the priorities set forth in Section
5.07(c), an amount equal to the sum of the amounts
distributable in respect of principal on the REMIC III
Certificates under Sections 5.04(a)(i) and (ii).
(c) The amount described in Section 5.07(b)(ii) shall be
deemed distributed as follows:
first, so as to keep the Uncertificated Principal Balance of
each REMIC I Regular Interest ending with the designation "GRP" equal to 0.01%
of the aggregate Scheduled Principal Balance of the Mortgage Loans in the
related Group,
second, to each REMIC I Regular Interest ending with the
designation "SUB," so that the Uncertificated Principal Balance of each such
REMIC I Regular Interest is equal to 0.01% of the excess of (x) the aggregate
Scheduled Principal Balance of the Mortgage Loans in the related Loan Group over
(y) the Certificate Principal Balance of the Senior Certificates (other than the
Class AIO-1 Certificates); provided, however, that if any such excess is a
larger number than in the preceding distribution period, the least amount of
principal shall be deemed distributed to such REMIC I Regular Interests such
that the REMIC I Subordinated Balance Ratio is maintained; provided, further
that all distributions on such REMIC I Regular Interests shall be deemed to be
from principal received on Mortgage Loans in the related Loan Group;
third, to the Holders of the REMIC I Regular Interest
LTI-AIO1, on the Distribution Date in August 2008 or any Distribution Date
thereafter until $100 has been distributed pursuant to this clause
fourth, any remaining principal received on Mortgage Loans in
each Loan Group shall be deemed distributed to REMIC I Regular Interest
LTI-ZZZ."
(d) In determining from time to time the REMIC I Regular
Interest distribution amounts, Realized Losses on the Mortgage Loans in Loan
Group I allocated to the REMIC II Regular Interests shall be allocated to the
REMIC I Regular Interests as follows:
first, so as to keep the Uncertificated Principal Balance of
each REMIC I Regular Interest ending with the designation "GRP" equal to 0.01%
of the aggregate Scheduled Principal Balance of the Mortgage Loans in the
related Group,
second, to each REMIC I Regular Interest ending with the
designation "SUB," so that the Uncertificated Principal Balance of each such
REMIC I Regular Interest is equal to 0.01% of the excess of (x) the aggregate
Scheduled Principal Balance of the Mortgage Loans in the related Loan Group over
(y) the Certificate Principal Balance of the Senior Certificates (other than the
Class AIO-1 Certificates); provided, however, that if any such excess is a
larger number than in the preceding distribution period, the least amount of
Realized Losses principal shall be applied to such REMIC I Regular Interests
such that the REMIC I Subordinated Balance Ratio is maintained; provided,
further that all Realized Losses applied to such REMIC I Regular Interests shall
be deemed to be Realized Losses on Mortgage Loans in the related Loan Group;
third, any remaining Realized Losses with respect to Mortgage
Loans in each Loan Group shall be applied to REMIC I Regular Interest LTI-ZZZ."
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(e) On each Distribution Date, the Trustee shall cause the
Group I Available Funds and the Group II Available Funds, in the following order
of priority and in accordance with the Remittance Report, to be distributed by
REMIC II to REMIC III on account of the REMIC II Regular Interests or withdrawn
from the Distribution Account and distributed to the Holders of the Class R
Certificates, as the case may be:
(i) Uncertificated Accrued Interest on the
Uncertificated REMIC II Regular
Interests for such Distribution Date, plus any Uncertificated Accrued Interest
thereon remaining unpaid from any previous Distribution Date; and
(ii) In accordance with the priorities set forth in
Section 5.07(f), an amount
equal to the sum of the amounts distributable in respect of principal on the
REMIC II Certificates under Sections 5.04(a)(i) and (ii). Principal shall be
distributable to, and shortfalls, losses and prepayments are allocable to, the
REMIC II Regular Interests as such amounts are distributable and allocable to
the Corresponding Certificates.
(f) Notwithstanding the deemed distributions on the REMIC I
Regular Interests and REMIC II Regular Interests described in this Section 5.07,
distributions of funds from the Distribution Account shall be made only in
accordance with Section 6.05.
Section 5.08 CLASS AIO-1 CERTIFICATE ACCOUNT.
The Trustee shall establish and maintain with itself a separate,
segregated trust account titled "Nomura Asset Acceptance Corporation,
Alternative Loan Trust 2003-A2 Class AIO-1 Certificate Account". On the Closing
Date, the Depositor will deposit, or cause to be deposited in the Class AIO-1
Certificate Account $100.00. The amount on deposit in the Class AIO-1
Certificate Account shall be held uninvested. On the August 2008 Distribution
Date, the Trustee shall withdraw the amount on deposit in the Class AIO-1
Certificate Account and remit such amount to the holders of the Class AIO-1
Certificates, on a pro rata basis, in reduction of the Certificate Principal
Balance thereof.
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ARTICLE VI
THE CERTIFICATES
Section 6.01 THE CERTIFICATES.
The Certificates shall be substantially in the forms attached
hereto as Exhibits A-1 through A-5. The Certificates shall be issuable in
registered form, in the minimum dollar denominations, integral dollar multiples
in excess thereof (except that one Certificate of each Class may be issued in a
different amount which must be in excess of the applicable minimum dollar
denomination) and aggregate dollar denominations as set forth in the following
table:
MINIMUM INTEGRAL MULTIPLE IN ORIGINAL CERTIFICATE
CLASS DENOMINATION EXCESS OF MINIMUM PRINCIPAL BALANCE PASS-THROUGH RATE
--------------- ---------------- ---------------------- --------------------- --------------------------------
A1 $25,000 $1,000 $142,380,000.00 Class A1 Pass-Through Rate
A2 $25,000 $1,000 $34,368,000.00 Class A2 Pass-Through Rate
A3 $25,000 $1,000 $15,756,000.00 Class A3 Pass-Through Rate
AIO-1 $25,000 $1,000 $100.00 Class AIO-1 Pass-Through Rate
AIO-2 $25,000 $1,000 N/A Class AIO-2 Pass-Through Rate
M1 $25,000 $1,000 $9,222,000.00 Class M1 Pass-Through Rate
M2 $25,000 $1,000 $4,610,000.00 Class M2 Pass-Through Rate
B1 $25,000 $1,000 $7,492,000.00 Class B1 Pass-Through Rate
B2 $25,000 $1,000 $3,619,000.00 Class B2 Pass-Through Rate
B3 $25,000 $1,000 $1,567,000.00 Class B3 Pass-Through Rate
B4 $25,000 $1,000 $1,198,000.00 Class B4 Pass-Through Rate
B5 $25,000 $1,000 $2,605,000.00 Class B5 Pass-Through Rate
B6 $25,000 $1,000 $2,074,000.00 Class B6 Pass-Through Rate
B7 $25,000 $1,000 $5,653,291.40 Class B7Pass-Through Rate
The Certificates shall be executed by manual or facsimile
signature on behalf of the Trustee by an authorized officer upon the written
order of the Depositor. Certificates bearing the manual or facsimile signatures
of individuals who were, at the time when such signatures were affixed,
authorized to sign on behalf of the Trustee shall bind the Trustee,
notwithstanding that such individuals or any of them have ceased to be so
authorized prior to the authentication and delivery of such Certificates or did
not hold such offices at the date of such authentication and delivery. No
Certificate shall be entitled to any benefit under this Agreement, or be valid
for any purpose, unless there appears on such Certificate the countersignature
of the Trustee by manual signature, and such countersignature upon any
Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly countersigned and delivered hereunder. All
Certificates shall be dated the date of their countersignature. On the Closing
Date, the Trustee shall authenticate the Certificates to be issued at the
written direction of the Depositor, or any affiliate thereof.
The Depositor shall provide, or cause to be provided, to the
Trustee on a continuous basis, an adequate inventory of Certificates to
facilitate transfers.
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Section 6.02 CERTIFICATE REGISTER; REGISTRATION OF TRANSFER AND
EXCHANGE OF CERTIFICATES.
(a) The Trustee shall maintain, or cause to be maintained in
accordance with the provisions of Section 6.09, a Certificate Register for the
Trust Fund in which, subject to the provisions of subsections (b) and (c) below
and to such reasonable regulations as it may prescribe, the Trustee shall
provide for the registration of Certificates and of Transfers and exchanges of
Certificates as herein provided. Upon surrender for registration of Transfer of
any Certificate, the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of the same
Class and of like aggregate Percentage Interest.
At the option of a Certificateholder, Certificates may be
exchanged for other Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest upon surrender of the
Certificates to be exchanged at the office or agency of the Trustee. Whenever
any Certificates are so surrendered for exchange, the Trustee shall execute,
authenticate, and deliver the Certificates that the Certificateholder making the
exchange is entitled to receive. Every Certificate presented or surrendered for
registration of Transfer or exchange shall be accompanied by a written
instrument of Transfer in form satisfactory to the Trustee duly executed by the
holder thereof or his attorney duly authorized in writing.
No service charge to the Certificateholders shall be made for
any registration of Transfer or exchange of Certificates, but payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any Transfer or exchange of Certificates may be required.
All Certificates surrendered for registration of Transfer or
exchange shall be canceled and subsequently destroyed by the Trustee in
accordance with the Trustee's customary procedures.
(b) No Transfer of a Private Certificate shall be made unless
such Transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under the Securities Act and such state securities
laws. In the event that a Transfer is to be made in reliance upon an exemption
from the Securities Act and such laws, in order to assure compliance with the
Securities Act and such laws, the Certificateholder desiring to effect such
Transfer and such Certificateholder's prospective transferee shall each certify
to the Trustee in writing the facts surrounding the Transfer in substantially
the forms set forth in Exhibit E (the "Transferor Certificate") and (x) deliver
a letter in substantially the form of either Exhibit F (the "Investment Letter")
or Exhibit G (the "Rule 144A Letter") or (y) there shall be delivered to the
Trustee an Opinion of Counsel, at the expense of the transferor, that such
Transfer may be made pursuant to an exemption from the Securities Act, which
Opinion of Counsel shall not be an expense of the Depositor, the Seller, the
Trustee or the Trust Fund. The Depositor shall provide to any Holder of a
Private Certificate and any prospective transferee designated by any such
Holder, information regarding the related Certificates and the Mortgage Loans
and such other information as shall be necessary to satisfy the condition to
eligibility set forth in Rule 144A(d)(4) for Transfer of any such Certificate
without registration thereof under the Securities Act pursuant to the
registration
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exemption provided by Rule 144A. The Trustee shall cooperate with the Depositor
in providing the Rule 144A information referenced in the preceding sentence,
including providing to the Depositor such information regarding the
Certificates, the Mortgage Loans and other matters regarding the Trust Fund as
the Depositor shall reasonably request to meet its obligation under the
preceding sentence. Each Holder of a Private Certificate desiring to effect such
Transfer shall, and does hereby agree to, indemnify the Trustee, the Depositor
and the Seller against any liability that may result if the Transfer is not so
exempt or is not made in accordance with such federal and state laws.
No Transfer of an ERISA Restricted Certificate shall be made
unless the Trustee shall have received either (i) a representation from the
transferee of such Certificate acceptable to and in form and substance
satisfactory to the Trustee to the effect that such transferee is not an
employee benefit plan subject to Section 406 of ERISA and/or a plan subject to
Section 4975 of the Code, or a Person acting on behalf of any such plan or using
the assets of any such plan, or (ii) in the case of any such ERISA Restricted
Certificate presented for registration in the name of an employee benefit plan
subject to ERISA, or a plan subject to Section 4975 of the Code (or comparable
provisions of any subsequent enactments), or a trustee of any such plan or any
other person acting on behalf of any such plan, an Opinion of Counsel
satisfactory to the Trustee for the benefit of the Trustee, the Depositor and
the Servicer and on which they may rely to the effect that the purchase and
holding of such ERISA Restricted Certificate will not result in any prohibited
transactions under ERISA or Section 4975 of the Code and will not subject the
Trustee, the Depositor or the Servicer to any obligation in addition to those
expressly undertaken in this Agreement, which Opinion of Counsel shall not be an
expense of the Trustee, the Depositor or the Servicer or (iii) in the case of a
Class B5, Class B6 or Class B7 Certificate, a representation (or, in the case of
book entry certificate, a deemed representation) that the proposed transfer and
holding of the Certificate and the servicing, management, and operation of the
trust and its assets (A) will not result in any prohibited transaction which is
not covered under an individual or class prohibited transaction exemption,
including, but not limited to, prohibited transaction exemption ("PTE") 84-14,
XXX 00-00, XXX 00-0, XXX 00-00, XXX 00-00 or Section 401(c) of ERISA and the
regulations promulgated thereunder and (B) will not give rise to any additional
fiduciary duties on the part of the Depositor, the Trustee or the Servicer.
Notwithstanding anything else to the contrary herein, any purported transfer of
an ERISA Restricted Certificate to or on behalf of an employee benefit plan
subject to Section 406 of ERISA and/or a plan subject to Section 4975 of the
Code other than in compliance with the foregoing shall be void and of no effect;
provided that the restriction set forth in this sentence shall not be applicable
if there has been delivered to the Trustee an Opinion of Counsel meeting the
requirements of clause (ii) of the first sentence of this paragraph. The Trustee
shall not be under any liability to any Person for any registration of transfer
of any ERISA Restricted Certificate that is in fact not permitted by this
Section 6.02(b) or for making any payments due on such Certificate to the Holder
thereof or taking any other action with respect to such Holder under the
provisions of this Agreement. The Trustee shall be entitled, but not obligated,
to recover from any Holder of any ERISA Restricted Certificate that was in fact
an employee benefit plan subject to Section 406 of ERISA or a plan subject to
Section 4975 of the Code or a Person acting on behalf of any such plan at the
time it became a Holder or, at such subsequent time as it became such a plan or
Person acting on behalf of such a plan, all payments made on such ERISA
Restricted Certificate at and after either such time. Any such payments so
recovered
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by the Trustee shall be paid and delivered by the Trustee to the last preceding
Holder of such Certificate that is not such a plan or Person acting on behalf of
a plan.
Each beneficial owner of a Class M1, Class M2, Class B1, Class
B2, Class B3 or Class B4 Certificate or any interest therein shall be deemed to
have represented, by virtue of its acquisition or holding of that certificate or
interest therein, that either (i) it is not a Plan or investing with "Plan
Assets", (ii) it has acquired and is holding such certificate in reliance on the
Exemption, and that it understands that there are certain conditions to the
availability of the Exemption, including that the certificate must be rated, at
the time of purchase, not lower than "BBB-" (or its equivalent) by S&P, Fitch or
Xxxxx'x, and the certificate is so rated or (iii) (1) it is an insurance
company, (2) the source of funds used to acquire or hold the certificate or
interest therein is an "insurance company general account," as such term is
defined in Prohibited Transaction Class Exemption ("PTCE") 95-60, and (3) the
conditions in Sections I and III of PTCE 95-60 have been satisfied.
Each beneficial owner of a Class A1 Certificate will be deemed
to have represented, by its acquisition or holding of the Class A1 Certificate,
that either (i) it is not a Plan or investing with "Plan Assets" or (ii) the
acquisition and holding of such Certificate will not give rise to a non-exempt
prohibited transaction under Section 406 of ERISA or Section 4975 of the Code.
(c) Each Person who has or who acquires any Ownership Interest
in a Residual Certificate shall be deemed by the acceptance or acquisition of
such Ownership Interest to have agreed to be bound by the following provisions,
and the rights of each Person acquiring any Ownership Interest in a Residual
Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in
a Residual Certificate shall be a Permitted Transferee and shall
promptly notify the Trustee of any change or impending change in its
status as a Permitted Transferee.
(ii) No Ownership Interest in a Residual Certificate may be
registered on the Closing Date or thereafter transferred, and the
Trustee shall not register the Transfer of any Residual Certificate
unless, in addition to the certificates required to be delivered to the
Trustee under subparagraph (b) above, the Trustee shall have been
furnished with an affidavit (a "Transfer Affidavit") of the initial
owner or the proposed transferee in the form attached hereto as Exhibit
D.
(iii) Each Person holding or acquiring any Ownership Interest
in a Residual Certificate shall agree (A) to obtain a Transfer
Affidavit from any other Person to whom such Person attempts to
Transfer its Ownership Interest in a Residual Certificate, (B) to
obtain a Transfer Affidavit from any Person for whom such Person is
acting as nominee, trustee or agent in connection with any Transfer of
a Residual Certificate and (C) not to Transfer its Ownership Interest
in a Residual Certificate or to cause the Transfer of an Ownership
Interest in a Residual Certificate to any other Person if it has actual
knowledge that such Person is not a Permitted Transferee.
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(iv) Any attempted or purported Transfer of any Ownership
Interest in a Residual Certificate in violation of the provisions of
this Section 6.02(c) shall be absolutely null and void and shall vest
no rights in the purported Transferee. If any purported transferee
shall become a Holder of a Residual Certificate in violation of the
provisions of this Section 6.02(c), then the last preceding Permitted
Transferee shall be restored to all rights as Holder thereof
retroactive to the date of registration of Transfer of such Residual
Certificate. The Trustee shall be under no liability to any Person for
any registration of Transfer of a Residual Certificate that is in fact
not permitted by Section 6.02(b) and this Section 6.02(c) or for making
any payments due on such Certificate to the Holder thereof or taking
any other action with respect to such Holder under the provisions of
this Agreement so long as the Transfer was registered after receipt of
the related Transfer Affidavit. The Trustee shall be entitled but not
obligated to recover from any Holder of a Residual Certificate that was
in fact not a Permitted Transferee at the time it became a Holder or,
at such subsequent time as it became other than a Permitted Transferee,
all payments made on such Residual Certificate at and after either such
time. Any such payments so recovered by the Trustee shall be paid and
delivered by the Trustee to the last preceding Permitted Transferee of
such Certificate.
The restrictions on Transfers of a Residual Certificate set
forth in this Section 6.02(c) shall cease to apply (and the applicable portions
of the legend on a Residual Certificate may be deleted) with respect to
Transfers occurring after delivery to the Trustee of an Opinion of Counsel,
which Opinion of Counsel shall not be an expense of the Trustee or the Seller to
the effect that the elimination of such restrictions will not cause REMIC I,
REMIC II and/or REMIC III, as applicable, to fail to qualify as a REMIC at any
time that the Certificates are outstanding or result in the imposition of any
tax on the Trust Fund, a Certificateholder or another Person. Each Person
holding or acquiring any ownership Interest in a Residual Certificate hereby
consents to any amendment of this Agreement that, based on an Opinion of Counsel
furnished to the Trustee, is reasonably necessary (a) to ensure that the record
ownership of, or any beneficial interest in, a Residual Certificate is not
transferred, directly or indirectly, to a Person that is not a Permitted
Transferee and (b) to provide for a means to compel the Transfer of a Residual
Certificate that is held by a Person that is not a Permitted Transferee to a
Holder that is a Permitted Transferee.
(d) The preparation and delivery of all certificates and
opinions referred to above in this Section 6.02 shall not be an expense of the
Trust Fund, the Trustee, the Depositor or the Seller.
Section 6.03 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If (a) any mutilated Certificate is surrendered to the
Trustee, or the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Certificate and of the ownership thereof and
(b) there is delivered to the Trustee 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 that such Certificate has been acquired by a bona fide purchaser,
the Trustee shall execute, authenticate and deliver, in exchange for or in lieu
of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate
of like Class, tenor and Percentage Interest. In connection with the issuance of
any new Certificate under this Section 6.03, the Trustee may require the
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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) connected therewith. Any replacement Certificate
issued pursuant to this Section 6.03 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. All
Certificates surrendered to the Trustee under the terms of this Section 6.03
shall be canceled and destroyed by the Trustee in accordance with its standard
procedures without liability on its part.
Section 6.04 PERSONS DEEMED OWNERS.
The Trustee and any agent of the Trustee may treat the person
in whose name any Certificate is registered as the owner of such Certificate for
the purpose of receiving distributions as provided in this Agreement and for all
other purposes whatsoever, and neither the Trustee nor any agent of the Trustee
shall be affected by any notice to the contrary.
Section 6.05 ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND
ADDRESSES.
If three or more Certificateholders (a) request such
information in writing from the Trustee, (b) state that such Certificateholders
desire to communicate with other Certificateholders with respect to their rights
under this Agreement or under the Certificates, and (c) provide a copy of the
communication that such Certificateholders propose to transmit or if the
Depositor shall request such information in writing from the Trustee, then the
Trustee shall, within ten Business Days after the receipt of such request,
provide the Depositor or such Certificateholders at such recipients' expense the
most recent list of the Certificateholders of the Trust Fund held by the
Trustee, if any. The Depositor and every Certificateholder, by receiving and
holding a Certificate, agree that the Trustee shall not be held accountable by
reason of the disclosure of any such information as to the list of the
Certificateholders hereunder, regardless of the source from which such
information was derived.
Section 6.06 BOOK-ENTRY CERTIFICATES.
The Regular Certificates, upon original issuance, shall be
issued in the form of one or more typewritten Certificates representing the
Book- Entry Certificates, to be delivered to the Depository by or on behalf of
the Depositor. Such Certificates shall initially be registered on the
Certificate Register in the name of the Depository or its nominee, and no
Certificate Owner of such Certificates will receive a definitive certificate
representing such Certificate Owner's interest in such Certificates, except as
provided in Section 6.08. Unless and until definitive, fully registered
Certificates ("Definitive Certificates") have been issued to the Certificate
Owners of such Certificates pursuant to Section 6.08:
(a) the provisions of this Section shall be in full force and
effect;
(b) the Depositor and the Trustee may deal with the Depository
and the Depository Participants for all purposes (including the making of
distributions) as the authorized representative of the respective Certificate
Owners of such Certificates;
(c) registration of the Book-Entry Certificates may not be
transferred by the Trustee except to another Depository;
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(d) the rights of the respective Certificate Owners of such
Certificates shall be exercised only through the Depository and the Depository
Participants and shall be limited to those established by law and agreements
between the Owners of such Certificates and the Depository and/or the Depository
Participants. Pursuant to the Depository Agreement, unless and until Definitive
Certificates are issued pursuant to Section 6.08, the Depository will make
book-entry transfers among the Depository Participants and receive and transmit
distributions of principal and interest on the related Certificates to such
Depository Participants;
(e) the Depository may collect its usual and customary fees,
charges and expenses from its Depository Participants;
(f) the Trustee may rely and shall be fully protected in
relying upon information furnished by the Depository with respect to its
Depository Participants; and
(g) to the extent that the provisions of this Section conflict
with any other provisions of this Agreement, the provisions of this Section
shall control.
For purposes of any provision of this Agreement requiring or
permitting actions with the consent of, or at the direction of,
Certificateholders evidencing a specified percentage of the aggregate unpaid
principal amount of any Class of Certificates, such direction or consent may be
given by Certificate Owners (acting through the Depository and the Depository
Participants) owning Book-Entry Certificates evidencing the requisite percentage
of principal amount of such Class of Certificates.
Section 6.07 NOTICES TO DEPOSITORY.
Whenever any notice or other communication is required to be
given to Certificateholders of a Class with respect to which Book-Entry
Certificates have been issued, unless and until Definitive Certificates shall
have been issued to the related Certificate Owners, the Trustee shall give all
such notices and communications to the Depository.
Section 6.08 DEFINITIVE CERTIFICATES.
If, after Book-Entry Certificates have been issued with
respect to any Certificates, (a) the Depositor or the Depository advises the
Trustee that the Depository is no longer willing or able to discharge properly
its responsibilities under the Depository Agreement with respect to such
Certificates and the Trustee or the Depositor is unable to locate a qualified
successor, (b) the Depositor, at its sole option, advises the Trustee that it
elects to terminate the book-entry system with respect to such Certificates
through the Depository or (c) after the occurrence and continuation of an Event
of Default, Certificate Owners of such Book-Entry Certificates having not less
than 51% of the Voting Rights evidenced by any Class of Book-Entry Certificates
advise the Trustee and the Depository in writing through the Depository
Participants that the continuation of a book-entry system with respect to
Certificates of such Class through the Depository (or its successor) is no
longer in the best interests of the Certificate Owners of such Class, then the
Trustee shall notify all Certificate Owners of such Certificates, through the
Depository, of the occurrence of any such event and of the availability of
Definitive Certificates to applicable Certificate Owners requesting the same.
The Depositor shall provide the Trustee
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with an adequate inventory of certificates to facilitate the issuance and
transfer of Definitive Certificates. Upon surrender to the Trustee of any such
Certificates by the Depository, accompanied by registration instructions from
the Depository for registration, the Trustee shall countersign and deliver such
Definitive Certificates. Neither the Depositor nor the Trustee shall be liable
for any delay in delivery of such instructions and each may conclusively rely
on, and shall be protected in relying on, such instructions. Upon the issuance
of such Definitive Certificates, all references herein to obligations imposed
upon or to be performed by the Depository shall be deemed to be imposed upon and
performed by the Trustee, to the extent applicable with respect to such
Definitive Certificates and the Trustee shall recognize the Holders of such
Definitive Certificates as Certificateholders hereunder.
Section 6.09 MAINTENANCE OF OFFICE OR AGENCY.
The Trustee will maintain or cause to be maintained at its
expense an office or offices or agency or agencies at 0000 Xxxxx Xxxxxx, 0xx
Xxxxx, Xxxxxx, Xxxxx, 00000, Attention: ITS Transfer Department, Nomura Asset
Acceptance Corporation, 2003-A2 where Certificates may be surrendered for
registration of transfer or exchange. The Trustee will give prompt written
notice to the Certificateholders of any change in such location of any such
office or agency.
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ARTICLE VII
THE DEPOSITOR AND THE SERVICER
Section 7.01 LIABILITIES OF THE DEPOSITOR AND THE SERVICER. Each of the
Depositor and the Servicer shall be liable in accordance herewith only to the
extent of the obligations specifically imposed upon and undertaken by it herein.
Section 7.02 Merger or Consolidation of the Depositor or the Servicer.
(a) Each of the Depositor and the Servicer will keep in full
force and effect its existence, rights and franchises as a corporation under the
laws of the state of its incorporation, and will 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 duties under this Agreement.
(b) Any Person into which the Depositor or the Servicer may be
merged or consolidated, or any corporation resulting from any merger or
consolidation to which the Depositor or the Servicer shall be a party, or any
Person succeeding to the business of the Depositor or the Servicer shall be the
successor of the Depositor or the Servicer hereunder, without the execution or
filing of any paper or further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
Section 7.03 Indemnification Depositor.
(a) The Depositor agrees to indemnify the Indemnified Persons
for, and to hold them harmless against, any loss, liability or expense
(including reasonable legal fees and disbursements of counsel) incurred on their
part that may be sustained in connection with, arising out of, or relating to,
any claim or legal action (including any pending or threatened claim or legal
action) relating to this Agreement or the Certificates (i) related to the
Depositor's failure to perform its duties in compliance with this Agreement
(except as any such loss, liability or expense shall be otherwise reimbursable
pursuant to this Agreement) or (ii) incurred by reason of the Depositor's
willful misfeasance, bad faith or gross negligence in the performance of duties
hereunder or by reason of reckless disregard of obligations and duties
hereunder. This indemnity shall survive the resignation and the termination of
this Agreement.
(b) The Servicer agrees to indemnify the Indemnified Persons
and to hold them harmless from and against any and all claims, losses, damages,
penalties, fines, forfeitures, legal fees and related costs, judgments, and any
other costs, fees and expenses that the Indemnified Persons may sustain in any
way related to the Servicer's gross negligence in the performance of its duties
under this Agreement or failure to service the Mortgage Loans in material
compliance with the terms of this Agreement and for breach of any representation
or warranty of the Servicer contained herein. The Servicer shall immediately
notify the Trustee if a claim is made by a third party with respect to this
Agreement or the Mortgage Loans, assume (with the consent of the Trustee and
with counsel reasonably satisfactory to the Trustee) the
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defense of any such claim and pay all expenses in connection therewith,
including counsel fees, and promptly pay, discharge and satisfy any judgment or
decree which may be entered against it or any Indemnified Person in respect of
such claim but failure to so notify the Servicer shall not limit its obligations
hereunder. The Servicer agrees that it will not enter into any settlement of any
such claim without the consent of the Indemnified Persons unless such settlement
includes an unconditional release of such Indemnified Persons from all liability
that is the subject matter of such claim. The provisions of this Section 7.03(b)
shall survive termination of this Agreement.
Section 7.04 Limitations on Liability of the Depositor, the Servicer
and Others. Subject to the obligation of the Depositor and the Servicer to
indemnify the Indemnified Persons pursuant to Section 7.03:
(a) Neither the Depositor, the Servicer nor any of the
directors, officers, employees or agents of the Depositor and the Servicer shall
be under any liability to the Indemnified Persons, the Trust Fund or the
Certificateholders for taking any action or for refraining from taking 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
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 such
Person's willful misfeasance, bad faith or gross negligence in the performance
of duties or by reason of reckless disregard of obligations and duties
hereunder.
(b) The Depositor, the Servicer and any director, officer,
employee or agent of the Depositor and the Servicer may rely in good faith on
any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising hereunder.
(c) The Depositor, the Servicer, the Trustee, each Custodian
and any director, officer, employee or agent of the Depositor, the Servicer, the
Trustee or either Custodian shall be indemnified by the Trust Fund and held
harmless thereby against any loss, liability or either expense (including
reasonable legal fees and disbursements of counsel) incurred on their part that
may be sustained in connection with, arising out of, or related to, any claim or
legal action (including any pending or threatened claim or legal action)
relating to this Agreement or the Certificates, other than (i) with respect to
the Servicer, such loss, liability or expense related to the Servicer's failure
to perform its respective duties in compliance with this Agreement (except as
any such loss, liability or expense shall be otherwise reimbursable pursuant to
this Agreement) or, with respect to the Custodian, to the Custodian's failure to
perform its duties hereunder, (ii) with respect to the Servicer, any such loss,
liability or expense incurred by reason of the Servicer's willful misfeasance,
bad faith or gross negligence in the performance of duties hereunder or (iii)
with respect to the Custodian, any such loss, liability or expense incurred by
reason of the Custodian's willful misfeasance, bad faith or gross negligence in
the performance of duties hereunder.
(d) Neither the Depositor nor the Servicer shall be under any
obligation to appear in, prosecute or defend any legal action that is not
incidental to its duties under this Agreement and that in its opinion may
involve it in any expense or liability; provided, however, the Trustee may in
its discretion, undertake any such action which it may deem necessary or
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desirable with 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 and any liability resulting
therefrom shall be expenses, costs and liabilities of the Trust Fund, and the
Trustee shall be entitled to be reimbursed therefor out of the Distribution
Account as provided by Section 4.05. Nothing in this Subsection 7.04(d) shall
affect the Trustee's obligation to take such actions as are necessary to ensure
the servicing and administration of the Mortgage Loans pursuant to this
Agreement.
(e) In taking or recommending any course of action pursuant to
this Agreement, unless specifically required to do so pursuant to this
Agreement, the Trustee shall not be required to investigate or make
recommendations concerning potential liabilities which the Trust might incur as
a result of such course of action by reason of the condition of the Mortgaged
Properties.
(f) The Trustee shall not be liable for any acts or omissions
of the Servicer, the Depositor or the Custodian.
Section 7.05 SERVICER NOT TO RESIGN.
(a) The Servicer shall not resign from the obligations and
duties hereby imposed on it except upon the determination that its duties
hereunder are no longer permissible under applicable law or the performance of
such duties are no longer possible in order to comply with applicable law and
such incapacity or impossibility cannot be cured by the Servicer. Any
determination permitting the resignation of the Servicer shall be evidenced by
an Opinion of Counsel to such effect delivered to the Trustee which Opinion of
Counsel shall be in form and substance acceptable to the Trustee. No appointment
of a successor to the Servicer shall be effective hereunder unless (a) the
Rating Agencies have confirmed in writing that such appointment will not result
in a downgrade, qualification or withdrawal of the then current ratings assigned
to the Certificates, (b) such successor shall have represented that it is meets
the eligibility criteria set forth in clause (i) above and (c) such successor
has agreed to assume the obligations of the Servicer hereunder to the extent of
the Mortgage Loans to be serviced by such successor. The Servicer shall provide
a copy of the written confirmation of the Rating Agencies and the agreement
executed by such successor to the Trustee. No such resignation shall become
effective until a Qualified Successor or the Trustee shall have assumed the
Servicer's responsibilities and obligations hereunder. The Servicer shall notify
the Trustee and the Rating Agencies of the resignation of the Servicer.
(b) The Trustee and the Depositor hereby specifically (i)
consent to the pledge and assignment by the Servicer of all of the Servicer's
right, title and interest in, to and under this Agreement to the Servicing
Rights Pledgee, for the benefit of certain lenders and (ii) provided that no
Servicer Default exists, agree that upon delivery to the Trustee by the
Servicing Rights Pledgee of a letter signed by the Servicer whereunder the
Servicer shall resign as Servicer under this Agreement, the Trustee shall
appoint the Servicing Rights Pledgee or its designee as successor Servicer,
provided that at the time of such appointment, the Servicing Rights Pledgee or
such designee meets the requirements of a successor Servicer pursuant to Section
8.02(a) hereof and agrees to be subject to the terms of this Agreement. If,
pursuant to any provision hereof, the duties of the Servicer are transferred to
a successor Servicer, the entire amount of the
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Servicing Fee and other compensation payable to the Servicer pursuant hereto
shall thereafter be payable to such successor Servicer.
Section 7.06 TERMINATION OF THE SERVICER WITHOUT CAUSE.
The Seller may, at its option, terminate the servicing
responsibilities of Option One Mortgage Corporation hereunder with respect to
the Mortgage Loans without cause. No such termination shall become effective
unless and until a successor to Option One Mortgage Corporation shall have been
appointed to service and administer the Mortgage Loans pursuant to the terms and
conditions of this Agreement. No appointment shall be effective unless (i) such
successor to Option One Mortgage Corporation meets the eligibility criteria
contained in Section 8.02, (ii) the Trustee shall have consented to such
appointment, (iii) the Rating Agencies have confirmed in writing that such
appointment will not result in a downgrade, qualification or withdrawal of the
then current ratings assigned to the Certificates, (iv) such successor has
agreed to assume the obligations of Option One Mortgage Corporation hereunder to
the extent of the Mortgage Loans and (v) all amounts reimbursable to Option One
Mortgage Corporation pursuant to the terms of this Agreement shall have been
paid to Option One Mortgage Corporation by the successor appointed pursuant to
the terms of this Section 7.06 or by the Seller. The Seller shall provide a copy
of the written confirmation of the Rating Agencies and the agreement executed by
such successor to the Trustee.
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ARTICLE VIII
DEFAULT; TERMINATION OF SERVICER
Section 8.01 SERVICER DEFAULT.
In case one or more of the following events of default by the
Servicer (each, a "Servicer Default") shall occur and be continuing, that is to
say:
(i) any failure by the Servicer to remit to the Trustee any
payment required to be made under the terms of this Agreement which continues
unremedied for a period of three Business Days; or
(ii) failure on the part of the Servicer duly to observe or
perform in any material respect any other of the covenants or agreements on the
part of the Servicer set forth in this Agreement, the breach of which has a
material adverse effect and which continue unremedied for a period of sixty days
(except that such number of days shall be fifteen in the case of a failure to
pay any premium for any insurance policy required to be maintained under this
Agreement and such failure shall be deemed to have a material adverse effect)
after the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Trustee; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or receiver
or liquidator in any insolvency, bankruptcy, readjustment of debt, marshaling of
assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer and
such decree or order shall have remained in force undischarged or unstayed for a
period of sixty days; or
(iv) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, bankruptcy,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings of or relating to the Servicer or of or relating to all or
substantially all of its property; or
(v) the Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations; or
(vi) the Servicer attempts to assign its right to servicing
compensation hereunder or the Servicer attempts to sell or otherwise dispose of
all or substantially all of its property or assets or to assign this Agreement
or the servicing responsibilities hereunder or to delegate its duties hereunder
or any portion thereof except as otherwise permitted herein; or
(vii) the Servicer ceases to be qualified to transact business
in any jurisdiction where it is currently so qualified, but only to the extent
such non-qualification materially and adversely affects the Servicer's ability
to perform its obligations hereunder;
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then, and in each and every such case, so long as a Servicer Default
shall not have been remedied, the Trustee, by notice in writing to the Servicer
shall with respect to a payment default by the Servicer pursuant to Section
8.01(i) and, upon the occurrence and continuance of any other Servicer Default,
may, and, at the written direction of Certificateholders evidencing not less
than 25% of the Voting Rights shall, in addition to whatever rights the Trustee
on behalf of the Certificateholders may have under Section 7.03 and at law or
equity to damages, including injunctive relief and specific performance,
terminate all the rights and obligations of the Servicer under this Agreement
and in and to the related Mortgage Loans and the proceeds thereof without
compensating the Servicer for the same. On or after the receipt by a Servicer of
such written notice, all authority and power of Servicer under this Agreement
whether with respect to the related Mortgage Loans or otherwise, shall pass to
and be vested in the Trustee. Upon written request from the Trustee, the
Servicer shall prepare, execute and deliver, any and all documents and other
instruments, place in the Trustee's possession all Mortgage Files relating to
the related Mortgage Loans, and do or accomplish all other acts or things
necessary or appropriate to effect the purposes of such notice of termination,
whether to complete the transfer and endorsement or assignment of the related
Mortgage Loans and related documents, or otherwise, at the Servicer's sole
expense; provided, however, in no event shall the Servicer be responsible for
any expenses incurred as a result of any termination pursuant to Section
8.01(viii). The Servicer shall cooperate with the Trustee in effecting the
termination of the Servicer's responsibilities and rights hereunder, including,
without limitation, the transfer to such successor for administration by it of
all cash amounts which shall at the time be credited by the Servicer to its
Custodial Account or Escrow Account or thereafter received with respect to the
related Mortgage Loans or any related REO Property. The Trustee shall not have
knowledge of a Servicer Default unless a Responsible Officer of the Trustee has
actual knowledge or unless written notice of any Servicer Default is received by
the Trustee at its Corporate Trust Office and such notice references the
Certificates, the Trust Fund or this Agreement.
Section 8.02 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.
(a) On and after the time a Servicer receives a notice of
termination pursuant to Section 8.01, the Trustee shall automatically become the
successor to the Servicer with respect to the transactions set forth or provided
for herein and after a transition period (not to exceed 90 days), shall be
subject to all the responsibilities, duties and liabilities relating thereto
placed on the Servicer by the terms and provisions hereof and applicable law
including the obligation to make Advances pursuant to Article VI hereof except
as otherwise provided herein; provided, however, that the Trustee's obligation
to make Advances in its capacity as Successor Servicer shall not be subject to
such 90 day transition period and the Trustee in such capacity will make any
Advance required to be made by the predecessor Servicer on the Distribution Date
on which the predecessor Servicer was required to make such Advance. Effective
on the date of such notice of termination, as compensation therefor, the Trustee
shall be entitled to all fees, costs and expenses relating to the Mortgage Loans
that the terminated Servicer would have been entitled to if it had continued to
act hereunder, provided, however, that the Trustee shall not be (i) liable for
any acts or omissions of the terminated Servicer, (ii) obligated to make
Advances if it is prohibited from doing so under applicable law or determines
that such Advance, if made, would constitute a Nonrecoverable Advance, (iii)
responsible for expenses of the Servicer pursuant to Section 2.03 or (iv)
obligated to deposit losses on any Permitted Investment directed by the
terminated Servicer. Notwithstanding the foregoing, the Trustee may, if it shall
be unwilling to
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so act, or shall, if it is prohibited by applicable law from making Advances
pursuant to Article VI or if it is otherwise unable to so act, appoint, or
petition a court of competent jurisdiction to appoint, any established mortgage
loan servicing institution the appointment of which does not adversely affect
the then current rating of the Certificates by each Rating Agency as the
successor to the Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Servicer hereunder. Any Successor
Servicer shall (i) be an institution that is a Xxxxxx Xxx and Xxxxxxx Mac
approved seller/servicer in good standing, that has a net worth of at least
$15,000,000 and (ii) be willing to act as successor servicer of any Mortgage
Loans under this Agreement, and shall have executed and delivered to the
Depositor and the Trustee an agreement accepting such delegation and assignment,
that contains an assumption by such Person of the rights, powers, duties,
responsibilities, obligations and liabilities of the terminated Servicer (other
than any liabilities of the terminated Servicer hereof incurred prior to
termination of the Servicer under Section 8.01), with like effect as if
originally named as a party to this Agreement, provided that each Rating Agency
shall have acknowledged in writing that its rating of the Certificates in effect
immediately prior to such assignment and delegation will not be qualified or
reduced as a result of such assignment and delegation. If the Trustee assumes
the duties and responsibilities of a Servicer in accordance with this Section
8.02, the Trustee shall not resign as Servicer until a Successor Servicer has
been appointed and has accepted such appointment. Pending appointment of a
successor to the Servicer hereunder, the Trustee, unless the Trustee is
prohibited by law from so acting, shall, subject to Section 4.04 hereof, 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 or otherwise as it and such
successor shall agree; provided that no such compensation shall be in excess of
that permitted the Servicer hereunder. The Trustee and such successor shall take
such action, consistent with this Agreement, as shall be necessary to effectuate
any such succession. Neither the Trustee nor any other Successor Servicer shall
be deemed to be in default hereunder by reason of any failure to make, or any
delay in making, any distribution hereunder or any portion thereof or any
failure to perform, or any delay in performing, any duties or responsibilities
hereunder, in either case caused by the failure of the Servicer to deliver or
provide, or any delay in delivering or providing, any cash, information,
documents or records to it.
The costs and expenses of the Trustee in connection with the
termination of a Servicer, appointment of a Successor Servicer and, if
applicable, any transfer of servicing, including, without limitation, all costs
and expenses associated with the complete transfer of all servicing data and the
completion, correction or manipulation of such servicing data as may be required
by the Trustee to correct any errors or insufficiencies in the servicing data or
otherwise to enable the Trustee or the Successor Servicer to service the related
Mortgage Loans properly and effectively, to the extent not paid by the
terminated Servicer, shall be payable to the Trustee from the Distribution
Account pursuant to Section 4.07. Any successor to the terminated Servicer as
successor servicer under this Agreement or a separate servicing agreement shall
give notice to the applicable Mortgagors of such change of servicer and shall,
during the term of its service as successor servicer maintain in force the
policy or policies that the Servicer is required to maintain pursuant to Section
3.04.
(b) In the event of a Servicer Default, notwithstanding
anything to the contrary above, the Trustee and the Depositor hereby agree that
upon delivery to the Trustee by the
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Servicing Rights Pledgee of a letter signed by the Servicer within ten Business
Days of when notification of such event shall have been provided to the Trustee,
whereunder the Servicer shall resign as Servicer under this Agreement, the
Trustee shall appoint the Servicing Rights Pledgee or its designee as successor
Servicer, provided that at the time of such appointment, the Servicing Rights
Pledgee or such designee meets the requirements of a successor Servicer set
forth in paragraph (a) above and the Servicing Rights Pledgee or such designee
agrees to be subject to the terms of this Agreement
Section 8.03 NOTIFICATION TO CERTIFICATEHOLDERS.
(a) Upon any termination of or appointment of a successor to a
Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders and to each Rating Agency.
(b) Within 60 days after the occurrence of any Servicer
Default, the Trustee shall transmit by mail to all Certificateholders notice of
each such Servicer Default hereunder known to the Trustee, unless such default
shall have been cured or waived.
Section 8.04 WAIVER OF SERVICER DEFAULTS.
The Trustee may waive only by written notice from
Certificateholders evidencing 66-2/3 of the Voting Rights (unless such default
materially and adversely affects all Certificateholders, in which case the
written direction shall be from all of the Certificateholders) any default by a
Servicer in the performance of its obligations hereunder and its consequences.
Upon any such waiver of a past default, such default shall cease to exist, and
any Servicer Default arising therefrom shall be deemed to have been remedied for
every purpose of this Agreement. No such waiver shall extend to any subsequent
or other default or impair any right consequent thereon except to the extent
expressly so waived in writing.
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ARTICLE IX
CONCERNING THE TRUSTEE AND THE CUSTODIAN
Section 9.01 DUTIES OF TRUSTEE.
(a) The Trustee, prior to the occurrence of a Servicer
Default, and after the curing or waiver of all Servicer Defaults, which may have
occurred undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement as duties of the Trustee. If a Servicer
Default has occurred and has not been cured or waived, the Trustee shall
exercise such of the rights and powers vested in it by this Agreement, and the
same degree of care and skill in their exercise, as a prudent person would
exercise under the circumstances in the conduct of such Person's own affairs.
(b) Upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments which are specifically
required to be furnished to the Trustee pursuant to any provision of this
Agreement, the Trustee shall examine them to determine whether they are in the
form required by this Agreement; provided, however, that the Trustee shall not
be responsible for the accuracy or content of any resolution, certificate,
statement, opinion, report, document, order or other instrument furnished by any
Servicer.
(c) On each Distribution Date, the Trustee shall make monthly
distributions and the final distribution to the Certificateholders from funds in
the Distribution Account as provided in Sections 5.04 and 10.01 based the
applicable Remittance Report.
(d) 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 a Servicer Default and after
the curing or waiver of all such Servicer Defaults which may have
occurred with respect to the Trustee, 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 their respective 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 and
shall be fully protected in acting or refraining from acting, as to the
truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Trustee and
conforming to the requirements of this Agreement;
(ii) The Trustee shall not be liable in its individual
capacity 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 liable with respect to any
action taken, suffered or omitted to be taken by it in good faith and
believed by it to be authorized or within the
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rights or powers conferred upon it by this Agreement or in accordance
with the directions of the Holders of Certificates evidencing not less
than 25% of the aggregate Voting Rights of the Certificates, if such
action or non-action relates to the time, method and place of
conducting any proceeding for any remedy available to the Trustee or
exercising any trust or other power conferred upon the Trustee under
this Agreement;
(iv) The Trustee shall not be required to take notice or be
deemed to have notice or knowledge of any default or Servicer Default
unless a Responsible Officer of the Trustee shall have actual knowledge
thereof. In the absence of such notice, the Trustee may conclusively
assume there is no such default or Servicer Default;
(v) The Trustee shall not in any way be liable by reason of
any insufficiency in any Account held by or in the name of Trustee
unless it is determined by a court of competent jurisdiction that the
Trustee's gross negligence or willful misconduct was the primary cause
of such insufficiency (except to the extent that the Trustee is obligor
and has defaulted thereon);
(vi) Anything in this Agreement to the contrary
notwithstanding, in no event shall the Trustee be liable for special,
indirect, punitive or consequential loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the
Trustee has been advised of the likelihood of such loss or damage and
regardless of the form of action and whether or not any such damages
were forseeable or contemplated; and
(vii) None of the Seller, the Depositor or the Trustee shall
be responsible for the acts or omissions of the other, it being
understood that this Agreement shall not be construed to render them
partners, joint venturers or agents of one another.
The Trustee shall not be required to expend or risk its own funds or otherwise
incur liability, financial or otherwise, in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of the Servicer hereunder.
(e) All funds received by the Trustee and required to be
deposited in the Distribution Account pursuant to this Agreement will be
promptly so deposited by the Trustee.
Section 9.02 CERTAIN MATTERS AFFECTING THE TRUSTEE.
(a) Except as otherwise provided in Section 9.01:
(i) The Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting in reliance on any
resolution or certificate of the Seller, the Depositor or any Servicer,
any certificates 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;
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(ii) The Trustee may consult with counsel and any advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection with respect to any action taken or
suffered or omitted by it hereunder in good faith and in accordance
with such advice or Opinion of Counsel:
(iii) The Trustee shall not be under any obligation to
exercise any of the trusts or powers vested in it by this Agreement,
other than its obligation to give notices pursuant to 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 satisfactory to it 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 a Servicer Default of which a Responsible
Officer of the Trustee has actual knowledge (which has not been cured
or waived), 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 person would exercise under the circumstances in
the conduct of his own affairs;
(iv) The Trustee shall not be liable in its individual
capacity 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) 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 to do so by Holders of Certificates evidencing not less than
25% of the aggregate Voting Rights of the Certificates and provided
that 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 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 taking any such action. The
reasonable expense of every such examination shall be paid by the
Certificateholders requesting the investigation;
(vi) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or through
Affiliates, nominees, custodians, agents or attorneys. The Trustee
shall not be liable or responsible for the misconduct or negligence of
any of the Trustee's agents or attorneys or paying agent appointed
hereunder by the Trustee with due care;
(vii) Should the Trustee deem the nature of any action
required on its part to be unclear, the Trustee may require prior to
such action that it be provided by the Depositor with reasonable
further instructions; the right of the Trustee to perform any
discretionary act enumerated in this Agreement shall not be construed
as a duty, and the Trustee shall not be accountable for other than its
negligence or willful misconduct in the performance of any such act;
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(viii) The Trustee shall not be required to give any bond or
surety with respect to the execution of the trust created hereby or the
powers granted hereunder;
(ix) The Trustee shall not have any duty to conduct any
affirmative investigation as to the occurrence of any condition
requiring the repurchase of any Mortgage Loan by any Person pursuant to
this Agreement, or the eligibility of any Mortgage Loan for purposes of
this Agreement; and
(x) The Trustee shall have no duty hereunder with respect to
any complaint, claim, demand, notice or other document it may receive
or which may be alleged to have been delivered or served upon it by the
parties as a consequence of the assignment of any Mortgage Loan
hereunder; provided, however that the Trustee shall promptly remit to
the Servicer upon receipt any such complaint, claim, demand, notice or
other document (i) which is delivered to the Trustee at is Corporate
Trust Office, (ii) of which a Responsible Officer has actual knowledge
or (iii) which contains information sufficient to permit the Trustee to
make a determination that the real property to which such document
relates is a Mortgaged Property.
Section 9.03 TRUSTEE NOT LIABLE FOR CERTIFICATES OR MORTGAGE LOANS.
The recitals contained herein and in the Certificates (other
than the signature and authentication of the Trustee on the Certificates) shall
be taken as the statements of the Depositor, and the Trustee shall not have any
responsibility for their correctness. The Trustee does not make any
representation as to the validity or sufficiency of the Certificates (other than
the signature and authentication of the Trustee on the Certificates) or of any
Mortgage Loan except as expressly provided in Sections 2.02 and 2.06; provided,
however, that the foregoing shall not relieve the Custodian of the obligation to
review the Mortgage Files pursuant to Sections 2.02 and 2.05 of this Agreement.
The Trustee's signature and authentication (or authentication of its agent) on
the Certificates shall be solely in its capacity as Trustee and shall not
constitute the Certificates an obligation of the Trustee in any other capacity.
The Trustee shall not be accountable for the use or application by the Depositor
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 with respect to the
Mortgage Loans. The Trustee (other than in its capacity as Custodian and on such
capacity, subject to the provisions of Section 2.06) shall not be responsible
for the legality or validity of this Agreement or any document or instrument
relating to this Agreement, the validity of the execution of this Agreement or
of any supplement hereto or instrument of further assurance, or the validity,
priority, perfection or sufficiency of the security for the Certificates issued
hereunder or intended to be issued hereunder. The Trustee shall not at any time
have any responsibility or liability for or with respect to the legality,
validity and enforceability of any Mortgage or any Mortgage Loan, or the
perfection and priority of any Mortgage or the maintenance of any such
perfection and priority, or for or with respect to the sufficiency of the Trust
Fund or its ability to generate the payments to be distributed to
Certificateholders, under this Agreement. The Trustee shall not have any
responsibility for filing any financing or continuation statement in any public
office at any time or to otherwise perfect or maintain the perfection of any
security interest or lien granted to it hereunder or to record this Agreement.
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Section 9.04 TRUSTEE MAY OWN CERTIFICATES.
The Trustee in its individual capacity or in any capacity
other than as Trustee hereunder may become the owner or pledgee of any
Certificates with the same rights it would have if it were not the Trustee and
may otherwise deal with the parties hereto.
Section 9.05 TRUSTEE'S FEES AND EXPENSES; INDEMNIFICATION.
(a) The Trustee shall withdraw from the Distribution Account
on each Distribution Date the Trustee Fee. In addition, all income and gain
realized from any investment of funds in the Distribution Account shall be for
the benefit of the Trustee as additional compensation.
In addition, the Trustee will be entitled to recover from the
Distribution Account pursuant to Section 4.07 all reasonable out-of-pocket
expenses, disbursements and advances and the expenses of the Trustee in
connection with the performance of its duties and obligations hereunder or under
any related documents, any Servicer Default, any breach of this Agreement or any
claim or legal action (including any pending or threatened claim or legal
action) incurred or made by the Trustee in the administration of the trusts
hereunder (including the reasonable compensation, expenses and disbursements of
its counsel) except any such expense, disbursement or advance as may arise from
its negligence or intentional misconduct. If funds in the Distribution Account
are insufficient therefor, the Trustee shall recover such expenses from the
Seller. Such compensation and reimbursement obligation shall not be limited by
any provision of law in regard to the compensation of a trustee of an express
trust. The rights of the Trustee under this Section 9.05 shall survive the
termination of this Agreement and the resignation or removal of the Trustee.
(b) The Trustee and its directors, officers, agents and
employees shall be indemnified and held harmless by the Trust Fund against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever, including reasonable attorney's fees, that may be imposed on,
incurred by or asserted against it or them in any way relating to or arising out
of this Agreement or any action taken or not taken by it or them hereunder
except to the extent caused by the Trustee's negligence or willful misconduct.
The indemnification provided for under this Section 9.05 shall survive the
termination of this Agreement and the resignation or removal of the Trustee.
The Trustee and its directors, officers, agents and
employees shall be indemnified and
held harmless by the Trust Fund from and against any and all claims, demands,
losses, penalties, liabilities, costs, damages, injuries and expenses,
including, without limitation, reasonable attorneys' fees and expenses, suffered
or sustained by the Trustee, either directly or indirectly, relating to or
arising out of any environmental law or regulation of the United States or any
state thereof, including, without limitation, any judgment, award, settlement,
reasonable attorneys' fees and expenses and other costs or expenses incurred in
connection with the defense of any actual or threatened action, proceeding or
claim.
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Section 9.06 ELIGIBILITY REQUIREMENTS FOR TRUSTEE.
The Trustee and any successor Trustee shall during the entire
duration of this Agreement be a state bank or trust company or a national
banking association organized and doing business under the laws of a state or
the United States of America, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus and undivided profits of at
least $40,000,000 or, in the case of a successor Trustee, $50,000,000, subject
to supervision or examination by federal or state authority and, in the case of
the Trustee, rated "BBB" or higher by Fitch with respect to their long-term
rating and rated "A+" or higher by Standard & Poor's and "Baa2" or higher by
Moody's with respect to any outstanding long-term unsecured unsubordinated debt,
and, in the case of a successor Trustee other than pursuant to Section 9.10,
rated in one of the two highest long-term debt categories of, or otherwise
acceptable to, each of the Rating Agencies. If the Trustee publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section 9.06 the combined capital and surplus of such corporation shall be
deemed to be its total equity capital (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 9.06, the Trustee shall resign immediately in the manner and with the
effect specified in Section 9.08.
Section 9.07 INSURANCE.
The Custodian hereunder, at its own expense, shall at all
times maintain and keep in full force and effect such insurance in amounts, with
standard coverage and subject to deductibles, as are customary for insurance
typically maintained by banks which act as custodians but, in any event not less
than that required by Xxxxxx Mae. Evidence of such insurance shall be furnished
to any Certificateholder upon reasonable written request.
Section 9.08 RESIGNATION AND REMOVAL OF TRUSTEE.
The Trustee may at any time resign and be discharged from the
Trust hereby created by giving written notice thereof to the Depositor and the
Seller, with a copy to the Rating Agencies. Upon receiving such notice of
resignation, the Depositor shall promptly appoint a successor trustee by written
instrument, in triplicate, one copy of which instrument shall be delivered to
the resigning trustee and 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 or removal, the resigning or removed
Trustee may petition any court of competent jurisdiction for the appointment of
a successor trustee.
If at any time (i) the Trustee shall cease to be eligible in
accordance with the provisions of Section 10.06 hereof and shall fail to resign
after written request thereto by the Depositor, (ii) the Trustee shall become
incapable of acting, or shall be adjudged as bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, or
(iii)(A) a tax is imposed with respect to the Trust Fund by any state in which
the Trustee or the Trust Fund is located, (B) the imposition of such tax would
be avoided by the appointment of a different trustee and (C) the Trustee fails
to indemnify the Trust Fund against such tax, then the Depositor may remove the
Trustee and
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appoint a successor trustee by written instrument, in multiple copies, a copy of
which instrument shall be delivered to the Trustee and the successor trustee.
The Holders evidencing at least 51% of the Voting Rights of
each Class of Certificates may at any time remove the Trustee and appoint a
successor trustee by written instrument or instruments, in multiple copies,
signed by such Holders or their attorneys-in-fact duly authorized, one complete
set of which instruments shall be delivered by the successor trustee to the
Trustee so removed and the successor trustee so appointed. Notice of any removal
of the Trustee shall be given to each Rating Agency by the Trustee or successor
trustee.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 9.08 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 10.09 hereof.
Section 9.09 SUCCESSOR TRUSTEE.
Any successor trustee appointed as provided in Section 9.08
hereof 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, 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.
No successor trustee shall accept appointment as provided in
this Section 9.09 unless at the time of such acceptance such successor trustee
shall be eligible under the provisions of Section 9.07 hereof and its
appointment shall not adversely affect the then current rating of the
Certificates.
Upon acceptance of appointment by a successor trustee as
provided in this Section 9.09, the successor trustee shall mail notice of the
succession of such trustee hereunder to all Holders of Certificates. If the
successor trustee fails to mail such notice within ten days after acceptance of
appointment, the Depositor shall cause such notice to be mailed at the expense
of the Trust Fund.
Section 9.10 MERGER OR CONSOLIDATION OF TRUSTEE.
Any corporation, state bank or national banking association
into which the Trustee may be merged or converted or with which it may be
consolidated or any corporation, state bank or national banking association
resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any corporation, state bank or national banking association
succeeding to substantially all of the corporate trust business of the Trustee
or shall be the successor of the Trustee hereunder, provided that such
corporation shall be eligible under the provisions of Section 9.06 without the
execution or filing of any paper or further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
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Section 9.11 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions of this Agreement, at any
time, for the purpose of meeting any legal requirements of any jurisdiction in
which any part of the Trust Fund or property securing any Mortgage Note may at
the time be located, the Trustee shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved by the Trustee
to act as co-trustee or co-trustees jointly with the Trustee, or separate
trustee or separate trustees, of all or any part of the Trust Fund, and to vest
in such Person or Persons, in such capacity and for the benefit of the
Certificateholders, such title to the Trust Fund or any part thereof, whichever
is applicable, and, subject to the other provisions of this Section 9.11, such
powers, duties, obligations, rights and trusts as the Trustee may consider
necessary or desirable. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
9.06 and no notice to Certificateholders of the appointment of any co-trustee or
separate trustee shall be required under Section 9.09.
Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) All rights, powers, duties and obligations conferred or
imposed upon the Trustee, except for the obligation of the Trustee as
Successor Servicer under this Agreement to advance funds on behalf of
the Servicer, shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee
is not authorized to act separately without the Trustee joining in such
act), except to the extent that under any law of any jurisdiction in
which any particular act or acts are to be performed (whether a Trustee
hereunder or as a Successor 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 singly by such separate
trustee or co-trustee, but solely at the direction of the Trustee;
(ii) No trustee hereunder shall be held personally liable by
reason of any act or omission of any other trustee hereunder; and
(iii) The Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article IX. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Trustee. Every such instrument shall be filed with the Trustee and a
copy thereof given to the Depositor. The Trust Fund shall pay associated fees
and expenses.
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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 9.12 TAX MATTERS.
It is intended that the Trust Fund shall constitute, and that
the affairs of the Trust Fund shall be conducted so that each REMIC formed
hereunder qualifies as, a "real estate mortgage investment conduit" as defined
in and in accordance with the REMIC Provisions. In furtherance of such
intention, the Trustee covenants and agrees that it shall act as agent (and the
Trustee is hereby appointed to act as agent) on behalf of the Trust Fund. The
Trustee, as agent on behalf of the Trust Fund, shall do or refrain from doing,
as applicable, the following: (a) the Trustee shall prepare and file, or cause
to be prepared and filed, in a timely manner, U.S. Real Estate Mortgage
Investment Conduit Income Tax Returns (Form 1066 or any successor form adopted
by the Internal Revenue Service) and prepare and file or cause to be prepared
and filed with the Internal Revenue Service and applicable state or local tax
authorities income tax or information returns for each taxable year with respect
to each such REMIC containing such information and at the times and in the
manner as may be required by the Code or state or local tax laws, regulations,
or rules, and furnish or cause to be furnished to Certificateholders the
schedules, statements or information at such times and in such manner as may be
required thereby; (b) the Trustee shall apply for an employer identification
number with the Internal Revenue Service via a Form SS-4 or other comparable
method for each REMIC that is or becomes a taxable entity, and within thirty
days of the Closing Date, furnish or cause to be furnished to the Internal
Revenue Service, on Forms 8811 or as otherwise may be required by the Code, the
name, title, address, and telephone number of the person that the holders of the
Certificates may contact for tax information relating thereto, together with
such additional information as may be required by such Form, and update such
information at the time or times in the manner required by the Code for the
Trust Fund; (c) the Trustee shall make or cause to be made elections, on behalf
of each REMIC formed hereunder to be treated as a REMIC on the federal tax
return of such REMIC for its first taxable year (and, if necessary, under
applicable state law); (d) the Trustee shall prepare and forward, or cause to be
prepared and forwarded, to the Certificateholders and to the Internal Revenue
Service and, if necessary, state tax authorities, all information returns and
reports as and when required to be provided to them in accordance with the REMIC
Provisions, including without limitation, the calculation of any original issue
discount using the Prepayment Assumption; (e) the Trustee shall provide
information necessary for the computation of tax imposed on the transfer of a
Residual Certificate to a Person that is not a Permitted Transferee, or an agent
(including a broker, nominee or other middleman) of a Person that is not a
Permitted Transferee, or a pass-through entity in which a Person that is not a
Permitted Transferee is the record holder of an interest (the reasonable cost of
computing and furnishing such information may be charged to the Person liable
for such tax); (f) the Trustee shall, to the extent under its control, conduct
the affairs of the Trust Fund at all times that any Certificates are outstanding
so as to maintain the status of each REMIC formed hereunder as a REMIC under the
REMIC Provisions; (g) the Trustee shall not knowingly or intentionally take any
action or omit to take any action that would cause the termination of the REMIC
status of
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any REMIC formed hereunder; (h) the Trustee shall pay, from the sources
specified in the last paragraph of this Section 9.12, the amount of any federal,
state and local taxes, including prohibited transaction taxes as described
below, imposed on any REMIC formed hereunder prior to the termination of the
Trust Fund when and as the same shall be due and payable (but such obligation
shall not prevent the Trustee or any other appropriate Person from contesting
any such tax in appropriate proceedings and shall not prevent the Trustee from
withholding payment of such tax, if permitted by law, pending the outcome of
such proceedings); (i) the Trustee shall sign or cause to be signed federal,
state or local income tax or information returns or any other document prepared
by the Trustee pursuant to this Section 9.12 requiring a signature thereon by
the Trustee; (j) the Trustee shall maintain records relating to each REMIC
formed hereunder including but not limited to the income, expenses, assets and
liabilities of each such REMIC and adjusted basis of the Trust Fund property
determined at such intervals as may be required by the Code, as may be necessary
to prepare the foregoing returns, schedules, statements or information; (k) the
Trustee shall, for federal income tax purposes, maintain books and records with
respect to the REMICs on a calendar year and on an accrual basis; (l) the
Trustee shall not enter into any arrangement not otherwise provided for in this
Agreement by which the REMICs will receive a fee or other compensation for
services nor permit the REMICs 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; and (m) as and when
necessary and appropriate, the Trustee shall represent the Trust Fund in any
administrative or judicial proceedings relating to an examination or audit by
any governmental taxing authority, request an administrative adjustment as to
any taxable year of any REMIC formed hereunder, enter into settlement agreements
with any governmental taxing agency, extend any statute of limitations relating
to any tax item of the Trust Fund, and otherwise act on behalf of each REMIC
formed hereunder in relation to any tax matter involving any such REMIC.
In order to enable the Trustee to perform its duties as set
forth herein, the Depositor shall provide, or cause to be provided, to the
Trustee within 10 days after the Closing Date all information or data that the
Trustee requests in writing and determines to be relevant for tax purposes to
the valuations and offering prices of the Certificates, including, without
limitation, the price, yield, prepayment assumption and projected cash flows of
the Certificates and the Mortgage Loans. Thereafter, the Depositor shall provide
to the Trustee promptly upon written request therefor, any such additional
information or data that the Trustee may, from time to time, request in order to
enable the Trustee to perform its duties as set forth herein. The Depositor
hereby indemnifies the Trustee for any losses, liabilities, damages, claims or
expenses of the Trustee arising from any errors or miscalculations of the
Trustee that result from any failure of the Depositor to provide, or to cause to
be provided, accurate information or data to the Trustee on a timely basis.
In the event that any tax is imposed on "prohibited
transactions" of any of REMIC I, REMIC II or REMIC III as defined in Section
860F(a)(2) of the Code, on the "net income from foreclosure property" of the
Trust Fund as defined in Section 860G(c) of the Code, on any contribution to any
of REMIC I, REMIC II or REMIC III after the startup day pursuant to Section
860G(d) of the Code, or any other tax is imposed, including, without limitation,
any federal, state or local tax or minimum tax imposed upon any of REMIC I,
REMIC II or REMIC III, and is not paid as otherwise provided for herein, such
tax shall be paid by (i) the Trustee, if any such other tax arises out of or
results from a breach by the Trustee of any of its obligations
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under this Section, (ii) any party hereto (other than the Trustee) to the extent
any such other tax arises out of or results from a breach by such other party of
any of its obligations under this Agreement or (iii) in all other cases, or in
the event that any liable party hereto fails to honor its obligations under the
preceding clauses (i) or (ii), any such tax will be paid first with amounts
otherwise to be distributed to the Class R Certificateholders, and second with
amounts otherwise to be distributed to all other Certificateholders in the
following order of priority: first, to the Class B7 Certificates, second, to the
Class B6 Certificates, third, to the Class B5 Certificates, fourth, to the Class
B4 Certificates, fifth, to the Class B3 Certificates, sixth, to the Class B2
Certificates, seventh, to the Class B1 Certificates, eighth, to the Class M2
Certificates, ninth, to the Class M1 Certificates and tenth, to the Senior
Certificates (pro rata based on the amounts to be distributed). Notwithstanding
anything to the contrary contained herein, to the extent that such tax is
payable by the Holder of any Certificates, the Trustee is hereby authorized to
retain on any Distribution Date, from the Holders of the Class R Certificates
(and, if necessary, second, from the Holders of the other Certificates in the
priority specified in the preceding sentence), funds otherwise distributable to
such Holders in an amount sufficient to pay such tax. The Trustee shall include
in its Remittance Report instructions as to distributions to such parties taking
into account the priorities described in the second preceding sentence. The
Trustee agrees to promptly notify in writing the party liable for any such tax
of the amount thereof and the due date for the payment thereof.
Section 9.13 CUSTODIAN'S FEES AND EXPENSES.
The Seller covenants and agrees to pay 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 of the Custodian hereunder, and the Seller 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 or to the extent that such cost or expense is
indemnified by the Depositor pursuant to this Agreement.
Section 9.14 INDEMNIFICATION OF CUSTODIAN.
The Custodian and its directors, officers, agents and
employees shall be indemnified and held harmless by the Trust Fund against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever, including reasonable attorney's fees, that may be imposed on,
incurred by or asserted against it or them in any way relating to or arising out
of this Agreement or any action taken or not taken by it or them hereunder
except to the extent caused by the Custodian's negligence or willful misconduct.
If funds in the Trust Fund are insufficient therefor, the Custodian shall
recover such expenses from the Seller. The indemnification provided for under
this Section 9.14 shall survive the termination of this Agreement and the
resignation or removal of the Custodian.
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Section 9.15 RELIANCE OF CUSTODIAN.
(a) The Custodian may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein, upon any
request, instructions, direction, certificate, opinion or other document
furnished to the Custodian, reasonably believed by the Custodian to be genuine
and to have been signed or presented by the proper party or parties and
conforming to the requirements of this Agreement;
(b) The Custodian shall have no duties or responsibilities
except those that are specifically set forth in this Agreement. The Custodian
shall have no responsibility nor duty with respect to any Mortgage File while
such Mortgage File is not in its possession. If the Custodian requests
instructions from the Trustee with respect to any act, action or failure to act
in connection with this Agreement, the Custodian shall be entitled to refrain
from acting unless and until the Custodian shall have received written
instructions from the Trustee with respect to a Mortgage File without incurring
any liability therefor to the Trustee or any other Person;
(c) The Custodian shall not be liable for an error of judgment
made in good faith by a Responsible Officer or Responsible Officers of the
Custodian unless it shall be proved that the Custodian was negligent in
ascertaining the pertinent facts;
(d) Anything in this Agreement to the contrary
notwithstanding, in no event shall the Custodian be liable for special,
indirect, punitive or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Custodian has been
advised of the likelihood of such loss or damage and regardless of the form of
action and whether or not any such damages were foreseeable or contemplated;
(e) The Custodian shall not be required to expend or risk its
own funds or otherwise incur financial liability (other than expenses or
liabilities otherwise required to be incurred by the express terms of this
Agreement) in the performance of any of its duties hereunder if it shall have
reasonable grounds for believing that the repayment of such funds or indemnity
satisfactory to it is not reasonably assured to it;
(f) The Custodian may consult with counsel and any advice of
such counsel or any Opinion of Counsel shall be full and complete authorization
and protection with respect to any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such advice or Opinion of
Counsel;
(g) The Custodian makes no representations and has no
responsibilities as to (i) the validity, legality, enforceability,
recordability, sufficiency, due authorization or genuineness of any of the
documents contained in the Mortgage Files or any of the Mortgage Loans or (ii)
the collectability, insurability, effectiveness or suitability of any such
Mortgage Loan;
(h) Neither the Custodian nor any of this directors, officers,
agents or employees shall be liable for any action taken, suffered or omitted to
be taken by it in good faith and believed by it to be authorized or within the
rights or powers conferred upon it by this Agreement. The obligations of the
Custodian or any of its directors, officers, agents or employees shall be
determined solely by the express provisions of this Agreement. No
representation, warranty, covenant, agreement, obligation or duty of the
Custodian or any of its
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directors, officers, agents or employees shall be implied with respect to this
Agreement or the Custodian's services hereunder;
(i) The Custodian, its directors, officers and employees shall
be under no duty or obligation to inspect, review or examine the Mortgage Files
to determine that the contents thereof are genuine, enforceable or appropriate
for the represented purpose or that they have been actually recorded or that
they are other than what they purport to be on their face;
(j) Any corporation into which the Custodian may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Custodian shall be a
party, or any corporation succeeding to the business of the Custodian shall be
the successor of the Custodian hereunder without the execution or filing of any
paper with any party hereto or any further act on the part of any of the parties
hereto except where an instrument of transfer or assignment is required by law
to effect such succession, anything to the contrary herein notwithstanding.
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ARTICLE X
TERMINATION
Section 10.01 TERMINATION UPON LIQUIDATION OR REPURCHASE OF ALL
MORTGAGE LOANS.
Subject to Section 10.03, the obligations and responsibilities
of the Depositor, the Seller and the Trustee created hereby with respect to the
Trust Fund shall terminate upon the earlier of (a) the purchase by the Depositor
of all of the Mortgage Loans (and REO Properties) remaining in the Trust Fund at
a price (the "Mortgage Loan Purchase Price") equal to the sum of (i) 100% of the
Stated Principal Balance of each Mortgage Loan (other than in respect of REO
Property), (ii) accrued interest thereon at the applicable Mortgage Rate to, but
not including, the first day of the month of such purchase, (iii) the appraised
value of any REO Property in the Trust Fund (up to the Stated Principal Balance
of the related Mortgage Loan), such appraisal to be conducted by an appraiser
mutually agreed upon by the Depositor and the Trustee and (iv) unreimbursed
out-of pocket costs of the Servicers or the Trustee, including unreimbursed
servicing advances and the principal portion of any unreimbursed Advances, made
on the Mortgage Loans prior to the exercise of such repurchase right and (v) any
unreimbursed costs and expenses of the Trustee payable pursuant to Section 9.05
and (b) the later of (i) the maturity or other liquidation (or any Advance with
respect thereto) of the last Mortgage Loan remaining in the Trust Fund and the
disposition of all REO Property and (ii) the distribution to Certificateholders
of all amounts required to be distributed to them pursuant to this Agreement, as
applicable. In no event shall the trusts created hereby continue beyond the
earlier of (i) 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 (ii) the Latest
Possible Maturity Date.
The right to repurchase all Mortgage Loans and REO Properties
pursuant to clause (a) in the preceding paragraph shall be conditioned upon the
Stated Principal Balance of all of the Mortgage Loans in the Trust Fund, at the
time of any such repurchase, aggregating five percent or less of the aggregate
Cut-off Date Principal Balance of all of the Mortgage Loans.
Section 10.02 FINAL DISTRIBUTION ON THE CERTIFICATES.
If on any Determination Date, (i) the Trustee determines based
on the reports delivered by the Servicer under this Agreement that there are no
Outstanding Mortgage Loans and no other funds or assets in the Trust Fund other
than the funds in the Distribution Account, the Trustee shall to send a final
distribution notice promptly to each Certificateholder or (ii) the Trustee
determines that a Class of Certificates shall be retired after a final
distribution on such Class, the Trustee shall notify the Certificateholders
within five (5) Business Days after such Determination Date that the final
distribution in retirement of such Class of Certificates is scheduled to be made
on the immediately following Distribution Date. Any final distribution made
pursuant to the immediately preceding sentence will be made only upon
presentation and surrender of the related Certificates at the office of the
Trustee set forth herein. If the Depositor elects to terminate the Trust Fund
pursuant to Section 10.01, at least 20 days prior to the date notice is to be
mailed to the Certificateholders, the Depositor shall notify the Trustee of the
date the
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Depositor intends to terminate the Trust Fund. The Depositor shall remit the
Mortgage Loan Purchase Price to the Trustee on the Business Day prior to the
Distribution Date for such Optional Termination by the Depositor.
Notice of any termination of the Trust Fund, specifying the
Distribution Date on which Certificateholders may surrender their Certificates
for payment of the final distribution and cancellation, shall be given promptly
by the Trustee by letter to Certificateholders mailed not earlier than the 10th
day and no later than the 15th day of the month immediately preceding the month
of such final distribution. Any such notice shall specify (a) the Distribution
Date upon which final distribution on the Certificates will be made upon
presentation and surrender of Certificates at the office therein designated, (b)
the amount of such final distribution, (c) the location of the office or agency
at which such presentation and surrender must be made and (d) that the Record
Date otherwise applicable to such Distribution Date is not applicable,
distributions being made only upon presentation and surrender of the
Certificates at the office therein specified. The Trustee will give such notice
to each Rating Agency at the time such notice is given to Certificateholders.
In the event such notice is given, the Depositor shall deposit
in the Distribution Account on the Business Day prior to the applicable
Distribution Date in an amount equal to the final distribution in respect of the
Certificates. Upon such final deposit with respect to the Trust Fund and the
receipt by the Trustee of a Request for Release therefor, the Trustee shall
promptly release to the Depositor, as applicable the Mortgage Files for the
Mortgage Loans and any documents necessary to transfer any REO Property.
Upon presentation and surrender of the Certificates, the
Trustee shall cause to be distributed to Certificateholders of each Class the
amounts allocable to such Certificates held in the Distribution Account in the
order and priority set forth in Section 6.04 hereof on the final Distribution
Date and in proportion to their respective Percentage Interests.
In the event that any affected Certificateholders shall not
surrender Certificates for cancellation within six months after the date
specified in the above mentioned written notice, the Trustee shall give a second
written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within six months after the second notice all the applicable
Certificates shall not have been surrendered for cancellation, the Trustee may
take appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining Certificateholders concerning surrender of their
Certificates, and the cost thereof shall be paid out of the funds and other
assets that remain a part of the Trust Fund. If within two years after the
second notice all Certificates shall not have been surrendered for cancellation,
the Class R Certificateholders shall be entitled to all unclaimed funds and
other assets of the Trust Fund that remain subject hereto and the Trustee shall
release such funds upon written direction.
Section 10.03 ADDITIONAL TERMINATION REQUIREMENTS.
(a) Upon exercise by the Depositor of its purchase option as
provided in Section 10.01, the Trust Fund shall be terminated in accordance with
the following additional requirements, unless the Trustee has been supplied with
an Opinion of Counsel, at the expense of
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the Depositor, to the effect that the failure of the Trust Fund to comply with
the requirements of this Section 11.03 will not (i) result in the imposition of
taxes on "prohibited transactions" of a REMIC, or (ii) cause any REMIC to fail
to qualify as a REMIC at any time that any Certificates are outstanding:
(1) The Depositor shall establish a 90-day liquidation period
and notify the Trustee thereof, and the Trustee shall in turn specify the first
day of such period in a statement attached to the tax return for each of REMIC
I, REMIC II and REMIC III pursuant to Treasury Regulation Section 1.860F-1. The
Depositor shall satisfy all the requirements of a qualified liquidation under
Section 860F of the Code and any regulations thereunder, as evidenced by an
Opinion of Counsel obtained at the expense of the Depositor;
(2) During such 90-day liquidation period, and at or prior to
the time of making the final payment on the Certificates, the Depositor shall
sell all of the assets of REMIC I, REMIC II and REMIC III for cash; and
(3) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be distributed
or credited, to the Holders of the Residual Certificates all cash on hand (other
than cash retained to meet claims), and REMIC I shall terminate at that time.
(b) By their acceptance of the Certificates, the Holders
thereof hereby authorize the Depositor to specify the 90-day liquidation period
for REMIC I, REMIC II and REMIC III, which authorization shall be binding upon
all successor Certificateholders.
(c) The Trustee as agent for each REMIC hereby agrees to adopt
and sign such a plan of complete liquidation upon the written request of the
Depositor, and the receipt of the Opinion of Counsel referred to in Section
10.03(a)(1) and to take such other action in connection therewith as may be
reasonably requested by the Depositor.
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ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 AMENDMENT.
This Agreement may be amended from time to time by parties
hereto, without the consent of any of the Certificateholders to cure any
ambiguity, to correct or supplement any provisions herein, to change the manner
in which the Distribution Account maintained by the Trustee or the Custodial
Account maintained by the Servicer is maintained or to make such other
provisions with respect to matters or questions arising under this Agreement as
shall not be inconsistent with any other provisions herein if such action shall
not, as evidenced by an Opinion of Counsel, adversely affect in any material
respect the interests of any Certificateholder; provided that any such amendment
shall be deemed not to adversely affect in any material respect the interests of
the Certificateholders and no such Opinion of Counsel shall be required if the
Person requesting such amendment obtains a letter from each Rating Agency
stating that such amendment would not result in the downgrading or withdrawal of
the respective ratings then assigned to the Certificates.
Notwithstanding the foregoing, without the consent of the
Certificateholders, the parties hereto may at any time and from time to time
amend this Agreement to modify, eliminate or add to any of its provisions to
such extent as shall be necessary or appropriate to maintain the qualification
of each of REMIC I, REMIC II and REMIC III as a REMIC under the Code or to avoid
or minimize the risk of the imposition of any tax on any of REMIC I, REMIC II or
REMIC III pursuant to the Code that would be a claim against any of REMIC I,
REMIC II or REMIC III at any time prior to the final redemption of the
Certificates, provided that the Trustee has been provided an Opinion of Counsel,
which opinion shall be an expense of the party requesting such opinion but in
any case shall not be an expense of the Trustee or the Trust Fund, to the effect
that such action is necessary or appropriate to maintain such qualification or
to avoid or minimize the risk of the imposition of such a tax.
This Agreement may also be amended from time to time by the
parties hereto and the Holders of each Class of Certificates affected thereby
evidencing over 50% of the Voting Rights of such Class or Classes for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement or of modifying in any manner the rights of
the Holders of Certificates; provided that no such amendment shall (i) reduce in
any manner the amount of, or delay the timing of, payments required to be
distributed on any Certificate without the consent of the Holder of such
Certificate, (ii) cause any of REMIC I, REMIC II or REMIC III to cease to
qualify as a REMIC or (iii) reduce the aforesaid percentages of Certificates of
each Class the Holders of which are required to consent to any such amendment
without the consent of the Holders of all Certificates of such Class then
outstanding.
Notwithstanding any contrary provision of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel, which opinion shall be an expense of
the party requesting such amendment but in any case shall not be an expense of
the Trustee, to the effect that such amendment will not (other
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than an amendment pursuant to clause (ii) of, and in accordance with, the
preceding paragraph) cause the imposition of any tax on REMIC I, REMIC II or
REMIC III or the Certificateholders or cause REMIC I, REMIC II or REMIC III to
cease to qualify as a REMIC at any time that any Certificates are outstanding.
Further, nothing in this Agreement shall require the Trustee to enter into an
amendment without receiving an Opinion of Counsel, satisfactory to the Trustee
that (i) such amendment is permitted and is not prohibited by this Agreement and
(ii) that all requirements for amending this Agreement (including any consent of
the applicable Certificateholders) have been complied with.
Promptly after the execution of any amendment to this
Agreement requiring the consent of Certificateholders, the Trustee shall furnish
written notification of the substance of such amendment to each
Certificateholder and each Rating Agency.
It shall not be necessary for the consent of
Certificateholders under this Section 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.
Section 11.02 RECORDATION OF AGREEMENT; COUNTERPARTS.
To the extent permitted by applicable law, this Agreement is
subject to recordation in all appropriate public offices for real property
records in all of the counties or other comparable jurisdictions in which any or
all of the Mortgaged Properties are situated, and in any other appropriate
public recording office or elsewhere. The Seller or the Depositor shall effect
such recordation at the Trust's expense upon the request in writing of a
Certificateholder, but only if such direction is accompanied by an Opinion of
Counsel (provided at the expense of the Certificateholder requesting
recordation) to the effect that such recordation would materially and
beneficially affect the interests of the Certificateholders or is required by
law.
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 GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HERETO AND THE
CERTIFICATEHOLDERS SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT
REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
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Section 11.04 INTENTION OF PARTIES.
It is the express intent of the parties hereto that the
conveyance of the Mortgage Notes, Mortgages, assignments of Mortgages, title
insurance policies and any modifications, extensions and/or assumption
agreements and private mortgage insurance policies relating to the Mortgage
Loans by the Seller to the Depositor, and by the Depositor to the Trust Fund be,
and be construed as, an absolute sale thereof to the Depositor or the Trust
Fund, as applicable. It is, further, not the intention of the parties that such
conveyance be deemed a pledge thereof by the Seller to the Depositor, or by the
Depositor to the Trust Fund. However, in the event that, notwithstanding the
intent of the parties, such assets are held to be the property of the Seller or
the Depositor, as applicable, or if for any other reason this Agreement is held
or deemed to create a security interest in such assets, then (i) this Agreement
shall be deemed to be a security agreement within the meaning of the Uniform
Commercial Code of the State of New York and (ii) each conveyance provided for
in this Agreement shall be deemed to be an assignment and a grant by the Seller
or the Depositor, as applicable, for the benefit of the Certificateholders, of a
security interest in all of the assets that constitute the Trust Fund, whether
now owned or hereafter acquired.
The Depositor for the benefit of the Certificateholders shall,
to the extent consistent with this Agreement, take such actions as may be
necessary to ensure that, if this Agreement were deemed to create a security
interest in the assets of the Trust Fund, 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 the Agreement.
Section 11.05 NOTICES.
(a) The Trustee shall use its best efforts to promptly provide
notice to each Rating Agency with respect to each of the following of which it
has actual knowledge:
(i) Any material change or amendment to this Agreement;
(ii) The occurrence of any Event of Default that has not been
cured;
(iii) The resignation or termination of the Servicer or the
Trustee and the appointment of any successor; and
(iv) The final payment to Certificateholders.
In addition, the Trustee shall promptly furnish to each Rating
Agency copies of the following:
(i) Each report to Certificateholders described in Section
5.05;
(ii) Each annual statement as to compliance described in
Section 3.16; and
(iii) Each annual independent public accountants' servicing
report described in Section 4.17.
(b) All directions, demands and notices hereunder shall be in
writing and shall be deemed to have been duly given when delivered at or mailed
by registered mail, return receipt
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requested, postage prepaid, or by recognized overnight courier, or by facsimile
transmission to a number provided by the appropriate party if receipt of such
transmission is confirmed to (i) in the case of the Depositor, Nomura Asset
Acceptance Corp., 2 World Xxxxxxxxx Xxxxxx, Xxxxxxxx X, Xxx Xxxx, Xxx Xxxx 00000
Attention: Nomura Asset Acceptance Corporation, Alternative Loan Trust, Series
2003-A2; (ii) in the case of the Seller, Nomura Credit & Capital, Inc., 2 World
Xxxxxxxxx Xxxxxx, Xxxxxxxx X, Xxx Xxxx, Xxx Xxxx 00000, Attention: Nomura Asset
Acceptance Corporation, Alternative Loan Trust, Series 2003-A2 or such other
address as may be hereafter furnished to the other parties hereto by the Master
Servicer in writing; (iii) in the case of the Servicer, Option One Mortgage
Corporation, 3 Ada, Xxxxxx, Xxxxxxxxxx 00000, Attention: Nomura Asset Acceptance
Corporation, Alternative Loan Trust, Series 2003-A2; (iv) in the case of the
Trustee, at each Corporate Trust Office or such other address as the Trustee may
hereafter furnish to the other parties hereto; (v) in the case of the Rating
Agencies, (x) Fitch Ratings, Xxx Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
(y) Standard & Poor's, 00 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Mortgage Surveillance Group and (z) Xxxxx'x Investors Service, Inc.,
00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Home Equity Monitoring.
Any notice delivered to the Seller or the Trustee under this Agreement shall be
effective only upon receipt. Any notice required or permitted to be mailed to a
Certificateholder, unless otherwise provided herein, shall be given by
first-class mail, postage prepaid, at the address of such Certificateholder 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 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 11.07 ASSIGNMENT.
Notwithstanding anything to the contrary contained herein,
except as provided pursuant to Section 7.02, this Agreement may not be assigned
by the Seller or the Depositor.
Section 11.08 LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS.
The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representative or heirs to claim an accounting or to
take any action or commence any proceeding in any court for a petition or
winding up of the Trust Fund, or otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
No Certificateholder shall have any right to vote (except as
provided herein) or in any manner otherwise control the operation and management
of the Trust Fund, or the obligations of the parties hereto, nor shall anything
herein set forth or contained in the terms of the Certificates be construed so
as to constitute the Certificateholders from time to time as
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partners or members of an association; nor shall any Certificateholder be under
any liability to any third party by reason of any action taken by the parties to
this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue or by
availing itself of any provisions of this Agreement to institute any suit,
action or proceeding in equity or at law upon or under or with respect to this
Agreement, unless such Holder previously shall have given to the Trustee, a
written notice of a Servicer Default and of the continuance thereof, as
hereinbefore provided, the Holders of Certificates evidencing not less than 25%
of the Voting Rights evidenced by the Certificates shall also have made written
request to the Trustee to institute such action, suit or proceeding in its own
name as Trustee, hereunder and shall have offered to the Trustee such indemnity
satisfactory to it as it may require against the costs, expenses, and
liabilities to be incurred therein or thereby, and the Trustee or for 60 days
after its receipt of such notice, request and offer of indemnity shall have
neglected or refused to institute any such action, suit or proceeding; it being
understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder and the Trustee, that no
one or more Holders of Certificates shall have any right in any manner whatever
by virtue or by availing itself or themselves of any provisions of this
Agreement to affect, disturb or prejudice the rights of the Holders of any other
of the Certificates, or to obtain or seek to obtain priority over or preference
to any other such Holder or to enforce any right under this Agreement, except in
the manner herein provided and for the common benefit of all Certificateholders.
For the protection and enforcement of the provisions of this Section 11.08, each
and every Certificateholder or the Trustee shall be entitled to such relief as
can be given either at law or in equity.
Section 11.09 CERTIFICATES NONASSESSABLE AND FULLY PAID.
It is the intention of the Depositor that Certificateholders
shall not be personally liable for obligations of the Trust Fund, that the
interests in the Trust Fund represented by the Certificates shall be
nonassessable for any reason whatsoever, and that the Certificates, upon due
authentication thereof by the Trustee pursuant to this Agreement, are and shall
be deemed fully paid.
* * *
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IN WITNESS WHEREOF, the Depositor, the Seller, the 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.
NOMURA ASSET ACCEPTANCE CORPORATION,
as Depositor
By:
---------------------------------
Name:
Title:
NOMURA CREDIT & CAPITAL, INC.,
as a Seller
By:
---------------------------------
Name:
Title:
OPTION ONE MORTGAGE CORPORATION,
as Servicer
By:
---------------------------------
Name:
Title:
JPMORGAN CHASE BANK
as Trustee
By:
--------------------------------
Name: Xxxxxxx Xxxx
Title: Vice President
JPMORGAN CHASE BANK
as Custodian
By:
------------------------------
Name: Xxxxx Xxxxx
Title: Vice President
ACKNOWLEDGED AND AGREED (WITH
RESPECT TO SECTIONS 4.08 AND 4.09):
THE MURRAYHILL COMPANY
By:
---------------------------
Name:
Title:
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ___ day of July, 2003, before me, a notary public in
and for said State, appeared ______________, personally known to me on the basis
of satisfactory evidence to be an authorized representative of Nomura Asset
Acceptance 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
such 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 this ____ day of July, 2003, before me, a notary public in
and for said State, appeared _______________, personally known to me on the
basis of satisfactory evidence to be an authorized representative of Nomura
Credit & Capital, Inc., that executed the within instrument, and also known to
me to be the person who executed it on behalf of such 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 NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of July, 2003, before me, a notary public in
and for said State, appeared _________________, personally known to me on the
basis of satisfactory evidence to be an authorized representative of Option One
Mortgage 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
such 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 this ____ day of July, 2003, before me, a notary public in
and for said State, appeared _______________, personally known to me on the
basis of satisfactory evidence to be an authorized representative of JPMorgan
Chase Bank that executed the within instrument, and also known to me to be the
person who executed it on behalf of such 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 COLORADO )
) ss.:
COUNTY OF )
On this ___ day of July, 2003, before me, a notary public in
and for said State, appeared ______________, personally known to me on the basis
of satisfactory evidence to be an authorized representative of The Murrayhill
Company, one of the corporations that executed the within instrument, and also
known to me to be the person who executed it on behalf of such 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]
