EXHIBIT 99.1
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FINANCIAL ASSET SECURITIES CORP.,
Depositor
CREDIT-BASED ASSET SERVICING AND SECURITIZATION LLC,
Seller
XXXXXX LOAN SERVICING LP,
Servicer
and
U.S. BANK NATIONAL ASSOCIATION,
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of April 1, 2002
2002-CB2 Trust
C-BASS Mortgage Loan Asset-Backed Certificates, Series 2002-CB2
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
Section 1.01 Defined Terms...............................................11
Section 1.02 Accounting..................................................47
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01 Conveyance of Mortgage Loans................................47
Section 2.02 Acceptance by Trustee.......................................50
Section 2.03 Repurchase or Substitution of Mortgage Loans by the Seller..51
Section 2.04 Representations and Warranties of the Seller with
Respect to the Mortgage Loans...............................54
Section 2.05 Representations, Warranties and Covenants of the Servicer...55
Section 2.06 Representations and Warranties of the Depositor.............56
Section 2.07 Issuance of Certificates....................................58
Section 2.08 Representations and Warranties of the Seller................58
Section 2.09 Covenants of the Seller.....................................60
ARTICLE III
ADMINISTRATION AND SERVICING OF THE TRUST FUND
Section 3.01 Servicer to Act as Servicer.................................61
Section 3.02 Collection of Mortgage Loan Payments........................63
Section 3.03 Realization Upon Defaulted Mortgage Loans...................63
Section 3.04 Collection Account and Distribution Account.................64
Section 3.05 Permitted Withdrawals From the Collection Account...........66
Section 3.06 Establishment of Escrow Accounts; Deposits in
Escrow Accounts.............................................67
Section 3.07 Permitted Withdrawals From Escrow Account...................67
Section 3.08 Payment of Taxes, Insurance and Other Charges;
Collections Thereunder......................................68
Section 3.09 Transfer of Accounts........................................69
Section 3.10 Maintenance of Hazard Insurance.............................69
Section 3.11 Maintenance of Mortgage Impairment Insurance Policy.........70
Section 3.12 Fidelity Bond, Errors and Omissions Insurance...............70
Section 3.13 Title, Management and Disposition of REO Property...........71
Section 3.14 Due-on-Sale Clauses; Assumption and Substitution
Agreements..................................................73
Section 3.15 Notification of Adjustments.................................74
Section 3.16 Optional Purchases of Mortgage Loans by Servicer............74
Section 3.17 Trustee to Cooperate; Release of Files......................75
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Section 3.18 Servicing Compensation......................................76
Section 3.19 Annual Statement as to Compliance...........................76
Section 3.20 Annual Independent Certified Public Accountants' Reports....77
Section 3.21 Access to Certain Documentation and Information
Regarding the Mortgage Loans................................77
Section 3.22 Reserved....................................................78
Section 3.23 Obligations of the Servicer in Respect of
Compensating Interest.......................................78
Section 3.24 Obligations of the Servicer in Respect of Mortgage
Interest Rates and Monthly Payments.........................78
Section 3.25 Investment of Funds in the Collection Account and
the Distribution Account....................................78
Section 3.26 Liability of Servicer; Indemnification......................79
Section 3.27 Reports of Foreclosure and Abandonment of Mortgaged
Properties..................................................81
Section 3.28 Protection of Assets........................................81
ARTICLE IV
FLOW OF FUNDS
Section 4.01 Interest Distributions......................................81
Section 4.02 Distributions of Principal and Monthly Excess
Cashflow Amounts............................................83
Section 4.03 Allocation of Losses........................................86
Section 4.04 Method of Distribution......................................87
Section 4.05 Distributions on Book-Entry Certificates....................87
Section 4.06 Statements..................................................87
Section 4.07 Remittance Reports; Advances................................90
Section 4.08 Basis Risk Reserve Fund.....................................91
Section 4.09 Interest Rate Cap Account...................................90
ARTICLE V
THE CERTIFICATES
Section 5.01 The Certificates............................................94
Section 5.02 Registration of Transfer and Exchange of Certificates.......95
Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates..........100
Section 5.04 Persons Deemed Owners......................................100
Section 5.05 Appointment of Paying Agent................................100
ARTICLE VI
THE SELLER, THE SERVICER AND THE DEPOSITOR
Section 6.01 Liability of the Seller, the Servicer and the Depositor....101
Section 6.02 Merger or Consolidation of, or Assumption of the
Obligations of, the Seller, the Servicer or the Depositor..101
Section 6.03 Limitation on Liability of the Servicer and Others.........101
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Section 6.04 Servicer Not to Resign.....................................102
Section 6.05 Delegation of Duties.......................................103
ARTICLE VII
DEFAULT
Section 7.01 Servicer Events of Termination.............................103
Section 7.02 Trustee to Act; Appointment of Successor...................105
Section 7.03 Waiver of Defaults.........................................106
Section 7.04 Notification to Certificateholders.........................106
Section 7.05 Survivability of Servicer Liabilities......................107
ARTICLE VIII
THE TRUSTEE
Section 8.01 Duties of Trustee..........................................107
Section 8.02 Certain Matters Affecting the Trustee......................109
Section 8.03 Trustee Not Liable for Certificates or Mortgage Loans......110
Section 8.04 Trustee May Own Certificates...............................111
Section 8.05 Seller to Pay Trustee Fees and Expenses....................111
Section 8.06 Eligibility Requirements for Trustee.......................112
Section 8.07 Resignation or Removal of Trustee..........................112
Section 8.08 Successor Trustee..........................................113
Section 8.09 Merger or Consolidation of Trustee.........................113
Section 8.10 Appointment of Co-Trustee or Separate Trustee..............113
Section 8.11 Limitation of Liability....................................115
Section 8.12 Trustee May Enforce Claims Without Possession
of Certificates............................................115
Section 8.13 Suits for Enforcement......................................115
Section 8.14 Waiver of Bond Requirement.................................116
Section 8.15 Waiver of Inventory, Accounting and Appraisal Requirement..116
Section 8.16 Compliance with National Housing Act of 1934...............116
ARTICLE IX
REMIC ADMINISTRATION
Section 9.01 REMIC Administration.......................................116
Section 9.02 Prohibited Transactions and Activities.....................120
Section 9.03 Indemnification with Respect to Certain Taxes and
Loss of REMIC Status.......................................120
Section 9.04 REO Property...............................................120
ARTICLE X
TERMINATION
Section 10.01 Termination................................................121
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Section 10.02 Additional Termination Requirements........................123
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 Amendment..................................................124
Section 11.02 Recordation of Agreement; Counterparts.....................125
Section 11.03 Limitation on Rights of Certificateholders.................125
Section 11.04 Governing Law; Jurisdiction................................126
Section 11.05 Notices....................................................126
Section 11.06 Severability of Provisions.................................127
Section 11.07 Article and Section References.............................127
Section 11.08 Notice to the Rating Agencies..............................127
Section 11.09 Further Assurances.........................................128
Section 11.10 Benefits of Agreement......................................128
Section 11.11 Acts of Certificateholders.................................128
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EXHIBITS
Exhibit A-1 Form of Class A-1 Certificates
Exhibit A-2 Form of Class A-2 Certificates
Exhibit A-3 Form of Class A-IO Certificates
Exhibit B-1 Form of Class B-1 Certificates
Exhibit B-2 Form of Class B-2 Certificates
Exhibit C-1 Form of Class R Certificates
Exhibit C-2 Form of Class M-1 Certificates
Exhibit C-3 Form of Class M-2 Certificates
Exhibit C-4 Form of Class X Certificates
Exhibit C-5 Form of Class N Certificates
Exhibit D Mortgage Loan Schedule
Exhibit E Form of Request for Release
Exhibit F-1 Form of Trustee's Initial Certification
Exhibit F-2 Form of Trustee's Final Certification
Exhibit F-3 Form of Receipt of Mortgage Note
Exhibit G Mortgage Loan Purchase Agreement
Exhibit H Form of Lost Note Affidavit
Exhibit I Form of ERISA Representation
Exhibit J Form of Investment Letter
Exhibit K Form of Residual Certificate Transfer Affidavit
Exhibit L Form of Transferor Certificate
Exhibit M [Reserved]
Exhibit N [Reserved]
Exhibit O Ineligible Foreclosure Property Loan Schedule
Exhibit P Monthly Information Provided by Servicer
Exhibit Q Form of Officer's Certificate with Respect to Prepayments
Exhibit R Form of Confirmation
Exhibit S Form of Interest Rate Cap Agreement
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This Pooling and Servicing Agreement is dated as of April 1,
2002 (the "Agreement"), among FINANCIAL ASSET SECURITIES CORP., as depositor
(the "Depositor"), CREDIT-BASED ASSET SERVICING AND SECURITIZATION LLC, as
seller (the "Seller"), XXXXXX LOAN SERVICING LP, as servicer (the "Servicer"),
and U.S. BANK NATIONAL ASSOCIATION, as trustee (the "Trustee").
PRELIMINARY STATEMENT
The Depositor intends to sell pass-through certificates
(collectively, the "Certificates"), to be issued hereunder in multiple
Classes, which in the aggregate will evidence the entire beneficial ownership
interest in the Trust Fund created hereunder. The Certificates will consist of
twelve Classes of Certificates, designated as (i) the Class A-1, Class A-2 and
Class A-IO Certificates, (ii) the Class M-1 and Class M-2 Certificates, (iii)
the Class B-1 and Class B-2 Certificates, (iv) the Class N Certificates, (v)
the Class X Certificates and (vi) the Class R-1, Class R-2 and Class R-3
Certificates.
The Depositor hereby assigns to the Trustee, acting on
behalf of the Certificateholders its interests and rights in the Mortgage
Loans (exclusive of any Arrearage in respect of Delinquent Mortgage Loans). As
provided herein, the Trustee will make multiple elections to treat segregated
pools of assets subject to this Agreement for federal income tax purposes as
five separate real estate mortgage investment conduits (each, a "REMIC").
The following provisions in the Preliminary Statement are
intended to cause all interest and principal collection in respect of the
Mortgage Loans to be distributed from the Subsidiary REMIC to the Middle
REMIC, from the Middle REMIC to the Master REMIC, from the Master REMIC to
each Class of Certificates and to the Class B-2 REMIC and the Class X/N REMIC,
and from the Class B-2 REMIC and Class X/N REMIC to each of the Class B-2
Certifcates and Class X Certificates, respectively. The Preliminary Statement
will be interpreted and applied consistently with such intent. The Trustee
will seek guidance from Tax Counsel to the extent that it believes that any of
the subsequent provisions are inconsistent with the foregoing to reconcile or
eliminate such inconsistency.
The Subsidiary REMIC
As provided herein, the Trustee will make an election to
treat the segregated pool of assets consisting of the Mortgage Loans
(exclusive of the Basis Risk Reserve Fund and any monies received pursuant to
the Interest Rate Cap Agreement) subject to this Agreement as a REMIC for
federal income tax purposes, and such segregated pool of assets will be
designated as the "Subsidiary REMIC." The Class R-1a Interest will represent
the sole class of "residual interests" in the Subsidiary REMIC for purposes of
the REMIC Provisions (as defined herein) under federal income tax law.
The following table irrevocably sets forth the designation,
the initial Uncertificated Principal Balance and the Uncertificated Subsidiary
REMIC Pass-Through Rate of each Subsidiary REMIC Regular Interest. None of the
Subsidiary REMIC Regular Interests will be certificated.
Uncertificated Uncertificated Subsidiary REMIC
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Class Principal Balance Pass-Through Rate
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1-Support (1) Weighted Average Net Mortgage Rate
1-NAS-1 $94,652,000 Weighted Average Net Mortgage Rate
1-NAS-2 $86,421,000 Weighted Average Net Mortgage Rate
R-1a (2) 0.00%
(1) The principal balance of the Class 1-Support Interest will initially
equal the principal balance of the Mortgage Loans as of the Cut-off
Date less the principal balance of the Class 1-NAS-1 and Class
1-NAS-2 Interests.
(2) The Class R-1a Interest represents the sole class of "residual
interest" in the Subsidiary REMIC for purposes of the REMIC
provisions and shall not have a principal balance or bear interest.
All payments of principal (both prepaid and scheduled) and Realized
Losses will be allocated to the Class 1-Support Interest until its
principal balance is reduced to zero, then to the Class 1-NAS-1
Interest until its principal balance is reduced to zero, then to the
Class 1-NAS-2 Interest until its principal balance is reduced to
zero.
The Middle REMIC
As provided herein, the Trustee shall make an election to
treat the segregated pool of assets consisting of the the Subsidiary REMIC
Regular Interests as a REMIC for federal income tax purposes, and such
segregated pool of assets will be designated as the "Middle REMIC".
The following table irrevocably sets forth the designation,
the initial Uncertificated Principal Balance, the Uncertificated Middle REMIC
Pass-Through Rate and the Corresponding Certificate Class for each Middle
REMIC Regular Interest. None of the Middle REMIC Regular Interests will be
certificated.
Uncertificated Uncertificated Middle REMIC Corresponding
Class Principal Balance Pass-Through Rate Certificate Class
------------------------- ------------------------ ------------------------------- --------------------------
2-A-1 (1) Pool Cap Class A-1
2-A-2 (1) Pool Cap Class A-2
2-M-1 (1) Pool Cap Class M-1
2-M-2 (1) Pool Cap Class M-2
2-B-1 (1) Pool Cap Class B-1
2-B-2 (1) Pool Cap Class B-2
2-AIO-1 (2) 4.20% n/a
2-AIO-2 (3) 4.20% n/a
2-Accrual (4) Pool Cap n/a
R-1b (5) 0.00% n/a
(1) The Class 2-A-1 Interest, Class 2-A-2 Interest, Class 2-M-1 Interest,
Class 2-M-2 Interest, Class 2-B-1 Interest and Class 2-B-2 Interest
each have a principal balance that
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is initially equal to 50% of its corresponding Certificate Class
issued by the Master REMIC. Principal payments, both scheduled and
prepaid, Realized Losses, and interest accruing on the Class 2-Accrual
Interest will be allocated to each of the foregoing classes to
maintain each Class' size relative to its Corresponding Certificate
Class (i.e., 50%) with any excess payments of principal and Realized
Losses being allocated to the Class 2-Accrual Interest in such manner
as to cause the principal balance of the Class 2-Accrual Interest to
have a principal balance equal to 50% of the Pool Balance plus 50% of
the excess of the Pool Balance over the sum of the principal balances
of the Class X-0, Xxxxx X-0, Class M-1, Class M-2, Class B-1 and
Class B-2 Certificates for such Distribution Date.
(2) Notional Balance equal to the principal balance of the Class 1-NAS-1
Interest, with respect to the first six Distribution Dates, and
thereafter, $0.
(3) Notional Balance equal to the principal balance of the Class 1-NAS-2
Interest, with respect to the first twelve Distribution Dates, and
thereafter, $0.
(4) The principal balance of the Class 2-Accrual Interest initially
equals the excess of the principal balance of the Class 1-Support
Interest, Class 1-NAS-1 and Class 1-NAS-2 Interest over the aggregate
principal balance of the Class 2-A-1 Interest, Class 2-A-2 Interest,
Class 2-M-1 Interest, Class 2-M-2 Interest, Class 2-B-1 Interest and
Class 2-B-2 Interest.
(5) The Class R-1b Interest represents the sole class of "residual
interest" in the Middle REMIC for purposes of the REMIC
provisions and shall not have a principal balance or bear interest.
The Master REMIC
As provided herein, the Trustee shall make an election to
treat the segregated pool of assets consisting of the Middle REMIC Regular
Interests as a REMIC for federal income tax purposes, and such segregated pool
of assets will be designated as the "Master REMIC."
The following table sets forth (or describes) the Class
designation, Pass-Through Rate and Original Class Certificate Principal
Balance or Original Notional Amount, for each interest in the Master REMIC,
each of which is hereby designated a regular interest in the Master REMIC
(except for the Class R-1c Interest):
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Original Class
Certificate Principal Pass-Through Assumed Final
Class or Notional Amount Rate Maturity Dates
------------------------------- ----------------------------- --------------------------- ----------------------------
A-1 $168,296,000 (1) July 25, 2032
------------------------------- ----------------------------- --------------------------- ----------------------------
A-2 $65,310,000 (2) July 25, 2032
------------------------------- ----------------------------- --------------------------- ----------------------------
A-IO $181,073,000(3) (4) April 25, 2003
------------------------------- ----------------------------- --------------------------- ----------------------------
M-1 $11,478,000 (5) July 25, 2032
------------------------------- ----------------------------- --------------------------- ----------------------------
M-2 $10,803,000 (6) July 25, 2032
------------------------------- ----------------------------- --------------------------- ----------------------------
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------------------------------- ----------------------------- --------------------------- ----------------------------
B-1 $8,777,000 (7) July 25, 2032
------------------------------- ----------------------------- --------------------------- ----------------------------
3-B-2 $4,051,000 (8) July 25, 2032
------------------------------- ----------------------------- --------------------------- ----------------------------
3-X (9) (9) July 25, 2032
------------------------------- ----------------------------- --------------------------- ----------------------------
R-1c (10) N/A N/A July 25, 2032
------------------------------- ----------------------------- --------------------------- ----------------------------
Total
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(1) Interest will accrue on the Class A-1 Certificates during each
Interest Accrual Period at a rate equal to the lesser of: (i) the
Class A-1 Pass-Through Rate and (ii) the Pool Cap for such
Distribution Date.
(2) Interest will accrue on the Class A-2 Certificates at a rate equal to
the lesser of: (i) the Class A-2 Pass-Through Rate and (ii) the
Pool Cap for such Distribution Date.
(3) Notional Amount. No principal will be paid on the Class A-IO
Certificates.
For federal income tax purposes, the Class A-IO will be comprised of two
components entitled to 100% of the interest entitlements in respect of the
Class 2-AIO-1 and 2-AIO-2 Interests, respectively.
(4) Interest will accrue on the Class A-IO Certificates at the Class A-IO
Pass-Through Rate for the first twelve Interest Accrual Periods. No
interest will accrue on the Class A-IO Certificates thereafter.
(5) Interest will accrue on the Class M-1 Certificates at a rate equal to
the lesser of: (i) the Class M-1 Pass-Through Rate and (ii) the Pool
Cap for such Distribution Date.
(6) Interest will accrue on the Class M-2 Certificates at a rate equal to
the lesser of: (i) the Class M-2 Pass-Through Rate and (ii) the Pool
Cap for such Distribution Date.
(7) Interest will accrue on the Class B-1 Certificates at a rate equal to
the lesser of: (i) the Class B-1 Pass-Through Rate and (ii) the Pool
Cap for such Distribution Date.
(8) Interest will accrue on the Class 3-B-2 Interest at a rate equal to
the lesser of: (i) the Class B-2 Pass-Through Rate and (ii) the Pool
Cap for such Distribution Date. This will also be the rate at which
interest accrues on the Class B-2 Certificates, as described below
under "The Class B-2 REMIC."
(9) For federal income tax purposes, the Class 3-X Interest will be
comprised of two components: Component 1 will have a principal
balance equal to the Initial Overcollateralization Amount and shall
not be entitled to receive interest on such balance and Component 2
shall have a notional balance equal to the principal balance of the
Mortgage Loans which is also equal to the aggregate Principal
Balances of the Class 2-A-1 Interest, Class 2-A-2 Interest, Class
2-M-1 Interest, Class 2-M-2 Interest, Class 2-B-1 Interest, Class
2-B-2 Interest and Class 2-Accrual Interest and a pass-through rate
equal to the excess of the Pool Cap over the product of (i) two and
(ii) the weighted average net rate of the Class 2-A-1 Interest, Class
2-A-2 Interest, Class 2-M-1 Interest, Class 2-M-2 Interest, Class
2-B-1 Interest, Class 2-B-2 Interest, and Class 2-Accrual Interest
treating, for purposes of this calculation each interest other than
the Class 2-Accrual Interest, as capped at the Pass-Through Rate of
its Corresponding Certificate Class and treating the Class 2-Accrual
Interest as capped at 0%. The Pass-Through Rate of the Class 3-X
Interest shall be a rate sufficient to entitle it to all interest
accrued on the Mortgage Loans less the interest accrued on the other
regular interests issued by the Master REMIC per annum.
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(10) The Class R-1 Certificates will represent the sole class of
beneficial interest in each of the Class R-1a, Class R-1b and Class
R-1c Interests. The Class R-1c Interest will represent the sole class
of residual interest in the Master REMIC.
The Class B-2 REMIC
As provided herein, the Trustee shall make an election to
treat the segregated pool of assets consisting of the Class 3-B-2 Interest as
a REMIC for federal income tax purposes, and such segregated pool of assets
will be designated as the "Class B-2 REMIC". The Class B-2 REMIC will issue
the Class B-2 Certificates in an Original Certificate Principal Balance of
$4,051,000, which are hereby designated a class of regular interest in the
Class B-2 REMIC for federal income tax purposes and will be entitled to all
payments of principal and interest in respect of the Class 3-B-2 Interest, and
the Class R-2 Interest, which is hereby designated as the sole class of
residual interest in the Class B-2 REMIC for federal income tax purposes. The
Class R-2 Certificates will represent the sole class of beneficial interest in
the Class R-2 Interest.
The Class X/N REMIC
As provided herein, the Trustee shall make an election to
treat the segregated pool of assets consisting of the Class 3-X Interest as a
REMIC for federal income tax purposes, and such segregated pool of assets will
be designated as the "Class X/N REMIC". The Class X/N REMIC will issue the
Class X Interest, which is hereby designated a class of regular interest in
the Class X/N REMIC for federal income tax purposes, is represented by the
Class X and Class N Certificates, and will be entitled to all payments of
principal and interest in respect of the Class 3-X Interest, and the Class R-3
Interest, which is hereby designated as the sole class of residual interest in
the Class X/N REMIC for federal income tax purposes. The Class R-3
Certificates will represent the sole class of beneficial interest in the Class
R-3 Interest. The Class N Certificates will have an initial Notional Amount of
$9,400,000 and a Pass-Through Rate of 9.798%. The Trustee will treat the Class
N and Class X Certificates as provided in Section 9.01(n) hereunder.
The Trustee shall account for the right of the Class X-0,
Xxxxx X-0, Class M-1, Class M-2, Class B-1 and Class B-2 Certificates to
receive amounts in excess of the Pool Cap, including any monies paid pursuant
to the Interest Rate Cap Agreement: (i) as contractual rights separate and
apart from the regular interest consistent with Treasury regulation section
1.860G-2(i), (ii) as first paid to the Basis Risk Reserve Fund, an outside
reserve fund that is not an asset of any REMIC created under this Agreement,
that is owned by the Class X Interest, and (iii), for all federal tax
purposes, amounts transferred by the Master REMIC to this outside reserve fund
are treated as amounts distributed by the Master REMIC to the Class X Interest
and then paid by the Class X Interest to the Class entitled to receive such
amounts. These provisions are intended to create the contractual obligations
and rights required by Treasury regulation section 1.860G-2(h) to qualify as
an outside reserve fund and shall be applied and interpreted consistently with
this intention.
For any purpose for which the Pool Cap and the Weighted
Average Net Mortgage Rate are calculated, the interest rate on the Mortgage
Loans shall be appropriately adjusted to account for the difference between
the monthly day count convention of the Mortgage Loans and
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the monthly day count convention of the regular interests issued by each of
the REMICs. For purposes of calculating the Pool Cap and the Weighted Average
Net Mortgage Rate for each of the interests issued by the Subsidiary REMIC,
the Middle REMIC and the Master REMIC, such rates shall be adjusted to equal a
monthly day count convention based on the actual number of days in the
preceding Due Period and a 360 day year so that the Mortgage Loans and all
regular interests will be using the same monthly day count convention. Each
REMIC regular interest issued hereunder will be retired on or before the
Assumed Final Maturity Date.
ARTICLE I
DEFINITIONS
Section 1.01 Defined Terms.
Whenever used in this Agreement or in the Preliminary
Statement, the following words and phrases, unless the context otherwise
requires, shall have the meanings specified in this Article. Unless otherwise
specified, interest on the Class X-0, Xxxxx X-0, Class M-1, Class M-2, Class
B-1 and Class B-2 Certificates will be calculated on the basis of the actual
number of days in the related Interest Accrual Period and a 360-day year.
Interest on the Class A-IO, Class N and Class X Certificates will be
calculated on the basis of a 360-day year consisting of twelve 30-day months.
"1933 Act": The Securities Act of 1933, as amended.
"60+ Day Delinquent Loan": Each Mortgage Loan with respect
to which any portion of a Monthly Payment is, as of the last day of the prior
Collection Period, two months or more past due (other than a Re-Performing 60+
Day Delinquent Loan), each Mortgage Loan in foreclosure, all REO Property and
each Mortgage Loan for which the Mortgagor has filed for bankruptcy after the
Closing Date.
"Account": Any of the Collection Account, the Distribution
Account, the Interest Rate Cap Account and the Basis Risk Reserve Fund.
"Accrued Certificate Interest": With respect to each
Distribution Date and Class of Certificates, an amount equal to the interest
accrued at the applicable rate set forth or described opposite such Class in
the table in the Preliminary Statement during the related Interest Accrual
Period on the Certificate Principal Balance (or Notional Amount) of such Class
of Certificates, reduced by (except with respect to the Class N Certificates)
such Class' Interest Percentage of Relief Act Interest Shortfalls for such
Distribution Date.
"Actuarial Mortgage Loan": Any Mortgage Loan other than a
Simple Interest Mortgage Loan.
"Adjustable-Rate Mortgage Loan": A Mortgage Loan which has a
rate at which interest accrues that adjusts based on an Index plus a related
Gross Margin, as set forth and subject to the limitations in the related
Mortgage Note.
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"Adjustment Date": With respect to each Adjustable-Rate
Mortgage Loan, each adjustment date, on which the Mortgage Interest Rate of an
Adjustable-Rate Mortgage Loan changes pursuant to the related Mortgage Note.
The first Adjustment Date following the Cut-off Date as to each
Adjustable-Rate Mortgage Loan is set forth in the Mortgage Loan Schedule.
"Advance": As to any Actuarial Mortgage Loan, any advance
made by the Servicer in respect of any Distribution Date pursuant to Section
4.07.
"Adverse REMIC Event": As defined in Section 9.01(f) hereof.
"Affiliate": With respect to any Person, any other Person
controlling, controlled by or under common control with such Person. For
purposes of this definition, "control" means the power to direct the
management and policies of a Person, directly or indirectly, whether through
ownership of voting securities, by contract or otherwise and "controlling" and
"controlled" shall have meanings correlative to the foregoing.
"Agency Insurance Agreements": Collectively, the FHA
Insurance Contracts and VA Guaranty Agreements.
"Agreement": This Pooling and Servicing Agreement and all
amendments and supplements hereto.
"Applicable Regulations": As to any Mortgage Loan, all
federal, state and local laws, statutes, rules and regulations applicable
thereto, including with respect to each FHA Loan, the FHA Regulations and the
related FHA Insurance Contract and with respect to each VA Loan, the VA
Regulations and the related VA Guaranty Agreement.
"Applied Realized Loss Amount": As defined in Section 4.03
hereof.
"Arrearage": With respect to a Delinquent Mortgage Loan, the
total amount of scheduled monthly payments due thereon on or before the
Cut-off Date that were not received prior to the Cut-off Date but for which
advances of principal and interest were made, plus any unreimbursed Servicing
Advances as of the Cut-off Date.
"Assignment": An assignment of Mortgage, notice of transfer
or equivalent instrument, in recordable form, which is sufficient under the
laws of the jurisdiction wherein the related Mortgaged Property is located to
reflect of record the sale of the Mortgage.
"Assumed Final Maturity Date": As to each Class of
Certificates, the date set forth as such in the Preliminary Statement.
"Available Funds": As to any Distribution Date, an amount
equal to the excess of (i) the sum of (a) the aggregate of the Monthly
Payments due and collected during the related Collection Period and received
by the Trustee one Business Day prior to the related Distribution Date, (b)
any unscheduled recoveries of principal and interest and Principal Prepayments
(excluding prepayment penalties and amounts received in respect of
Arrearages), Insurance Proceeds and Liquidation Proceeds in respect of the
Mortgage Loans during the related Prepayment Period, (c) the aggregate of any
Advances made by the Servicer for such
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Distribution Date and any Compensating Interest for such Distribution Date,
(d) the Purchase Price for any repurchased Mortgage Loan deposited to the
Collection Account during the related Prepayment Period, (e) any Substitution
Adjustment Amounts deposited in the Collection Account during the related
Prepayment Period, and (f) on the Distribution Date on which the Trust is to
be terminated pursuant to Section 10.01 hereof, the Termination Price, over
(ii) the sum of (a) amounts reimbursable or payable to the Servicer pursuant
to Section 3.05, (b) Stayed Funds, (c) the Servicing Fee, (d) amounts
deposited in the Collection Account or the Distribution Account, as the case
may be, in error, and (e) the Mortgage Insurance Premium for such Distribution
Date.
"Balloon Mortgage Loan": A Mortgage Loan that provides for
the payment of the unamortized principal balance of such Mortgage Loan in a
single payment at the maturity of such Mortgage Loan that is substantially
greater than the preceding monthly payment.
"Balloon Payment": A payment of the unamortized principal
balance of a Mortgage Loan in a single payment at the maturity of such
Mortgage Loan that is substantially greater than the preceding Monthly
Payment.
"Bankruptcy Code": Title 11 of the United States Code, as
amended.
"Basis Risk Reserve Fund Deposit": With respect to each
Distribution Date, an amount equal to the lesser of: (1) the sum of (a) the
sum of any LIBOR Carryover Amounts for such Distribution Date that remain
unpaid following the distribution of amounts in the Interest Rate Cap Account
on such Distribution Date pursuant to Section 4.09(e) and (b) the Required
Basis Risk Reserve Fund Deposit; and (2) any Monthly Excess Cashflow Amount
remaining on such Distribution Date following the distributions pursuant to
Section 4.02(b)(i)-(xiv).
"Book-Entry Certificates": Any of the Certificates that
shall be registered in the name of the Depository or its nominee, the
ownership of which is reflected on the books of the Depository or on the books
of a Person maintaining an account with the Depository (directly, as a
"Depository Participant," or indirectly, as an indirect participant in
accordance with the rules of the Depository and as described in Section 5.02
hereof). On the Closing Date, the Class X-0, Xxxxx X-0, Class A-IO, Class M-1,
Class M-2 and Class B-1 Certificates shall be Book-Entry Certificates.
"Business Day": Any day other than a Saturday, a Sunday or a
day on which banking institutions in the city of London, England, the State of
Delaware, the State of New York, the State of Texas or in the city in which
the Corporate Trust Office of the Trustee is located are authorized or
obligated by law or executive order to be closed.
"Carryover Termination Payment": For any Distribution Date,
the portion of any Termination Payment payable by the Trust to the Interest
Rate Cap Provider previously due on a prior Distribution Date that remains
unpaid on such Distribution Date plus interest thereon at the Default Rate for
the period from the date such Termination Payment was due but unpaid to but
excluding the date such amount has been paid (such interest to be compounded
daily).
"Certificate": Any Regular Certificate or Residual
Certificate.
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"Certificate Owner": With respect to each Book-Entry
Certificate, any beneficial owner thereof.
"Certificate Principal Balance": With respect to any Class
of Certificates (other than the Class A-IO, Class N, Class X and Residual
Certificates) and any Distribution Date, the Original Class Certificate
Principal Balance reduced by the sum of (i) all amounts actually distributed
in respect of principal of such Class on all prior Distribution Dates and (ii)
Applied Realized Loss Amounts allocated thereto. The Class A-IO, Class N,
Class X and Residual Certificates do not have a Certificate Principal Balance.
With respect to any Certificate (other than a Class A-IO, Class N, Class X or
a Residual Certificate) of a Class and any Distribution Date, the portion of
the Certificate Principal Balance of such Class represented by such
Certificate equal to the product of the Percentage Interest evidenced by such
Certificate and the Certificate Principal Balance of such Class.
"Certificate Register" and "Certificate Registrar": The
register maintained and registrar appointed pursuant to Section 5.02 hereof.
"Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register, except that a
Disqualified Organization or non-U.S. Person shall not be a Holder of a
Residual Certificate for any purpose hereof.
"Class": Collectively, Certificates or REMIC Regular
Interests which have the same priority of payment and bear the same class
designation and the form of which is identical except for variation in the
Percentage Interest evidenced thereby.
"Class A Certificate": Any one of the Certificates with an
"A" designated on the face thereof substantially in the form annexed hereto as
Exhibits X-0, X-0 and A-3, executed by the Trustee on behalf of the Trust and
authenticated and delivered by the Certificate Registrar, representing the
right to distributions as set forth herein and therein.
"Class A Certificateholders": Collectively, the Holders of
the Class A Certificates.
"Class A Principal Distribution Amount": With respect to any
Distribution Date, the sum of the Class A-1 Principal Distribution Amount and
the Class A-2 Principal Distribution Amount for such Distribution Date.
"Class A-1 Certificate Margin": For each Distribution Date
(i) on or prior to the Optional Termination Date, 0.36% per annum, and (ii)
following the Optional Termination Date, 0.72% per annum.
"Class A-1 Pass-Through Rate": For each Distribution Date,
the lesser of (a) LIBOR as of the related LIBOR Determination Date, plus the
Class A-1 Certificate Margin and (b) 12.00%.
"Class A-1 Principal Allocation Percentage" means, with
respect to any Distribution Date, the percentage equivalent of a fraction, the
numerator of which is (x) the
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Group I Principal Remittance Amount for such Distribution Date, and the
denominator of which is (y) the Principal Remittance Amount for such
Distribution Date.
"Class A-1 Principal Distribution Amount": As of any
Distribution Date on or after the Stepdown Date and as long as a Trigger Event
is not in effect, the excess of (x) the Certificate Principal Balance of the
Class A-1 Certificates immediately prior to such Distribution Date over (y)
the lesser of (A) the product of (i) 73.00% and (ii) the Group I Balance as of
the last day of the related Collection Period and (B) the excess of the Group
I Balance as of the last day of the related Collection Period over the product
of (i) 0.50% and (ii) the Group I Balance on the Cut-off Date.
"Class A-2 Certificate Margin": For each Distribution Date
(i) on or prior to the Optional Termination Date, 0.55% per annum, and (ii)
following the Optional Termination Date, 1.10% per annum.
"Class A-2 Pass-Through Rate": For each Distribution Date,
the lesser of (a) LIBOR as of the related LIBOR Determination Date, plus the
Class A-2 Certificate Margin and (b) 12.00%.
"Class A-2 Principal Allocation Percentage": With respect to
any Distribution Date, the percentage equivalent of a fraction, the numerator
of which is (x) the Group II Principal Remittance Amount for such Distribution
Date, and the denominator of which is (y) the Principal Remittance Amount for
such Distribution Date.
"Class A-2 Principal Distribution Amount": As of any
Distribution Date on or after the Stepdown Date and as long as a Trigger Event
is not in effect, the excess of (x) the Certificate Principal Balance of the
Class A-2 Certificates immediately prior to such Distribution Date over (y)
the lesser of (A) the product of (i) 73.00% and (ii) the Group II Balance as
of the last day of the related Collection Period and (B) the excess of the
Group II Balance as of the last day of the related Collection Period over the
product of (i) 0.50% and (ii) the Group II Balance on the Cut-off Date.
"Class A-IO Pass-Through Rate": With respect to the first
through the twelfth Distribution Date, 4.20% per annum, and with respect to
any Distribution Date thereafter, 0.00%.
"Class B Certificate": Any one of the Certificates with a
"B" designated on the face thereof substantially in the form annexed hereto as
Exhibit B-1 and Exhibit B-2, executed by the Trustee on behalf of the Trust
and authenticated and delivered by the Certificate Registrar, representing the
right to distributions as set forth herein and therein.
"Class B Certificateholders": Collectively, the Holders of
the Class B Certificates.
"Class B-1 Certificate Margin": For each Distribution Date
(i) on or prior to the Optional Termination Date, 2.00% per annum, and (ii)
following the Optional Termination Date, 3.00% per annum.
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"Class B-1 Pass-Through Rate": For each Distribution Date,
the lesser of (a) LIBOR as of the related LIBOR Determination Date, plus the
Class B-1 Certificate Margin and (b) 12.00%.
"Class B-1 Principal Distribution Amount": As of any
Distribution Date on or after the Stepdown Date and as long as a Trigger Event
is not in effect, the excess of (x) the sum of (i) the Certificate Principal
Balance of the Class A Certificates (after taking into account the payment of
the Class A Principal Distribution Amount on such Distribution Date), (ii) the
Certificate Principal Balance of the Class M-1 Certificates (after taking into
account the payment of the Class M-1 Principal Distribution Amount on such
Distribution Date), (iii) the Certificate Principal Balance of the Class M-2
Certificates (after taking into account the payment of the Class M-2 Principal
Distribution Amount on such Distribution Date), and (iv) the Certificate
Principal Balance of the Class B-1 Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) 96.00% and
(ii) the Pool Balance as of the last day of the related Collection Period and
(B) the excess of the Pool Balance as of the last day of the related
Collection Period over the product of (i) 0.50% and (ii) the Pool Balance on
the Cut-off Date.
"Class B-2 Certificate Margin": For each Distribution Date
(i) on or prior to the Optional Termination Date, 3.50% per annum, and (ii)
following the Optional Termination Date, 5.25% per annum.
"Class B-2 Pass-Through Rate": For each Distribution Date,
the lesser of (a) LIBOR as of the related LIBOR Determination Date, plus the
Class B-2 Certificate Margin and (b) 12.00%.
"Class B-2 Principal Distribution Amount": As of any
Distribution Date on or after the Stepdown Date and as long as a Trigger Event
is not in effect, the excess of (x) the sum of (i) the Certificate Principal
Balance of the Class A Certificates (after taking into account the payment of
the Class A Principal Distribution Amount on such Distribution Date), (ii) the
Certificate Principal Balance of the Class M-1 Certificates (after taking into
account the payment of the Class M-1 Principal Distribution Amount on such
Distribution Date), (iii) the Certificate Principal Balance of the Class M-2
Certificates (after taking into account the payment of the Class M-2 Principal
Distribution Amount on such Distribution Date), (iv) the Certificate Principal
Balance of the Class B-1 Certificates (after taking into account the payment
of the Class B-1 Principal Distribution Amount on such Distribution Date), and
(v) the Certificate Principal Balance of the Class B-2 Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) 99.00% and (ii) the Pool Balance as of the last day of the
related Collection Period and (B) the excess of the Pool Balance as of the
last day of the related Collection Period over the product of (i) 0.50% and
(ii) the Pool Balance on the Cut-off Date.
"Class B-2 REMIC Regular Interest": As defined in the
Preliminary Statement.
"Class Interest Distribution": With respect to any
Distribution Date and each class of Senior Certificates, the sum of Accrued
Certificate Interest and any Interest Carry Forward Amounts for such
Distribution Date and such Class.
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"Class M Certificate": Any one of the Certificates with an
"M" designated on the face thereof substantially in the form annexed hereto as
Exhibit C-2 and Exhibit C-3, executed by the Trustee on behalf of the Trust
and authenticated and delivered by the Certificate Registrar, representing the
right to distributions as set forth herein and therein.
"Class M Certificateholders": Collectively, the Holders of
the Class M Certificates.
"Class M-1 Certificate Margin": For each Distribution Date
(i) on or prior to the Optional Termination Date, 0.83% per annum, and (ii)
following the Optional Termination Date, 1.245% per annum.
"Class M-1 Pass-Through Rate": For each Distribution Date,
the lesser of (a) LIBOR as of the related LIBOR Determination Date, plus the
Class M-1 Certificate Margin and (b) 12.00%.
"Class M-1 Principal Distribution Amount": As of any
Distribution Date on or after the Stepdown Date and as long as a Trigger Event
is not in effect, the excess of (x) the sum of (i) the Certificate Principal
Balance of the Class A Certificates (after taking into account the payment of
the Class A Principal Distribution Amount on such Distribution Date) and (ii)
the Certificate Principal Balance of the Class M-1 Certificates immediately
prior to such Distribution Date over (y) the lesser of (A) the product of (i)
81.50% and (ii) the Pool Balance as of the last day of the related Collection
Period and (B) the excess of the Pool Balance as of the last day of the
related Collection Period over the product of (i) 0.50% and (ii) the Pool
Balance on the Cut-off Date.
"Class M-2 Certificate Margin": For each Distribution Date
(i) on or prior to the Optional Termination Date, 1.30% per annum, and (ii)
following the Optional Termination Date, 1.95% per annum.
"Class M-2 Pass-Through Rate": For each Distribution Date,
the lesser of (a) LIBOR as of the related LIBOR Determination Date, plus the
Class M-2 Certificate Margin and (b) 12.00%.
"Class M-2 Principal Distribution Amount": As of any
Distribution Date on or after the Stepdown Date and as long as a Trigger Event
is not in effect, the excess of (x) the sum of (i) the Certificate Principal
Balance of the Class A Certificates (after taking into account the payment of
the Class A Principal Distribution Amount on such Distribution Date), (ii) the
Certificate Principal Balance of the Class M-1 Certificates (after taking into
account the payment of the Class M-1 Principal Distribution Amount on such
Distribution Date) and (iii) the Certificate Principal Balance of the Class
M-2 Certificates immediately prior to such Distribution Date over (y) the
lesser of (A) the product of (i) 89.50% and (ii) the Pool Balance as of the
last day of the related Collection Period and (B) the excess of the Pool
Balance as of the last day of the related Collection Period minus the product
of (i) 0.50% and (ii) the Pool Balance on the Cut-off Date.
"Class N Certificate": Any one of the Certificates with an
"N" designated on the face thereof substantially in the form annexed hereto as
Exhibit C-5, executed by the Trustee on
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behalf of the Trust and authenticated and delivered by the Certificate
Registrar, representing the right to distributions as set forth herein and
therein.
"Class R Certificate": Any one of the Class R-1, Class R-2
and Class R-3 Certificates.
"Class R-1 Certificate": Any one of the Certificates with an
"R-1" designated on the face thereof substantially in the form annexed hereto
as Exhibit C-1, executed by the Trustee on behalf of the Trust and
authenticated and delivered by the Certificate Registrar, representing the
right to distributions as set forth herein and therein.
"Class R-2 Certificate": Any one of the Certificates with an
"R-2" designated on the face thereof substantially in the form annexed hereto
as Exhibit C-1, executed by the Trustee on behalf of the Trust and
authenticated and delivered by the Certificate Registrar, representing the
right to distributions as set forth herein and therein.
"Class R-3 Certificate": Any one of the Certificates with an
"R-3" designated on the face thereof substantially in the form annexed hereto
as Exhibit C-1, executed by the Trustee on behalf of the Trust and
authenticated and delivered by the Certificate Registrar, representing the
right to distributions as set forth herein and therein.
"Class X Certificate": Any one of the Certificates with an
"X" designated on the face thereof substantially in the form annexed hereto as
Exhibit C-4, executed by the Trustee on behalf of the Trust and authenticated
and delivered by the Certificate Registrar, representing the right to
distributions as set forth herein and therein.
"Class X Distributable Amount": With respect to any
Distribution Date, the excess of (i) the aggregate of amounts distributable on
the Class X Interest for such Distribution Date as provided in the Preliminary
Statement, over (ii) the aggregate of amounts distributable to the Class N
Certificates pursuant to Section 4.02(b).
"Class X/N REMIC Regular Interest": As defined in the
Preliminary Statement.
"Closing Date": April 30, 2002.
"Code": The Internal Revenue Code of 1986, as it may be
amended from time to time.
"Collection Account": The account or accounts created and
maintained by the Servicer pursuant to Section 3.04, which shall be entitled
"Collection Account, Xxxxxx Loan Servicing LP, as Servicer for the Trust under
the Pooling and Servicing Agreement dated as of April 1, 2002 among Financial
Asset Securities Corp., as Depositor, Credit-Based Asset Servicing and
Securitization LLC, as Seller, Xxxxxx Loan Xxxxxx Loan Servicing LP, as
Servicer, and U.S. Bank National Association, as Trustee, in trust for
registered Holders of 2002-CB2 Trust, C-BASS Mortgage Loan Asset-Backed
Certificates, Series 2002-CB2," and which must be an Eligible Account.
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"Collection Period": With respect to any Distribution Date,
the period from the second day of the calendar month preceding the month in
which such Distribution Date occurs through the first day of the month in
which such Distribution Date occurs.
"Combined Loan-to-Value Ratio": As of any date and Mortgage
Loan, the fraction, expressed as a percentage, the numerator of which is the
Principal Balance of the Mortgage Loan plus the principal balance of any
related senior mortgage loan or loans, and the denominator of which is the
Value of the related Mortgaged Property.
"Compensating Interest": As defined in Section 3.23 hereof.
"Condemnation Proceeds": All awards or settlements in
respect of a taking of a Mortgaged Property by exercise of the power of
eminent domain or condemnation.
"Confirmation": The Confirmation dated April 30, 2002,
evidencing a transaction between the Interest Rate Cap Provider and the
Seller, a form of which is attached hereto as Exhibit R.
"Conventional Mortgage Loan": Any Mortgage Loan that is
neither an FHA Loan nor a VA Loan.
"Corporate Trust Office": The principal corporate trust
office of the Trustee at which at any particular time its corporate trust
business in connection with this Agreement shall be administered, which office
at the date of the execution of this instrument is located at 000 Xxxx Xxxxx
Xxxxxx, Xx. Xxxx, Xxxxxxxxx 00000, Attention: Structured Finance, C-BASS
2002-CB2, or at such other address as the Trustee may designate from time to
time by notice to the Certificateholders, the Depositor, the Servicer and the
Seller.
"Covered Mortgage Loan": A Mortgage Loan listed on the
Mortgage Loan Schedule as being covered by the Mortgage Insurance Policy.
"Custodial Agreement": The Custodial Agreement, dated as of
April 1, 2002, among the Trustee, the Servicer and the Custodian, as the same
may be amended or supplemented pursuant to the terms thereof.
"Custodian": The Bank of New York, a New York banking
corporation, or any successor custodian appointed pursuant to the terms of the
Custodial Agreement.
"Cut-off Date": April 1, 2002.
"Cut-off Date Principal Balance": With respect to any
Mortgage Loan, the unpaid principal balance thereof as of the Cut-off Date
after application of funds received or advanced on or before such date (or as
of the applicable date of substitution with respect to an Eligible Substitute
Mortgage Loan).
"Debt Service Reduction": With respect to any Mortgage Loan,
a reduction in the scheduled Monthly Payment for such Mortgage Loan by a court
of competent jurisdiction in a
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proceeding under the Bankruptcy Code, except such a reduction resulting from a
Deficient Valuation.
"Default Rate": As defined in the Interest Rate Cap
Agreement.
"Defective Mortgage Loan": A Mortgage Loan replaced or to be
replaced by one or more Eligible Substitute Mortgage Loans.
"Deferred Interest": With respect to any Mortgage Loan
identified on the Mortgage Loan Schedule as having the possibility of negative
amortization, the current portion of interest not currently paid by the
Mortgagor that is added to the principal balance of such Mortgage Loan.
"Deficient Valuation": With respect to any Mortgage Loan, a
valuation of the related Mortgaged Property by a court of competent
jurisdiction in an amount less than the then outstanding principal balance of
the Mortgage Loan, which valuation results from a proceeding initiated under
the Bankruptcy Code.
"Definitive Certificates": As defined in Section 5.02(c)
hereof.
"Delinquent": Any Mortgage Loan, the Monthly Payment due on
a Due Date with respect to which such monthly payment is not made by the close
of business on the next scheduled Due Date for such Mortgage Loan.
"Depositor": Financial Asset Securities Corp., a Delaware
corporation, or any successor in interest.
"Depository": The initial depository shall be The Depository
Trust Company, whose nominee is Cede & Co., or any other organization
registered as a "clearing agency" pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended. The Depository shall initially be the
registered Holder of the Book-Entry Certificates. The Depository shall at all
times be a "clearing corporation" as defined in Section 8-102(3) of the
Uniform Commercial Code of the State of New York.
"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 10th day of the calendar month in which such Distribution Date occurs or,
if such 10th day is not a Business Day, the Business Day immediately preceding
such 10th day.
"Directly Operate": With respect to any REO Property, the
furnishing or rendering of services to the tenants thereof, the management or
operation of such REO Property, the holding of such REO Property primarily for
sale to customers, the performance of any construction work thereon or any use
of such REO Property in a trade or business conducted by the Trust other than
through an Independent Contractor; provided, however, that the Trustee (nor
the Servicer under this Agreement) shall not be considered to Directly Operate
an REO Property
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solely because the Trustee (or the Servicer under this Agreement) establishes
rental terms, chooses tenants, enters into or renews leases, deals with taxes
and insurance, or makes decisions as to repairs or capital expenditures with
respect to such REO Property.
"Disqualified Organization": A "disqualified organization"
under Section 860E of the Code, which as of the Closing Date is any of: (i)
the United States, any state or political subdivision thereof, any possession
of the United States, any foreign government, any international organization,
or any agency or instrumentality of any of the foregoing, (ii) any
organization (other than a cooperative described in Section 521 of the Code)
which is exempt from the tax imposed by Chapter 1 of the Code unless such
organization is subject to the tax imposed by Section 511 of the Code, (iii)
any organization described in Section 1381(a)(2)(C) of the Code, or (iv) any
other Person so designated by the Trustee based upon an Opinion of Counsel
provided by nationally recognized counsel to the Trustee that the holding of
an ownership interest in a Residual Certificate by such Person may cause the
Trust Fund or any Person having an ownership interest in any Class of
Certificates (other than such Person) to incur liability for any federal tax
imposed under the Code that would not otherwise be imposed but for the
transfer of an ownership interest in a Residual Certificate to such Person. A
corporation will not be treated as an instrumentality of the United States or
of any state or political subdivision thereof if all of its activities are
subject to tax and a majority of its board of directors is not selected by a
governmental unit. The term "United States," "state" and "international
organization" shall have the meanings set forth in Section 7701 of the Code.
"Distribution Account": The trust account or accounts
created and maintained by the Trustee pursuant to Section 3.04(b) which shall
be entitled "Distribution Account, U.S. Bank National Association, as Trustee,
in trust for the registered Holders of 2002-CB2 Trust, C-BASS Mortgage Loan
Asset-Backed Certificates, Series 2002-CB2" and which must be an Eligible
Account.
"Distribution Date": The 25th day of any calendar month, or
if such 25th day is not a Business Day, the Business Day immediately following
such 25th day, commencing on May 28, 2002.
"Due Date": With respect to each Mortgage Loan and any
Distribution Date, the day of the calendar month in which such Distribution
Date occurs on which the Monthly Payment for such Mortgage Loan was due,
exclusive of any grace period.
"Early Termination Date": As defined in the Interest Rate
Cap Agreement.
"Eligible Account": Any of (i) an account or accounts
maintained with a federal or state chartered depository institution or trust
company the short-term unsecured debt obligations of which (or, in the case of
a depository institution or trust company that is the principal subsidiary of
a holding company, the short-term unsecured debt obligations of such holding
company) are rated "A-1" (or the equivalent) by each of the Rating Agencies at
the time any amounts are held on deposit therein, (ii) an account or accounts
the deposits in which are fully insured by the FDIC (to the limits established
by such corporation), the uninsured deposits in which account are otherwise
secured such that, as evidenced by an Opinion of Counsel delivered to the
Trustee and to each Rating Agency, the Certificateholders will have a claim
with
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respect to the funds in such account or a perfected first priority security
interest against such collateral (which shall be limited to Permitted
Investments) securing such funds that is superior to claims of any other
depositors or creditors of the depository institution with which such account
is maintained, (iii) a trust account or accounts maintained with the trust
department of a federal or state chartered depository institution, national
banking association or trust company acting in its fiduciary capacity or (iv)
an account otherwise acceptable to each Rating Agency without reduction or
withdrawal of their then current ratings of the Certificates as evidenced by a
letter from each Rating Agency to the Trustee. Eligible Accounts may bear
interest.
"Eligible Substitute Mortgage Loan": A mortgage loan
substituted for a Defective Mortgage Loan pursuant to the terms of this
Agreement which must, on the date of such substitution, (i) have an
outstanding principal balance, after application of all scheduled payments of
principal and interest due during or prior to the month of substitution, not
in excess of, and not more than 5% less than, the outstanding principal
balance of the Defective Mortgage Loan as of the Due Date in the calendar
month during which the substitution occurs, (ii) have a Mortgage Interest
Rate, with respect to a Fixed-Rate Mortgage Loan, not less than the Mortgage
Interest Rate of the Defective Mortgage Loan and not more than 1% in excess of
the Mortgage Interest Rate of such Defective Mortgage Loan, (iii) if an
Adjustable-Rate Mortgage Loan, have a Maximum Loan Rate not less than the
Maximum Loan Rate for the Defective Mortgage Loan, (iv) if an Adjustable-Rate
Mortgage Loan, have a Minimum Loan Rate not less than the Minimum Loan Rate of
the Defective Mortgage Loan, (v) if an Adjustable-Rate Mortgage Loan, have a
Gross Margin equal to or greater than the Gross Margin of the Defective
Mortgage Loan, (vi) have the same Due Date as the Defective Mortgage Loan;
(vii) if an Adjustable-Rate Mortgage Loan, have a next Adjustment Date not
more than two months later than the next Adjustment Date on the Defective
Mortgage Loan, except in the case of any Mortgage Loan which has an Arrearage
due to the application of any related forbearance plan with respect to such
Mortgage Loan, an Eligible Substitute Mortgage Loan must have all Adjustment
Dates occurring during the same Interest Accrual Period during which
Adjustment Dates occur with respect to the substituted Mortgage Loan, (viii)
have a remaining term to maturity not greater than (and not more than one year
less than) that of the Defective Mortgage Loan, (ix) be current as of the date
of substitution, (x) have a Combined Loan-to-Value Ratio as of the date of
substitution equal to or lower than the Combined Loan-to-Value Ratio of the
Defective Mortgage Loan as of such date, (xi) have a risk grading determined
by the Seller at least equal to the risk grading assigned on the Defective
Mortgage Loan, (xii) have been reunderwritten by the Seller in accordance with
the same underwriting criteria and guidelines as the Defective Mortgage Loan,
and (xiii) conform to each representation and warranty set forth in Section
2.04 hereof applicable to the Defective Mortgage Loan. In the event that one
or more mortgage loans are substituted for one or more Defective Mortgage
Loans, the amounts described in clause (i) hereof shall be determined on the
basis of aggregate principal balances, the Mortgage Interest Rates described
in clause (ii) hereof shall be determined on the basis of weighted average
Mortgage Interest Rates, the risk gradings described in clause (xi) hereof
shall be satisfied as to each such mortgage loan, the terms described in
clause (viii) hereof shall be determined on the basis of weighted average
remaining term to maturity, the Combined Loan-to-Value Ratios described in
clause (x) hereof shall be satisfied as to each such mortgage loan and, except
to the extent otherwise provided in this sentence, the representations and
warranties described in clause (xiii) hereof must be satisfied as to each
Eligible Substitute Mortgage Loan or in the aggregate, as the case may be.
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"ERISA": The Employee Retirement Income Security Act of
1974, as amended.
"ERISA-Restricted Certificates": Any of the Class A-2, Class
M-1, Class M-2, Class B-1, Class B-2, Class N, Class X, Class R-1, Class R-2
and Class R-3 Certificates.
"Escrow Account": The account or accounts created and
maintained pursuant to Section 3.06.
"Escrow Payments": The amounts constituting ground rents,
taxes, assessments, water rates, mortgage insurance premiums, fire and hazard
insurance premiums and other payments required to be escrowed by the Mortgagor
with the mortgagee pursuant to any Mortgage Loan.
"Estate in Real Property": A fee simple estate in a parcel
of real property.
"Expense Fee Rate": With respect to each Mortgage Loan and
any Distribution Date, the sum of (i) the Trustee Fee Rate, (ii) the Servicing
Fee Rate and (iii) with respect to a Covered Mortgage Loan, the Mortgage
Insurance Premium Rate for such Mortgage Loan and the related Collection
Period.
"Extended Period": As defined in Section 9.04(b).
"Extra Principal Distribution Amount": As of any
Distribution Date, the lesser of (x) the Monthly Excess Interest Amount for
such Distribution Date and (y) the Overcollateralization Deficiency for such
Distribution Date.
"FDIC": Federal Deposit Insurance Corporation or any
successor thereto.
"FHA": The Federal Housing Administration, an agency within
HUD.
"FHA Approved Mortgagee": Those institutions which are
approved by FHA to act as servicer and mortgagee of record pursuant to FHA
Regulations.
"FHA Insurance Contract" or "FHA Insurance": The contractual
obligation of FHA respecting the insurance of an FHA Loan pursuant to the
National Housing Act, as amended.
"FHA Loan": A Mortgage Loan which is the subject of an FHA
Insurance Contract as evidenced by a Mortgage Insurance Certificate.
"FHA Regulations": Regulations promulgated by HUD under the
National Housing Act, codified in 24 Code of Federal Regulations, and other
HUD issuances relating to FHA Loans, including the related handbooks,
circulars, notices and mortgagee letters.
"Fidelity Bond": Shall have the meaning assigned thereto in
Section 3.12.
"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
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the Servicer pursuant to or as contemplated by Section 2.03 or 10.01), a
determination made by the Servicer that all Insurance Proceeds, Liquidation
Proceeds and other payments or recoveries which the Servicer, in its
reasonable good faith judgment, expects to be finally recoverable in respect
thereof have been so recovered. The Servicer shall maintain records, prepared
by a Servicing Officer, of each Final Recovery Determination made thereby.
"Fitch": Fitch Inc. and its successors, and if such company
shall for any reason no longer perform the functions of a securities rating
agency, "Fitch" shall be deemed to refer to any other "nationally recognized
statistical rating organization" as set forth on the most current list of such
organizations released by the Securities and Exchange Commission.
"Fixed-Rate Mortgage Loan": A Mortgage Loan which has a
constant annual rate at which interest accrues in accordance with the
provisions of the related Mortgage Note.
"Foreclosure Price": The amount reasonably expected to be
received from the sale of the related Mortgaged Property net of any expenses
associated with foreclosure proceedings.
"Gross Margin": With respect to each Adjustable-Rate
Mortgage Loan, the fixed percentage set forth in the related Mortgage Note
that is added to the Index on each Adjustment Date in accordance with the
terms of the related Mortgage Note used to determine the Mortgage Interest
Rate for such Mortgage Loan.
"Group I Balance": With respect to any Distribution Date,
the aggregate Principal Balance of the Group I Mortgage Loans.
"Group I Class A-IO Interest Distribution": With respect to
any Distribution Date and the Class A-IO Certificates, an amount equal to the
product of (a) the Class Interest Distribution for the Class A-IO Certificates
for such Distribution Date, and (b) a fraction, the numerator of which is
equal to the Group I Balance and the denominator of which is equal to the Pool
Balance, in each case as of the first day of the related Collection Period.
"Group I Interest Remittance Amount": With respect to any
Distribution Date, that portion of the Available Funds for such Distribution
Date attributable to interest received or advanced with respect to the Group I
Mortgage Loans or to Compensating Interest paid by the Servicer with respect
to the Group I Mortgage Loans.
"Group I Principal Distribution Amount": With respect to any
Distribution Date, the sum of (i) (x) the Group I Principal Remittance Amount
for such Distribution Date minus (y) the amount of any Overcollateralization
Release Amount for such Distribution Date multiplied by the Class A-1
Principal Allocation Percentage for such Distribution Date, and (ii) the Extra
Principal Distribution Amount for such Distribution Date multiplied by the
Class A-1 Principal Allocation Percentage for such Distribution Date.
"Group I Principal Remittance Amount": With respect to any
Distribution Date, to the extent of funds available therefor, the sum (less
amounts available for reimbursement of Advances and Servicing Advances
pursuant to Section 3.05 and expenses reimbursable pursuant to Section 6.03)
of: (i) each payment of principal on a Group I Mortgage Loan due during the
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related Collection Period and received by the Servicer on or prior to the
related Determination Date, and any Advances with respect thereto, (ii) all
full and partial Principal Prepayments received by the Servicer on the Group I
Mortgage Loans during the related Prepayment Period, (iii) the Net Liquidation
Proceeds allocable to principal actually collected by the Servicer on the
Group I Mortgage Loans during the related Prepayment Period, (iv) with respect
to Defective Mortgage Loans that are Group I Mortgage Loans repurchased with
respect to such Prepayment Period, the portion of the Purchase Price allocable
to principal, (v) any Substitution Adjustment Amounts received with respect to
Group I Mortgage Loans on or prior to the previous Determination Date and not
yet distributed and (vi) on the Distribution Date on which the Trust is to be
terminated in accordance with Section 10.01 hereof, that portion of the
Termination Price in respect of principal on the Group I Mortgage Loans.
"Group II Balance": With respect to any Distribution Date,
the aggregate Principal Balance of the Group II Mortgage Loans.
"Group II Class A-IO Interest Distribution": With respect to
any Distribution Date and the Class A-IO Certificates, an amount equal to the
product of (a) the Class Interest Distribution for the Class A-IO Certificates
for such Distribution Date, and (b) a fraction, the numerator of which is
equal to the Group II Balance and the denominator of which is equal to the
Pool Balance, in each case as of the first day of the related Collection
Period.
"Group II Interest Remittance Amount": With respect to any
Distribution Date, that portion of the Available Funds for such Distribution
Date attributable to interest received or advanced with respect to the Group
II Mortgage Loans or to Compensating Interest paid by the Servicer with
respect to the Group II Mortgage Loans.
"Group II Principal Distribution Amount": With respect to
any Distribution Date, the sum of (i) (x) the Group II Principal Remittance
Amount for such Distribution Date minus (y) the amount of any
Overcollateralization Release Amount for such Distribution Date multiplied by
the Class A-2 Principal Allocation Percentage for such Distribution Date, and
(ii) the Extra Principal Distribution Amount for such Distribution Date
multiplied by the Class A-2 Principal Allocation Percentage for such
Distribution Date.
"Group II Principal Remittance Amount": With respect to any
Distribution Date, to the extent of funds available therefor, the sum (less
amounts available for reimbursement of Advances and Servicing Advances
pursuant to Section 3.05 and expenses reimbursable pursuant to Section 6.03)
of: (i) each payment of principal on a Group II Mortgage Loan due during the
related Collection Period and received by the Servicer on or prior to the
related Determination Date, and any Advances with respect thereto, (ii) all
full and partial Principal Prepayments received by the Servicer on the Group
II Mortgage Loans during the related Prepayment Period, (iii) the Net
Liquidation Proceeds allocable to principal actually collected by the Servicer
on the Group II Mortgage Loans during the related Prepayment Period, (iv) with
respect to Defective Mortgage Loans that are Group II Mortgage Loans
repurchased with respect to such Prepayment Period, the portion of the
Purchase Price allocable to principal, (v) any Substitution Adjustment Amounts
received with respect to Group II Mortgage Loans on or prior to the previous
Determination Date and not yet distributed and (vi) on the Distribution Date
on which the Trust
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is to be terminated in accordance with Section 10.01 hereof, that portion of
the Termination Price in respect of principal on the Group II Mortgage Loans.
"HUD": The United States Department of Housing and Urban
Development, or any successor thereto and including the Federal Housing
Commissioner and the Secretary of Housing and Urban Development where
appropriate under the FHA Regulations.
"Independent": When used with respect to any specified
Person, any such Person who (i) is in fact independent of the Depositor, the
Servicer and their respective Affiliates, (ii) does not have any direct
financial interest in or any material indirect financial interest in the
Depositor or the Servicer or any Affiliate thereof, and (iii) is not connected
with the Depositor or the Servicer or any Affiliate thereof as an officer,
employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, however, that a Person shall not fail
to be Independent of the Depositor or the Servicer or any Affiliate thereof
merely because such Person is the beneficial owner of 1% or less of any Class
of securities issued by the Depositor or the Servicer or any Affiliate
thereof, as the case may be.
"Independent Contractor": Either (i) any Person (other than
the Servicer) that would be an "independent contractor" with respect to the
Trust Fund within the meaning of Section 856(d)(3) of the Code if the Trust
Fund were a real estate investment trust (except that the ownership tests set
forth in that section shall be considered to be met by any Person that owns,
directly or indirectly, 35 percent or more of any Class of Certificates), so
long as the Trust Fund does not receive or derive any income from such Person
and provided that the relationship between such Person and the Trust Fund is
at arm's length, all within the meaning of Treasury Regulation Section
1.856-4(b)(5), or (ii) any other Person (including the Servicer) if the
Trustee has received an Opinion of Counsel, which Opinion of Counsel shall be
an expense of the Trust Fund, to the effect that the taking of any action in
respect of any REO Property by such Person, subject to any conditions therein
specified, that is otherwise herein contemplated to be taken by an Independent
Contractor will not cause such REO Property to cease to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code
(determined without regard to the exception applicable for purposes of Section
860D(a) of the Code), or cause any income realized in respect of such REO
Property to fail to qualify as Rents from Real Property.
"Index": With respect to each Adjustable-Rate Mortgage Loan
and with respect to each related Adjustment Date, the index as specified in
the related Mortgage Note.
"Ineligible Foreclosure Property Loan": Any Mortgage Loan
listed on the Ineligible Foreclosure Property Loan Schedule as of the Closing
Date and for which there is no written agreement modifying such Mortgagor's
obligation to make payments under the Mortgage Loan.
"Ineligible Foreclosure Property Loan Schedule": The
schedule, attached hereto as Exhibit O, of Ineligible Foreclosure Property
Loans to be prepared by the Seller.
"Initial Certificate Principal Balance": With respect to any
Certificate other than a Class A-IO, Class N, Class X or Residual Certificate,
the amount designated "Initial Certificate Principal Balance" on the face
thereof.
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"Initial Notional Amount": With respect to any Class A-IO or
Class N Certificate, the amount designated "Initial Notional Amount" on the
face thereof.
"Initial Overcollateralization Amount": $1,351,234.27.
"Insurance Proceeds": Proceeds of any title policy, hazard
policy or other insurance policy covering a Mortgage Loan, including the
Mortgage Insurance Policy, to the extent such proceeds are not to be applied
to the restoration of the related Mortgaged Property or released to the
Mortgagor in accordance with the procedures that the Servicer would follow in
servicing mortgage loans held for its own account, subject to the terms and
conditions of the related Mortgage Note and Mortgage.
"Interest Accrual Period": With respect to any Distribution
Date and (i) with respect to the Class X-0, Xxxxx X-0, Class M-1, Class M-2,
Class B-1 and Class B-2 Certificates, the period from the preceding
Distribution Date to the day prior to the current Distribution Date (or, in
the case of the first Distribution Date, the period from the Closing Date
through May 27, 2002), and (ii) with respect to (x) the Class A-IO, Class N
and Class X Certificates, the calendar month immediately preceding the month
in which such Distribution Date occurs.
"Interest Carry Forward Amount": For any Class of
Certificates (other than the Class X and Residual Certificates) and any
Distribution Date, the sum of (a) the excess, if any, of the Accrued
Certificate Interest and any Interest Carry Forward Amount for the prior
Distribution Date, over the amount in respect of interest actually distributed
on such Class on such prior Distribution Date and (b) with respect to the
Offered Certificates (other than the Class A-IO Certificates), interest on
such excess at the applicable Pass-Through Rate for the actual number of days
elapsed on the basis of a 360-day year since the prior Distribution Date, and
with respect to the Class N Certificates, 30 days' interest on such excess at
the applicable Pass-Through Rate on the basis of a 360-day year consisting of
twelve 30-day months.
"Interest Percentage": With respect to the Class B-2
Certificates and any Class of Offered Certificates and any Distribution Date,
the ratio (expressed as a decimal carried to six places) of the Accrued
Certificate Interest for such Class to the sum of the Accrued Certificate
Interest for the Offered Certificates and the Class B-2 Certificates, in each
case with respect to such Distribution Date.
"Interest Rate Cap Account": The separate Eligible Account
created and initially maintained by the Trustee pursuant to Section 4.09 in
the name of the Trustee for the benefit of the Certificateholders which shall
be entitled and designated "Interest Rate Cap Account, U.S. Bank National
Association, as Trustee, in trust for the registered Holders of 2002-CB2
Trust, C-BASS Mortgage Loan Asset-Backed Certificates, Series 2002-CB2." Funds
in the Interest Rate Cap Account shall be held in trust for the
Certificateholders for the uses and purposes set forth in this Agreement. The
Interest Rate Cap Account will not be an asset of any REMIC. Ownership of the
Interest Rate Cap Account is evidenced by the Class X Interest.
"Interest Rate Cap Agreement": The Assignment and Assumption
Agreement, a form of which is attached hereto as Exhibit S, among the Trustee,
the Interest Rate Cap Provider and the Seller evidencing the assignment to the
Trustee on behalf of the Certificateholders of an
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interest rate cap agreement, the terms of which are set forth in the
Confirmation, which incorporates the terms of the ISDA Master Agreement.
"Interest Rate Cap Agreement Termination Date": The
Distribution Date in April 2007, after any required payment is made.
"Interest Rate Cap Provider": JPMorgan Chase Bank or any
successor thereto.
"ISDA": International Swaps and Derivatives Association,
Inc.
"ISDA Master Agreement": The Master Agreement
(Multicurrency-CrossBorder) in the form published by ISDA.
"Late Collections": With respect to any Mortgage Loan, all
amounts received subsequent to the Determination Date immediately following
any related Collection Period, whether as late payments of Monthly Payments or
as Insurance Proceeds, Liquidation Proceeds or otherwise, which represent late
payments or collections of principal and/or interest due (without regard to
any acceleration of payments under the related Mortgage and Mortgage Note) but
delinquent on a contractual basis for such Collection Period and not
previously recovered.
"LIBOR": With respect to each Interest Accrual Period, the
rate determined by the Trustee on the related LIBOR Determination Date on the
basis of the offered rate for one-month United States dollar deposits, as such
rate appears on the Telerate Page 3750, as of 11:00 a.m. (London time) on such
LIBOR Determination Date. If no such quotations are available on an LIBOR
Determination Date, LIBOR for the related Interest Accrual Period will be
established by the Trustee as follows:
(i) If on such LIBOR Determination Date two or more
Reference Banks provide such offered quotations, LIBOR for the
related Interest Accrual Period shall be the arithmetic mean of such
offered quotations (rounded upwards if necessary to the nearest whole
multiple of 0.001%);
(ii) If on such LIBOR Determination Date fewer than two
Reference Banks provide such offered quotations, LIBOR for the
related Interest Accrual Period shall be the arithmetic mean of the
rates quoted by one or more major banks in New York City, selected by
the Trustee after consultation with the Depositor, as of 11:00 A.M.,
New York City time, on such date for loans in U.S. Dollars to leading
European banks for a period of one month in amounts approximately
equal to the aggregate Certificate Principal Balance of the Offered
Certificates; and
(iii) If no such quotations can be obtained, LIBOR for the
related Interest Accrual Period shall be LIBOR for the prior
Distribution Date.
"LIBOR Business Day": Any day on which banks in London,
England and The City of New York are open and conducting transactions in
foreign currency and exchange.
"LIBOR Carryover Amount": If on any Distribution Date, the
Accrued Certificate Interest for any Offered Certificate (other than a Class
A-IO Certificate) or Class B-2
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Certificate is based upon the Pool Cap, the excess of (i) the amount of
interest such Certificate would have been entitled to receive on such
Distribution Date based on its Pass-Through Rate, over (ii) the amount of
interest such Certificate received on such Distribution Date based on the Pool
Cap, together with the unpaid portion of any such excess from prior
Distribution Dates (and interest accrued thereon at the then applicable
Pass-Through Rate on such Certificate).
"LIBOR Determination Date": With respect to the Offered
Certificates (other than the Class A-IO Certificates) and the Class B-2
Certificates, (i) for the first Distribution Date, the second LIBOR Business
Day preceding the Closing Date and (ii) for each subsequent Distribution Date,
the second LIBOR Business Day prior to the immediately preceding Distribution
Date.
"Liquidated Mortgage Loan": As to any Distribution Date, any
Mortgage Loan in respect of which the Servicer has determined, in accordance
with the servicing procedures specified herein, as of the end of the related
Prepayment Period, that all Liquidation Proceeds and Insurance Proceeds which
it expects to recover with respect to the liquidation of the Mortgage Loan or
disposition of the related REO Property have been recovered.
"Liquidation Event": With respect to any Mortgage Loan, any
of the following events: (i) such Mortgage Loan is paid in full; (ii) a Final
Recovery Determination is made as to such Mortgage Loan; or (iii) such
Mortgage Loan is removed from the Trust Fund by reason of its being purchased,
sold or replaced pursuant to or as contemplated by Section 2.03 or Section
10.01. With respect to any REO Property, either of the following events: (i) a
Final Recovery Determination is made as to such REO Property; or (ii) such REO
Property is removed from the Trust Fund by reason of its being sold or
purchased pursuant to Section 3.13 or Section 10.01.
"Liquidation Proceeds": The amount (other than amounts
received in respect of the rental of any REO Property prior to REO
Disposition) received by the Servicer in connection with (i) the taking of all
or a part of a Mortgaged Property by exercise of the power of eminent domain
or condemnation or (ii) the liquidation of a defaulted Mortgage Loan by means
of a trustee's sale, foreclosure sale or otherwise.
"Liquidation Report": As to any Distribution Date, the
report with respect to any Liquidated Mortgage Loans for such Distribution
Date in such form and containing such information as is agreed to by the
Servicer and the Trustee.
"Loan Group": Any of Loan Group I or Loan Group II, as
applicable.
"Loan Guaranty Certificate": The certificate evidencing a VA
Guaranty Agreement.
"Losses": As defined in Section 9.03.
"Lost Note Affidavit": With respect to any Mortgage Loan as
to which the original Mortgage Note has been permanently lost or destroyed and
has not been replaced, an affidavit from the Seller certifying that the
original Mortgage Note has been lost, misplaced or destroyed (together with a
copy of the related Mortgage Note and indemnifying the Trust against
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any loss, cost or liability resulting from the failure to deliver the original
Mortgage Note) in the form of Exhibit H hereto.
"Majority Certificateholders": The Holders of Certificates
evidencing at least 51% of the Voting Rights.
"Master REMIC Regular Interest": As defined in the
Preliminary Statement.
"Maximum Loan Rate": With respect to each Adjustable-Rate
Mortgage Loan, the percentage set forth in the related Mortgage Note as the
maximum Mortgage Interest Rate thereunder.
"Middle REMIC Regular Interest": As defined in the
Preliminary Statement.
"Minimum Loan Rate": With respect to each Adjustable-Rate
Mortgage Loan, the percentage set forth in the related Mortgage Note as the
minimum Mortgage Interest Rate thereunder.
"Monthly Excess Cashflow Amount": With respect to each
Distribution Date, the sum of the Monthly Excess Interest Amount for such
Distribution Date, the Overcollateralization Release Amount for such
Distribution Date and (without duplication) any portion of the Principal
Distribution Amount remaining after all distributions made pursuant to Section
4.02(a) hereof on such Distribution Date.
"Monthly Excess Interest Amount": With respect to each
Distribution Date, the amount, if any, by which the Group I Interest
Remittance Amount and Group II Interest Remittance Amount for such
Distribution Date exceed the aggregate amount distributed on such Distribution
Date pursuant to paragraphs (a) through (c) under Section 4.01 hereof.
"Monthly Payment": With respect to any Mortgage Loan, the
scheduled monthly payment of principal and interest on such Mortgage Loan
which is payable by the related Mortgagor from time to time under the related
Mortgage Note, determined: (a) after giving effect to (i) any Deficient
Valuation and/or Debt Service Reduction with respect to such Mortgage Loan and
(ii) any reduction in the amount of interest collectible from the related
Mortgagor pursuant to the Relief Act; (b) without giving effect to any
extension granted or agreed to by the Servicer pursuant to Section 3.01; and
(c) on the assumption that all other amounts, if any, due under such Mortgage
Loan are paid when due.
"Moody's": Xxxxx'x Investors Service, Inc. and its
successors, and if such company shall for any reason no longer perform the
functions of a securities rating agency, "Moody's" shall be deemed to refer to
any other "nationally recognized statistical rating organization" as set forth
on the most current list of such organizations released by the Securities and
Exchange Commission.
"Mortgage": The mortgage, deed of trust or other instrument
creating a first or second lien on, or first or second priority security
interest in, a Mortgaged Property securing a Mortgage Note.
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"Mortgage File": The mortgage documents listed in Section
2.01 pertaining to a particular Mortgage Loan and any additional documents
required to be added to the Mortgage File pursuant to this Agreement.
"Mortgage Insurance Certificate": The certificate evidencing
an FHA Insurance Contract.
"Mortgage Insurance Policy": The mortgage insurance policy
issued by the Mortgage Insurer with respect to certain mortgage loans
identified in the Mortgage Loan Schedule.
"Mortgage Insurance Premium": The premium payable on the
Mortgage Insurance Policy on each Distribution Date, as provided by the
Mortgage Insurance Policy.
"Mortgage Insurance Premium Rate": With respect to a Covered
Mortgage Loan and any Collection Period, a per annum rate agreed to by the
Master Servicer and the Mortgage Insurer.
"Mortgage Insurer": The Mortgage Guaranty Insurance
Corporation or any successor thereto.
"Mortgage Interest Rate": With respect to each Mortgage
Loan, the annual rate at which interest accrues on such Mortgage Loan from
time to time in accordance with the provisions of the related Mortgage Note,
which rate (i) in the case of each Fixed-Rate Mortgage Loan shall remain
constant at the rate set forth in the Mortgage Loan Schedule as the Mortgage
Interest Rate in effect immediately following the Cut-off Date and (ii) in the
case of each Adjustable-Rate Mortgage Loan (A) as of any date of determination
until the first Adjustment Date following the Cut-off Date shall be the rate
set forth in the Mortgage Loan Schedule as the Mortgage Interest Rate in
effect immediately following the Cut-off Date and (B) as of any date of
determination thereafter shall be the rate as adjusted on the most recent
Adjustment Date, to equal the sum, rounded to the nearest 0.125% as provided
in the Mortgage Note, of the Index, determined as set forth in the related
Mortgage Note, plus the related Gross Margin subject to the limitations set
forth in the related Mortgage Note. With respect to each Mortgage Loan that
becomes an REO Property, as of any date of determination, the annual rate
determined in accordance with the immediately preceding sentence as of the
date such Mortgage Loan became an REO Property.
"Mortgage Loan": Each mortgage loan transferred and assigned
to the Trustee pursuant to Section 2.01 or Section 2.03(d) as from time to
time held as a part of the Trust Fund, the Mortgage Loans so held being
identified in the Mortgage Loan Schedule.
"Mortgage Loan Purchase Agreement": The agreement between
the Seller and the Depositor, dated as of April 1, 2002, regarding the
transfer of the Mortgage Loans by the Seller to or at the direction of the
Depositor.
"Mortgage Loan Schedule": As of any date (i) with respect to
the Mortgage Loans, the list of such Mortgage Loans included in the Trust Fund
on such date, separately identifying the Fixed-Rate Mortgage Loans and the
Adjustable-Rate Mortgage Loans, attached
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hereto as Exhibit D. The Mortgage Loan Schedule shall be prepared by the
Seller and shall set forth the following information with respect to each
Mortgage Loan:
(1) the Seller's Mortgage Loan identifying number;
(2) the city, state, and zip code of the Mortgaged Property;
(3) the type of Residential Dwelling constituting the Mortgaged
Property or a designation that the Mortgaged Property is a
multi-family property;
(4) the occupancy status of the Mortgaged Property at
origination;
(5) the original months to maturity;
(6) the date of origination;
(7) the first payment date;
(8) the stated maturity date;
(9) the stated remaining months to maturity;
(10) the original principal amount of the Mortgage Loan;
(11) the Principal Balance of each Mortgage Loan as of the Cut-
off Date;
(12) the Arrearage of the Mortgage Loan as of the Cut-off Date;
(13) the Mortgage Interest Rate of the Mortgage Loan as of the
Cut-off Date;
(14) the current principal and interest payment of the Mortgage
Loan as of the Cut-off Date;
(15) the contractual interest paid to date of the Mortgage Loan;
(16) if the Mortgage Loan is not owner-financed, the Combined
Loan-to-Value Ratio at origination;
(17) a code indicating the loan performance status of the Mortgage
Loan as of the Cut-off Date;
(18) a code indicating whether the Mortgage Loan is a Simple
Interest Mortgage Loan or an Actuarial Mortgage Loan;
(19) a code indicating whether the Mortgaged Property is in
bankruptcy or in its forbearance period as of the Cut-off
Date;
(20) a code indicating whether the Mortgage Loan is conventional,
insured by the FHA or guaranteed by the VA;
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(21) a code indicating the Index that is associated with such
Mortgage Loan;
(22) the Gross Margin;
(23) the Periodic Rate Cap;
(24) the Minimum Loan Rate;
(25) the Maximum Loan Rate;
(26) a code indicating whether the Mortgage Loan has a prepayment
penalty and the type of prepayment penalty;
(27) the first Adjustment Date immediately following the Cut-off
Date;
(28) the rate adjustment frequency;
(29) the payment adjustment frequency;
(30) a code indicating whether the Mortgage Loan is
owner-financed;
(31) a code indicating whether the Mortgage Loan is subject to
negative amortization;
(32) a code indicating whether the Mortgage Loan is a second lien
or a third lien; and
(33) a code indicating whether the Mortgage Loan is a Covered
Mortgage Loan and if so, the Mortgage Insurance Premium Rate
for such Mortgage Loan.
The Mortgage Loan Schedule shall set forth the following
information, as of the Cut-off Date, with respect to the Mortgage Loans in the
aggregate, for the Fixed-Rate Mortgage Loans and for the Adjustable-Rate
Mortgage Loans: (1) the number of Mortgage Loans; (2) the current Principal
Balance of the Mortgage Loans; (3) the weighted average Mortgage Interest Rate
of the Mortgage Loans; and (4) the weighted average maturity of the Mortgage
Loans. The Mortgage Loan Schedule shall be amended from time to time by the
Seller in accordance with the provisions of this Agreement. With respect to
any Eligible Substitute Mortgage Loan, Cut-off Date shall refer to the related
Cut-off Date for such Mortgage Loan, determined in accordance with the
definition of Cut-off Date herein.
"Mortgage Note": The original executed note or other
evidence of indebtedness evidencing the indebtedness of a Mortgagor under a
Mortgage Loan.
"Mortgage Pool": The pool of Mortgage Loans, identified on
Exhibit D from time to time, and any REO Properties acquired in respect
thereof.
"Mortgaged Property": The underlying property securing a
Mortgage Loan, including any REO Property, consisting of an Estate in Real
Property improved by a Residential Dwelling or multi-family dwelling.
"Mortgagor": The obligor on a Mortgage Note.
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"Net Excess Spread": With respect to any Distribution Date,
a fraction, expressed as a percentage, the numerator of which is equal to the
product of (i) the excess of (x) the Pool Balance as of the last day of the
related Collection Period, multiplied by 1/12th of the Weighted Average Net
Mortgage Rate over (y) the sum of Accrued Certificate Interest for the Class
X-0, Xxxxx X-0, Class A-IO, Class M-1, Class M-2, Class B-1 and Class B-2
Certificates for such Distribution Date, and (ii) 12, and the denominator of
which is the Pool Balance as of the last day of the related Collection Period.
"Net Liquidation Proceeds": With respect to any Liquidated
Mortgage Loan or any other disposition of related Mortgaged Property
(including REO Property) the related Liquidation Proceeds net of unreimbursed
Advances, unreimbursed Servicing Advances, Servicing Fees and any other
accrued and unpaid servicing fees received and retained in connection with the
liquidation of such Mortgage Loan or Mortgaged Property.
"Net Mortgage Interest Rate": With respect to any Mortgage
Loan and any Collection Period, the Mortgage Interest Rate borne by such
Mortgage Loan minus the Expense Fee Rate for such Mortgage Loan and such
Collection Period.
"New Lease": Any lease of REO Property entered into on
behalf of the Trust, including any lease renewed or extended on behalf of the
Trust if the Trust has the right to renegotiate the terms of such lease.
"Nonrecoverable Advance": Any Advance or Servicing Advance
previously made or proposed to be made in respect of a Mortgage Loan that, in
the good faith business judgment of the Servicer, will not or, in the case of
a proposed Advance or Servicing Advance, would not be ultimately recoverable
from Late Collections on such Mortgage Loan as provided herein.
"Notional Amount": With respect to the Class A-IO
Certificates, (i) on any Distribution Date through the Distribution Date in
April 2003, an amount equal to the lesser of (a) with respect to the first six
Distribution Dates, $181,073,000, and with respect to the next six
Distribution Dates, $86,421,000 and (b) the Pool Balance as of the first day
of the related Interest Accrual Period, and (ii) after the April 2003
Distribution Date, zero. With respect to the Class N Certificates, an amount
equal to the Original Class N Notional Amount reduced by the aggregate
distributions made to the Class N Certificates pursuant to Section
4.02(b)(xvii).
"Offered Certificates": The Class A-1, Class A-2, Class
A-IO, Class M-1, Class M-2 and Class B-1 Certificates.
"Offered P&I Certificates": The Class A-1, Class A-2, Class
M-1, Class M-2 and Class B-1 Certificates.
"Officers' Certificate": A certificate signed by the
Chairman of the Board, the Vice Chairman of the Board, the President or a vice
president (however denominated), and by the Treasurer, the Secretary, or one
of the assistant treasurers or assistant secretaries of the Servicer, the
Seller or the Depositor, as applicable.
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"Opinion of Counsel": A written opinion of counsel, who may,
without limitation, be a salaried counsel for the Depositor or the Servicer
except that any opinion of counsel relating to (a) the qualification of any
REMIC as a REMIC or (b) compliance with the REMIC Provisions must be an
opinion of Independent counsel.
"Optional Termination Date": The first Distribution Date on
which the Servicer may opt to terminate the Mortgage Pool pursuant to Section
10.01.
"Original Class A-IO Notional Amount": The Notional Amount
of the Class A-IO Certificates on the Closing Date, as set forth opposite such
Class in the Preliminary Statement.
"Original Class N Notional Amount": The Notional Amount of
the Class N Certificates on the Closing Date, as set forth opposite such Class
in the Preliminary Statement.
"Original Class Certificate Principal Balance": With respect
to each Class of Certificates, the Certificate Principal Balance thereof on
the Closing Date, as set forth opposite such Class in the Preliminary
Statement, except with respect to the Class A-IO, Class N, Class X and
Residual Certificates, which have an Original Class Certificate Principal
Balance of zero.
"Original Notional Amount": The Original Class A-IO Notional
Amount or the Original Class N Notional Amount, as the case may be.
"Overcollateralization Amount": As of any Distribution Date,
the excess, if any, of (x) the Pool Balance as of the last day of the
immediately preceding Collection Period over (y) the aggregate Certificate
Principal Balances of all Classes of Certificates (after taking into account
all distributions of principal on such Distribution Date).
"Overcollateralization Deficiency": As of any Distribution
Date, the excess, if any, of (x) the Targeted Overcollateralization Amount for
such Distribution Date over (y) the Overcollateralization Amount for such
Distribution Date, calculated for this purpose after taking into account the
reduction on such Distribution Date of the Certificate Principal Balances of
all Classes of Certificates resulting from the distribution of the Principal
Distribution Amount (but not the Extra Principal Distribution Amount) on such
Distribution Date, but prior to taking into account any Applied Realized Loss
Amounts on such Distribution Date.
"Overcollateralization Release Amount": With respect to any
Distribution Date after the Stepdown Date on which a Trigger Event is not in
effect, the lesser of (x) the Principal Remittance Amount for such
Distribution Date and (y) the excess, if any, of (i) the Overcollateralization
Amount for such Distribution Date, assuming that 100% of the Principal
Remittance Amount is applied as a principal payment on the Certificates on
such Distribution Date, over (ii) the Targeted Overcollateralization Amount
for such Distribution Date. With respect to any Distribution Date on which a
Trigger Event is in effect, the Overcollateralization Release Amount shall be
zero.
"Ownership Interest": As to any Certificate, any ownership
or security interest in such Certificate, including any interest in such
Certificate as the Holder thereof and any other interest therein, whether
direct or indirect, legal or beneficial, as owner or as pledgee.
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"Pass-Through Rate": Any of the Class A-1 Pass-Through Rate,
the Class A-2 Pass-Through Rate, the Class A-IO Pass-Through Rate, the Class
M-1 Pass-Through Rate, the Class M-2 Pass-Through Rate, Class B-1 Pass-Through
Rate and the Class B-2 Pass-Through Rate. With respect to the Class N
Certificates, the Pass-Through Rate is 9.798% per annum.
"Paying Agent": Any paying agent appointed pursuant to
Section 5.05.
"Percentage Interest": With respect to any Certificate
(other than a Class A-IO, Class N, Class X or Residual Certificate), a
fraction, expressed as a percentage, the numerator of which is the Initial
Certificate Principal Balance, as the case may be, represented by such
Certificate and the denominator of which is the Original Class Certificate
Principal Balance of the related Class. With respect to a Class A-IO or Class
N Certificate, the undivided percentage interest obtained by dividing the
Initial Notional Amount evidenced by such Certificate by the Original Class
A-IO Notional Amount or Original Class N Notional Amount, as the case may be,
of such Class. With respect to a Class X or Residual Certificate, the portion
of the Class evidenced thereby, expressed as a percentage, as stated on the
face of such Certificate; provided, however, that the sum of all such
percentages for each such Class totals 100%.
"Periodic Rate Cap": With respect to each Adjustable-Rate
Mortgage Loan and any Adjustment Date therefor, the fixed percentage set forth
in the related Mortgage Note, which is the maximum amount by which the
Mortgage Interest Rate for such Mortgage Loan may increase or decrease
(without regard to the Maximum Loan Rate or the Minimum Loan Rate) on such
Adjustment Date from the Mortgage Interest Rate in effect immediately prior to
such Adjustment Date.
"Permitted Investments": Any one or more of the following
obligations or securities acquired at a purchase price of not greater than
par, regardless of whether issued or managed by the Depositor, the Servicer,
the Trustee or any of their respective Affiliates or for which an Affiliate of
the Trustee serves as an advisor:
(i) direct obligations of, or obligations fully guaranteed
as to timely payment of principal and interest by, the United States
or any agency or instrumentality thereof, provided such obligations
are backed by the full faith and credit of the United States;
(ii) (A) demand and time deposits in, certificates of
deposit of, bankers' acceptances issued by or federal funds sold by
any depository institution or trust company (including the Trustee or
its agents acting in its commercial capacity) incorporated under the
laws of the United States of America or any state thereof and subject
to supervision and examination by federal and/or state authorities,
so long as, at the time of such investment or contractual commitment
providing for such investment, such depository institution or trust
company or its ultimate parent has a short-term uninsured debt rating
in one of the two highest available rating categories of S&P and
Moody's and the highest available rating category of Fitch and
provided that each such investment has an original maturity of no
more than 365 days and (B) any other demand or time deposit or
deposit which is fully insured by the FDIC;
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(iii) repurchase obligations with a term not to exceed 30
days with respect to any security described in clause (i) above and
entered into with a depository institution or trust company (acting
as principal) rated A or higher by S&P and Fitch and rated A2 or
higher by Moody's, provided, however, that collateral transferred
pursuant to such repurchase obligation must be of the type described
in clause (i) above and must (A) be valued daily at current market
prices plus accrued interest or (B) pursuant to such valuation, be
equal, at all times, to 105% of the cash transferred by the Trustee
in exchange for such collateral and (C) be delivered to the Trustee
or, if the Trustee is supplying the collateral, an agent for the
Trustee, in such a manner as to accomplish perfection of a security
interest in the collateral by possession of certificated securities;
(iv) securities bearing interest or sold at a discount that
are issued by any corporation incorporated under the laws of the
United States of America or any State thereof and that are rated by
each Rating Agency in its highest long-term unsecured rating
categories at the time of such investment or contractual commitment
providing for such investment;
(v) commercial paper (including both non-interest-bearing
discount obligations and interest-bearing obligations payable on
demand or on a specified date not more than 30 days after the date of
acquisition thereof) that is rated by each Rating Agency in its
highest short-term unsecured debt rating available at the time of
such investment;
(vi) units of money market funds registered under the
Investment Company Act of 1940 including funds managed or advised by
the Trustee or affiliates thereof having the highest rating category
by the applicable Rating Agency; and
(vii) if previously confirmed in writing to the Trustee, any
other demand, money market or time deposit, or any other obligation,
security or investment, as may be acceptable to the Rating Agencies
in writing as a permitted investment of funds backing securities
having ratings equivalent to its highest initial rating of the Class
A Certificates;
provided, that no instrument described hereunder shall evidence either the
right to receive (a) only interest with respect to the obligations underlying
such instrument or (b) both principal and interest payments derived from
obligations underlying such instrument and the interest and principal payments
with respect to such instrument provide a yield to maturity at par greater
than 120% of the yield to maturity at par of the underlying obligations.
"Permitted Transferee": Any transferee of a Residual
Certificate other than a Disqualified Organization or a non-U.S. Person.
"Person": Any individual, corporation, partnership, joint
venture, association, joint stock company, trust, limited liability company,
unincorporated organization or government or any agency or political
subdivision thereof.
"Pool Balance": As of any date of determination, the
aggregate Principal Balance of the Mortgage Loans.
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"Pool Cap": With respect to any Distribution Date, the
fraction, expressed as a percentage, (i) the numerator of which is the product
of (A) 360 and (B) the excess of (1) the product of (a) 1/12, (b) the Weighted
Average Net Mortgage Rate as of the first day of the related Collection Period
and (c) the Pool Balance as of the first day of the related Collection Period
over (2) the Accrued Certificate Interest on the Class A-IO Certificates for
such Distribution Date and (ii) the denominator of which is the product of (x)
the Pool Balance as of the first day of the related Collection Period and (y)
the actual number of days in the related Collection Period.
"Prepayment Interest Shortfall": With respect to any
Distribution Date, for each Mortgage Loan that was during the related
Prepayment Period the subject of a Principal Prepayment in full that was
applied by the Servicer to reduce the outstanding principal balance of such
loan on a date preceding the related Due Date, an amount equal to interest at
the applicable Mortgage Interest Rate (net of the Servicing Fee Rate and, with
respect to Covered Mortgage Loans, the Mortgage Insurance Premium Rate) on the
amount of such Principal Prepayment for the number of days commencing on the
date on which the prepayment is applied and ending on the last day of the
related Prepayment Period.
"Prepayment Period": With respect to any Distribution Date,
the calendar month preceding the month in which such Distribution Date occurs.
"Primary Insurance Policy": Each policy of primary guaranty
mortgage insurance issued by a Qualified Insurer in effect with respect to any
Mortgage Loan, or any replacement policy therefor obtained by the Servicer
pursuant to Section 3.08.
"Principal Balance": As to any Mortgage Loan and any day,
other than a Liquidated Mortgage Loan, the related Cut-off Date Principal
Balance, minus all collections credited against the principal balance of any
such Mortgage Loan and the principal portion of Advances plus, Deferred
Interest, if any. For purposes of this definition, a Liquidated Mortgage Loan
shall be deemed to have a Principal Balance equal to the Principal Balance of
the related Mortgage Loan as of the final recovery of related Liquidation
Proceeds and a Principal Balance of zero thereafter. As to any REO Property
and any day, the Principal Balance of the related Mortgage Loan immediately
prior to such Mortgage Loan becoming REO Property minus any REO Principal
Amortization received with respect thereto on or prior to such day.
"Principal Distribution Amount": As to any Distribution
Date, the sum of (i) the Principal Remittance Amount minus, for Distribution
Dates occurring on and after the Stepdown Date and for which a Trigger Event
is not in effect, the Overcollateralization Release Amount, if any, and (ii)
the Extra Principal Distribution Amount, if any.
"Principal Prepayment": Any payment of principal made by the
Mortgagor on a Mortgage Loan which is received in advance of its scheduled Due
Date and which is not accompanied by an amount of interest representing the
full amount of scheduled interest due on any Due Date in any month or months
subsequent to the month of prepayment.
"Principal Remittance Amount": With respect to any
Distribution Date, the sum of the Group I Principal Remittance Amount and the
Group II Principal Remittance Amount.
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"Private Certificates": Any of the Class B-2, Class N, Class
X and Residual Certificates.
"Property Insurance Proceeds": Proceeds of any title policy,
hazard policy or other insurance policy covering a Mortgage Loan, to the
extent such proceeds are received by the Servicer and are not to be applied to
the restoration of the related Mortgaged Property or released to the Mortgagor
in accordance with the Servicer's servicing procedures, subject to the terms
and conditions of the related Mortgage Note and Mortgage.
"Prospectus Supplement": That certain Prospectus Supplement
dated April 23, 2002 relating to the public offering of the Offered
Certificates.
"Purchase Price": With respect to any Mortgage Loan or REO
Property to be purchased pursuant to or as contemplated by Section 2.03 or
10.01, and as confirmed by an Officers' Certificate from the Servicer to the
Trustee, an amount equal to the sum of (i) 100% of the Principal Balance
thereof as of the date of purchase (or such other price as provided in Section
10.01), (ii) in the case of (x) a Mortgage Loan, accrued interest on such
Principal Balance at the applicable Mortgage Interest Rate in effect from time
to time from the Due Date as to which interest was last covered by a payment
by the Mortgagor or an Advance by the Servicer, which payment or Advance had
as of the date of purchase been distributed pursuant to Section 4.01, through
the end of the calendar month in which the purchase is to be effected, and (y)
an REO Property, its fair market value, determined in good faith by the
Servicer, (iii) any unreimbursed Servicing Advances and Advances and any
unpaid Servicing Fees and Special Servicing Fees allocable to such Mortgage
Loan or REO Property, (iv) any amounts previously withdrawn from the
Collection Account in respect of such Mortgage Loan or REO Property pursuant
to Section 3.13, and (v) in the case of a Mortgage Loan required to be
purchased pursuant to Section 2.03, expenses reasonably incurred or to be
incurred by the Servicer or the Trustee in respect of the breach or defect
giving rise to the purchase obligation.
"Qualified Insurer": Any insurance company acceptable to
Xxxxxx Mae or Xxxxxxx Mac.
"Rating Agency" or "Rating Agencies": Fitch, Moody's and
S&P, or their respective successors. If such agencies or their successors are
no longer in existence, "Rating Agencies" shall be such nationally recognized
statistical rating organizations as set forth on the most current list of such
organizations released by the Securities and Exchange Commission and
designated by the Depositor, notice of which designation shall be given to the
Trustee and the Servicer.
"Realized Loss": With respect to a Liquidated Mortgage Loan,
the amount by which the remaining unpaid principal balance of the Mortgage
Loan exceeds the amount of Net Liquidation Proceeds applied to the principal
balance of the related Mortgage Loan.
"Record Date": With respect to all of the Certificates
(except for the Class A-IO Certificates) and any Distribution Date, the
Business Day immediately preceding such Distribution Date; provided, however,
that if any such Certificate becomes a Definitive Certificate, the Record Date
for such Certificate shall be the last Business Day of the month
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immediately preceding the month in which such Distribution Date occurs. With
respect to the Class A-IO, Class N, Class X and Residual Certificates and any
Distribution Date, the last Business Day of the month immediately preceding
the month in which such Distribution Date occurs (or the Closing Date, in the
case of the first Distribution Date).
"Reference Banks": Those banks (i) with an established place
of business in London, England, (ii) not controlling, under the control of or
under common control with the Depositor or the Trustee, (iii) whose quotations
appear on the Telerate Page 3750 on the relevant LIBOR Determination Date and
(iv) which have been designated as such by the Trustee after consultation with
the Servicer.
"Regular Certificate": Any of the Offered Certificates, the
Class B-2 Certificates, Class N Certificates and the Class X Certificates.
"Related Documents": With respect to any Mortgage Loan, the
related Mortgage Notes, Mortgages and other related documents.
"Relief Act": The Soldiers' and Sailors Civil Relief Act of
1940, as amended.
"Relief Act Interest Shortfall": With respect to any
Distribution Date, for any Mortgage Loan with respect to which there has been
a reduction in the amount of interest collectible thereon for the most
recently ended Collection Period as a result of the application of the Relief
Act, the amount by which (i) interest collectible on such Mortgage Loan during
such Collection Period is less than (ii) one month's interest on the Principal
Balance of such Mortgage Loan at the Mortgage Interest Rate for such Mortgage
Loan before giving effect to the application of the Relief Act.
"REMIC": A "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code.
"REMIC Provisions:" Provisions of the federal income tax law
relating to real estate mortgage investment conduits which appear at Section
860A through 860G of Subchapter M of Chapter 1 of the Code, and related
provisions, and regulations and rulings promulgated thereunder, as the
foregoing may be in effect from time to time.
"REMIC Regular Interest": Any of the Master REMIC Regular
Interests, the Middle REMIC Regular Interests, the Subsidiary REMIC Regular
Interests, the Class B-2 REMIC Regular Interest, and the Class X/N REMIC
Regular Interest.
"Remittance Report": A report prepared by the Servicer and
delivered to the Trustee pursuant to Section 4.07, containing the information
attached hereto as Exhibit P.
"Rents from Real Property": With respect to any REO
Property, gross income of the character described in Section 856(d) of the
Code.
"REO Disposition": The sale or other disposition of an REO
Property on behalf of the Trust Fund.
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"REO Principal Amortization": With respect to any REO
Property, for any calendar month, the aggregate of all amounts received in
respect of such REO Property during such calendar month, whether in the form
of rental income, sale proceeds (including, without limitation, that portion
of the Termination Price paid in connection with a purchase of all of the
Mortgage Loans and REO Properties pursuant to Section 10.01 that is allocable
to such REO Property) or otherwise, net of any portion of such amounts (i)
payable pursuant to Section 3.13 in respect of the proper operation,
management and maintenance of such REO Property or (ii) payable or
reimbursable to the Servicer pursuant to Section 3.13 for unpaid Servicing
Fees in respect of the related Mortgage Loan and unreimbursed Servicing
Advances and Advances in respect of such REO Property or the related Mortgage
Loan.
"REO Property": A Mortgaged Property acquired by the
Servicer on behalf of the Trust Fund through foreclosure or deed-in-lieu of
foreclosure, as described in Section 3.13.
"Re-Performing 60+ Day Delinquent Loan": Each Mortgage Loan
with respect to which, as of any date of determination, (x) any portion of a
Monthly Payment is, as of the last day of the prior Collection Period, two
months or more past due and (y) with respect to which the Mortgagor has made
three Monthly Payments within the three calendar months preceding such date of
determination. To the extent that, as of any date of determination, more than
10% of the Mortgage Loans (measured by aggregate principal balance) are
Re-Performing 60+ Day Delinquent Loans, the Re-Performing 60+ Day Delinquent
Loans constituting such excess shall be deemed to be 60+ Day Delinquent Loans.
"Re-Performance Test": The following criteria one of which
must be met for a Mortgage Loan to qualify as a Re-Performing Mortgage Loan:
(1) the Mortgagor has made at least three aggregate Monthly Payments in the
three calendar months preceding the Cut-off Date (regardless of either the
timing of receipt of such payments or the payment history of such loans prior
to January 1, 2002), or (2) the Mortgagor has made at least four aggregate
Monthly Payments in the four calendar months preceding the Cut-off Date
(regardless of either the timing of receipt of such payments or the payment
history of such loans prior to December 1, 2001), or (3) the Mortgagor has
made at least five aggregate Monthly Payments in the five calendar months
preceding the Cut-off Date (regardless of either the timing of receipt of such
payments or the payment history of such loans prior to November 1, 2001).
"Re-Performing Mortgage Loan": A Mortgage Loan which has
defaulted in the past and which is at least 90 days Delinquent with respect to
certain Monthly Payments but which satisfies one of the Re-Performance Test
criteria.
"Request for Release": A release signed by a Servicing
Officer, in the form of Exhibit E attached hereto.
"Required Basis Risk Reserve Fund Amount": With respect to
any Distribution Date on which the related Net Excess Spread is less than
0.25%, an amount equal to the lesser of (x) $15,000 and (y) the product of (i)
0.50% and (ii) the Pool Balance as of the last day of the related Collection
Period. With respect to any Distribution Date on which the Net Excess Spread
is equal to or greater than 0.25%, an amount equal to $5,000.
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"Required Basis Risk Reserve Fund Deposit": With respect to
any Distribution Date, the excess, if any, of (i) the Required Basis Risk
Reserve Fund Amount over (ii) the amount of funds on deposit in the Basis Risk
Reserve Fund as of the close of business on the Business Day immediately
preceding such Distribution Date.
"Residential Dwelling": Any one of the following: (i) a
one-family dwelling, (ii) a two- to four-family dwelling, (iii) a one-family
dwelling unit in a Xxxxxx Xxx eligible condominium project, (iv) a one-family
dwelling in a planned unit development, which is not a co-operative, or (v) a
mobile or manufactured home (as defined in 00 Xxxxxx Xxxxxx Code, Section
5402(6)).
"Residual Certificates": The Class R Certificates.
"Residual Interest": The sole Class of "residual interests"
in each REMIC within the meaning of Section 860G(a)(2) of the Code.
"Responsible Officer": When used with respect to the
Trustee, any officer assigned to the Corporate Trust Division (or any
successor thereto), including any Vice President, Assistant Vice President,
Trust Officer, any Assistant Secretary, any trust officer or any other officer
of the Trustee customarily performing functions similar to those performed by
any of the above designated officers and in each case having direct
responsibility for the administration of this Agreement.
"S&P": Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc., and its successors, and if such company shall for
any reason no longer perform the functions of a securities rating agency,
"S&P" shall be deemed to refer to any other "nationally recognized statistical
rating organization" as set forth on the most current list of such
organizations released by the Securities and Exchange Commission.
"Schedule": The schedule accompanying the ISDA Master
Agreement.
"Seller": Credit-Based Asset Servicing and Securitization
LLC, or its successor in interest, in its capacity as seller under the
Mortgage Loan Purchase Agreement.
"Senior Certificates": The Class A-1, Class A-2 and Class
A-IO Certificates.
"Senior Enhancement Percentage": For any Distribution Date,
the percentage obtained by dividing (x) the sum of (i) the aggregate
Certificate Principal Balances of the Subordinate Certificates and (ii) the
Overcollateralization Amount, in each case after taking into account the
distribution of the Principal Distribution Amount on such Distribution Date by
(y) the Pool Balance as of the last day of the related Collection Period.
"Senior Specified Enhancement Percentage": On any date of
determination thereof, 27.00%.
"Servicer": Xxxxxx Loan Servicing LP, a Delaware limited
partnership, or any successor servicer appointed as herein provided, in its
capacity as Servicer hereunder.
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"Servicer Affiliate": A Person (i) controlling, controlled
by or under common control with the Servicer or which is 50% or more owned by
the Servicer and (ii) which is qualified to service residential mortgage
loans.
"Servicer Event of Termination": One or more of the events
described in Section 7.01.
"Servicer Remittance Date": With respect to any Distribution
Date, the Business Day immediately preceding such Distribution Date.
"Servicing Advances": All customary, reasonable and
necessary "out of pocket" costs and expenses incurred by the Servicer in the
performance of its servicing obligations, including, but not limited to, the
cost of (i) the preservation, restoration and protection of the Mortgaged
Property, (ii) any enforcement or judicial proceedings, including
foreclosures, (iii) the management and liquidation of the REO Property and
(iv) compliance with the obligations under Section 3.08.
"Servicing Fee": With respect to each Mortgage Loan
(including each REO Property) and for any calendar month, an amount equal to
one month's interest (or in the event of any payment of interest which
accompanies a Principal Prepayment in full made by the Mortgagor during such
calendar month, interest for the number of days covered by such payment of
interest) at the Servicing Fee Rate on the same principal amount on which
interest on such Mortgage Loan accrues for such calendar month.
"Servicing Fee Rate": With respect to each Mortgage Loan,
0.50% per annum.
"Servicing Officer": Any officer of the Servicer involved
in, or responsible for, the administration and servicing of Mortgage Loans,
whose name and specimen signature appear on a list of servicing officers
furnished by the Servicer to the Trustee and the Depositor on the Closing
Date, as such list may from time to time be amended.
"Servicing Rights Pledgee": One or more lenders, selected by
the Servicer, to which the Servicer will pledge and assign all of its right,
title and interest in, to and under this Agreement, including First Union
National Bank, as the representative of certain lenders.
"Servicing Standard": Shall mean the standards set forth in
Section 3.01.
"Simple Interest Method": The method of allocating a payment
to principal and interest, pursuant to which the portion of such payment that
is allocated to interest is equal to the product of the fixed rate of interest
multiplied by the unpaid principal balance multiplied by the period of time
elapsed since the preceding payment of interest was made and divided by either
360 or 365, as specified in the related Mortgage Note, and the remainder of
such payment is allocated to principal.
"Simple Interest Mortgage Loan": Any Mortgage Loan under
which the portion of a payment allocable to interest and the portion of such
payment allocable to principal is determined in accordance with the Simple
Interest Method.
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"Special Servicing Fee": With respect to each Mortgage Loan
that is delinquent 90 or more days (other than a Re-Performing Mortgage Loan
or a second or third lien Mortgage Loan), $150 per month payable until the
earlier of (i) 18 consecutive months and (ii) the Delinquency status of such
Mortgage Loan has been reduced to less than 90 days Delinquent or is
liquidated or repurchased.
"Startup Day": As defined in Section 9.01(b) hereof.
"Stayed Funds": Any payment required to be made under the
terms of the Certificates and this Agreement but which is not remitted by the
Servicer because the Servicer is the subject of a proceeding under the
Bankruptcy Code and the making of such remittance is prohibited by Section 362
of the Bankruptcy Code.
"Stepdown Date": The later to occur of (x) the earlier to
occur of (A) the Distribution Date in May 2005 and (B) the Distribution Date
on which the aggregate Certificate Principal Balance of the Class A
Certificates is reduced to zero, and (y) the first Distribution Date on which
the Senior Enhancement Percentage (after taking into account distributions of
principal on such Distribution Date) is greater than or equal to the Senior
Specified Enhancement Percentage.
"Subordinate Certificates": The Class M-1, Class M-2, Class
B-1, Class B-2, Class N, Class X, Class R-1, Class R-2 and Class R-3
Certificates.
"Subsidiary REMIC Regular Interest": As defined in the
Preliminary Statement.
"Substitution Adjustment Amount": As defined in Section
2.03(d) hereof.
"Targeted Overcollateralization Amount": As of any
Distribution Date, (x) prior to the Stepdown Date, 0.50% of the initial Pool
Balance and (y) on and after the Stepdown Date, the lesser of (i) 0.50% of the
initial Pool Balance and (ii) the greater of (A) 1.00% of the Pool Balance as
of the last day of the related Collection Period and (B) 0.50% of the initial
Pool Balance.
"Tax Matters Person": The tax matters person appointed
pursuant to Section 9.01(e) hereof.
"Tax Returns": The federal income tax returns on Internal
Revenue Service Form 1066, U.S. Real Estate Mortgage Investment Conduit Income
Tax Return, including Schedule Q thereto, Quarterly Notice to Residual
Interest Holders of the REMIC Taxable Income or Net Loss Allocation, or any
successor forms, to be filed on behalf of the Trust for each of the eight
REMICs created pursuant to this Agreement under the REMIC Provisions, together
with any and all other information reports or returns that may be required to
be furnished to the Certificateholders or filed with the Internal Revenue
Service or any other governmental taxing authority under any applicable
provisions of federal, state or local tax laws.
"Telerate Page 3750": The display page currently so
designated on the Bridge Telerate Service (or such other page as may replace
the Telerate Page 3750 page on that service for the purpose of displaying
London interbank offered rates of major banks).
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"Termination Payment": As defined in the Interest Rate Cap
Agreement.
"Termination Price": As defined in Section 10.01(a) hereof.
"Trigger Event": With respect to any Distribution Date, if
(i) the six-month rolling average of 60+ Day Delinquent Loans equals or
exceeds 60.00% of the Senior Enhancement Percentage; provided, that if the
Certificate Principal Balance of the Senior Certificates has been reduced to
zero, a Trigger Event will have occurred if the six-month rolling average of
60+ Day Delinquent Loans equals or exceeds 20.00% or (ii) the aggregate amount
of Realized Losses incurred since the Cut-off Date through the last day of the
related Collection Period divided by the initial Pool Balance exceeds the
applicable percentages set forth below with respect to such Distribution Date:
Distribution Date Occurring In Percentage
May 2005 through April 2006 2.75%
May 2006 through April 2007 3.75%
May 2007 through April 2008 4.50%
May 2008 and thereafter 5.00%
"Trust": 2002-CB2 Trust, the trust created hereunder.
"Trust Fund": The segregated pool of assets subject hereto,
constituting the primary trust created hereby and to be administered
hereunder, with respect to a portion of which five REMIC elections are to be
made, such entire Trust Fund consisting of: (i) such Mortgage Loans as from
time to time are subject to this Agreement, together with the Mortgage Files
relating thereto, and together with all collections thereon and proceeds
thereof, (ii) any REO Property, together with all collections thereon and
proceeds thereof, (iii) the Trustee's rights with respect to the Mortgage
Loans under all insurance policies required to be maintained pursuant to this
Agreement and any proceeds thereof, (iv) the Depositor's rights under the
Mortgage Loan Purchase Agreement (including any security interest created
thereby), (v) the Collection Account, the Distribution Account, the Basis Risk
Reserve Fund, the Interest Rate Cap Account and any REO Account and such
assets that are deposited therein from time to time and any investments
thereof, together with any and all income, proceeds and payments with respect
thereto, and (vi) the rights of the Seller under the Interest Rate Cap
Agreement. Notwithstanding the foregoing, however, the Trust Fund specifically
excludes all payments and other collections of principal and interest
representing Arrearage.
"Trustee": U.S. Bank National Association, a national
banking association, or any successor Trustee appointed as herein provided.
"Trustee Fee": With respect to any Distribution Date, the
product of (x) one-twelfth of the Trustee Fee Rate and (y) the aggregate of
the Principal Balances of all Mortgage Loans as of the opening of business on
the first day of the related Collection Period.
"Trustee Fee Rate": With respect to any Distribution Date,
0.0095% per annum.
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"Underwriters": Greenwich Capital Markets, Inc., Xxxxxxx
Lynch, Pierce, Xxxxxx & Xxxxx Incorporated and Residential Funding Securities
Corporation, as underwriters with respect to the Offered Certificates.
"United States Person" or "U.S. Person": (i) A citizen or
resident of the United States, (ii) a corporation, partnership or other entity
treated as a corporation or partnership for United States federal income tax
purposes organized in or under the laws of the United States or any state
thereof or the District of Columbia (unless, in the case of a partnership,
Treasury regulations provide otherwise) or (iii) an estate the income of which
is includible in gross income for United States tax purposes, regardless of
its source, or (iv) a trust if a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more United States persons have authority to control all substantial decisions
of the trust. Notwithstanding the preceding sentence, to the extent provided
in Treasury regulations, certain Trusts in existence on August 20, 1996, and
treated as United States persons prior to such date, that elect to continue to
be treated as United States persons will also be a U.S. Person.
"Unpaid Realized Loss Amount": With respect to the Class A-2
and each Class of Subordinate Certificates and any Distribution Date, the
excess of (x) the cumulative amount of Applied Realized Loss Amounts allocated
to such class pursuant to Section 4.03 for all Distribution Dates over (y) the
cumulative amount of payments in respect of Unpaid Realized Loss Amounts to
such Class for all prior Distribution Dates pursuant to Section 4.02(b).
"VA": The United States Department of Veterans Affairs.
"VA Approved Lender": Those institutions that are approved
by the VA to act as servicer and mortgagee of record pursuant to VA
Regulations.
"VA Guaranty Agreements": With respect to a VA Loan, the
agreements evidencing the guaranty of such Mortgage Loan by the VA.
"VA Loan": A Mortgage Loan guaranteed by the VA.
"VA Regulations": Any and all regulations promulgated by the
VA under the Servicemen's Readjustment Act of 1944, as amended.
"Value": With respect to any Mortgaged Property, the value
thereof as determined by an independent appraisal made at the time of the
origination of the related Mortgage Loan or the sale price, if the appraisal
is not available; except that, with respect to any Mortgage Loan that is a
purchase money mortgage loan, the lesser of (i) the value thereof as
determined by an independent appraisal made at the time of the origination of
such Mortgage Loan, if any, and (ii) the sales price of the related Mortgaged
Property.
"Voting Rights": The portion of the voting rights of all of
the Certificates which is allocated to any Certificate. The Voting Rights
allocated among Holders of the Offered Certificates (other than the Class A-IO
Certificates) and the Class B-2 Certificates shall be 97% for so long as the
Class A-IO Certificates are outstanding and 98% thereafter. Such Voting Rights
shall be allocated among each such Class according to the fraction, expressed
as a percentage, the numerator of which is the aggregate Certificate Principal
Balance of all the
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Certificates of such Class then outstanding and the denominator of which is
the aggregate Certificate Principal Balance of all of the Certificates then
outstanding. The Voting Rights allocated to each such Class of Certificates
shall be allocated among all Holders of each such Class in proportion to the
outstanding Certificate Principal Balance of such Certificates; provided,
however, that any Certificate registered in the name of the Servicer, the
Depositor, the Trustee or any of their respective affiliates shall not be
included in the calculation of Voting Rights; provided that only such
Certificates as are known by a Responsible Officer of the Trustee to be so
registered will be so excluded. For so long as the Class A-IO Certificates are
outstanding, the percentage of the Voting Rights allocated among Holders of
such Certificates will be 1%. The percentage of all the Voting Rights
allocated among the Holders of the Class N and Class X Certificates shall be
2%. The Residual Certificates shall have no Voting Rights.
"Weighted Average Net Mortgage Rate": The weighted average
(based on Principal Balance as of the first day of the related Collection
Period or, in the case of the first Distribution Date, the Cut-Off Date) of
the Net Mortgage Interest Rates of the Mortgage Loans, expressed as an annual
rate and calculated on the basis of twelve months consisting of 30 days each
and a 360-day year.
"Written Order to Authenticate": A written order by which
the Depositor directs the Trustee to execute, authenticate and deliver the
Certificates.
Section 1.02 Accounting.
Unless otherwise specified herein, for the purpose of any
definition or calculation, whenever amounts are required to be netted,
subtracted or added or any distributions are taken into account such
definition or calculation and any related definitions or calculations shall be
determined without duplication of such functions.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01 Conveyance of Mortgage Loans.
The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee, on behalf of the Trust, without recourse for the benefit of the
Certificateholders all the right, title and interest of the Depositor,
including any security interest therein for the benefit of the Depositor, in
and to (i) each Mortgage Loan identified on the Mortgage Loan Schedule,
including the related Cut-off Date Principal Balance, all interest accruing
thereon after the Cut-off Date and all collections in respect of interest and
principal due after the Cut-off Date; (ii) property which secured each such
Mortgage Loan and which has been acquired by foreclosure or deed in lieu of
foreclosure; (iii) its interest in any insurance policies in respect of the
Mortgage Loans; (iv) all proceeds of any of the foregoing; (v) the rights of
the Depositor under the Mortgage Loan Purchase Agreement, and (vi) all other
assets included or to be included in the Trust Fund; provided, however, so
long as the Servicer is an FHA Approved Mortgagee, the Commissioner of HUD
shall have no
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obligation to recognize or deal with any person other than the Servicer with
respect to FHA Insurance. Such assignment includes all interest and principal
due to the Depositor or the Servicer after the Cut-off Date with respect to
the Mortgage Loans.
In connection with such transfer and assignment, the Seller,
on behalf of the Depositor, does hereby deliver to, and deposit with the
Trustee, or its designated agent (the "Custodian"), the following documents or
instruments with respect to each Mortgage Loan (a "Mortgage File") so
transferred and assigned:
(i) the original Mortgage Note, endorsed either (A) in blank or
(B) in the following form: "Pay to the order of U.S. Bank
National Association, as Trustee under the Pooling and
Servicing Agreement, dated as of April 1, 2002, among
Credit-Based Asset Servicing and Securitization LLC,
Financial Asset Securities Corp., Xxxxxx Loan Servicing LP
and U.S. Bank National Association, C-BASS Mortgage Loan
Asset-Backed Certificates, Series 2002-CB2, without
recourse," or with respect to any lost Mortgage Note, an
original Lost Note Affidavit, together with a copy of the
related Mortgage Note;
(ii) the original Mortgage with evidence of recording thereon,
and the original recorded power of attorney, if the Mortgage
was executed pursuant to a power of attorney, with evidence
of recording thereon or, if such Mortgage or power of
attorney has been submitted for recording but has not been
returned from the applicable public recording office, has
been lost or is not otherwise available, a copy of such
Mortgage or power of attorney, as the case may be, certified
to be a true and complete copy of the original submitted for
recording;
(iii) an original Assignment of Mortgage, in form and substance
acceptable for recording. The Mortgage shall be assigned
either (A) in blank or (B) to "U.S. Bank National
Association, as Trustee under the Pooling and Servicing
Agreement, dated as of April 1, 2002, among Credit-Based
Asset Servicing and Securitization LLC, Financial Asset
Securities Corp., Xxxxxx Loan Servicing LP and U.S. Bank
National Association, C-BASS Mortgage Loan Asset-Backed
Certificates, Series 2002-CB2, without recourse";
(iv) an original copy of any intervening assignment of Mortgage
showing a complete chain of assignments;
(v) the original or a certified copy of lender's title insurance
policy;
(vi) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any;
(vii) for each FHA Loan, the original Mortgage Insurance
Certificate; and
(viii) for each VA Loan, the original Loan Guaranty Certificate.
The Trustee agrees to execute and deliver (or cause the
Custodian to execute and deliver) to the Depositor on or prior to the Closing
Date an acknowledgment of receipt of the
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original Mortgage Note (with any exceptions noted), substantially in the form
attached as Exhibit F-3 hereto.
The Servicer shall within 90 days following the Closing
Date, with respect to each Mortgage Loan that is subject to the provisions of
the Homeownership and Equity Protection Act of 1994 place a legend on the
original Mortgage Note indicating (1) the satisfaction of the provisions of
such Act and the regulations issued thereunder, and (2) that the Mortgage Loan
is subject to special truth in lending rules.
The Servicer shall promptly (and in no event later than
thirty days following the Closing Date) submit or cause to be submitted for
recording, at the Servicer's expense and at no expense to the Trust Fund or
the Trustee, in the appropriate public office for real property records, each
Assignment referred to in Sections 2.01(iii) and (iv) above. In the event that
any such Assignment is lost or returned unrecorded because of a defect
therein, the Seller shall promptly prepare or cause to be prepared a
substitute Assignment or cure or cause to be cured such defect, as the case
may be, and thereafter cause each such Assignment to be duly recorded.
If any of the documents referred to in Section 2.01(ii),
(iii) or (iv) above has as of the Closing Date been submitted for recording
but either (x) has not been returned from the applicable public recording
office or (y) has been lost or such public recording office has retained the
original of such document, the obligations of the Seller to deliver such
documents shall be deemed to be satisfied upon (1) delivery to the Trustee or
the Custodian no later than the Closing Date, of a copy of each such document
certified by the Seller in the case of (x) above or the applicable public
recording office in the case of (y) above to be a true and complete copy of
the original that was submitted for recording and (2) if such copy is
certified by the Seller, delivery to the Trustee or the Custodian, promptly
upon receipt thereof of either the original or a copy of such document
certified by the applicable public recording office to be a true and complete
copy of the original. The Seller shall deliver or cause to be delivered to the
Trustee or the Custodian promptly upon receipt thereof any other documents
constituting a part of a Mortgage File received with respect to any Mortgage
Loan, including, but not limited to, any original documents evidencing an
assumption or modification of any Mortgage Loan.
Upon discovery or receipt of notice of any materially
defective document in, or that a document is missing from, a Mortgage File,
the Seller shall have 120 days to cure such defect or 150 days following the
Closing Date, in the case of missing Mortgages or Assignments or deliver such
missing document to the Trustee or the Custodian. If the Seller does not cure
such defect or deliver such missing document within such time period, the
Seller shall either repurchase or substitute for such Mortgage Loan in
accordance with Section 2.03.
In the event that any Mortgage Note is endorsed in blank as
of the Closing Date, promptly following the Closing Date the Seller shall
cause to be completed such endorsements "Pay to the order of U.S. Bank
National Association, as Trustee under the Pooling and Servicing Agreement,
dated as of April 1, 2002, among Credit-Based Asset Servicing and
Securitization LLC, Financial Asset Securities Corp., Xxxxxx Loan Servicing LP
and U.S. Bank National Association, C-BASS Mortgage Loan Asset-Backed
Certificates, Series 2002-CB2, without recourse."
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The Depositor herewith delivers to the Trustee executed
copies of the Mortgage Loan Purchase Agreement.
Section 2.02 Acceptance by Trustee.
The Trustee acknowledges the receipt of, subject to the
provisions of Section 2.01 and subject to the review described below and any
exceptions noted on the exception report described in the next paragraph
below, the documents referred to in Section 2.01 above and all other assets
included in the definition of "Trust Fund" and declares that it holds and will
hold such documents and the other documents delivered to it constituting a
Mortgage File, and that it holds or will hold all such assets and such other
assets included in the definition of "Trust Fund" in trust for the exclusive
use and benefit of all present and future Certificateholders.
The Trustee agrees, for the benefit of the
Certificateholders, to review (or cause the Custodian to review) each Mortgage
File within 60 days after the Closing Date (or, with respect to any document
delivered after the Startup Day, within 60 days of receipt and with respect to
any Qualified Substitute Mortgage, within 60 days after the assignment
thereof) and to certify in substantially the form attached hereto as Exhibit
F-1 that, as to each Mortgage Loan listed in the Mortgage Loan Schedule (other
than any Mortgage Loan paid in full or any Mortgage Loan specifically
identified in the exception report annexed thereto as not being covered by
such certification), (i) all documents required to be delivered to it pursuant
to Section 2.01 of this Agreement are in its possession, (ii) such documents
have been reviewed by it and have not been mutilated, damaged or torn and
relate to such Mortgage Loan and (iii) based on its examination and only as to
the foregoing, the information set forth in the Mortgage Loan Schedule that
corresponds to items (1), (2), (3), (5), (13) and (26) (in the case of (26),
only as to whether there is a prepayment penalty) of the Mortgage Loan
Schedule accurately reflects information set forth in the Mortgage File. It is
herein acknowledged that, in conducting such review, the Trustee (or the
Custodian, as applicable) is under no duty or obligation to inspect, review or
examine any such documents, instruments, certificates or other papers to
determine that they are genuine, enforceable, or appropriate for the
represented purpose or that they have actually been recorded or that they are
other than what they purport to be on their face.
Prior to the first anniversary date of this Agreement the
Trustee shall deliver (or cause the Custodian to deliver) to the Depositor and
the Servicer a final certification in the form annexed hereto as Exhibit F-2
evidencing the completeness of the Mortgage Files, with any applicable
exceptions noted thereon.
If in the process of reviewing the Mortgage Files and making
or preparing, as the case may be, the certifications referred to above, the
Trustee (or the Custodian, as applicable) finds any document or documents
constituting a part of a Mortgage File to be missing or defective in any
material respect, at the conclusion of its review the Trustee shall so notify
the Seller, the Depositor and the Servicer. In addition, upon the discovery by
the Seller, Depositor, or the Servicer (or upon receipt by the Trustee of
written notification of such breach) of a breach of any of the representations
and warranties made by the Seller in the related Mortgage Loan Purchase
Agreement in respect of any Mortgage Loan which materially adversely affects
such Mortgage Loan or the interests of the related Certificateholders in such
Mortgage Loan, the party discovering such breach shall give prompt written
notice to the other parties.
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The Depositor and the Trustee intend that the assignment and
transfer herein contemplated constitute a sale of the Mortgage Loans and the
Related Documents, conveying good title thereto free and clear of any liens
and encumbrances, from the Depositor to the Trustee and that such property not
be part of the Depositor's estate or property of the Depositor in the event of
any insolvency by the Depositor. In the event that such conveyance is deemed
to be, or to be made as security for, a loan, the parties intend that the
Depositor shall be deemed to have granted and does hereby grant to the
Trustee, on behalf of the Trust, a first priority perfected security interest
in all of the Depositor's right, title and interest in and to the Mortgage
Loans and the Related Documents, and that this Agreement shall constitute a
security agreement under applicable law.
Section 2.03 Repurchase or Substitution of Mortgage Loans by
the Seller.
(a) Upon discovery or receipt of written notice of any
materially defective document in, or that a document is missing from, a
Mortgage File or of the breach by the Seller of any representation, warranty
or covenant under the Mortgage Loan Purchase Agreement or in Section 2.04 in
respect of any Mortgage Loan which materially adversely affects the value of
such Mortgage Loan or the interest therein of the Certificateholders, the
Trustee (or the Custodian, as applicable) shall promptly notify the Seller and
the Servicer of such defect, missing document or breach and request that the
Seller deliver such missing document or cure such defect or breach within 120
days or 150 days following the Closing Date, in the case of missing Mortgages
or Assignments from the date the Seller was notified of such missing document,
defect or breach, and if the Seller does not deliver such missing document or
cure such defect or breach in all material respects during such period, the
Trustee, shall enforce the Seller's obligation under the Mortgage Loan
Purchase Agreement and cause the Seller to repurchase such Mortgage Loan from
the Trust Fund at the Purchase Price on or prior to the Determination Date
following the expiration of such 120 day period (subject to Section 2.03(e));
provided that, in connection with any such breach that could not reasonably
have been cured within such 120 day or 150 day period, if the Seller shall
have commenced to cure such breach within such 120 day or 150 day period, the
Seller shall be permitted to proceed thereafter diligently and expeditiously
to cure the same within the additional period provided under the Mortgage Loan
Purchase Agreement. The Purchase Price for the repurchased Mortgage Loan shall
be deposited in the Collection Account, and the Trustee, upon receipt of
written certification from the Servicer of such deposit, shall release to the
Seller the related Mortgage File and shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, as the
Seller shall furnish to it and as shall be necessary to vest in the Seller any
Mortgage Loan released pursuant hereto and the Trustee shall have no further
responsibility with regard to such Mortgage File. In lieu of repurchasing any
such Mortgage Loan as provided above, the Seller may cause such Mortgage Loan
to be removed from the Trust Fund (in which case it shall become a Defective
Mortgage Loan) and substitute one or more Eligible Substitute Mortgage Loans
in the manner and subject to the limitations set forth in Section 2.03(d). It
is understood and agreed that the obligation of the Seller to cure or to
repurchase (or to substitute for) any Mortgage Loan as to which a document is
missing, a material defect in a constituent document exists or as to which
such a breach has occurred and is continuing shall constitute the sole remedy
against the Seller respecting such omission, defect or breach available to the
Trustee, on behalf of the Certificateholders.
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(b) A Mortgage Loan that has an Arrearage cannot be
substituted for a Mortgage Loan that does not have an Arrearage.
(c) Within 90 days of the earlier of discovery by the
Servicer or receipt of notice by the Servicer of the breach of any
representation, warranty or covenant of the Servicer set forth in Section 2.05
which materially and adversely affects the interests of the Certificateholders
in any Mortgage Loan, the Servicer shall cure such breach in all material
respects.
(d) Any substitution of Eligible Substitute Mortgage Loans
for Defective Mortgage Loans made pursuant to Section 2.03(a) must be effected
prior to the last Business Day that is within two years after the Closing
Date. As to any Defective Mortgage Loan for which the Seller substitutes a
Eligible Substitute Mortgage Loan or Loans, such substitution shall be
effected by the Seller delivering to the Trustee, for such Eligible Substitute
Mortgage Loan or Loans, the Mortgage Note, the Mortgage, the Assignment to the
Trustee, and such other documents and agreements, with all necessary
endorsements thereon, as are required by Section 2.01, together with an
Officers' Certificate providing that each such Eligible Substitute Mortgage
Loan satisfies the definition thereof and specifying the Substitution
Adjustment Amount (as described below), if any, in connection with such
substitution. The Trustee shall acknowledge receipt for such Eligible
Substitute Mortgage Loan or Loans and, within ten Business Days thereafter,
shall review such documents as specified in Section 2.02 and deliver (or cause
the Custodian to deliver) to the Servicer, with respect to such Eligible
Substitute Mortgage Loan or Loans, a certification substantially in the form
attached hereto as Exhibit F-1, with any applicable exceptions noted thereon.
Within one year of the date of substitution, the Trustee shall deliver (or
cause the Custodian to deliver) to the Servicer a certification substantially
in the form of Exhibit F-2 hereto with respect to such Eligible Substitute
Mortgage Loan or Loans, with any applicable exceptions noted thereon. Monthly
Payments due with respect to Eligible Substitute Mortgage Loans in the month
of substitution are not part of the Trust Fund and will be retained by the
Seller. For the month of substitution, distributions to Certificateholders
will reflect the collections and recoveries in respect of such Defective
Mortgage Loan in the Collection Period preceding the month of substitution and
the Depositor or the Seller, as the case may be, shall thereafter be entitled
to retain all amounts subsequently received in respect of such Defective
Mortgage Loan. The Seller shall give or cause to be given written notice to
the Certificateholders that such substitution has taken place, shall amend the
Mortgage Loan Schedule to reflect the removal of such Defective Mortgage Loan
from the terms of this Agreement and the substitution of the Eligible
Substitute Mortgage Loan or Loans and shall deliver a copy of such amended
Mortgage Loan Schedule to the Trustee. Upon such substitution, such Eligible
Substitute Mortgage Loan or Loans shall constitute part of the Mortgage Pool
and shall be subject in all respects to the terms of this Agreement and, in
the case of a substitution effected by the Seller, the Mortgage Loan Purchase
Agreement, including, in the case of a substitution effected by the Seller all
applicable representations and warranties thereof included in the Mortgage
Loan Purchase Agreement and all applicable representations and warranties
thereof set forth in Section 2.04, in each case as of the date of
substitution.
For any month in which the Seller substitutes one or more
Eligible Substitute Mortgage Loans for one or more Defective Mortgage Loans,
the Servicer will determine the amount (the "Substitution Adjustment Amount"),
if any, by which the aggregate Purchase Price of all such Defective Mortgage
Loans exceeds the aggregate, as to each such Eligible Substitute
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Mortgage Loan, of the principal balance thereof as of the date of
substitution, together with one month's interest on such principal balance at
the applicable Net Mortgage Interest Rate. On the date of such substitution,
the Seller will deliver or cause to be delivered to the Servicer for deposit
in the Collection Account an amount equal to the Substitution Adjustment
Amount, if any, and the Trustee, upon receipt of the related Eligible
Substitute Mortgage Loan or Loans and certification by the Servicer of such
deposit, shall release to the Seller the related Mortgage File or Files and
shall execute and deliver such instruments of transfer or assignment, in each
case without recourse, as the Seller shall deliver to it and as shall be
necessary to vest therein any Defective Mortgage Loan released pursuant
hereto.
In addition, the Seller shall obtain at its own expense and
deliver to the Trustee an Opinion of Counsel to the effect that such
substitution will not cause (a) any federal tax to be imposed on the Trust
Fund, including without limitation, any federal tax imposed on "prohibited
transactions" under Section 860F(a)(l) of the Code or on "contributions after
the startup date" under Section 860G(d)(l) of the Code, or (b) any REMIC to
fail to qualify as a REMIC at any time that any Certificate is outstanding. If
such Opinion of Counsel can not be delivered, then such substitution may only
be effected at such time as the required Opinion of Counsel can be given.
(e) Upon discovery by the Seller, the Servicer or the
Trustee that any Mortgage Loan does not constitute a "qualified mortgage"
within the meaning of Section 860G(a)(3) of the Code, the party discovering
such fact shall within two Business Days give written notice thereof to the
other parties. In connection therewith, the Seller shall repurchase or,
subject to the limitations set forth in Section 2.03(d), substitute one or
more Eligible Substitute Mortgage Loans for the affected Mortgage Loan within
90 days of the earlier of discovery or receipt of such notice with respect to
such affected Mortgage Loan. In addition, upon discovery that a Mortgage Loan
is defective in a manner that would cause it to be a "defective obligation"
within the meaning of Treasury regulations relating to REMICs, the Seller
shall cure the defect or make the required purchase or substitution no later
than 90 days after the earlier of the discovery of the defect and receipt of
notification of the defect. Any such repurchase or substitution shall be made
in the same manner as set forth in Section 2.03(a), if made by the Seller. 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.
Notwithstanding anything to the contrary contained herein,
the parties hereto acknowledge that the functions of the Trustee, with respect
to the custody, acceptance, inspection and release of the Mortgage Files
pursuant to Sections 2.01, 2.02 and 2.03 and preparation and delivery of the
certifications in the form of Exhibit F-1 and Exhibit F-2 shall be performed
by the Custodian pursuant to the terms and conditions of the Custodial
Agreement. The fees and expenses of the Custodian shall be paid by the
Servicer.
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Section 2.04 Representations and Warranties of the Seller
with Respect to the Mortgage Loans.
The Seller hereby represents and warrants to the Trustee for
the benefit of the Certificateholders that as of the Closing Date or as of
such other date specifically provided herein:
(a) The representations and warranties made by the Seller
pursuant to Section 3.01 of the Mortgage Loan Purchase Agreement are hereby
being made to the Trustee and are true and correct as of the Closing Date.
(b) Any written agreement between the Mortgagor in respect
of a Mortgage Loan and the Servicer modifying such Mortgagor's obligation to
make payments under the Mortgage Loan (such modified Mortgage Loan, a
"Modified Mortgage Loan") involved the application of the Seller's
underwriting standards or some assessment of the Mortgagor's ability to repay
the Modified Mortgage Loan.
With respect to the representations and warranties set forth
in this Section 2.04 that are made to the best of the Seller's knowledge or as
to which the Seller has no knowledge, if it is discovered by the Depositor,
the Seller, the Servicer or the Trustee that the substance of such
representation and warranty is inaccurate and such inaccuracy materially and
adversely affects the value of the related Mortgage Loan or the interest
therein of the Certificateholders then, notwithstanding the Seller's lack of
knowledge with respect to the substance of such representation and warranty
being inaccurate at the time the representation or warranty was made, such
inaccuracy shall be deemed a breach of the applicable representation or
warranty.
Upon discovery by the Depositor, the Seller, the Servicer or
the Trustee of a breach of any of the representations and warranties contained
in this Section that materially and adversely affects the value of any
Mortgage Loan or the interest therein of the Certificateholders, the party
discovering the breach shall give prompt written notice to the others and in
no event later than two Business Days from the date of such discovery. Within
ninety days of its discovery or its receipt of notice of any such missing or
materially defective documentation or any such breach of a representation or
warranty, the Seller shall promptly deliver such missing document or cure such
defect or breach in all material respects, or in the event such defect or
breach cannot be cured, the Seller shall repurchase the affected Mortgage Loan
or cause the removal of such Mortgage Loan from the Trust Fund and substitute
for it one or more Eligible Substitute Mortgage Loans, in either case, in
accordance with Section 2.03.
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 and shall inure to the benefit of the
Certificateholders notwithstanding any restrictive or qualified endorsement or
assignment. It is understood and agreed that the obligations of the Seller set
forth in this Section 2.04 to cure, substitute for or repurchase a Mortgage
Loan pursuant to Section 2.03(a) and the Mortgage Loan Purchase Agreement
constitute the sole remedies available to the Certificateholders or to the
Trustee on their behalf respecting a breach of the representations and
warranties contained in this Section 2.04.
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Section 2.05 Representations, Warranties and Covenants of
the Servicer.
The Servicer hereby represents, warrants and covenants to
the Trustee, for the benefit of each of the Trustee and the Certificateholders
and to the Depositor that as of the Closing Date or as of such date
specifically provided herein:
(i) The Servicer is duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its formation and
has all licenses necessary to carry on its business as now being
conducted, except for such licenses, certificates and permits the
absence of which, individually or in the aggregate, would not have a
material adverse effect on the ability of the Servicer to conduct its
business as it is presently conducted, and is licensed, qualified and
in good standing in the states where the Mortgaged Property is
located if the laws of such state require licensing or qualification
in order to conduct business of the type conducted by the Servicer or
to ensure the enforceability or validity of each Mortgage Loan; the
Servicer has the power and authority to execute and deliver this
Agreement and to perform in accordance herewith; the execution,
delivery and performance of this Agreement (including all instruments
of transfer to be delivered pursuant to this Agreement) by the
Servicer and the consummation of the transactions contemplated hereby
have been duly and validly authorized; this Agreement evidences the
valid, binding and enforceable obligation of the Servicer, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights
generally; and all requisite corporate action has been taken by the
Servicer to make this Agreement valid and binding upon the Servicer
in accordance with its terms;
(ii) The consummation of the transactions contemplated by
this Agreement are in the ordinary course of business of the Servicer
and will not result in the breach of any term or provision of the
certificate of formation or the partnership agreement of the Servicer
or result in the breach of any term or provision of, or conflict with
or constitute a default under or result in the acceleration of any
obligation under, any agreement, indenture or loan or credit
agreement or other instrument to which the Servicer or its property
is subject, or result in the violation of any law, rule, regulation,
order, judgment or decree to which the Servicer or its property is
subject;
(iii) The Servicer is an approved seller/servicer of
conventional mortgage loans for Xxxxxx Xxx, and is an FHA Approved
Mortgagee in good standing to service mortgages, is a VA Approved
Lender and has not been suspended as a mortgagee or servicer by the
FHA or VA and has the facilities, procedures and experienced
personnel necessary for the sound servicing of mortgage loans of the
same type as the Mortgage Loans. The Servicer is, and shall remain
for as long as it is servicing the Mortgage Loans hereunder, in good
standing as a FHA Approved Mortgagee and a VA Approved Lender and to
service mortgage loans for HUD, Xxxxxx Mae or Xxxxxxx Mac, and no
event has occurred, including but not limited to a change in
insurance coverage, which would make the Servicer unable to comply
with HUD, Xxxxxx Mae, Xxxxxxx Mac, FHA or VA eligibility requirements
or which would require notification to any of HUD, Xxxxxx Mae,
Xxxxxxx Mac, FHA or VA;
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(iv) This Agreement, and all documents and instruments
contemplated hereby which are executed and delivered by the Servicer,
constitute and will constitute valid, legal and binding obligations
of the Servicer, enforceable in accordance with their respective
terms, except as the enforcement thereof may be limited by applicable
bankruptcy laws and general principles of equity;
(v) The Servicer does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every
covenant contained in this Agreement;
(vi) There is no action, suit, proceeding or investigation
pending or, to its knowledge, threatened against the Servicer that,
either individually or in the aggregate, may result in any material
adverse change in the business, operations, financial condition,
properties or assets of the Servicer, or in any material impairment
of the right or ability of the Servicer to carry on its business
substantially as now conducted, or in any material liability on the
part of the Servicer, or that would draw into question the validity
or enforceability of this Agreement or of any action taken or to be
taken in connection with the obligations of the Servicer contemplated
herein, or that would be likely to impair materially the ability of
the Servicer to perform under the terms of this Agreement;
(vii) No consent, approval or order of any court or
governmental agency or body is required for the execution, delivery
and performance by the Servicer of or compliance by the Servicer with
this Agreement or the consummation of the transactions contemplated
by this Agreement, except for such consents, approvals,
authorizations and orders, if any, that have been obtained; and
(viii) Neither this Agreement nor any information,
certificate of an officer, statement furnished in writing or report
delivered to the Trustee by the Servicer in connection with the
transactions contemplated hereby contains or will contain any untrue
statement of a material fact or omits or will omit to state a
material fact necessary in order to make the statements contained
therein, in light of the circumstances under which they were made,
not misleading.
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.05 shall survive delivery
of the Mortgage Files to the Trustee and shall inure to the benefit of the
Trustee, the Depositor and the Certificateholders. Upon discovery by any of
the Depositor, the Servicer, the Seller or the Trustee of a breach of any of
the foregoing representations, warranties and covenants which materially and
adversely affects the value of any Mortgage Loan or the interests therein of
the Certificateholders, the party discovering such breach shall give prompt
written notice (but in no event later than two Business Days following such
discovery) to the other parties hereto.
Section 2.06 Representations and Warranties of the
Depositor.
The Depositor represents and warrants to the Trust and the
Trustee on behalf of the Certificateholders as follows:
(i) This agreement constitutes a legal, valid and binding
obligation of the Depositor, enforceable against the Depositor in
accordance with its terms, except as
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enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect affecting the enforcement of creditors' rights in general and
except as such enforceability may be limited by general principles of
equity (whether considered in a proceeding at law or in equity);
(ii) Immediately prior to the sale and assignment by the
Depositor to the Trustee on behalf of the Trust of each Mortgage
Loan, the Depositor had good and marketable title to each Mortgage
Loan (insofar as such title was conveyed to it by the Seller) subject
to no prior lien, claim, participation interest, mortgage, security
interest, pledge, charge or other encumbrance or other interest of
any nature;
(iii) As of the Closing Date, the Depositor has transferred
all right, title interest in the Mortgage Loans to the Trustee on
behalf of the Trust;
(iv) The Depositor has not transferred the Mortgage Loans
to the Trustee on behalf of the Trust with any intent to hinder,
delay or defraud any of its creditors;
(v) The Depositor has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Delaware, with full corporate power and authority to own its
assets and conduct its business as presently being conducted;
(vi) The Depositor is not in violation of its certificate of
incorporation or by-laws or in default in the performance or
observance of any material obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the Depositor is
a party or by which it or its properties may be bound, which default
might result in any material adverse changes in the financial
condition, earnings, affairs or business of the Depositor or which
might materially and adversely affect the properties or assets, taken
as a whole, of the Depositor;
(vii) The execution, delivery and performance of this
Agreement by the Depositor, and the consummation of the transactions
contemplated thereby, do not and will not result in a material breach
or violation of any of the terms or provisions of, or, to the
knowledge of the Depositor, constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Depositor is a party or by which the
Depositor is bound or to which any of the property or assets of the
Depositor is subject, nor will such actions result in any violation
of the provisions of the articles of incorporation or by-laws of the
Depositor or, to the best of the Depositor's knowledge without
independent investigation, any statute or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Depositor or any of its properties or assets
(except for such conflicts, breaches, violations and defaults as
would not have a material adverse effect on the ability of the
Depositor to perform its obligations under this Agreement);
(viii) To the best of the Depositor's knowledge without any
independent investigation, no consent, approval, authorization,
order, registration or qualification of or
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with any court or governmental agency or body of the United States or
any other jurisdiction is required for the issuance of the
Certificates, or the consummation by the Depositor of the other
transactions contemplated by this Agreement, except such consents,
approvals, authorizations, registrations or qualifications as (a) may
be required under State securities or Blue Sky laws, (b) have been
previously obtained or (c) the failure of which to obtain would not
have a material adverse effect on the performance by the Depositor of
its obligations under, or the validity or enforceability of, this
Agreement; and
(ix) There are no actions, proceedings or investigations
pending before or, to the Depositor's knowledge, threatened by any
court, administrative agency or other tribunal to which the Depositor
is a party or of which any of its properties is the subject: (a)
which if determined adversely to the Depositor would have a material
adverse effect on the business, results of operations or financial
condition of the Depositor; (b) asserting the invalidity of this
Agreement or the Certificates; (c) seeking to prevent the issuance of
the Certificates or the consummation by the Depositor of any of the
transactions contemplated by this Agreement, as the case may be; (d)
which might materially and adversely affect the performance by the
Depositor of its obligations under, or the validity or enforceability
of, this Agreement.
Section 2.07 Issuance of Certificates.
The Trustee acknowledges the assignment to it of the
Mortgage Loans and the delivery to it (or the Custodian, as bailee and
Custodian of the Trustee) of the Mortgage Files, subject to the provisions of
Sections 2.01 and 2.02, and the Trustee acknowledges the assignment to it of
all other assets included in the Trust Fund, receipt of which is hereby
acknowledged. Concurrently with such assignment and delivery and in exchange
therefor, the Trustee, pursuant to the Written Order to Authenticate executed
by an officer of the Depositor, has executed, and the Certificate Registrar
has authenticated and delivered to or upon the order of the Depositor, the
Certificates (other than the Class X and Residual Certificates) in minimum
dollar denominations or $25,000 and integral dollar multiples of $1 in excess.
The Class X Certificates and the Residual Certificates are issuable only in
minimum Percentage Interests of 10%. The interests evidenced by the
Certificates constitute the entire beneficial ownership interest in the Trust
Fund.
Section 2.08 Representations and Warranties of the Seller.
The Seller hereby represents and warrants to the Trust and
the Trustee on behalf of the Certificateholders that as of the Closing Date or
as of such date specifically provided herein:
(i) The Seller is duly organized, validly existing and in
good standing as a limited liability company under the laws of the
State of Delaware and has the power and authority to own its assets
and to transact the business in which it is currently engaged. The
Seller is duly qualified to do business and is in good standing in
each jurisdiction in which the character of the business transacted
by it or properties owned or leased by it requires such qualification
and in which the failure to so qualify would have a material
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adverse effect on (a) its business, properties, assets or condition
(financial or other), (b) the performance of its obligations under
this Agreement, (c) the value or marketability of the Mortgage Loans,
or (d) its ability to foreclose on the related Mortgaged Properties.
(ii) The Seller has the power and authority to make,
execute, deliver and perform this Agreement and to consummate all of
the transactions contemplated hereunder and has taken all necessary
action to authorize the execution, delivery and performance of this
Agreement. When executed and delivered, this Agreement will
constitute the Seller's legal, valid and binding obligations
enforceable in accordance with its terms, except as enforcement of
such terms may be limited by (1) bankruptcy, insolvency,
reorganization, receivership, moratorium or similar laws affecting
the enforcement of creditors' rights generally and by the
availability of equitable remedies, (2) general equity principles
(regardless of whether such enforcement is considered in a proceeding
in equity or at law) or (3) public policy considerations underlying
the securities laws, to the extent that such policy considerations
limit the enforceability of the provisions of this Agreement which
purport to provide indemnification from securities laws liabilities.
(iii) The Seller holds all necessary licenses, certificates
and permits from all governmental authorities necessary for
conducting its business as it is presently conducted, except for such
licenses, certificates and permits the absence of which, individually
or in the aggregate, would not have a material adverse effect on the
ability of the Seller to conduct its business as it is presently
conducted. It is not required to obtain the consent of any other
party or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau
or agency in connection with the execution, delivery, performance,
validity or enforceability of this Agreement, except for such
consents, licenses, approvals or authorizations, or registrations or
declarations as shall have been obtained or filed, as the case may
be, prior to the Closing Date.
(iv) The execution, delivery and performance of this
Agreement by the Seller will not conflict with or result in a breach
of, or constitute a default under, any provision of any existing law
or regulation or any order or decree of any court applicable to the
Seller or any of its properties or any provision of its Limited
Liability Company Agreement, or constitute a material breach of, or
result in the creation or imposition of any lien, charge or
encumbrance upon any of its properties pursuant to any mortgage,
indenture, contract or other agreement to which it is a party or by
which it may be bound.
(v) No certificate of an officer, written statement or
report delivered pursuant to the terms hereof by the Seller contains
any untrue statement of a material fact or omits to state any
material fact necessary to make the certificate, statement or report
not misleading.
(vi) The transactions contemplated by this Agreement are in
the ordinary course of the Seller's business.
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(vii) The Seller is not insolvent, nor will the Seller be
made insolvent by the transfer of the Mortgage Loans to the
Depositor, nor is the Seller aware of any pending insolvency.
(viii) The Seller is not in violation of, and the execution
and delivery of this Agreement by it and its performance and
compliance with the terms of this Agreement will not constitute a
violation with respect to any order or decree of any court, or any
order or regulation of any federal, state, municipal or governmental
agency having jurisdiction, which violation would materially and
adversely affect the Seller's condition (financial or otherwise) or
operations or any of the Seller's properties, or materially and
adversely affect the performance of any of its duties hereunder.
(ix) There are no actions or proceedings against, or
investigations of, the Seller pending or, to its knowledge,
threatened, before any court, administrative agency or other tribunal
(i) that, if determined adversely, would prohibit the Seller from
entering into this Agreement, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this
Agreement or (iii) that, if determined adversely, would prohibit or
materially and adversely affect the Seller's performance of any of
its respective obligations under, or the validity or enforceability
of, this Agreement.
(x) The Seller did not transfer the Mortgage Loans to the
Depositor with any intent to hinder, delay or defraud any of its
creditors.
(xi) The Seller acquired title to the Mortgage Loans in good
faith, without notice of any adverse claims.
(xii) The transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Seller to the Depositor are
not subject to the bulk transfer laws or any similar statutory
provisions in effect in any applicable jurisdiction.
Section 2.09 Covenants of the Seller.
(a) The Seller hereby covenants that except for the transfer
to the Depositor, the Seller will not sell, pledge, assign or transfer to any
other Person, or grant, create, incur, assume or suffer to exist any lien on
any Mortgage Loan, or any interest therein; the Seller will notify the
Trustee, as assignee of the Depositor, of the existence of any lien on any
Mortgage Loan immediately upon discovery thereof, and the Seller will defend
the right, title and interest of the Trust, as assignee of the Depositor, in,
to and under the Mortgage Loans, against all claims of third parties claiming
through or under the Seller; provided, however that nothing in this Section
2.09 shall prevent or be deemed to prohibit the Seller from suffering to exist
upon any of the Mortgage Loans any liens for municipal or other local taxes
and other governmental charges if such taxes or governmental charges shall not
at the time be due and payable or if the Seller shall currently be contesting
the validity thereof in good faith by appropriate proceedings and shall have
set aside on its books adequate reserves with respect thereto.
(b) The Seller hereby covenants that neither it nor any
Affiliate of the Seller will directly solicit any Mortgagor hereunder to
refinance the related Mortgage Loan. For the purposes of the foregoing,
neither the Seller nor any Affiliate of the Seller shall be deemed to
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directly solicit any Mortgagor if the Seller responds to a request from a
Mortgagor regarding a refinancing or if the Mortgagor receives marketing
materials which are generally disseminated.
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE TRUST FUND
Section 3.01 Servicer to Act as Servicer.
The Servicer, as independent contract servicer, shall
service and administer the Mortgage Loans in accordance with this Agreement
and the normal and usual standards of practice of prudent mortgage servicers,
and shall have full power and authority, acting alone, to do or cause to be
done any and all things in connection with such servicing and administration
which the Servicer may deem necessary or desirable and consistent with the
terms of this Agreement including, in the case of FHA Loans and VA Loans,
taking all actions that a mortgagee is permitted or required to take by the
FHA or the VA, as the case may be (the "Servicing Standards").
Consistent with the terms of this Agreement, the Servicer
may waive, modify or vary any term of any Mortgage Loan or consent to the
postponement of strict compliance with any such term or in any manner grant
indulgence to any Mortgagor if in the Servicer's reasonable and prudent
determination such waiver, modification, postponement or indulgence is not
materially adverse to the Certificateholders; provided, however that the
Servicer shall not make future advances and (unless the Mortgagor is in
default with respect to the Mortgage Loan or such default is, in the judgment
of the Servicer, reasonably foreseeable) the Servicer shall not permit any
modification with respect to any Mortgage Loan that would (i) change the
Mortgage Interest Rate, defer or forgive the payment thereof of any principal
or interest payments, reduce the outstanding principal amount (except for
actual payments of principal) or extend the final maturity date with respect
to such Mortgage Loan, (ii) in the case of FHA Loans and VA Loans, affect the
FHA Insurance Contract or VA Guaranty Agreement, as the case may be, with
respect to such Mortgage Loan, (iii) affect adversely the status of any REMIC
as a REMIC or (iv) cause any REMIC to be subject to a tax on "prohibited
transactions" or "contributions" pursuant to the REMIC Provisions.
Notwithstanding the foregoing, the Servicer shall not permit any modification
with respect to any Mortgage Loan that would both (x) effect an exchange or
reissuance of such Mortgage Loan under Section 1.860G-2(b) of the Treasury
Regulations and (y) cause any REMIC constituting part of the Trust Fund to
fail to qualify as a REMIC under the Code or the imposition of any tax on
"prohibited transactions" or "contributions" after the Startup Day under the
REMIC Provisions. Without limiting the generality of the foregoing, the
Servicer shall continue, and is hereby authorized and empowered to execute and
deliver on behalf of itself, and the Trustee, all instruments of satisfaction
or cancellation, or of partial or full release, discharge and all other
comparable instruments, with respect to the Mortgage Loans and with respect to
the Mortgaged Property. The Servicer shall make all required Servicing
Advances and shall service and administer the Mortgage Loans in accordance
with Applicable Regulations, and shall provide to the Mortgagor any reports
required to be provided to them thereby. If reasonably required by the
Servicer, the Trustee shall furnish the Servicer with any
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powers of attorney and other documents necessary or appropriate to enable the
Servicer to carry out its servicing and administrative duties under this
Agreement.
In servicing and administering FHA Loans and VA Loans, the
Servicer shall comply strictly with the National Housing Act, the FHA
Regulations, the Servicemen's Readjustment Act and the VA Regulations and
administrative guidelines issued thereunder or pursuant thereto (insofar as
the same apply to any Mortgage Loan) and, to the extent permitted hereunder,
promptly discharge all of the obligations of the mortgagee thereunder and
under each Mortgage including the timely giving of notices, the essence hereof
being that the full benefits of each FHA Insurance Contract and VA Guaranty
Agreement inure to the Trustee, on behalf of the Certificateholders.
In servicing and administering the Mortgage Loans, the
Servicer shall employ procedures including collection procedures and exercise
the same care that it customarily employs and exercises in servicing and
administering mortgage loans for its own account giving due consideration to
accepted mortgage servicing practices of prudent lending institutions, the FHA
Insurance Contracts and the VA Guaranty Agreements, where applicable, and the
Certificateholders' reliance on the Servicer.
The Servicer shall give prompt notice to the Trustee of any
action, of which the Servicer has actual knowledge, to (i) assert a claim
against the Trust Fund or (ii) assert jurisdiction over the Trust Fund.
Notwithstanding anything in this Agreement to the contrary,
in the event of a Principal Prepayment in full of a Mortgage Loan, the
Servicer may not waive any prepayment penalty or portion thereof required by
the terms of the related Mortgage Note unless (i) the Servicer determines that
such waiver would maximize recovery of Liquidation Proceeds for such Mortgage
Loan, taking into account the value of such prepayment penalty, or (ii) (A)
the enforceability thereof is limited (1) by bankruptcy, insolvency,
moratorium, receivership, or other similar law relating to creditors' rights
generally or (2) due to acceleration in connection with a foreclosure or other
involuntary payment, or (B) the enforceability is otherwise limited or
prohibited by applicable law. In the event of a Principal Prepayment in full
with respect to any Mortgage Loan, the Servicer shall deliver to the Trustee
an Officer's Certificate substantially in the form of Exhibit Q no later than
the third Business Day following the immediately succeeding Determination Date
with a copy to the Class X Certificateholder. If the Servicer has waived or
does not collect all or a portion of a prepayment penalty relating to a
Principal Prepayment in full due to any action or omission of the Servicer,
other than as provided above, the Servicer shall, within 90 days of the date
on which the Principal Prepayment in full is remitted to the Trustee, deliver
to the Trustee the amount of such prepayment penalty (or such portion thereof
as had been waived for deposit) into the Distribution Account for distribution
in accordance with the terms of this Agreement.
The Trustee shall prepare and deliver to the Depositor and
the owner of the Class N and Class X Certificates, on a monthly basis, a
statement setting forth the amounts due and received with respect to
prepayment penalties.
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Section 3.02 Collection of Mortgage Loan Payments.
Continuously from the date hereof until the principal and
interest on all Mortgage Loans are paid in full, the Servicer will diligently
collect all payments due under each Mortgage Loan when the same shall become
due and payable and shall, to the extent such procedures shall be consistent
with this Agreement and the terms and provisions of any related Primary
Insurance Policy and Applicable Regulations, follow such collection procedures
as it follows with respect to mortgage loans comparable to the Mortgage Loans
and held for its own account. Further, the Servicer will take special care in
ascertaining and estimating annual ground rents, taxes, assessments, water
rates, fire and hazard insurance premiums, mortgage insurance premiums, and
all other charges that, as provided in the Mortgage, will become due and
payable to that end that the installments payable by the Mortgagors will be
sufficient to pay such charges as and when they become due and payable.
Section 3.03 Realization Upon Defaulted Mortgage Loans.
In the event that any payment due under any Conventional
Mortgage Loan is not paid when the same becomes due and payable, or in the
event the Mortgagor fails to perform any other covenant or obligation under
the Mortgage Loan and such failure continues beyond any applicable grace
period, the Servicer shall take such action as it shall deem to be in the best
interest of the Certificateholders. In the event that any payment due under
any FHA Loan becomes delinquent, the Servicer shall take all such actions as
are in the best interests of the Certificateholders and permitted under any
applicable FHA loss mitigation proceedings, including, but not limited to,
requesting the FHA to accept an assignment of such FHA Loan, and, upon the
Servicer's determination that foreclosure is in the best interest of the
Certificateholders, commencing foreclosure proceedings. With respect to each
VA Loan, the Servicer shall diligently seek to mitigate losses by utilizing
all remedies available in the VA Regulations. With respect to any defaulted
Mortgage Loan, the Servicer shall have the right to review the status of the
related forbearance plan and, subject to the second paragraph of Section 3.01,
may modify such forbearance plan; including, extending the Mortgage Loan
repayment date for a period of one year or reducing the Loan Rate up to 50
basis points.
In connection with a foreclosure or other conversion, the
Servicer shall exercise such rights and powers vested in it hereunder and use
the same degree of care and skill in its exercise as prudent mortgage
servicers would exercise or use under the circumstances in the conduct of
their own affairs and consistent with Applicable Regulations and the servicing
standards set forth in the Xxxxxx Xxx Guide, including, without limitation,
advancing funds for the payment of taxes and insurance premiums with respect
to first lien Mortgage Loans.
Notwithstanding the foregoing provisions of this Section
3.03, with respect to any Mortgage Loan as to which the Servicer has received
actual notice of, or has actual knowledge of, the presence of any toxic or
hazardous substance on the related Mortgaged Property, the Servicer shall not
either (i) obtain title to such Mortgaged Property as a result of or in lieu
of foreclosure or otherwise, or (ii) otherwise acquire possession of, or take
any other action with respect to, such Mortgaged Property if, as a result of
any such action, the Trust Fund would be considered to hold title to, to be a
mortgagee-in-possession of, or to be an owner or operator of such Mortgaged
Property within the meaning of the Comprehensive Environmental Response,
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Compensation and Liability Act of 1980, as amended from time to time, or any
comparable law, unless the Servicer has also previously determined, based on
its reasonable judgment and a prudent report prepared by a Person who
regularly conducts environmental audits using customary industry standards,
that:
A. such Mortgaged Property is in compliance with applicable
environmental laws or, if not, that it would be in the best economic interest
of the Certificateholders to take such actions as are necessary to bring the
Mortgaged Property into compliance therewith; and
B. there are no circumstances present at such Mortgaged
Property relating to the use, management or disposal of any hazardous
substances, hazardous materials, hazardous wastes, or petroleum-based
materials for which investigation, testing, monitoring, containment, clean-up
or remediation could be required under any federal, state or local law or
regulation, or that if any such materials are present for which such action
could be required, that it would be in the best economic interest of the
Certificateholders to take such actions with respect to the affected Mortgaged
Property.
The cost of the environmental audit report contemplated by
this Section 3.03 shall be advanced by the Servicer, subject to the Servicer's
right to be reimbursed therefor from the Collection Account as provided in
Section 3.05(ii).
If the Servicer determines, as described above, that it is
in the best economic interest of the Certificateholders to take such actions
as are necessary to bring any such Mortgaged Property into compliance with
applicable environmental laws, or to take such action with respect to the
containment, clean-up or remediation of hazardous substances, hazardous
materials, hazardous wastes, or petroleum-based materials affecting any such
Mortgaged Property, then the Servicer shall take such action as it deems to be
in the best economic interest of the Certificateholders. The cost of any such
compliance, containment, cleanup or remediation shall be advanced by the
Servicer, subject to the Servicer's right to be reimbursed therefor from the
Collection Account as provided in Section 3.05(ii).
Section 3.04 Collection Account and Distribution Account.
(a) The Servicer shall segregate and hold all funds
collected and received pursuant to each Mortgage Loan separate and apart from
any of its own funds and general assets and shall establish and maintain one
or more Collection Accounts. Each Collection Account shall be an Eligible
Account.
The Servicer shall deposit in the Collection Account on a
daily basis within two Business Days of receipt, and retain therein, the
following payments and collections received or made by it after the Cut-off
Date with respect to the Mortgage Loans:
(i) all payments on account of principal, including
Principal Prepayments, on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage
Loans adjusted to the Mortgage Interest Rate less the Servicing Fee
Rate and, with respect to Covered Mortgage Loans, the Mortgage
Insurance Premium;
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(iii) all proceeds from a Cash Liquidation;
(iv) all Insurance Proceeds including amounts required to be
deposited pursuant to Section 3.10, other than proceeds to be held in
the Escrow Account and applied to the restoration or repair of the
Mortgaged Property or released to the Mortgagor in accordance with
the Servicer's normal servicing procedures, the loan documents or
applicable law;
(v) all Condemnation Proceeds affecting any Mortgaged
Property which are not released to the Mortgagor in accordance with
the Servicer's normal servicing procedures, the loan documents or
applicable law; and
(vi) any amounts required to be deposited by the Servicer in
connection with any REO Property pursuant to Section 3.13.
Any interest paid on funds deposited in the Collection
Account, subject to Section 3.25, shall accrue to the benefit of the Servicer
and the Servicer shall be entitled to retain and withdraw such interest from
the Collection Account pursuant to Section 3.05(v). The foregoing requirements
for deposit from the Collection 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, prepayment charges that are
not prepayment penalties, and assumption fees need not be deposited by the
Servicer in the Collection Account.
(b) On behalf of the Trust Fund, the Trustee shall establish
and maintain one or more accounts (such account or accounts, the "Distribution
Account"), held in trust for the benefit of the Certificateholders. On behalf
of the Trust Fund, the Servicer shall deliver to the Trustee in immediately
available funds for deposit in the Distribution Account by the close of
business New York time on the Servicer Remittance Date, that portion of the
Available Funds then on deposit in the Collection Account.
(c) Funds in the Collection Account and the Distribution
Account may be invested in Permitted Investments in accordance with the
provisions set forth in Section 3.25. The Servicer shall give notice to the
Trustee of the location of the Collection Account maintained by it when
established and prior to any change thereof. The Trustee shall give notice to
the Servicer and the Depositor of the location of the Distribution Account
when established and prior to any change thereof.
(d) In the event the Servicer shall deliver to the Trustee
for deposit in the Distribution Account any amount not required to be
deposited therein, it may at any time request that the Trustee withdraw such
amount from the Distribution Account and remit to the Servicer any such
amount, any provision herein to the contrary notwithstanding. In addition, the
Servicer shall deliver to the Trustee from time to time for deposit, and the
Trustee shall so deposit, in the Distribution Account:
(i) any Advances, as required pursuant to Section 4.07;
(ii) any Stayed Funds, as soon as permitted by the federal
bankruptcy court having jurisdiction in such matters;
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(iii) any prepayment penalties and premiums or amounts in
connection with the waiver of such prepayment penalties or premiums,
in each case required to be deposited pursuant to Section 3.01;
(iv) any amounts required to be deposited in the
Distribution Account pursuant to Sections 3.04, 3.15, 3.16,
3.23 or 4.07; and
(v) any amounts required to be deposited by the Servicer
pursuant to Section 3.11 in connection with the deductible clause in
any blanket hazard insurance policy, such deposit being made from the
Servicer's own funds, without reimbursement therefor.
(e) Promptly upon receipt of any Stayed Funds, whether from
the Servicer, a trustee in bankruptcy, or federal bankruptcy court or other
source, the Trustee shall notify the Servicer of such receipt and deposit such
funds in the Distribution Account, subject to withdrawal thereof as permitted
hereunder. In addition, the Trustee shall deposit in the Distribution Account
any amounts required to be deposited pursuant to Section 3.25(b) in connection
with losses realized on Permitted Investments with respect to funds held in
the Distribution Account.
Section 3.05 Permitted Withdrawals From the Collection
Account.
The Servicer may, from time to time, withdraw from the
Collection Account for the following purposes:
(i) to remit to the Trustee for deposit in the Distribution
Account the amounts required to be so remitted pursuant to Sections
3.04(b) and 3.04(d);
(ii) to reimburse itself for Advances and Servicing
Advances; the Servicer's right to reimburse itself pursuant to this
subclause (ii) being limited to amounts received on the related
Mortgage Loan which represent payments of (a) principal and/or
interest respecting which any such Advance was made or (b)
Condemnation Proceeds, Insurance Proceeds or Liquidation Proceeds
respecting which any such Servicing Advance was made;
(iii) to reimburse itself for unreimbursed Servicing
Advances, any unpaid Servicing Fees and for unreimbursed Advances to
the extent that such amounts are deemed to be Nonrecoverable
Advances, and to reimburse itself for such amounts to the extent that
such amounts are nonrecoverable from the disposition of REO Property
pursuant to Section 3.03 or Section 3.13 hereof;
(iv) to reimburse itself for any amounts paid pursuant to
Section 3.03 (and not otherwise previously reimbursed);
(v) to pay to itself as servicing compensation (a) any
interest earned on funds in the Collection Account (all such interest
to be withdrawn monthly not later than each Servicer Remittance Date)
and (b) the Servicing Fee from that portion of any payment or
recovery as to interest to a particular Mortgage Loan to the extent
not retained pursuant to Section 3.04(ii);
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(vi) to pay or reimburse itself for any amounts payable or
paid pursuant to Section 6.03 (and not otherwise previously
reimbursed); and
(vii) to clear and terminate the Collection Account upon the
termination of this Agreement.
The foregoing requirements for withdrawal from the
Collection Account shall be exclusive. In the event the Servicer shall deposit
in the Collection Account any amount not required to be deposited therein, it
may at any time withdraw such amount from the Collection Account, any
provision herein to the contrary notwithstanding.
Section 3.06 Establishment of Escrow Accounts; Deposits in
Escrow Accounts.
The Servicer shall segregate and hold all funds collected
and received pursuant to each Mortgage Loan which constitute Escrow Payments
separate and apart from any of its own funds and general assets and shall
establish and maintain one or more Escrow Accounts, in the form of time
deposit or demand accounts. A copy of such letter agreement shall be furnished
to the Trustee upon request. The Escrow Account shall be an Eligible Account.
The Servicer shall deposit in the Escrow Account or Accounts
on a daily basis within two Business Days of receipt, and retain therein, (i)
all Escrow Payments collected on account of the Mortgage Loans, for the
purpose of effecting timely payment of any such items as required under the
terms of this Agreement, and (ii) all Insurance Proceeds which are to be
applied to the restoration or repair of any Mortgaged Property. The Servicer
shall make withdrawals therefrom only to effect such payments as are required
under this Agreement, and for such other purposes as shall be set forth in, or
in accordance with, Section 3.07. The Servicer shall be entitled to retain any
interest paid on funds deposited in the Escrow Account by the depository
institution other than interest on escrowed funds required by law to be paid
to the Mortgagor and, to the extent required by the related Mortgage Loan or
Applicable Regulations, the Servicer shall pay interest on escrowed funds to
the Mortgagor notwithstanding that the Escrow Account is non-interest bearing
or that interest paid thereon is insufficient for such purposes.
Section 3.07 Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account may be made by the
Servicer (i) to effect timely payments of ground rents, taxes, assessments,
water rates, fire, flood and hazard insurance premiums, Primary Insurance
Policy premiums, if applicable, and comparable items, (ii) to reimburse the
Servicer for any Servicing Advance made by the Servicer with respect to a
related Mortgage Loan but only from amounts received on the related Mortgage
Loan which represent late payments or Late Collections of Escrow Payments
thereunder, (iii) to refund to the Mortgagor any funds as may be determined to
be overages, (iv) for transfer to the Collection Account in accordance with
the terms of this Agreement, (v) for application to restoration or repair of
the Mortgaged Property, (vi) to pay to the Servicer, or to the Mortgagor to
the extent required by the related Mortgage Loan or Applicable Regulations,
any interest paid on the funds deposited in the Escrow Account, (vii) to clear
and terminate the Escrow Account on the termination of this Agreement, (viii)
to transfer to the Collection Account any insurance
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proceeds, or (ix) in the case of FHA Loans and VA Loans, for transfer to the
Collection Account, fire and hazard insurance proceeds and Escrow Payments
with respect to any Mortgage Loan where the FHA or VA, as the case may be, has
directed application of such funds as a credit against the proceeds of the FHA
Insurance Contract or the VA Guaranty Agreement. As part of its servicing
duties, the Servicer shall pay to the Mortgagor interest on funds in the
Escrow Account, to the extent required by the related Mortgage Loan or
Applicable Regulations, and to the extent that interest earned on funds in the
Escrow Account is insufficient, shall pay such interest from its own funds,
without any reimbursement therefor.
In the event the Servicer shall deposit in the Escrow
Account any amount not required to be deposited therein, it may at any time
withdraw such amount from the Escrow Account, any provision herein to the
contrary notwithstanding.
Section 3.08 Payment of Taxes, Insurance and Other Charges;
Collections Thereunder.
With respect to each first lien Mortgage Loan, the Servicer
shall maintain accurate records reflecting the status of ground rents, taxes,
assessments, water rates and other charges which are or may become a lien upon
the Mortgaged Property and the status of Primary Insurance Policy premiums and
fire, flood and hazard insurance coverage and shall obtain, from time to time,
all bills for the payment of such charges (including renewal premiums) and
shall effect payment thereof prior to the applicable penalty or termination
date and at a time appropriate for securing maximum discounts allowable,
employing for such purpose deposits of the Mortgagor in the Escrow Account
which shall have been estimated and accumulated by the Servicer in amounts
sufficient for such purposes, as allowed under the terms of the Mortgage or
Applicable Regulations. To the extent that the Mortgage does not provide for
Escrow Payments, the Servicer shall determine that any such payments are made
by the Mortgagor at the time they first become due. The Servicer assumes full
responsibility for the timely payment of all such bills and shall effect
timely payments of all such bills irrespective of the Mortgagor's faithful
performance in the payment of same or the making of the Escrow Payments and
shall make Servicing Advances from its own funds to effect such payments.
The Servicer, on behalf of the Trustee, as mortgagee, will
maintain in full force and effect (to the extent a Mortgage Loan has a Primary
Insurance Policy) a Primary Insurance Policy issued by a Qualified Insurer
with respect to each Mortgage Loan for which such coverage is required. Such
coverage will be maintained until the Combined Loan-to-Value Ratio of the
related Mortgage Loan is reduced to 80% or less. The Servicer will not cancel
or refuse to renew any Primary Insurance Policy in effect on the Closing Date
that is required to be kept in force under this Agreement unless a replacement
Primary Insurance Policy for such cancelled or non-renewed policy is obtained
from and maintained with a Qualified Insurer. The Servicer shall not take any
action which would result in non-coverage under any applicable Primary
Insurance Policy of any loss which, but for the actions of the Servicer, would
have been covered thereunder. In connection with any assumption or
substitution agreement entered into or to be entered into pursuant to Section
3.14, the Servicer shall promptly notify the insurer under the related Primary
Insurance Policy, if any, of such assumption or substitution of liability in
accordance with the terms of such policy and shall take all actions which may
be required by such insurer as a condition to the continuation of coverage
under the Primary Insurance Policy.
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If such Primary Insurance Policy is terminated as a result of such assumption
or substitution of liability, the Servicer shall obtain a replacement Primary
Insurance Policy as provided above.
In connection with its activities as servicer, the Servicer
agrees to prepare and present, on behalf of itself and the Trustee, claims to
the insurer under any Primary Insurance Policy in a timely fashion in
accordance with the terms of such policies and, in this regard, to take such
action as shall be necessary to permit recovery under any Primary Insurance
Policy respecting a defaulted Mortgage Loan. Pursuant to Section 3.04, any
amounts collected by the Servicer under any Primary Insurance Policy shall be
deposited in the Collection Account, subject to withdrawal pursuant to Section
3.05.
Section 3.09 Transfer of Accounts.
The Servicer may transfer the Collection Account or the
Escrow Account to a different depository institution from time to time. Upon
such transfer, the Servicer shall deliver to the Trustee and the Depositor, a
certification or letter agreement, as the case may be, as required pursuant to
Sections 3.04 and 3.06.
Section 3.10 Maintenance of Hazard Insurance.
The Servicer shall cause to be maintained for each first
lien Mortgage Loan fire and hazard insurance with extended coverage as is
customary in the area where the Mortgaged Property is located in an amount
which is at least equal to the lesser of (i) the amount necessary to fully
compensate for any damage or loss to the improvements which are a part of such
property on a replacement cost basis, (ii) the Principal Balance of the
Mortgage Loan, in each case in an amount not less than such amount as is
necessary to prevent the Mortgagor and/or the Mortgagee from becoming a
co-insurer or (iii) the amount required under applicable HUD/FHA regulations.
If the Mortgaged Property is in an area identified in the Federal Register by
the Flood Emergency Management Agency as having special flood hazards and
flood insurance has been made available, the Servicer will cause to be
maintained a flood insurance policy meeting the requirements of the current
guidelines of the Federal Insurance Administration with a generally acceptable
insurance carrier, in an amount representing coverage not less than the least
of (i) the Principal Balance of the Mortgage Loan, (ii) the maximum insurable
value of the improvements securing such Mortgage Loan or (iii) the maximum
amount of insurance which is available under the Flood Disaster Protection Act
of 1973, as amended. The Servicer shall also maintain on the REO Property for
the benefit of the Certificateholders, (x) fire and hazard insurance with
extended coverage in an amount which is at least equal to the replacement cost
of the improvements which are a part of such property, (y) public liability
insurance and, (z) to the extent required and available under the Flood
Disaster Protection Act of 1973, as amended, flood insurance in an amount as
provided above. Any amounts collected by the Servicer under any such policies
other than amounts to be deposited in the Escrow Account and applied to the
restoration or repair of the Mortgaged Property or REO Property, or released
to the Mortgagor in accordance with the Servicer's normal servicing
procedures, shall be deposited in the Collection Account, subject to
withdrawal pursuant to Section 3.05. It is understood and agreed that no
earthquake or other additional insurance is required to be maintained by the
Servicer or the Mortgagor or maintained on property acquired in respect of the
Mortgage Loan, other than pursuant to such Applicable Regulations as shall at
any time be in force and as shall require such
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additional insurance. All such policies shall be endorsed with standard
mortgagee clauses with loss payable to the Servicer and shall provide for at
least thirty days prior written notice of any cancellation, reduction in the
amount of or material change in coverage to the Servicer. The Servicer shall
not interfere with the Mortgagor's freedom of choice in selecting either his
insurance carrier or agent, provided, however, that the Servicer shall not
accept any such insurance policies from insurance companies unless such
companies currently reflect a general policy rating of B:VI or better in
Best's Key Rating Guide and are licensed to do business in the state wherein
the property subject to the policy is located.
Section 3.11 Maintenance of Mortgage Impairment Insurance
Policy.
In the event that the Servicer shall obtain and maintain a
blanket policy issued by an insurer that has a general policy rating of B:VI
or better in Best's Key Rating Guide insuring against hazard losses on all of
the Mortgage Loans, then, to the extent such policy provides coverage in an
amount equal to the amount required pursuant to Section 3.10 and otherwise
complies with all other requirements of Section 3.10, it shall conclusively be
deemed to have satisfied its obligations as set forth in Section 3.10, 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 Section 3.10, and there shall have been a loss which would have
been covered by such policy, deliver to the Trustee for deposit in the
Distribution Account the amount not otherwise payable under the blanket policy
because of such deductible clause, which amount shall not be reimbursable to
the Servicer from the Trust Fund. In connection with its activities as
servicer of the Mortgage Loans, the Servicer agrees to prepare and present, on
behalf of the Trustee, claims under any such blanket policy in a timely
fashion in accordance with the terms of such policy. Upon request of the
Trustee, the Servicer shall cause to be delivered to the Trustee a certified
true copy of such policy and a statement from the insurer thereunder that such
policy shall in no event be terminated or materially modified without thirty
days prior written notice to the Trustee.
Section 3.12 Fidelity Bond, Errors and Omissions Insurance.
The Servicer shall maintain, at its own expense, a blanket
fidelity bond (the "Fidelity Bond") and an errors and omissions insurance
policy, with broad coverage with financially responsible companies on all
officers, employees or other persons acting in any capacity with regard to the
Mortgage Loans to handle funds, money, documents and papers relating to the
Mortgage Loans. The Fidelity Bond and errors and omissions insurance shall be
in the form of the Mortgage Banker's Blanket Bond and shall protect and insure
the Servicer against losses, including forgery, theft, embezzlement, fraud,
errors and omissions and negligent acts of such persons. Such Fidelity Bond
shall also protect and insure the Servicer against losses in connection with
the failure to maintain any insurance policies required pursuant to this
Agreement and the release or satisfaction of a Mortgage Loan without having
obtained payment in full of the indebtedness secured thereby. No provision of
this Section 3.12 requiring the Fidelity Bond and errors and omissions
insurance shall diminish or relieve the Servicer from its duties and
obligations as set forth in this Agreement. The minimum coverage under any
such bond and insurance policy shall be at least equal to the corresponding
amounts required by Xxxxxx Xxx in the Xxxxxx Mae MBS Selling and Servicing
Guide or by Xxxxxxx Mac in the
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Xxxxxxx Mac Servicer's Guide. Upon request of the Trustee, the Servicer shall
cause to be delivered to the Trustee a certified true copy of the Fidelity
Bond and errors and omissions insurance policy and a statement from the surety
and the insurer that such Fidelity Bond and errors and omissions insurance
policy shall in no event be terminated or materially modified without thirty
days' prior written notice to the Trustee.
Section 3.13 Title, Management and Disposition of REO
Property.
(a) In the event that title to a Mortgaged Property is
acquired in foreclosure or by deed in lieu of foreclosure, the deed or
certificate of sale shall be taken (pursuant to a limited power of attorney to
be provided by the Trustee to the Servicer) in the name of the Trustee, on
behalf of the Certificateholders, or in the event the Trustee is not
authorized or permitted to hold title to real property in the state where the
REO Property is located, or would be adversely affected under the "doing
business" or tax laws of such state by so holding title, the deed or
certificate of sale shall be taken in the name of such Person or Persons as
shall be consistent with an Opinion of Counsel obtained by the Servicer from
an attorney duly licensed to practice law in the state where the REO Property
is located. Any Person or Persons holding such title other than the Trustee
shall acknowledge in writing that such title is being held as nominee for the
benefit of the Trustee.
(b) In the event that the Trust Fund acquires any REO
Property as aforesaid or otherwise in connection with a default or imminent
default on a Mortgage Loan, the Servicer shall dispose of such REO Property
before the end of the third calendar year beginning after the year of its
acquisition by the Trust Fund for purposes of Section 860G(a)(8) of the Code
or, at the expense of the Trust Fund, request from the Internal Revenue
Service, more than 60 days before the day on which the above-mentioned grace
period would otherwise expire, an extension of the above-mentioned grace
period, unless the Servicer obtains an Opinion of Counsel, addressed to the
Servicer and the Trustee, to the effect that the holding by the Trust Fund of
such REO Property subsequent to such period will not: (i) result in the
imposition of any tax on "prohibited transactions" as defined in Section 860F
of the Code; or (ii) cause any REMIC constituting any part of the Trust Fund
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 REO
Property (subject to any conditions contained in such Opinion of Counsel). The
Servicer shall be entitled to be reimbursed from the Collection Account for
any costs incurred in obtaining such Opinion of Counsel, as provided in
Section 3.05.
Subject to compliance with applicable laws and regulations
as shall at any time be in force, and notwithstanding any other provisions of
this Agreement, no REO Property acquired by the Trust Fund shall be rented (or
allowed to continue to be rented) or otherwise used by or on behalf of the
Trust Fund in such a manner or pursuant to any terms that would: (i) cause
such REO Property to fail to qualify as "foreclosure property" within the
meaning of Section 860G(a)(8) of the Code; or (ii) subject any REMIC
constituting part of the Trust Fund to the imposition of any federal income
taxes on the income earned from such REO Property, including any taxes imposed
by reason of Sections 860F or 860G(c) of the Code, unless the Servicer has
agreed to indemnify and hold harmless the Trust Fund with respect to the
imposition of any such taxes.
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The Servicer shall manage, conserve, protect and operate
each REO Property for the Certificateholders and the Trust Fund solely for the
purpose of its prompt disposition and sale in a manner which does not cause
such REO Property to fail to qualify as "foreclosure property" within the
meaning of Section 860G(a)(8) of the Code or result in the receipt by the
related REMIC of any "income from non-permitted assets" within the meaning of
Section 860F(a)(2)(B) of the Code, or any "net income from foreclosure
property" which is subject to taxation under the REMIC Provisions. The
Servicer shall cause each REO Property to be inspected promptly upon the
acquisition of title thereto and shall cause each REO Property to be inspected
at least annually thereafter. The Servicer shall make or cause to be made a
written report of each such inspection. Such reports shall be retained in the
Mortgage Servicing File and copies thereof shall be forwarded by the Servicer
to the Trustee upon request. The Servicer shall attempt to sell the same (and
may temporarily rent the same) on such terms and conditions as the Servicer
deems to be in the best interest of the Certificateholders and the Trust Fund.
With respect to each REO Property, the Servicer shall
account separately for each REO Property with respect to all funds collected
and received in connection with the operation of such REO Property.
The Servicer shall deposit or cause to be deposited, on a
daily basis, within two Business Days of receipt, in the Collection Account,
all revenues received with respect to each REO Property and shall withdraw
therefrom funds necessary for the proper operation, management and maintenance
of the related REO Property, including the cost of maintaining any hazard
insurance pursuant to Section 3.10 hereof and the fees of any managing agent
acting on behalf of the Servicer.
The Servicer shall furnish to the Trustee, on each Servicer
Remittance Date, an operating statement for each REO Property covering the
operation of each REO Property for the previous month. Such operating
statement shall be accompanied by such other information as the Trustee shall
reasonably request.
The Servicer shall use its best efforts to dispose of the
REO Property as promptly as is practically consistent with protecting the
Certificateholders' interests.
Each REO Disposition shall be carried out by the Servicer at
such price and upon such terms and conditions as the Servicer deems to be in
the best interest of the Certificateholders. If as of the date title to any
REO Property was acquired by the Servicer there were outstanding unreimbursed
Servicing Advances with respect to the REO Property, the Servicer, upon an REO
Disposition of such REO Property, shall be entitled to reimbursement for any
related unreimbursed Servicing Advances from proceeds received in connection
with such REO Disposition. The proceeds from the REO Disposition, net of any
payment to the Servicer as provided above, shall be deposited in the
Collection Account for distribution on the succeeding Servicer Remittance Date
in accordance with Section 4.01.
Any REO Disposition shall be for cash only (unless changes
in the REMIC Provisions made subsequent to the Startup Day allow a sale for
other consideration and an Opinion of Counsel is obtained by the Servicer to
the effect that such sale shall not cause any REMIC constituting part of the
Trust Fund to fail to qualify as a REMIC).
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The Servicer shall not complete, or allow to be completed, a
foreclosure or accept a deed in lieu of a foreclosure with respect to any
Ineligible Foreclosure Property Loan if it would cause the Trustee to hold REO
Property from Ineligible Foreclosure Property Loans with an aggregate value in
excess of 0.75% of the aggregate outstanding Principal Balance of the Mortgage
Loans as of the end of the prior Collection Period. If the Value of REO
Property from Ineligible Foreclosure Property Loans equals or exceeds 1% of
the outstanding Principal Balance of the Mortgage Loans as of the end of any
Collection Period, the Seller shall purchase at the Purchase Price on or prior
to the related Distribution Date sufficient REO Property from Ineligible
Foreclosure Property Loans to cause the Trustee to hold REO Property from
Ineligible Foreclosure Property Loans with a Value of less than 1% of the
outstanding Principal Balance of the Mortgage Loans and such proceeds shall be
treated as received during the related Prepayment Period. If the Seller shall
fail to purchase any REO Property as described in the preceding sentences, the
Servicer shall sell such REO Property as soon as reasonably practicable and in
a commercially reasonable manner. For purposes of this paragraph the "Value"
of REO Property from a Ineligible Foreclosure Property Loan shall be treated
as equal to the Principal Balance of the related Ineligible Foreclosure
Property Loan plus interest that had accrued on such Mortgage Loan as of the
date of acquisition of the REO Property by the Trustee. The Trustee shall
reconvey a Mortgage Loan so purchased in the same manner and under the same
terms as specified in Section 2.03.
Section 3.14 Due-on-Sale Clauses; Assumption and
Substitution Agreements.
When a Mortgaged Property has been or is about to be
conveyed by the Mortgagor, the Servicer shall, to the extent it has knowledge
of such conveyance or prospective conveyance, exercise its rights to
accelerate the maturity of the related Mortgage Loan under any "due-on-sale"
clause contained in the related Mortgage or Mortgage Note; provided, however,
that the Servicer shall not exercise any such right if the "due-on-sale"
clause, in the reasonable belief of the Servicer, is not enforceable under
applicable law. An Opinion of Counsel at the expense of the Servicer (which
expense shall constitute a Servicing Advance) delivered to the Trustee and the
Depositor to the foregoing effect shall conclusively establish the
reasonableness of such belief. In such event, the Servicer shall make
reasonable efforts to enter into an assumption and modification agreement 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 law or the Mortgage, the Mortgagor remains liable
thereon. If the foregoing is not permitted under applicable law, the Servicer
is authorized to enter into a substitution of liability agreement with such
Person, pursuant to which the original Mortgagor is released from liability
and such Person is substituted as Mortgagor and becomes liable under the Note.
The Mortgage Loan, as assumed, shall conform in all respects to the
requirements, representations and warranties of this Agreement. The Servicer
shall notify the Trustee that any such assumption or substitution agreement
has been completed by forwarding to the Trustee (or the Custodian, as the case
may be) the original copy of such assumption or substitution agreement
(indicating the Mortgage File to which it relates) which copy shall be added
by the Trustee (or the Custodian, as the case may be) to the related Mortgage
File and which 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. The Servicer shall be responsible for recording any such
assumption or substitution agreements. In connection with any such assumption
or substitution agreement, the Monthly Payment on the related Mortgage Loan
shall
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not be changed but shall remain as in effect immediately prior to the
assumption or substitution, the stated maturity or outstanding principal
amount of such Mortgage Loan shall not be changed nor shall any required
monthly payments of principal or interest be deferred or forgiven. Any fee
collected by the Servicer for consenting to any such conveyance or entering
into an assumption or substitution agreement shall be retained by or paid to
the Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other
provision of this Agreement, the Servicer shall not be deemed to be in
default, breach or any other violation of its obligations hereunder by reason
of any assumption of a Mortgage Loan by operation of law or any assumption
which the Servicer may be restricted by law from preventing, for any reason
whatsoever.
Section 3.15 Notification of Adjustments.
On each Adjustment Date, the Servicer shall make Mortgage
Interest Rate adjustments for each Adjustable-Rate Mortgage Rate Loan in
compliance with the requirements of the related Mortgage and Mortgage Note and
Applicable Regulations. The Servicer shall execute and deliver the notices
required by each Mortgage and Mortgage Note and Applicable Regulations
regarding Mortgage Interest Rate adjustments. The Servicer also shall provide
timely notification to the Trustee of all applicable data and information
regarding such Mortgage Interest Rate adjustments and the Servicer's methods
of implementing such Mortgage Interest Rate adjustments. Upon the discovery by
the Servicer or the Trustee that the Servicer has failed to adjust or has
incorrectly adjusted a Mortgage Interest Rate or a Monthly Payment pursuant to
the terms of the related Mortgage Note and Mortgage, the Servicer shall
deliver to the Trustee for deposit in the Distribution Account from its own
funds the amount of any interest loss caused thereby without reimbursement
therefor; provided, however, the Servicer shall be held harmless with respect
to any Mortgage Interest Rate adjustments made by any servicer prior to the
Servicer.
Section 3.16 Optional Purchases of Mortgage Loans by
Servicer.
The Servicer (or an affiliate of the Servicer) may, at its
option, repurchase a Mortgage Loan or REO Property which becomes 120 or more
days Delinquent or for which the Servicer has accepted a deed in lieu of
foreclosure, during the period commencing on the first day of the calendar
quarter succeeding the calendar quarter in which the Initial Delinquency Date
occurred with respect to such Mortgage Loan and ending on the last Business
Day of such calendar quarter. If the Servicer (or an affiliate of the
Servicer) does not exercise its purchase right with respect to a Mortgage Loan
during the period specified in the preceding sentence, such Mortgage Loan
shall thereafter again become eligible for purchase pursuant to the preceding
sentence only after the Mortgage Loan ceases to be 120 days or more Delinquent
and thereafter becomes 120 days Delinquent again. The "Initial Delinquency
Date" of a Mortgage Loan shall mean the date on which the Mortgage Loan first
became 120 days Delinquent or, in the event such loan is a Re-Performing
Mortgage Loan which was Delinquent 120 days or more as of the Cut-off Date,
the date on which the such Re-Performing Mortgage Loan first becomes an
additional 30 days or more Delinquent. Prior to repurchase pursuant to this
Section 3.16, the Servicer shall be required to continue to make monthly
advances pursuant to Section 4.07. The
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Servicer shall not use any procedure in selecting Mortgage Loans to be
repurchased which is materially adverse to the interests of the
Certificateholders. The Servicer shall purchase such (i) delinquent Mortgage
Loan at a price equal to the Principal Balance of the Mortgage Loan plus
accrued interest thereon at the Mortgage Interest Rate from the date to which
interest has last been paid to the Trust Fund to the date of purchase plus any
unreimbursed Servicing Advances and Advances or (ii) REO Property at its fair
market value as determined in good faith by the Servicer. Any such repurchase
of a Mortgage Loan or REO Property pursuant to this Section 3.16 shall be
accomplished by delivery to the Trustee for deposit in the Distribution
Account of the amount of the purchase price. The Trustee shall immediately
effectuate the conveyance of such delinquent Mortgage Loan or REO Property to
the Servicer to the extent necessary, including the prompt delivery of all
documentation to the Servicer.
Section 3.17 Trustee to Cooperate; Release of Files.
(a) Upon the payment in full of any Mortgage Loan (including
any liquidation of such Mortgage Loan through foreclosure or otherwise, or the
receipt by the Servicer of a notification that payment in full will be
escrowed in a manner customary for such purposes), the Servicer shall deliver
to the Trustee (or the Custodian as the case may be) two executed copies of a
completed "Request for Release" in the form of Exhibit E. Upon receipt of such
Request for Release of Documents, the Trustee (or the Custodian as the case
may be) shall promptly release the related Mortgage File, in trust to (i) the
Servicer, or (ii) such other party identified in the related Request for
Release. Upon any such payment in full, or the receipt of such notification
that such funds have been placed in escrow, the Servicer shall direct the
Trustee in writing to execute an instrument of satisfaction (or assignment of
Mortgage without recourse) regarding the Mortgaged Property relating to such
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 payment in full, it being understood and agreed that no expense
incurred in connection with such instrument of satisfaction or assignment, as
the case may be, shall be chargeable to the Collection Account. In lieu of
executing any such satisfaction or assignment, as the case may be, the
Servicer may prepare and submit to the Trustee a satisfaction (or assignment
without recourse, if requested by the Person or Persons entitled thereto) in
form for execution by the Trustee with all requisite information completed by
the Servicer; in such event, the Trustee shall execute and acknowledge such
satisfaction or assignment, as the case may be, and deliver the same with the
related Mortgage File, as aforesaid.
(b) From time to time and as appropriate in the servicing of
any Mortgage Loan, including, without limitation, foreclosure or other
comparable conversion of a Mortgage Loan or collection under any insurance
policy relating to a Mortgage Loan, the Trustee shall (except in the case of
the payment or liquidation pursuant to which the related Mortgage File is
released to an escrow agent or an employee, agent or attorney of the Trustee),
upon written request of the Servicer and delivery to the Trustee (or the
Custodian, as the case may be) of two executed copies of a "Request for
Release" in the form of Exhibit E signed by a Servicing Officer, release the
related Mortgage File to the Servicer and shall execute such documents as
shall be necessary to the prosecution of any such proceedings, including,
without limitation, an assignment without recourse of the related Mortgage to
the Servicer. Such receipt shall obligate the Servicer to return the Mortgage
File to the Trustee (or the Custodian, as the case may be) when the need
therefor by the Servicer no longer exists unless the Mortgage Loan shall be
liquidated, in which
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case, upon receipt of a Request for Release evidencing such liquidation, the
receipt shall be released by the Trustee (or the Custodian, as the case may
be) to the Servicer.
(c) Subject to Section 3.01, the Servicer shall have the
right to accept applications of Mortgagors for consent to (i) partial releases
of Mortgages, (ii) alterations, (iii) removal, demolition or division of
properties subject to Mortgages and (iv) second mortgage subordination
agreements. No application for approval shall be considered by the Servicer
unless: (w) it has received an Opinion of Counsel, addressed to the Trustee
(which opinion shall not be an expense of the Trustee or the Trust Fund) that
such sale, disposition, substitution, acquisition or contribution will not
affect adversely the status of any REMIC constituting part of the Trust Fund
as a REMIC or cause any REMIC constituting part of the Trust Fund to be
subject to a tax on "prohibited transactions" or "contributions" pursuant to
the REMIC Provisions; (x) the provisions of the related Note and Mortgage have
been complied with; (y) the Combined Loan-to-Value Ratio and debt-to-income
ratio after any release does not exceed the maximum Combined Loan-to-Value
Ratio and debt-to-income ratio established in accordance with the underwriting
standards of the Mortgage Loans; and (z) the lien priority of the related
Mortgage is not affected. Upon receipt by the Trustee of a Servicing Officer's
certificate setting forth the action proposed to be taken in respect of a
particular Mortgage Loan and certifying that the criteria set forth in the
immediately preceding sentence have been satisfied, the Trustee shall execute
and deliver to the Servicer the consent or partial release so requested by the
Servicer. A proposed form of consent or partial release, as the case may be,
shall accompany any Servicing Officer's certificate delivered by the Servicer
pursuant to this paragraph.
Section 3.18 Servicing Compensation.
As compensation for its activities hereunder, the Servicer
shall be entitled to retain the amount of the Servicing Fee with respect to
each Mortgage Loan (including REO Properties). The Servicer shall be entitled
to retain additional servicing compensation in the form of release fees, bad
check charges, assumption fees, modification or extension fees, late payment
charges, or any other service-related fees, Insurance Proceeds and Liquidation
Proceeds not required to be deposited in the Collection Account and similar
items, to the extent collected from Mortgagors. Additionally, the Servicer
shall be entitled to the Special Servicing Fee, payable in accordance with
Section 4.02.
Section 3.19 Annual Statement as to Compliance.
(a) The Servicer, at its own expense, will deliver to the
Trustee and the Depositor, not later than 90 days following the end of the
fiscal year of the Servicer which as of the Startup Day ends on the last day
of December, commencing in 2003, a Servicing Officer's certificate stating, as
to each signer thereof, that (i) a review of the activities of the Servicer
during such preceding fiscal year (or such shorter period in the case of the
first such report) 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 its obligations under
this Agreement for such year, or, if there has been a default in the
fulfillment of all such obligations, specifying each such default known to
such officers and the nature and status thereof including the steps being
taken by the Servicer to remedy such default.
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(b) Delivery of such reports, information and documents to
the Trustee is for informational purposes only and their receipt of such shall
not constitute constructive notice of any information contained therein or
determinable, from information contained therein, including the Servicer's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
Section 3.20 Annual Independent Certified Public
Accountants' Reports.
(a) Not later than 90 days following the end of each fiscal
year of the Servicer commencing in 2003, the Servicer, at its expense, shall
cause a nationally recognized firm of independent certified public accountants
to furnish to the Trustee and the Depositor 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 either the Uniform Single Attestation Program for Mortgage
Bankers established by the Mortgage Bankers Association of America or the
Audit Program for Mortgages serviced by Xxxxxxx Mac, with respect to the
servicing of residential mortgage loans during the most recently completed
fiscal year and (ii) on the basis of an examination conducted by such firm in
accordance with standards established by the American Institute of Certified
Public Accountants, such representation is fairly stated in all material
respects, subject to such exceptions and other qualifications that may be
appropriate. Immediately upon receipt of such report, the Servicer shall
furnish a copy of such report to the Trustee, the Depositor 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.
(b) Delivery of such reports, information and documents to
the Trustee is for informational purposes only and its receipt of such shall
not constitute constructive notice of any information contained therein or
determinable, from information contained therein, including the Servicer's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
(c) The Trustee shall, on behalf of the Trust Fund, file
with the Securities and Exchange Commission any and all reports, statements
and information respecting the Trust which the Depositor determines are
required to be filed with the Securities and Exchange Commission pursuant to
Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended,
each such report, statement and information to be filed on or prior to the
required filing date for such report, statement or information. Upon the
request of the Trustee, each of the Seller, the Servicer and the Depositor
shall cooperate with the Trustee in the preparation of any such report and
shall provide to the Trustee in a timely manner all such information or
documentation as the Trustee may reasonably request in connection with the
performance of its duties and obligations under this Section.
Section 3.21 Access to Certain Documentation and Information
Regarding the Mortgage Loans.
The Servicer shall provide to the Trustee,
Certificateholders that are federally insured savings and loan associations,
the Office of Thrift Supervision, the FDIC and the
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supervisory agents and examiners of each of the foregoing (which, in the case
of supervisory agents and examiners, may be required by applicable state and
federal regulations) access to the documentation regarding the Mortgage Loans,
such access being afforded without charge but only upon reasonable request and
during normal business hours at the offices of the Servicer designated by it.
Section 3.22 Reserved.
Section 3.23 Obligations of the Servicer in Respect of
Compensating Interest.
Not later than the close of business on each Servicer
Remittance Date, the Servicer shall deliver to the Trustee for deposit in the
Distribution Account an amount ("Compensating Interest") equal to the lesser
of (A) the aggregate of the Prepayment Interest Shortfalls on the Actuarial
Mortgage Loans for the related Distribution Date resulting from Principal
Prepayments on the Actuarial Mortgage Loans during the related Prepayment
Period and (B) 50% of its aggregate Servicing Fee received in the related
Collection Period. The Servicer shall apply Compensating Interest to offset
any Prepayment Interest Shortfalls on the Actuarial Mortgage Loans. The
Servicer shall not have the right to reimbursement for any amounts remitted to
the Trustee for deposit in the Distribution Account in respect of Compensating
Interest. Such amounts so remitted shall be included in the Available Funds
and distributed therewith on the next Distribution Date. The Servicer shall
not be obligated to pay Compensating Interest with respect to Prepayment
Interest Shortfalls on Simple Interest Mortgage Loans or Relief Act Interest
Shortfalls.
Section 3.24 Obligations of the Servicer in Respect of
Mortgage Interest Rates and Monthly Payments.
In the event that a shortfall in any collection on or
liability with respect to any Mortgage Loan results from or is attributable to
adjustments to Mortgage Interest Rates, Monthly Payments or Principal Balances
that were made by the Servicer in a manner not consistent with the terms of
the related Mortgage Note and this Agreement, the Servicer, upon discovery or
receipt of notice thereof, immediately shall deliver to the Trustee for
deposit in the Distribution Account from its own funds the amount of any such
shortfall and shall indemnify and hold harmless the Trust Fund, the Trustee,
the Depositor and any successor servicer in respect of any such liability.
Such indemnities shall survive the termination or discharge of this Agreement.
Section 3.25 Investment of Funds in the Collection Account
and the Distribution Account.
(a) The Servicer may direct any depository institution
maintaining the Collection Account and the Trustee may direct any depository
institution maintaining the Distribution Account (for purposes of this Section
3.25, each an "Investment Account"), to invest the funds in such Investment
Account in one or more Permitted Investments bearing interest or sold at a
discount, and maturing, unless payable on demand, (i) no later than the
Business Day immediately preceding the date on which such funds are required
to be withdrawn from such account pursuant to this Agreement, if a Person
other than the Trustee is the obligor thereon, and (ii) no later than the date
on which such funds are required to be withdrawn from such account
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pursuant to this Agreement, if the Trustee is the obligor thereon. All such
Permitted Investments shall be held to maturity, unless payable on demand. Any
investment of funds in an Investment Account shall be made in the name of the
Trustee or the Servicer, as applicable (in its capacity as such) or in the
name of a nominee of the Trustee. The Trustee shall be entitled to sole
possession (except with respect to investment direction of funds held in the
Collection Account) over each such investment and the income thereon, and any
certificate or other instrument evidencing any such investment shall be
delivered directly to the Trustee or its agent, together with any document of
transfer necessary to transfer title to such investment to the Trustee or its
nominee. In the event amounts on deposit in an Investment Account are at any
time invested in a Permitted Investment payable on demand, the Trustee shall
at the direction of the Servicer:
(x) consistent with any notice required to be
given thereunder, demand that payment
thereon be made on the last day such
Permitted Investment may otherwise mature
hereunder in an amount equal to the lesser
of (1) all amounts then payable thereunder
and (2) the amount required to be
withdrawn on such date; and
(y) demand payment of all amounts due
thereunder promptly upon determination by
a Responsible Officer of the Trustee that
such Permitted Investment would not
constitute a Permitted Investment in
respect of funds thereafter on deposit in
the Investment Account.
(b) All income and gain realized from the investment of
funds in the Collection Account shall be for the benefit of the Servicer. The
Servicer shall deposit in the Collection Account the amount of any loss
incurred in respect of any such Permitted Investment made with funds in such
account immediately upon realization of such loss. All income and gain
realized from the investment of funds in the Distribution Account shall be for
the benefit of the Trustee. The Trustee shall deposit in the Distribution
Account the amount of any loss incurred on Permitted Investments in the
Distribution Account.
(c) Except as otherwise expressly provided in this
Agreement, if any default occurs in the making of a payment due under any
Permitted Investment, or if a default occurs in any other performance required
under any Permitted Investment, the Trustee may and, subject to Section 8.01
and Section 8.02(a)(v), upon the request of the Holders of Certificates
representing more than 50% of the Voting Rights allocated to any Class of
Certificates, shall take such action as may be appropriate to enforce such
payment or performance, including the institution and prosecution of
appropriate proceedings.
The Trustee shall not in any way be held liable by reason of
any insufficiency in any Account held by the Trustee resulting from any
investment loss on any Permitted Investment included therein (except to the
extent that the Trustee is the obligor and has defaulted thereon).
Section 3.26 Liability of Servicer; Indemnification.
(a) Subject to clause (b) below and Section 6.03, the
Servicer (except the Trustee if it is required to succeed the Servicer
hereunder) indemnifies and holds the Trustee, the Seller, the Depositor and
each Certificateholder harmless against any and all claims, losses, penalties,
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fines, forfeitures, reasonable legal fees and related costs, judgments, and
any other costs, fees and expenses that the Trustee, the Depositor and any
Certificateholder may sustain in any way related to the failure of the
Servicer to perform its duties and service the Mortgage Loans in compliance
with the Servicing Standards. The Servicer shall immediately notify the
Trustee, the Depositor and each Certificateholder if a claim is made that may
result in such claims, losses, penalties, fines, forfeitures, legal fees or
related costs, judgments, or any other costs, fees and expenses, and the
Servicer shall assume (with the consent of the Trustee) the defense of any
such claim and pay all expenses in connection therewith, including reasonable
counsel fees, and promptly pay, discharge and satisfy any judgment or decree
which may be entered against the Servicer, the Trustee, the Depositor and/or
Certificateholder in respect of such claim. The provisions of this Section
3.26 shall survive the termination of this Agreement and the payment of the
outstanding Certificates.
(b) None of the Depositor, the Seller, the Servicer, or any
of the directors, officers, employees or agents of the Depositor, the Seller
or the Servicer shall be under any liability to the Trust Fund or the
Certificateholders for any action taken, or for refraining from the taking of
any action, in good faith pursuant to this Agreement, or for errors in
judgment; provided, however, that this provision shall not protect the
Depositor, the Seller or the Servicer or any such Person against any breach of
warranties or representations made herein, or against any specific liability
imposed on the Servicer for a breach of the Servicing Standard, or against any
liability which would otherwise be imposed by reason of its respective willful
misfeasance, bad faith, fraud or negligence in the performance of its duties
or by reasons of negligent disregard of its respective obligations or duties
hereunder.
The Depositor, the Servicer, the Seller and any director,
officer, employee or agent of the Depositor, the Seller or the Servicer, may
rely in good faith on any document of any kind which, prima facie, is properly
executed and submitted by any appropriate Person with respect to any matters
arising hereunder. The Depositor, the Servicer, the Seller, and any director,
officer, employee or agent of the Depositor, the Seller or the Servicer shall
be indemnified and held harmless by the Trust Fund against any loss, liability
or expense incurred in connection with any legal action relating to this
Agreement or the Certificates, other than any loss, liability or expense
incurred in connection with any legal action incurred by reason of its
respective misfeasance, bad faith, fraud or negligence, a breach of a
representation or warranty hereunder or (in the case of the Servicer) a breach
of the Servicing Standard in the performance of its respective duties or by
reason of negligent disregard of its respective obligations or duties
hereunder. Neither the Depositor, the Seller nor the Servicer shall be under
any obligation to appear in, prosecute or defend any legal action unless such
action is related to its respective duties under this Agreement and in its
opinion does not expose it to any expense or liability; provided, however,
that the Depositor, the Seller or the Servicer may in its discretion undertake
any action related to its obligations hereunder which it may deem necessary or
desirable with respect to this Agreement and the rights and duties of the
parties hereto and the interests of the Certificateholders hereunder.
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Section 3.27 Reports of Foreclosure and Abandonment of
Mortgaged Properties.
On or before the last day of February of each year beginning
in 2003, the Servicer shall file the reports of foreclosure and abandonment of
any Mortgaged Property required by Section 6050J of the Code with the Internal
Revenue Service and provide an Officer's Certificate certifying its compliance
with this Section 3.27 to the Trustee. The reports from the Servicer shall be
in form and substance sufficient to meet the reporting requirements imposed by
such Section 6050J.
Section 3.28 Protection of Assets.
(a) Except for transactions and activities entered into in
connection with the securitization that is the subject of this Agreement, the
Trust is not authorized and has no power to:
(1) borrow money or issue debt;
(2) merge with another entity, reorganize, liquidate or
sell assets; or
(3) engage in any business or activities.
(b) Each party to this Agreement agrees that it will not
file an involuntary bankruptcy petition against the Trustee or the Trust Fund
or initiate any other form of insolvency proceeding until after the
Certificates have been paid.
Section 3.29 Maintenance of Mortgage Insurance Policy.
The Servicer shall maintain the Mortgage Insurance Policy
with respect to the Covered Mortgage Loans. The Servicer shall pay the
Mortgage Insurance Premium on a monthly basis from payments on account of
interest on the Covered Mortgage Loans.
In connection with its activities as servicer, the Servicer
agrees to prepare and present, on behalf of itself and the Trustee, claims to
the Mortgage Insurer under the Mortgage Insurance Policy in a timely fashion
in accordance with the terms of such policy and, in this regard, to take such
action as shall be necessary to permit recovery under such policy respecting a
defaulted Mortgage Loan. Any amounts collected by the Servicer under the
Mortgage Insurance Policy shall be deposited in the Collection Account.
ARTICLE IV
FLOW OF FUNDS
Section 4.01 Interest Distributions.
On each Distribution Date, the Trustee shall withdraw from
the Distribution Account the Group I Interest Remittance Amount and the Group
II Interest Remittance Amount and apply them in the following order of
priority (based upon the Mortgage Loan information
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provided to it in the Remittance Report, upon which the Trustee may
conclusively rely), and the calculations required to be made by the Trustee,
in each case to the extent of the Group I Interest Remittance Amount or the
Group II Interest Remittance Amount, as applicable, remaining for such
Distribution Date:
(a) the Group I Interest Remittance Amount will be
distributed:
(i) first, to the Trustee, the portion of the Trustee Fee
for such Distribution Date relating to the Group I Mortgage Loans;
(ii) second, concurrently, to the Class A-IO Certificates,
the Group I Class A-IO Interest Distribution and to the Class A-1
Certificates, the Class Interest Distribution for the Class A-1
Certificates, allocated pro rata based on entitlement pursuant to
this clause (a)(ii);
(iii) third, concurrently, to the Class A-IO Certificates,
the Group II Class A-IO Interest Distribution and to the Class A-2
Certificates, the Class Interest Distribution for the Class A-2
Certificates, in each case to the extent not paid pursuant to clause
(b)(ii) below, allocated pro rata based on entitlement pursuant to
this clause (a)(iii);
(b) the Group II Interest Remittance Amount will be
distributed:
(i) first, to the Trustee,the portion of the Trustee Fee for
such Distribution Date relating to the Group II Mortgage Loans;
(ii) second, concurrently, to the Class A-IO Certificates,
the Group II Class A-IO Interest Distribution and to the Class A-2
Certificates, the Class Interest Distribution for the Class A-2
Certificates, allocated pro rata based on entitlement pursuant to
this clause (b)(ii);
(iii) third, concurrently, to the Class A-IO Certificates,
the Group I Class A-IO Interest Distribution and to the Class A-1
Certificates, the Class Interest Distribution for the Class A-1
Certificates, in each case to the extent not paid pursuant to clause
(a)(ii) above, allocated pro rata based on entitlement pursuant to
this clause (b)(iii);
(c) any Group I Interest Remittance Amount and Group II
Interest Remittance Amount remaining undistributed following the distributions
pursuant to clauses (a) and (b) above will be distributed:
(i) first, to the Class M-1 Certificates, the Accrued
Certificate Interest thereon for such Distribution Date;
(ii) second, to the Class M-2 Certificates, the Accrued
Certificate Interest thereon for such Distribution Date;
(iii) third, to the Class B-1 Certificates, the Accrued
Certificate Interest thereon for such Distribution Date; and
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(iv) fourth, to the Class B-2 Certificates, the Accrued
Certificate Interest thereon for such Distribution Date;
(d) the amount, if any, of the Group I Interest Remittance
Amount and the Group II Interest Remittance Amount remaining after application
with respect to the priorities set forth above will be applied as described
under Section 4.02(b) hereof.
Section 4.02 Distributions of Principal and Monthly Excess
Cashflow Amounts.
(a) On each Distribution Date, the Trustee shall distribute
the Group I Principal Distribution Amount and the Group II Principal
Distribution Amount in the following amounts and order of priority (based upon
the Mortgage Loan information provided to it in the Remittance Report), and
the calculations required to be made by the Trustee, in each case to the
extent of the Group I Principal Distribution Amount or the Group II Principal
Distribution Amount, as applicable, remaining for such Distribution Date:
(i) With respect to any Distribution Date before the
Stepdown Date or with respect to which a Trigger Event is in effect:
(A) the Group I Principal Distribution Amount will
be distributed:
(1) first, to the Class A-1 Certificates, until
the Certificate Principal Balance thereof has
been reduced to zero; and
(2) second, to the Class A-2 Certificates, until
the Certificate Principal Balance thereof has been
reduced to zero;
(B) the Group II Principal Distribution Amount will
be distributed:
(1) first, to the Class A-2 Certificates, until
the Certificate Principal Balance thereof has
been reduced to zero; and
(2) second, to the Class A-1 Certificates, until
the Certificate Principal Balance thereof has been
reduced to zero;
(C) any Group I Principal Distribution Amount and
Group II Principal Distribution Amount remaining
undistributed following the distributions pursuant to
clauses (i)(A) and (i)(B) above will be distributed:
(1) first, to the Class M-1 Certificates, until the
Certificate Principal Balance thereof has been reduced
to zero;
(2) second, to the Class M-2 Certificates, until
the Certificate Principal Balance thereof has been
reduced to zero;
(3) third, to the Class B-1 Certificates, until
the Certificate Principal Balance thereof has
been reduced to zero; and
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(4) fourth, to the Class B-2 Certificates,
until the Certificate Principal Balance thereof has
been reduced to zero.
(D) the amount, if any, of the Group I Principal
Distribution Amount and the Group II Principal Distribution
Amount remaining after application with respect to the
priorities set forth above in clauses (i)(A), (i)(B) and
(i)(C) will constitute part of the "Monthly Excess Cashflow
Amount" for such Distribution Date and will be applied as
set forth in Section 4.02(b).
(ii) With respect to any Distribution Date on or after the
Stepdown Date or with respect to which a Trigger Event is not in
effect:
(A) the Group I Principal Distribution Amount will
be distributed:
(1) first, to the Class A-1 Certificates,
the Class A-1 Principal Distribution Amount, until
the Certificate Principal Balance of such Class has
been reduced to zero; and
(2) second, to the Class A-2 Certificates,
any remaining Class A-2 Principal Distribution
Amount that has not been paid pursuant to clause
(B)(1) below, until the Certificate Principal
Balance of such Class has been reduced to zero;
(B) the Group II Principal Distribution Amount will
be distributed:
(1) first, to the Class A-2 Certificates,
the Class A-2 Principal Distribution Amount, until
the Certificate Principal Balance of such Class has
been reduced to zero; and
(2) second, to the Class A-1 Certificates,
any remaining Class A-1 Principal Distribution
Amount that has not been paid pursuant to clause
(A)(1) above, until the Certificate Principal
Balance of such Class has been reduced to zero;
(C) any Group I Principal Distribution Amount and
Group II Principal Distribution Amount remaining
undistributed following the distributions pursuant to
clauses (ii)(A) and (ii)(B) above will be distributed:
(1) first, to the Class M-1 Certificates,
the Class M-1 Principal Distribution Amount, until
the Certificate Principal Balance of such Class has
been reduced to zero;
(2) second, to the Class M-2 Certificates,
the Class M-2 Principal Distribution Amount, until
the Certificate Principal Balance of such Class has
been reduced to zero;
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(3) third, to the Class B-1 Certificates,
the Class B-1 Principal Distribution Amount, until
the Certificate Principal Balance of such Class has
been reduced to zero; and
(4) fourth, to the Class B-2 Certificates,
the Class B-2 Principal Distribution Amount, until
the Certificate Principal Balance of such Class has
been reduced to zero;
(D) the amount, if any, of the Group I Principal
Distribution Amount and the Group II Principal Distribution
Amount remaining after application with respect to the
priorities set forth above in clauses (ii)(A), (ii)(B) and
(ii)(C) will constitute part of the "Monthly Excess Cashflow
Amount" for such Distribution Date and will be applied as
set forth in Section 4.02(b).
(b) On each Distribution Date, any Monthly Excess Cashflow
Amount shall be distributed, to the extent available, in the following order
of priority on such Distribution Date:
(i) to the Class or Classes of Certificates then entitled to
receive distributions in respect of principal, in an amount equal to
the Extra Principal Distribution Amount for such Distribution Date,
payable to such holders as part of the related Principal Distribution
Amount;
(ii) to the Class A-2 Certificates, the Unpaid Realized Loss
Amount for such Class and Distribution Date, if any;
(iii) to the Class M-1 Certificates, any remaining Accrued
Certificate Interest for such Distribution Date;
(iv) to the Class M-1 Certificates, the Interest Carry
Forward Amount for such Class and Distribution Date, if any;
(v) to the Class M-1 Certificates, the Unpaid Realized
Loss Amount for such Class and Distribution Date;
(vi) to the Class M-2 Certificates, any remaining Accrued
Certificate Interest for such Distribution Date;
(vii) to the Class M-2 Certificates, the Interest Carry
Forward Amount for such Class and Distribution Date, if any;
(viii) to the Class M-2 Certificates, the Unpaid Realized
Loss Amount for such Class and Distribution Date;
(ix) to the Class B-1 Certificates, any remaining Accrued
Certificate Interest for such Distribution Date;
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(x) to the Class B-1 Certificates, the Interest Carry
Forward Amount for such Class and Distribution Date, if any;
(xi) to the Class B-1 Certificates, the Unpaid Realized
Loss Amount for such Class and Distribution Date;
(xii) to the Class B-2 Certificates, any remaining Accrued
Certificate Interest for such Distribution Date;
(xiii) to the Class B-2 Certificates, the Interest Carry
Forward Amount for such Class and Distribution Date, if any;
(xiv) to the Class B-2 Certificates, the Unpaid Realized
Loss Amount for such Class and Distribution Date;
(xv) to the Basis Risk Reserve Fund, the Basis Risk Reserve
Fund Deposit;
(xvi) to pay any Special Servicing Fees for such
Distribution Date or which remain unpaid from any previous
Distribution Date; and
(xvii) to pay the Class N Certificates, (x) the Accrued
Certificate Interest for the Class N Certificates, (y) the Interest
Carry Forward Amount for the Class N Certificates and (z) any
remaining Monthly Excess Cashflow Amount to reduce the Notional
Amount for the Class N Certificates, until the Notional Amount for
such Class has been reduced to zero;
(xviii) to the Class X Certificates, the Class X
Distributable Amount; and
(xix) to the Interest Rate Cap Provider, if an Early
Termination Date has been designated under the Interest Rate
Cap Agreement, any Termination Payments or Carryover Termination
Payments owed by the Trust;
On each Distribution Date, there shall be distributed to
Holders of the Residual Certificates, any remaining amount in the
Distribution Account on such date after the application pursuant to
Sections 4.01, 4.02(a), 4.02(b)(i)-(xviii) and 4.02(c).
(c) On each Distribution Date, all prepayment penalties
(including amounts deposited in connection with the full or partial waiver of
such prepayment penalties pursuant to Section 3.01) shall be allocated to the
Class N Certificates for so long as the Notional Amount of the Class N
Certificates is greater than zero pursuant to Section 4.02(b)(xvii) above),
and to the Class X Certificates after the Class N Notional Amount has been
reduced to zero.
Section 4.03 Allocation of Losses.
If, after giving effect to the distribution of the Principal
Distribution Amount on any Distribution Date the aggregate Certificate
Principal Balance of the Offered Certificates and the Class B-2 Certificates
exceeds the Pool Balance as of the end of the related Collection Period, such
excess will be allocated to reduce the Certificate Principal Balance of the
Class X-0,
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Xxxxx X-0, Class M-2, Class M-1 and Class A-2 Certificates, in that
order, until the respective Certificate Principal Balances thereof are reduced
to zero. Any reduction of a Certificate Principal Balance of a class of
Certificates is an "Applied Realized Loss Amount" for such class.
Section 4.04 Method of Distribution.
The Trustee shall make distributions in respect of a
Distribution Date to each Certificateholder of record on the related Record
Date (other than as provided in Section 10.01 respecting the final
distribution), in the case of Certificateholders of the Certificates, by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trustee in writing at least
five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of such Certificates the
aggregate initial Certificate Principal Balance or Notional Amount of which is
in excess of $5,000,000, or by check mailed by first class mail to the address
of the Person entitled thereto, as such name and address shall appear on the
Certificate Register, provided that the Trustee may deduct a reasonable wire
transfer fee from any payment made by wire transfer. Distributions among
Certificateholders shall be made in proportion to the Percentage Interests
evidenced by the Certificates held by such Certificateholders.
Section 4.05 Distributions on Book-Entry Certificates.
Each distribution with respect to a Book-Entry Certificate
shall be paid to the Depository, which shall credit the amount of such
distribution to the accounts of its Depository Participants in accordance with
its normal procedures. Each Depository Participant shall be responsible for
disbursing such distribution to the Certificate Owners that it represents and
to each indirect participating brokerage firm (a "brokerage firm" or "indirect
participating firm") for which it acts as agent. Each brokerage firm shall be
responsible for disbursing funds to the Certificate Owners that it represents.
All such credits and disbursements with respect to a Book-Entry Certificate
are to be made by the Depository and the Depository Participants in accordance
with the provisions of the Certificates. None of the Trustee, the Depositor,
the Servicer or the Seller shall have any responsibility therefor except as
otherwise provided by applicable law.
Section 4.06 Statements.
(a) On each Distribution Date, based, as applicable, on the
Mortgage Loan information contained in the Remittance Report, the Trustee
shall prepare and post on its website at xxx.xxxxxx.xxx/xxx and forward by
mail to each Holder of the Regular Certificates, a statement as to the
distributions made on such Distribution Date:
(i) the amount of the distribution made on such Distribution
Date to the Holders of each Class of Certificates allocable to
principal or reduction of Notional Amount, separately identified;
(ii) the amount of the distribution made on such
Distribution Date to the Holders of each Class of Certificates
allocable to interest or Class X Distributable Amount, separately
identified;
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(iii) the Overcollateralization Amount, the
Overcollateralization Release Amount, the Overcollateralization
Deficiency and the Overcollateralization Target Amount as of such
Distribution Date and the Monthly Excess Interest Amount
and Monthly Excess Cashflow Amount for such Distribution Date;
(iv) the aggregate amount of servicing compensation
received by the Servicer during the related Collection
Period and accrued and unpaid Special Servicing Fees;
(v) the aggregate amount of Advances for the related
Collection Period;
(vi) the Pool Balance at the close of business at the end
of the related Collection Period;
(vii) the number, weighted average remaining term to
maturity and weighted average Mortgage Interest Rate of the Mortgage
Loans as of the related Due Date;
(viii) the number and aggregate unpaid principal balance of
Mortgage Loans (a) 30 to 59 days past due on a contractual basis, (b)
60 to 89 days past due on a contractual basis, (c) 90 or more days
past due on a contractual basis, (d) as to which foreclosure
proceedings have been commenced and (e) in bankruptcy 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 became an REO
Property during the preceding calendar month, the loan number of such
Mortgage Loan, the unpaid principal balance and the Principal Balance
of such Mortgage Loan as of the date it became an REO Property;
(x) the book value of any REO Property as of the close of
business on the last Business Day of the calendar month preceding the
Distribution Date, and, cumulatively, the total number and cumulative
principal balance of all REO Properties as of the close of business
of the last day of the preceding Collection Period;
(xi) the aggregate amount of Principal Prepayments made
during the related Prepayment Period;
(xii) the aggregate amount of prepayment penalties collected
(including amounts deposited in connection with the full or partial
waiver of such prepayment penalties pursuant to Section 3.01) during
the related Collection Period and the amounts thereof allocable to
the Class N Certificates and the Class X Certificates;
(xiii) the aggregate amount of Realized Losses incurred
during the related Collection Period and the cumulative amount of
Realized Losses;
(xiv) the Certificate Principal Balance, or Notional Amount,
as applicable, of each Class of Certificates, after giving effect to
the distributions, and allocations of Realized Losses or Applied
Realized Loss Amounts, as applicable, made on such Distribution Date,
separately identifying any reduction thereof due to allocations of
Realized Losses or Applied Realized Loss Amounts;
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(xv) the Accrued Certificate Interest in respect of each
Class of Offered Certificates and the Class B-2 Certificates for such
Distribution Date, separately identifying the portions thereof
attributable to LIBOR Carryover Amounts, and the respective portions
thereof, if any, remaining unpaid following the distributions made in
respect of such Certificates on such Distribution Date;
(xvi) the aggregate amount of any Prepayment Interest
Shortfalls for such Distribution Date, to the extent not covered by
payments by the Servicer pursuant to Section 3.23;
(xvii) [Reserved];
(xviii) [Reserved];
(xix) the amount of the Trustee Fee paid;
(xx) the LIBOR Carryover Amounts distributed on such
Distribution Date, separately identifying any LIBOR Carryover Amounts
paid from amounts received in respect of the Interest Rate Cap
Agreement, and any LIBOR Carryover Amounts remaining after giving
effect to distributions thereof on such Distribution Date;
(xxi) any Overcollateralization Deficiency after giving
effect to the distribution of principal on such Distribution Date;
(xxii) whether a Trigger Event has occurred and is
continuing, and the cumulative Realized Losses, as a percentage
of the original Pool Balance;
(xxiii) the Available Funds;
(xxiv) the rate at which interest accrues for each Class
of Certificates for such Distribution Date;
(xxv) the Liquidation Report for such Distribution Date;
(xxvi) the aggregate Principal Balance of Mortgage Loans
purchased by the Servicer or Seller during the related Collection
Period and indicating the Section of this Agreement requiring or
allowing the purchase of each such Mortgage Loan; and
(xxvii) the aggregate Principal Balance of the Mortgage
Loans repurchased by the Servicer (or an affiliate) during the
related Collection Period in connection with Section 3.16.
The Trustee may fully rely upon and shall have no liability
with respect to information with respect to the Mortgage Loans provided by the
Servicer.
In the case of information furnished pursuant to subclauses
(i) through (iii) above, the amounts shall be expressed in a separate section
of the report as a dollar amount for each Class for each $1,000 original
dollar amount as of the Cut-off Date.
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(b) Within a reasonable period of time after the end of each
calendar year, the Trustee shall furnish to each Person who at any time during
the calendar year was a Certificateholder of a Regular Certificate, if
requested in writing by such Person, such information as is reasonably
necessary to provide to such Person a statement containing the information set
forth in subclauses (i), (ii), (xv) and (xx) above, aggregated for such
calendar year or applicable portion thereof during which such Person was a
Certificateholder. Such obligation of the Trustee shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
prepared and furnished by the Trustee to Certificateholders pursuant to any
requirements of the Code as are in force from time to time.
(c) On each Distribution Date, the Trustee shall forward to
the Residual Certificateholders a copy of the reports forwarded to the Regular
Certificateholders in respect of such Distribution Date with such other
information as the Trustee deems necessary or appropriate. Such obligation of
the Trustee shall be deemed to have been satisfied to the extent that
substantially comparable information shall be prepared and furnished to
Residual Certificateholders by the Trustee pursuant to any requirements of the
Code as from time to time in force.
(d) The Seller shall provide information regarding the
Mortgage Insurance Premium to any Certificateholder upon written request of
such Certificateholder.
Section 4.07 Remittance Reports; Advances.
(a) On the second Business Day following each Determination
Date but in no event less than four Business Days prior to the related
Distribution Date, the Servicer shall deliver to the Trustee by telecopy (or
by such other means as the Servicer and the Trustee may agree from time to
time) a Remittance Report with respect to the related Distribution Date. On
the same date, the Servicer shall forward to the Trustee by overnight mail a
computer readable magnetic tape or diskette or in such other medium as may be
agreed between the Servicer and the Trustee containing the information set
forth in such Remittance Report with respect to the related Distribution Date.
Not later than the close of business New York time on the Servicer Remittance
Date, the Servicer shall deliver or cause to be delivered to the Trustee in
addition to the information provided on the Remittance Report, such other
information reasonably available to it with respect to the Mortgage Loans as
the Trustee may reasonably request or order in order for the Trustee to
perform the calculations necessary to make the distributions contemplated by
Section 4.01, 4.02 and 4.03 and to prepare the statements to
Certificateholders contemplated by Section 4.06. The Trustee shall not be
responsible to recompute, recalculate or verify any information provided to it
by the Servicer.
(b) The amount of Advances to be made by the Servicer for
any Distribution Date shall equal, subject to Section 4.07(d), the aggregate
amount of Monthly Payments (net of the related Servicing Fee), due during the
related Collection Period in respect of the Actuarial Mortgage Loans, which
Monthly Payments were delinquent on a contractual basis as of the close of
business on the related Determination Date. For purposes of the preceding
sentence, the Monthly Payment on each Balloon Mortgage Loan with a delinquent
Balloon Payment is equal to the assumed monthly payment that would have been
due on the related Due Date based on the original principal amortization
schedule for the such Balloon Mortgage Loan. The Servicer shall
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not be obligated to make any Advance with respect to Simple Interest Mortgage
Loans or REO Properties.
On or before the close of business New York time on the
Servicer Remittance Date, the Servicer shall remit in immediately available
funds to the Trustee for deposit in the Distribution Account an amount equal
to the aggregate amount of Advances, if any, to be made in respect of the
Mortgage Loans for the related Distribution Date either (i) from its own funds
or (ii) from the Collection Account, to the extent of funds held therein for
future distribution (in which case it will cause to be made an appropriate
entry in the records of the Collection Account that amounts held for future
distribution have been, as permitted by this Section 4.07, used by the
Servicer in discharge of any such Advance) or (iii) in the form of any
combination of (i) and (ii) aggregating the total amount of Advances to be
made by the Servicer with respect to the Mortgage Loans. Any amounts held for
future distribution and so used shall be appropriately reflected in the
Servicer's records and replaced by the Servicer by deposit in the Collection
Account on or before any future Servicer Remittance Date to the extent that
the Available Funds for the related Distribution Date (determined without
regard to Advances to be made on the Servicer Remittance Date) shall be less
than the total amount that would be distributed to the Classes of
Certificateholders pursuant to Section 4.01 and 4.02 on such Distribution Date
if such amounts held for future distributions had not been so used to make
Advances. The Trustee will provide notice to the Servicer by telecopy by the
close of business on any Servicer Remittance Date in the event that the amount
remitted by the Servicer to the Trustee on such date is less than the Advances
required to be made by the Servicer for the related Distribution Date, as set
forth in the related Remittance Report.
(c) The obligation of the Servicer to make such Advances is
mandatory, notwithstanding any other provision of this Agreement but subject
to (d) below, and, with respect to any Mortgage Loan, shall continue until the
earlier of such time as the Trust acquires title to the related Mortgaged
Property or such Mortgage Loan is paid in full by the Mortgagor or disposed of
by the Trust, or until the recovery of all Liquidation Proceeds thereon.
(d) Notwithstanding anything herein to the contrary, no
Advance or Servicing Advance shall be required to be made hereunder by the
Servicer if such Advance would, if made, constitute a Nonrecoverable Advance.
The determination by the Servicer that it has made a Nonrecoverable Advance or
that any proposed Advance, if made, would constitute a Nonrecoverable Advance,
shall be evidenced by an Officers' Certificate of the Servicer delivered to
the Depositor and the Trustee.
Section 4.08 Basis Risk Reserve Fund.
(a) On the Closing Date, the Trustee shall establish and
maintain in its name, in trust for the benefit of the Holders of the Class
X-0, Xxxxx X-0, Class M-1, Class M-2, Class B-1 and Class B-2 Certificates,
the Basis Risk Reserve Fund. The Basis Risk Reserve Fund shall be an Eligible
Account, and funds on deposit therein shall be held separate and apart from,
and shall not be commingled with, any other moneys, including without
limitation, other moneys held by the Trustee pursuant to this Agreement.
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(b) On the Closing Date, $5,000 will be deposited by the
Depositor into the Basis Risk Reserve Fund. On each Distribution Date, the
Trustee shall transfer from the Certificate Account to the Basis Risk Reserve
Fund pursuant to Section 4.02(b)(xv), the Basis Risk Reserve Fund Deposit.
Following the distribution of amounts on deposit in the Interest Rate Cap
Account pursuant to Section 4.09(e) hereof on any Distribution Date and the
deposit of the Basis Risk Reserve Fund Deposit in the Basis Risk Reserve Fund
on such Distribution Date pursuant to Section 4.02(b)(xv) hereof, the Trustee
shall withdraw any amounts on deposit in the Basis Risk Reserve Fund in the
following amounts and order of priority:
(i) concurrently to the Class A-1 and Class A-2
Certificates, any unpaid LIBOR Carryover Amounts for such Classes,
pro rata on the basis of such unpaid LIBOR Carryover Amounts;
(ii) to the Class M-1 Certificates, any unpaid LIBOR
Carryover Amounts for such Class;
(iii) to the Class M-2 Certificates, any unpaid LIBOR
Carryover Amounts for such Class;
(iv) to the Class B-1 Certificates, any unpaid LIBOR
Carryover Amounts for such Class; and
(v) to the Class B-2 Certificates, any unpaid LIBOR
Carryover Amounts for such Class.
Any such amounts distributed shall be treated for federal
tax purposes as amounts distributed by the Class X/N REMIC to the Class X
Interest. On any Distribution Date, any amounts on deposit in the Basis Risk
Reserve Fund in excess of the Required Basis Risk Reserve Fund Amount shall be
distributed to the Class X Interest pursuant to Section 4.02(b)(xviii) hereof,
until the Class X Notional Amount is reduced to zero.
(c) Funds in the Basis Risk Reserve Fund may be invested in
Eligible Investments by the Trustee at the direction of the majority holder of
the Class X Certificates. Any net investment earnings on such amounts shall be
payable to the Class X Certificates. Amounts held in the Basis Risk Reserve
Fund from time to time shall continue to constitute assets of the Trust Fund,
but not of any REMIC created hereunder, until released from the Basis Risk
Reserve Fund pursuant to this Section 4.08. The Basis Risk Reserve Fund
constitutes an "outside reserve fund" within the meaning of Treasury
Regulation ss.1.860G-2(h) and is not an asset of any REMIC created hereunder.
For all federal tax purposes, amounts transferred by the Class X/N REMIC to
the Basis Risk Reserve Fund shall be treated as amounts distributed by the
Class X/N REMIC to the Class X Interest. The Class X Interest shall evidence
ownership of the Basis Risk Reserve Fund for federal tax purposes and the
Holders thereof shall direct the Trustee in writing as to the investment of
amounts therein. In the absence of such written direction, all funds in the
Basis Risk Reserve Fund shall be invested by the Trustee in the First American
Funds, Inc. First American Prime Obligations Fund (Class A). The Trustee shall
have no liability for losses on investments in Eligible Investments made
pursuant to this Section 4.08(c) (other than as obligor on any such
investments). Upon termination of the Trust Fund, any amounts remaining in the
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Basis Risk Reserve Fund shall be distributed to the Class X Interest in the
same manner as if distributed pursuant to Section 4.02(b)(xviii) hereof.
(d) On the Distribution Date immediately after the
Distribution Date on which the aggregate Class Principal Balance of the Class
A-1, Class A-2, Class M-1, Class M-2, Class B-1 and Class B-2 Certificates
equals zero, any amounts on deposit in the Basis Risk Reserve Fund not payable
on the Class X-0, Xxxxx X-0, Class M-1, Class M-2, Class B-1 or Class B-2
Certificates shall be distributed to the Class X Interest in the same manner
as if distributed pursuant to Section 4.02(b)(xvii) and 4.02(b)(xviii) hereof.
Section 4.09 The Interest Rate Cap Agreement.
(a) On the Closing Date, the Trustee shall establish and
maintain in its name, in trust for the benefit of the Certificates, the
Interest Rate Cap Account. The Interest Rate Cap Account shall be an Eligible
Account, and funds on deposit therein shall be held separate and apart from,
and shall not be commingled with, any other moneys, including without
limitation, other moneys held by the Trustee pursuant to this Agreement.
(b) The Interest Rate Cap Agreement will be an asset of the
Trust Fund but will not be an asset of any REMIC. The Trustee shall deposit
any amounts received with respect to the Interest Rate Cap Agreement into the
Interest Rate Cap Account.
(c) The Trustee will prepare and deliver any notices
required to be delivered to the Interest Rate Cap Provider under the Interest
Rate Cap Agreement.
(d) The Trustee shall terminate the Interest Rate Cap
Provider upon the occurrence of an event of default under the Interest Rate
Cap Agreement of which a Responsible Officer of the Trustee has actual
knowledge. Upon such a termination, the Interest Rate Cap Provider may be
required to pay an amount to the Trustee in respect of market quotations for
the replacement cost of the Interest Rate Cap Agreement.
(e) On each Distribution Date, prior to any distributions
pursuant to Sections 4.01 and 4.02 hereof, the Trustee shall distribute
amounts on deposit in the Interest Rate Cap Account to the Basis Risk Reserve
Fund and from the Basis Risk Reserve Fund to the Certificates in the following
amounts and order of priority:
(i) concurrently to the Class A-1 and Class A-2
Certificates, any LIBOR Carryover Amounts for such classes and such
Distribution Date, pro rata on the basis of such LIBOR Carryover
Amounts;
(ii) to the Class M-1 Certificates, any LIBOR Carryover
Amount for such class and Distribution Date;
(iii) to the Class M-2 Certificates, any LIBOR Carryover
Amount for such class and Distribution Date;
(iv) to the Class B-1 Certificates, any LIBOR Carryover
Amount for such class and Distribution Date; and
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(v) to the Class B-2 Certificates, any LIBOR Carryover
Amount for such class and Distribution Date.
(f) Funds in the Interest Rate Cap Account may be invested
in Eligible Investments by the Trustee at the direction of the Seller maturing
on or prior to the next succeeding Distribution Date. The Trustee shall
account for the Interest Rate Cap Account as an outside reserve fund within
the meaning of Treasury regulation 1.860G-2(h) and not an asset of any REMIC
created pursuant to this Agreement. The Trustee shall treat amounts paid by
the Interest Rate Cap Account as payments made from outside the REMICs for all
Federal tax purposes. Any net investment earnings on such amounts shall be
payable to the Seller. The Holders of the Class X Interest will be the owner
of the Interest Rate Cap Account for federal tax purposes and the Holders of
the Class X Interest shall direct the Trustee in writing as to the investment
of amounts therein. In the absence of such written direction, all funds in the
Interest Rate Cap Account shall remain uninvested. The Trustee shall have no
liability for losses on investments in Eligible Investments made pursuant to
this Section 4.13(f) (other than as obligor on any such investments). Upon
termination of the Trust Fund, any amounts remaining in the Interest Rate Cap
Account shall be distributed to the Seller.
(g) On the Distribution Date immediately after the
Distribution Date on which the aggregate Certificate Principal Balance of the
Certificates equals zero, any amounts on deposit in the Interest Rate Cap
Agreement not payable on such Certificates shall be distributed to the Seller.
ARTICLE V
THE CERTIFICATES
Section 5.01 The Certificates.
Each of the Class A-1, Class A-2, Class A-IO, Class M-1,
Class M-2, Class B-1, Class B-2, Class N, Class X, Class R-1, Class R-2 and
Class R-3 Certificates shall be substantially in the forms annexed hereto as
exhibits, and shall, on original issue, be executed by the Trustee and
authenticated and delivered by the Certificate Registrar to or upon the
receipt of a Written Order to Authenticate from the Depositor concurrently
with the sale and assignment to the Trustee of the Trust Fund. Each Class of
the Offered Certificates shall be initially evidenced by one or more
Certificates representing a Percentage Interest with a minimum dollar (or
notional amount) denomination of $25,000 and integral multiples of $1 in
excess thereof. The Class N, Class X, Class R-1, Class R-2 and Class R-3
Certificates are issuable only in minimum Percentage Interests of 10%.
The Certificates shall be executed on behalf of the Trust by
manual or facsimile signature on behalf of the Trustee by a Responsible
Officer. Certificates bearing the manual or facsimile signatures of
individuals who were, at the time when such signatures were affixed,
authorized to sign on behalf of the Trustee shall bind the Trust,
notwithstanding that such individuals or any of them have ceased to be so
authorized prior to the authentication and delivery of such Certificates or
did not hold such offices at the date of such Certificate. No Certificate
shall be entitled to any benefit under this Agreement or be valid for any
purpose,
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unless such Certificate shall have been manually authenticated by the
Certificate Registrar substantially in the form provided for herein, and such
authentication upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication.
Subject to Section 5.02(c), the Offered Certificates shall be Book-Entry
Certificates. The Class B-2, Class N, Class X, Class R-1, Class R-2 and Class
R-3 Certificates shall not be Book-Entry Certificates but shall be issued in
fully registered certificate form.
Section 5.02 Registration of Transfer and Exchange of
Certificates.
(a) The Certificate Registrar shall cause to be kept at the
Corporate Trust Office of the Trustee a Certificate Register in which, subject
to such reasonable regulations as it may prescribe, the Certificate Registrar
shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. The Trustee shall initially
serve as Certificate Registrar for the purpose of registering Certificates and
transfers and exchanges of Certificates as herein provided. The Trustee as
Certificate Registrar shall be subject to the same standards of care,
limitations on liability and rights to indemnity as the Trustee, and the
provisions of Sections 8.01, 8.02, 8.03, 8.04, 8.05, 8.14, 8.15 and 8.16 shall
apply to the Certificate Registrar to the same extent as they apply to the
Trustee. Any Certificate Registrar appointed in accordance with this Section
5.02(a) may at any time resign by giving at least 30 days' advance written
notice of resignation to the Trustee, the Servicer and the Depositor, such
resignation to become effective upon appointment of a successor Certificate
Registrar.
Upon surrender for registration of transfer of any
Certificate at any office or agency of the Certificate Registrar maintained
for such purpose pursuant to the foregoing paragraph and, in the case of a
Residual Certificate, upon satisfaction of the conditions set forth below, the
Trustee on behalf of the Trust shall execute and the Certificate Registrar
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of the same aggregate Percentage
Interest.
At the option of the Certificateholders, Certificates may be
exchanged for other Certificates in authorized denominations and the same
aggregate Percentage Interests, upon surrender of the Certificates to be
exchanged at any such office or agency. Whenever any Certificates are so
surrendered for exchange, the Trustee shall execute on behalf of the Trust and
the Certificate Registrar shall authenticate and deliver the Certificates
which the Certificateholder making the exchange is entitled to receive. Every
Certificate presented or surrendered for registration of transfer or exchange
shall (if so required by the Trustee or the Certificate Registrar) be duly
endorsed by, or be accompanied by a written instrument of transfer
satisfactory to the Trustee and the Certificate Registrar duly executed by,
the Holder thereof or his attorney duly authorized in writing.
(b) Upon original issuance, the Book-Entry Certificates
shall be issued in the form of one or more typewritten certificates, to be
delivered to the Depository, the initial Depository, by, or on behalf of, the
Depositor; or to, and deposited with the Custodian, on behalf of the
Depository, if directed to do so pursuant to instructions from the Depository.
Except as provided in paragraph (c) below, the Book-Entry Certificates shall
at all times remain registered in the name of the Depository or its nominee
and at all times: (i) registration of such Certificates
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may not be transferred by the Trustee except to another Depository; (ii) the
Depository shall maintain book-entry records with respect to the Certificate
Owners and with respect to ownership and transfers of such Certificates; (iii)
ownership and transfers of registration of such Certificates on the books of
the Depository shall be governed by applicable rules established by the
Depository; (iv) the Depository may collect its usual and customary fees,
charges and expenses from its Depository Participants; (v) the Trustee shall
for all purposes deal with the Depository as representative of the Certificate
Owners of the Certificates for purposes of exercising the rights of Holders
under this Agreement, and requests and directions for and votes of such
representative shall not be deemed to be inconsistent if they are made with
respect to different Certificate Owners; (vi) the Trustee may rely and shall
be fully protected in relying upon information furnished by the Depository
with respect to its Depository Participants and furnished by the Depository
Participants with respect to indirect participating firms and Persons shown on
the books of such indirect participating firms as direct or indirect
Certificate Owners; and (vii) the direct participants of the Depository shall
have no rights under this Agreement under or with respect to any of the
Certificates held on their behalf by the Depository, and the Depository may be
treated by the Trustee and its agents, employees, officers and directors as
the absolute owner of the Certificates for all purposes whatsoever.
All transfers by Certificate Owners of Book-Entry
Certificates shall be made in accordance with the procedures established by
the Depository Participant or brokerage firm representing such Certificate
Owners. Each Depository Participant shall only transfer Book-Entry
Certificates of Certificate Owners that it represents or of brokerage firms
for which it acts as agent in accordance with the Depository's normal
procedures. The parties hereto are hereby authorized to execute a Letter of
Representations with the Depository or take such other action as may be
necessary or desirable to register a Book-Entry Certificate to the Depository.
In the event of any conflict between the terms of any such Letter of
Representation and this Agreement, the terms of this Agreement shall control.
(c) If (i)(x) the Depository or the Depositor advises the
Trustee in writing that the Depository is no longer willing or able to
discharge properly its responsibilities as Depository and (y) the Trustee or
the Depositor is unable to locate a qualified successor, (ii) the Depositor,
at its sole option, with the consent of the Trustee, elects to terminate the
book-entry system through the Depository or (iii) after the occurrence of a
Servicer Event of Termination, the Certificate Owners of each Class of
Book-Entry Certificates representing Percentage Interests of such Classes
aggregating not less than 51% advises the Trustee and Depository through the
Financial Intermediaries and the Depository Participants in writing that the
continuation of a book-entry system through the Depository to the exclusion of
definitive, fully registered certificates (the "Definitive Certificates") to
Certificate Owners is no longer in the best interests of the Certificate
Owners. Upon surrender to the Certificate Registrar of the Book-Entry
Certificates by the Depository, accompanied by registration instructions from
the Depository for registration, the Trustee shall, at the Depositor's
expense, in the case of (ii) above, or the Seller's expense, in the case of
(i) and (iii) above, execute on behalf of the Trust and the Certificate
Registrar shall authenticate the Definitive Certificates. None of the
Depositor or the Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying
on, such instructions. Upon the issuance of Definitive Certificates, the
Trustee, the Certificate Registrar, the Servicer, any Paying Agent and the
Depositor shall recognize the Holders of the Definitive Certificates as
Certificateholders hereunder.
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(d) Except with respect to the initial transfer of the
Private Certificates by the Depositor, no transfer, sale, pledge or other
disposition of any Private Certificate shall be made unless such disposition
is exempt from the registration requirements of the Securities Act of 1933, as
amended (the "1933 Act"), and any applicable state securities laws or is made
in accordance with the 1933 Act and laws. In the event of any such transfer,
(i) unless such transfer is made in reliance upon Rule 144A (as evidenced by
the investment letter delivered to the Certificate Registrar, in substantially
the form attached hereto as Exhibit J) under the 1933 Act, the Certificate
Registrar and the Depositor shall require a written Opinion of Counsel (which
may be in-house counsel) acceptable to and in form and substance reasonably
satisfactory to the Certificate Registrar and the Depositor that such transfer
may be made pursuant to an exemption, describing the applicable exemption and
the basis therefor, from the 1933 Act or is being made pursuant to the 1933
Act, which Opinion of Counsel shall not be an expense of the Certificate
Registrar or the Depositor or (ii) the Certificate Registrar shall require the
transferor to execute a transferor certificate (in substantially the form
attached hereto as Exhibit L) and the transferee to execute an investment
letter (in substantially the form attached hereto as Exhibit J) acceptable to
and in form and substance reasonably satisfactory to the Depositor and the
Certificate Registrar certifying to the Depositor and the Certificate
Registrar the facts surrounding such transfer, which investment letter shall
not be an expense of the Certificate Registrar or the Depositor. The Holder of
a Private Certificate desiring to effect such transfer shall, and does hereby
agree to, indemnify the Certificate Registrar and the Depositor against any
liability that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws.
No transfer of an ERISA-Restricted Certificate shall be made
unless the Certificate Registrar shall have received either (i) a
representation from the transferee of such Certificate, acceptable to and in
form and substance satisfactory to the Certificate Registrar and the
Depositor, (such requirement is satisfied only by the Certificate Registrar's
receipt of a representation letter from the transferee substantially in the
form of Exhibit I hereto, as appropriate), to the effect that such transferee
is not an employee benefit plan or arrangement subject to Section 406 of ERISA
or a plan subject to Section 4975 of the Code, nor a person acting on behalf
of any such plan or arrangement or using the assets of any such plan or
arrangement to effect such transfer or (ii) (except in the case of a Class
R-1, Class R-2, Class R-3, Class X, Class N or Class B-2 Certificate) if the
purchaser is an insurance company, a representation that the purchaser is an
insurance company which is purchasing such Certificates with funds contained
in an "insurance company general account" (as such term is defined in Section
V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60") and that
the purchase and holding of such Certificates are covered under Sections I and
III of PTCE 95-60 or (iii) in the case of any such ERISA-Restricted
Certificate presented for registration in the name of an employee benefit plan
subject to ERISA or a plan or arrangement subject to Section 4975 of the Code
(or comparable provisions of any subsequent enactments), or a trustee of any
such plan or any other person acting on behalf of any such plan or arrangement
or using such plan's or arrangement's assets, an Opinion of Counsel
satisfactory to the Certificate Registrar and the Depositor, and upon which
the Trustee, the Depositor and the Servicer shall be entitled to rely, to the
effect that the purchase or holding of such ERISA-Restricted Certificate will
not result in the assets of the Trust being deemed to be "plan assets" and
subject to the prohibited transaction provisions of ERISA or 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 or to any liability.
For purposes of clause (i) of the preceding sentence, such representation
shall be deemed to have
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been made to the Certificate Registrar by the acceptance by a Certificate
Owner of the beneficial interest in any such Class of ERISA-Restricted
Certificates, unless the Certificate Registrar shall have received from the
transferee an alternative representation acceptable in form and substance to
the Certificate Registrar and the Depositor. Notwithstanding anything else to
the contrary herein, any purported transfer of an ERISA-Restricted Certificate
to or on behalf of an employee benefit plan subject to ERISA or to the Code
without the delivery to the Certificate Registrar of an Opinion of Counsel
satisfactory to the Certificate Registrar as described above shall be void and
of no effect.
Each Person who has or who acquires any Ownership Interest
in a Residual Certificate shall be deemed by the acceptance or acquisition of
such Ownership Interest to have agreed to be bound by the following provisions
and to have irrevocably appointed the Depositor or its designee as its
attorney-in-fact to negotiate the terms of any mandatory sale under clause (v)
below and to execute all instruments of transfer and to do all other things
necessary in connection with any such sale, and the rights of each Person
acquiring any Ownership Interest in a Residual Certificate are expressly
subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest
in a Residual Certificate shall be a Permitted Transferee and shall
promptly notify the Certificate Registrar of any change or impending
change in its status as a Permitted Transferee.
(ii) No Person shall acquire an Ownership Interest in a
Residual Certificate unless such Ownership Interest is a pro rata
undivided interest.
(iii) In connection with any proposed transfer of any
Ownership Interest in a Class R Certificate, the Certificate
Registrar shall as a condition to registration of the transfer,
require delivery to it, in form and substance satisfactory to it, of
each of the following:
A. an affidavit in the form of Exhibit K hereto from the
proposed transferee to the effect that, among other things, such transferee is
a Permitted Transferee and that it is not acquiring its Ownership Interest in
the Residual Certificate that is the subject of the proposed transfer as a
nominee, trustee or agent for any Person who is not a Permitted Transferee;
and
B. a covenant of the proposed transferee to the effect that
the proposed transferee agrees to be bound by and to abide by the transfer
restrictions applicable to the Residual Certificates.
(iv) Any attempted or purported transfer of any Ownership
Interest in a Residual Certificate in violation of the provisions of
this Section shall be absolutely null and void and shall vest no
rights in the purported transferee. If any purported transferee
shall, in violation of the provisions of this Section, become a
Holder of a Residual Certificate, then the prior Holder of such
Residual Certificate that is a Permitted Transferee shall, upon
discovery that the registration of transfer of such Residual
Certificate was not in fact permitted by this Section, be restored to
all rights as Holder thereof retroactive to the date of registration
of transfer of such Residual Certificate. The Certificate Registrar
shall be under no liability to any Person for any registration of
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transfer of a Residual Certificate that is in fact not permitted by
this Section or for making any distributions due on such Residual
Certificate to the Holder thereof or taking any other action with
respect to such Holder under the provisions of this Agreement so long
as the Certificate Registrar received the documents specified in
clause (iii). The Trustee shall be entitled to recover from any
Holder of a Residual Certificate that was in fact not a Permitted
Transferee at the time such distributions were made all distributions
made on such Residual Certificate. Any such distributions so
recovered by the Trustee shall be distributed and delivered by the
Trustee to the prior Holder of such Residual Certificate that is a
Permitted Transferee.
(v) If any Person other than a Permitted Transferee acquires
any Ownership Interest in a Residual Certificate in violation of the
restrictions in this Section, then the Certificate Registrar shall
have the right but not the obligation, without notice to the Holder
of such Residual Certificate or any other Person having an Ownership
Interest therein, to notify the Depositor to arrange for the sale of
such Residual Certificate. The proceeds of such sale, net of
commissions (which may include commissions payable to the Depositor
or its affiliates in connection with such sale), expenses and taxes
due, if any, will be remitted by the Trustee to the previous Holder
of such Residual Certificate that is a Permitted Transferee, except
that in the event that the Trustee determines that the Holder of such
Residual Certificate may be liable for any amount due under this
Section or any other provisions of this Agreement, the Trustee may
withhold a corresponding amount from such remittance as security for
such claim. The terms and conditions of any sale under this clause
(v) shall be determined in the sole discretion of the Trustee and it
shall not be liable to any Person having an Ownership Interest in a
Residual Certificate as a result of its exercise of such discretion.
(vi) If any Person other than a Permitted Transferee
acquires any Ownership Interest in a Residual Certificate in
violation of the restrictions in this Section, then the Trustee will
provide to the Internal Revenue Service, and to the persons specified
in Sections 860E(e)(3) and (6) of the Code, information needed to
compute the tax imposed under Section 860E(e)(5) of the Code on
transfers of residual interests to disqualified organizations. The
Trustee shall be entitled to reasonable compensation for providing
such information from the person to whom it is provided.
The foregoing provisions of this Section shall cease to
apply to transfers occurring on or after the date on which there shall have
been delivered to the Certificate Registrar, in form and substance
satisfactory to the Certificate Registrar, (i) written notification from each
Rating Agency that the removal of the restrictions on Transfer set forth in
this Section will not cause such Rating Agency to downgrade its rating of the
Certificates and (ii) an Opinion of Counsel to the effect that such removal
will not cause any REMIC hereunder to fail to qualify as a REMIC.
No transfer of a Class N Certificate shall be made, and any
attempted or purported transfer of a Class N Certificate shall be absolutely
null and void and shall vest no rights in the purported transferee, if the
purported transferee is not a U.S. Person. Notwithstanding the foregoing, a
100% Percentage Interest in the Class N Certificate may be transferred to a
Non-U.S. Person that is, or will be as of the date of such transfer, the
Holder of Class X Certificates evidencing a 100% Percentage Interest in such
Class. Any holder of the Class X Certificates that
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is a Non-U.S. Person and that also is a beneficial owner of a 100% Percentage
Interest in the Class N Certificates, may not transfer any portion of the
Class X Certificates to another Person as long as it continues to hold any
interest in the Class N Certificates.
(e) No service charge shall be made for any registration of
transfer or exchange of Certificates of any Class, but the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of Certificates.
All Certificates surrendered for registration of transfer or
exchange shall be cancelled by the Certificate Registrar and disposed of
pursuant to its standard procedures.
Section 5.03 Mutilated, Destroyed, Lost or Stolen
Certificates.
If (i) any mutilated Certificate is surrendered to the
Certificate Registrar or the Certificate Registrar receives evidence to its
satisfaction of the destruction, loss or theft of any Certificate and (ii)
there is delivered to the Trustee, the Depositor and the Certificate Registrar
such security or indemnity as may be required by them to save each of them
harmless, then, in the absence of notice to the Trustee or the Certificate
Registrar that such Certificate has been acquired by a bona fide purchaser,
the Trustee shall execute on behalf of the Trust, and the Certificate
Registrar shall authenticate and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Certificate, a new Certificate of
like tenor and Percentage Interest. Upon the issuance of any new Certificate
under this Section, the Trustee or the Certificate Registrar may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including the fees
and expenses of the Trustee and the Certificate Registrar) in connection
therewith. Any duplicate Certificate issued pursuant to this Section, shall
constitute complete and indefeasible evidence of ownership in the Trust, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
Section 5.04 Persons Deemed Owners.
The Servicer, the Depositor, the Trustee, the Certificate
Registrar, any Paying Agent and any agent of the Servicer, the Depositor, the
Certificate Registrar, any Paying Agent or the Trustee may treat the Person,
including a Depository, in whose name any Certificate is registered as the
owner of such Certificate for the purpose of receiving distributions pursuant
to Section 4.01 and 4.02 and for all other purposes whatsoever, and none of
the Servicer, the Trust, the Trustee nor any agent of any of them shall be
affected by notice to the contrary.
Section 5.05 Appointment of Paying Agent.
The Paying Agent shall make distributions to
Certificateholders from the Distribution Account pursuant to Section 4.01 and
4.02 and shall report the amounts of such distributions to the Trustee. The
duties of the Paying Agent may include the obligation (i) to withdraw funds
from the Collection Account pursuant to Section 3.05 and for the purpose of
making the distributions referred to above and (ii) to distribute statements
and provide information to Certificateholders as required hereunder. The
Paying Agent hereunder shall at all times be an entity duly incorporated and
validly existing under the laws of the United States of
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America or any state thereof, authorized under such laws to exercise corporate
trust powers and subject to supervision or examination by federal or state
authorities. The Paying Agent shall initially be the Trustee. The Trustee may
appoint a successor to act as Paying Agent, which appointment shall be
reasonably satisfactory to the Depositor and the Rating Agencies. The Trustee
as Paying Agent shall be subject to the same standards of care, limitations on
liability and rights to indemnity as the Trustee, and the provisions of
Sections 8.01, 8.02, 8.03, 8.04, 8.05, 8.14, 8.15 and 8.16 shall apply to the
Paying Agent to the same extent as they apply to the Trustee. Any Paying Agent
appointed in accordance with this Section 5.02(a) may at any time resign by
giving at least 30 days' advance written notice of resignation to the Trustee,
the Servicer and the Depositor, such resignation to become effective upon
appointment of a successor Paying Agent.
ARTICLE VI
THE SELLER, THE SERVICER AND THE DEPOSITOR
Section 6.01 Liability of the Seller, the Servicer and the
Depositor.
The Seller and the Servicer shall be liable in accordance
herewith only to the extent of the obligations specifically imposed upon and
undertaken by the Seller or Servicer, as the case may be, herein. The
Depositor shall be liable in accordance herewith only to the extent of the
obligations specifically imposed upon and undertaken by the Depositor.
Section 6.02 Merger or Consolidation of, or Assumption of
the Obligations of, the Seller, the Servicer or the Depositor.
Any entity into which the Seller, the Servicer or the
Depositor may be merged or consolidated, or any entity resulting from any
merger, conversion or consolidation to which the Seller, the Servicer or the
Depositor shall be a party, or any corporation succeeding to the business of
the Seller, the Servicer or the Depositor, shall be the successor of the
Seller, the Servicer or the Depositor, as the case may be, hereunder, without
the execution or filing of any paper or any further act on the part of any of
the parties hereto, anything herein to the contrary notwithstanding; provided,
however that the successor Servicer shall satisfy all the requirements of
Section 7.02 with respect to the qualifications of a successor Servicer.
Section 6.03 Limitation on Liability of the Servicer and
Others.
Neither the Servicer nor any of the directors or officers or
employees or agents of the Servicer shall be under any liability to the Trust
or the Certificateholders for any action taken or for refraining from the
taking of any action by the Servicer in good faith pursuant to this Agreement,
or for errors in judgment; provided, however, that this provision shall not
protect the Servicer or any such Person against any liability which would
otherwise be imposed by reason of its willful misfeasance, bad faith or gross
negligence in the performance of duties of the Servicer or by reason of its
reckless disregard of its obligations and duties of the Servicer hereunder;
provided, further, that this provision shall not be construed to entitle the
Servicer to indemnity in the event that amounts advanced by the Servicer to
retire any senior lien exceed Liquidation Proceeds (in excess of related
liquidation expenses) realized with respect to the related Mortgage
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Loan. The Servicer and any director or officer or employee or agent of the
Servicer may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. The Servicer and any director or officer or employee or agent of
the Servicer shall be indemnified by the Trust and held harmless against any
loss, liability or expense incurred in connection with any legal action
relating to this Agreement or the Certificates, other than any loss, liability
or expense incurred by reason of its willful misfeasance, bad faith or
negligence in the performance of duties hereunder or by reason of its reckless
disregard of obligations and duties hereunder. The Servicer may undertake any
such action which it may deem necessary or desirable in respect of this
Agreement, and the rights and duties of the parties hereto and the interests
of the Certificateholders hereunder. In such event, the reasonable legal
expenses and costs of such action and any liability resulting therefrom shall
be expenses, costs and liabilities of the Trust and the Servicer shall be
entitled to pay such expenses from the proceeds of the Trust or to be
reimbursed therefor pursuant to Section 3.05 upon presentation to the Trustee
of documentation of such expenses, costs and liabilities. The Servicer's right
to indemnity or reimbursement pursuant to this Section shall survive any
resignation or termination of the Servicer pursuant to Section 6.04 or 7.01
with respect to any losses, expenses, costs or liabilities arising prior to
such resignation or termination (or arising from events that occurred prior to
such resignation or termination). This paragraph shall apply to the Servicer
solely in its capacity as Servicer hereunder and in no other capacities.
Section 6.04 Servicer Not to Resign.
Subject to the provisions of Section 7.01 and Section 6.02,
the Servicer shall not resign from the obligations and duties hereby imposed
on it except (i) upon determination that the performance of its obligations or
duties hereunder are no longer permissible under applicable law or are in
material conflict by reason of applicable law with any other activities
carried on by it or its subsidiaries or Affiliates, the other activities of
the Servicer so causing such a conflict being of a type and nature carried on
by the Servicer or its subsidiaries or Affiliates at the date of this
Agreement or (ii) upon satisfaction of the following conditions: (a) the
Servicer has proposed a successor servicer to the Trustee in writing and such
proposed successor servicer is reasonably acceptable to the Trustee; and (b)
each Rating Agency shall have delivered a letter to the Trustee prior to the
appointment of the successor servicer stating that the proposed appointment of
such successor servicer as Servicer hereunder will not result in the reduction
or withdrawal of the then current rating of the Regular Certificates or the
ratings that are in effect; provided, however, that no such resignation by the
Servicer shall become effective until such successor servicer or, in the case
of (i) above, the Trustee shall have assumed the Servicer's responsibilities
and obligations hereunder or the Trustee shall have designated a successor
servicer in accordance with Section 7.02. Any such resignation shall not
relieve the Servicer of responsibility for any of the obligations specified in
Sections 7.01 and 7.02 as obligations that survive the resignation or
termination of the Servicer. Any such determination permitting the resignation
of the Servicer pursuant to clause (i) above shall be evidenced by an Opinion
of Counsel to such effect delivered to the Trustee. Any such determination
permitting the resignation of the Servicer shall be evidenced by an Opinion of
Counsel to such effect delivered to the Trustee.
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Section 6.05 Delegation of Duties.
In the ordinary course of business, the Servicer at any time
may delegate any of its duties hereunder to any Person, including any of its
Affiliates, who agrees to conduct such duties in accordance with standards
comparable to those set forth in Section 3.01. Such delegation shall not
relieve the Servicer of its liabilities and responsibilities with respect to
such duties and shall not constitute a resignation within the meaning of
Section 6.04. The Servicer shall provide the Trustee and the Rating Agencies
with 60 days prior written notice prior to the delegation of any of its duties
to any Person other than any of the Servicer's Affiliates or their respective
successors and assigns.
The Trustee hereby specifically (i) consents to the pledge
and assignment by the Servicer of all the Servicer's right, title and interest
in, to and under this Agreement to the Servicing Rights Pledgee, for the
benefit of certain lenders, and (ii) provided that no Servicer Event of
Termination exists, agrees 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 7.02(a) 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,
the entire amount of the Servicing Fee and other compensation payable to the
Servicer pursuant hereto shall thereafter be payable to such successor.
ARTICLE VII
DEFAULT
Section 7.01 Servicer Events of Termination.
(a) If any one of the following events ("Servicer Events of
Termination") shall occur and be continuing:
(i) (A) The failure by the Servicer to make any Advance; or
(B) any other failure by the Servicer to deposit in the Collection
Account or Distribution Account any deposit required to be made under
the terms of this Agreement which continues unremedied for a period
of one Business Day after the date upon which written notice of such
failure shall have been given to the Servicer by the Trustee or by
any Holder of a Regular Certificate evidencing at least 25% of the
Voting Rights; or
(ii) The failure by the Servicer to make any required
Servicing Advance which failure continues unremedied for a period of
30 days, or the failure by the Servicer duly to observe or perform,
in any material respect, any other covenants, obligations or
agreements of the Servicer as set forth in this Agreement, which
failure continues unremedied for a period of 30 days, after the date
(A) on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the
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Trustee or by any Holder of a Regular Certificate evidencing at least
25% of the Voting Rights or (B) actual knowledge of such failure by a
Servicing Officer of the Servicer; or
(iii) The entry against the Servicer of a decree or order by
a court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a trustee, conservator, receiver or
liquidator in any insolvency, conservatorship, receivership,
readjustment of debt, marshalling of assets and liabilities or
similar proceedings, or for the winding up or liquidation of its
affairs, and the continuance of any such decree or order unstayed and
in effect for a period of 60 days; or
(iv) The Servicer shall voluntarily go into liquidation,
consent to the appointment of a conservator or receiver or liquidator
or similar person in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or
relating to the Servicer or of or relating to all or substantially
all of its property; or a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises for the
appointment of a conservator, receiver, liquidator or similar person
in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the
Servicer and such decree or order shall have remained in force
undischarged, unbonded or unstayed for a period of 60 days; or the
Servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of
any applicable insolvency or reorganization statute, make an
assignment for the benefit of its creditors or voluntarily suspend
payment of its obligations; or
(v) The aggregate amount of cumulative Realized Losses
incurred since the Cut-off Date through the last day of the related
Collection Period divided by the initial Pool Balance exceeds the
applicable percentages set forth below with respect to such
Distribution Date:
Distribution Date Occurring In Percentage
May 2005 through April 2006 2.75%
May 2006 through April 2007 3.75%
May 2007 through April 2008 4.50%
May 2008 and thereafter 5.00%
(b) Then, and in each and every such case, so long as a
Servicer Event of Termination shall not have been remedied within the
applicable grace period, (x) with respect solely to clause (i)(A) above, if
such Advance is not made by 2:00 P.M., New York time, on the Business Day
immediately following the Servicer Remittance Date, the Trustee may terminate
all of the rights and obligations of the Servicer under this Agreement and the
Trustee, or a successor servicer appointed in accordance with Section 7.02,
shall immediately make such Advance and assume, pursuant to Section 7.02, the
duties of a successor Servicer and (y) in the case of (i)(B), (ii), (iii),
(iv) and (v) above, the Trustee shall, at the direction of the Holders of each
Class of Regular Certificates evidencing Percentage Interests aggregating not
less than 51%, by notice then given in writing to the Servicer (and to the
Trustee if given by Holders of
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Certificates), terminate all of the rights and obligations of the Servicer as
servicer under this Agreement. Any such notice to the Servicer shall also be
given to each Rating Agency, the Depositor and the Seller. On or after the
receipt by the Servicer (and by the Trustee if such notice is given by the
Holders) of such written notice, all authority and power of the Servicer under
this Agreement, whether with respect to the Certificates or the Mortgage Loans
or otherwise, shall pass to and be vested in the Trustee pursuant to and under
this Section; and, without limitation, the Trustee is hereby authorized and
empowered to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments,
and to do or accomplish all other acts or things necessary or appropriate to
effect the purposes of such notice of termination, whether to complete the
transfer and endorsement of each Mortgage Loan and Related Documents or
otherwise. The Servicer agrees to cooperate with the Trustee (or the
applicable successor Servicer) in effecting the termination of the
responsibilities and rights of the Servicer hereunder, including, without
limitation, the delivery to the Trustee of all documents and records requested
by it to enable it to assume the Servicer's functions under this Agreement
within ten Business Days subsequent to such notice, the transfer within one
Business Day subsequent to such notice to the Trustee (or the applicable
successor Servicer) for the administration by it of all cash amounts that
shall at the time be held by the Servicer and to be deposited by it in the
Collection Account, the Distribution Account, any REO Account or any Escrow
Account or that have been deposited by the Servicer in such accounts or
thereafter received by the Servicer with respect to the Mortgage Loans or any
REO Property received by the Servicer. All reasonable costs and expenses
(including attorneys' fees) incurred in connection with transferring the
servicing to the successor Servicer and amending this Agreement to reflect
such succession as Servicer pursuant to this Section shall be paid by the
predecessor Servicer (or if the predecessor Servicer is the Trustee, the
initial Servicer) upon presentation of reasonable documentation of such costs
and expenses.
Section 7.02 Trustee to Act; Appointment of Successor.
(a) Within 90 days of the time the Servicer and the Trustee
receives a notice of termination pursuant to Section 7.01 or 6.04, the Trustee
(or such other successor Servicer as is approved in accordance with this
Agreement) shall be the successor in all respects to the Servicer in its
capacity as servicer under this Agreement and the transactions set forth or
provided for herein and shall be subject to all the responsibilities, duties
and liabilities relating thereto placed on the Servicer by the terms and
provisions hereof arising on and after its succession. As compensation
therefor, the Trustee (or such other successor Servicer) shall be entitled to
such compensation as the Servicer would have been entitled to hereunder if no
such notice of termination had been given. Notwithstanding the above, (i) if
the Trustee is unwilling to act as successor Servicer or (ii) if the Trustee
is legally unable so to act, the Trustee shall appoint or petition a court of
competent jurisdiction to appoint, any established housing and home finance
institution, bank or other mortgage loan or home equity loan servicer having a
net worth of not less than $50,000,000 as the successor to the Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Servicer hereunder; provided, that the appointment of
any such successor Servicer will not result in the qualification, reduction or
withdrawal of the ratings assigned to the Certificates or the ratings that are
in effect by the Rating Agencies as evidenced by a letter to such effect from
the Rating Agencies. Pending appointment of a successor to the Servicer
hereunder, unless the Trustee is prohibited by law from so acting, the Trustee
shall act in such capacity as hereinabove provided. In connection
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with such appointment and assumption, the successor shall be entitled to
receive compensation out of payments on Mortgage Loans in an amount equal to
the compensation which the Servicer would otherwise have received pursuant to
Section 3.18 (or such other compensation as the Trustee and such successor
shall agree, not to exceed the Servicing Fee). The successor servicer shall be
entitled to withdraw from the Collection Account all costs and expenses
associated with the transfer of the servicing to the successor servicer. The
appointment of a successor servicer shall not affect any liability of the
predecessor Servicer which may have arisen under this Agreement prior to its
termination as Servicer to pay any deductible under an insurance policy
pursuant to Section 3.12 or to indemnify the parties indicated in Section 3.26
pursuant to the terms thereof, nor shall any successor Servicer be liable for
any acts or omissions of the predecessor Servicer or for any breach by such
Servicer of any of its representations or warranties contained herein or in
any related document or agreement. The Trustee and such successor shall take
such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession.
In the event of a Servicer Event of Termination,
notwithstanding anything to the contrary above, the Trustee and the Depositor
hereby agree that upon delivery to the Trustee by the Servicing Rights Pledgee
of a letter signed by the Servicer within ten Business Days of when
notification of such event shall have been provided to the Trustee, whereunder
the Servicer shall resign as Servicer under this Agreement, the Servicing
Rights Pledgee or its designee shall be appointed as successor Servicer
(provided that at the time of such appointment the Servicing Rights Pledgee or
such designee meets the requirements of a successor Servicer set forth above)
and the Servicing Rights Pledgee agrees to be subject to the terms of this
Agreement.
(b) Any successor, including the Trustee, to the Servicer as
servicer shall during the term of its service as servicer continue to service
and administer the Mortgage Loans for the benefit of Certificateholders, and
maintain in force a policy or policies of insurance covering errors and
omissions in the performance of its obligations as Servicer hereunder and a
Fidelity Bond in respect of its officers, employees and agents to the same
extent as the Servicer is so required pursuant to Section 3.12.
Section 7.03 Waiver of Defaults.
The Majority Certificateholders may, on behalf of all
Certificateholders, waive any events permitting removal of the Servicer as
servicer pursuant to this Article VII, provided, however, that the Majority
Certificateholders may not waive a default in making a required distribution
on a Certificate without the consent of the Holder of such Certificate. Upon
any waiver of a past default, such default shall cease to exist and any
Servicer Event of Termination arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to
any subsequent or other default or impair any right consequent thereto except
to the extent expressly so waived. Notice of any such waiver shall be given by
the Trustee to the Rating Agencies.
Section 7.04 Notification to Certificateholders.
(a) On any termination or appointment of a successor the
Servicer pursuant to this Article VII or Section 6.04, the Trustee shall give
prompt written notice thereof to the
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Certificateholders at their respective addresses appearing in the Certificate
Register and each Rating Agency.
(b) No later than 60 days after the occurrence of any event
which constitutes or which, with notice or a lapse of time or both, would
constitute a Servicer Event of Termination for five Business Days after a
Responsible Officer of the Trustee becomes aware of the occurrence of such an
event, the Trustee shall transmit by mail to all Certificateholders notice of
such occurrence unless such default or Servicer Event of Termination shall
have been waived or cured. Such notice shall be given to the Rating Agencies
promptly after any such occurrence.
Section 7.05 Survivability of Servicer Liabilities.
Notwithstanding anything herein to the contrary, upon
termination of the Servicer hereunder, any liabilities of the Servicer which
accrued prior to such termination shall survive such termination.
ARTICLE VIII
THE TRUSTEE
Section 8.01 Duties of Trustee.
The Trustee, prior to the occurrence of a Servicer Event of
Termination of which a Responsible Officer of the Trustee shall have actual
knowledge and after the curing of all Servicer Events of Termination which may
have occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. If a Servicer Event of Termination
has occurred (which has not been cured) of which a Responsible Officer has
actual knowledge, the Trustee shall exercise such of the rights and powers
vested in it by this Agreement, and use the same degree of care and skill in
their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments
furnished to the Trustee, which are specifically required to be furnished
pursuant to any provision of this Agreement, shall examine them to determine
whether they conform to the requirements of this Agreement; provided, however
that that Trustee shall not be responsible for the accuracy or content of any
resolution, certificate, statement, opinion, report, document, order or other
instrument furnished by the Servicer, the Seller or the Depositor hereunder.
If any such instrument is found not to conform in any material respect to the
requirements of this Agreement, the Trustee shall notify the
Certificateholders of such instrument in the event that the Trustee, after so
requesting, does not receive a satisfactorily corrected instrument.
No provision of this Agreement shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act or its own misconduct; provided, however that:
(i) prior to the occurrence of a Servicer Event of
Termination, and after the curing of all such Servicer Events of
Termination which may have occurred, the duties
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and obligations of the Trustee shall be determined solely by the
express provisions of this Agreement, the Trustee shall not be liable
except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and,
in the absence of bad faith on the part of the Trustee, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates
or opinions furnished to the Trustee and conforming to the
requirements of this Agreement;
(ii) the Trustee shall not be personally liable for an error
of judgment made in good faith by a Responsible Officer of the
Trustee unless it shall be proved that the Trustee was negligent in
ascertaining or investigating the facts related thereto;
(iii) the Trustee shall not be personally liable with
respect to any action taken, suffered or omitted to be taken by it in
good faith in accordance with the direction of the Majority
Certificateholders relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee or
exercising or omitting to exercise any trust or power conferred upon
the Trustee under this Agreement; and
(iv) the Trustee shall not be charged with knowledge of any
failure by the Servicer to comply with the obligations of the
Servicer referred to in clauses (i) and (ii) of Section 7.01 or any
Servicer Event of Termination unless a Responsible Officer of the
Trustee at the Corporate Trust Office obtains actual knowledge of
such failure or the Trustee receives written notice of such failure
from the Servicer or the Majority Certificateholders. In the absence
of such receipt of such notice, the Trustee may conclusively assume
that there is no Servicer Event of Termination.
The Trustee shall not be required to expend or risk its own
funds or otherwise incur financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights or powers, if there
is reasonable ground for believing that the repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it, and none of the provisions contained in this Agreement shall in any event
require the Trustee to perform, or be responsible for the manner of
performance of, any of the obligations of the Servicer under this Agreement,
except during such time, if any, as the Trustee shall be the successor to, and
be vested with the rights, duties, powers and privileges of, the Servicer in
accordance with the terms of this Agreement.
The Trustee shall not have any duty (A) to see any
recording, filing, or depositing of this Agreement or any agreement referred
to herein or any financing statement or continuation statement evidencing a
security interest, or to see to the maintenance of any such recording or
filing or depositing or to any rerecording, refiling or redepositing of any
thereof, (B) to see to any insurance or (C) to see to the payment or discharge
of any tax, assessment, or other governmental charge or any lien or
encumbrance of any kind owing with respect to, assessed or levied against, any
part of the Trust Fund other than from funds available in the Distribution
Account.
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The Trustee shall not complete foreclosure proceedings, or
accept a deed in lieu of foreclosure, with respect to any Ineligible
Foreclosure Property Loan that would cause the Trustee to hold REO Property
from Ineligible Foreclosure Property Loans with an aggregate value in excess
of 0.75% of the Pool Balance as of the end of the prior Collection Period,
unless the Trustee has been supplied with an Opinion of Counsel to the effect
that if the related Mortgaged Property is acquired by the Trust, such
Mortgaged Property from such Mortgage will qualify as "foreclosure property"
within the meaning of Section 860G(a) (8) of the Code. In the event that the
Trustee acquires possession of any Mortgaged Property in spite of the
foregoing, the Trustee shall dispose of the acquired Mortgaged Property as
expeditiously as possible.
Section 8.02 Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
(i) the Trustee may request and rely upon, and shall be
protected in acting or refraining from acting upon, any resolution,
Officer's Certificate, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond or other paper or document reasonably
believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(ii) the Trustee may consult with counsel and any advice or
Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by
it hereunder in good faith and in accordance with such advice or
Opinion of Counsel;
(iii) the Trustee shall not be under any obligation to
exercise any of the rights or powers vested in it by this Agreement,
or to institute, conduct or defend any litigation hereunder or in
relation hereto, at the request, order or direction of the
Certificateholders pursuant to the provisions of this Agreement,
unless such Certificateholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby; the right of
the Trustee to perform any discretionary act enumerated in this
Agreement shall not be construed as a duty, and the Trustee shall not
be answerable for other than its negligence or willful misconduct in
the performance of any such act;
(iv) the Trustee shall not be personally liable for any
action taken, suffered or omitted by it in good faith and believed by
it to be authorized or within the discretion or rights or powers
conferred upon it by this Agreement;
(v) prior to the occurrence of a Servicer Event of
Termination and after the curing of all Servicer Events of
Termination which may have occurred, the Trustee shall not be bound
to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, bond or other paper or
documents, unless requested in writing to do so by the Majority
Certificateholders; provided, however, that if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is,
in the opinion of the Trustee, not reasonably assured to
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the Trustee by the security afforded to it by the terms of this
Agreement, the Trustee may require reasonable indemnity against such
cost, expense or liability as a condition to such proceeding. The
reasonable expense of every such examination shall be paid by the
Servicer or, if paid by the Trustee, shall be reimbursed by the
Servicer upon demand. Nothing in this clause (v) shall derogate from
the obligation of the Servicer to observe any applicable law
prohibiting disclosure of information regarding the Mortgagors;
(vi) the Trustee shall not be accountable, shall have any
liability or make any representation as to any acts or omissions
hereunder of the Servicer until such time as the Trustee may be
required to act as Servicer pursuant to Section 7.02;
(vii) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys or a custodian and the Trustee shall not
be responsible for any misconduct or negligence on the part of any
such agent, attorney or custodian appointed by it with due care; and
(viii) the right of the Trustee to perform any discretionary
act enumerated in this Agreement shall not be construed as a duty,
and the Trustee shall not be answerable for other than its negligence
or willful misconduct in the performance of such act.
Section 8.03 Trustee Not Liable for Certificates or Mortgage
Loans.
The recitals contained herein and in the Certificates (other
than the authentication of the Trustee on the Certificates) shall be taken as
the statements of the Seller, and the Trustee assumes no responsibility for
the correctness of the same. The Trustee makes no representation as to the
validity or sufficiency of this Agreement or of the Certificates (other than
the signature and authentication of the Trustee on the Certificates) or of any
Mortgage Loan or Related Document. The Trustee shall not be accountable for
the use or application by the Servicer, or for the use or application of any
funds paid to the Servicer in respect of the Mortgage Loans or deposited in or
withdrawn from the Collection Account by the Servicer. The Trustee shall 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 or its ability to generate the payments to be distributed to
Certificateholders under this Agreement, including, without limitation: the
existence, condition and ownership of any Mortgaged Property; the existence
and enforceability of any hazard insurance thereon (other than if the Trustee
shall assume the duties of the Servicer pursuant to Section 7.02); the
validity of the assignment of any Mortgage Loan to the Trustee or of any
intervening assignment; the completeness of any Mortgage Loan; the performance
or enforcement of any Mortgage Loan (other than if the Trustee shall assume
the duties of the Servicer pursuant to Section 7.02); the compliance by the
Depositor, the Seller or the Servicer with any warranty or representation made
under this Agreement or in any related document or the accuracy of any such
warranty or representation prior to the Trustee's receipt of notice or other
discovery of any non-compliance therewith or any breach thereof; any
investment of monies by or at the direction of the Servicer or any loss
resulting therefrom, it being understood that the Trustee shall remain
responsible for any Trust property that it may hold in its individual
capacity; the acts or omissions of any of the Servicer (other than if the
Trustee shall assume the duties of the Servicer pursuant to Section 7.02), or
any Mortgagor; any action of the Servicer (other than if the Trustee shall
assume the
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duties of the Servicer pursuant to Section 7.02), taken in the name
of the Trustee; the failure of the Servicer to act or perform any duties
required of it as agent of the Trustee hereunder; or any action by the Trustee
taken at the instruction of the Servicer (other than if the Trustee shall
assume the duties of the Servicer pursuant to Section 7.02); provided,
however, that the foregoing shall not relieve the Trustee of its obligation to
perform its duties under this Agreement. 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.
Section 8.04 Trustee May Own Certificates.
The Trustee in its individual or any other capacity may
become the owner or pledgee of Certificates with the same rights as it would
have if it were not Trustee and may transact any banking and trust business
with the Seller, the Servicer, the Depositor or their Affiliates.
Section 8.05 Seller to Pay Trustee Fees and Expenses.
The Trustee shall withdraw from the Distribution Account on
each Distribution Date and pay to itself its fees in an aggregate amount equal
to the Trustee Fee pursuant to Section 4.01(a) and (b), to the extent the
Group I Interest Remittance Amount and the Group II Interest Remittance Amount
are at any time insufficient for such purpose, the Seller shall pay such fees
as reasonable compensation (which shall not be limited by any provision of law
in regard to the compensation of a trustee of an express trust) for all
services rendered by it in the execution of the trusts hereby created and in
the exercise and performance of any of the powers and duties hereunder of the
Trustee, and the Seller will pay or reimburse the Trustee upon its request for
all reasonable expenses, disbursements and advances incurred or made by the
Trustee in accordance with any of the provisions of this Agreement (including
the reasonable compensation and the expenses and disbursements of its counsel
and of all persons not regularly in its employ) except any such expense,
disbursement or advance as may arise from such party's negligence or bad faith
or which is the responsibility of Certificateholder or the Trustee.
Notwithstanding any other provision of this Agreement, including Section
2.03(a) and Section 2.04, to the contrary, the Seller covenants and agrees to
indemnify the Trustee and its officers, directors, employees and agents from,
and hold each of them harmless against, any and all losses, liabilities,
damages, claims or expenses incurred in connection with any legal action
relating to this Agreement, the Certificates or incurred in connection with
the administration of the Trust, other than with respect to a party, any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
negligence of such party in the performance of its duties hereunder or by
reason of such party's reckless disregard of obligations and duties hereunder.
Anything in this Agreement to the contrary notwithstanding, in no event shall
the Trustee be liable for special, indirect 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. The Trustee and any director, officer,
employee or agent of the Trustee shall be indemnified, to the extent not paid
by the Seller pursuant to this Section, by the Trust Fund and held harmless
against any loss, liability or expense (not including expenses, disbursements
and advances incurred or made by the Trustee, in the ordinary course of
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the Trustee's performance in accordance with the provisions of this Agreement)
incurred by the Trustee, or such party arising out of or in connection with
the acceptance or administration of its duties under this Agreement, other
than any loss, liability or expense incurred by reason of willful misfeasance,
bad faith or negligence in the performance by the Trustee of its duties under
this Agreement or by reason of the reckless disregard of the Trustee's
obligations and duties under this Agreement. This section shall survive
termination of this Agreement or the resignation or removal of any Trustee
hereunder.
Section 8.06 Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a Department of
Housing and Urban Development and Federal Housing Administration approved
mortgagee, an entity duly organized and validly existing under the laws of the
United States of America or any state thereof, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at
least $50,000,000 and a minimum long-term debt rating of BBB by Fitch and S&P
and a long term debt rating of at least A1 or better by Xxxxx'x, and subject
to supervision or examination by federal or state authority. If such entity
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section 8.06, the combined capital and surplus of such entity
shall be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published. The principal office of the
Trustee (other than the initial Trustee) shall be in a state with respect to
which an Opinion of Counsel has been delivered to such Trustee at the time
such Trustee is appointed Trustee to the effect that the Trust will not be a
taxable entity under the laws of such state. In case at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section
8.06, the Trustee shall resign immediately in the manner and with the effect
specified in Section 8.07.
Section 8.07 Resignation or Removal of Trustee.
The Trustee may at any time resign and be discharged from
the trusts hereby created by giving written notice thereof to the Depositor,
the Servicer and each Rating Agency. Upon receiving such notice of
resignation, the Depositor shall promptly appoint a successor Trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Trustee and one copy to the successor Trustee. If
no successor Trustee shall have been so appointed and having accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.06 and shall fail to resign after
written request therefor by the Depositor, or if at any time the Trustee shall
be legally unable to act, or shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then
the Depositor may remove the Trustee. If the Depositor or the Servicer removes
the Trustee under the authority of the immediately preceding sentence, the
Depositor shall promptly appoint a successor Trustee by written instrument, in
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duplicate, one copy of which instrument shall be delivered to the Trustee so
removed and one copy to the successor Trustee.
The Majority Certificateholders may at any time remove the
Trustee by written instrument or instruments delivered to the Servicer, the
Depositor and the Trustee; the Depositor shall thereupon use its best efforts
to appoint a successor Trustee in accordance with this Section.
Any resignation or removal of the Trustee and appointment of
a successor Trustee pursuant to any of the provisions of this Section 8.07
shall not become effective until acceptance of appointment by the successor
Trustee as provided in Section 8.08.
Section 8.08 Successor Trustee.
Any successor Trustee appointed as provided in Section 8.07
shall execute, acknowledge and deliver to the Depositor, the Rating Agencies,
the Servicer and to its predecessor Trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall become effective, and such successor Trustee,
without any further act, deed or conveyance, shall become fully vested with
all the rights, powers, duties and obligations of its predecessor hereunder,
with like effect as if originally named as Trustee. The Depositor, the
Servicer and the predecessor Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for fully
and certainly vesting and confirming in the successor Trustee all such rights,
powers, duties and obligations.
No successor Trustee shall accept appointment as provided in
this Section 8.08 unless at the time of such acceptance such successor Trustee
shall be eligible under the provisions of Section 8.06 and the appointment of
such successor Trustee shall not result in a downgrading of the Regular
Certificates by either Rating Agency, as evidenced by a letter from each
Rating Agency.
Upon acceptance of appointment by a successor Trustee as
provided in this Section 8.08, the successor Trustee shall mail notice of the
appointment of a successor Trustee hereunder to all Holders of Certificates at
their addresses as shown in the Certificate Register and to each Rating
Agency.
Section 8.09 Merger or Consolidation of Trustee.
Any entity into which the Trustee may be merged or converted
or with which it may be consolidated, or any entity resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
entity succeeding to the business of the Trustee, shall be the successor of
the Trustee hereunder, provided such entity shall be eligible under the
provisions of Section 8.06 and 8.08, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
Section 8.10 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at
any time, for the purpose of meeting any legal requirements of any
jurisdiction in which any part of the Trust or
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any Mortgaged Property may at the time be located, the Depositor and the
Trustee acting jointly shall have the power and shall execute and deliver all
instruments to appoint one or more Persons approved by the Trustee to act as
co-trustee or co-trustees, jointly with the Trustee, or separate trustee or
separate trustees, of all or any part of the Trust, and to vest in such Person
or Persons, in such capacity and for the benefit of the Certificateholders,
such title to the Trust, or any part thereof, and, subject to the other
provisions of this Section 8.10, such powers, duties, obligations, rights and
trusts as the Servicer and the Trustee may consider necessary or desirable.
Any such co-trustee or separate trustee shall be subject to the written
approval of the Servicer. If the Servicer shall not have joined in such
appointment within 15 days after the receipt by it of a request so to do, or
in the case a Servicer Event of Termination shall have occurred and be
continuing, the Trustee alone shall have the power to make such appointment.
No co-trustee or separate trustee hereunder shall be required to meet the
terms of eligibility as a successor Trustee under Section 8.06, and no notice
to Certificateholders of the appointment of any co-trustee or separate trustee
shall be required under Section 8.08. The Servicer shall be responsible for
the fees of any co-trustee or separate trustee appointed hereunder.
Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as successor to the Servicer
hereunder), the Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties
and obligations (including the holding of title to the Trust or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely
at the direction of the Trustee;
(ii) no trustee hereunder shall be held personally liable by
reason of any act or omission of any other trustee hereunder; and
(iii) the Servicer and the Trustee, acting jointly may at
any time accept the resignation of or remove any separate trustee or
co-trustee except that following the occurrence of a Servicer Event
of Termination, the Trustee acting alone may accept the resignation
or remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement
and the conditions of this Article VIII. Each separate trustee and co-trustee,
upon its acceptance of the trusts conferred, shall be vested with the estates
or property specified in its instrument of appointment, either jointly with
the Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the
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Trustee. Every such instrument shall be filed with the Trustee and a copy
thereof given to the Depositor, the Rating Agencies and the Servicer.
Any separate trustee or co-trustee may, at any time,
constitute the Trustee, its agent or attorney-in-fact, with full power and
authority, to the extent not prohibited by law, to do any lawful act under or
in respect of this Agreement on its behalf and in its name. If any separate
trustee or co-trustee shall die, become incapable of acting, resign or be
removed, all of its estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Trustee, to the extent permitted by law,
without the appointment of a new or successor Trustee.
Section 8.11 Limitation of Liability.
The Certificates are executed by the Trustee, not in its
individual capacity but solely as Trustee of the Trust, in the exercise of the
powers and authority conferred and vested in it by this Agreement. Each of the
undertakings and agreements made on the part of the Trustee in the
Certificates is made and intended not as a personal undertaking or agreement
by the Trustee but is made and intended for the purpose of binding only the
Trust.
Section 8.12 Trustee May Enforce Claims Without Possession
of Certificates.
(a) All rights of action and claims under this Agreement or
the Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and such proceeding instituted by the Trustee
shall be brought in its own name or in its capacity as Trustee for the benefit
of all Holders of such Certificates, subject to the provisions of this
Agreement. Any recovery of judgment shall, after provision for the payment of
the reasonable compensation, expenses, disbursement and advances of the
Trustee, its agents and counsel, be for the ratable benefit of the
Certificateholders in respect of which such judgment has been recovered.
(b) The Trustee shall afford the Seller, the Depositor, the
Servicer and each Certificateholder upon reasonable notice during normal
business hours, access to all records maintained by the Trustee in respect of
its duties hereunder and access to officers of the Trustee responsible for
performing such duties. The Trustee shall cooperate fully with the Seller, the
Servicer, the Depositor and such Certificateholder and shall make available to
the Seller, the Servicer, the Depositor and such Certificateholder for review
and copying at the expense of the party requesting such copies, such books,
documents or records as may be requested with respect to the Trustee's duties
hereunder. The Seller, the Depositor, the Servicer and the Certificateholders
shall not have any responsibility or liability for any action or failure to
act by the Trustee and are not obligated to supervise the performance of the
Trustee under this Agreement or otherwise.
Section 8.13 Suits for Enforcement.
In case a Servicer Event of Termination or other default by
the Servicer or the Seller hereunder shall occur and be continuing, the
Trustee may proceed to protect and enforce its rights and the rights of the
Certificateholders under this Agreement by a suit, action or proceeding in
equity or at law or otherwise, whether for the specific performance of any
covenant or agreement contained in this Agreement or in aid of the execution
of any power
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granted in this Agreement or for the enforcement of any other legal, equitable
or other remedy, as the Trustee, being advised by counsel, and subject to the
foregoing, shall deem most effectual to protect and enforce any of the rights
of the Trustee and the Certificateholders.
Section 8.14 Waiver of Bond Requirement.
The Trustee shall be relieved of, and each Certificateholder
hereby waives, any requirement of any jurisdiction in which the Trust, or any
part thereof, may be located that the Trustee post a bond or other surety with
any court, agency or body whatsoever.
Section 8.15 Waiver of Inventory, Accounting and Appraisal
Requirement.
The Trustee shall be relieved of, and each Certificateholder
hereby waives, any requirement of any jurisdiction in which the Trust, or any
part thereof, may be located that the Trustee file any inventory, accounting
or appraisal of the Trust with any court, agency or body at any time or in any
manner whatsoever.
Section 8.16 Compliance with National Housing Act of 1934.
In performing its duties hereunder with respect to FHA
Loans, the Trustee shall comply with all requirements of the National Housing
Act of 1934, as amended.
ARTICLE IX
REMIC ADMINISTRATION
Section 9.01 REMIC Administration.
(a) The Trustee shall make or cause to be made REMIC
elections for each REMIC designated as such in the Preliminary Statement on
Forms 1066 or other appropriate federal tax or information return for the
taxable year ending on the last day of the calendar year in which the
Certificates are issued. The regular interests and residual interest in each
REMIC shall be as designated in the Preliminary Statement.
(b) The Closing Date is hereby designated as the "Startup
Day" of each REMIC within the meaning of section 860G(a)(9) of the Code.
(c) The Servicer shall pay any and all tax related expenses
(not including taxes) of each REMIC, including but not limited to any
professional fees or expenses related to audits or any administrative or
judicial proceedings with respect to such REMIC that involve the Internal
Revenue Service or state tax authorities, but only to the extent that (i) such
expenses are ordinary or routine expenses, including expenses of a routine
audit but not expenses of litigation (except as described in (ii)); or (ii)
such expenses or liabilities (including taxes and penalties) are attributable
to the negligence or willful misconduct of the Servicer in fulfilling its
duties hereunder. The Servicer shall be entitled to reimbursement of expenses
to the extent provided in clause (i) above from the Collection Account.
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(d) The Trustee shall prepare or cause to be prepared and
shall file or cause to be filed, each REMIC's federal and state tax and
information returns as such REMIC's direct representative. The expenses of
preparing and filing such returns shall be borne by the Trustee.
(e) The Holder of the Residual Certificates with respect to
each REMIC holding the largest Percentage Interest shall be the "tax matters
person" as defined in the REMIC Provisions (the "Tax Matters Person") with
respect to the applicable REMIC or REMICs, and the Trustee is irrevocably
designated as and shall act as attorney-in-fact and agent for such Tax Matters
Person for each REMIC. The Trustee, as agent for the Tax Matters Person, shall
perform, on behalf of each REMIC, all reporting and other tax compliance
duties that are the responsibility of such REMIC under the Code, the REMIC
Provisions, or other compliance guidance issued by the Internal Revenue
Service or any state or local taxing authority. Among its other duties, if
required by the Code, the REMIC Provisions, or other such guidance, the
Trustee, as agent for the Tax Matters Person, shall provide (i) to the
Treasury or other governmental authority such information as is necessary for
the application of any tax relating to the transfer of a Residual Certificate
to any disqualified person or organization and (ii) to the Certificateholders
such information or reports as are required by the Code or REMIC Provisions.
(f) The Trustee, the Servicer, and the Holders of
Certificates shall take any action or cause any REMIC to take any action
necessary to create or maintain the status of such REMIC as a REMIC under the
REMIC Provisions and shall assist each other as necessary to create or
maintain such status. Neither the Trustee, the Servicer, nor the Holder of any
Residual Certificate shall take any action or cause any REMIC to take any
action or fail to take (or fail to cause to be taken) any action that, under
the REMIC Provisions, if taken or not taken, as the case may be, could (i)
endanger the status of such REMIC as a REMIC or (ii) result in the imposition
of a tax upon such REMIC (including but not limited to the tax on prohibited
transactions as defined in Code Section 860F(a)(2) and the tax on prohibited
contributions set forth on Section 860G(d) of the Code) (either such event, an
"Adverse REMIC Event") unless such action or failure to act is expressly
permitted under the terms of this Agreement or the Trustee and the Servicer
have received an Opinion of Counsel (at the expense of the party seeking to
take such action) to the effect that the contemplated action will not endanger
such status or result in the imposition of such a tax. In addition, prior to
taking any action with respect to any REMIC or the assets therein, or causing
such REMIC to take any action, which is not expressly permitted under the
terms of this Agreement, any Holder of a Residual Certificate will consult
with the Trustee and the Servicer, or their respective designees, in writing,
with respect to whether such action could cause an Adverse REMIC Event to
occur with respect to such REMIC, and no such Person shall take any such
action or cause such REMIC to take any such action as to which the Trustee or
the Servicer has advised it in writing that an Adverse REMIC Event could
occur.
(g) Each Holder of a Residual Certificate shall pay when due
its pro rata share of any and all taxes imposed on any REMIC by federal or
state governmental authorities. To the extent that such REMIC taxes are not
paid by Residual Certificateholders, the Trustee shall pay any remaining REMIC
taxes out of current or future amounts otherwise distributable to the Holder
of the Residual Certificate in each REMIC or, if no such amounts are
available, out of other amounts held in the Collection Account, and shall
reduce amounts otherwise payable to Holders of the REMIC Regular Interests or
the Certificates, as the case may be.
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(h) The Trustee, shall, for federal income tax purposes,
maintain or cause to be maintained books and records with respect to each
REMIC on a calendar year and on an accrual basis.
(i) No additional contributions of assets shall be made to
any REMIC, except as expressly provided in this Agreement with respect to
Eligible Substitute Mortgage Loans.
(j) Neither the Trustee nor the Servicer shall enter into
any arrangement by which any REMIC will receive a fee or other compensation
for services.
(k) On or before April 15 of each calendar year beginning in
2003, the Servicer shall deliver to the Trustee and each Rating Agency an
Officer's Certificate stating the Servicer's compliance with the provisions of
this Section 9.01.
(l) The Trustee shall treat the rights of the Offered P&I
Certificates and the Class B-2 Certificates to receive LIBOR Carryover Amounts
as a right in interest rate cap contracts written by the Holders of the Class
X Interest, as beneficial owners of the Class 3-X Interest, in favor of the
Holders of the Offered P&I Certificates and the Class B-2 Certificates, and
the Trustee shall account for such as property held separate and apart from
the regular interests it holds in each of the REMICs created hereunder. This
provision is intended to satisfy the requirements of Treasury Regulations
Section 1.860G-2(i) for the treatment of property rights coupled with regular
interests to be separately respected and shall be interpreted consistent with
such regulation. On each Distribution Date, to the extent the Offered P&I
Certificates and the Class B-2 Certificates receive interest in excess of the
Pool Cap, such interest will be treated as distributed to the Class X/N REMIC
in respect of interest on the Class 3-X Interest and then paid to the
respective Class of Offered P&I Certificates and Class B-2 Certificates
pursuant to the related interest rate cap agreement.
(m) [RESERVED]
(n) In the event that the beneficial ownership of the Class
N Certificates and the Class X Certificates is held by a single Person for
federal income tax purposes, such Person shall be treated as the beneficial
owner of the Class X Interest. In the event that beneficial ownership of the
Class N and the Class X Certificates is held by two or more Persons for tax
purposes, the Trustee shall treat the Class N Certificateholders and the Class
X Certificateholders as partners in a partnership that owns the Class X
Interest for federal income tax purposes and shall not treat the Class N and
Class X Certificates as an interest in any REMIC created hereunder. By
acquiring the Class N Certificates and the Class X Certificates, the
respective Holders will agree to treat the Class N Certificates and the Class
X Certificates in the manner described in the preceding sentence for federal
income tax purposes in the event that the beneficial ownership of the Class N
Certificates and the Class X Certificates is separated. In such event, (i) a
separate capital account shall be established and maintained for each Holder
of a Class N or Class X Certificate in accordance with Treasury Regulations
Section 1.704-1(b)(2)(iv), which shall be credited with income or gain and
debited by any expenses or losses and distributions allocable to such
Certificates, (ii) the Class N Certificates shall be allocated income in an
amount equal to interest at the Pass-Through Rate thereon and any original
issue discount that would be reportable thereon if the Class N Certificate
were a debt instrument issued on the date ownership
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of the Class N and Class X Certificates is separated, with a principal balance
equal to its Notional Amount, (iii) the Class X and Class N Certificates shall
be allocated income with respect to all prepayment penalties (including
amounts in connection with the full or partial waiver of such prepayment
penalties or premiums pursuant to Section 3.01) in accordance with the
allocation of such amounts pursuant to Section 4.02(c), to the extent not
allocated pursuant to Section 9.01(n)(ii) above, (iv) the Class X and Class N
Certificates shall be allocated accruals (under any reasonable method) of any
"cap premiums" deemed received on the date ownership of the Class X and Class
N Certificates is separated in respect of the obligation of the Class X
Interest to pay LIBOR Carryover Amounts, and shall be allocated expense in
respect of any actual payment of such LIBOR Carryover Amounts based on which
one of such Classes economically bears such expense, (v) the Class X
Certificates shall be allocated all remaining income and any expenses and
Realized Losses with respect to the Class X Interest, until the capital
account of the Class X Certificates is reduced to zero, and any remaining
expenses or losses shall be allocated to the Class N Certificates, (vi)
neither the Class N Certificates nor the Class X Certificates shall be
responsible for restoring any deficit to its capital account, (vii) upon
termination of the Trust Fund pursuant to Article X, all amounts available for
distribution to Holders of the Class N and Class X Certificates shall be
distributed in accordance with their positive capital account balances, first
to the Class N Certificates until their Notional Amount and any accrued but
unpaid interest thereon are reduced to zero, and then to the Class X
Certificates, and (viii) the Trustee shall maintain books and records with
respect to the partnership on a calendar year basis (unless a different
taxable year shall be required by the Code) and shall prepare or cause to be
prepared, and cause the Holder of the largest Percentage Interest of the Class
X Certificates to sign and file or cause to be filed all federal and state tax
and information returns for the partnership, and shall furnish or cause to be
furnished Schedule K-1's to the Holders of the Class N and Class X
Certificates at the time required by the Code. Unless otherwise directed by a
majority of the Percentage Interests of the Class X and Class N Certificates,
the Trustee shall not make an election under Section 754 of the Code. The
Holder of the largest Percentage Interest of the Class X Certificates, by
acceptance of its Class X Certificate, agrees to act as "tax matters partner"
(within the meaning of Section 6231(a)(7) of the Code and to sign and timely
file all federal and state partnership tax and information returns prepared by
the Trustee pursuant to this Section 9.01(n).
(o) The Trustee shall treat the Basis Risk Reserve Fund and
the Interest Rate Cap Agreement as outside reserve funds within the meaning of
Treasury Regulation 1.860G-2(h) that are owned by the Class X
Certificateholders and that are not assets of the REMICs. The Trustee shall
treat the rights of the Class X-0, Xxxxx X-0, Class M-1, Class M-2, Class B-1
and Class B-2 Certificateholders to receive payments from the Basis Risk
Reserve Fund and the Interest Rate Cap Agreement as rights in interest rate
cap contracts written by the Holders of the Class X Interest (in the case of
amounts payable from the Basis Risk Reserve Fund) and the Seller (in the case
of amounts payable from the Interest Rate Cap Account), in each case in favor
of the Class X-0, Xxxxx X-0, Class M-1, Class M-2, Class B-1 and Class B-2
Certificateholders. Thus, each Certificate other than the Class A-IO, Class X
and Class N Certificates shall be treated as representing ownership of not
only REMIC Regular Interests, but also ownership of an interest in one or more
interest rate cap contracts. For purposes of determining the issue price of
the REMIC Regular Interests, the Trustee shall assume that the Interest Rate
Cap Agreement has a value of 27 basis points.
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Section 9.02 Prohibited Transactions and Activities.
Neither the Seller, the Depositor, the Servicer nor the
Trustee shall sell, dispose of, or substitute for any of the Mortgage Loans,
except in a disposition pursuant to (i) the foreclosure of a Mortgage Loan,
(ii) the bankruptcy of the Trust Fund, (iii) the termination of any REMIC
pursuant to Article X of this Agreement, (iv) a substitution pursuant to
Article II of this Agreement or (v) a repurchase of Mortgage Loans pursuant to
Article II of this Agreement, nor acquire any assets for any REMIC, nor sell
or dispose of any investments in the Distribution Account for gain, nor accept
any contributions to any REMIC after the Closing Date, unless it has received
an Opinion of Counsel (at the expense of the party causing such sale,
disposition, or substitution) that such disposition, acquisition,
substitution, or acceptance will not (a) affect adversely the status of such
REMIC as a REMIC or of the interests therein other than the Residual
Certificates as the regular interests therein, (b) affect the distribution of
interest or principal on the Certificates, (c) result in the encumbrance of
the assets transferred or assigned to the Trust Fund (except pursuant to the
provisions of this Agreement) or (d) cause such REMIC to be subject to a tax
on prohibited transactions or prohibited contributions pursuant to the REMIC
Provisions.
Section 9.03 Indemnification with Respect to Certain Taxes
and Loss of REMIC Status.
In the event that any REMIC formed hereunder fails to
qualify as a REMIC, loses its status as a REMIC, or incurs federal, state or
local taxes as a result of a prohibited transaction or prohibited contribution
under the REMIC Provisions due to the negligent performance by the Servicer of
its duties and obligations set forth herein, the Servicer shall indemnify the
Holder of the related Residual Certificate against any and all losses, claims,
damages, liabilities or expenses ("Losses") resulting from such negligence;
provided, however, that the Servicer shall not be liable for any such Losses
attributable to the action or inaction of the Trustee, the Depositor or the
Holder of such Residual Certificate, as applicable, nor for any such Losses
resulting from misinformation provided by the Holder of such Residual
Certificate on which the Servicer has relied. The foregoing shall not be
deemed to limit or restrict the rights and remedies of the Holder of such
Residual Certificate now or hereafter existing at law or in equity.
Notwithstanding the foregoing, however, in no event shall the Servicer have
any liability (1) for any action or omission that is taken in accordance with
and in compliance with the express terms of, or which is expressly permitted
by the terms of, this Agreement, (2) for any Losses other than arising out of
a negligent performance by the Servicer of its duties and obligations set
forth herein, and (3) for any special or consequential damages to
Certificateholders (in addition to payment of principal and interest on the
Certificates).
Section 9.04 REO Property.
(a) Subject to compliance with applicable laws and
regulations as shall at any time be in force, and notwithstanding any other
provision of this Agreement, the Servicer, acting on behalf of the Trust
hereunder, shall not rent, lease, or otherwise earn income on behalf of any
REMIC with respect to any REO Property which might cause such REO Property to
fail to qualify as "foreclosure" property within the meaning of section
860G(a)(8) of the Code or result in the receipt by any REMIC of any "income
from non-permitted assets" within the meaning of
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section 860F(a)(2) of the Code or any "net income from foreclosure property"
which is subject to tax under the REMIC Provisions unless the Servicer has
advised, or has caused the applicable Servicer to advise, the Trustee in
writing to the effect that, under the REMIC Provisions, such action would not
adversely affect the status of any REMIC as a REMIC and any income generated
for such REMIC by the REO Property would not result in the imposition of a tax
upon such REMIC.
(b) The Servicer shall make reasonable efforts to sell any
REO Property for its fair market value. In any event, however, the Servicer
shall dispose of any REO Property before the close of the third calendar year
beginning after the year of its acquisition by the Trust Fund unless the
Servicer has received a grant of extension from the Internal Revenue Service
to the effect that, under the REMIC Provisions and any relevant proposed
legislation and under applicable state law, any REMIC may hold REO Property
for a longer period without adversely affecting its REMIC status or causing
the imposition of a Federal or state tax upon any REMIC. If the Servicer has
received such an extension, then the Servicer shall continue to attempt to
sell the REO Property for its fair market value as determined in good faith by
the Servicer for such longer period as such extension permits (the "Extended
Period"). If the Servicer has not received such an extension and the Servicer
is unable to sell the REO Property within 33 months after its acquisition by
the Trust Fund or if the Servicer has received such an extension, and the
Servicer is unable to sell the REO Property within the period ending three
months before the close of the Extended Period, the Servicer shall, before the
end of the applicable period, (i) purchase such REO Property at a price equal
to the REO Property's fair market value as determined in good faith by the
Servicer or (ii) auction the REO Property to the highest bidder (which may be
the Servicer) in an auction reasonably designed to produce a fair price prior
to the expiration of the applicable period.
ARTICLE X
TERMINATION
Section 10.01 Termination.
(a) The respective obligations and responsibilities of the
Seller, the Servicer, the Depositor, the Trustee and the Certificate Registrar
(other than the obligation of the Trustee to make certain payments to
Certificateholders after the final Distribution Date and the obligation of the
Servicer to send certain notices as hereinafter set forth) shall terminate
upon notice to the Trustee upon the earliest of (i) the Distribution Date on
which the Certificate Principal Balance of each Class of Certificates has been
reduced to zero, (ii) the final payment or other liquidation of the last
Mortgage Loan in the Trust, and (iii) the optional purchase by the Servicer of
the Mortgage Loans as described below. Notwithstanding the foregoing, in no
event shall the trust created hereby continue beyond the expiration of 21
years from the death of the last survivor of the descendants of Xxxxxx X.
Xxxxxxx, the late ambassador of the United States to the Court of St. James's,
living on the date hereof.
The Servicer may, at its option, terminate the Mortgage
Loans in the Trust Fund and retire the Certificates on the next succeeding
Distribution Date upon which the aggregate current Pool Balance is less than
10% of the aggregate Pool Balance of the Mortgage Loans as of
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the Cut-off Date by purchasing all of the outstanding (i) Mortgage Loans in
the Trust Fund at a price equal to the sum of the outstanding Principal
Balance of the Mortgage Loans and except to the extent previously advanced by
the Servicer, accrued and unpaid interest thereon at the weighted average of
the Mortgage Interest Rates through the end of the Collection Period preceding
the final Distribution Date plus unreimbursed Servicing Advances, Advances and
any unpaid Servicing Fees and Special Servicing Fees allocable to such
Mortgage Loans and (ii) REO Properties in the Trust Fund at a price equal to
their fair market value as determined in good faith by the Servicer (the
"Termination Price").
In connection with any such purchase pursuant to the
preceding paragraph, the Servicer shall deliver to the Trustee for deposit in
the Distribution Account all amounts then on deposit in the Collection Account
(less amounts permitted to be withdrawn by the Servicer pursuant to Section
3.07), which deposit shall be deemed to have occurred immediately following
such purchase.
Any such purchase shall be accomplished by delivery to the
Trustee for deposit into the Distribution Account as part of Available Funds
on the Determination Date before such Distribution Date of the Termination
Price.
(b) Notice of any termination, specifying the Distribution
Date (which shall be a date that would otherwise be a Distribution Date) upon
which the Certificateholders may surrender their Certificates to the Trustee
for payment of the final distribution and cancellation, shall be given
promptly by the Trustee upon the Trustee receiving notice of such date from
the Servicer, by letter to the Certificateholders mailed not earlier than the
15th day of the month preceding the month of such final distribution and not
later than the 15th day of the month of such final distribution specifying (1)
the Distribution Date upon which final distribution of the Certificates will
be made upon presentation and surrender of such Certificates at the office or
agency of the Trustee therein designated, (2) the amount of any such final
distribution and (3) that the Record Date otherwise applicable to such
Distribution Date is not applicable, distributions being made only upon
presentation and surrender of the Certificates at the office or agency of the
Trustee therein specified.
(c) Upon presentation and surrender of the Certificates, the
Trustee shall cause to be distributed to the Holders of the Certificates on
the Distribution Date for such final distribution, in proportion to the
Percentage Interests of their respective Class and to the extent that funds
are available for such purpose, an amount equal to the amount required to be
distributed to such Holders in accordance with the provisions of Sections 4.01
and 4.02 for such Distribution Date.
(d) In the event that all Certificateholders shall not
surrender their Certificates for final payment and cancellation on or before
such final Distribution Date, the Trustee shall promptly following such date
cause all funds in the Distribution Account not distributed in final
distribution to Certificateholders to be withdrawn therefrom and credited to
the remaining Certificateholders by depositing such funds in a separate escrow
account for the benefit of such Certificateholders, and the Servicer (if the
Servicer has exercised its right to purchase the Mortgage Loans) or the
Trustee (in any other case) shall give a second written notice to the
remaining Certificateholders, to surrender their Certificates for cancellation
and receive the final
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distribution with respect thereto. If within nine months after the second
notice all the Certificates shall not have been surrendered for cancellation,
the Class R-1 Certificateholders shall be entitled to all unclaimed funds and
other assets which remain subject hereto (except with respect to the Class
B-2, Class N and Class X Certificates and the assets of the Class B-2 REMIC
and the Class X/N REMIC) and the Trustee upon transfer of such funds shall be
discharged of any responsibility for such funds, and such Certificateholders
shall look to the Class R-1 Certificateholders for payment. The Class R-2 and
Class R-3 Certificateholders shall be entitled to all unclaimed funds and
other assets with respect to the Class B-2 REMIC and the Class X/N REMIC,
respectively. Holders of the Class B-2 Certificates (representing beneficial
ownership of the Class B-2 REMIC Regular Interest), and Class N and Class X
Certificates (representing partners in a partnership which beneficially owns
the Class X/N REMIC Regular Interest) shall be entitled to look only to the
related Residual Certificateholder for payment.
Section 10.02 Additional Termination Requirements.
(a) In the event that the Servicer exercises its purchase
option as provided in Section 10.01, the Trust shall be terminated in
accordance with the following additional requirements, unless the Trustee
shall have been furnished with an Opinion of Counsel to the effect that the
failure of the Trust to comply with the requirements of this Section will not
(i) result in the imposition of taxes on "prohibited transactions" of the
Trust as defined in Section 860F of the Code or (ii) cause any REMIC
constituting part of the Trust Fund to fail to qualify as a REMIC at any time
that any Certificates are outstanding:
(i) The Trustee shall designate a date within 90 days prior
to the final Distribution Date as the date of adoption of plans of
complete liquidation of each of the Master REMIC, the Middle REMIC,
the Subsidiary REMIC, the Class B-2 REMIC and the Class X/N REMIC and
shall specify such date in the final federal income tax return of
each REMIC;
(ii) After the date of adoption of such plans of complete
liquidation and at or prior to the final Distribution Date, the
Trustee shall sell all of the assets of the Trust to the Servicer for
cash; and
(iii) 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 in the following order of priority (A) (i) to
the Holders of each of the Class A-1 and Class A-2 Certificates, pro
rata and (ii) to the Class M-1, Class M-2, Class B-1 and Class B-2
Certificates, the related Certificate Principal Balance, as
applicable, plus one month's interest thereon at the applicable
Pass-Through Rate, (B) to the Class N and Class X Certificates in
respect of the Class X Interest, the amount of any remaining Monthly
Excess Cash Flow Amounts not previously distributed thereon, (C) to
the remaining REMIC Regular Interests the amounts allocable thereto
pursuant to Section 4.08 and (D) to the Class R Certificateholders,
all cash on hand in respect of the related REMIC or REMICs after such
payment (other than cash retained to meet claims) and the Trust shall
terminate at such time.
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(b) By their acceptance of Certificates, the Holders thereof
hereby agree to appoint the Trustee as their attorney in fact to: (i)
designate such date of adoption of plans of complete liquidation and (ii) to
take such other action in connection therewith as may be reasonably required
to carry out such plans of complete liquidation all in accordance with the
terms hereof.
(c) Notwithstanding any other provision of this Agreement,
the Class B-2 REMIC will terminate on the last Distribution Date on which the
Class B-2 Certificates are entitled to distributions pursuant to this
Agreement.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 Amendment.
This Agreement may be amended from time to time by the
Seller, the Depositor, the Servicer and the Trustee; and without the consent
of the Certificateholders, (i) to cure any ambiguity, (ii) to correct or
supplement any provisions herein which may be defective or inconsistent with
any other provisions herein or (iii) to make any other provisions with respect
to matters or questions arising under this Agreement, which shall not be
inconsistent with the provisions of this Agreement; provided, however, that
any such action listed in clause (i) through (iii) above shall not adversely
affect in any respect the interests of any Certificateholder, as evidenced by
(i) notice in writing to the Depositor, the Servicer and the Trustee from the
Rating Agencies that such action will not result in the reduction or
withdrawal of the rating of any outstanding Class of Certificates with respect
to which it is a Rating Agency, or (ii) an Opinion of Counsel delivered to the
Servicer and the Trustee.
In addition, this Agreement may be amended from time to time
by Seller, the Depositor, the Servicer and the Trustee, with the consent of
the Majority Certificateholders for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement
or of modifying in any manner the rights of the Holders of Certificates;
provided, however, that no such amendment or waiver shall (x) reduce in any
manner the amount of, or delay the timing of, payments on the Certificates
which are required to be made on any Certificate without the consent of the
Holder of such Certificate, (y) adversely affect in any material respect the
interests of the Holders of any Class of Certificates in a manner other than
as described in clause (x) above, without the consent of the Holders of
Certificates of such Class evidencing at least a 66% Percentage Interest in
such Class, or (z) reduce the percentage of Voting Rights required by clause
(y) above without the consent of the Holders of all Certificates of such Class
then outstanding. Upon approval of an amendment, a copy of such amendment
shall be sent to the Rating Agencies. Prior to the execution of any amendment
to this Agreement, the Trustee shall be entitled to receive and rely upon an
Opinion of Counsel (at the expense of the Person seeking such amendment)
stating that the execution of such amendment is authorized or permitted by
this Agreement. The Trustee may, but shall not be obligated to, enter into any
such amendment which affects the Trustee's own rights, duties or immunities
under this Agreement.
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Notwithstanding any provision of this Agreement to the
contrary, the Trustee shall not consent to any amendment to this Agreement
unless it shall have first received an Opinion of Counsel, delivered by (and
at the expense of) the Person seeking such Amendment, to the effect that such
amendment will not result in the imposition of a tax on any REMIC constituting
part of the Trust Fund pursuant to the REMIC Provisions or cause any REMIC
constituting part of the Trust to fail to qualify as a REMIC at any time that
any Certificates are outstanding and that the amendment is being made in
accordance with the terms hereof.
Promptly after the execution of any such amendment the
Trustee shall furnish, at the expense of the Person that requested the
amendment if such Person is the Seller or the Servicer (but in no event at the
expense of the Trustee), otherwise at the expense of the Trust, a copy of such
amendment and the Opinion of Counsel referred to in the immediately preceding
paragraph to the Servicer and each Rating Agency.
It shall not be necessary for the consent of
Certificateholders under this Section 11.01 to approve the particular form of
any proposed amendment; instead it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents and of
evidencing the authorization of the execution thereof by Certificateholders
shall be subject to such reasonable regulations as the Trustee may prescribe.
Section 11.02 Recordation of Agreement; Counterparts.
To the extent permitted by applicable law, this Agreement is
subject to recordation in all appropriate public offices for real property
records in all the counties or other comparable jurisdictions in which any or
all of the properties subject to the Mortgages are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Servicer at the expense of the Trust, but only upon direction
of Certificateholders, accompanied by an Opinion of Counsel to the effect that
such recordation materially and beneficially affects the interests of the
Certificateholders.
For the purpose of facilitating the recordation of this
Agreement as herein provided and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts shall
together constitute but one and the same instrument.
Section 11.03 Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not
(i) operate to terminate this Agreement or the Trust, (ii) entitle such
Certificateholder's legal representatives or heirs to claim an accounting or
to take any action or proceeding in any court for a partition or winding up of
the Trust, or (iii) otherwise affect the rights, obligations and liabilities
of the parties hereto or any of them.
Except as expressly provided for herein, no
Certificateholder shall have any right to vote or in any manner otherwise
control the operation and management of the Trust, or the obligations of the
parties hereto, nor shall anything herein set forth or contained in the terms
of the Certificates be construed so as to constitute the Certificateholders
from time to time as partners or members of an association; nor shall any
Certificateholder be under any liability to
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any third person by reason of any action taken by the parties to this
Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of default
and of the continuance thereof, as herein provided, and unless also the
Holders of Certificates entitled to at least 25% of the Voting Rights shall
have made written request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred therein or thereby, and the Trustee
for 15 days after its receipt of such notice, request and offer of indemnity,
shall have neglected or refused to institute any such action, suit or
proceeding. It is understood and intended, and expressly covenanted by each
Certificateholder with every other Certificateholder and the Trustee, that no
one or more Holders of Certificates shall have any right in any manner
whatever by virtue of any provision of this Agreement to affect, disturb or
prejudice the rights of the Holders of any other of such Certificates, or to
obtain or seek to obtain priority over or preference to any other such Holder,
which priority or preference is not otherwise provided for herein, or to
enforce any right under this Agreement, except in the manner herein provided
and for the equal, ratable and common benefit of all Certificateholders. For
the protection and enforcement of the provisions of this Section 11.03 each
and every Certificateholder and the Trustee shall be entitled to such relief
as can be given either at law or in equity.
Section 11.04 Governing Law; Jurisdiction.
This Agreement shall be construed in accordance with the
laws of the State of New York, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws. With
respect to any claim arising out of this Agreement, each party irrevocably
submits to the exclusive jurisdiction of the courts of the State of New York
and the United States District Court located in the Borough of Manhattan in
The City of New York, and each party irrevocably waives any objection which it
may have at any time to the laying of venue of any suit, action or proceeding
arising out of or relating hereto brought in any such courts, irrevocably
waives any claim that any such suit, action or proceeding brought in any such
court has been brought in any inconvenient forum and further irrevocably
waives the right to object, with respect to such claim, suit, action or
proceeding brought in any such court, that such court does not have
jurisdiction over such party, provided that service of process has been made
by any lawful means.
Section 11.05 Notices.
All directions, demands and notices hereunder shall be in
writing and shall be deemed to have been duly given if personally delivered at
or mailed by first class mail, postage prepaid, or by express delivery
service, to (a) in the case of the Seller, Credit-Based Asset Servicing and
Securitization LLC, 000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx,
Attention: Director - Mortgage Finance (telecopy number (000) 000-0000), or
such other address or telecopy number as may hereafter be furnished to the
Depositor and the Trustee and in writing by the Seller, (b) in the case of the
Trustee, U.S. Bank National Association, 000 Xxxx
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Xxxxx, Xx. Xxxx, Xxxxxxxxx 00000, Attention: Structured Finance, C-BASS
2002-CB2, or such other address as may hereafter be furnished to the
Depositor, the Seller and the Servicer in writing by the Trustee, (c) in the
case of the Depositor, Financial Asset Securities Corp., 000 Xxxxxxxxx Xxxx,
Xxxxxxxxx, Xxxxxxxxxxx 00000, Attention: C-BASS Mortgage Loan Asset-Backed
Certificates, Series 2002-CB2, or such other address as may be furnished to
the Seller, the Servicer and the Trustee in writing by the Depositor, and (d)
in the case of the Servicer, Xxxxxx Loan Servicing LP, 0000 Xxxx Xxxxxxx
Xxxxx, Xxxxxxx, Xxxxx 00000, Attention: Xxxxxx XxXxxxx, or such other address
as may be furnished to the Seller, the Depositor and the Trustee in writing by
the Servicer. Any notice required or permitted to be mailed to a
Certificateholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Notice of any
Servicer Event of Termination shall be given by telecopy and by certified
mail. Any notice so mailed within the time prescribed in this Agreement shall
be conclusively presumed to have duly been given when mailed, whether or not
the Certificateholder receives such notice. A copy of any notice required to
be telecopied hereunder shall also be mailed to the appropriate party in the
manner set forth above.
Section 11.06 Severability of Provisions.
If any one or more of the covenants, agreements, provisions
or terms of this Agreement shall for any reason whatsoever be held invalid,
then such covenants, agreements, provisions or terms shall be deemed severable
from the remaining covenants, agreements, provisions or terms of this
Agreement and shall in no way affect the validity or enforceability of the
other provisions of this Agreement or of the Certificates or the rights of the
Holders thereof.
Section 11.07 Article and Section References.
All article and section references used in this Agreement,
unless otherwise provided, are to articles and sections in this Agreement.
Section 11.08 Notice to the Rating Agencies.
(a) Each of the Trustee and the Servicer shall be obligated
to use its best reasonable efforts promptly to provide notice to the Rating
Agencies with respect to each of the following of which a Responsible Officer
of the Trustee or the Servicer, as the case may be, has actual knowledge:
(i) any material change or amendment to this Agreement;
(ii) the occurrence of any Servicer Event of Termination
that has not been cured or waived;
(iii) the resignation or termination of the Servicer or
the Trustee;
(iv) the final payment to Holders of the Certificates of
any Class;
(v) any change in the location of any Account; and
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(vi) if the Trustee is acting as successor Servicer
pursuant to Section 7.02 hereof, any event that would result in the
inability of the Trustee to make Advances.
(vii) In addition, the Servicer shall promptly furnish to
each Rating Agency copies of the following:
(A) each annual statement as to compliance
described in Section 3.19 hereof;
(B) each annual independent public accountants'
servicing report described in Section 3.20 hereof; and
(C) each notice delivered pursuant to Section
7.01(a) hereof which relates to the fact that the Servicer
has not made an Advance.
Any such notice pursuant to this Section 11.08 shall be in
writing and shall be deemed to have been duly given if personally delivered or
mailed by first class mail, postage prepaid, or by express delivery service to
Xxxxx'x Investors Service, Inc., 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Managing Director, Residential Mortgage-Backed Securities; Fitch
Ratings, Xxx Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Managing
Director, Residential Mortgage-Backed Securities; and Standard & Poor's
Ratings Services, a division of The XxXxxx-Xxxx Companies, Inc., 00 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Mortgage Surveillance Group.
Section 11.09 Further Assurances.
Notwithstanding any other provision of this Agreement,
neither the Regular Certificateholders nor the Trustee shall have any
obligation to consent to any amendment or modification of this Agreement
unless they have been provided reasonable security or indemnity against their
out-of-pocket expenses (including reasonable attorneys' fees) to be incurred
in connection therewith.
Section 11.10 Benefits of Agreement.
Nothing in this Agreement or in the Certificates, expressed
or implied, shall give to any Person, other than the Certificateholders and
the parties hereto and their successors hereunder, any benefit or any legal or
equitable right, remedy or claim under this Agreement.
Section 11.11 Acts of Certificateholders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Agreement to be given or
taken by the Certificateholders may be embodied in and evidenced by one or
more instruments of substantially similar tenor signed by such
Certificateholders in person or by agent duly appointed in writing; and such
action shall become effective when such instrument or instruments are
delivered to the Trustee, the Seller and the Servicer. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "act" of the Certificateholders signing such
instrument or instruments. Proof of execution of any such instrument or of a
writing
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appointing any such agent shall be sufficient for any purpose of this
Agreement and conclusive in favor of the Trustee and the Trust, if made in the
manner provided in this Section 11.11.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of a notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual
signing such instrument or writing acknowledged to him the execution thereof.
Whenever such execution is by a signer acting in a capacity other than his or
her individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority.
(c) Any request, demand, authorization, direction, notice,
consent, waiver or other action by any Certificateholder shall bind every
future Holder of such Certificate and the Holder of every Certificate issued
upon the registration of transfer thereof or in exchange therefor or in lieu
thereof, in respect of anything done, omitted or suffered to be done by the
Trustee or the Trust in reliance thereon, whether or not notation of such
action is made upon such Certificate.
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IN WITNESS WHEREOF, the Seller, the Depositor, the Servicer
and the Trustee have caused their names to be signed hereto by their
respective officers thereunto duly authorized, all as of the day and year
first above written.
FINANCIAL ASSET SECURITIES CORP., as
Depositor
By:_____________________________________
Name:
Title:
CREDIT-BASED ASSET SERVICING AND
SECURITIZATION LLC, as Seller
By:_____________________________________
Name: Xxxx Xxxxxxx
Title: Vice President
XXXXXX LOAN SERVICING LP, as Servicer
By:_____________________________________
Name: Xxxxxx XxXxxxx
Title: Senior Vice President
U.S. BANK NATIONAL ASSOCIATION, not
in its individual capacity but solely as
Trustee for the 2002-CB2 Trust, C-BASS
Mortgage Loan Asset-Backed Certificates,
Series 2002-CB2
By:______________________________________
Name: Xxxxxx X Xxxxxxxxxxxxxx
Title: Vice President
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STATE OF )
) ss.:
COUNTY OF )
On the 30th day of April, 2002 before me, a notary public in
and for said State, personally appeared ______________, known to me to be the
_____________ of Financial Asset Securities Corp., a Delaware corporation that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal the day and year in this certificate first above written.
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 30th day of April, 2002 before me, a notary public in
and for said State, personally appeared Xxxx Xxxxxxx known to me to be a Vice
President of Credit-Based Asset Servicing and Securitization LLC, a limited
liability company that executed the within instrument, and also known to me to
be the person who executed it on behalf of said limited liability company, and
acknowledged to me that such limited liability company executed the within
instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal the day and year in this certificate first above written.
Notary Public
STATE OF MINNESOTA )
) ss.:
COUNTY OF )
On the 30th day of April, 2002 before me, a notary public in
and for said State, personally appeared Xxxxxx X. Xxxxxxxxxxxxxx, known to me
to be a Vice President of U.S. Bank National Association, a national banking
association that executed the within instrument, and also known to me to be
the person who executed it on behalf of said association, and acknowledged to
me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal the day and year in this certificate first above written.
Notary Public
STATE OF TEXAS )
) ss.:
COUNTY OF )
On the 30th day of April, 2002 before me, a notary public in
and for said State, personally appeared Xxxxxx XxXxxxx, known to me to be a
Senior Vice President of Xxxxxx Loan Servicing LP, a Delaware limited
partnership, that executed the within instrument, and also known to me to be
the person who executed it on behalf of said limited partnership, and
acknowledged to me that such limited partnership 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
