ACE SECURITIES CORP.
Depositor
OCWEN FEDERAL BANK FSB
Servicer
XXXXX FARGO BANK, N.A.
Master Servicer and Securities Administrator
HSBC BANK USA, NATIONAL ASSOCIATION
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of September 1, 2004
ACE Securities Corp. Home Equity Loan Trust, Series 2004-SD1
Asset Backed Pass-Through Certificates
TABLE OF CONTENTS
ARTICLE I DEFINITIONS 4
Section 1.01. Defined Terms..............................................................................4
Accepted Master Servicing Practices.........................................................................4
Accepted Servicing Practices................................................................................4
Account.....................................................................................................4
Accrued Certificate Interest................................................................................4
Adjustable Rate Mortgage Loan...............................................................................4
Adjustment Date.............................................................................................5
Administration Fees.........................................................................................5
Administration Fee Rate.....................................................................................5
Advance Facility............................................................................................5
Advance Financing Person....................................................................................5
Advance Reimbursement Amounts...............................................................................5
Affiliate...................................................................................................5
Aggregate Loss Severity Percentage..........................................................................5
Agreement...................................................................................................5
Amounts Held for Future Distribution........................................................................5
Arrearages..................................................................................................5
Assignment..................................................................................................6
Available Distribution Amount...............................................................................6
Balloon Mortgage Loan.......................................................................................6
Balloon Payment.............................................................................................6
Bankruptcy Code.............................................................................................7
Book-Entry Certificate......................................................................................7
Book-Entry Custodian........................................................................................7
Business Day................................................................................................7
Cap Contract................................................................................................7
Cash-Out Refinancing........................................................................................7
Certificate.................................................................................................7
Certificate Factor..........................................................................................7
Certificate Margin..........................................................................................7
Certificateholder...........................................................................................8
Certificate Owner...........................................................................................8
Certificate Principal Balance...............................................................................8
Certificate Register........................................................................................9
Class.......................................................................................................9
Class A-1 Certificate.......................................................................................9
Class A-1 Principal Distribution Amount.....................................................................9
Class CE Certificate........................................................................................9
Class M Certificates........................................................................................9
Class M-1 Certificate.......................................................................................9
Class M-1 Principal Distribution Amount.....................................................................9
Class M-2 Certificate.......................................................................................9
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Class M-2 Principal Distribution Amount....................................................................10
Class M-3 Certificate......................................................................................10
Class M-3 Principal Distribution Amount....................................................................10
Class M-4 Certificate......................................................................................10
Class M-4 Principal Distribution Amount....................................................................10
Class P Certificate........................................................................................11
Class R Certificates.......................................................................................11
Class R-I Interest.........................................................................................11
Class R-II Interest........................................................................................11
Closing Date...............................................................................................11
Code.......................................................................................................11
Collection Account.........................................................................................11
Commission.................................................................................................11
Corporate Trust Office.....................................................................................11
Corresponding Certificate..................................................................................12
Credit Enhancement Percentage..............................................................................12
Credit Risk Management Agreements..........................................................................12
Credit Risk Management Fee.................................................................................12
Credit Risk Management Fee Rate............................................................................12
Credit Risk Manager........................................................................................12
Custodial Agreement........................................................................................12
Custodian..................................................................................................13
Cut-off Date...............................................................................................13
Debt Service Reduction.....................................................................................13
Deficient Valuation........................................................................................13
Definitive Certificates....................................................................................13
Deleted Mortgage Loan......................................................................................13
Delinquency Percentage.....................................................................................13
Depositor..................................................................................................13
Depository.................................................................................................13
Depository Institution.....................................................................................13
Depository Participant.....................................................................................14
Determination Date.........................................................................................14
Directly Operate...........................................................................................14
Disqualified Organization..................................................................................14
Distribution Account.......................................................................................14
Distribution Date..........................................................................................15
Due Date...................................................................................................15
Due Period.................................................................................................15
Eligible Account...........................................................................................15
ERISA......................................................................................................15
Estate in Real Property....................................................................................15
Excess Liquidation Proceeds................................................................................15
Extraordinary Trust Fund Expense...........................................................................15
Extra Principal Distribution Amount........................................................................15
Xxxxxx Mae.................................................................................................15
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FDIC.......................................................................................................16
Final Maturity Date........................................................................................16
Final Recovery Determination...............................................................................16
Fitch......................................................................................................16
Foreclosure Restricted Mortgage Loan.......................................................................16
Xxxxxxx Mac................................................................................................16
Gross Margin...............................................................................................16
Independent................................................................................................16
Independent Contractor.....................................................................................16
Index......................................................................................................17
Insurance Proceeds.........................................................................................17
Interest Accrual Period....................................................................................17
Interest Carry Forward Amount..............................................................................17
Interest Determination Date................................................................................17
Interest Distribution Amount...............................................................................17
Interest Remittance Amount.................................................................................18
Last Scheduled Distribution Date...........................................................................18
Late Collections...........................................................................................18
Liquidation Event..........................................................................................18
Liquidation Proceeds.......................................................................................18
Loan-to-Value Ratio........................................................................................18
London Business Day........................................................................................18
Loss Severity Percentage...................................................................................18
Marker Rate................................................................................................19
Master Servicer............................................................................................19
Master Servicer Certification..............................................................................19
Master Servicer Event of Default...........................................................................19
Master Servicer Fee Rate...................................................................................19
Master Servicing Fee.......................................................................................19
Maximum I-LTZZ Uncertificated Interest Deferral Amount.....................................................19
Maximum Mortgage Rate......................................................................................20
MERS.......................................................................................................20
MERS(R) System.............................................................................................20
Mezzanine Certificate......................................................................................20
MIN........................................................................................................20
Minimum Mortgage Rate......................................................................................20
MOM Loan...................................................................................................20
Monthly Payment............................................................................................20
Xxxxx'x....................................................................................................20
Mortgage...................................................................................................21
Mortgage File..............................................................................................21
Mortgage Loan..............................................................................................21
Mortgage Loan Documents....................................................................................21
Mortgage Loan Purchase Agreement...........................................................................21
Mortgage Loan Schedule.....................................................................................21
Mortgage Note..............................................................................................23
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Mortgage Rate..............................................................................................23
Mortgaged Property.........................................................................................24
Mortgagor..................................................................................................24
Net Monthly Excess Cashflow................................................................................24
Net Mortgage Rate..........................................................................................24
Net WAC Pass-Through Rate..................................................................................24
Net WAC Rate Carryover Amount..............................................................................24
New Lease..................................................................................................25
Nonrecoverable P&I Advance.................................................................................25
Nonrecoverable Servicing Advance...........................................................................25
Non-United States Person...................................................................................25
Notional Amount............................................................................................25
Offered Certificates.......................................................................................25
Officer's Certificate......................................................................................25
One-Month LIBOR............................................................................................25
One-Month LIBOR Pass-Through Rate..........................................................................26
Opinion of Counsel.........................................................................................26
Optional Termination Date..................................................................................26
Overcollateralization Amount...............................................................................27
Overcollateralization Increase Amount......................................................................27
Overcollateralization Reduction Amount.....................................................................27
Ownership Xxxxxxxx.........................................................................................00
X&X Advance................................................................................................27
Pass-Through Rate..........................................................................................27
Percentage Interest........................................................................................29
Periodic Rate Cap..........................................................................................29
Permitted Investments......................................................................................29
Permitted Transferee.......................................................................................31
Person.....................................................................................................31
Plan.......................................................................................................31
Prepayment Assumption......................................................................................31
Prepayment Charge..........................................................................................31
Prepayment Charge Schedule.................................................................................31
Prepayment Interest Excess.................................................................................31
Prepayment Interest Shortfall..............................................................................32
Prepayment Period..........................................................................................32
Principal Prepayment.......................................................................................32
Principal Distribution Amount..............................................................................32
Principal Remittance Amount................................................................................34
Purchase Price.............................................................................................33
Qualified Substitute Mortgage Loan.........................................................................33
Rate/Term Refinancing......................................................................................34
Rating Agency or Rating Agencies...........................................................................34
Realized Loss..............................................................................................34
Record Date................................................................................................35
Reference Banks............................................................................................36
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Refinanced Mortgage Loan...................................................................................36
Regular Certificate........................................................................................36
Regular Interest...........................................................................................36
Relief Act.................................................................................................36
Relief Act Interest Shortfall..............................................................................36
REMIC......................................................................................................36
REMIC I....................................................................................................36
REMIC I Interest Loss Allocation Amount....................................................................36
REMIC I Overcollateralization Amount.......................................................................37
REMIC I Principal Loss Allocation Amount...................................................................37
REMIC I Regular Interest...................................................................................37
REMIC I Regular Interest I-LTAA............................................................................37
REMIC I Regular Interest I-LTA1............................................................................37
REMIC I Regular Interest I-LTM1............................................................................37
REMIC I Regular Interest I-LTM2............................................................................38
REMIC I Regular Interest I-LTM3............................................................................38
REMIC I Regular Interest I-LTM4............................................................................38
REMIC I Regular Interest I-LTP.............................................................................38
REMIC I Regular Interest I-LTZZ............................................................................38
REMIC I Remittance Rate....................................................................................38
REMIC I Required Overcollateralization Amount..............................................................38
REMIC II...................................................................................................39
REMIC II Certificate.......................................................................................39
REMIC II Certificateholder.................................................................................39
REMIC Provisions...........................................................................................39
Remittance Report..........................................................................................39
Rents from Real Property...................................................................................39
REO Account................................................................................................39
REO Disposition............................................................................................39
REO Imputed Interest.......................................................................................39
REO Principal Amortization.................................................................................39
REO Property...............................................................................................39
Required Overcollateralization Amount......................................................................40
Reserve Fund...............................................................................................40
Reserve Interest Rate......................................................................................40
Residential Dwelling.......................................................................................40
Residual Certificate.......................................................................................40
Residual Interest..........................................................................................40
Responsible Officer........................................................................................40
S&P........................................................................................................40
Scheduled Principal Balance................................................................................40
Securities Act.............................................................................................41
Securities Administrator...................................................................................41
Seller.....................................................................................................41
Senior Interest Distribution Amount........................................................................41
Servicer...................................................................................................41
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Servicer Event of Default..................................................................................41
Servicer Remittance Date...................................................................................41
Servicer Report............................................................................................41
Servicing Advances.........................................................................................42
Servicing Fee..............................................................................................42
Servicing Fee Rate.........................................................................................42
Servicing Officer..........................................................................................42
Single Certificate.........................................................................................42
Startup Day................................................................................................43
Stepdown Date..............................................................................................43
Subordinate Certificates...................................................................................43
Subsequent Recoveries......................................................................................43
Sub-Servicer...............................................................................................43
Sub-Servicing Agreement....................................................................................43
Substitution Shortfall Amount..............................................................................43
Tax Returns................................................................................................43
Telerate Page 3750.........................................................................................43
Termination Price..........................................................................................43
Terminator.................................................................................................43
Transfer...................................................................................................43
Transferee.................................................................................................44
Transferor.................................................................................................44
Trigger Event..............................................................................................44
Trust......................................................................................................44
Trust Fund.................................................................................................44
Trust REMIC................................................................................................44
Trustee....................................................................................................44
Uncertificated Balance.....................................................................................44
Uncertificated Interest....................................................................................45
Uninsured Cause............................................................................................45
United States Person.......................................................................................45
Value......................................................................................................45
Voting Rights..............................................................................................46
Xxxxx Fargo................................................................................................46
Section 1.02. Allocation of Certain Interest Shortfalls.................................................46
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES 48
Section 2.01. Conveyance of the Mortgage Loans..........................................................48
Section 2.02. Acceptance of REMIC I by Trustee..........................................................49
Section 2.03. Repurchase or Substitution of Mortgage Loans..............................................49
Section 2.04. Representations and Warranties of the Master Servicer.....................................52
Section 2.05. Representations, Warranties and Covenants of the Servicer.................................53
Section 2.06. Issuance of the REMIC I Regular Interests and the Class R-I Interest......................56
Section 2.07. Conveyance of the REMIC I Regular Interests; Acceptance of REMIC I by the Trustee.........56
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Section 2.08. Issuance of Class R Certificates..........................................................56
Section 2.09. Establishment of the Trust................................................................56
ARTICLE III ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS; ACCOUNTS 58
Section 3.01. The Servicer to Act as a Servicer.........................................................58
Section 3.02. Sub-Servicing Agreements Between the Servicer and Sub-Servicers...........................60
Section 3.03. Successor Sub-Servicers...................................................................61
Section 3.04. No Contractual Relationship Between Sub-Servicer, Trustee or the Certificateholders.......61
Section 3.05. Assumption or Termination of Sub-Servicing Agreement by Successor Servicer................61
Section 3.06. Collection of Certain Mortgage Loan Payments..............................................61
Section 3.07. Collection of Taxes, Assessments and Similar Items; Servicing Accounts....................62
Section 3.08. Collection Account and Distribution Account...............................................63
Section 3.09. Withdrawals from the Collection Account and Distribution Account..........................65
Section 3.10. Investment of Funds in the Investment Accounts............................................67
Section 3.11. Maintenance of Hazard Insurance, Errors and Omissions and Fidelity
Coverage and Primary Mortgage Insurance...................................................69
Section 3.12. Enforcement of Due-on-Sale Clauses; Assumption Agreements.................................70
Section 3.13. Realization Upon Defaulted Mortgage Loans.................................................71
Section 3.14. Trustee to Cooperate; Release of Mortgage Files...........................................74
Section 3.15. Servicing Compensation....................................................................75
Section 3.16. Collection Account Statements.............................................................76
Section 3.17. Statement as to Compliance................................................................76
Section 3.18. Independent Public Accountants' Servicing Report..........................................76
Section 3.19. Annual Certification......................................................................77
Section 3.20. Access to Certain Documentation...........................................................77
Section 3.21. Title, Management and Disposition of REO Property.........................................78
Section 3.22. Obligations of the Servicer in Respect of Prepayment Interest Shortfalls;
Relief Act Interest Shortfalls............................................................81
Section 3.23. Obligations of the Servicer in Respect of Mortgage Rates and Monthly Payments............81
Section 3.24. Reserve Fund..............................................................................81
Section 3.25. Advance Facility..........................................................................83
Section 3.26. The Servicer Indemnification..............................................................85
ARTICLE IV ADMINISTRATION AND MASTER SERVICING OF THE MORTGAGE LOANS BY THE MASTER SERVICER 86
Section 4.01. Master Servicer...........................................................................86
Section 4.02. REMIC-Related Covenants...................................................................87
Section 4.03. Monitoring of Servicer....................................................................87
Section 4.04. Fidelity Bond.............................................................................88
Section 4.05. Power to Act; Procedures..................................................................88
Section 4.06. Due-on-Sale Clauses; Assumption Agreements................................................89
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Section 4.07. Documents, Records and Funds in Possession of Master Servicer To Be Held for Trustee......89
Section 4.08. Standard Hazard Insurance and Flood Insurance Policies....................................90
Section 4.09. Presentment of Claims and Collection of Proceeds..........................................90
Section 4.10. Maintenance of Primary Mortgage Insurance Policies........................................90
Section 4.11. Trustee to Retain Possession of Certain Insurance Policies and Documents..................91
Section 4.12. Realization Upon Defaulted Mortgage Loans.................................................91
Section 4.13. Compensation for the Master Servicer......................................................91
Section 4.14. REO Property..............................................................................91
Section 4.15. Annual Officer's Certificate as to Compliance.............................................92
Section 4.16. Annual Independent Accountant's Servicing Report..........................................93
Section 4.17. UCC.......................................................................................93
Section 4.18. Obligation of the Master Servicer in Respect of Prepayment Interest Shortfalls............93
Section 4.19. Prepayment Penalty Verification...........................................................93
ARTICLE V PAYMENTS TO CERTIFICATEHOLDERS 95
Section 5.01. Distributions.............................................................................95
Section 5.02. Statements to Certificateholders.........................................................101
Section 5.03. Servicer Reports; P&I Advances...........................................................105
Section 5.04. Allocation of Realized Losses............................................................106
Section 5.05. Compliance with Withholding Requirements.................................................109
Section 5.06. Reports Filed with Securities and Exchange Commission....................................109
ARTICLE VI THE CERTIFICATES 111
Section 6.01. The Certificates.........................................................................111
Section 6.02. Registration of Transfer and Exchange of Certificates....................................113
Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates........................................118
Section 6.04. Persons Deemed Owners....................................................................118
Section 6.05. Certain Available Information............................................................118
ARTICLE VII THE DEPOSITOR, THE SERVICER AND THE MASTER SERVICER 119
Section 7.01. Liability of the Depositor, the Servicer and the Master Servicer.........................119
Section 7.02. Merger or Consolidation of the Depositor, the Servicer or the Master Servicer............119
Section 7.03. Limitation on Liability of the Depositor, the Servicer, the Master Servicer and Others...120
Section 7.04. Limitation on Resignation of the Servicer................................................121
Section 7.05. Limitation on Resignation of the Master Servicer.........................................122
Section 7.06. Assignment of Master Servicing...........................................................122
Section 7.07. Rights of the Depositor in Respect of the Servicer and the Master Servicer...............122
Section 7.08. Duties of the Credit Risk Manager........................................................123
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Section 7.09. Limitation Upon Liability of the Credit Risk Manager.....................................124
Section 7.10. Removal of the Credit Risk Manager.......................................................124
ARTICLE VIII DEFAULT 126
Section 8.01. Servicer Events of Default...............................................................126
Section 8.02. Master Servicer to Act; Appointment of Successor.........................................130
Section 8.03. Notification to Certificateholders.......................................................131
Section 8.04. Waiver of Servicer Events of Default.....................................................132
ARTICLE IX CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR 133
Section 9.01. Duties of Trustee and Securities Administrator...........................................133
Section 9.02. Certain Matters Affecting Trustee and Securities Administrator...........................134
Section 9.03. Trustee and Securities Administrator not Liable for Certificates or Mortgage Loans.......136
Section 9.04. Trustee and Securities Administrator May Own Certificates................................136
Section 9.05. Fees and Expenses of Trustee and Securities Administrator................................137
Section 9.06. Eligibility Requirements for Trustee and Securities Administrator........................137
Section 9.07. Resignation and Removal of Trustee and Securities Administrator..........................138
Section 9.08. Successor Trustee or Securities Administrator............................................139
Section 9.09. Merger or Consolidation of Trustee or Securities Administrator...........................140
Section 9.10. Appointment of Co-Trustee or Separate Trustee............................................140
Section 9.11. Appointment of Office or Agency..........................................................141
Section 9.12. Representations and Warranties...........................................................141
ARTICLE X TERMINATION 143
Xxxxxxx 00.00. Xxxxxxxxxxx Xxxx Xxxxxxxxxx or Liquidation of All Mortgage Loans.........................143
Section 10.02. Additional Termination Requirements......................................................145
ARTICLE XI REMIC PROVISIONS 147
Section 11.01. REMIC Administration.....................................................................147
Section 11.02. Prohibited Transactions and Activities...................................................149
Section 11.03. Indemnification..........................................................................150
ARTICLE XII MISCELLANEOUS PROVISIONS 151
Section 12.01. Amendment................................................................................151
Section 12.02. Recordation of Agreement; Counterparts...................................................152
Section 12.03. Limitation on Rights of Certificateholders...............................................152
Section 12.04. Governing Law............................................................................153
Section 12.05. Notices..................................................................................153
Section 12.06. Severability of Provisions...............................................................154
Section 12.07. Notice to Rating Agencies................................................................154
Section 12.08. Article and Section References...........................................................155
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Section 12.09. Grant of Security Interest...............................................................155
Section 12.10. Survival of Indemnification..............................................................156
EXHIBITS
--------
Exhibit A-1 Form of Class A-1 Certificate
Exhibit A-2 Form of Class M Certificate
Exhibit A-3 Form of Class CE Certificate
Exhibit A-4 Form of Class P Certificate
Exhibit A-5 Form of Class R Certificate
Exhibit B-1 Form of Transferor Representation Letter and Form of Transferee Representation
Letter in Connection with Transfer of the Class P Certificates, Class CE
Certificates and Residual Certificates Pursuant to Rule 144A Under the 1933 Act
Exhibit B-2 Form of Transferor Representation Letter and Form of Transferee Representation
Letter in Connection with Transfer of the Class P Certificates, Class CE
Certificates and Residual Certificates Pursuant to Rule 501 (a) Under the 1933 Act
Exhibit B-3 Form of Transfer Affidavit and Agreement and Form of Transferor Affidavit in
Connection with Transfer of Residual
Certificates
Exhibit C Form of Servicer Certification
Exhibit D Form of Power of Attorney
Schedule 1 Mortgage Loan Schedule
Schedule 2 Prepayment Charge Schedule
Schedule 3 Standard File Layout - Delinquency Reporting
Schedule 4 Standard File Layout - Scheduled/Scheduled
Schedule 5 Schedule of Servicing Advances made prior to the Cut-off Date
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This Pooling and Servicing Agreement, is dated and effective
as of September 1, 2004, among ACE SECURITIES CORP., as Depositor, OCWEN FEDERAL
BANK FSB, as Servicer, XXXXX FARGO BANK, N.A., as Master Servicer and Securities
Administrator and HSBC BANK USA, NATIONAL ASSOCIATION, as Trustee.
PRELIMINARY STATEMENT:
The Depositor intends to sell pass-through certificates to be
issued hereunder in multiple classes, which in the aggregate will evidence the
entire beneficial ownership interest of the Trust Fund created hereunder. The
Trust Fund will consist of a segregated pool of assets comprised of the Mortgage
Loans and certain other related assets subject to this Agreement.
REMIC I
-------
As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the Mortgage Loans and certain other
related assets subject to this Agreement (other than the Reserve Fund) as a
REMIC for federal income tax purposes, and such segregated pool of assets will
be designated as "REMIC I". The Class R-I Interest will be the sole class of
"residual interests" in REMIC I for purposes of the REMIC Provisions (as defined
herein). The following table irrevocably sets forth the designation, the REMIC I
Remittance Rate, the initial Uncertificated Balance and, solely for purposes of
satisfying Treasury regulation Section 1.860G-1(a)(4)(iii), the "latest possible
maturity date" for each of the REMIC I Regular Interests (as defined herein).
None of the REMIC I Regular Interests will be certificated.
REMIC I INITIAL LATEST POSSIBLE
---------------------- -------------------------- ----------------------
DESIGNATION REMITTANCE RATE UNCERTIFICATED BALANCE MATURITY DATE (1)
---------------------------- ---------------------- -------------------------- ----------------------
I-LTAA Variable(2) $132,958,261.10 September 25, 2033
I-LTA1 Variable(2) $1,234,610.00 September 25, 2033
I-LTM1 Variable(2) $54,270.00 September 25, 2033
I-LTM2 Variable(2) $27,130.00 September 25, 2033
I-LTM3 Variable(2) $23,740.00 September 25, 2033
I-LTM4 Variable(2) $6,780.00 September 25, 2033
I-LTZZ Variable(2) $1,366,903.90 September 25, 0000
X-XXX Variable(2) $100.00 September 25, 2033
---------------------------
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date immediately following the maturity
date for the Mortgage Loan with the latest maturity date has been
designated as the "latest possible maturity date" for each REMIC I
Regular Interest.
(2) Calculated in accordance with the definition of "REMIC I Remittance
Rate" herein.
REMIC II
--------
As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the REMIC I Regular Interests as a REMIC
for federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC II." The Class R-II Interest will evidence the sole class
of "residual interests" in REMIC II for purposes of the REMIC Provisions. The
following table irrevocably sets forth the designation, the Pass-Through Rate,
the initial aggregate Certificate Principal Balance and, solely for purposes of
satisfying Treasury regulation Section 1.860G-1(a)(4)(iii), the "latest possible
maturity date" for the indicated Classes of Certificates.
2
Initial Aggregate
Certificate Principal Latest Possible
Designation Pass-Through Rate Balance Maturity Date (1)
---------------------------- ---------------------- -------------------------- ----------------------
Class A-1 Variable(2) $123,461,000.00 September 25, 2033
Class M-1 Variable(2) $ 5,427,000.00 September 25, 2033
Class M-2 Variable(2) $ 2,713,000.00 September 25, 2033
Class M-3 Variable(2) $ 2,374,000.00 September 25, 2033
Class M-4 Variable(2) $ 678,000.00 September 25, 2033
Class P N/A(3) $ 100.00 September 25, 2033
Class CE N/A(4) $ 1,018,695.00 September 25, 2033
-----------------
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date immediately following the maturity
date for the Mortgage Loan with the latest maturity date has been
designated as the "latest possible maturity date" for each Class of
Certificates.
(2) Calculated in accordance with the definition of "Pass-Through Rate"
herein.
(3) The Class P Certificates will not accrue interest.
(4) The Class CE Certificates will accrue interest at their variable
Pass-Through Rate on the Notional Amount of the Class CE Certificates
outstanding from time to time which shall equal the Uncertificated
Balance of the REMIC I Regular Interests (other than REMIC I Regular
Interest I-LTP). The Class CE Certificates will not accrue interest on
their Certificate Principal Balance.
As of the Cut-off Date, the Mortgage Loans had an aggregate Scheduled
Principal Balance equal to $135,671,795.29.
In consideration of the mutual agreements herein contained, the
Depositor, the Servicer, the Master Servicer, the Securities Administrator and
the Trustee agree as follows:
3
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINED TERMS.
Whenever used in this Agreement, including, without
limitation, in the Preliminary Statement hereto, the following words and
phrases, unless the context otherwise requires, shall have the meanings
specified in this Article. Unless otherwise specified, all calculations
described herein shall be made on the basis of a 360-day year consisting of
twelve 30-day months.
"Accepted Master Servicing Practices": With respect to any
Mortgage Loan, as applicable, either (x) those customary mortgage master
servicing practices of prudent mortgage servicing institutions that master
service mortgage loans of the same type and quality as such Mortgage Loan in the
jurisdiction where the related Mortgaged Property is located, to the extent
applicable to the Master Servicer (except in its capacity as successor to the
Servicer), or (y) as provided in Section 3.01 hereof, but in no event below the
standard set forth in clause (x).
"Accepted Servicing Practices": As defined in Section 3.01.
"Account": The Collection Account and the Distribution Account
as the context may require.
"Accrued Certificate Interest": With respect to any Class A-1
Certificate, Mezzanine Certificate or Class CE Certificate and each Distribution
Date, interest accrued during the related Interest Accrual Period at the
Pass-Through Rate for such Certificate for such Distribution Date on the
Certificate Principal Balance, in the case of the Class A-1 Certificates and the
Mezzanine Certificates, or on the Notional Amount in the case of the Class CE
Certificates, of such Certificate immediately prior to such Distribution Date.
The Class P Certificates are not entitled to distributions in respect of
interest and, accordingly, will not accrue interest. All distributions of
interest on the Class A-1 Certificates and the Mezzanine Certificates will be
calculated on the basis of a 360-day year and the actual number of days in the
applicable Interest Accrual Period. All distributions of interest on the Class
CE Certificates will be based on a 360-day year consisting of twelve 30-day
months. Accrued Certificate Interest with respect to each Distribution Date, as
to any Class A-1 Certificate, Mezzanine Certificate or Class CE Certificate
shall be reduced by an amount equal to the portion allocable to such Certificate
pursuant to Section 1.02 hereof, if any, of the sum of (a) the aggregate
Prepayment Interest Shortfall, if any, for such Distribution Date to the extent
not covered by payments pursuant to Section 3.22 or Section 4.18 of this
Agreement and (b) the aggregate amount of any Relief Act Interest Shortfall, if
any, for such Distribution Date. In addition, Accrued Certificate Interest with
respect to each Distribution Date, as to any Class CE Certificate, shall be
reduced by an amount equal to the portion allocable to such Class CE Certificate
of Realized Losses, if any, pursuant to Section 1.02 and Section 5.04 hereof.
"Adjustable Rate Mortgage Loan": Each of the Mortgage Loans
identified in the Mortgage Loan Schedule as having a Mortgage Rate that is
subject to adjustment.
4
"Adjustment Date": With respect to each Adjustable Rate
Mortgage Loan, the first day of the month in which the Mortgage 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.
"Administration Fees": The sum of (i) the Servicing Fee, (ii)
the Master Servicing Fee, and (iii) the Credit Risk Management Fee.
"Administration Fee Rate": The sum of (i) the Servicing Fee
Rate, (ii) the Master Servicer Fee Rate, and (iii) the Credit Risk Management
Fee Rate.
"Advance Facility": As defined in Section 3.25(a).
"Advance Financing Person": As defined in Section 3.25(a).
"Advance Reimbursement Amount": As defined in Section 3.25(b).
"Affiliate": With respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Aggregate Loss Severity Percentage": With respect to any
Distribution Date, the percentage equivalent of a fraction, the numerator of
which is the aggregate amount of Realized Losses incurred on any Mortgage Loans
from the Cut-off Date to the last day of the preceding calendar month and the
denominator of which is the aggregate principal balance of such Mortgage Loans
immediately prior to the liquidation of such Mortgage Loans.
"Agreement": This Pooling and Servicing Agreement, including
all exhibits and schedules hereto and all amendments hereof and supplements
hereto.
"Allocated Realized Loss Amount": With respect to any Class of
Mezzanine Certificates and any Distribution Date, an amount equal to the sum of
any Realized Loss allocated to that Class of Certificates on the Distribution
Date pursuant to Section 5.04 and any Allocated Realized Loss Amount for that
Class remaining unpaid from the previous Distribution Date.
"Amounts Held for Future Distribution": As to any Distribution
Date, the aggregate amount held in the Collection Account at the close of
business on the immediately preceding Determination Date on account of (i) all
Monthly Payments or portions thereof received in respect of the Mortgage Loans
due after the related Due Period and (ii) Principal Prepayments and Liquidation
Proceeds received in respect of such Mortgage Loans after the last day of the
related Prepayment Period.
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"Arrearages": With respect to each Mortgage Loan, the amount,
if any, equal to the interest portion of the payments due on such Mortgage Loan
on or prior to the Cut-off Date but not yet received by the Serivicer by such
date, as shown on the Mortgage Loan Schedule.
"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, which assignment, notice of transfer or
equivalent instrument may be in the form of one or more blanket assignments
covering Mortgages secured by Mortgaged Properties located in the same county,
if permitted by law.
"Authorized Officers": A managing director of the whole loan
trading desk and a managing director in global markets.
"Available Distribution Amount": With respect to any
Distribution Date, an amount equal to (1) the sum of (a) the aggregate of the
amounts on deposit in the Collection Account and Distribution Account as of the
close of business on the related Servicer Remittance Date, (b) the aggregate of
any amounts deposited in the Distribution Account by the Servicer or the Master
Servicer in respect of Prepayment Interest Shortfalls for such Distribution Date
pursuant to Section 3.22 or Section 4.18 of this Agreement, (c) the aggregate of
any P&I Advances for such Distribution Date made by the Servicer pursuant to
Section 5.03 of this Agreement and (d) the aggregate of any P&I Advances made by
a successor Servicer (including the Master Servicer) for such Distribution Date
pursuant to Section 8.02, reduced (to an amount not less than zero) by (2) the
portion of the amount described in clause (1)(a) above that represents (i)
Amounts Held for Future Distribution, (ii) Principal Prepayments on the Mortgage
Loans received after the related Prepayment Period (together with any interest
payments received with such Principal Prepayments to the extent they represent
the payment of interest accrued on the Mortgage Loans during a period subsequent
to the related Prepayment Period), (iii) Liquidation Proceeds and Insurance
Proceeds received in respect of the Mortgage Loans after the related Prepayment
Period, (iv) amounts reimbursable or payable to the Depositor, the Servicer, the
Trustee, the Master Servicer, the Securities Administrator, the Custodian or the
Credit Risk Manager pursuant to Section 3.09 or 9.05 of this Agreement or
otherwise payable in respect of Extraordinary Trust Fund Expenses, (v) the
Credit Risk Management Fee, (vi) amounts deposited in the Collection Account or
the Distribution Account in error, (vii) the amount of any Prepayment Charges
collected by the Servicer in connection with the Principal Prepayment of any of
the Mortgage Loans and (viii) amounts reimbursable to a successor Servicer
(including the Master Servicer) pursuant to Section 8.02.
"Balloon Mortgage Loan": A Mortgage Loan that provides for
the payment of the unamortized principal balance of such Mortgage Loan in a
single payment, that is substantially greater than the preceding monthly payment
at the maturity of such Mortgage Loan.
"Balloon Payment": A payment of the unamortized principal
balance of a Mortgage Loan in a single payment, that is substantially greater
than the preceding Monthly Payment at the maturity of such Mortgage Loan.
6
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11
of the United States Code), as amended.
"Book-Entry Certificates": The Offered Certificates for so
long as the Certificates of such Class shall be registered in the name of the
Depository or its nominee.
"Book-Entry Custodian": The custodian appointed pursuant to
Section 6.01.
"Business Day": Any day other than a Saturday, a Sunday or a
day on which banking or savings and loan institutions in the States of New York,
New Jersey, Florida, Maryland, Minnesota or in the city in which the Corporate
Trust Office of the Trustee is located, are authorized or obligated by law or
executive order to be closed.
"Cap Contract": Shall mean the Cap Contract between the
Trustee and the counterparty named thereunder, for the benefit of the Holders of
the Class A-1, the Mezzanine, the Class CE and the Class P Certificates.
"Cash-Out Refinancing": A Refinanced Mortgage Loan the
proceeds of which are more than a nominal amount in excess of the principal
balance of any existing first mortgage plus any subordinate mortgage on the
related Mortgaged Property and related closing costs.
"Certificate": Any one of ACE Securities Corp., Asset Backed
Pass-Through Certificates, Series 2004-SD1, Class A-1, Class M-1, Class M-2,
Class M-3, Class M-4, Class P, Class CE and Class R issued under this Agreement.
"Certificate Factor": With respect to any Class of
Certificates (other than the Residual Certificates) as of any Distribution Date,
a fraction, expressed as a decimal carried to six places, the numerator of which
is the aggregate Certificate Principal Balance (or Notional Amount, in the case
of the Class CE Certificates) of such Class of Certificates on such Distribution
Date (after giving effect to any distributions of principal and allocations of
Realized Losses resulting in reduction of the Certificate Principal Balance (or
Notional Amount, in the case of the Class CE Certificates) of such Class of
Certificates to be made on such Distribution Date), and the denominator of which
is the initial aggregate Certificate Principal Balance (or Notional Amount, in
the case of the Class CE Certificates) of such Class of Certificates as of the
Closing Date.
"Certificate Margin": With respect to the Class A-1
Certificates and, for purposes of the definition of "Marker Rate", REMIC I
Regular Interest I-LTA1 0.49% in the case of each Distribution Date through and
including the Optional Termination Date and 0.98% in the case of each
Distribution Date thereafter.
With respect to the Class M-1 Certificates and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTM1, 0.95% in
the case of each Distribution Date through and including the Optional
Termination Date and 1.425% in the case of each Distribution Date thereafter.
With respect to the Class M-2 Certificates and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTM2, 1.75% in
the case of each Distribution Date
7
through and including the Optional Termination Date and 2.625% in the case of
each Distribution Date thereafter.
With respect to the Class M-3 Certificates and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTM3, 2.75% in
the case of each Distribution Date through and including the Optional
Termination Date and 4.125% in the case of each Distribution Date thereafter.
With respect to the Class M-4 Certificates and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTM4, 2.75% in
the case of each Distribution Date through and including the Optional
Termination Date and 4.125% in the case of each Distribution Date thereafter.
"Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register, except that a
Disqualified Organization or a Non-United States Person shall not be a Holder of
a Residual Certificate for any purposes hereof, and solely for the purposes of
giving any consent pursuant to this Agreement, any Certificate registered in the
name of or beneficially owned by the Depositor, the Seller, the Servicer, the
Master Servicer, the Securities Administrator, the Trustee or any Affiliate
thereof shall be deemed not to be outstanding and the Voting Rights to which it
is entitled shall not be taken into account in determining whether the requisite
percentage of Voting Rights necessary to effect any such consent has been
obtained, except as otherwise provided in Section 12.01. The Trustee and the
Securities Administrator may conclusively rely upon a certificate of the
Depositor, the Seller, the Master Servicer, the Securities Administrator or the
Servicer in determining whether a Certificate is held by an Affiliate thereof.
All references herein to "Holders" or "Certificateholders" shall reflect the
rights of Certificate Owners as they may indirectly exercise such rights through
the Depository and participating members thereof, except as otherwise specified
herein; provided, however, that the Trustee and the Securities Administrator
shall be required to recognize as a "Holder" or "Certificateholder" only the
Person in whose name a Certificate is registered in the Certificate Register.
"Certificate Owner": With respect to a Book-Entry Certificate,
the Person who is the beneficial owner of such Certificate as reflected on the
books of the Depository or on the books of a Depository Participant or on the
books of an indirect participating brokerage firm for which a Depository
Participant acts as agent.
"Certificate Principal Balance": With respect to each Class
A-1 Certificate, Mezzanine Certificate or Class P Certificate as of any date of
determination, the Certificate Principal Balance of such Certificate on the
Distribution Date immediately prior to such date of determination plus any
Subsequent Recoveries added to the Certificate Principal Balance of such
Certificate pursuant to Section 5.04, minus all distributions allocable to
principal made thereon and Realized Losses allocated thereto, if any, on such
immediately prior Distribution Date (or, in the case of any date of
determination up to and including the first Distribution Date, the initial
Certificate Principal Balance of such Certificate, as stated on the face
thereof). With respect to each Class CE Certificate as of any date of
determination, an amount equal to the Percentage Interest evidenced by such
Certificate times the excess, if any, of (A) the then aggregate Uncertificated
Balances of the REMIC I Regular Interests over (B) the then aggregate
Certificate
8
Principal Balances of the Class A-1 Certificates, the Mezzanine Certificates and
the Class P Certificates then outstanding. The aggregate initial Certificate
Principal Balance of each Class of Regular Certificates is set forth in the
Preliminary Statement hereto.
"Certificate Register": The register maintained pursuant to
Section 6.02.
"Class": Collectively, all of the Certificates bearing the
same class designation.
"Class A-1 Certificate": Any one of the Class A-1
Certificates executed and authenticated by the Securities Administrator and
delivered by the Trustee, substantially in the form annexed hereto as Exhibit
A-1 and evidencing a Regular Interest in REMIC II for purposes of the REMIC
Provisions.
"Class A-1 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which 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) 82.00% and (ii) the aggregate Scheduled Principal
Balance of the Mortgage Loans as of the last day of the related Due Period and
(B) the aggregate Scheduled Principal Balance of the Mortgage Loans as of the
last day of the related Due Period minus the product of (i) 0.50% and (ii) the
aggregate principal balance of the Mortgage Loans as of the Cut-off Date.
"Class CE Certificate": Any one of the Class CE Certificates
executed and authenticated by the Securities Administrator and delivered by the
Trustee, substantially in the form annexed hereto as Exhibit A-3 and evidencing
a Regular Interest in REMIC II for purposes of the REMIC Provisions.
"Class M Certificates": The Class M-1, Class M-2, Class M-3
and Class M-4 Certificates.
"Class M-1 Certificate": Any one of the Class M-1 Certificates
executed and authenticated by the Securities Administrator and delivered by the
Trustee, substantially in the form annexed hereto as Exhibit A-2 and evidencing
a Regular Interest in REMIC II for purposes of the REMIC Provisions.
"Class M-1 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the Certificate Principal
Balance of the Class A-1 Certificates (after taking into account the payment of
the Class A-1 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)
90.0% and (ii) the aggregate Scheduled Principal Balance of the Mortgage Loans
as of the last day of the related Due Period and (B) the aggregate Scheduled
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period minus the product of (i) 0.50% and (ii) the aggregate principal balance
of the Mortgage Loans as of the Cut-off Date.
"Class M-2 Certificate": Any one of the Class M-2 Certificates
executed and authenticated by the Securities Administrator and delivered by the
Trustee, substantially in the
9
form annexed hereto as Exhibit A-2 and evidencing a Regular Interest in REMIC II
for purposes of the REMIC Provisions.
"Class M-2 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the Certificate Principal
Balance of the Class A-1 Certificates (after taking into account the payment of
the Class A-1 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) 94.0% and (ii) the aggregate Scheduled Principal Balance
of the Mortgage Loans as of the last day of the related Due Period and (B) the
aggregate Scheduled Principal Balance of the Mortgage Loans as of the last day
of the related Due Period minus the product of (i) 0.50% and (ii) the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.
"Class M-3 Certificate": Any one of the Class M-3 Certificates
executed and authenticated by the Securities Administrator and delivered by the
Trustee, substantially in the form annexed hereto as Exhibit A-2 and evidencing
a Regular Interest in REMIC II for purposes of the REMIC Provisions.
"Class M-3 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the Certificate Principal
Balance of the Class A-1 Certificates (after taking into account the payment of
the Class A-1 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 M-3 Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) 97.50% and (ii)
the aggregate Scheduled Principal Balance of the Mortgage Loans as of the last
day of the related Due Period and (B) the aggregate Scheduled Principal Balance
of the Mortgage Loans as of the last day of the related Due Period minus the
product of (i) 0.50% and (ii) the aggregate principal balance of the Mortgage
Loans as of the Cut-off Date.
"Class M-4 Certificate": Any one of the Class M-4 Certificates
executed and authenticated by the Securities Administrator and delivered by the
Trustee, substantially in the form annexed hereto as Exhibit A-2 and evidencing
a Regular Interest in REMIC II for purposes of the REMIC Provisions.
"Class M-4 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the Certificate Principal
Balance of the Class A-1 Certificates (after taking into account the payment of
the Class A-1 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
10
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 M-3
Certificates (after taking into account the payment of the Class M-3 Principal
Distribution Amount on such Distribution Date) and (v) the Certificate Principal
Balance of the Class M-4 Certificates immediately prior to such Distribution
Date over (y) the lesser of (A) the product of (i) 98.50% and (ii) the aggregate
Scheduled Principal Balance of the Mortgage Loans as of the last day of the
related Due Period and (B) the aggregate Scheduled Principal Balance of the
Mortgage Loans as of the last day of the related Due Period minus the product of
(i) 0.50% and (ii) the aggregate principal balance of the Mortgage Loans as of
the Cut-off Date.
"Class P Certificate": Any one of the Class P Certificates
executed and authenticated by the Securities Administrator and delivered by the
Trustee, substantially in the form annexed hereto as Exhibit A-4 and evidencing
a Regular Interest in REMIC II for purposes of the REMIC Provisions.
"Class R Certificates": Any one of the Class R Certificates
executed and authenticated by the Securities Administrator and delivered by the
Trustee, substantially in the form annexed hereto as Exhibit A-5, and evidencing
the Class R-I Interest and the Class R-II Interest.
"Class R-I Interest": The uncertificated residual interest in
REMIC I.
"Class R-II Interest": The uncertificated residual interest in
REMIC II.
"Closing Date": September 30, 2004.
"Code": The Internal Revenue Code of 1986 as amended from time
to time.
"Collection Account": The account or accounts created and
maintained, or caused to be created and maintained, by the Servicer pursuant to
Section 3.08(a), which shall be entitled "Ocwen Federal Bank FSB, as Servicer
for HSBC Bank USA, National Association as Trustee, in trust for the registered
holders of ACE Securities Corp., Home Equity Loan Trust, Series 2004-SD1, Asset
Backed Pass-Through Certificates". The Collection Account must be an Eligible
Account.
"Commission": The Securities and Exchange Commission.
"Corporate Trust Office": The principal corporate trust office
of the Trustee which office at the date of the execution of this instrument is
located at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: ACE Securities
Corp., 2004-SD1, or at such other address as the Trustee may designate from time
to time by notice to the Certificateholders, the Depositor, the Master Servicer,
the Securities Administrator and the Servicer. The office of the Securities
Administrator, which for purposes of Certificate transfers and surrender is
located at Xxxxx Fargo Bank, N.A., Sixth and Xxxxxxxxx Xxxxxx, Xxxxxxxxxxx,
Xxxxxxxxx 00000, Attention: Corporate Trust (ACE 2004-SD1), and for all other
purposes is located at Xxxxx Xxxxx Xxxx, X.X., X.X. Xxx 00, Xxxxxxxx, Xxxxxxxx
00000, Attention: Corporate Trust (ACE 2004-SD1) (or for
11
overnight deliveries, at 0000 Xxx Xxxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000,
Attention: Corporate Trust (ACE 2004-SD1)).
"Corresponding Certificate": With respect to each REMIC I
Regular Interest, as follows:
REMIC I Regular Interest Class
------------------------------- -----
REMIC I Regular Interest I-LTA1 A-1
REMIC I Regular Interest I-LTM1 M-1
REMIC I Regular Interest I-LTM2 M-2
REMIC I Regular Interest I-LTM3 M-3
REMIC I Regular Interest I-LTM4 M-4
REMIC I Regular Interest I-LTP P
"Credit Enhancement Percentage": For any Distribution Date and
any Class of Offerred Certificates will be the percentage obtained by dividing
(x) the sum of (i) the aggregate Certificate Principal Balance of the
Subordinate Certificates and (ii) the Overcollateralization Amount by (y) the
aggregate Scheduled Principal Balance of the Mortgage Loans as of the last day
of the Due Period, calculated after taking into account scheduled payments of
principal due during the related Due Period to the extent received or advanced,
and unscheduled collections of principal received during the related Prepayment
Period, and after reduction for Realized Losses incurred on the Mortgage Loans
during the related Prepayment Period, and distribution of the Principal
Distribution Amount to the Certificates then entitled to distributions of
principal on such Distribution Date.
"Credit Risk Management Agreements": The agreement between the
Credit Risk Manager and the Servicer, and the agreement between the Credit Risk
Manager and the Master Servicer, each regarding the loss mitigation and advisory
services to be provided by the Credit Risk Manager.
"Credit Risk Management Fee": The amount payable to the Credit
Risk Manager on each Distribution Date as compensation for all services rendered
by it in the exercise and performance of any and all powers and duties of the
Credit Risk Manager under the Credit Risk Management Agreements, which amount
shall equal one twelfth of the product of (i) the Credit Risk Management Fee
Rate multiplied by (ii) the Scheduled Principal Balance of the Mortgage Loans
and any related REO Properties as of the first day of the related Due Period.
"Credit Risk Management Fee Rate": 0.02% per annum.
"Credit Risk Manager": Risk Management Group, LLC, a New York
limited liability company, and its successors and assigns.
"Custodial Agreement": The Custodial Agreement dated as of
September 1, 2004, among the Trustee, the Custodian and the Servicer as such
agreement may be amended or supplemented from time to time, or any other
custodial agreement entered into after the date hereof with respect to any
Mortgage Loan subject to this Agreement.
12
"Custodian": Xxxxx Fargo or any other custodian appointed
under any custodial agreement entered into after the date of this Agreement.
"Cut-off Date": With respect to each Mortgage Loan, September
1, 2004. With respect to all Qualified Substitute Mortgage Loans, their
respective dates of substitution. References herein to the "Cut-off Date," when
used with respect to more than one Mortgage Loan, shall be to the respective
Cut-off Dates for such Mortgage Loans.
"Debt Service Reduction": With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment for such Mortgage Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code, except such a
reduction resulting from a Deficient Valuation.
"Deficient Valuation": With respect to any Mortgage Loan, a
valuation of the related Mortgaged Property by a court of competent jurisdiction
in an amount less than the then outstanding principal balance of the Mortgage
Loan, which valuation results from a proceeding initiated under the Bankruptcy
Code.
"Definitive Certificates": As defined in Section 6.01(b).
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be
replaced by a Qualified Substitute Mortgage Loan.
"Delinquency Percentage": As of the last day of the related
Due Period, the percentage equivalent of a fraction, the numerator of which is
the aggregate Scheduled Principal Balance of all Mortgage Loans that, as of the
last day of the previous calendar month, are 60 or more days delinquent, are in
foreclosure, have been converted to REO Properties or have been discharged by
reason of bankruptcy, provided that in the case of (i) Mortgage Loans that are
the subject of forebearance plans and (ii) Mortgage Loans with respect to which
the related borrower is the subject of bankruptcy proceedings, delinquency shall
be deemed to mean delinquency of the Monthly Payment due under the related
forebearance plan or bankruptcy plan, as applicable, and the denominator of
which is the aggregate Scheduled Principal Balance of the Mortgage Loans and REO
Properties as of the last day of the previous calendar month.
"Depositor": ACE Securities Corp., a Delaware corporation, or
its successor in interest.
"Depository": The Depository Trust Company, or any successor
Depository hereafter named. The nominee of the initial Depository, for purposes
of registering those Certificates that are to be Book-Entry Certificates, is
CEDE & Co. The Depository shall at all times be a "clearing corporation" as
defined in Section 8-102(3) of the Uniform Commercial Code of the State of New
York and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934, as amended.
"Depository Institution": Any depository institution or trust
company, including the Trustee, that (a) is incorporated under the laws of the
United States of America or any State thereof, (b) is subject to supervision and
examination by federal or state banking authorities and (c) has outstanding
unsecured commercial paper or other short-term unsecured debt obligations
13
(or, in the case of a depository institution that is the principal subsidiary of
a holding company, such holding company has unsecured commercial paper or other
short-term unsecured debt obligations) that are rated at least A-1+ by S&P, F-1+
by Fitch and P-1 by Xxxxx'x (or, if such Rating Agencies are no longer rating
the Offered Certificates, comparable ratings by any other nationally recognized
statistical rating agency then rating the Offered Certificates).
"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 each Distribution Date,
the 15th day of the calendar month in which such Distribution Date occurs, or if
such 15th day is not a Business Day, the Business Day immediately preceding such
15th day.
"Directly Operate": With respect to any REO Property, the
furnishing or rendering of services to the tenants thereof, the management or
operation of such REO Property, the holding of such REO Property primarily for
sale to customers, the performance of any construction work thereon or any use
of such REO Property in a trade or business conducted by REMIC I other than
through an Independent Contractor; provided, however, that the Servicer, on
behalf of the Trustee, shall not be considered to Directly Operate an REO
Property solely because the Servicer 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": Any of the following: (i) the
United States, any State or political subdivision thereof, any possession of the
United States, or any agency or instrumentality of any of the foregoing (other
than an instrumentality which is a corporation if all of its activities are
subject to tax and, except for Xxxxxxx Mac, a majority of its board of directors
is not selected by such governmental unit), (ii) any foreign government, any
international organization, or any agency or instrumentality of any of the
foregoing, (iii) any organization (other than certain farmers' cooperatives
described in Section 521 of the Code) which is exempt from the tax imposed by
Chapter 1 of the Code (including the tax imposed by Section 511 of the Code on
unrelated business taxable income), (iv) rural electric and telephone
cooperatives described in Section 1381(a)(2)(C) of the Code, (v) an "electing
large partnership" and (vi) any other Person so designated by the Trustee based
upon an Opinion of Counsel that the holding of an Ownership Interest in a
Residual Certificate by such Person may cause any Trust REMIC or any Person
having an Ownership Interest in any Class of Certificates (other than such
Person) to incur a liability for any federal tax imposed under the Code that
would not otherwise be imposed but for the Transfer of an Ownership Interest in
a Residual Certificate to such Person. The terms "United States," "State" and
"international organization" shall have the meanings set forth in Section 7701
of the Code or successor provisions.
"Distribution Account": The trust account or accounts created
and maintained by the Securities Administrator pursuant to Section 3.08(b) in
the name of the Securities Administrator for the benefit of the
Certificateholders and designated "Xxxxx Fargo Bank, N.A., in trust for
registered holders of ACE Securities Corp. Home Equity Loan Trust, Series
2004-SD1". Funds in the Distribution Account shall be held in trust for the
Certificateholders for the
14
uses and purposes set forth in this Agreement. The Distribution Account must be
an Eligible Account.
"Distribution Date": The 25th day of any month, or if such
25th day is not a Business Day, the Business Day immediately following such 25th
day, commencing in October 2004.
"Due Date": With respect to each Distribution Date, the day of
the month on which the Monthly Payment is due on a Mortgage Loan during the
related Due Period, exclusive of any days of grace.
"Due Period": With respect to any Distribution Date, the
period commencing on the second day of the month immediately preceding the month
in which such Distribution Date occurs and ending on the first day of the month
in which such Distribution Date occurs.
"Eligible Account": Any of (i) an account or accounts
maintained with a Depository Institution, (ii) an account or accounts the
deposits in which are fully insured by the FDIC or (iii) a trust account or
accounts maintained with a federal depository institution or state chartered
depository institution acting in its fiduciary capacity. Eligible Accounts may
bear interest.
"ERISA": The Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Estate in Real Property": A fee simple estate in a parcel of
land.
"Excess Liquidation Proceeds": To the extent that such amount
is not required by law to be paid to the related mortgagor, the amount, if any,
by which Liquidation Proceeds with respect to a liquidated Mortgage Loan exceed
the sum of (i) the outstanding principal balance of such Mortgage Loan and
accrued but unpaid interest at the related Net Mortgage Rate through the last
day of the month in which the related Liquidation Event occurs, plus (ii)
related liquidation expenses or other amounts to which the Servicer is entitled
to be reimbursed from Liquidation Proceeds with respect to such liquidated
Mortgage Loan pursuant to Section 3.09 of this Agreement.
"Extraordinary Trust Fund Expense": Any amounts payable or
reimbursable to the Trustee, the Master Servicer, the Securities Administrator,
the Custodian the Credit Risk Manager or any director, officer, employee or
agent of any such Person from the Trust Fund pursuant to the terms of this
Agreement and any amounts payable from the Distribution Account in respect of
taxes pursuant to Section 11.01(g)(v).
"Extra Principal Distribution Amount": With respect to any
Distribution Date, the lesser of (i) the Net Monthly Excess Cashflow for such
Distribution Date and (ii) the Overcollateralization Increase Amount for such
Distribution Date.
"Xxxxxx Xxx": Xxxxxx Xxx, formerly known as the Federal
National Mortgage Association, or any successor thereto.
15
"FDIC": Federal Deposit Insurance Corporation or any successor
thereto.
"Final Maturity Date": The Distribution Date occurring in
September 2033.
"Final Recovery Determination": With respect to any defaulted
Mortgage Loan or any REO Property (other than a Mortgage Loan or REO Property
purchased by the Seller or the Terminator pursuant to or as contemplated by
Section 2.03, 3.13(c) or Section 10.01), a determination made by the Servicer
that all Insurance Proceeds, Liquidation Proceeds and other payments or
recoveries which the Servicer, in its reasonable good faith judgment, expects to
be finally recoverable in respect thereof have been so recovered, which
determination shall be evidenced by a certificate of a Servicing Officer
delivered to the Master Servicer and maintained in its records.
"Fitch": Fitch Ratings or any successor in interest.
"Foreclosure Restricted Mortgage Loans" : A Mortgage Loan that
was 90 or more days delinquent as of the Closing Date and which was not current
under a repayment plan and identified as such on the Mortgage Loan Schedule.
"Xxxxxxx Mac": Xxxxxxx Mac, formerly known as the Federal Home
Loan Mortgage Corporation, or any successor thereto.
"Gross Margin": With respect to each Adjustable Rate Mortgage
Loan, the fixed percentage set forth in the related Mortgage Note that is added
to the Index on each Adjustment Date in accordance with the terms of the related
Mortgage Note used to determine the Mortgage Rate for such Adjustable Rate
Mortgage Loan.
"Independent": When used with respect to any specified Person,
any such Person who (a) is in fact independent of the Depositor, the Master
Servicer, the Securities Administrator, the Servicer, the Seller and their
respective Affiliates, (b) does not have any direct financial interest in or any
material indirect financial interest in the Depositor, the Master Servicer, the
Securities Administrator, the Servicer, the Seller or any Affiliate thereof, and
(c) is not connected with the Depositor, the Master Servicer, the Securities
Administrator, the Servicer, the Seller 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, the Master Servicer, the Securities Administrator,
the Servicer, the Seller 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, the Master Servicer, the Securities Administrator, the Servicer, the
Seller 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 REMIC I
within the meaning of Section 856(d)(3) of the Code if REMIC I were a real
estate investment trust (except that the ownership tests set forth in that
section shall be considered to be met by any Person that owns, directly or
indirectly, 35% or more of any Class of Certificates), so long as REMIC I does
not receive or derive any income from such Person and provided that the
relationship between such Person and REMIC I 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
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Counsel to the effect that the taking of any action in respect of any REO
Property by such Person, subject to any conditions therein specified, that is
otherwise herein contemplated to be taken by an Independent Contractor will not
cause such REO Property to cease to qualify as "foreclosure property" within the
meaning of Section 860G(a)(8) of the Code (determined without regard to the
exception applicable for purposes of Section 860D(a) of the Code), or cause any
income realized in respect of such REO Property to fail to qualify as Rents from
Real Property.
"Index": As of any Adjustment Date, the index applicable to
the determination of the Mortgage Rate on each Adjustable Rate Mortgage Loan
will generally be the average of the interbank offered rates for six-month
United States dollar deposits in the London market as published in THE WALL
STREET JOURNAL and as most recently available either (a) as of the first
Business Day 45 days prior to such Adjustment Date or (b) as of the first
Business Day of the month preceding the month of such Adjustment Date, as
specified in the related Mortgage Note.
"Insurance Proceeds": Proceeds of any title policy, hazard
policy or other insurance policy covering a Mortgage Loan or the related
Mortgaged Property, to the extent such proceeds are not to be applied to the
restoration of the related Mortgaged Property or released to the Mortgagor or a
senior lienholder in accordance with Accepted Servicing Practices, subject to
the terms and conditions of the related Mortgage Note and Mortgage.
"Interest Accrual Period": With respect to any Distribution
Date and the Class A-1 Certificates and the Mezzanine Certificates, the period
commencing on the Distribution Date of the month immediately preceding the month
in which such Distribution Date occurs (or, in the case of the first
Distribution Date, commencing on the Closing Date) and ending on the day
preceding such Distribution Date. With respect to any Distribution Date and the
Class CE Certificates and the REMIC I Regular Interests, the one-month period
ending on the last day of the calendar month immediately preceding the month in
which such Distribution Date occurs.
"Interest Carry Forward Amount": With respect to any
Distribution Date and any Class A-1 Certificate or Mezzanine Certificate, the
sum of (i) the amount, if any, by which (a) the Interest Distribution Amount for
such Class as of the immediately preceding Distribution Date exceeded (b) the
actual amount distributed on such Class in respect of interest on such
immediately preceding Distribution Date and (ii) the amount of any Interest
Carry Forward Amount for such Class remaining unpaid from the previous
Distribution Date, plus accrued interest on such sum calculated at the related
Pass-Through Rate for the most recently ended Interest Accrual Period.
"Interest Determination Date": With respect to the Class A-1
Certificates, the Mezzanine Certificates, REMIC I Regular Interest I-LTA1, REMIC
I Regular Interest I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I Regular
Interest I-LTM3 and REMIC I Regular Interest I-LTM4 and any Interest Accrual
Period therefor, the second London Business Day preceding the commencement of
such Interest Accrual Period.
"Interest Distribution Amount": With respect to any
Distribution Date and any Class A-1 Certificates, any Mezzanine Certificates and
any Class CE Certificates, the aggregate Accrued Certificate Interest on the
Certificates of such Class for such Distribution Date.
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"Interest Remittance Amount": With respect to any Distribution
Date is that portion of the Available Distribution Amount for such Distribution
Date that represents interest received or advanced on the Mortgage Loans (net of
the Administration Fees, Arrearages collected by the Servicer and any Prepayment
Charges and after taking into account amounts payable or reimbursable to the
Trustee, the Custodian, the Securities Administrator, the Master Servicer, the
Credit Risk Manager or the Servicer pursuant to this Agreement or the Custodial
Agreement).
"Last Scheduled Distribution Date": The Distribution Date in
September, 2033.
"Late Collections": With respect to any Mortgage Loan and any
Due Period, all amounts received subsequent to the Determination Date
immediately following such Due Period with respect to such Mortgage Loan,
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 for such Due Period
and not previously 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 REMIC I by reason of its being purchased, sold or replaced
pursuant to or as contemplated by Section 2.03, Section 3.13(c) or Section
10.01. With respect to any REO Property, either of the following events: (i) a
Final Recovery Determination is made as to such REO Property or (ii) such REO
Property is removed from REMIC I by reason of its being purchased pursuant to
Section 10.01.
"Liquidation Proceeds": The amount (other than Insurance
Proceeds, amounts received in respect of the rental of any REO Property prior to
REO Disposition, or required to be released to a Mortgagor or a senior
lienholder in accordance with applicable law or the terms of the related
Mortgage Loan Documents) 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 (other than amounts required to be released to
the Mortgagor or a senior lienholder), (ii) the liquidation of a defaulted
Mortgage Loan through a trustee's sale, foreclosure sale or otherwise, (iii) the
repurchase, substitution or sale of a Mortgage Loan or an REO Property pursuant
to or as contemplated by Section 2.03, Section 3.13(c), Section 3.21 or Section
10.01 of this Agreement or (iv) any Subsequent Recoveries.
"Loan-to-Value Ratio": As of any date of determination, the
fraction, expressed as a percentage, the numerator of which is the principal
balance of the related Mortgage Loan at such date and the denominator of which
is the Value of the related Mortgaged Property.
"London Business Day": Any day on which banks in the Cities of
London and New York are open and conducting transactions in United States
dollars.
"Loss Severity Percentage": With respect to any Distribution
Date, the percentage equivalent of a fraction, the numerator of which is the
amount of Realized Losses incurred on a Mortgage Loan and the denominator of
which is the principal balance of such Mortgage Loan immediately prior to the
liquidation of such Mortgage Loan.
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"Marker Rate": With respect to the Class CE Certificates and
any Distribution Date, a per annum rate equal to two (2) times the weighted
average of the REMIC I Remittance Rate for each of REMIC I Regular Interest
I-LTA1, REMIC I Regular Interest I-LTM1, REMIC I Regular Interest I-LTM2, REMIC
I Regular Interest I-LTM3, REMIC I Regular Interest I-LTM4 and REMIC I Regular
Interest I-LTZZ, with the rate on each such REMIC I Regular Interest (other than
REMIC I Regular Interest I-LTZZ) subject to a cap equal to the lesser of (i) the
related One-Month LIBOR Pass-Through Rate and (ii) the related Net WAC
Pass-Through Rate for the corresponding certificates for the purpose of this
calculation for such Distribution Date and with the rate on REMIC I Regular
Interest I-LTZZ subject to a cap of zero for the purpose of this calculation;
provided however, each such cap for each REMIC I Regular Interest shall be
multiplied by a fraction the numerator of which is the actual number of days in
the related Interest Accrual Period and the denominator of which is 30.
"Master Servicer": As of the Closing Date, Xxxxx Fargo Bank,
N.A. and thereafter, its respective successors in interest who meet the
qualifications of this Agreement. The Master Servicer and the Securities
Administrator shall at all times be the same Person.
"Master Servicer Certification": A written certification
covering servicing of the Mortgage Loans by a Servicer and signed by an officer
of the Master Servicer that complies with (i) the Xxxxxxxx-Xxxxx Act of 2002, as
amended from time to time, and (ii) the February 21, 2003 Statement by the Staff
of the Division of Corporation Finance of the Securities and Exchange Commission
Regarding Compliance by Asset-Backed Issuers with Exchange Act Rules 13a-14 and
15d-14, as in effect from time to time; provided that if, after the Closing Date
(a) the Xxxxxxxx-Xxxxx Act of 2002 is amended, (b) the Statement referred to in
clause (ii) is modified or superseded by any subsequent statement, rule or
regulation of the Securities and Exchange Commission or any statement of a
division thereof, or (c) any future releases, rules and regulations are
published by the Securities and Exchange Commission from time to time pursuant
to the Xxxxxxxx-Xxxxx Act of 2002, which in any such case affects the form or
substance of the required certification and results in the required
certification being, in the reasonable judgment of the Master Servicer,
materially more onerous than the form of the required certification as of the
Closing Date, the Master Servicer Certification shall be as agreed to by the
Master Servicer, the Depositor and the Seller following a negotiation in good
faith to determine how to comply with any such new requirements.
"Master Servicer Event of Default": One or more of the events
described in Section 8.01(b).
"Master Servicer Fee Rate": 0.055% per annum.
"Master Servicing Fee": With respect to each Mortgage Loan and
for any calendar month, an amount equal to one twelfth of the product of the
Master Servicer Fee Rate multiplied by the Scheduled Principal Balance of the
Mortgage Loans as of the Due Date in the preceding calendar month.
"Maximum I-LTZZ Uncertificated Interest Deferral Amount": With
respect to any Distribution Date, the excess of (i) accrued interest at the
REMIC I Remittance Rate applicable to REMIC I Regular Interest I-LTZZ for such
Distribution Date on a balance equal to
19
the Uncertificated Balance of REMIC I Regular Interest I-LTZZ minus the REMIC I
Overcollateralization Amount, in each case for such Distribution Date, over (ii)
Uncertificated Interest on REMIC I Regular Interest I-LTA1, REMIC I Regular
Interest I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I Regular Interest
I-LTM3 and REMIC I Regular Interest I-LTM4 for such Distribution Date, with the
rate on each such REMIC I Regular Interest subject to a cap equal to the lesser
of (i) the related One-Month LIBOR Pass-Through Rate and (ii) the related Net
WAC Pass-Through Rate for the corresponding certificates for the purpose of this
calculation for such Distribution Date; provided however, each such cap for each
REMIC I Regular Interest shall be multiplied by a fraction the numerator of
which is the actual number of days in the related Interest Accrual Period and
the denominator of which is 30.
"Maximum Mortgage Rate": With respect to each Adjustable Rate
Mortgage Loan, the percentage set forth in the related Mortgage Note as the
maximum Mortgage Rate thereunder.
"MERS": Mortgage Electronic Registration Systems, Inc., a
corporation organized and existing under the laws of the State of Delaware, or
any successor thereto.
"MERS(R) System": The system of recording transfers of
mortgages electronically maintained by MERS.
"Mezzanine Certificate": Any Class M-1, Class M-2, Class M-3
or Class M-4 Certificate.
"MIN": The Mortgage Identification Number for Mortgage Loans
registered with MERS on the MERS(R) System.
"Minimum Mortgage Rate": With respect to each Adjustable Rate
Mortgage Loan, the percentage set forth in the related Mortgage Note as the
minimum Mortgage Rate thereunder.
"MOM Loan": With respect to any Mortgage Loan, MERS acting as
the mortgagee of such Mortgage Loan, solely as nominee for the originator of
such Mortgage Loan and its successors and assigns, at the origination thereof.
"Monthly Payment": With respect to any Mortgage Loan, 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, a bankruptcy or a forebearance plan 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 or similar state laws; (b)
without giving effect to any extension granted or agreed to by the Servicer
pursuant to Section 3.01 of this Agreement; and (c) on the assumption that all
other amounts, if any, due under such Mortgage Loan are paid when due.
"Moody's": Xxxxx'x Investors Service, Inc. or any successor
interest.
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"Mortgage": The mortgage, deed of trust or other instrument
creating a first or second lien on, or first or second priority security
interest in, a Mortgaged Property securing a Mortgage Note.
"Mortgage File": The Mortgage Loan Documents pertaining to a
particular Mortgage Loan.
"Mortgage Loan": Each mortgage loan transferred and assigned
to the Trustee and the Mortgage Loan Documents for which have been delivered to
the Custodian pursuant to Section 2.01 of this Agreement and pursuant to the
Custodial Agreement, as held from time to time as a part of the Trust Fund, the
Mortgage Loans so held being identified in the Mortgage Loan Schedule.
"Mortgage Loan Documents": The documents evidencing or
relating to each Mortgage Loan delivered to the Custodian under the Custodial
Agreement on behalf of the Trustee.
"Mortgage Loan Purchase Agreement": Shall mean the Mortgage
Loan Purchase Agreement dated as of September 30, 2004, between the Depositor
and the Seller.
"Mortgage Loan Schedule": As of any date, the list of Mortgage
Loans included in REMIC I on such date attached hereto as Schedule 1. The
Depositor shall deliver or cause the delivery of the initial Mortgage Loan
Schedule to the Servicer, the Master Servicer, the Custodian and the Trustee on
the Closing Date. The Mortgage Loan Schedule shall set forth the following
information with respect to each Mortgage Loan:
(i) the Mortgage Loan identifying number;
(ii) the Mortgagor's first and last name;
(iii) the street address of the Mortgaged Property including
the state and zip code;
(iv) a code indicating whether the Mortgaged Property is
owner-occupied;
(v) the type of Residential Dwelling constituting the
Mortgaged Property;
(vi) the original months to maturity;
(vii) the original date of the Mortgage Loan and the
remaining months to maturity from the Cut-off Date, based on the
original amortization schedule;
(viii) the Loan-to-Value Ratio at origination;
(ix) the Mortgage Rate in effect immediately following the
Cut-off Date;
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(x) the date on which the first Monthly Payment was due on
the Mortgage Loan;
(xi) the stated maturity date;
(xii) the amount of the Monthly Payment at origination;
(xiii) the amount of the Monthly Payment (including as set
forth in a forebearence plan or in connection with a bankruptcy
proceeding) as of the Cut-off Date;
(xiv) the last Due Date on which a Monthly Payment was
actually applied to the unpaid Scheduled Principal Balance;
(xv) the original principal amount of the Mortgage Loan;
(xvi) the Scheduled Principal Balance of the Mortgage Loan
as of the close of business on the Cut-off Date;
(xvii) with respect to each Adjustable Rate Mortgage Loan,
the first Adjustment Date;
(xviii) with respect to each Adjustable Rate Mortgage Loan,
the Gross Margin;
(xix) a code indicating the purpose of the loan (i.e.,
purchase financing, rate/term refinancing, cash-out refinancing);
(xx) with respect to each Adjustable Rate Mortgage Loan, the
Maximum Mortgage Rate under the terms of the Mortgage Note;
(xxi) with respect to each Adjustable Rate Mortgage Loan,
the Minimum Mortgage Rate under the terms of the Mortgage Note;
(xxii) the Mortgage Rate at origination;
(xxiii) with respect to each Adjustable Rate Mortgage Loan,
the Periodic Rate Cap;
(xxiv) with respect to each Adjustable Rate Mortgage Loan,
the first Adjustment Date immediately following the Cut-off Date;
(xxv) with respect to each Adjustable Rate Mortgage Loan,
the Index;
(xxvi) the date on which the first Monthly Payment was due
on the Mortgage Loan and, if such date is not consistent with the Due
Date currently in effect, such Due Date;
(xxvii) a code indicating whether the Mortgage Loan is an
Adjustable Rate Mortgage Loan or a fixed rate Mortgage Loan;
22
(xxviii) a code indicating the documentation style (i.e.,
full, stated or limited);
(xxix) a code indicating if the Mortgage Loan is subject to
a primary insurance policy or lender paid mortgage insurance policy
and the name of the insurer;
(xxx) the Appraised Value of the Mortgaged Property;
(xxxi) the sale price of the Mortgaged Property, if
applicable;
(xxxii) a code indicating whether the Mortgage Loan is
subject to a Prepayment Charge, the term of such Prepayment Charge and
the amount of such Prepayment Charge;
(xxxiii) the product type (e.g., 2/28, 15 year fixed, 30
year fixed, 15/30 balloon, etc.);
(xxxiv) the Mortgagor's debt to income ratio;
(xxxv) the FICO score at origination;
(xxxvi) the amount of any Arrearage;
(xxxvii) a code indicating a Foreclosure Restricted Mortgage
Loan; and
(xxxviii) the amount of Servicing Advances made prior to the
Cut-off Date and outstanding as of such date.
The Mortgage Loan Schedule shall set forth the following
information with respect to the Mortgage Loans in the aggregate as of the
Cut-off Date: (1) the number of Mortgage Loans; (2) the current principal
balance of the Mortgage Loans; (3) the weighted average Mortgage Rate of the
Mortgage Loans; and (4) the weighted average maturity of the Mortgage Loans. The
Mortgage Loan Schedule shall be amended from time to time by the Depositor in
accordance with the provisions of this Agreement. With respect to any Qualified
Substitute Mortgage Loan, the 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 the indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgage 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 with
respect to 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 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 equal to the sum, rounded to the nearest 0.125% as provided in
the Mortgage Note, of the Index, as most recently available as of a date prior
to the
23
Adjustment Date as set forth in the related Mortgage Note, plus the related
Gross Margin; provided that the Mortgage Rate on such Adjustable Rate Mortgage
Loan on any Adjustment Date shall never be more than the lesser of (i) the sum
of the Mortgage Rate in effect immediately prior to the Adjustment Date plus the
related Periodic Rate Cap, if any, and (ii) the related Maximum Mortgage Rate,
and shall never be less than the greater of (i) the Mortgage Rate in effect
immediately prior to the Adjustment Date less the Periodic Rate Cap, if any, and
(ii) the related Minimum Mortgage Rate. With respect to each Mortgage Loan that
becomes an REO Property, as of any date of determination, the annual rate
determined in accordance with the immediately preceding sentence as of the date
such Mortgage Loan became an REO Property.
"Mortgaged Property": The underlying property securing a
Mortgage Loan, including any REO Property, consisting of an Estate in Real
Property improved by a Residential Dwelling.
"Mortgagor": The obligor on a Mortgage Note.
"Net Monthly Excess Cashflow": With respect to any
Distribution Date, the sum of (i) the amount of any collections in respect of
Arrearages on the Mortgage Loans, (ii) any Overcollateralization Reduction
Amount for such Distribution Date and (iii) the excess of (x) the Available
Distribution Amount for such Distribution Date over (y) the sum for such
Distribution Date of (A) the Senior Interest Distribution Amount payable to the
Holders of the Class A-1 Certificates, (B) the aggregate Interest Distribution
Amounts payable to the holders of the Mezzanine Certificates and (C) the
Principal Remittance Amount.
"Net Mortgage Rate": With respect to any Mortgage Loan (or the
related REO Property) as of any date of determination, a per annum rate of
interest equal to the then applicable Mortgage Rate for such Mortgage Loan minus
the Administration Fee Rate.
"Net WAC Pass-Through Rate": With respect to the Class A-1
Certificates and the Mezzanine Certificates and any Distribution Date, a rate
per annum equal to the product of (x) the weighted average of the Net Mortgage
Rates on the then outstanding Mortgage Loans, weighted based on their Scheduled
Principal Balances as of the first day of the calendar month preceding the month
in which the Distribution Date occurs and (y) a fraction, the numerator of which
is 30 and the denominator of which is the actual number of days elapsed in the
related Interest Accrual Period. For federal income tax purposes, the economic
equivalent of such rate shall be expressed as the weighted average of (adjusted
for the actual number of days elapsed in the related Interest Accrual Period)
the REMIC I Remittance Rates on the REMIC I Regular Interests, weighted on the
basis of the Uncertificated Balance of each such REMIC I Regular Interest
(solely for purposes of this calculation, the Servicing Fee Rate shall equal
0.50%).
"Net WAC Rate Carryover Amount": With respect to any Class
A-1 Certificate or Mezzanine Certificate and any Distribution Date on which the
Pass-Through Rate is limited to the applicable Net WAC Pass-Through Rate, an
amount equal to the sum of (i) the excess of (x) the amount of interest such
Class would have been entitled to receive on such
24
Distribution Date if the applicable Net WAC Pass-Through Rate would not have
been applicable to such Class on such Distribution Date over (y) the amount of
interest paid to such Class on such Distribution Date at the applicable Net WAC
Pass-Through Rate plus (ii) the related Net WAC Rate Carryover Amount for the
previous Distribution Date not previously distributed to such Class together
with interest thereon at a rate equal to the Pass-Through Rate for such Class
for the most recently ended Interest Accrual Period without taking into account
the applicable Net WAC Pass-Through Rate.
"New Lease": Any lease of REO Property entered into on behalf
of REMIC I, including any lease renewed or extended on behalf of REMIC I, if
REMIC I has the right to renegotiate the terms of such lease.
"Nonrecoverable P&I Advance": Any P&I Advance previously made
or proposed to be made in respect of a Mortgage Loan or REO Property that, in
the good faith business judgment of the Servicer or a successor to the Servicer
(including the Trustee or the Master Servicer) will not or, in the case of a
proposed P&I Advance, would not be ultimately recoverable from related Late
Collections, Insurance Proceeds or Liquidation Proceeds on such Mortgage Loan or
REO Property as provided herein.
"Nonrecoverable Servicing Advance": Any Servicing Advance
previously made or proposed to be made in respect of a Mortgage Loan or REO
Property that, in the good faith business judgment of the Servicer, will not or,
in the case of a proposed Servicing Advance, would not be ultimately recoverable
from related Late Collections, Insurance Proceeds or Liquidation Proceeds on
such Mortgage Loan or REO Property as provided herein.
"Non-United States Person": Any Person other than a United
States Person.
"Notional Amount": With respect to the Class CE Certificates
and any Distribution Date, the Uncertificated Balance of the REMIC I Regular
Interests (other than REMIC I Regular Interest I-LTP) for such Distribution
Date.
"Offered Certificates": The Class A-1 Certificates and the
Mezzanine Certificates, collectively.
"Officer's Certificate": A certificate signed by the Chairman
of the Board, the Vice Chairman of the Board, the President or a vice president
(however denominated), or by the Treasurer, the Secretary, or one of the
assistant treasurers or assistant secretaries of the Servicer, the Seller or the
Depositor, as applicable.
"One-Month LIBOR": With respect to the Class A-1 Certificates,
the Mezzanine Certificates, REMIC I Regular Interest I-LTA1, REMIC I Regular
Interest I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I Regular Interest
I-LTM3, REMIC I Regular Interest I-LTM4 and any Interest Accrual Period
therefor, the rate determined by the Securities Administrator on the related
Interest Determination Date on the basis of the offered rate for one-month U.S.
dollar deposits, as such rate appears on Telerate Page 3750 as of 11:00 a.m.
(London time) on such Interest Determination Date; provided that if such rate
does not appear on Telerate Page 3750, the rate for such date will be determined
on the basis of the offered rates of the Reference Banks for one-month U.S.
dollar deposits, as of 11:00 a.m. (London time) on such Interest Determination
Date. In such event, the Securities Administrator will request the principal
London office of each of the Reference Banks to provide a quotation of its rate.
If on such Interest Determination Date, two or more Reference Banks provide such
offered quotations, One-Month 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 1/16). If on such
25
Interest Determination Date, fewer than two Reference Banks provide such offered
quotations, One-Month LIBOR for the related Interest Accrual Period shall be the
higher of (i) LIBOR as determined on the previous Interest Determination Date
and (ii) the Reserve Interest Rate. Notwithstanding the foregoing, if, under the
priorities described above, LIBOR for an Interest Determination Date would be
based on LIBOR for the previous Interest Determination Date for the third
consecutive Interest Determination Date, the Securities Administrator shall
select an alternative comparable index (over which the Securities Administrator
has no control), used for determining one-month Eurodollar lending rates that is
calculated and published (or otherwise made available) by an independent party.
The establishment of One-Month LIBOR by the Securities Administrator and the
Securities Administrator's subsequent calculation of the One-Month LIBOR
Pass-Through Rates for the relevant Interest Accrual Period, shall, in the
absence of manifest error, be final and binding.
"One-Month LIBOR Pass-Through Rate": With respect to the Class
A-1 Certificates and, for purposes of the definition of "Marker Rate", REMIC I
Regular Interest I-LTA1, a per annum rate equal to One-Month LIBOR plus the
related Certificate Margin.
With respect to the Class M-1 Certificates and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTM1, a per annum
rate equal to One-Month LIBOR plus the related Certificate Margin.
With respect to the Class M-2 Certificates and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTM2, a per annum
rate equal to One-Month LIBOR plus the related Certificate Margin.
With respect to the Class M-3 Certificates and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTM3, a per annum
rate equal to One-Month LIBOR plus the related Certificate Margin.
With respect to the Class M-4 Certificates and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTM4, a per annum
rate equal to One-Month LIBOR plus the related Certificate Margin.
"Opinion of Counsel": A written opinion of counsel, who may,
without limitation, be salaried counsel for the Depositor, the Servicer, the
Securities Administrator or the Master Servicer, acceptable to the Trustee,
except that any opinion of counsel relating to (a) the qualification of any
REMIC as a REMIC or (b) compliance with the REMIC Provisions must be an opinion
of Independent counsel.
"Optional Termination Date": The Distribution Date on which
the aggregate principal balance of the Mortgage Loans (and properties acquired
in respect thereof) remaining in the Trust Fund is reduced to less than 10% of
the aggregate principal balance of the Mortgage Loans as of the Cut-off Date.
26
"Overcollateralization Amount": With respect to any
Distribution Date, the excess, if any, of (a) the aggregate Scheduled Principal
Balances of the Mortgage Loans and REO Properties immediately following such
Distribution Date over (b) the sum of the aggregate Certificate Principal
Balances of the Class A-1 Certificates, the Mezzanine Certificates and the Class
P Certificates as of such Distribution Date (after taking into account the
payment of the Principal Remittance Amount on such Distribution Date).
"Overcollateralization Increase Amount": With respect to the
Class A-1 Certificates and the Mezzanine Certificates, and any Distribution Date
is any amount of Net Monthly Excess Cashflow actually applied as an accelerated
payment of principal to the extent the Required Overcollateralization Amount
exceeds the Overcollateralization Amount.
"Overcollateralization Reduction Amount": With respect to any
Distribution Date, is the lesser of (i) the amount by which the
Overcollateralization Amount exceeds the Required Overcollateralization Amount
and (ii) the Principal Remittance Amount; provided however that on any
Distribution Date on which a Trigger Event is in effect, the
Overcollateralization Reduction Amount shall equal 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.
"P&I Advance": As to any Mortgage Loan or REO Property, any
advance made by the Servicer in respect of any Determination Date pursuant to
Section 5.03 of this Agreement, an Advance Financing Person pursuant to Section
3.25 of this Agreement or in respect of any Distribution Date by a successor
Servicer (including the Master Servicer) pursuant to Section 8.02 of this
Agreement (which advances shall not include principal or interest shortfalls due
to bankruptcy proceedings or application of the Relief Act or similar state or
local laws.)
"Pass-Through Rate": With respect to the Class A-1
Certificates, a rate per annum equal to the lesser of (i) One Month LIBOR plus
0.49% in the case of each Distribution Date through and including the Optional
Termination Date, or One Month LIBOR plus 0.98%, in the case of any Distribution
Date thereafter and (ii) the Net WAC Pass Through Rate for the Distribution
Date.
With respect to the Class M-1 Certificates, a rate per annum
equal to the lesser of (i) One Month LIBOR plus 0.95% in the case of each
Distribution Date through and including the Optional Termination Date, or One
Month LIBOR plus 1.425%, in the case of any Distribution Date thereafter and
(ii) the Net WAC Pass Through Rate for the Distribution Date.
With respect to the Class M-2 Certificates, a rate per annum
equal to the lesser of (i) One Month LIBOR plus 1.75% in the case of each
Distribution Date through and including the Optional Termination Date, or One
Month LIBOR plus 2.625%, in the case of any Distribution Date thereafter and
(ii) the Net WAC Pass Through Rate for the Distribution Date.
With respect to the Class M-3 Certificates, a rate per annum
equal to the lesser of (i) One Month LIBOR plus 2.75% in the case of each
Distribution Date through and including
27
the Optional Termination Date, or One Month LIBOR plus 4.125%, in the case of
any Distribution Date thereafter and (ii) the Net WAC Pass Through Rate for the
Distribution Date.
With respect to the Class M-4 Certificates, a rate per annum
equal to the lesser of (i) One Month LIBOR plus 2.75% in the case of each
Distribution Date through and including the Optional Termination Date, or One
Month LIBOR plus 4.125%, in the case of any Distribution Date thereafter and
(ii) the Net WAC Pass Through Rate for the Distribution Date.
With respect to the Class CE Certificates and any Distribution
Date, a rate per annum equal to the percentage equivalent of a fraction, the
numerator of which is the sum of the amounts calculated pursuant to clauses (i)
through (viii) below, and the denominator of which is the aggregate
Uncertificated Balances of REMIC I Regular Interest I-LTAA, REMIC I Regular
Interest I-LTA1, REMIC I Regular Interest I-LTM1, REMIC I Regular Interest
I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I Regular Interest I-LTM4 and
REMIC I Regular Interest I-LTZZ. For purposes of calculating the Pass-Through
Rate for the Class CE Certificates, the numerator is equal to the sum of the
following components:
(i) the REMIC I Remittance Rate for REMIC I Regular Interest
I-LTAA minus the Marker Rate, applied to an amount equal to the
Uncertificated Balance of REMIC II Regular Interest I-LTAA;
(ii) the REMIC I Remittance Rate for REMIC I Regular
Interest I-LTA1 minus the Marker Rate, applied to an amount equal to
the Uncertificated Balance of REMIC I Regular Interest I-LTA1;
(iii) the REMIC I Remittance Rate for REMIC I Regular
Interest I-LTM1 minus the Marker Rate, applied to an amount equal to
the Uncertificated Balance of REMIC I Regular Interest I-LTM1;
(iv) the REMIC I Remittance Rate for REMIC I Regular
Interest I-LTM2 minus the Marker Rate, applied to an amount equal to
the Uncertificated Balance of REMIC I Regular Interest I-LTM2;
(v) the REMIC I Remittance Rate for REMIC I Regular Interest
I-LTM3 minus the Marker Rate, applied to an amount equal to the
Uncertificated Balance of REMIC I Regular Interest I-LTM3;
(vi) the REMIC I Remittance Rate for REMIC I Regular
Interest I-LTM4 minus the Marker Rate, applied to an amount equal to
the Uncertificated Balance of REMIC I Regular Interest I-LTM4;
(vii) the REMIC I Remittance Rate for REMIC I Regular
Interest I-LTZZ minus the Marker Rate, applied to an amount equal to
the Uncertificated Balance of REMIC I Regular Interest I-LTZZ; and
(viii) 100% of the interest on REMIC I Regular Interest
I-LTP.
28
"Percentage Interest": With respect to any Class of
Certificates (other than the Residual Certificates), the undivided percentage
ownership in such Class evidenced by such Certificate, expressed as a
percentage, the numerator of which is the initial Certificate Principal Balance
represented by such Certificate and the denominator of which is the aggregate
initial Certificate Principal Balance or Notional Amount of all of the
Certificates of such Class. The Class A-1 Certificates and the Mezzanine
Certificates are issuable only in minimum Percentage Interests corresponding to
minimum initial Certificate Principal Balances of $25,000 and integral multiples
of $1.00 in excess thereof. The Class P Certificates are issuable only in
Percentage Interests corresponding to initial Certificate Principal Balances of
$20 and integral multiples thereof. The Class CE Certificates are issuable only
in minimum Percentage Interests corresponding to minimum initial Certificate
Principal Balances of $10,000 and integral multiples of $1.00 in excess thereof;
provided, however, that a single Certificate of each such Class of Certificates
may be issued having a Percentage Interest corresponding to the remainder of the
aggregate initial Certificate Principal Balance of such Class or to an otherwise
authorized denomination for such Class plus such remainder. With respect to any
Residual Certificate, the undivided percentage ownership in such Class evidenced
by such Certificate, as set forth on the face of such Certificate. The Residual
Certificates are issuable in Percentage Interests of 20% and integral multiples
of 5% in excess thereof.
"Periodic Rate Cap": With respect to each Adjustable Rate
Mortgage Loan and any Adjustment Date therefor, the fixed percentage set forth
in the related Mortgage Note, which is the maximum amount by which the Mortgage
Rate for such Adjustable Rate Mortgage Loan may increase or decrease (without
regard to the Maximum Mortgage Rate or the Minimum Mortgage Rate) on such
Adjustment Date from the Mortgage Rate in effect immediately prior to such
Adjustment Date.
"Permitted Investments": Any one or more of the following
obligations or securities acquired at a purchase price of not greater than par,
regardless of whether issued by the Depositor, the Servicer, the Master
Servicer, the Trustee or any of their respective Affiliates:
(i) direct obligations of, or obligations fully guaranteed
as to timely payment of principal and interest by, the United States
or any agency or instrumentality thereof, provided such obligations
are backed by the full faith and credit of the United States;
(ii) (A) demand and time deposits in, certificates of
deposit of, bankers' acceptances issued by or federal funds sold by
any depository institution or trust company (including the Trustee or
its agent acting in their respective commercial capacities)
incorporated under the laws of the United States of America or any
state thereof and subject to supervision and examination by federal
and/or state authorities, so long as, at the time of such investment
or contractual commitment providing for such investment, such
depository institution or trust company (or, if the only Rating Agency
is S&P, in the case of the principal depository institution in a
depository institution holding company, debt obligations of the
depository institution holding company) or its ultimate parent has a
short-term uninsured debt rating in the highest available rating
category of Xxxxx'x, Fitch and S&P and provided that each such
investment has an original maturity of no more than 365 days; and
provided further that, if the only Rating Agency is S&P
29
and if the depository or trust company is a principal subsidiary of a
bank holding company and the debt obligations of such subsidiary are
not separately rated, the applicable rating shall be that of the bank
holding company; and, provided further that, if the original maturity
of such short-term obligations of a domestic branch of a foreign
depository institution or trust company shall exceed 30 days, the
short-term rating of such institution shall be A-1+ in the case of S&P
if S&P is the Rating Agency; and (B) any other demand or time deposit
or deposit which is fully insured by the FDIC;
(iii) repurchase obligations with a term not to exceed 30
days with respect to any security described in clause (i) above and
entered into with a depository institution or trust company (acting as
principal) rated A-1+ or higher by S&P, F-1 or higher by Fitch and A2
or higher by Xxxxx'x, provided, however, that collateral transferred
pursuant to such repurchase obligation must be of the type described
in clause (i) above and must (A) be valued daily at current market
prices plus accrued interest, (B) pursuant to such valuation, be
equal, at all times, to 105% of the cash transferred by a party in
exchange for such collateral and (C) be delivered to such party or, if
such party is supplying the collateral, an agent for such party, 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 that rates such securities 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 that rates
such securities in its highest short-term unsecured debt rating
available at the time of such investment;
(vi) units of money market funds that have been rated "AAA"
by Fitch (if rated by Fitch), "AAAm" by S&P or "Aaa" by Xxxxx'x
including any such money market fund managed or advised by the Master
Servicer, the Trustee or any of their Affiliates; 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 as
a permitted investment of funds backing securities having ratings
equivalent to its highest initial rating of the Class A-1
Certificates;
provided, however, 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.
30
"Permitted Transferee": Any Transferee of a Residual
Certificate other than a Disqualified Organization or Non-United States Person.
"Person": Any individual, limited liability company,
corporation, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Plan": Any employee benefit plan or certain other retirement
plans and arrangements, including individual retirement accounts and annuities,
Xxxxx plans and bank collective investment funds and insurance company general
or separate accounts in which such plans, accounts or arrangements are invested,
that are subject to ERISA or Section 4975 of the Code.
"Prepayment Assumption": A prepayment rate of 28% CPR. The
Prepayment Assumption is used solely for determining the accrual of original
issue discount on the Certificates for federal income tax purposes. A CPR (or
Constant Prepayment Rate) represents an annualized constant assumed rate of
prepayment each month of a pool of mortgage loans relative to its outstanding
principal balance for the life of such pool.
"Prepayment Charge": With respect to any Principal Prepayment,
any prepayment premium, penalty or charge payable by a Mortgagor in connection
with any Principal Prepayment on a Mortgage Loan pursuant to the terms of the
related Mortgage Note.
"Prepayment Charge Schedule": As of any date, the list of
Mortgage Loans providing for a Prepayment Charge included in the Trust Fund on
such date, attached hereto as Schedule 2 (including the prepayment charge
summary attached thereto). The Depositor shall deliver or cause the delivery of
the Prepayment Charge Schedule to the Servicer, the Master Servicer and the
Trustee on the Closing Date. The Prepayment Charge Schedule shall set forth the
following information with respect to each Prepayment Charge:
(i) the Mortgage Loan identifying number;
(ii) a code indicating the type of Prepayment Charge;
(iii) the date on which the first Monthly Payment was due on
the related Mortgage Loan;
(iv) the term of the related Prepayment Charge;
(v) the original Scheduled Principal Balance of the related
Mortgage Loan; and
(vi) the Scheduled Principal Balance of the related Mortgage
Loan as of the Cut-off Date.
"Prepayment Interest Excess": With respect to each Mortgage
Loan that was the subject of a Principal Prepayment in full during the portion
of the related Prepayment Period occurring between the first day of the calendar
month in which such Distribution Date occurs
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and the Determination Date of the calendar month in which such Distribution Date
occurs, an amount equal to interest (to the extent received) at the applicable
Net Mortgage Rate on the amount of such Principal Prepayment for the number of
days commencing on the first day of the calendar month in which such
Distribution Date occurs and ending on the last date through which interest is
collected from the related Mortgagor. The Servicer may withdraw such Prepayment
Interest Excess from the Collection Account in accordance with Section
3.09(a)(x).
"Prepayment Interest Shortfall": With respect to any
Distribution Date, for each such Mortgage Loan that was the subject of a
Principal Prepayment in full or in part during the portion of the related
Prepayment Period occurring between the first day of the related Prepayment
Period and the last day of the calendar month preceding the month in which such
Distribution Date occurs that was applied by the Servicer to reduce the
outstanding principal balance of such Mortgage Loan on a date preceding the Due
Date in the succeeding Prepayment Period, an amount equal to interest at the
applicable Net Mortgage Rate on the amount of such Principal Prepayment for the
number of days commencing on the date on which the prepayment is applied and
ending on the last day of the calendar month preceding such Distribution Date.
The obligations of the Servicer and the Master Servicer in respect of any
Prepayment Interest Shortfall are set forth in Section 3.22 and Section 4.18,
respectively of this Agreement.
"Prepayment Period": With respect to any Distribution Date,
the period commencing on the 16th day of the month prior to the month in which
the related Distribution Date occurs (or, on the Cut-off Date, in connection
with the first Prepayment Period) and ending on the 15th day of the month in
which such Distribution Date occurs.
"Principal Prepayment": Any voluntary 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 Distribution Amount": With respect to any
Distribution Date will be the sum of (i) the principal portion of all Monthly
Payments on the Mortgage Loans due during the related Due Period, whether or not
received on or prior to the related Determination Date (including without
limitation the principal portion of all Monthly Payments due before the Cut-off
Date and collected by the Servicer after the Cut-off Date); (ii) the principal
portion of all proceeds received in respect of the repurchase of a Mortgage Loan
or, in the case of a substitution, certain amounts representing a principal
adjustment, during the related Prepayment Period pursuant to or as contemplated
by Section 2.03, Section 3.13(c) and Section 10.01; (iii) the principal portion
of all other unscheduled collections, including Insurance Proceeds, Liquidation
Proceeds, Subsequent Recoveries and all Principal Prepayments in full and in
part, received during the related Prepayment Period, to the extent applied as
recoveries of principal on the Mortgage Loans, net in each case of payments or
reimbursements to the Trustee, the Custodian, the Master Servicer, the Credit
Risk Manager, the Securities Administrator and the Servicer and (iv) the amount
of any Overcollateralization Increase Amount for such Distribution Date MINUS
(v) the amount of any Overcollateralization Reduction Amount for such
Distribution Date.
32
"Principal Remittance Amount": With respect to any
Distribution Date will be the sum of the amounts described in clauses (i)
through (iii) of the definition of Principal Distribution Amount.
"Purchase Price": With respect to any Mortgage Loan or REO
Property to be purchased pursuant to or as contemplated by Section 2.03, Section
3.13(c) or Section 10.01, and as confirmed by a certification of a Servicing
Officer to the Trustee, an amount equal to the sum of (i) 100% of the Scheduled
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 Scheduled Principal Balance at the applicable Net Mortgage Rate
in effect from time to time from the Due Date as to which interest was last
covered by a payment by the Mortgagor or a P&I Advance by the Servicer, which
payment or P&I Advance had as of the date of purchase been distributed pursuant
to Section 5.01, through the end of the calendar month in which the purchase is
to be effected and (y) an REO Property, the sum of (1) accrued interest on such
Scheduled Principal Balance at the applicable Net Mortgage Rate in effect from
time to time from the Due Date as to which interest was last covered by a
payment by the Mortgagor or a P&I Advance by the Servicer through the end of the
calendar month immediately preceding the calendar month in which such REO
Property was acquired, plus (2) REO Imputed Interest for such REO Property for
each calendar month commencing with the calendar month in which such REO
Property was acquired and ending with the calendar month in which such purchase
is to be effected, net of the total of all net rental income, Insurance
Proceeds, Liquidation Proceeds and P&I Advances that as of the date of purchase
had been distributed as or to cover REO Imputed Interest pursuant to Section
5.01, (iii) any unreimbursed Servicing Advances and P&I Advances (including
Nonrecoverable P&I Advances and Nonrecoverable Servicing Advances) and any
unpaid Servicing Fees allocable to such Mortgage Loan or REO Property, (iv) any
amounts previously withdrawn from the Collection Account pursuant to Section
3.09(a)(ix) and Section 3.13(b) 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 and any costs and damages incurred by the
Trust Fund and the Trustee in connection with any violation by any such Mortgage
Loan of any predatory or abusive lending law.
"Qualified Substitute Mortgage Loan": A mortgage loan
substituted for a Deleted 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 the Scheduled
Principal Balance of the Deleted Mortgage Loan as of the Due Date in the
calendar month during which the substitution occurs, (ii) have a Mortgage Rate
not less than (and not more than one percentage point in excess of) the Mortgage
Rate of the Deleted Mortgage Loan, (iii) if the mortgage loan is an Adjustable
Rate Mortgage Loan, have a Maximum Mortgage Rate not less than the Maximum
Mortgage Rate on the Deleted Mortgage Loan, (iv) if the mortgage loan is an
Adjustable Rate Mortgage Loan, have a Minimum Mortgage Rate not less than the
Minimum Mortgage Rate of the Deleted Mortgage Loan, (v) if the mortgage loan is
an Adjustable Rate Mortgage Loan, have a Gross Margin equal to the Gross Margin
of the Deleted Mortgage Loan, (vi) if the mortgage loan is an Adjustable Rate
Mortgage Loan, have a next Adjustment Date not more than two months later than
the next Adjustment Date on the Deleted Mortgage Loan, (vii) have a remaining
term to maturity not greater than
33
(and not more than one year less than) that of the Deleted Mortgage Loan, (viii)
have the same Due Date as the Due Date on the Deleted Mortgage Loan, (ix) have a
Loan-to-Value Ratio as of the date of substitution equal to or lower than the
Loan-to-Value Ratio of the Deleted Mortgage Loan as of such date, (x) be secured
by the same priority lien on the related Mortgaged Property as the Deleted
Mortgage Loan, (xi) have a credit grade at least equal to the credit grading
assigned on the Deleted Mortgage Loan, (xii) be a "qualified mortgage" as
defined in the REMIC Provisions and (xiii) conform to each representation and
warranty set forth in Section 6 of the Mortgage Loan Purchase Agreement
applicable to the Deleted Mortgage Loan. In the event that one or more mortgage
loans are substituted for one or more Deleted Mortgage Loans, the amounts
described in clause (i) hereof shall be determined on the basis of aggregate
principal balances, the Mortgage Rates described in clause (ii) hereof shall be
determined on the basis of weighted average Mortgage Rates, the terms described
in clause (vii) hereof shall be determined on the basis of weighted average
remaining term to maturity, the Loan-to-Value Ratios described in clause (ix)
hereof shall be satisfied as to each such mortgage loan, the credit grades
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 (xii) hereof must be
satisfied as to each Qualified Substitute Mortgage Loan or in the aggregate, as
the case may be.
"Rate/Term Refinancing": A Refinanced Mortgage Loan, the
proceeds of which are not more than a nominal amount in excess of the existing
first mortgage loan and any subordinate mortgage loan on the related Mortgaged
Property and related closing costs, and were used exclusively (except for such
nominal amount) to satisfy the then existing first mortgage loan and any
subordinate mortgage loan of the Mortgagor on the related Mortgaged Property and
to pay related closing costs.
"Rating Agency or Rating Agencies": Fitch and S&P or their
successors. If such agencies or their successors are no longer in existence,
"Rating Agencies" shall be such nationally recognized statistical rating
agencies, or other comparable Persons, designated by the Depositor, notice of
which designation shall be given to the Trustee and the Servicer.
"Realized Loss": With respect to each Mortgage Loan as to
which a Final Recovery Determination has been made, an amount (not less than
zero), as reported by the Servicer to the Master Servicer (in substantially the
form of Schedule 4 hereto) equal to (i) the unpaid principal balance of such
Mortgage Loan as of the commencement of the calendar month in which the Final
Recovery Determination was made, plus (ii) accrued interest from the Due Date as
to which interest was last paid by the Mortgagor through the end of the calendar
month in which such Final Recovery Determination was made, calculated in the
case of each calendar month during such period (A) at an annual rate equal to
the annual rate at which interest was then accruing on such Mortgage Loan and
(B) on a principal amount equal to the Scheduled Principal Balance of such
Mortgage Loan as of the close of business on the Distribution Date during such
calendar month, plus (iii) any amounts previously withdrawn from the Collection
Account in respect of such Mortgage Loan pursuant to Section 3.09(a)(ix) and
Section 3.13(b), minus (iv) the proceeds, if any, received in respect of such
Mortgage Loan during the calendar month in which such Final Recovery
Determination was made, net of amounts that are payable therefrom to the
Servicer with respect to such Mortgage Loan pursuant to Section 3.09(a)(iii) of
this Agreement.
34
With respect to any REO Property as to which a Final Recovery
Determination has been made, an amount (not less than zero) equal to (i) the
unpaid principal balance of the related Mortgage Loan as of the date of
acquisition of such REO Property on behalf of REMIC I, plus (ii) accrued
interest from the Due Date as to which interest was last paid by the Mortgagor
in respect of the related Mortgage Loan through the end of the calendar month
immediately preceding the calendar month in which such REO Property was
acquired, calculated in the case of each calendar month during such period (A)
at an annual rate equal to the annual rate at which interest was then accruing
on the related Mortgage Loan and (B) on a principal amount equal to the
Scheduled Principal Balance of the related Mortgage Loan as of the close of
business on the Distribution Date during such calendar month, plus (iii) REO
Imputed Interest for such REO Property for each calendar month commencing with
the calendar month in which such REO Property was acquired and ending with the
calendar month in which such Final Recovery Determination was made, plus (iv)
any amounts previously withdrawn from the Collection Account in respect of the
related Mortgage Loan pursuant to Section 3.09(a)(ix) and Section 3.13(b) of
this Agreement, minus (v) the aggregate of all P&I Advances and Servicing
Advances (in the case of Servicing Advances, without duplication of amounts
netted out of the rental income, Insurance Proceeds and Liquidation Proceeds
described in clause (vi) below) made by the Servicer in respect of such REO
Property or the related Mortgage Loan for which the Servicer has been or, in
connection with such Final Recovery Determination, will be reimbursed pursuant
to Section 3.21 of this Agreement out of rental income, Insurance Proceeds and
Liquidation Proceeds received in respect of such REO Property, minus (vi) the
total of all net rental income, Insurance Proceeds and Liquidation Proceeds
received in respect of such REO Property that has been, or in connection with
such Final Recovery Determination, will be transferred to the Distribution
Account pursuant to Section 3.21 of this Agreement.
With respect to each Mortgage Loan which has become the
subject of a Deficient Valuation, the difference between the principal balance
of the Mortgage Loan outstanding immediately prior to such Deficient Valuation
and the principal balance of the Mortgage Loan as reduced by the Deficient
Valuation.
With respect to each Mortgage Loan which has become the
subject of a Debt Service Reduction, the portion, if any, of the reduction in
each affected Monthly Payment attributable to a reduction in the Mortgage Rate
imposed by a court of competent jurisdiction. Each such Realized Loss shall be
deemed to have been incurred on the Due Date for each affected Monthly Payment.
To the extent the Servicer receives Subsequent Recoveries,
with respect to any Mortgage Loan, the amount of Realized Loss with respect to
that Mortgage Loan will be reduced to the extent such recoveries are applied to
reduce the Certificate Principal Balance of any Class on any Distribution Date.
"Record Date": With respect to each Distribution Date and the
Class A-1 Certificates and the Mezzanine Certificates, the Business Day
immediately preceding such Distribution Date for so long as such Certificates
are Book-Entry Certificates. With respect to each Distribution Date and any
other Class of Certificates, including any Definitive Certificates, the last day
of the calendar month immediately preceding the month in which such Distribution
Date occurs.
35
"Reference Banks": Xxxxxxx'x Bank PLC, The Tokyo Mitsubishi
Bank and National Westminster Bank PLC and their successors in interest;
provided, however, that if any of the foregoing banks are not suitable to serve
as a Reference Bank, then any leading banks selected by the Securities
Administrator which are engaged in transactions in Eurodollar deposits in the
International Eurocurrency market (i) with an established place of business in
London, (ii) not controlling, under the control of or under common control with
the Depositor or any Affiliate thereof and (iii) which have been designated as
such by the Securities Administrator.
"Refinanced Mortgage Loan": A Mortgage Loan the proceeds of
which were not used to purchase the related Mortgaged Property.
"Regular Certificate": Any Class A-1 Certificate, Mezzanine
Certificate, Class CE Certificate or Class P Certificate.
"Regular Interest": A "regular interest" in a REMIC within the
meaning of Section 860G(a)(1) of the Code.
"Relief Act": The Servicemembers Civil Relief Act, as amended,
or similar state or local laws.
"Relief Act Interest Shortfall": With respect to any
Distribution Date and any Mortgage Loan, any reduction in the amount of interest
collectible on such Mortgage Loan for the most recently ended Due Period as a
result of the application of the Relief Act.
"REMIC": A "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code.
"REMIC I": The segregated pool of assets subject hereto,
constituting the primary trust created hereby and to be administered hereunder,
with respect to which a REMIC election is to be made, consisting of: (i) such
Mortgage Loans and Prepayment Charges 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); and (v) the Collection Account, the
Distribution 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. Notwithstanding the
foregoing, however, REMIC I specifically excludes (i) all payments and other
collections of principal and interest due on the Mortgage Loans on or before the
Cut-off Date and all Prepayment Charges payable in connection with Principal
Prepayments made before the Cut-off Date; (ii) the Reserve Fund and any amounts
on deposit therein from time to time and any proceeds thereof and (iii) the Cap
Contract.
"REMIC I Interest Loss Allocation Amount": With respect to any
Distribution Date, an amount equal to (a) the product of (i) the aggregate
Scheduled Principal Balance of the
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Mortgage Loans and REO Properties then outstanding and (ii) the REMIC I
Remittance Rate for REMIC I Regular Interest I-LTAA minus the Marker Rate,
divided by (b) 12.
"REMIC I Overcollateralization Amount": With respect to any
date of determination, (i) the aggregate Uncertificated Balances of the REMIC I
Regular Interests minus (ii) the aggregate of the Uncertificated Balances of
REMIC I Regular Interest I-LTA1, REMIC I Regular Interest I-LTM1, REMIC I
Regular Interest I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I Regular
Interest I-LTM4 and REMIC I Regular Interest I-LTP, in each case as of such date
of determination.
"REMIC I Principal Loss Allocation Amount": With respect to
any Distribution Date, an amount equal to (a) the product of (i) the aggregate
Scheduled Principal Balance of the Mortgage Loans and REO Properties then
outstanding and (ii) 1 minus a fraction, the numerator of which is two times the
aggregate of the Uncertificated Balances of REMIC I Regular Interest I-LTA1,
REMIC I Regular Interest I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I
Regular Interest I-LTM3, REMIC I Regular Interest I-LTM4 and the denominator of
which is the aggregate of the Uncertificated Balances of REMIC I Regular
Interest I-LTA1, REMIC I Regular Interest I-LTM1, REMIC I Regular Interest
I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I Regular Interest I-LTM4 and
REMIC I Regular Interest I-LTZZ.
"REMIC I Regular Interest": Any of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a "regular interest" in REMIC I. Each REMIC I Regular Interest
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto. The
designations for the respective REMIC I Regular Interests are set forth in the
Preliminary Statement hereto.
"REMIC I Regular Interest I-LTAA": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTAA
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LTA1": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTA1
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LTM1": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTM1
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal,
37
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LTM2": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTM2
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LTM3": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTM3
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LTM4": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTM4
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LTP": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTP
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LTZZ": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTZZ
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Remittance Rate": With respect to REMIC I Regular
Interest I-LTAA, REMIC I Regular Interest I-LTA1, REMIC I Regular Interest
I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I Regular Interest I-LTM3, REMIC
I Regular Interest I-LTM4, REMIC I Regular Interest I-LTZZ and REMIC I Regular
Interest I-LTP, the weighted average of the Net Mortgage Rates of the Mortgage
Loans.
"REMIC I Required Overcollateralization Amount": 1% of the
Required Overcollateralization Amount.
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"REMIC II": The segregated pool of assets consisting of all of
the REMIC I Regular Interests conveyed in trust to the Trustee, for the benefit
of the REMIC II Certificateholders pursuant to Section 2.07, and all amounts
deposited therein, with respect to which a separate REMIC election is to be
made.
"REMIC II Certificate": Any Regular Certificate or Class R
Certificate.
"REMIC II Certificateholder": The Holder of any REMIC II
Certificate.
"REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Section
860A through 860G of the Code, and related provisions, and proposed, temporary
and final regulations and published rulings, notices and announcements
promulgated thereunder, as the foregoing may be in effect from time to time.
"Remittance Report": A report by the Servicer pursuant to
Section 5.03(a).
"Rents from Real Property": With respect to any REO Property,
gross income of the character described in Section 856(d) of the Code as being
included in the term "rents from real property."
"REO Account": The account or accounts maintained, or caused
to be maintained, by the Servicer in respect of an REO Property pursuant to
Section 3.21 of this Agreement.
"REO Disposition": The sale or other disposition of an REO
Property on behalf of REMIC I.
"REO Imputed Interest": As to any REO Property, for any
calendar month during which such REO Property was at any time part of REMIC I,
one month's interest at the applicable Net Mortgage Rate on the Scheduled
Principal Balance of such REO Property (or, in the case of the first such
calendar month, of the related Mortgage Loan, if appropriate) as of the close of
business on the Distribution Date in such calendar month.
"REO Principal Amortization": With respect to any REO
Property, for any calendar month, the excess, if any, of (a) the aggregate of
all amounts received in respect of such REO Property during such calendar month,
whether in the form of rental income, sale proceeds (including, without
limitation, that portion of the Termination Price paid in connection with a
purchase of all of the Mortgage Loans and REO Properties pursuant to Section
10.01 that is allocable to such REO Property) or otherwise, net of any portion
of such amounts (i) payable in respect of the proper operation, management and
maintenance of such REO Property or (ii) payable or reimbursable to the Servicer
pursuant to Section 3.21(d) of this Agreement for unpaid Servicing Fees in
respect of the related Mortgage Loan and unreimbursed Servicing Advances and P&I
Advances in respect of such REO Property or the related Mortgage Loan, over (b)
the REO Imputed Interest in respect of such REO Property for such calendar
month.
"REO Property": A Mortgaged Property acquired by the Servicer
or its nominee on behalf of REMIC I through foreclosure or deed-in-lieu of
foreclosure, as described in Section 3.21 of this Agreement.
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"Required Overcollateralization Amount": With respect to any
Distribution Date (i) prior to the Stepdown Date, the product of (A) 0.75% and
(B) the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date, (ii) on or after the Stepdown Date provided a Trigger Event is not in
effect, the greater of (x) 1.50% of the aggregate Scheduled Principal Balance of
the Mortgage Loans as of the last day of the related Due Period and (y) an
amount equal to the product of (A) 0.50% and (B) the aggregate principal balance
of the Mortgage Loans as of the Cut-off Date, and (iii) on or after the Stepdown
Date and a Trigger Event is in effect, the Required Overcollateralization Amount
for the immediately preceding Distribution Date. Notwithstanding the foregoing,
on and after any Distribution Date following the reduction of the aggregate
Certificate Principal Balance of the Class A-1 Certificates and Mezzanine
Certificates to zero, the Required Overcollateralization Amount shall be zero.
"Reserve Fund": A fund created pursuant to Section 3.24 which
shall be an asset of the Trust Fund but which shall not be an asset of any Trust
REMIC.
"Reserve Interest Rate": With respect to any Interest
Determination Date, the rate per annum that the Securities Administrator
determines to be either (i) the arithmetic mean (rounded upwards if necessary to
the nearest whole multiple of 1/16%) of the one-month U.S. dollar lending rates
which New York City banks selected by the Securities Administrator, after
consultation with the Depositor, are quoting on the relevant Interest
Determination Date to the principal London offices of leading banks in the
London interbank market or (ii) in the event that the Securities Administrator
can determine no such arithmetic mean, the lowest one-month U.S. dollar lending
rate which New York City banks selected by the Securities Administrator are
quoting on such Interest Determination Date to leading European banks.
"Residential Dwelling": Any one of the following: (i) a
detached one-family dwelling, (ii) a detached two- to four-family dwelling,
(iii) a one-family dwelling unit in a Xxxxxx Xxx eligible condominium project,
(iv) a manufactured home, or (v) a detached one-family dwelling in a planned
unit development, none of which is a co-operative or mobile home.
"Residual Certificate": Any one of the Class R Certificates.
"Residual Interest": The sole class of "residual interests" in
a REMIC within the meaning of Section 860G(a)(2) of the Code.
"Responsible Officer": When used with respect to the Trustee,
any officer of the Trustee having direct responsibility for the administration
of this Agreement and, with respect to a particular matter, to whom such matter
is referred because of such officer's knowledge of and familiarity with the
particular subject.
"S&P": Standard and Poor's, a division of the XxXxxx-Xxxx
Companies, Inc.
"Scheduled Principal Balance": With respect to any Mortgage
Loan: (a) as of the Cut-off Date, the outstanding principal balance of such
Mortgage Loan as of such date; (b) as of any Due Date subsequent to the Cut-off
Date up to and including the Due Date in the calendar month in which a
Liquidation Event occurs with respect to such Mortgage Loan, the Scheduled
Principal Balance of such Mortgage Loan as of the Cut-off Date, minus the sum of
(i) the principal portion of each Monthly Payment due on or before such Due Date
but subsequent to the
40
Cut-off Date, whether or not received, (ii) the principal portion of all Monthly
Payments due before the Cut-off Date and collected by the Servicer after the
Cut-off Date, (iii) all Principal Prepayments received before such Due Date but
after the Cut-off Date, (iv) the principal portion of all Liquidation Proceeds
and Insurance Proceeds received before such Due Date but after the Cut-off Date,
net of any portion thereof that represents principal due (without regard to any
acceleration of payments under the related Mortgage and Mortgage Note) on a Due
Date occurring on or before the date on which such proceeds were received and
(v) any Realized Loss incurred with respect thereto as a result of a Deficient
Valuation occurring before such Due Date, but only to the extent such Realized
Loss represents a reduction in the portion of principal of such Mortgage Loan
not yet due (without regard to any acceleration of payments under the related
Mortgage and Mortgage Note) as of the date of such Deficient Valuation; and (c)
as of any Due Date subsequent to the occurrence of a Liquidation Event with
respect to such Mortgage Loan, zero. With respect to any REO Property: (a) as of
any Due Date subsequent to the date of its acquisition on behalf of the Trust
Fund up to and including the Due Date in the calendar month in which a
Liquidation Event occurs with respect to such REO Property, an amount (not less
than zero) equal to the Scheduled Principal Balance of the related Mortgage Loan
as of the Due Date in the calendar month in which such REO Property was
acquired, minus the aggregate amount of REO Principal Amortization, if any, in
respect of REO Property for all previously ended calendar months; and (b) as of
any Due Date subsequent to the occurrence of a Liquidation Event with respect to
such REO Property, zero.
"Securities Act": The Securities Act of 1933, as amended.
"Securities Administrator": As of the Closing Date, Xxxxx
Fargo Bank, N.A. and thereafter, its respective successors in interest that meet
the qualifications of this Agreement. The Securities Administrator and the
Master Servicer shall at all times be the same Person.
"Seller": DB Structured Products, Inc. or its successor in
interest, in its capacity as seller under the Mortgage Loan Purchase Agreement.
"Senior Interest Distribution Amount": With respect to any
Distribution Date, an amount equal to the sum of (i) the Interest Distribution
Amount for such Distribution Date for the Class A-1 Certificates and (ii) the
Interest Carry Forward Amount, if any, for such Distribution Date for the Class
A-1 Certificates.
"Servicer": Ocwen Federal Bank FSB, or any successor thereto
appointed hereunder in connection with the servicing and administration of the
Mortgage Loans.
"Servicer Event of Default": One or more of the events
described in Section 8.01(a).
"Servicer Remittance Date": With respect to any Distribution
Date, by 12:00 p.m. New York time on the third (3rd) Business Day immediately
preceding the related Distribution Date.
"Servicer Report": A report (substantially in the form of
Schedule 4 hereto) or otherwise in form and substance acceptable to the Master
Servicer and Securities Administrator on an electronic data file or tape
prepared by the Servicer pursuant to Section 5.03(a) of this
41
Agreement with such additions, deletions and modifications as agreed to by the
Master Servicer, the Securities Administrator and the Servicer.
"Servicing Advances": The customary and reasonable
"out-of-pocket" costs and expenses incurred by the Servicer in the performance
of its servicing obligations or by the Seller in connection with a default,
delinquency or other unanticipated event prior to or following the Cut-off Date,
including, but not limited to, the cost of (i) the preservation, restoration and
protection of a Mortgaged Property, (ii) any enforcement or judicial
proceedings, including but not limited to foreclosures, in respect of a
particular Mortgage Loan, including any expenses incurred in relation to any
such proceedings that result from the Mortgage Loan being registered on the
MERS(R) System, (iii) the management (including reasonable fees in connection
therewith) and liquidation of any REO Property and (iv) the performance of its
obligations under Section 3.01, Section 3.07, Section 3.11, Section 3.13 and
Section 3.21 of this Agreement. Servicing Advances also include any reasonable
"out-of-pocket" cost and expenses (including legal fees) incurred by the
Servicer in connection with executing and recording instruments of satisfaction,
deeds of reconveyance or Assignments to the extent not recovered from the
Mortgagor or otherwise payable under this Agreement. Servicing Advances made
prior to the Cut-off Date are set forth on Schedule 5 attached hereto. The
Servicer shall not be required to make any Nonrecoverable Servicing Advances.
"Servicing Fee": With respect to each Mortgage Loan and for
any calendar month, an amount equal to one-twelfth of the product of the
Servicing Fee Rate multiplied by the Scheduled Principal Balance of the Mortgage
Loans as of the Due Date in the preceeding calendar month. The Servicing Fee is
payable solely from collections of interest on the Mortgage Loans.
"Servicing Fee Rate": 0.50% per annum; provided, however, that
for so long as the initial Servicer is the Servicer, the initial Servicer shall
only be entitled to a Servicing Fee calculated at a rate equal to 0.315% per
annum, and the difference between the Servicing Fee calculated at a rate equal
to 0.50% per annum and the Servicing Fee payable to the initial Servicer shall
be paid to the Holder of the Class CE Certificate, and is included in the
Pass-Through Rate of the Class CE Certificate. For federal income tax purposes
and the definition of REMIC I Remittance Rate, Servicing Fee Rate with respect
to the initial Servicer shall be 0.315% per annum, and with respect to any
successor to the Servicer shall be 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, the Master Servicer, the Securities Administrator
and the Depositor on the Closing Date, as such list may from time to time be
amended.
"Single Certificate": With respect to any Class of
Certificates (other than the Residual Certificates), a hypothetical Certificate
of such Class evidencing a Percentage Interest for such Class corresponding to
an initial Certificate Principal Balance of $1,000. With respect to the Residual
Certificates, a hypothetical Certificate of such Class evidencing a 100%
Percentage Interest in such Class.
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"Startup Day": With respect to each Trust REMIC, the day
designated as such pursuant to Section 11.01(b) hereof.
"Stepdown Date": The earlier to occur of (i) the later to
occur of (a) the Distribution Date occurring in October 2007 and (b) the first
Distribution Date on which the Credit Enhancement Percentage (calculated for
this purpose only after taking into account distributions of principal on the
Mortgage Loans but prior to any distribution of the Principal Distribution
Amount to the Certificates then entitled to distributions of principal on such
Distribution Date) is equal to or greater than 18.00% and (ii) the first
Distribution Date on which the Certificate Principal Balance of the Class A-1
Certificates has been reduced to zero.
"Subordinate Certificates": Collectively, the Mezzanine
Certificates and the Class CE Certificates.
"Subsequent Recoveries": As of any Distribution Date, amounts
received during the related Prepayment Period by the Servicer specifically
related to a defaulted Mortgage Loan or disposition of an REO Property prior to
the related Prepayment Period that resulted in a Realized Loss, after the
liquidation or disposition of such defaulted Mortgage Loan.
"Sub-Servicer": Any Person with which a Servicer has entered
into a Sub-Servicing Agreement and which meets the qualifications of a
Sub-Servicers pursuant to Section 3.02 of this Agreement.
"Sub-Servicing Agreement": The written contract between the
Servicer and a Sub-Servicer relating to servicing and administration of certain
Mortgage Loans as provided in Section 3.02 of this Agreement.
"Substitution Shortfall Amount": As defined in Section 2.03.
"Tax Returns": The federal income tax return on Internal
Revenue Service Form 1066, U.S. Real Estate Mortgage Investment Conduit Income
Tax Return, including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of REMIC Taxable Income or Net Loss Allocation, or any successor forms,
to be filed on behalf of the Trust REMICs under the REMIC Provisions, together
with any and all other information reports or returns that may be required to be
furnished to the Certificateholders or filed with the Internal Revenue Service
or any other governmental taxing authority under any applicable provisions of
federal, state or local tax laws.
"Telerate Page 3750": The display designated as page "3750" on
the Dow Xxxxx Telerate Capital Markets Report (or such other page as may replace
page 3750 on that report for the purpose of displaying London interbank offered
rates of major banks).
"Termination Price": As defined in Section 10.01.
"Terminator": As defined in Section 10.01.
"Transfer": Any direct or indirect transfer, sale, pledge,
hypothecation, or other form of assignment of any Ownership Interest in a
Certificate.
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"Transferee": Any Person who is acquiring by Transfer any
Ownership Interest in a Certificate.
"Transferor": Any Person who is disposing by Transfer of any
Ownership Interest in a Certificate.
"Trigger Event": A Trigger Event has occurred with respect to
a Distribution Date if either (x) the Delinquency Percentage exceeds 50% of the
Credit Enhancement Percentage with respect to such Distribution Date or (y) the
aggregate amount of Realized Losses incurred since the Cut-off Date through the
last day of the related Due Period divided by the aggregate principal balance of
the Mortgage Loans as of the Cut-off Date exceeds the applicable percentages set
forth below with respect to such Distribution Date:
DISTRIBUTION DATE PERCENTAGE
----------------- ----------
October 2007 to September 2008 2.25%, plus 1/12 of 0.75% for each month thereafter
October 2008 to September 2009 3.00%, plus 1/12 of 0.50% for each month thereafter
October 2009 to September 2010 3.50%, plus 1/12 of 0.25% for each month thereafter
October 2010 and thereafter 3.75%
"Trust": ACE Securities Corp., Home Equity Loan Trust, Series
2004-SD1, the trust created hereunder.
"Trust Fund": Collectively, all of the assets of REMIC I,
REMIC II and the Reserve Fund and any amounts on deposit therein and any
proceeds thereof, the Prepayment Charges and the Cap Contract.
"Trust REMIC": REMIC I or REMIC II.
"Trustee": HSBC Bank USA, National Association a national
banking association, or its successor in interest, or any successor trustee
appointed as herein provided.
"Uncertificated Balance": The amount of the REMIC I Regular
Interests outstanding as of any date of determination. As of the Closing Date,
the Uncertificated Balance of each REMIC I Regular Interest shall equal the
amount set forth in the Preliminary Statement hereto as its initial
uncertificated balance. On each Distribution Date, the Uncertificated Balance of
the REMIC I Regular Interest shall be reduced by all distributions of principal
made on such REMIC I Regular Interest on such Distribution Date pursuant to
Section 5.01 and, if and to the extent necessary and appropriate, shall be
further reduced on such Distribution Date by Realized Losses as provided in
Section 5.04 and the Uncertificated Balance of REMIC I Regular Interest
44
I-LTZZ shall be increased by interest deferrals as provided in Section
5.01(a)(1)(i). The Uncertificated Balance of each REMIC I Regular Interest shall
never be less than zero.
"Uncertificated Interest": With respect to any REMIC I Regular
Interest for any Distribution Date, one month's interest at the REMIC I
Remittance Rate applicable to such REMIC I Regular Interest for such
Distribution Date, accrued on the Uncertificated Balance thereof immediately
prior to such Distribution Date. Uncertificated Interest in respect of the REMIC
I Regular Interests shall accrue on the basis of a 360-day year consisting of
twelve 30-day months. Uncertificated Interest with respect to each Distribution
Date, as to any REMIC I Regular Interest, shall be reduced by an amount equal to
the sum of (a) the aggregate Prepayment Interest Shortfall, if any, for such
Distribution Date to the extent not covered by payments pursuant to Section 3.22
or Section 4.18 of this Agreement and (b) the aggregate amount of any Relief Act
Interest Shortfall, if any allocated, in each case, to such REMIC I Regular
Interest or REMIC I Regular Interest pursuant to Section 1.02. In addition,
Uncertificated Interest with respect to each Distribution Date, as to any
Uncertificated REMIC Regular Interest, shall be reduced by Realized Losses, if
any, allocated to such Uncertificated REMIC Regular Interest pursuant to Section
1.02 and Section 5.04.
"Uninsured Cause": Any cause of damage to a Mortgaged Property
such that the complete restoration of such property is not fully reimbursable by
the hazard insurance policies required to be maintained pursuant to Section
3.11.
"United States Person": A citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States or any political subdivision thereof
(except, in the case of a partnership, to the extent provided in regulations)
provided that, for purposes solely of the restrictions on the transfer of any
Class R Certificate, no partnership or other entity treated as a partnership for
United States federal income tax purposes shall be treated as a United States
Person unless all persons that own an interest in such partnership either
directly or through any entity that is not a corporation for United States
federal income tax purposes are required to be United States Persons, or an
estate whose income is subject to United States federal income tax regardless of
its source, or a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one or more United
States persons have the authority to control all substantial decisions of the
trust. To the extent prescribed in regulations by the Secretary of the Treasury,
a trust which was in existence on August 20, 1996 (other than a trust treated as
owned by the grantor under subpart E of part I of subchapter J of chapter I of
the Code), and which was treated as a United States person on August 20, 1996
may elect to continue to be treated as a United States person notwithstanding
the previous sentence. The term "United States" shall have the meaning set forth
in Section 7701 of the Code.
"Value": With respect to any Mortgaged Property, the lesser of
(i) the lesser of (a) the value thereof as determined by an appraisal made for
the originator of the Mortgage Loan at the time of origination of the Mortgage
Loan by an appraiser who met the minimum requirements of Xxxxxx Xxx and Xxxxxxx
Mac and (b) the value thereof as determined by a review appraisal conducted by
the originator of the Mortgage Loan in accordance with such originator's
underwriting guidelines, (ii) the purchase price paid for the related Mortgaged
Property by the Mortgagor with the proceeds of the Mortgage Loan; provided,
however, (A) in
45
the case of a Refinanced Mortgage Loan, such value of the Mortgaged Property is
based solely upon the lesser of (1) the value determined by an appraisal made
for the originator of the Mortgage Loan of such Refinanced Mortgage Loan at the
time of origination of such Refinanced Mortgage Loan by an appraiser who met the
minimum requirements of Xxxxxx Mae and Xxxxxxx Mac and (2) the value thereof as
determined by a review appraisal conducted by the originator of the Mortgage
Loan in accordance with such originator's underwriting guidelines, and (B) in
the case of a Mortgage Loan originated in connection with a "lease-option
purchase," such value of the Mortgaged Property is based on the lower of the
value determined by an appraisal made for the originator of such Mortgage Loan
at the time of origination or the sale price of such Mortgaged Property if the
"lease option purchase price" was set less than 12 months prior to origination,
and is based on the value determined by an appraisal made for the originator of
such Mortgage Loan at the time of origination if the "lease option purchase
price" was set 12 months or more prior to origination and (iii) the value
determined pursuant to a broker's price opinion or an automated value model
conducted on behalf of the Seller.
"Verification Report": As defined in Section 4.19.
"Voting Rights": The portion of the voting rights of all of
the Certificates which is allocated to any such Certificate. With respect to any
date of determination, 98% of all Voting Rights will be allocated among the
holders of the Class A-1 Certificates, the Mezzanine Certificates and the Class
CE Certificates in proportion to the then outstanding Certificate Principal
Balances of their respective Certificates, 1% of all Voting Rights will be
allocated among the holders of the Class P Certificates and 1% of all Voting
Rights will be allocated among the holders of the Class R Certificates. The
Voting Rights allocated to each Class of Certificate shall be allocated among
Holders of each such Class in accordance with their respective Percentage
Interests as of the most recent Record Date.
"Xxxxx Fargo": Xxxxx Fargo Bank, N.A. or any successor
thereto.
SECTION 1.02. ALLOCATION OF CERTAIN INTEREST SHORTFALLS.
For purposes of calculating the amount of Accrued Certificate
Interest and the amount of the Interest Distribution Amount for the Class A-1
Certificates, the Mezzanine Certificates and the Class CE Certificates for any
Distribution Date, (1) the aggregate amount of any Prepayment Interest
Shortfalls (to the extent not covered by payments by the Servicer pursuant to
Section 3.22 of this Agreement or the Master Servicer pursuant to Section 4.18
and any Relief Act Interest Shortfalls incurred in respect of the Mortgage Loans
for any Distribution Date shall be allocated first, to the Class CE
Certificates, second, to the Class M-4 Certificates, third, to the Class M-3
Certificates, fourth, to the Class M-2 Certificates, fifth, to the Class M-1
Certificates and sixth, to the Class A-1 Certificates, on a PRO RATA basis, in
each case based on, and to the extent of, one month's interest at the then
applicable respective Pass-Through Rate on the respective Certificate Principal
Balance or Notional Amount, as applicable, of each such Certificate and (2) the
aggregate amount of any Realized Losses allocated to the Mezzanine Certificates
and Net WAC Rate Carryover Amounts paid to the Class A-1 Certificates and the
Mezzanine Certificates incurred for any Distribution Date shall be allocated to
the Class CE Certificates on a PRO RATA basis based on, and to the extent of,
one month's interest at the then
46
applicable respective Pass-Through Rate on the respective Certificate Principal
Balance or Notional Amount thereof, as applicable.
For purposes of calculating the amount of Uncertificated
Interest for the REMIC I Regular Interests for any Distribution Date, the
aggregate amount of any Prepayment Interest Shortfalls (to the extent not
covered by payments by the Servicer pursuant to Section 3.22 of this Agreement
or the Master Servicer pursuant to Section 4.18) and any Relief Act Interest
Shortfalls incurred in respect of the Mortgage Loans for any Distribution Date
shall be allocated among REMIC I Regular Interest I-LTA1, REMIC I Regular
Interest I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I Regular Interest
I-LTM3, REMIC I Regular Interest I-LTM4 and REMIC I Regular Interest I-LTZZ PRO
RATA based on, and to the extent of, one month's interest at the then applicable
respective REMIC I Remittance Rate on the respective Uncertificated Balance of
each such REMIC I Regular Interest.
47
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. CONVEYANCE OF THE 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 the Mortgage Loans identified on the Mortgage Loan Schedule, the rights of
the Depositor under the Mortgage Loan Purchase Agreement (including, without
limitation the right to enforce the obligations of the other parties thereto
thereunder), and all other assets included or to be included in REMIC I. Such
assignment includes all interest and principal received by the Depositor or the
Servicer on or with respect to the Mortgage Loans (including all payments of
principal and interest due on such Mortgage Loans on or before the Cut-off Date
but not paid by the related Mortgagors by such date). The Depositor herewith
delivers to the Trustee and the Servicer an executed copy of the Mortgage Loan
Purchase Agreement.
In connection with such transfer and assignment, the Depositor
does hereby deliver to, and deposit with the Custodian pursuant to the Custodial
Agreement the documents with respect to each Mortgage Loan as described under
Section 2 of the Custodial Agreement (the "Mortgage Loan Documents"). In
connection with such delivery and as further described in the Custodial
Agreement, the Custodian will be required to review such Mortgage Loan Documents
and deliver to the Trustee, the Depositor, the Servicer and the Seller
certifications (in the forms attached to the Custodial Agreement) with respect
to such review with exceptions noted thereon. In addition, under the Custodial
Agreement the Depositor will be required to cure certain defects with respect to
the Mortgage Loan Documents for the related Mortgage Loans after the delivery
thereof by the Depositor to the Custodian as more particularly set forth
therein.
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, including,
but not limited to certain insurance policies and documents contemplated by
Section 4.11, and preparation and delivery of the certifications shall be
performed by the Custodian pursuant to the terms and conditions of the Custodial
Agreement.
The Depositor shall deliver or cause the originator to deliver
to the Servicer copies of all trailing documents required to be included in the
Mortgage File at the same time the originals or certified copies thereof are
delivered to the Trustee or Custodian, such documents including the mortgagee
policy of title insurance and any Mortgage Loan Documents upon return from the
recording office. The Servicer shall not be responsible for any custodian fees
or other costs incurred in obtaining such documents and the Depositor shall
cause the Servicer to be reimbursed for any such costs the Servicer may incur in
connection with performing its obligations under this Agreement.
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The Mortgage Loans permitted by the terms of this Agreement to
be included in the Trust are limited to (i) Mortgage Loans (which the Depositor
acquired pursuant to the Mortgage Loan Purchase Agreement, which contains, among
other representations and warranties, a representation and warranty of the
Seller that no Mortgage Loan is a "High-Cost Home Loan" as defined in the New
Jersey Home Ownership Act effective November 27, 2003 or as defined in the New
Mexico Home Loan Protection Act effective January 1, 2004) and (ii) Qualified
Substitute Mortgage Loans (which, by definition as set forth herein and referred
to in the Mortgage Loan Purchase Agreement, are required to conform to, among
other representations and warranties, the representation and warranty of the
Seller that no Qualified Substitute Mortgage Loan is a "High-Cost Home Loan" as
defined in the New Jersey Home Ownership Act effective November 27, 2003 or as
defined in the New Mexico Home Loan Protection Act effective January 1, 2004.
The Depositor and the Trustee on behalf of the Trust understand and agree that
it is not intended that any mortgage loan be included in the Trust that is a
"High-Cost Home Loan" as defined in the New Jersey Home Ownership Act effective
November 27, 2003 or as defined in the New Mexico Home Loan Protection Act
effective January 1, 2004.
SECTION 2.02. ACCEPTANCE OF REMIC I BY TRUSTEE.
The Trustee acknowledges receipt, subject to the provisions of
Section 2.01 hereof and Section 2 of the Custodial Agreement, of the Mortgage
Loan Documents and all other assets included in the definition of "REMIC I"
under clauses (i), (iii), (iv) and (v) (to the extent of amounts deposited into
the Distribution Account) and declares that it holds (or the Custodian on its
behalf holds) and will hold such documents and the other documents delivered to
it constituting a Mortgage Loan Document, and that it holds (or the Custodian on
its behalf holds) or will hold all such assets and such other assets included in
the definition of "REMIC I" in trust for the exclusive use and benefit of all
present and future Certificateholders.
SECTION 2.03. REPURCHASE OR SUBSTITUTION OF MORTGAGE LOANS.
(a) Upon discovery or receipt of notice of any materially
defective document in, or that a document is missing from, a Mortgage
File, other than a defective or missing document with respect to the
Mortgage Loans listed on Schedule A to the Mortgage Loan Purchase
Agreement or of a breach by the Seller of any representation, warranty
or covenant under the Mortgage Loan Purchase Agreement in respect of
any Mortgage Loan that materially and adversely affects the value of
such Mortgage Loan or the interest therein of the Certificateholders,
the Trustee shall promptly notify the Seller and the Servicer of such
defect, missing document or breach and request that the Seller deliver
such missing document, cure such defect or breach within 60 days 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 obligations of the Seller under
the Mortgage Loan Purchase Agreement to repurchase such Mortgage Loan
from REMIC I at the Purchase Price within 90 days after the date on
which the Seller was notified of such missing document, defect or
breach, if and to the extent that the Seller is obligated to do so
under the Mortgage Loan Purchase Agreement. The Purchase Price for the
repurchased Mortgage Loan shall be remitted to the Servicer for
deposit in the Collection Account and the Trustee, upon receipt of
written certification from the Servicer of
49
such deposit, shall release or cause the Custodian (upon receipt of a
request for release in the form attached to the Custodial Agreement)
to release to the Seller the related Mortgage File and the Trustee
shall execute and deliver such instruments of transfer or assignment,
in each case without recourse, representation or warranty, 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 not have any further responsibility with regard to such Mortgage
File. In lieu of repurchasing any such Mortgage Loan as provided
above, if so provided in the Mortgage Loan Purchase Agreement, the
Seller may cause such Mortgage Loan to be removed from REMIC I (in
which case it shall become a Deleted Mortgage Loan) and substitute one
or more Qualified Substitute Mortgage Loans in the manner and subject
to the limitations set forth in Section 2.03(b). 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 respecting such omission, defect or breach available
to the Trustee and the Certificateholders.
In addition, promptly upon the earlier of discovery by the
Servicer or receipt of notice by the Servicer of the breach of the
representation or covenant of the Seller set forth in Section 5(xiv) of the
Mortgage Loan Purchase Agreement which materially and adversely affects the
interests of the Holders of the Class P Certificates in any Prepayment Charge,
the Servicer shall promptly notify the Seller and the Trustee of such breach.
The Trustee shall enforce the obligations of the Seller under the Mortgage Loan
Purchase Agreement to remedy such breach to the extent and in the manner set
forth in the Mortgage Loan Purchase Agreement.
(b) Any substitution of Qualified Substitute Mortgage Loans
for Deleted Mortgage Loans made pursuant to Section 2.03(a) must be
effected prior to the date which is two years after the Startup Day
for REMIC I.
As to any Deleted Mortgage Loan for which the Seller
substitutes a Qualified Substitute Mortgage Loan or Loans, such substitution
shall be effected by the Seller delivering to the Trustee or the Custodian on
behalf of the Trustee, for such Qualified 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 of the Custodial Agreement, as applicable, together with
an Officers' Certificate providing that each such Qualified Substitute Mortgage
Loan satisfies the definition thereof and specifying the Substitution Shortfall
Amount (as described below), if any, in connection with such substitution. The
Custodian on behalf of the Trustee shall acknowledge receipt of such Qualified
Substitute Mortgage Loan or Loans and, within ten Business Days thereafter,
review such documents and deliver to the Depositor, the Trustee and the
Servicer, with respect to such Qualified Substitute Mortgage Loan or Loans, an
initial certification pursuant to the Custodial Agreement, with any applicable
exceptions noted thereon. Within one year of the date of substitution, the
Custodian on behalf of the Trustee shall deliver to the Depositor, the Trustee
and the Servicer a final certification pursuant to the Custodial Agreement with
respect to such Qualified Substitute Mortgage Loan or Loans, with any applicable
exceptions noted thereon. Monthly Payments due with respect to Qualified
Substitute Mortgage Loans in the month of substitution are not part of REMIC I
and will be retained by the Seller. For the month of substitution, distributions
to Certificateholders will reflect the Monthly Payment due on such Deleted
Mortgage Loan on or
50
before the Due Date in the month of substitution, and the Seller shall
thereafter be entitled to retain all amounts subsequently received in respect of
such Deleted Mortgage Loan. The Depositor 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 Deleted
Mortgage Loan from the terms of this Agreement and the substitution of the
Qualified Substitute Mortgage Loan or Loans and shall deliver a copy of such
amended Mortgage Loan Schedule to the Trustee and the Servicer. Upon such
substitution, such Qualified Substitute Mortgage Loan or Loans shall constitute
part of the Trust Fund and shall be subject in all respects to the terms of this
Agreement and the Mortgage Loan Purchase Agreement, including all applicable
representations and warranties thereof included herein or in the Mortgage Loan
Purchase Agreement.
For any month in which the Seller substitutes one or more
Qualified Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the
Servicer will determine the amount (the "Substitution Shortfall Amount"), if
any, by which the aggregate Purchase Price of all such Deleted Mortgage Loans
exceeds the aggregate of, as to each such Qualified Substitute Mortgage Loan,
the Scheduled Principal Balance thereof as of the date of substitution, together
with one month's interest on such Scheduled Principal Balance at the applicable
Net Mortgage Rate, plus all outstanding P&I Advances and Servicing Advances
(including Nonrecoverable P&I Advances and Nonrecoverable Servicing Advances)
related thereto. 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 Shortfall Amount, if any, and the Trustee or
the Custodian on behalf of the Trustee, upon receipt of the related Qualified
Substitute Mortgage Loan or Loans, upon receipt of a request for release in the
form attached to the Custodial Agreement and certification by the Servicer of
such deposit, shall release to the Seller the related Mortgage File or Files and
the Trustee shall execute and deliver such instruments of transfer or
assignment, in each case without recourse, representation or warranty, as the
Seller shall deliver to it and as shall be necessary to vest therein any Deleted
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 any Trust
REMIC, including without limitation, any federal tax imposed on "prohibited
transactions" under Section 860F(a)(1) of the Code or on "contributions after
the startup date" under Section 860G(d)(1) of the Code, or (b) any Trust REMIC
to fail to qualify as a REMIC at any time that any Certificate is outstanding.
(c) Upon discovery by the Depositor, 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 substitute one or more
Qualified Substitute Mortgage Loans for the affected Mortgage Loan
within 90 days of the earlier of discovery or receipt of such notice
with respect to such affected Mortgage Loan. Such repurchase or
substitution shall be made by (i) the Seller if the affected Mortgage
Loan's status as a
51
non-qualified mortgage is or results from a breach of any
representation, warranty or covenant made by the Seller under the
Mortgage Loan Purchase Agreement or (ii) the Depositor, if the
affected Mortgage Loan's status as a non-qualified mortgage is a
breach of no representation or warranty. Any such repurchase or
substitution shall be made in the same manner as set forth in Section
2.03(a). 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.
(d) With respect to a breach of the representations made
pursuant to Section 5(xiv) of the Mortgage Loan Purchase Agreement
that materially and adversely affects the value of such Mortgage Loan
or the interest therein of the Certificateholders, the Seller shall be
required to take the actions set forth in this Section 2.03.
(e) 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 or Prepayment Charge, the
Servicer shall cure such breach in all material respects.
SECTION 2.04. REPRESENTATIONS AND WARRANTIES OF THE MASTER
SERVICER.
The Master Servicer hereby represents, warrants and covenants
to the Servicer, the Depositor and the Trustee, for the benefit of each of the
Trustee and the Certificateholders, that as of the Closing Date or as of such
date specifically provided herein:
(i) The Master Servicer is a national banking association
duly formed, validly existing and in good standing under the laws of
the United States of America and is duly authorized and qualified to
transact any and all business contemplated by this Agreement to be
conducted by the Master Servicer;
(ii) The Master Servicer has the full power and authority to
conduct its business as presently conducted by it and to execute,
deliver and perform, and to enter into and consummate, all
transactions contemplated by this Agreement. The Master Servicer has
duly authorized the execution, delivery and performance of this
Agreement, has duly executed and delivered this Agreement, and this
Agreement, assuming due authorization, execution and delivery by the
other parties hereto, constitutes a legal, valid and binding
obligation of the Master Servicer, enforceable against it in
accordance with its terms except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization or similar laws
affecting the enforcement of creditors' rights generally and by
general principles of equity;
(iii) The execution and delivery of this Agreement by the
Master Servicer, the consummation by the Master Servicer of any other
of the transactions herein contemplated, and the fulfillment of or
compliance with the terms hereof are in the ordinary course of
business of the Master Servicer and will not (A) result in a breach of
any term or provision of charter and by-laws of the Master Servicer or
(B) conflict with, result in a breach, violation or acceleration of,
or result in a default under, the terms of any other material
agreement or instrument to which the Master Servicer is a party or by
which it may be bound, or any statute, order or regulation applicable
to the Master Servicer of any court, regulatory body, administrative
agency or governmental body
52
having jurisdiction over the Master Servicer; and the Master Servicer
is not a party to, bound by, or in breach or violation of any
indenture or other agreement or instrument, or subject to or in
violation of any statute, order or regulation of any court, regulatory
body, administrative agency or governmental body having jurisdiction
over it, which materially and adversely affects or, to the Master
Servicer's knowledge, would in the future materially and adversely
affect, (x) the ability of the Master Servicer to perform its
obligations under this Agreement or (y) the business, operations,
financial condition, properties or assets of the Master Servicer taken
as a whole;
(iv) The Master Servicer does not believe, nor does it have
any reason or cause to believe, that it cannot perform each and every
covenant made by it and contained in this Agreement;
(v) No litigation is pending against the Master Servicer
that would materially and adversely affect the execution, delivery or
enforceability of this Agreement or the ability of the Master Servicer
to perform any of its other obligations hereunder in accordance with
the terms hereof,
(vi) There are no actions or proceedings against, or
investigations known to it of, the Master Servicer before any court,
administrative or other tribunal (A) that might prohibit its entering
into this Agreement, (B) seeking to prevent the consummation of the
transactions contemplated by this Agreement or (C) that might prohibit
or materially and adversely affect the performance by the Master
Servicer of its obligations under, or validity or enforceability of,
this Agreement; and
(vii) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution,
delivery and performance by the Master Servicer of, or compliance by
the Master Servicer with, this Agreement or the consummation by it of
the transactions contemplated by this Agreement, except for such
consents, approvals, authorizations or orders, if any, that have been
obtained prior to the Closing Date.
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.04 shall survive the
resignation or termination of the parties hereto and the termination of this
Agreement and shall inure to the benefit of the Trustee, the Depositor and the
Certificateholders.
SECTION 2.05. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
SERVICER.
The Servicer hereby represents, warrants and covenants to the
Master Servicer, the Securities Administrator, the Depositor and the Trustee,
for the benefit of each of such Persons and the Certificateholders that as of
the Closing Date or as of such date specifically provided herein:
(i) The Servicer is a federally chartered savings bank duly
organized and validly existing under the laws of the United States and
is duly authorized and qualified to transact any and all business
contemplated by this Agreement to be conducted by the Servicer in any
state in which a Mortgaged Property is located or is
53
otherwise not required under applicable law to effect such
qualification and, in any event, is in compliance with the doing
business laws of any such State, to the extent necessary to ensure its
ability to enforce each Mortgage Loan and to service the Mortgage
Loans in accordance with the terms of this Agreement;
(ii) The Servicer has the full power and authority to
conduct its business as presently conducted by it and to execute,
deliver and perform, and to enter into and consummate, all
transactions contemplated by this Agreement. The Servicer has duly
authorized the execution, delivery and performance of this Agreement,
has duly executed and delivered this Agreement, and this Agreement,
assuming due authorization, execution and delivery by the other
parties hereto, constitutes a legal, valid and binding obligation of
the Servicer, enforceable against it in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting the enforcement
of creditors' rights generally and by general principles of equity;
(iii) The execution and delivery of this Agreement by the
Servicer, the servicing of the Mortgage Loans by the Servicer
hereunder, the consummation by the Servicer of any other of the
transactions herein contemplated, and the fulfillment of or compliance
with the terms hereof are in the ordinary course of business of the
Servicer and will not (A) result in a breach of any term or provision
of the charter or by-laws of the Servicer or (B) conflict with, result
in a breach, violation or acceleration of, or result in a default
under, the terms of any other material agreement or instrument to
which the Servicer is a party or by which it may be bound, or any
statute, order or regulation applicable to the Servicer of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over the Servicer; and the Servicer is not a party to,
bound by, or in breach or violation of any indenture or other
agreement or instrument, or subject to or in violation of any statute,
order or regulation of any court, regulatory body, administrative
agency or governmental body having jurisdiction over it, which
materially and adversely affects or, to the Servicer's knowledge,
would in the future materially and adversely affect, (x) the ability
of the Servicer to perform its obligations under this Agreement, (y)
the business, operations, financial condition, properties or assets of
the Servicer taken as a whole or (z) the legality, validity or
enforceability of this Agreement;
(iv) The Servicer does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every
covenant made by it and contained in this Agreement;
(v) No litigation is pending against the Servicer that would
materially and adversely affect the execution, delivery or
enforceability of this Agreement or the ability of the Servicer to
service the Mortgage Loans or to perform any of its other obligations
hereunder in accordance with the terms hereof;
(vi) There are no actions or proceedings against, or
investigations known to it of, the Servicer before any court,
administrative or other tribunal (A) that might prohibit its entering
into this Agreement, (B) seeking to prevent the consummation
54
of the transactions contemplated by this Agreement or (C) that might
prohibit or materially and adversely affect the performance by the
Servicer of its obligations under, or the validity or enforceability
of, this Agreement;
(vii) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution,
delivery and performance by the Servicer of, or compliance by the
Servicer with, this Agreement or the consummation by it of the
transactions contemplated by this Agreement, except for such consents,
approvals, authorizations or orders, if any, that have been obtained
prior to the Closing Date;
(viii) The Servicer has fully furnished and will continue to
fully furnish, in accordance with the Fair Credit Reporting Act and
its implementing regulations, accurate and complete information (e.g.,
favorable and unfavorable) on its borrower credit files to Equifax,
Experian and Trans Union Credit Information Company or their
successors on a monthly basis; and
(ix) The Servicer will not waive any Prepayment Charge other
than in accordance with the standard set forth in Section 3.01.
Notwithstanding anything to the contrary contained in this Agreement, if the
covenant of the Servicer set forth in Section 2.05(ix) above is breached, the
Servicer will pay the amount of such waived Prepayment Charge, from its own
funds without any right of reimbursement, for the benefit of the Holders of the
Class P Certificates, by depositing such amount into the Collection Account
within 90 days of the earlier of discovery by the Servicer or receipt of notice
by the Servicer of such breach. Furthermore, notwithstanding any other
provisions of this Agreement, any payments made by the Servicer in respect of
any waived Prepayment Charges pursuant to this paragraph shall be deemed to be
paid outside of the Trust Fund.
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.05 shall survive the
resignation or termination of the parties hereto, the termination of this
Agreement and the delivery of the Mortgage Files to the Custodian and shall
inure to the benefit of the Trustee, the Master Servicer, the Securities
Administrator, the Depositor and the Certificateholders. Upon discovery by any
such Person or the Servicer of a breach of any of the foregoing representations,
warranties and covenants which materially and adversely affects the value of any
Mortgage Loan, Prepayment Charge or the interests therein of the
Certificateholders, the party discovering such breach shall give prompt written
notice (but in no event later than two Business Days following such discovery)
to the Trustee. Subject to Section 8.01, unless such breach shall not be
susceptible of cure within 90 days, the obligation of the Servicer set forth in
Section 2.03(e) to cure breaches shall constitute the sole remedy against the
Servicer available to the Certificateholders, the Depositor or the Trustee on
behalf of the Certificateholders respecting a breach of the representations,
warranties and covenants contained in this Section 2.05.
55
SECTION 2.06. ISSUANCE OF THE REMIC I REGULAR INTERESTS AND
THE CLASS R-I INTEREST.
The Trustee acknowledges the assignment to it of the Mortgage
Loans and the delivery to the Custodian on its behalf of the Mortgage Loan
Documents, subject to the provisions of Section 2.01 and Section 2.02 hereof and
Section 2 of the Custodial Agreement, together with the assignment to it of all
other assets included in REMIC I, the receipt of which is hereby acknowledged.
The interests evidenced by the Class R-I Interest, together with the REMIC I
Regular Interests, constitute the entire beneficial ownership interest in REMIC
I. The rights of the Holders of the Class R-I Interest and REMIC I (as holder of
the REMIC I Regular Interests) to receive distributions from the proceeds of
REMIC I in respect of the Class R-I Interest and the REMIC I Regular Interests,
respectively, and all ownership interests evidenced or constituted by the Class
R-I Interest and the REMIC I Regular Interests, shall be as set forth in this
Agreement.
SECTION 2.07. CONVEYANCE OF THE REMIC I REGULAR INTERESTS;
ACCEPTANCE OF REMIC I BY THE TRUSTEE.
The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee, without recourse all the right, title and interest of the Depositor in
and to the REMIC I Regular Interests for the benefit of the Class R-II Interest
and REMIC II (as holder of the REMIC I Regular Interests). The Trustee
acknowledges receipt of the REMIC I Regular Interests and declares that it holds
and will hold the same in trust for the exclusive use and benefit of all present
and future Holders of the Class R-II Interest and REMIC II (as holder of the
REMIC I Regular Interests). The rights of the Holder of the Class R-II Interest
and REMIC II (as holder of the REMIC I Regular Interests) to receive
distributions from the proceeds of REMIC II in respect of the Class R-II
Interest and Regular Certificates, respectively, and all ownership interests
evidenced or constituted by the Class R-II Interest and the Regular Interests,
shall be as set forth in this Agreement. The Class R-II Interest and the Regular
Certificates shall constitute the entire beneficial ownership interest in REMIC
II.
SECTION 2.08. ISSUANCE OF CLASS R CERTIFICATES.
The Trustee acknowledges the assignment to it of the REMIC I
Regular Interests and, concurrently therewith and in exchange therefor, pursuant
to the written request of the Depositor executed by an officer of the Depositor,
the Securities Administrator has executed and authenticated and the Trustee has
delivered to or upon the order of the Depositor, the Class R Certificates in
authorized denominations. The Class R Certificates evidence ownership in the
Class R-I Interest and the Class R-II Interest.
SECTION 2.09. ESTABLISHMENT OF THE TRUST.
The Depositor does hereby establish, pursuant to the further
provisions of this Agreement and the laws of the State of New York, an express
trust to be known, for convenience, as "ACE Securities Corp., Home Equity Loan
Trust, Series 2004-SD1" and does
56
hereby appoint HSBC Bank USA, National Association as Trustee in accordance with
the provisions of this Agreement.
57
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE MORTGAGE LOANS; ACCOUNTS
SECTION 3.01. THE SERVICER TO ACT AS A SERVICER.
The Servicer shall service and administer the Mortgage Loans
on behalf of the Trust Fund and in the best interests of and for the benefit of
the Certificateholders (as determined by the Servicer in its reasonable
judgment) in accordance with the terms of this Agreement and the respective
Mortgage Loans and all applicable law and regulations and, to the extent
consistent with such terms, in the same manner in which it services and
administers similar mortgage loans for its own portfolio, giving due
consideration to customary and usual standards of practice of prudent mortgage
lenders and loan servicers administering similar mortgage loans but without
regard to:
(i) any relationship that the Servicer or any Affiliate of
the Servicer may have with the related Mortgagor;
(ii) the ownership of any Certificate by the Servicer or any
Affiliate of the Servicer;
(iii) the Servicer's obligation to make P&I Advances or
Servicing Advances; or
(iv) the Servicer's right to receive compensation for its
services hereunder.
To the extent consistent with the foregoing, the Servicer
shall also seek to maximize the timely and complete recovery of principal and
interest on the Mortgage Notes related to the Mortgage Loans and shall waive (or
permit a Sub-Servicer to waive) a Prepayment Charge only under the following
circumstances: (i) such waiver is standard and customary in servicing similar
Mortgage Loans and such waiver is related to a default or reasonably foreseeable
default and would, in the reasonable judgement of the Servicer, maximize
recovery of total proceeds taking into account the value of such Prepayment
Charge and the related the Mortgage Loan and, if such waiver is made in
connection with a refinancing of the related the Mortgage Loan, such refinancing
is related to a default or a reasonably foreseeable default, (ii) such
Prepayment Charge is unenforceable in accordance with applicable law or the
collection of such related Prepayment Charge would otherwise violate applicable
law or (iii) the collection of such Prepayment Charge would be considered
"predatory" pursuant to written guidance published or issued by any applicable
federal, state or local regulatory authority acting in its official capacity and
having jurisdiction over such matters. Notwithstanding any provision in this
Agreement to the contrary, in the event the Prepayment Charge payable under the
terms of the Mortgage Note related to a Mortgage Loan is less than the amount of
the Prepayment Charge set forth in the Prepayment Charge Schedule or other
information provided to the Servicer, the Servicer shall not have any liability
or obligation with respect to such difference, and in addition shall not have
any liability or obligation to pay the amount of any uncollected Prepayment
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Charge if the failure to collect such amount is the direct result of inaccurate
or incomplete information on the Prepayment Charge Schedule.
Subject only to the above-described servicing standards (the
"Accepted Servicing Practices") and the terms of this Agreement and of the
respective Mortgage Loans, the Servicer shall have full power and authority, to
do or cause to be done any and all things in connection with such servicing and
administration which it may deem necessary or desirable with the goal of
maximizing proceeds of the Mortgage Loan. Without limiting the generality of the
foregoing, the Servicer in its own name is hereby authorized and empowered by
the Trustee when the Servicer believes it appropriate in its best judgment, to
execute and deliver, on behalf of the Trust Fund, the Certificateholders and the
Trustee or any of them, and upon written notice to the Trustee, any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge or subordination, and all other comparable instruments, with respect
to the Mortgage Loans and the Mortgaged Properties and to institute foreclosure
proceedings or obtain a deed-in-lieu of foreclosure so as to convert the
ownership of such properties, and to hold or cause to be held title to such
properties, on behalf of the Trustee, for the benefit of the Trust Fund and the
Certificateholders. The Servicer shall service and administer the Mortgage Loans
in accordance with applicable state and federal law and shall provide to the
Mortgagors any reports required to be provided to them thereby. The Servicer
shall also comply in the performance of this Agreement with all reasonable rules
and requirements of each insurer under any standard hazard insurance policy.
Subject to Section 3.14, the Trustee shall execute, at the written request of
the Servicer, and furnish to the Servicer a power of attorney in the form
Exhibit D hereto and other documents necessary or appropriate to enable the
Servicer to carry out its servicing and administrative duties hereunder and
furnished to the Trustee by the Servicer, and the Trustee shall not be liable
for the actions of the Servicer under such powers of attorney and shall be
indemnified by the Servicer for any cost, liability or expense incurred by the
Trustee in connection with the Servicer's use or misuse of any such power of
attorney.
In accordance with Accepted Servicing Practices, the Servicer
shall make or cause to be made Servicing Advances as necessary for the purpose
of effecting the payment of taxes and assessments on the Mortgaged Properties,
which Servicing Advances shall be reimbursable in the first instance from
related collections from the related Mortgagors pursuant to Section 3.07, and
further as provided in Section 3.09; provided, however, the Servicer shall only
make such Servicing Advance if the related Mortgagor has not made such payment
and if the failure to make such Servicing Advance would result in the loss of
the related Mortgaged Property due to a tax sale or foreclosure as result of a
tax lien. Any cost incurred by the Servicer in effecting the payment of taxes
and assessments on a Mortgaged Property shall not, for the purpose of
calculating the Scheduled Principal Balance of such Mortgage Loan or
distributions to Certificateholders, be added to the unpaid principal balance of
the related Mortgage Loan, notwithstanding that the terms of such Mortgage Loan
so permit. The parties to this Agreement acknowledge that Servicing Advances
shall be reimbursable pursuant to Section 3.06 of this Agreement, and agree that
no Servicing Advance shall be rejected or disallowed by any party unless it has
been shown that such Servicing Advance was not made in accordance with the terms
of this Agreement. Notwithstanding the foregoing, the Servicer shall be
reimbursed for Servicing Advances made by the Seller or the Servicer prior to
the Cut-off Date to the extent not previously reimbursed.
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Notwithstanding anything in this Agreement to the contrary,
the Servicer may not make any future advances with respect to a Mortgage Loan
and the Servicer shall not permit any modification with respect to any related
Mortgage Loan that would change the Mortgage Rate, reduce or increase the
principal balance (except for reductions resulting from actual payments of
principal) or change the final maturity date on such related Mortgage Loan
(unless, as provided in Section 3.06, the related Mortgagor is in default with
respect to the related Mortgage Loan or such default is, in the judgment of the
Servicer, reasonably foreseeable) or any modification, waiver or amendment of
any term of any Mortgage Loan that would both (A) effect an exchange or
reissuance of such Mortgage Loan under Section 1001 of the Code (or final,
temporary or proposed Treasury regulations promulgated thereunder) and (B) cause
any Trust REMIC created hereunder to fail to qualify as a REMIC under the Code
or the imposition of any tax on "prohibited transactions" or "contributions
after the startup date" under the REMIC Provisions.
In the event that the Mortgage Loan Documents relating to any
Mortgage Loan contain provisions requiring the related Mortgagor to arbitrate
disputes (at the option of the Trustee, on behalf of the Trust), the Trustee
hereby authorizes the Servicer to waive the Trustee's right or option to
arbitrate disputes and to send written notice of such waiver to the Mortgagor,
although the Mortgagor may still require arbitration at its option.
SECTION 3.02. SUB-SERVICING AGREEMENTS BETWEEN THE SERVICER
AND SUB-SERVICERS.
The Servicer may arrange for the subservicing of any Mortgage
Loan by a Sub- Servicer pursuant to a Sub-Servicing Agreement; provided that
such sub-servicing arrangement and the terms of the related Sub-Servicing
Agreement must provide for the servicing of such Mortgage Loans in a manner
consistent with the servicing arrangements contemplated hereunder. Each
Sub-Servicer shall be (i) authorized to transact business in the state or states
where the related Mortgaged Properties it is to service are situated, if and to
the extent required by applicable law to enable the Sub-Servicer to perform its
obligations hereunder and under the Sub-Servicing Agreement and (ii) a Xxxxxxx
Mac or Xxxxxx Mae approved mortgage servicer. Notwithstanding the provisions of
any Sub-Servicing Agreement, any of the provisions of this Agreement relating to
agreements or arrangements between the Servicer or a Sub-Servicer or reference
to actions taken through the Servicer or otherwise, the Servicer shall remain
obligated and liable to the Depositor, the Trustee and the Certificateholders
for the servicing and administration of the Mortgage Loans in accordance with
the provisions of this Agreement without diminution of such obligation or
liability by virtue of such Sub-Servicing Agreements or arrangements or by
virtue of indemnification from the Sub-Servicer and to the same extent and under
the same terms and conditions as if the Servicer alone were servicing and
administering the Mortgage Loans. Every Sub-Servicing Agreement entered into by
the Servicer shall contain a provision giving the successor Servicer the option
to terminate such agreement in the event a successor Servicer is appointed. All
actions of each Sub-Servicer performed pursuant to the related Sub-Servicing
Agreement shall be performed as an agent of the Servicer with the same force and
effect as if performed directly by the Servicer.
For purposes of this Agreement, the Servicer shall be deemed
to have received any collections, recoveries or payments with respect to the
Mortgage Loans that are received by
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a Sub-Servicer regardless of whether such payments are remitted by the
Sub-Servicer to the Servicer.
SECTION 3.03. SUCCESSOR SUB-SERVICERS.
Any Sub-Servicing Agreement shall provide that the Servicer
shall be entitled to terminate any Sub-Servicing Agreement and to either itself
directly service the related Mortgage Loans or enter into a Sub-Servicing
Agreement with a successor Sub-Servicer which qualifies under Section 3.02. Any
Sub-Servicing Agreement shall include the provision that such agreement may be
immediately terminated by any successor to the Servicer (which may be the
Trustee or the Master Servicer) without fee, in accordance with the terms of
this Agreement, in the event that the Servicer (or any successor to the
Servicer) shall, for any reason, no longer be the Servicer of the Mortgage Loans
(including termination due to a Servicer Event of Default).
SECTION 3.04. NO CONTRACTUAL RELATIONSHIP BETWEEN
SUB-SERVICER, TRUSTEE OR THE CERTIFICATEHOLDERS.
Any Sub-Servicing Agreement and any other transactions or
services relating to the Mortgage Loans involving a Sub-Servicer shall be deemed
to be between the Sub-Servicer and the Servicer alone and the Master Servicer,
the Trustee and the Certificateholders shall not be deemed parties thereto and
shall have no claims, rights, obligations, duties or liabilities with respect to
any Sub-Servicer except as set forth in Section 3.05.
SECTION 3.05. ASSUMPTION OR TERMINATION OF SUB-SERVICING
AGREEMENT BY SUCCESSOR SERVICER.
In connection with the assumption of the responsibilities,
duties and liabilities and of the authority, power and rights of the Servicer
hereunder by a successor Servicer (which may be the Trustee or the Master
Servicer) pursuant to Section 8.02, it is understood and agreed that the
Servicer's rights and obligations under any Sub-Servicing Agreement then in
force between the Servicer and a Sub-Servicer shall be assumed simultaneously by
such successor Servicer without act or deed on the part of such successor
Servicer; provided, however, that any successor Servicer may terminate the
Sub-Servicer.
The Servicer shall, upon the reasonable request of the Master
Servicer, but at the expense of the Servicer, deliver to the assuming party
documents and records relating to each Sub-Servicing Agreement and an accounting
of amounts collected and held by it and otherwise use its best efforts to effect
the orderly and efficient transfer of the Sub-Servicing Agreements to the
assuming party.
The Servicing Fee payable to any such successor Servicer shall
be payable from payments received on the Mortgage Loans in the amount and in the
manner set forth in this Agreement.
SECTION 3.06. COLLECTION OF CERTAIN MORTGAGE LOAN PAYMENTS.
The Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans, and
shall, to the extent such procedures shall be
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consistent with this Agreement and Accepted Servicing Practices, follow such
collection procedures as it would follow with respect to mortgage loans
comparable to the Mortgage Loans and held for its own account. Consistent with
the foregoing, the Servicer may in its discretion (i) waive any late payment
charge or, if applicable, penalty interest or (ii) extend the due dates for the
Monthly Payments due on a Mortgage Note for a period of not greater than 180
days; provided that any extension pursuant to this clause shall not affect the
amortization schedule of any Mortgage Loan for purposes of any computation
hereunder. Notwithstanding the foregoing, in the event that any Mortgage Loan is
in default or, in the judgment of the Servicer, such default is reasonably
foreseeable, the Servicer, consistent with Accepted Servicing Practices may
waive, modify or vary any term of such Mortgage Loan (including modifications
that change the Mortgage Rate, forgive the payment of principal or interest or
extend the final maturity date of such Mortgage Loan), accept payment from the
related Mortgagor of an amount less than the Scheduled Principal Balance in
final satisfaction of such Mortgage Loan, or consent to the postponement of
strict compliance with any such term or otherwise grant indulgence to any
Mortgagor if in the Servicer's determination such waiver, modification,
postponement or indulgence is not materially adverse to the interests of the
Certificateholders (taking into account any estimated Realized Loss that might
result absent such action).
SECTION 3.07. COLLECTION OF TAXES, ASSESSMENTS AND SIMILAR
ITEMS; SERVICING ACCOUNTS.
To the extent the terms of a Mortgage provide for Escrow
Payments, the Servicer shall establish and maintain one or more accounts (the
"Servicing Accounts"), into which all collections from the related Mortgagors
(or related advances from Sub-Servicers) for the payment of taxes, assessments,
fire, flood, and hazard insurance premiums, and comparable items for the account
of the Mortgagors ("Escrow Payments") shall be deposited and retained. Servicing
Accounts shall be Eligible Accounts. The Servicer shall deposit in the Servicing
Accounts on a daily basis and in no event later than the second Business Day
after receipt, and retain therein, all Escrow Payments collected on account of
the Mortgage Loans, for the purpose of effecting the timely payment of any such
items as required under the terms of this Agreement. Withdrawals of amounts from
a Servicing Account may be made only to (i) effect timely payment of taxes,
assessments, fire, flood, and hazard insurance premiums, and comparable items;
(ii) reimburse itself out of related collections for any Servicing Advances made
prior to the Cut-off Date by the Seller or the Servicer to the extent not
previously reimbursed or following the Cut-off Date by the Servicer pursuant to
Section 3.01 (with respect to taxes and assessments) and Section 3.11 (with
respect to fire, flood and hazard insurance); (iii) refund to Mortgagors any
sums as may be determined to be overages; (iv) pay interest, if required and as
described below, to Mortgagors on balances in the Servicing Account; or (v)
clear and terminate the Servicing Account at the termination of the Servicer's
obligations and responsibilities in respect of the Mortgage Loans under this
Agreement in accordance with Article X. As part of its servicing duties, the
Servicer shall pay to the Mortgagors interest on funds in Servicing Accounts, to
the extent required by law and, to the extent that interest earned on funds in
the Servicing Accounts is insufficient, to pay such interest from its or their
own funds, without any reimbursement therefor. Notwithstanding the foregoing,
the Servicer shall not be obligated to collect Escrow Payments if the related
Mortgage Loan does not require such payments but the Servicer shall nevertheless
be obligated to make Servicing Advances as provided in Section 3.01 and Section
3.11. In the event the Servicer shall deposit in the Servicing Accounts any
amount
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not required to be deposited therein, it may at any time withdraw such amount
from the Servicing Accounts, any provision to the contrary notwithstanding.
To the extent that a Mortgage does not provide for Escrow
Payments, the Servicer (i) shall determine whether any such payments are made by
the Mortgagor in a manner and at a time that is necessary to avoid the loss of
the Mortgaged Property due to a tax sale or the foreclosure as a result of a tax
lien and (ii) shall ensure that all insurance required to be maintained on the
Mortgaged Property pursuant to this Agreement is maintained. If any such payment
has not been made and the Servicer receives notice of a tax lien with respect to
the Mortgage Loan being imposed, the Servicer shall, promptly and to the extent
required to avoid loss of the Mortgaged Property, advance or cause to be
advanced funds necessary to discharge such lien on the Mortgaged Property unless
the Servicer determines the advance to be nonrecoverable. The Servicer assumes
full responsibility for the payment of all such bills and shall effect 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 to effect such payments subject to its determination of recoverability.
SECTION 3.08. COLLECTION ACCOUNT AND DISTRIBUTION ACCOUNT.
(a) On behalf of the Trust Fund, the Servicer shall
establish and maintain one or more "Collection Accounts", held in
trust for the benefit of the Trustee and the Certificateholders. On
behalf of the Trust Fund, the Servicer shall deposit or cause to be
deposited in the Collection Account on a daily basis and in no event
later than two Business Days after receipt, as and when received or as
otherwise required hereunder, the following payments and collections
received or made by it on or subsequent to the Cut-off Date:
(i) all payments on account of principal, including
Principal Prepayments, on the Mortgage Loans;
(ii) all payments on account of interest (net of the related
Servicing Fee and any Prepayment Interest Excess) on each Mortgage
Loan;
(iii) all Insurance Proceeds and Liquidation Proceeds (other
than proceeds collected in respect of any particular REO Property) and
all Subsequent Recoveries;
(iv) any amounts required to be deposited by the Servicer
pursuant to Section 3.10 in connection with any losses realized on
Permitted Investments with respect to funds held in the Collection
Account;
(v) any amounts required to be deposited by the Servicer
pursuant to the second paragraph of Section 3.11(a) in respect of any
blanket policy deductibles;
(vi) any Purchase Price or Substitution Shortfall Amount
delivered to the Servicer and all proceeds (net of amounts payable or
reimbursable to the Servicer, the Master Servicer, the Trustee, the
Custodian or the Securities Administrator) of Mortgage Loans purchased
in accordance with Section 2.03, Section 3.13 or Section 10.01; and
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(vii) any Prepayment Charges collected by the Servicer in
connection with the Principal Prepayment of any of the Mortgage Loans
or amounts required to be deposited by the Servicer in connection with
a breach of its obligations under Section 2.05.
The foregoing requirements for deposit in the Collection
Account shall be exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, payments in the nature of late payment
charges, assumption fees or other similar fees need not be deposited by the
Servicer in the Collection Account and may be retained by the Servicer as
additional compensation. In the event the Servicer shall deposit in the
Collection Account any amount not required to be deposited therein, it may at
any time withdraw such amount from the Collection Account, any provision herein
to the contrary notwithstanding.
(b) On behalf of the Trust Fund, the Securities
Administrator shall establish and maintain one or more accounts (such
account or accounts, the "Distribution Account"), held in trust for
the benefit of the Trustee, the Trust Fund and the Certificateholders.
On behalf of the Trust Fund, the Servicer shall deliver to the
Securities Administrator in immediately available funds for deposit in
the Distribution Account on or before 12:00 noon New York time on the
Servicer Remittance Date, that portion of the Available Distribution
Amount (calculated without regard to the references in clause (2) of
the definition thereof to amounts that may be withdrawn from the
Distribution Account) for the related Distribution Date then on
deposit in the Collection Account and the amount of all Prepayment
Charges collected by the Servicer in connection with the Principal
Prepayment of any of the Mortgage Loans then on deposit in the
Collection Account and the amount of any funds reimbursable to an
Advance Financing Person pursuant to Section 3.25. If the balance on
deposit in a Collection Account exceeds $100,000 as of the
commencement of business on any Business Day and the Collection
Account constitutes an Eligible Account solely pursuant to clause (ii)
of the definition of "Eligible Account," the Servicer shall, on or
before 5:00 p.m. New York time on such Business Day, withdraw from the
Collection Account any and all amounts payable or reimbursable to the
Depositor, the Servicer, the Trustee, the Master Servicer, the
Securities Administrator or the Seller pursuant to Section 3.09(a) and
shall pay such amounts to the Persons entitled thereto.
With respect to any remittance received by the Securities
Administrator after the Servicer Remittance Date on which such payment was due,
the Securities Administrator shall send written notice thereof to the Servicer.
The Servicer shall pay to the Securities Administrator interest on any such late
payment by the Servicer at an annual rate equal to Prime Rate (as defined in THE
WALL STREET JOURNAL) plus one percentage point, but in no event greater than the
maximum amount permitted by applicable law. Such interest shall be paid by the
Servicer to the Securities Administrator on the date such late payment is made
and shall cover the period commencing with the Servicer Remittance Date and
ending with the Business Day on which such payment is made, both inclusive. The
payment by the Servicer of any such interest, or the failure of the Securities
Administrator to notify the Servicer of such interest, shall not be deemed an
extension of time for payment or a waiver of any Event of Default by the
Servicer.
(c) Funds in the Collection Account and funds in the
Distribution Account may be invested in Permitted Investments in
accordance with the provisions set forth in
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Section 3.10. The Servicer shall give notice to the Trustee, the
Securities Administrator and the Master Servicer of the location of
the Collection Account maintained by it when established and prior to
any change thereof. The Securities Administrator shall give notice to
the Servicer and the Depositor of the location of the Distribution
Account when established and prior to any change thereof.
(d) Funds held in the Collection Account at any time may be
delivered by the Servicer in immediately available funds to the
Securities Administrator for deposit in the Distribution Account. In
the event the Servicer shall deliver to the Securities Administrator
for deposit in the Distribution Account any amount not required to be
deposited therein, it may at any time request that the Securities
Administrator withdraw such amount from the Distribution Account and
remit to it any such amount, any provision herein to the contrary
notwithstanding. In no event shall the Securities Administrator incur
liability as a result of withdrawals from the Distribution Account at
the direction of the Servicer in accordance with the immediately
preceding sentence. In addition, the Servicer shall deliver to the
Securities Administrator no later than the Servicer Remittance Date
the amounts set forth in clauses (i) through (iv) below:
(i) any P&I Advances, as required pursuant to Section 5.03;
(ii) any amounts required to be deposited pursuant to
Section 3.21(d) or 3.21(f) in connection with any REO Property;
(iii) any amounts to be paid in connection with a purchase
of Mortgage Loans and REO Properties pursuant to Section 10.01; and
(iv) any amounts required to be deposited pursuant to
Section 3.22 in connection with any Prepayment Interest Shortfalls.
SECTION 3.09. WITHDRAWALS FROM THE COLLECTION ACCOUNT AND
DISTRIBUTION ACCOUNT.
(a) The Servicer shall, from time to time, make withdrawals
from Collection Account for any of the following purposes or as
described in Section 5.03:
(i) to remit to the Securities Administrator for deposit in
the Distribution Account the amounts required to be so remitted
pursuant to Section 3.08(b) or permitted to be so remitted pursuant
to the first sentence of Section 3.08(d);
(ii) subject to Section 3.13(d), to reimburse itself
(including any successor Servicer) for P&I Advances made by it, but
only to the extent of amounts received which represent Late
Collections (net of the related Servicing Fees) of Monthly Payments
on related Mortgage Loans with respect to which such P&I Advances
were made in accordance with the provisions of Section 5.03;
(iii) subject to Section 3.13(d), to pay itself any unpaid
Servicing Fees and reimburse itself any unreimbursed Servicing
Advances made by the Seller or the Servicer prior to or following
the Cut-off Date with respect to each Mortgage Loan, but
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only to the extent of any Liquidation Proceeds and Insurance
Proceeds received with respect to such Mortgage Loan;
(iv) to pay to itself as servicing compensation (in addition
to the Servicing Fee) on the Servicer Remittance Date any interest
or investment income earned on funds deposited in the Collection
Account;
(v) to pay itself or the Seller, as the case may be, with
respect to each Mortgage Loan that has previously been purchased or
replaced pursuant to Section 2.03 or Section 3.13(c) all amounts
received thereon not included in the Purchase Price or the
Substitution Shortfall Amount;
(vi) to reimburse itself (including any successor Servicer)
for
(A) any P&I Advance or Servicing Advance previously made
by the Seller or the Servicer prior to or following the
Cut-off Date which it has determined to be a
Nonrecoverable P&I Advance or a Nonrecoverable Servicing
Advance in accordance with the provisions of Section
5.03; or
(B) any unpaid Servicing Fees to the extent not
recoverable from Liquidation Proceeds, Insurance
Proceeds or other amounts received with respect to the
related Mortgage Loan under Section 3.06(a)(iii);
(vii) to reimburse itself or the Depositor for expenses
incurred by or reimbursable to it or the Depositor, as the case may
be, pursuant to Section 3.01 or Section 7.03;
(viii) to reimburse itself or the Trustee, as the case may
be, for expenses reasonably incurred in respect of the breach or
defect giving rise to the purchase obligation under Section 2.03 of
this Agreement that were included in the Purchase Price of the
related Mortgage Loan, including any expenses arising out of the
enforcement of the purchase obligation;
(ix) to pay, or to reimburse itself for advances in respect
of, expenses incurred in connection with any Mortgage Loan pursuant
to Section 3.13(b);
(x) to pay to itself any Prepayment Interest Excess on the
Mortgage Loans to the extent not retained pursuant to Section
3.08(a)(ii)); and
(xi) to clear and terminate the Collection Account pursuant
to Section 10.01.
The Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Collection Account, to the extent held by or on behalf of
it, pursuant to subclauses (ii), (iii), (v), (vi), (vii), (viii), (ix) and (x)
above.
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(b) The Securities Administrator shall, from time to time,
make withdrawals from the Distribution Account, for any of the
following purposes, without priority:
(i) to make distributions to Certificateholders in
accordance with Section 5.01;
(ii) to pay to itself, the Custodian and the Master Servicer
amounts to which it is entitled pursuant to Section 9.05 or any
other provision of this Agreement and any Extraordinary Trust Fund
Expenses;
(iii) to reimburse itself or the Master Servicer pursuant to
Section 8.02;
(iv) to pay to an Advance Financing Person reimbursements
for P&I Advances and/or Servicing Advances pursuant to Section 3.25;
(v) to pay any amounts in respect of taxes pursuant to
Section 11.01(g)(v);
(vi) to pay the Master Servicing Fee to the Master Servicer;
(vii) to pay the Credit Risk Management Fee to the Credit
Risk Manager; and
(viii) to clear and terminate the Distribution Account
pursuant to Section 10.01.
SECTION 3.10. INVESTMENT OF FUNDS IN THE INVESTMENT ACCOUNTS.
(a) The Servicer may direct, by means of written directions
(which may be standing directions), any depository institution
maintaining the Collection Account to invest the funds in such
Collection Account (for purposes of this Section 3.10, an "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 Securities Administrator is the
obligor thereon, and (ii) no later than the date on which such funds
are required to be withdrawn from such account pursuant to this
Agreement, if the Securities Administrator is the obligor on such
Permitted Investment. Amounts in the Distribution Account may be
invested in Permitted Investments as directed in writing by the Master
Servicer 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 Securities Administrator is the obligor
thereon, and (ii) no later than the date on which such funds are
required to be withdrawn from such account pursuant to this Agreement,
if the Securities Administrator is the obligor thereon. All such
Permitted Investments shall be held to maturity, unless payable on
demand. Any investment of funds shall be made in the name of the
Trustee (in its capacity as such) or in the name of a nominee of the
Trustee. The Securities Administrator shall be entitled to sole
possession over each such investment in the Distribution Account and,
subject to subsection (b) below, the income thereon, and any
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certificate or other instrument evidencing any such investment shall be
delivered directly to the Securities Administrator 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 the Collection Account are at any time invested in a
Permitted Investment payable on demand, the party with investment
discretion over such Investment Account shall:
(x) consistent with any notice required to be given
thereunder, demand that payment thereon be made on the last
day such Permitted Investment may otherwise mature hereunder
in an amount equal to the lesser of (1) all amounts then
payable thereunder and (2) the amount required to be withdrawn
on such date; and
(y) demand payment of all amounts due thereunder
promptly upon receipt by such party of written notice from the
Servicer that such Permitted Investment would not constitute a
Permitted Investment in respect of funds thereafter on deposit
in the Investment Account.
(b) All income and gain realized from the investment of
funds deposited in the Collection Account, shall be for the benefit of
the Servicer and shall be subject to its withdrawal in accordance with
Section 3.09. 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 earnings and gain realized from the investment of funds
deposited in the Distribution Account shall be for the benefit of the
Master Servicer. The Master Servicer shall remit from its own funds for
deposit into 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 9.01 and Section 9.02(a)(v), shall, at the
written direction of the Servicer, take such action as may be
appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate proceedings.
(d) The Trustee, the Master Servicer or their respective
Affiliates are permitted to receive additional compensation that could
be deemed to be in the Trustee's or the Master Servicer's economic
self-interest for (i) serving as investment adviser, administrator,
shareholder servicing agent, custodian or sub-custodian with respect to
certain of the Permitted Investments, (ii) using Affiliates to effect
transactions in certain Permitted Investments and (iii) effecting
transactions in certain Permitted Investments. Such compensation shall
not be considered an amount that is reimbursable or payable to the
Trustee or the Master Servicer pursuant to Section 3.09 or 3.10 or
otherwise payable in respect of Extraordinary Trust Fund Expenses. Such
additional compensation shall not be an expense of the Trust Fund.
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SECTION 3.11. MAINTENANCE OF HAZARD INSURANCE, ERRORS AND
OMISSIONS AND FIDELITY COVERAGE AND PRIMARY MORTGAGE INSURANCE.
(a) The terms of each Mortgage Note require the related
Mortgagor to maintain fire, flood and hazard insurance policies. To the
extent such policies are not maintained, the Servicer shall cause to be
maintained for each Mortgaged Property 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 the current principal balance of such Mortgage Loan and the amount
necessary to compensate fully for any damage or loss to the
improvements which are a part of such property on a replacement cost
basis, in each case in an amount not less than such amount as is
necessary to avoid the application of any coinsurance clause contained
in the related hazard insurance policy. The Servicer shall also cause
to be maintained fire and hazard insurance on each REO Property 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 maximum insurable value of the improvements which are a part
of such property and (ii) the outstanding principal balance of the
related Mortgage Loan at the time it became an REO Property. The
Servicer will comply in the performance of this Agreement with all
reasonable rules and requirements of each insurer under any such hazard
policies. Any amounts to be collected by the Servicer under any such
policies (other than amounts to be applied to the restoration or repair
of the property subject to the related Mortgage or amounts to be
released to the Mortgagor in accordance with Accepted Servicing
Practices, subject to the terms and conditions of the related Mortgage
and Mortgage Note) shall be deposited in the Collection Account,
subject to withdrawal pursuant to Section 3.09, if received in respect
of a Mortgage Loan, or in the REO Account, subject to withdrawal
pursuant to Section 3.21, if received in respect of an REO Property.
Any cost incurred by the Servicer in maintaining any such insurance
shall not, for the purpose of calculating distributions to
Certificateholders, be added to the unpaid principal balance of the
related Mortgage Loan, notwithstanding that the terms of such Mortgage
Loan so permit. It is understood and agreed that no earthquake or other
additional insurance is to be required of any Mortgagor other than
pursuant to such applicable laws and regulations as shall at any time
be in force and as shall require such additional insurance. If the
Mortgaged Property or REO Property is at any time in an area identified
in the Federal Register by the Federal Emergency Management Agency as
having special flood hazards, the Servicer will cause to be maintained
a flood insurance policy in respect thereof. Such flood insurance shall
be in an amount equal to the lesser of (i) the unpaid principal balance
of the related Mortgage Loan and (ii) the maximum amount of such
insurance available for the related Mortgaged Property under the
national flood insurance program (assuming that the area in which such
Mortgaged Property is located is participating in such program).
In the event that the Servicer shall obtain and maintain a
blanket policy with an insurer having a General Policy Rating of B:VI or better
in Best's Key Rating Guide or otherwise acceptable to Xxxxxx Xxx or Xxxxxxx Mac
insuring against hazard losses on all of the Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations to cause fire and
hazard insurance to be maintained on the Mortgaged Properties, it being
understood and agreed that such policy may contain a deductible clause, in which
case the Servicer shall, in the event that there shall not have been maintained
on the related Mortgaged Property or REO Property a policy complying with the
first two sentences of this Section 3.11, and there shall
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have been one or more losses which would have been covered by such policy,
deposit to the Collection Account from its own funds the amount not otherwise
payable under the blanket policy because of such deductible clause. In
connection with its activities as administrator and servicer of the Mortgage
Loans, the Servicer agrees to prepare and present, on behalf of itself, the
Trustee, the Trust Fund and the Certificateholders, claims under any such
blanket policy in a timely fashion in accordance with the terms of such policy.
(b) The Servicer shall keep in force during the term of this
Agreement a policy or policies of insurance covering errors and
omissions for failure in the performance of its respective obligations
under this Agreement, which policy or policies shall be in such form
and amount that would meet the requirements of Xxxxxx Mae or Xxxxxxx
Mac if it were the purchaser of the Mortgage Loans, unless the
Servicer, has obtained a waiver of such requirements from Xxxxxx Mae or
Xxxxxxx Mac. The Servicer shall also maintain a fidelity bond in the
form and amount that would meet the requirements of Xxxxxx Mae or
Xxxxxxx Mac, unless the Servicer has obtained a waiver of such
requirements from Xxxxxx Mae or Xxxxxxx Mac. The Servicer shall be
deemed to have complied with this provision if an Affiliate of the
Servicer, has such errors and omissions and fidelity bond coverage and,
by the terms of such insurance policy or fidelity bond, the coverage
afforded thereunder extends to the Servicer. Any such errors and
omissions policy and fidelity bond shall by its terms not be cancelable
without thirty days' prior written notice to the Trustee.
(c) The Servicer shall not take any action that would result
in noncoverage under any applicable primary mortgage insurance policy
of any loss which, but for the actions of the Servicer would have been
covered thereunder. The Servicer shall use its best efforts to keep in
force and effect any applicable primary mortgage insurance policy and,
to the extent that the related Mortgage Loan requires the Mortgagor to
maintain such insurance, any other primary mortgage insurance
applicable to any Mortgage Loan. Except as required by applicable law
or the related Mortgage Loan Documents, the Servicer shall not cancel
or refuse to renew any such primary mortgage insurance policy that is
in effect at the date of the initial issuance of the related Mortgage
Note and is required to be kept in force hereunder.
The Servicer agrees to present on behalf of the Trustee and
the Certificateholders claims to the applicable insurer under any primary
mortgage insurance policies and, in this regard, to take such reasonable action
as shall be necessary to permit recovery under any primary mortgage insurance
policies respecting defaulted Mortgage Loans. Pursuant to Section 3.08, any
amounts collected by the Servicer under any primary mortgage insurance policies
shall be deposited in the Collection Account, subject to withdrawal pursuant to
Section 3.09. Notwithstanding any provision to the contrary, the Servicer shall
not have any responsibility with respect to a primary mortgage insurance policy
unless the Servicer has been made aware of such policy, as reflected on the
Mortgage Loan Schedule or otherwise and have been provided with adequate
information to administer such policy.
SECTION 3.12. ENFORCEMENT OF DUE-ON-SALE CLAUSES; ASSUMPTION
AGREEMENTS.
The Servicer shall, to the extent it has knowledge of any
conveyance of any Mortgaged Property by any Mortgagor (whether by absolute
conveyance or by contract of sale,
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and whether or not the Mortgagor remains or is to remain liable under the
Mortgage Note and/or the Mortgage), exercise its rights to accelerate the
maturity of such Mortgage Loan under the "due-on-sale" clause, if any,
applicable thereto; provided, however, that the Servicer shall not exercise any
such rights if prohibited by law from doing so. If the Servicer reasonably
believes it is unable under applicable law to enforce such "due-on-sale" clause,
or if any of the other conditions set forth in the proviso to the preceding
sentence apply, the Servicer shall enter into an assumption and modification
agreement from or with the person to whom such property has been conveyed or is
proposed to be conveyed, pursuant to which such person becomes liable under the
Mortgage Note and, to the extent permitted by applicable state law, the
Mortgagor remains liable thereon. The Servicer is also authorized to enter into
a substitution of liability agreement with such person, pursuant to which the
original Mortgagor is released from liability and such person is substituted as
the Mortgagor and becomes liable under the Mortgage Note, provided that no such
substitution shall be effective unless such person satisfies the then current
underwriting criteria of the Servicer for mortgage loans similar to the Mortgage
Loans. In connection with any assumption or substitution, the Servicer shall
apply such underwriting standards and follow such practices and procedures as
shall be normal and usual in its general mortgage servicing activities and as it
applies to other mortgage loans owned solely by it. The Servicer shall not take
or enter into any assumption and modification agreement, however, unless (to the
extent practicable in the circumstances) it shall have received confirmation, in
writing, of the continued effectiveness of any applicable hazard insurance
policy. Any fee collected by the Servicer in respect of an assumption or
substitution of liability agreement will be retained by the Servicer as
additional servicing compensation. In connection with any such assumption, no
material term of the Mortgage Note (including but not limited to the related
Mortgage Rate and the amount of the Monthly Payment) may be amended or modified,
except as otherwise required pursuant to the terms thereof. The Servicer shall
notify the Trustee (or the Custodian) that any such substitution or assumption
agreement has been completed by forwarding to the Trustee the executed original
of such substitution or assumption agreement, which document shall be added to
the related Mortgage File and shall, for all purposes, be considered a part of
such Mortgage File to the same extent as all other documents and instruments
constituting a part thereof.
Notwithstanding the foregoing paragraph or any other provision
of this Agreement, the Servicer shall not be deemed to be in default, breach or
any other violation of its obligations hereunder by reason of any assumption of
a Mortgage Loan by operation of law or by the terms of the Mortgage Note or any
assumption which the Servicer may be restricted by law from preventing, for any
reason whatever. For purposes of this Section 3.12, the term "assumption" is
deemed to also include a sale (of the Mortgaged Property) subject to the
Mortgage that is not accompanied by an assumption or substitution of liability
agreement.
SECTION 3.13. REALIZATION UPON DEFAULTED MORTGAGE LOANS.
(a) The Servicer shall use its best efforts, consistent with
Accepted Servicing Practices, to foreclose upon or otherwise comparably convert
the ownership of properties securing such of the Mortgage Loans as come into and
continue in default and as to which no satisfactory arrangements can be made for
collection of delinquent payments pursuant to Section 3.06. The Servicer shall
be responsible for all costs and expenses incurred by it in any such
proceedings; provided, however, that such costs and expenses will be recoverable
as Servicing Advances by the Servicer as contemplated in Sections 3.09 and 3.21.
The foregoing is
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subject to the provision that, in any case in which a Mortgaged Property shall
have suffered damage from an Uninsured Cause, the Servicer shall not be required
to expend its own funds toward the restoration of such property unless it shall
determine in its discretion that such restoration will increase the proceeds of
liquidation of the related Mortgage Loan after reimbursement to itself for such
expenses.
(b) Notwithstanding the foregoing provisions of this Section
3.13 or any other provision of this Agreement, with respect to any Mortgage Loan
as to which the Servicer has received actual notice of, or has actual knowledge
of, the presence of any toxic or hazardous substance on the related Mortgaged
Property, the Servicer shall not, on behalf of the Trust Fund, 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, the Trustee or the Certificateholders would be considered to
hold title to, to be a "mortgagee-in-possession" of, or to be an "owner" or
"operator" of such Mortgaged Property within the meaning of the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended from
time to time, or any comparable law, unless the Servicer has also previously
determined, based on its reasonable judgment and a prudent report prepared by an
Independent Person who regularly conducts environmental audits using customary
industry standards, that:
(1) such Mortgaged Property is in compliance
with applicable environmental laws or, if not, that it would
be in the best economic interest of the Trust Fund to take
such actions as are necessary to bring the Mortgaged Property
into compliance therewith; and
(2) there are no circumstances present at
such Mortgaged Property relating to the use, management or
disposal of any hazardous substances, hazardous materials,
hazardous wastes or petroleum-based materials for which
investigation, testing, monitoring, containment, clean-up or
remediation could be required under any federal, state or
local law or regulation, or that if any such materials are
present for which such action could be required, that it would
be in the best economic interest of the Trust Fund to take
such actions with respect to the affected Mortgaged Property.
The cost of the environmental audit report contemplated by
this Section 3.13 shall be advanced by the Servicer, subject to the Servicer's
right to be reimbursed therefor from the Collection Account as provided in
Section 3.09(a)(ix), such right of reimbursement being prior to the rights of
Certificateholders to receive any amount in the Collection Account received in
respect of the affected Mortgage Loan or other Mortgage Loans.
If the Servicer determines, as described above, that it is in
the best economic interest of the Trust Fund to take such actions as are
necessary to bring any such Mortgaged Property into compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials, hazardous
wastes, or petroleum-based materials affecting any such Mortgaged Property, then
the Servicer shall take such action as it deems to be in the best economic
interest of the Trust Fund.
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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 Sections 3.09(a)(iii) or
3.09(a)(ix), such right of reimbursement being prior to the rights of
Certificateholders to receive any amount in the Collection Account received in
respect of the affected Mortgage Loan or other Mortgage Loans.
(c) The Servicer shall have the right to purchase from REMIC I
any defaulted Mortgage Loan that is 90 days or more delinquent, which the
Servicer determines in good faith will otherwise become subject to foreclosure
proceedings (evidence of such determination to be delivered in writing to the
Trustee, in form and substance satisfactory to the Servicer and the Trustee,
prior to purchase), at a price equal to the Purchase Price. The Purchase Price
for any Mortgage Loan purchased hereunder shall be deposited in the Collection
Account, and the Trustee, upon receipt of written certification from the
Servicer of such deposit, shall release or cause to be released to the Servicer
the related Mortgage File and the Trustee shall execute and deliver such
instruments of transfer or assignment, in each case without recourse,
representation or warranty, as the Servicer shall furnish and as shall be
necessary to vest in the Servicer title to any Mortgage Loan released pursuant
hereto.
(d) Proceeds received in connection with any Final Recovery
Determination, as well as any recovery resulting from a partial collection of
Insurance Proceeds or Liquidation Proceeds, in respect of any Mortgage Loan,
will be applied in the following order of priority: first, to reimburse the
Servicer for any related unreimbursed Servicing Advances and P&I Advances,
pursuant to Section 3.09(a)(ii) or (a)(iii); second, to accrued and unpaid
interest on the Mortgage Loan, to the date of the Final Recovery Determination,
or to the Due Date prior to the Distribution Date on which such amounts are to
be distributed if not in connection with a Final Recovery Determination; and
third, as a recovery of principal of the Mortgage Loan. If the amount of the
recovery so allocated to interest is less than the full amount of accrued and
unpaid interest due on such Mortgage Loan, the amount of such recovery will be
allocated by the Servicer as follows: first, to unpaid Servicing Fees; and
second, to the balance of the interest then due and owing. The portion of the
recovery so allocated to unpaid Servicing Fees shall be reimbursed to the
Servicer pursuant to Section 3.09(a)(iii). The portion of the recovery allocated
to interest (net of unpaid Servicing Fees) and the portion of the recovery
allocated to principal of the Mortgage Loan shall be applied as follows: first,
to reimburse the Servicer for any related unreimbursed Servicing or P&I Advances
in accordance with Section 3.09(a)(ii) and any other amounts reimbursable to the
Servicer pursuant to Section 3.09, and second, as part of the amounts to be
transferred to the Distribution Account in accordance with Section 3.08(b).
(e) Notwithstanding the foregoing provisions of this Section
3.13 or any other provision of this Agreement, the Servicer shall not acquire
title to a Mortgaged Property related to a Foreclosure Restricted Mortgage Loan
if acquiring title to such Mortgaged Property would cause the adjusted basis
(for federal income tax purposes) of the Mortgaged Properties in respect of
Foreclosure Restricted Mortgage Loans that are currently owned by REMIC I after
foreclosure (along with any other assets owned by REMIC I other than "qualified
mortgages" and "permitted investments" within the meaning of Section 860G of the
Internal Revenue Code) to exceed 0.75% of the adjusted basis of the assets in
REMIC I. Instead, the Servicer shall dispose of the Foreclosure Restricted
Mortgage Loan for cash in a
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foreclosure sale. In addition, if the Servicer determines that, following a
distribution on any Distribution Date, the adjusted basis of the REO Properties
relating to such Foreclosure Resitricted Mortgage Loans (along with any other
assets owned by REMIC I other than "qualified mortgages" and "permitted
investments" within the meaning of Section 860G of the Internal Revenue Code)
exceeds 1.0% of the adjusted basis of the assets of REMIC I immediately after
the Distribution Date, then prior to the next Distribution Date, the Servicer
shall dispose of enough of such REO Properties for cash, so that the adjusted
basis of such REO Properties relating to Foreclosure Restricted Mortgage Loans
(along with any other assets owned by REMIC I other than "qualified mortgages"
and "permitted investments" within the meaning of Section 860G of the Internal
Revenue Code) will be less than 1.0% of the adjusted basis of the assets of
REMIC I. In either event, the Servicer is permitted to acquire (for its own
account and not on behalf of the Trust Fund) the REO Property at the foreclosure
sale for an amount not less than the greater of: (i) the highest amount bid by
any other person at the foreclosure sale, or (ii) the estimated fair market
value of the REO Property, as determined by the Servicer in good faith. These
restrictions will be lifted with respect to a Foreclosure Restricted Mortgage
Loan if such Mortgage Loan becomes current for three consecutive Monthly
Payments.
SECTION 3.14. TRUSTEE TO COOPERATE; RELEASE OF MORTGAGE FILES.
(a) Upon becoming aware of the payment in full of any Mortgage
Loan, or the receipt by the Servicer of a notification that payment in full has
been escrowed in a manner customary for such purposes for payment to
Certificateholders on the next Distribution Date, the Servicer will promptly
furnish to the Custodian, on behalf of the Trustee, two copies of a request for
release substantially in the form attached to the Custodial Agreement signed by
a Servicing Officer or in a mutually agreeable electronic format which will, in
lieu of a signature on its face, originate from a Servicing Officer (which
certification shall include a statement to the effect that all amounts received
in connection with such payment that are required to be deposited in the
Collection Account have been or will be so deposited) and shall request that the
Custodian, on behalf of the Trustee, deliver to the Servicer the related
Mortgage File. Upon receipt of such certification and request, the Custodian, on
behalf of the Trustee, shall within five (5) Business Days release the related
Mortgage File to the Servicer and the Trustee and Custodian shall have no
further responsibility with regard to such Mortgage File. Upon any such payment
in full, the Servicer is authorized, to give, as agent for the Trustee, as the
mortgagee under the Mortgage that secured the Mortgage Loan, an instrument of
satisfaction (or assignment of mortgage without recourse) regarding the
Mortgaged Property subject to the Mortgage, which instrument of satisfaction or
assignment, as the case may be, shall be delivered to the Person or Persons
entitled thereto against receipt therefor of such payment, it being understood
and agreed that no expenses incurred in connection with such instrument of
satisfaction or assignment, as the case may be, shall be chargeable to the
Collection Account.
(b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, the Trustee shall execute such documents as
shall be prepared and furnished to the Trustee by the Servicer (in form
reasonably acceptable to the Trustee) and as are necessary to the prosecution of
any such proceedings. The Custodian, on behalf of the Trustee, shall, upon the
request of the Servicer, and delivery to the Custodian, on behalf of the
Trustee, of two copies of a request for release signed by a Servicing Officer
substantially in
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the form attached to the Custodial Agreement (or in a mutually agreeable
electronic format which will, in lieu of a signature on its face, originate from
a Servicing Officer), release within five (5) Business Days the related Mortgage
File held in its possession or control to the Servicer. Such trust receipt shall
obligate the Servicer to return the Mortgage File to the Custodian on behalf of
the Trustee, when the need therefor by the Servicer no longer exists unless the
Mortgage Loan shall be liquidated, in which case, upon receipt of a certificate
of a Servicing Officer similar to that hereinabove specified, the Mortgage File
shall be released by the Custodian, on behalf of the Trustee, to the Servicer.
Notwithstanding the foregoing, in connection with a Principal
Prepayment in full of any Mortgage Loan, the Master Servicer may request release
of the related Mortgage File from the Custodian, in accordance with the
provisions of the Custodial Agreement, in the event the Servicer fails to do so.
Upon written certification of a Servicing Officer, the Trustee
shall execute and deliver to the Servicer, any court pleadings, requests for
trustee's sale or other documents prepared and delivered to the Trustee and
reasonably acceptable to it and necessary to the foreclosure or trustee's sale
in respect of a Mortgaged Property or to any legal action brought to obtain
judgment against any Mortgagor on the Mortgage Note or Mortgage or to obtain a
deficiency judgment, or to enforce any other remedies or rights provided by the
Mortgage Note or Mortgage or otherwise available at law or in equity. Each such
certification shall include a request that such pleadings or documents be
executed by the Trustee and a statement as to the reason such documents or
pleadings are required and that the execution and delivery thereof by the
Trustee will not invalidate or otherwise affect the lien of the Mortgage, except
for the termination of such a lien upon completion of the foreclosure or
trustee's sale. So long as no Servicer Event of Default shall have occurred and
be continuing, the Servicer shall have the right to execute any and all such
court pleadings, requests and other documents as attorney-in-fact for, and on
behalf of the Trustee.
SECTION 3.15. SERVICING COMPENSATION.
As compensation for the activities of the Servicer, hereunder,
the Servicer shall be entitled to the Servicing Fee with respect to each
Mortgage Loan payable solely from payments of interest in respect of such
Mortgage Loan, subject to Section 3.22. In addition, the Servicer shall be
entitled to recover unpaid Servicing Fees out of Insurance Proceeds or
Liquidation Proceeds to the extent permitted by Section 3.09(a)(iii) and out of
amounts derived from the operation and sale of an REO Property to the extent
permitted by Section 3.21. The right to the Servicing Fee may not be transferred
in whole or in part except in connection with the transfer of all of the
Servicer's responsibilities and obligations under this Agreement to the extent
permitted herein.
Additional servicing compensation in the form of assumption
fees, late payment charges and other miscellaneous fees (other than Prepayment
Charges) shall be retained by the Servicer only to the extent such fees or
charges are received by the Servicer. The Servicer shall also be entitled
pursuant to Section 3.09(a)(iv) to withdraw from the Collection Account and
pursuant to Section 3.21(b) to withdraw from any REO Account, as additional
servicing compensation, interest or other income earned on deposits therein,
subject to Section 3.10. In
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addition, the Servicer shall be entitled to retain or withdraw from the
Collection Account, pursuant to Section 3.09(a)(x), any Prepayment Interest
Excess as additional servicing compensation. The Servicer shall be required to
pay all expenses incurred by it in connection with its servicing activities
hereunder and shall not be entitled to reimbursement therefor except as
specifically provided herein.
SECTION 3.16. COLLECTION ACCOUNT STATEMENTS.
Not later than fifteen days after each Distribution Date, the
Servicer shall forward to the Master Servicer, the Securities Administrator, the
Trustee and the Depositor a statement prepared by the institution at which the
Collection Account is maintained setting forth the status of the Collection
Account as of the close of business on such Distribution Date and showing, for
the period covered by such statement, the aggregate amount of deposits into and
withdrawals from the Collection Account of each category of deposit specified in
Section 3.08(a) and each category of withdrawal specified in Section 3.09.
Copies of such statement shall be provided by the Securities Administrator to
any Certificateholder and to any Person identified to the Securities
Administrator as a prospective transferee of a Certificate, upon request at the
expense of the requesting party, provided such statement is delivered by the
Servicer to the Securities Administrator.
SECTION 3.17. STATEMENT AS TO COMPLIANCE.
Not later than March 15th of each calendar year commencing in
2005, the Servicer shall deliver to the Trustee, the Master Servicer and the
Depositor an Officers' Certificate in a form acceptable for filing with the
Securities and Exchange Commission as an exhibit to Form 8-K or other required
form (upon which the Master Servicer can conclusively rely in connection with
its obligations under Section 5.06) stating, as to each signatory thereof, that
(i) a review of the activities of the Servicer during the preceding year and of
performance under this Agreement has been made under such officers' supervision
and (ii) to the best of such officer's knowledge, based on such review, the
Servicer has fulfilled all of its obligations under this Agreement throughout
such year, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature
and status thereof. Copies of any such statement shall be provided by the
Trustee to any Certificateholder, upon request at the expense of the requesting
party, provided such statement is delivered by the Servicer to the Trustee.
SECTION 3.18. INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING
REPORT.
Not later than March 15th of each calendar year commencing in
2005, the Servicer, at its expense, shall cause a nationally recognized firm of
independent certified public accountants to furnish to the Servicer a report in
a form acceptable for filing with the Securities and Exchange Commission as an
exhibit to Form 8-K or other required form stating that (i) it has obtained a
letter of representation regarding certain matters from the management of the
Servicer which includes an assertion that the Servicer has complied with certain
minimum residential mortgage loan servicing standards, identified in the Uniform
Single Attestation Program for Mortgage Bankers established by the Mortgage
Bankers Association of America, with respect to the servicing of residential
mortgage loans during the most recently completed fiscal year and (ii)
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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 and such firm has determined that the
Servicer has complied 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 Master Servicer,
the Trustee and each Rating Agency. Copies of such statement shall be provided
by the Trustee to any Certificateholder upon request at the Servicer's expense,
provided that such statement is delivered by the Servicer to the Trustee.
SECTION 3.19. ANNUAL CERTIFICATION.
(a) The Servicer shall deliver to the Master Servicer, on or
before March 15th of each calendar year beginning in 2005 (or, if any such day
is not a Business Day, the immediately preceding Business Day) or such
alternative date reasonably specified by the Master Servicer which shall occur
not later than 15 days prior to the date any Form 10-K is required to be filed
with the Commission in connection with the transactions contemplated by this
Agreement, a certification in the form attached hereto as Exhibit C. Such
certification shall be signed by the senior officer in charge of servicing of
the Servicer. In addition, the Servicer shall provide such other information
with respect to the Mortgage Loans and the servicing and administration thereof
within the control of the Servicer which shall be required to enable the Master
Servicer to comply with the reporting requirements of the Securities and
Exchange Act of 1934, as amended, pursuant to Section 5.06 hereof.
(b) The Servicer shall indemnify and hold harmless the Master
Servicer, the Securities Administrator, the Trustee, the Depositor and their
respective officers, directors, agents and affiliates from and against any
losses, damages, penalties, fines, forfeitures, reasonable legal fees and
related costs, judgments and other costs and expenses arising out of or based
upon a breach by the Servicer or any of its officers, directors, agents or
affiliates of its obligations under this Section 3.19 or the Servicer's
negligence, bad faith or willful misconduct in connection therewith. Such
indemnity shall survive the termination or resignation of the parties hereto or
the termination of this Agreement. If the indemnification provided for herein is
unavailable or insufficient to hold harmless the Master Servicer, the Securities
Administrator, the Trustee and the Depositor, then the Servicer agrees that it
shall contribute to the amount paid or payable by the Master Servicer, the
Securities Administrator, the Trustee and the Depositor as a result of the
losses, claims, damages or liabilities of the Master Servicer, the Securities
Administrator, the Trustee and the Depositor in such proportion as is
appropriate to reflect the relative fault of the Master Servicer, the Securities
Administrator, the Trustee and the Depositor on the one hand and the Servicer on
the other in connection with a breach of the Servicer's obligations under this
Section 3.19.
SECTION 3.20. ACCESS TO CERTAIN DOCUMENTATION.
The Servicer shall provide to the Office of Thrift
Supervision, the FDIC, and any other federal or state banking or insurance
regulatory authority that may exercise authority over any Certificate Owner,
access to the documentation regarding the Mortgage Loans required by applicable
laws and regulations. Such access shall be afforded without charge, but only
upon reasonable request and during normal business hours at the offices of the
Servicer designated by
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it. Nothing in this Section 3.20 shall limit the obligation of the Servicer to
comply with any applicable law prohibiting disclosure of information regarding
the Mortgagors and the failure of the Servicer to provide access as provided in
this Section as a result of such obligation shall not constitute a breach of
this Section. Nothing in this Section 3.20 shall require the Servicer to
collect, create, collate or otherwise generate any information that it does not
generate in its usual course of business. The Servicer shall not be required to
make copies of or ship documents to any Person unless provisions have been made
for the reimbursement of the costs thereof.
SECTION 3.21. TITLE, MANAGEMENT AND DISPOSITION OF REO
PROPERTY.
(a) The deed or certificate of sale of any REO Property
shall be taken in the name of the Trustee, or its nominee, on behalf of
the Trust Fund and for the benefit of the Certificateholders. The
Servicer, on behalf of REMIC I, shall either sell any REO Property by
the close of the third calendar year following the calendar year in
which REMIC I acquires ownership of such REO Property for purposes of
Section 860G(a)(8) of the Code or request from the Internal Revenue
Service, no later than 60 days before the day on which the three-year
grace period would otherwise expire an extension of the three-year
grace period, unless the Servicer had delivered to the Trustee an
Opinion of Counsel, addressed to the Trustee and the Depositor, to the
effect that the holding by REMIC I of such REO Property subsequent to
three years after its acquisition will not result in the imposition on
any Trust REMIC created hereunder of taxes on "prohibited transactions"
thereof, as defined in Section 860F of the Code, or cause any Trust
REMIC hereunder to fail to qualify as a REMIC under Federal law at any
time that any Certificates are outstanding. The Servicer shall manage,
conserve, protect and operate each REO Property for the
Certificateholders solely for the purpose of its prompt disposition and
sale in a manner which does not cause such REO Property to fail to
qualify as "foreclosure property" within the meaning of Section
860G(a)(8) of the Code or result in the receipt by any Trust REMIC
created hereunder of any "income from non-permitted assets" within the
meaning of Section 860F(a)(2)(B) of the Code, or any "net income from
foreclosure property" which is subject to taxation under the REMIC
Provisions.
(b) The Servicer shall segregate and hold all funds
collected and received in connection with the operation of any REO
Property separate and apart from its own funds and general assets and
shall establish and maintain with respect to REO Properties an account
held in trust for the Trustee, on behalf of the Trust Fund and for the
benefit of the Certificateholders (the "REO Account"), which shall be
an Eligible Account. The Servicer shall be permitted to allow the
Collection Account to serve as the REO Account, subject to the
maintenance of separate ledgers for each REO Property. The Servicer
shall be entitled to retain or withdraw any interest income paid on
funds deposited in the REO Account.
(c) The Servicer shall have full power and authority,
subject only to the specific requirements and prohibitions of this
Agreement, to do any and all things in connection with any REO Property
as are consistent with the manner in which the Servicer manages and
operates similar property owned by it or any of its Affiliates, all on
such terms and for such period as the Servicer deems to be in the best
interests of Certificateholders. In connection therewith, the Servicer
shall deposit, or cause to be deposited, on a daily basis in the REO
Account all revenues received by it with respect to an REO Property and
shall
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withdraw therefrom funds necessary for the proper operation, management
and maintenance of such REO Property including, without limitation:
(i) all insurance premiums due and payable in respect of
such REO Property;
(ii) all real estate taxes and assessments in respect of
such REO Property that may result in the imposition of a lien thereon;
and
(iii) all costs and expenses necessary to maintain such REO
Property.
To the extent that amounts on deposit in the REO Account with
respect to an REO Property are insufficient for the purposes set forth in
clauses (i) through (iii) above with respect to such REO Property, the Servicer
shall advance from its own funds such amount as is necessary for such purposes
if, but only if, the Servicer would make such advances if the Servicer owned the
REO Property and if in the Servicer's judgment, the payment of such amounts will
be recoverable from the rental or sale of the REO Property.
Subject to compliance with applicable laws and regulations as
shall at any time be in force, and notwithstanding the foregoing, the Servicer,
on behalf of the Trust Fund, shall not:
(i) enter into, renew or extend any New Lease with respect
to any REO Property, if the New Lease by its terms will give rise to
any income that does not constitute Rents from Real Property;
(ii) permit any amount to be received or accrued under any
New Lease other than amounts that will constitute Rents from Real
Property;
(iii) authorize or permit any construction on any REO
Property, other than the completion of a building or other improvement
thereon, and then only if more than ten percent of the construction of
such building or other improvement was completed before default on the
related Mortgage Loan became imminent, all within the meaning of
Section 856(e)(4)(B) of the Code; or
(iv) allow any Person to Directly Operate any REO Property
on any date more than 90 days after its date of acquisition by the
Trust Fund;
unless, in any such case, the Servicer has obtained an Opinion of Counsel,
provided to the Servicer and the Trustee, to the effect that such action will
not cause such REO Property to fail to qualify as "foreclosure property" within
the meaning of Section 860G(a)(8) of the Code at any time that it is held by
REMIC I, in which case the Servicer may take such actions as are specified in
such Opinion of Counsel.
The Servicer may contract with any Independent Contractor for
the operation and management of any REO Property, provided that:
(i) the terms and conditions of any such contract shall not
be inconsistent herewith;
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(ii) any such contract shall require, or shall be
administered to require, that the Independent Contractor pay all costs
and expenses incurred in connection with the operation and management
of such REO Property, including those listed above and remit all
related revenues (net of such costs and expenses) to the Servicer as
soon as practicable, but in no event later than thirty days following
the receipt thereof by such Independent Contractor;
(iii) none of the provisions of this Section 3.21(c)
relating to any such contract or to actions taken through any such
Independent Contractor shall be deemed to relieve the Servicer of any
of its duties and obligations to the Trustee on behalf of the Trust
Fund and for the benefit of the Certificateholders with respect to the
operation and management of any such REO Property; and
(iv) the Servicer shall be obligated with respect thereto to
the same extent as if it alone were performing all duties and
obligations in connection with the operation and management of such REO
Property.
The Servicer shall be entitled to enter into any agreement
with any Independent Contractor performing services for it related to its duties
and obligations hereunder for indemnification of the Servicer by such
Independent Contractor, and nothing in this Agreement shall be deemed to limit
or modify such indemnification. The Servicer shall be solely liable for all fees
owed by it to any such Independent Contractor, irrespective of whether the
Servicer's compensation pursuant to Section 3.15 is sufficient to pay such fees.
Any such agreement shall include a provision that such agreement may be
immediately terminated by the Trustee (as successor Servicer) or any other
successor Servicer (including the Master Servicer) without fee, in the event the
Servicer shall for any reason, no longer be the Servicer of the Mortgage Loans
(including termination due to a Servicer Event of Default).
(d) In addition to the withdrawals permitted under Section
3.21(c), the Servicer may from time to time make withdrawals from the
REO Account for any REO Property: (i) to pay itself unpaid Servicing
Fees in respect of the related Mortgage Loan; and (ii) to reimburse
itself or any Sub-Servicer for unreimbursed Servicing Advances and
Advances made in respect of such REO Property or the related Mortgage
Loan. On the Servicer Remittance Date, the Servicer shall withdraw from
each REO Account maintained by it and deposit into the Distribution
Account in accordance with Section 3.08(d)(ii), for distribution on the
related Distribution Date in accordance with Section 5.01, the income
from the related REO Property received during the prior calendar month,
net of any withdrawals made pursuant to Section 3.21(c) or this Section
3.21(d).
(e) Subject to the time constraints set forth in Section
3.21(a), each REO Disposition shall be carried out by the Servicer at
such price and upon such terms and conditions as the Servicer shall
deem necessary or advisable, as shall be normal and usual in accordance
with Accepted Servicing Practices.
(f) The proceeds from the REO Disposition, net of any amount
required by law to be remitted to the Mortgagor under the related
Mortgage Loan and net of any payment or reimbursement to the Servicer
as provided above, shall be deposited in the Distribution
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Account in accordance with Section 3.08(d)(ii) on the Servicer
Remittance Date in the month following the receipt thereof for
distribution on the related Distribution Date in accordance with
Section 5.01. Any REO Disposition shall be for cash only (unless
changes in the REMIC Provisions made subsequent to the Startup Day
allow a sale for other consideration).
(g) The Servicer shall file information returns (and shall
provide a certification of a Servicing Officer to the Master Servicer
that such filings have been made) with respect to the receipt of
mortgage interest received in a trade or business, reports of
foreclosures and abandonments of any Mortgaged Property and
cancellation of indebtedness income with respect to any Mortgaged
Property as required by Sections 6050H, 6050J and 6050P of the Code,
respectively. Such reports shall be in form and substance sufficient to
meet the reporting requirements imposed by such Sections 6050H, 6050J
and 6050P of the Code.
SECTION 3.22. OBLIGATIONS OF THE SERVICER IN RESPECT OF
PREPAYMENT INTEREST SHORTFALLS; RELIEF ACT INTEREST SHORTFALLS.
The Servicer shall deliver to the Securities Administrator for
deposit into the Distribution Account on or before 12:00 noon New York time on
the Servicer Remittance Date from its own funds an amount equal to the lesser of
(i) the aggregate amount of the Prepayment Interest Shortfalls attributable to
prepayments in full on the Mortgage Loans for the related Distribution Date
resulting solely from voluntary Principal Prepayments received by the Servicer
during the related Prepayment Period and (ii) the aggregate amount of the
related Servicing Fees payable to the Servicer on such Distribution Date with
respect to the Mortgage Loans. The Servicer shall not have the right to
reimbursement for any amounts remitted to the Securities Administrator in
respect of this Section 3.22. The Servicer shall not be obligated to pay the
amounts set forth in this Section 3.22 with respect to shortfalls resulting from
the application of the Relief Act.
SECTION 3.23. OBLIGATIONS OF THE SERVICER IN RESPECT OF
MORTGAGE RATES AND MONTHLY PAYMENTS.
In the event that a shortfall in any collection on or
liability with respect to any Mortgage Loan results from or is attributable to
adjustments to Mortgage Rates, Monthly Payments or Scheduled 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 Securities
Administrator 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 Securities Administrator and the Master Servicer, the
Depositor and any successor Servicer in respect of any such liability. Such
indemnities shall survive the termination or discharge of this Agreement.
Notwithstanding the foregoing, this Section 3.23 shall not limit the ability of
the Servicer to seek recovery of any such amounts from the related Mortgagor
under the terms of the related Mortgage Note and Mortgage, to the extent
permitted by applicable law.
SECTION 3.24. RESERVE FUND.
(a) No later than the Closing Date, the Securities
Administrator shall establish and maintain a separate, segregated trust
account entitled, "Reserve Fund, Xxxxx
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Fargo Bank, N.A., in trust for the registered holders of ACE Securities
Corp. Home Equity Loan Trust, Series 2004-SD1, Asset Backed
Pass-Through Certificates." On the Closing Date, the Depositor will
deposit, or cause to be deposited, into the Reserve Fund $1,000. In
addition, the amount deposited in the Reserve Fund shall be increased
by any payments received by the Securities Administrator under the Cap
Contract and deposited into Reserve Fund for the benefit of the Class
A-1, the Mezzanine, the Class CE and the Class P Certificates.
(b) On each Distribution Date, the Securities Administrator
shall deposit into the Reserve Fund the amounts described in clause
SIXTH of Section 5.01(a)(5), rather than distributing such amounts to
the Class CE Certificateholders, and in clause SEVENTH of Section
5.01(a)(5). On each such Distribution Date, the Securities
Administrator shall hold all such amounts for the benefit of the
Holders of the Class A-1 Certificates and the Mezzanine Certificates
and will distribute such amounts to the Holders of the Class A-1
Certificates and the Mezzanine Certificates, in the amounts and
priorities set forth in clause SIXTH of Section 5.01(a)(5); provided,
however, that the portion of the Servicing Fee payable to the Holder of
the Class CE Certificate (as described in the definition of Servicing
Fee Rate in Section 1.01) shall not be available to pay Net WAC Rate
Carryover Amounts. If no Net WAC Rate Carryover Amounts are payable on
a Distribution Date, the Securities Administrator shall deposit, into
the Reserve Fund on behalf of the Class CE Certificateholders, from
amounts otherwise distributable to the Class CE Certificateholders, an
amount such that when added to other amounts already on deposit in the
Reserve Fund, the aggregate amount on deposit therein is equal to
$1,000.
(c) For federal and state income tax purposes, the Class CE
Certificateholders will be deemed to be the owners of the Reserve Fund
and all amounts deposited into the Reserve Fund (other than the initial
deposit therein of $1,000) and any amounts paid to the Reserve Fund
shall be treated as amounts distributed by REMIC II to the Holders of
the Class CE Certificates (other than any amount paid to the Reserve
Fund by the Cap Contract). Upon the termination of the Trust Fund, or
the payment in full of the Class A-1 Certificates and the Mezzanine
Certificates, all amounts remaining on deposit in the Reserve Fund will
be released by the Trust Fund and distributed to the Class CE
Certificateholders or their designees. The Reserve Fund will be part of
the Trust Fund but not part of any REMIC and any payments to the
Holders of the Class A-1 Certificates and the Mezzanine Certificates of
Net WAC Rate Carryover Amounts will not be payments with respect to a
"regular interest" in a REMIC within the meaning of Code Section
860(G)(a)(1).
(d) By accepting a Class CE Certificate, each Class CE
Certificateholder hereby agrees that the Securities Administrator will
deposit into the Reserve Fund the amounts described above on each
Distribution Date rather than distributing such amounts to the Class CE
Certificateholders. By accepting a Class CE Certificate, each Class CE
Certificateholder further agrees that its agreement to such action by
the Securities Administrator is given for good and valuable
consideration, the receipt and sufficiency of which is acknowledged by
such acceptance.
(e) At the direction of the Holders of a majority in
Percentage Interest in the Class CE Certificates, the Securities
Administrator shall direct any depository institution
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maintaining the Reserve Fund to invest the funds in such account in one
or more Permitted Investments bearing interest or sold at a discount,
and maturing, unless payable on demand, (i) no later than the Business
Day immediately preceding the date on which such funds are required to
be withdrawn from such account pursuant to this Agreement, if a Person
other than the Securities Administrator or an Affiliate manages or
advises such investment, and (ii) no later than the date on which such
funds are required to be withdrawn from such account pursuant to this
Agreement, if the Securities Administrator or an Affiliate manages or
advises such investment. All income and gain earned upon such
investment shall be deposited into the Reserve Fund. In no event shall
the Securities Administrator be liable for any investments made
pursuant to this clause (e). If the Holders of a majority in Percentage
Interest in the Class CE Certificates fail to provide investment
instructions, funds on deposit in the Reserve Fund shall be held
uninvested by the Securities Administrator without liability for
interest or compensation.
(f) For federal tax return and information reporting, the
right of the Class A-1 Certificateholders and the Mezzanine
Certificateholders to receive payments from the Reserve Fund in respect
of any Net WAC Rate Carryover Amount shall be assigned a value of
$415,050 with respect to Certificates covered by the Cap Contract.
SECTION 3.25. ADVANCE FACILITY.
(a) Notwithstanding anything to the contrary contained
herein, (i) the Servicer is hereby authorized to enter into an advance
facility ("Advance Facility") but no more than two Advance Facilities
without the prior written consent of the Trustee, which consent shall
not be unreasonably withheld, under which (A) the Servicer sells,
assigns or pledges to an advancing person (an "Advance Financing
Person") the Servicer's rights under this Agreement to be reimbursed
for any P&I Advances or Servicing Advances and/or (B) an Advance
Financing Person agrees to finance some or all P&I Advances or
Servicing Advances required to be made by the Servicer pursuant to this
Agreement and (ii) the Servicer is hereby authorized to assign its
rights to the Servicing Fee (which rights shall terminate upon the
resignation, termination or removal of the Servicer pursuant to the
terms of this Agreement); it being understood that neither the Trust
Fund nor any party hereto shall have a right or claim (including
without limitation any right of offset) to any amounts for
reimbursement of P&I Advances or Servicing Advances so assigned or to
the portion of the Servicing Fee so assigned. Subject to the provisions
of the first sentence of this Section 3.25(a), no consent of the
Depositor, Trustee, Certificateholders or any other party is required
before the Servicer may enter into an Advance Facility, but the
Servicer shall provide notice to the Depositor, Master Servicer and the
Trustee of the existence of any such Advance Facility promptly upon the
consummation thereof stating (a) the identity of the Advance Financing
Person and (b) the identity of any Person ("Servicer's Assignee") who
has the right to receive amounts in reimbursement of previously
xxxxxxxxxxxx X&X Advances or Servicing Advances. Notwithstanding the
existence of any Advance Facility under which an advancing person
agrees to finance P&I Advances and/or Servicing Advances on the
Servicer's behalf, the Servicer shall remain obligated pursuant to this
Agreement to make P&I Advances and Servicing Advances pursuant to and
as required by this Agreement, and shall not be relieved of such
obligations by virtue of such Advance Facility.
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(b) Reimbursement amounts ("Advance Reimbursement Amounts")
shall consist solely of amounts in respect of P&I Advances and/or
Servicing Advances made with respect to the Mortgage Loans for which
the Servicer would be permitted to reimburse itself in accordance with
this Agreement, assuming the Servicer had made the related P&I
Advance(s) and/or Servicing Advance(s).
(c) The Servicer shall maintain and provide to any successor
Servicer (with, upon request, a copy to the Trustee) a detailed
accounting on a loan-by-loan basis as to amounts advanced by, pledged
or assigned to, and reimbursed to any advancing person. The successor
Servicer shall be entitled to rely on any such information provided by
the predecessor Servicer, and the successor Servicer shall not be
liable for any errors in such information.
(d) Reimbursement amounts distributed with respect to each
Mortgage Loan shall be allocated to outstanding xxxxxxxxxxxx X&X
Advances or Servicing Advances (as the case may be) made with respect
to that Mortgage Loan on a "first-in, first out" (FIFO) basis. The
documentation establishing any Advance Facility shall require the
Servicer to provide to the related advancing person or its designee
loan-by-loan information with respect to each such reimbursement amount
distributed to such advancing person or Advance Facility trustee on
each Distribution Date, to enable the advancing person or Advance
Facility trustee to make the FIFO allocation of each such reimbursement
amount with respect to each Mortgage Loan. The Servicer shall remain
entitled to be reimbursed by the advancing person or Advance Facility
trustee for all P&I Advances and Servicing Advances funded by the
Servicer to the extent the related rights to be reimbursed therefor
have not been sold, assigned or pledged to an advancing person.
(e) Any amendment to this Section 3.25 or to any other
provision of this Agreement that may be necessary or appropriate to
effect the terms of an Advance Facility as described generally in this
Section 3.25, including amendments to add provisions relating to a
successor Servicer, may be entered into by the Trustee, the Depositor
and the Servicer without the consent of any Certificateholder,
notwithstanding anything to the contrary in this Agreement, provided,
that the Trustee has been provided an Opinion of Counsel that such
amendment is authorized hereunder and has no material adverse effect on
the Certificateholders, which opinion shall be an expense of the party
requesting such opinion but in any case shall not be an expense of the
Trustee or the Trust Fund; provided, further, that the amendment shall
not be deemed to adversely affect in any material respect the interests
of the Certificateholders if the Person requesting the amendment
obtains a letter from each Rating Agency (instead of obtaining an
Opinion of Counsel to such effect) stating that the amendment would not
result in the downgrading or withdrawal of the respective ratings then
assigned to the Certificates; it being understood and agreed that any
such rating letter in and of itself will not represent a determination
as to the materiality of any such amendment and will represent a
determination only as to the credit issues affecting any such rating.
Prior to entering into an Advance Facility, the Servicer shall notify
the lender under such facility in writing that: (a) the P&I Advances
and/or Servicing Advances financed by and/or pledged to the lender are
obligations owed to the Servicer on a non-recourse basis payable only
from the cash flows and proceeds received under this Agreement for
reimbursement of P&I Advances and/or Servicing Advances only to the
extent provided herein, and neither the Master Servicer,
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the Securities Administrator, the Trustee nor the Trust are otherwise
obligated or liable to repay any P&I Advances and/or Servicing Advances
financed by the lender; (b) the Servicer will be responsible for
remitting to the lender the applicable amounts collected by it as
Servicing Fees and as reimbursement for P&I Advances and/or Servicing
Advances funded by the lender, as applicable, subject to the
restrictions and priorities created in this Agreement; and (c) neither
the Master Servicer, the Securities Administrator nor the Trustee shall
have any responsibility to calculate any amount payable under an
Advance Facility or to track or monitor the administration of the
financing arrangement between the Servicer and the lender or the
payment of any amount under an Advance Facility.
(f) The Servicer shall indemnify the Master Servicer, the
Securities Administrator, the Trustee and the Trust Fund for any cost,
liability or expense relating to the Advance Facility including,
without limitation, a claim, pending or threatened, by an Advance
Financing Person.
SECTION 3.26. THE SERVICER INDEMNIFICATION.
The Servicer agrees to indemnify Trustee, Master Servicer and
the Securities Administrator, from, and hold the Trustee, Master Servicer and
the Securities Administrator harmless against, any loss, liability or expense
(including reasonable attorney's fees and expenses) incurred by any such Person
by reason of the Servicer's willful misfeasance, bad faith or gross negligence
in the performance of its duties under this Agreement or by reason of the
Servicer's reckless disregard of its obligations and duties under this
Agreement. Such indemnity shall survive the termination or discharge of this
Agreement and the resignation or removal of the Servicer, the Trustee, the
Master Servicer and the Securities Administrator. Any payment hereunder made by
the Servicer to any such Person shall be from the Servicer's own funds, without
reimbursement from REMIC I therefor.
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ARTICLE IV
ADMINISTRATION AND MASTER SERVICING
OF THE MORTGAGE LOANS BY THE MASTER SERVICER
SECTION 4.01. MASTER SERVICER.
The Master Servicer shall supervise, monitor and oversee the
obligation of the Servicer to service and administer the Mortgage Loans in
accordance with the terms of this Agreement and shall have full power and
authority to do any and all things which it may deem necessary or desirable in
connection with such master servicing and administration. In performing its
obligations hereunder, the Master Servicer shall act in a manner consistent with
Accepted Master Servicing Practices. Furthermore, the Master Servicer shall
oversee and consult with the Servicer as necessary from time-to-time to carry
out the Master Servicer's obligations hereunder, shall receive, review and
evaluate all reports, information and other data provided to the Master Servicer
by the Servicer and shall cause the Servicer to perform and observe the
covenants, obligations and conditions to be performed or observed by the
Servicer under this Agreement. The Master Servicer shall independently and
separately monitor the Servicer's servicing activities with respect to each
related Mortgage Loan, reconcile the results of such monitoring with such
information provided in the previous sentence on a monthly basis and coordinate
corrective adjustments to the Servicer's and Master Servicer's records, and
based on such reconciled and corrected information, prepare the statements
specified in Section 5.03 and any other information and statements required to
be provided by the Master Servicer hereunder. The Master Servicer shall
reconcile the results of its Mortgage Loan monitoring with the actual
remittances of the Servicer to the Distribution Account pursuant to the terms
hereof based on information provided to the Master Servicer by the Servicer.
The Trustee shall furnish the Servicer and the Master Servicer
with any limited powers of attorney and other documents in form as provided to
it necessary or appropriate to enable the Servicer and the Master Servicer to
service and administer the related Mortgage Loans and REO Property. The Trustee
shall have no responsibility for any action of the Master Servicer or the
Servicer pursuant to any such limited power of attorney and shall be indemnified
by the Master Servicer or the Servicer, as applicable, for any cost, liability
or expense incurred by the Trustee in connection with such Person's misuse of
any such power of attorney.
The Trustee, the Custodian and the Securities Administrator
shall provide access to the records and documentation in possession of the
Trustee, the Custodian or the Securities Administrator regarding the related
Mortgage Loans and REO Property and the servicing thereof to the
Certificateholders, the FDIC, and the supervisory agents and examiners of the
FDIC, such access being afforded only upon reasonable prior written request and
during normal business hours at the office of the Trustee, the Custodian or the
Securities Administrator; provided, however, that, unless otherwise required by
law, none of the Trustee, the Custodian or the Securities Administrator shall be
required to provide access to such records and documentation if the provision
thereof would violate the legal right to privacy of any Mortgagor. The Trustee,
the Custodian and the Securities Administrator shall allow representatives of
the above entities to photocopy any of the records and documentation and shall
provide equipment for that purpose at a charge that covers the Trustee's, the
Custodian's or the Securities Administrator's actual costs.
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The Trustee shall execute and deliver to the Servicer or the
Master Servicer upon request any court pleadings, requests for trustee's sale or
other documents necessary or desirable to (i) the foreclosure or trustee's sale
with respect to a Mortgaged Property; (ii) any legal action brought to obtain
judgment against any Mortgagor on the Mortgage Note or any other Mortgage Loan
Document; (iii) obtain a deficiency judgment against the Mortgagor; or (iv)
enforce any other rights or remedies provided by the Mortgage Note or any other
Mortgage Loan Document or otherwise available at law or equity.
SECTION 4.02. REMIC-RELATED COVENANTS.
For as long as each REMIC shall exist, the Trustee and the
Securities Administrator shall act in accordance herewith to treat such REMIC as
a REMIC, and the Trustee and the Securities Administrator shall comply with any
directions of the Seller, the Servicer or the Master Servicer to assure such
continuing treatment. In particular, the Trustee shall not (a) sell or permit
the sale of all or any portion of the Mortgage Loans or of any investment of
deposits in an Account unless such sale is as a result of a repurchase of the
Mortgage Loans pursuant to this Agreement or the Trustee has received a REMIC
Opinion prepared at the expense of the Trust Fund; and (b) other than with
respect to a substitution pursuant to the Mortgage Loan Purchase Agreement or
Section 2.03 of this Agreement, as applicable, accept any contribution to any
REMIC after the Startup Day without receipt of a Opinion of Counsel stating that
such contribution will not result in an Adverse REMIC Event as defined in
Section 11.01(f).
SECTION 4.03. MONITORING OF SERVICER.
(a) The Master Servicer shall be responsible for monitoring
the compliance by the Servicer with its duties under this Agreement. In
the review of the Servicer's activities, the Master Servicer may rely
upon an officer's certificate of the Servicer with regard to the
Servicer's compliance with the terms of this Agreement. In the event
that the Master Servicer, in its judgment, determines that the Servicer
should be terminated in accordance with the terms hereof or that a
notice should be sent pursuant to the terms hereof with respect to the
occurrence of an event that, unless cured, would constitute a Servicer
Event of Default by the Servicer, the Master Servicer shall notify the
Servicer, the Seller and the Trustee thereof and the Master Servicer
shall issue such notice or take such other action as it deems
appropriate.
(b) The Master Servicer, for the benefit of the Trustee and
the Certificateholders, shall enforce the obligations of the Servicer
under this Agreement and shall, in the event that the Servicer fails to
perform its obligations in accordance with this Agreement, subject to
this Section and Article VIII, cause the Trustee to terminate the
rights and obligations of the Servicer hereunder in accordance with the
provisions of Article VIII. Such enforcement, including, without
limitation, the legal prosecution of claims and the pursuit of other
appropriate remedies, shall be in such form and carried out to such an
extent and at such time as the Master Servicer, in its good faith
business judgment, would require were it the owner of the related
Mortgage Loans. The Master Servicer shall pay the costs of such
enforcement at its own expense, provided that the Master Servicer shall
not be required to prosecute or defend any legal action except to the
extent that the Master Servicer shall have received reasonable
indemnity for its costs and expenses in pursuing such action.
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(c) The Master Servicer shall be entitled to be reimbursed
by the Servicer (or from amounts on deposit in the Distribution Account
if the Servicer is unable to fulfill its obligations hereunder) for all
reasonable out-of-pocket or third party costs associated with the
transfer of servicing from the predecessor Servicer (or if the
predecessor Servicer is the Master Servicer, from the Servicer
immediately preceding the Master Servicer), including without
limitation, any reasonable out-of-pocket or third party costs or
expenses associated with the complete transfer of all servicing data
and the completion, correction or manipulation of such servicing data
as may be required by the Master Servicer to correct any errors or
insufficiencies in the servicing data or otherwise to enable the Master
Servicer to service the Mortgage Loans properly and effectively, upon
presentation of reasonable documentation of such costs and expenses.
(d) The Master Servicer shall require the Servicer to comply
with the remittance requirements and other obligations set forth in
this Agreement.
(e) If the Master Servicer acts as successor to the
Servicer, it will not assume liability for the representations and
warranties of the terminated Servicer.
SECTION 4.04. FIDELITY BOND.
The Master Servicer, at its expense, shall maintain in effect
a blanket fidelity bond and an errors and omissions insurance policy, affording
coverage with respect to all directors, officers, employees and other Persons
acting on such Master Servicer's behalf, and covering errors and omissions in
the performance of the Master Servicer's obligations hereunder. The errors and
omissions insurance policy and the fidelity bond shall be in such form and
amount generally acceptable for entities serving as master servicers or
trustees.
SECTION 4.05. POWER TO ACT; PROCEDURES.
The Master Servicer shall master service the Mortgage Loans
and shall have full power and authority, subject to the REMIC Provisions and the
provisions of Article XI, to do any and all things that it may deem necessary or
desirable in connection with the master servicing and administration of the
Mortgage Loans, including but not limited to the power and authority (i) to
execute and deliver, on behalf of the Certificateholders and the Trustee,
customary consents or waivers and other instruments and documents, (ii) to
consent to transfers of any Mortgaged Property and assumptions of the Mortgage
Notes and related Mortgages, (iii) to collect any Insurance Proceeds and
Liquidation Proceeds, and (iv) to effectuate foreclosure or other conversion of
the ownership of the Mortgaged Property securing any Mortgage Loan, in each
case, in accordance with the provisions of this Agreement; provided, however,
that the Master Servicer shall not (and, consistent with its responsibilities
under Section 4.03, shall not permit the Servicer to) knowingly or intentionally
take any action, or fail to take (or fail to cause to be taken) any action
reasonably within its control and the scope of duties more specifically set
forth herein, that, under the REMIC Provisions, if taken or not taken, as the
case may be, would cause REMIC I or REMIC II to fail to qualify as a REMIC or
result in the imposition of a tax upon the Trust Fund (including but not limited
to the tax on prohibited transactions as defined in Section 860F(a)(2) of the
Code and the tax on contributions to a REMIC set forth in Section 860G(d) of the
Code) unless the Master Servicer has received an Opinion of Counsel (but not at
the expense
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of the Master Servicer) to the effect that the contemplated action will not
would cause REMIC I or REMIC II to fail to qualify as a REMIC or result in the
imposition of a tax upon REMIC I or REMIC II, as the case may be. The Trustee
shall furnish the Master Servicer, upon written request from a Servicing
Officer, with any powers of attorney prepared and delivered to it and reasonably
acceptable to it by empowering the Master Servicer or the Servicer to execute
and deliver instruments of satisfaction or cancellation, or of partial or full
release or discharge, and to foreclose upon or otherwise liquidate Mortgaged
Property, and to appeal, prosecute or defend in any court action relating to the
Mortgage Loans or the Mortgaged Property, in accordance with this Agreement, and
the Trustee shall execute and deliver such other documents prepared and
delivered to it and reasonably acceptable to it, as the Master Servicer or the
Servicer may request, to enable the Master Servicer to master service and
administer the Mortgage Loans and carry out its duties hereunder, in each case
in accordance with Accepted Master Servicing Practices (and the Trustee shall
have no liability for misuse of any such powers of attorney by the Master
Servicer or the Servicer and shall be indemnified by the Master Servicer or the
Servicer, as applicable, for any cost, liability or expense incurred by the
Trustee in connection with such Person's use or misuse of any such power of
attorney). If the Master Servicer or the Trustee has been advised that it is
likely that the laws of the state in which action is to be taken prohibit such
action if taken in the name of the Trustee or that the Trustee would be
adversely affected under the "doing business" or tax laws of such state if such
action is taken in its name, the Master Servicer shall join with the Trustee in
the appointment of a co-trustee pursuant to Section 9.10. In the performance of
its duties hereunder, the Master Servicer shall be an independent contractor and
shall not, except in those instances where it is taking action in the name of
the Trustee, be deemed to be the agent of the Trustee.
SECTION 4.06. DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS.
To the extent Mortgage Loans contain enforceable due-on-sale
clauses, the Master Servicer shall cause the Servicer to enforce such clauses in
accordance with this Agreement. If applicable law prohibits the enforcement of a
due-on-sale clause or such clause is otherwise not enforced in accordance with
this Agreement and, as a consequence, a Mortgage Loan is assumed, the original
Mortgagor may be released from liability in accordance with this Agreement.
SECTION 4.07. DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF
MASTER SERVICER TO BE HELD FOR TRUSTEE.
(a) The Master Servicer shall transmit to the Trustee or
Custodian such documents and instruments coming into the possession of
the Master Servicer from time to time as are required by the terms
hereof to be delivered to the Trustee or Custodian. Any funds received
by the Master Servicer in respect of any Mortgage Loan or which
otherwise are collected by the Master Servicer as Liquidation Proceeds
or Insurance Proceeds in respect of any Mortgage Loan shall be remitted
to the Securities Administrator for deposit in the Distribution
Account. The Master Servicer shall, and, subject to Section 3.20, shall
cause the Servicer to, provide access to information and documentation
regarding the Mortgage Loans to the Trustee, its agents and accountants
at any time upon reasonable request and during normal business hours,
and to Certificateholders that are savings and loan associations, banks
or insurance companies, the Office of Thrift Supervision, the FDIC and
the supervisory agents
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and examiners of such Office and Corporation or examiners of any other
federal or state banking or insurance regulatory authority if so
required by applicable regulations of the Office of Thrift Supervision
or other regulatory authority, such access to be afforded without
charge but only upon reasonable request in writing and during normal
business hours at the offices of the Master Servicer designated by it.
In fulfilling such a request the Master Servicer shall not be
responsible for determining the sufficiency of such information.
(b) All Mortgage Files and funds collected or held by, or
under the control of, the Master Servicer, in respect of any Mortgage
Loans, whether from the collection of principal and interest payments
or from Liquidation Proceeds or Insurance Proceeds, shall be remitted
to the Trustee for deposit in the Distribution Account.
SECTION 4.08. STANDARD HAZARD INSURANCE AND FLOOD INSURANCE
POLICIES.
For each Mortgage Loan, the Master Servicer shall enforce the
obligation of the Servicer under this Agreement to maintain or cause to be
maintained standard fire and casualty insurance and, where applicable, flood
insurance, all in accordance with the provisions of this Agreement. It is
understood and agreed that such insurance shall be with insurers meeting the
eligibility requirements set forth in Section 3.11 and that no earthquake or
other additional insurance is to be required of any Mortgagor or to be
maintained on property acquired in respect of a defaulted loan, other than
pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance.
SECTION 4.09. PRESENTMENT OF CLAIMS AND COLLECTION OF
PROCEEDS.
The Master Servicer shall enforce the Servicer's obligations
under this Agreement to, prepare and present on behalf of the Trustee and the
Certificateholders all claims under the insurance policies and take such actions
(including the negotiation, settlement, compromise or enforcement of the
insured's claim) as shall be necessary to realize recovery under such policies.
Any proceeds disbursed to the Master Servicer in respect of such policies, bonds
or contracts shall be promptly remitted to the Trustee for deposit in the
Distribution Account upon receipt, except that any amounts realized that are to
be applied to the repair or restoration of the related Mortgaged Property as a
condition precedent to the presentation of claims on the related Mortgage Loan
to the insurer under any applicable insurance policy need not be so or remitted.
SECTION 4.10. MAINTENANCE OF PRIMARY MORTGAGE INSURANCE
POLICIES.
(a) The Master Servicer shall not take, or permit the
Servicer to take (to the extent such action is prohibited by this
Agreement), any action that would result in noncoverage under any
primary mortgage insurance policy of any loss which, but for the
actions of the Master Servicer or the Servicer, as applicable, would
have been covered thereunder. The Master Servicer shall use its best
reasonable efforts to cause the Servicer to keep in force and effect
(to the extent that the Mortgage Loan requires the Mortgagor to
maintain such insurance), primary mortgage insurance applicable to each
Mortgage Loan in accordance with the provisions of this Agreement. The
Master Servicer shall not, and shall not permit the Servicer to, cancel
or refuse to renew any primary mortgage insurance policy that is in
effect at the date of the initial issuance of the Mortgage Note and is
required to be kept in force hereunder except in accordance with the
provisions of this Agreement.
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(b) The Master Servicer agrees to cause the Servicer to
present, on behalf of the Trustee and the Certificateholders, claims to
the insurer under any primary mortgage insurance policies and, in this
regard, to take such reasonable action as shall be necessary to permit
recovery under any primary mortgage insurance policies respecting
defaulted Mortgage Loans.
SECTION 4.11. TRUSTEE TO RETAIN POSSESSION OF CERTAIN
INSURANCE POLICIES AND DOCUMENTS.
The Trustee or the applicable Custodian, shall retain
possession and custody of the originals (to the extent available) of any primary
mortgage insurance policies, or certificate of insurance if applicable, and any
certificates of renewal as to the foregoing as may be issued from time to time
as contemplated by this Agreement. Until all amounts distributable in respect of
the Certificates have been distributed in full and the Master Servicer and the
Servicer have otherwise fulfilled their respective obligations under this
Agreement, the Trustee or the Custodian shall also retain possession and custody
of each Mortgage File in accordance with and subject to the terms and conditions
of this Agreement and the Custodial Agreement. The Master Servicer shall
promptly deliver or cause to be delivered to the Trustee or the Custodian, upon
the execution or receipt thereof the originals of any primary mortgage insurance
policies, any certificates of renewal, and such other documents or instruments
that constitute Mortgage Loan Documents that come into the possession of the
Master Servicer from time to time.
SECTION 4.12. REALIZATION UPON DEFAULTED MORTGAGE LOANS.
The Master Servicer shall cause the Servicer to foreclose
upon, repossess or otherwise comparably convert the ownership of Mortgaged
Properties securing such of the Mortgage Loans as come into and continue in
default and as to which no satisfactory arrangements can be made for collection
of delinquent payments, all in accordance with this Agreement.
SECTION 4.13. COMPENSATION FOR THE MASTER SERVICER.
As compensation for the activities of the Master Servicer
hereunder, the Master Servicer shall be entitled to the Master Servicing Fee and
the income from investment of or earnings on the funds from time to time in the
Distribution Account, as provided in Section 3.10. The Master Servicing Fee
payable to the Master Servicer in respect of any Distribution Date shall be
reduced in accordance with Section 4.18. The Master Servicer shall be required
to pay all expenses incurred by it in connection with its activities hereunder
and shall not be entitled to reimbursement therefor except as provided in this
Agreement.
SECTION 4.14. REO PROPERTY.
(a) In the event the Trust Fund acquires ownership of any
REO Property in respect of any related Mortgage Loan, the deed or
certificate of sale shall be issued to the Trustee, or to its nominee,
on behalf of the related Certificateholders. The Master Servicer shall
cause the Servicer to sell, any REO Property as expeditiously as
possible and in accordance with the provisions of this Agreement.
Further, the Master Servicer shall cause the Servicer to sell any REO
Property prior to three years after the end of the calendar year of
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its acquisition by REMIC I unless (i) the Trustee shall have been
supplied by the Servicer with an Opinion of Counsel to the effect that
the holding by the Trust Fund of such REO Property subsequent to such
three-year period will not result in the imposition of taxes on
"prohibited transactions" of any REMIC hereunder as defined in section
860F of the Code or cause any REMIC hereunder to fail to qualify as a
REMIC at any time that any Certificates are outstanding, in which case
the Trust Fund may continue to hold such Mortgaged Property (subject to
any conditions contained in such Opinion of Counsel) or (ii) the
Servicer shall have applied for, prior to the expiration of such
three-year period, an extension of such three-year period in the manner
contemplated by Section 856(e)(3) of the Code, in which case the
three-year period shall be extended by the applicable extension period.
The Master Servicer shall cause the Servicer to protect and conserve,
such REO Property in the manner and to the extent required by this
Agreement in accordance with the REMIC Provisions and in a manner that
does not result in a tax on "net income from foreclosure property" or
cause such REO Property to fail to qualify as "foreclosure property"
within the meaning of Section 860G(a)(8) of the Code.
(b) The Master Servicer shall cause the Servicer to deposit
all funds collected and received in connection with the operation of
any REO Property in the REO Account.
SECTION 4.15. ANNUAL OFFICER'S CERTIFICATE AS TO COMPLIANCE.
(a) The Master Servicer shall deliver to the Trustee and the
Rating Agencies on or before March 15 of each year, commencing on March
15, 2005, an Officer's Certificate, certifying that with respect to the
period ending December 31 of the prior year: (i) such Servicing Officer
has reviewed the activities of such Master Servicer during the
preceding calendar year or portion thereof and its performance under
this Agreement, (ii) to the best of such Servicing Officer's knowledge,
based on such review, such Master Servicer has performed and fulfilled
its duties, responsibilities and obligations under this Agreement in
all material respects throughout such year, or, if there has been a
default in the fulfillment of any such duties, responsibilities or
obligations, specifying each such default known to such Servicing
Officer and the nature and status thereof, (iii) nothing has come to
the attention of such Servicing Officer to lead such Servicing Officer
to believe that the Master Servicer has failed to perform any of its
duties, responsibilities and obligations under this Agreement in all
material respects throughout such year, or, if there has been a
material default in the performance or fulfillment of any such duties,
responsibilities or obligations, specifying each such default known to
such Servicing Officer and the nature and status thereof.
(b) Copies of such statements shall be provided to any
Certificateholder upon request, by the Master Servicer or by the
Trustee at the Master Servicer's expense if the Master Servicer failed
to provide such copies (unless (i) the Master Servicer shall have
failed to provide the Trustee with such statement or (ii) the Trustee
shall be unaware of the Master Servicer's failure to provide such
statement).
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SECTION 4.16. ANNUAL INDEPENDENT ACCOUNTANT'S SERVICING
REPORT.
If the Master Servicer has, during the course of any calendar
year, directly serviced any of the Mortgage Loans, then the Master Servicer at
its expense shall cause a nationally recognized firm of independent certified
public accountants to furnish a statement to the Trustee, the Rating Agencies
and the Seller on or before March 15 of each year, commencing on March 15, 2005
to the effect that, with respect to the most recently ended fiscal year, such
firm has examined certain records and documents relating to the Master
Servicer's performance of its servicing obligations under this Agreement and
pooling and servicing and trust agreements in material respects similar to this
Agreement and to each other and that, on the basis of such examination conducted
substantially in compliance with the audit program for mortgages serviced for
Xxxxxxx Mac or the Uniform Single Attestation Program for Mortgage Bankers, such
firm is of the opinion that the Master Servicer's activities have been conducted
in compliance with this Agreement, or that such examination has disclosed no
material items of noncompliance except for (i) such exceptions as such firm
believes to be immaterial, (ii) such other exceptions as are set forth in such
statement and (iii) such exceptions that the Uniform Single Attestation Program
for Mortgage Bankers or the Audit Program for Mortgages Serviced by Xxxxxxx Mac
requires it to report. Copies of such statements shall be provided to any
Certificateholder upon request by the Master Servicer, or by the Trustee at the
expense of the Master Servicer if the Master Servicer shall fail to provide such
copies (unless (i) the Master Servicer shall have failed to provide the Trustee
with such statement or (ii) the Trustee shall be unaware of the Master
Servicer's failure to provide such statement). If such report discloses
exceptions that are material, the Master Servicer shall advise the Trustee
whether such exceptions have been or are susceptible of cure, and will take
prompt action to do so.
SECTION 4.17. UCC.
The Depositor agrees to file continuation statements for any
Uniform Commercial Code financing statements which the Seller has informed the
Depositor were filed on the Closing Date in connection with the Trust. The
Depositor shall file any financing statements or amendments thereto required by
any change in the Uniform Commercial Code.
SECTION 4.18. OBLIGATION OF THE MASTER SERVICER IN RESPECT OF
PREPAYMENT INTEREST SHORTFALLS.
In the event of any Prepayment Interest Shortfalls, the Master
Servicer shall deposit into the Distribution Account not later than the related
Distribution Date an amount equal to the lesser of (i) the aggregate amounts
required to be paid by the Servicer with respect to Prepayment Interest
Shortfalls attributable to Principal Prepayments in full on the Mortgage Loans
for the related Distribution Date, and not so paid by the Servicer and (ii) the
aggregate amount of the related Master Servicing Fees for such Distribution
Date, without reimbursement therefor.
SECTION 4.19. PREPAYMENT PENALTY VERIFICATION.
On or prior to each Servicer Remittance Date, the Servicer
shall provide in an electronic format acceptable to the Master Servicer and it
the data necessary for the Master Servicer to perform its verification duties
set forth in this Section 4.19. The Master Servicer or a
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third party reasonably acceptable to the Master Servicer and the Depositor (the
"Verification Agent") will perform such verification duties and will use its
best efforts to issue its findings in a report (the "Verification Report")
delivered to the Master Servicer and the Depositor within ten (10) Business Days
following the related Distribution Date; provided, however, that if the
Verification Agent is unable to issue the Verification Report within ten (10)
Business Days following the Distribution Date, the Verification Agent may issue
and deliver to the Master Servicer and the Depositor the Verification Report
upon the completion of its verification duties. The Master Servicer shall
forward the Verification Report to the Servicer and shall notify the Servicer if
the Master Servicer has determined that the Servicer did not deliver the
appropriate Prepayment Charge to the Securities Administrator in accordance with
this Agreement. Such written notification from the Master Servicer shall include
the loan number, prepayment penalty code and prepayment penalty amount as
calculated by the Master Servicer or the Verification Agent, as applicable, of
each Mortgage Loan for which there is a discrepancy. If the Servicer agrees with
the verified amounts, the Servicer shall adjust the immediately succeeding
Servicer Report and the amount remitted to the Trustee with respect to
prepayments accordingly. If the Servicer disagrees with the determination of the
Master Servicer, the Servicer shall, within five (5) Business Days of its
receipt of the Verification Report, notify the Master Servicer of such
disagreement and provide the Master Servicer with detailed information to
support its position. The Servicer and the Master Servicer shall cooperate to
resolve any discrepancy on or prior to the immediately succeeding Servicer
Remittance Date, and the Servicer will indicate the effect of such resolution on
the related Servicer Report and shall adjust the amount remitted with respect to
prepayments on such Servicer Remittance Date accordingly.
During such time as the Servicer and the Master Servicer are
resolving discrepancies with respect to the Prepayment Charges, no payments in
respect of any disputed Prepayment Charges will be remitted to the Securities
Administrator for deposit in the Distribution Account and the Master Servicer
shall not be obligated to deposit such payments, unless otherwise required
pursuant to Section 8.01 hereof. In connection with such duties, the Master
Servicer shall be able to rely solely on the information provided to it by the
Servicer in accordance with this Section. The Master Servicer shall not be
responsible for verifying the accuracy of any of the information provided to it
by the Servicer.
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ARTICLE V
PAYMENTS TO CERTIFICATEHOLDERS
Section 5.01. DISTRIBUTIONS.
(a) (1) On each Distribution Date, the following amounts, in
the following order of priority, shall be distributed by REMIC I to REMIC II on
account of the REMIC I Regular Interests or withdrawn from the Distribution
Account and distributed to the holders of the Class R Certificates, in respect
of the Class R-I Interest, as the case may be:
(i) to Holders of REMIC I Regular Interest I-LTAA, REMIC I
Regular Interest I-LTA1, REMIC I Regular Interest I-LTM1, REMIC I
Regular Interest I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I
Regular Interest I-LTM4, REMIC I Regular Interest I-LTZZ and REMIC I
Regular Interest I-LTP, PRO RATA, in an amount equal to (A) the
Uncertificated Interest for such Distribution Date, plus (B) any
amounts in respect thereof remaining unpaid from previous Distribution
Dates. Amounts payable as Uncertificated Interest in respect of REMIC I
Regular Interest I-LTZZ shall be reduced when the REMIC I
Overcollateralization Amount is less than the REMIC I Required
Overcollateralization Amount, by the lesser of (x) the amount of such
difference and (y) the Maximum I-LTZZ Uncertificated Interest Deferral
Amount and such amount will be payable to the Holders of REMIC I
Regular Interest I-LTA1, REMIC I Regular Interest I-LTM1, REMIC I
Regular Interest I-LTM2, REMIC I Regular Interest I-LTM3 and REMIC I
Regular Interest I-LTM4, in the same proportion as the
Overcollateralization Increase Amount is allocated to the Corresponding
Certificates and the Uncertificated Balance of REMIC I Regular Interest
I-LTZZ shall be increased by such amount;
(ii) to the Holders of REMIC I Regular Interests, in an
amount equal to the remainder of the Available Funds for such
Distribution Date after the distributions made pursuant to clause (i)
above, allocated as follows:
(A) 98.00% of such remainder to the Holders of REMIC I
Regular Interest I-LTAA, until the Uncertificated Balance of such
Uncertificated REMIC I Regular Interest is reduced to zero;
(B) 2.00% of such remainder first to the Holders of REMIC I
Regular Interest I-LTA1, REMIC I Regular Interest I-LTM1, REMIC I
Regular Interest I-LTM2, REMIC I Regular Interest I-LTM3 and REMIC I
Regular Interest I-LTM4, 1.00% of and in the same proportion as
principal payments are allocated to the Corresponding Certificates,
until the Uncertificated Balances of such REMIC I Regular Interests
are reduced to zero and second to the Holders of REMIC I Regular
Interest I-LTZZ, until the Uncertificated Balance of such REMIC I
Regular Interest is reduced to zero;
(C) to the Holders of REMIC I Regular Interest I-LTP, on the
Distribution Date immediately following the expiration of the latest
Prepayment
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Charge as identified on the Prepayment Charge Schedule or any
Distribution Date thereafter until $100 has been distributed
pursuant to this clause; then
(D) any remaining amount to the Holders of the Class R-I
Interest, in respect of the Class R-I Interest;
provided, however, that 98.00% and 2.00% of any principal payments that
are attributable to an Overcollateralization Reduction Amount shall be
allocated to Holders of REMIC I Regular Interest I-LTAA and REMIC I
Regular Interest I-LTZZ, respectively.
Notwithstanding the distributions described in Section
5.01(a)(1), distributions of funds shall be made to Certificateholders
only in accordance with Section 5.01(a)(2) through (5) and Section
5.01(b).
(2) On each Distribution Date, the Securities Administrator shall
withdraw from the Distribution Account to the extent on deposit therein an
amount equal to the Interest Remittance Amount and make the following
disbursements and transfers in the order of priority described below, in each
case to the extent of the Interest Remittance Amount remaining for such
Distribution Date:
FIRST, to the Holders of the Class A-1 Certificates, the Senior
Interest Distribution Amount allocable to the Class A-1 Certificates;
and
SECOND, sequentially, to the Holders of the Class X-0, Xxxxx X-0, Class
M-3 and Class M-4, Certificates, in that order, the Interest
Distribution Amount allocable to each such Class.
(3) On each Distribution Date (a) prior to the Stepdown Date or (b) on
which a Trigger Event is in effect, the Securities Administrator shall withdraw
from the Distribution Account to the extent on deposit therein an amount equal
to the Principal Distribution Amount and distribute to the Certificateholders
the following amounts, in the following order of priority:
FIRST, to the Holders of the Class A-1 Certificates until the
Certificate Principal Balance of the Class A-1 Certificates has been
reduced to zero; and
SECOND, sequentially, to the Holders of the Class X-0, Xxxxx X-0,
Class M-3 and Class M-4 Certificates, in that order, until the
Certificate Principal Balance of each such Class has been reduced to
zero.
(4) On each Distribution Date (a) on or after the Stepdown Date and (b)
on which a Trigger Event is not in effect, the Securities Administrator shall
withdraw from the Distribution Account to the extent on deposit therein an
amount equal to the Principal Distribution Amount and distribute to the
Certificateholders the following amounts, in the following order of priority:
FIRST, to the Holders of the Class A-1 Certificates, the Class A-1
Principal Distribution Amount until the Certificate Principal Balance
of the Class A-1 Certificates has been reduced to zero;
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SECOND, to the Holders of the Class M-1 Certificates, the lesser of
(x) the excess of (i) the Principal Distribution Amount over (ii) the
amount distributed to the Holders of the Class A-1 Certificates under
clause FIRST above, and (y) the Class M-1 Principal Distribution
Amount, until the Certificate Principal Balance of the Class M-1
Certificates has been reduced to zero;
THIRD, to the Holders of the Class M-2 Certificates, the lesser of (x)
the excess of (i) the Principal Distribution Amount over (ii) the sum
of the amounts distributed to the Holders of the Class A-1
Certificates under clause FIRST above and to the Holders of the Class
M-1 Certificates under clause SECOND above, and (y) the Class M-2
Principal Distribution Amount, until the Certificate Principal Balance
of the Class M-2 Certificates has been reduced to zero;
FOURTH, to the Holders of the Class M-3 Certificates, the lesser of
(x) the excess of (i) the Principal Distribution Amount over (ii) the
sum of the amounts distributed to the holders of the Class A-1
Certificates under clause FIRST above, to the Holders of the Class M-1
Certificates pursuant to clause SECOND above and to the Holders of the
Class M-2 Certificates pursuant to clause THIRD above, and (y) the
Class M-3 Principal Distribution Amount, until the Certificate
Principal Balance of the Class M-3 Certificates has been reduced to
zero;
FIFTH, to the Holders of the Class M-4 Certificates, the lesser of (x)
the excess of (i) the Principal Distribution Amount over (ii) the sum
of the amounts distributed to the holders of the Class A-1
Certificates under clause FIRST above, to the Holders of the Class M-1
Certificates pursuant to clause SECOND above, to the Holders of the
Class M-2 Certificates pursuant to clause THIRD above and to the
Holders of the Class M-3 Certificates pursuant to clause FOURTH above
and (y) the Class M-4 Principal Distribution Amount, until the
Certificate Principal Balance of the Class M-4 Certificates has been
reduced to zero.
(5) On each Distribution Date, the Net Monthly Excess Cashflow (or, in
the case of clause FIRST below, the Net Monthly Excess Cashflow exclusive of any
Overcollateralization Reduction Amount) shall be distributed as follows:
FIRST, to the Holders of the Class or Classes of Certificates then
entitled to receive distributions in respect of principal, in an
amount equal to any Extra Principal Distribution Amount, payable to
such Holders in accordance with the priorities set forth in Section
5.01(b) below;
SECOND, sequentially, to the Holders of the Class X-0, Xxxxx X-0,
Class M-3 and Class M-4 Certificates, in that order, in an amount
equal to the Interest Carry Forward Amount allocable to each such
Class;
THIRD, sequentially, to the Holders of the Class X-0, Xxxxx X-0, Class
M-3 and Class M-4 Certificates, in that order, in an amount equal to
the Allocated Realized Loss Amount allocable to each such Class;
FOURTH, to the Holders of the Class A-1 Certificates, in an amount
equal to such Certificates' allocated share of any Prepayment Interest
Shortfalls on the related
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Mortgage Loans to the extent not covered by payments pursuant to
Section 3.22 or 4.19 and any shortfalls resulting from the application
of the Relief Act or similar state or local law or the bankruptcy code
with respect to the related Mortgage Loans to the extent not
previously reimbursed pursuant to 1.02;
FIFTH, to the Holders of the Class X-0, Xxxxx X-0, Class M-3 and Class
M-4 Certificates, in that order, in an amount equal to such
certificates' share of any Prepayment Interest Shortfalls on the
Mortgage Loans to the extent not covered by payments pursuant to
Sections 3.22 or Section 4.18 and any Relief Act Interest Shortfall,
in each case that were allocated to such Class for such Distribution
Date and for any prior Distribution Date, to the extent not previously
reimbursed pursuant to Section 1.02;
SIXTH, to the Reserve Fund from amounts otherwise payable to the Class
CE Certificates (other than the portion of the Servicing Fee payable
to the Class CE Certificates, if any, which shall be distributed to
the Holders thereof), and then from the Reserve Fund to the Class A-1,
Class M-1, Class M-2, Class M-3 and Class M-4 Certificates, in that
order, in an amount equal to the unpaid amount of any Net WAC Rate
Carryover Amount for each such Class for such Distribution Date;
SEVENTH, to the Reserve Fund, the amount required to be deposited
therein pursuant to Section 3.24(b), after taking into account amounts
received under the Cap Contract;
EIGHTH, to the Holders of the Class CE Certificates the Interest
Distribution Amount and any Overcollateralization Reduction Amount for
such Distribution Date; and
NINTH, to the Holders of the Class R Certificates, in respect of the
Class R-II Interest, any remaining amounts; provided that if such
Distribution Date is the Distribution Date immediately following the
expiration of the latest Prepayment Charge term as identified on the
Mortgage Loan Schedule or any Distribution Date thereafter, then any
such remaining amounts will be distributed first, to the Holders of
the Class P Certificates, until the Certificate Principal Balance
thereof has been reduced to zero; and second, to the Holders of the
Class R Certificates.
On each Distribution Date, after making the distributions of the
Available Distribution Amount as set forth above, the Securities Administrator
will FIRST, withdraw from the Reserve Fund all income from the investment of
funds in the Reserve Fund and distribute such amount to the Holders of the Class
CE Certificates, and SECOND, withdraw from the Reserve Fund, to the extent of
amounts remaining on deposit therein, the amount of any Net WAC Rate Carryover
Amount for such Distribution Date and distribute such amount sequentially to the
Class A-1, Class M-1, Class M-2, Class M-3 and Class M-4 Certificates, in that
order, in each case to the extent to the extent any Net WAC Rate Carryover
Amount is allocable to each such Class.
(b)(i) On each Distribution Date (a) prior to the Stepdown
Date or (b) on which a Trigger Event is in effect, the Extra Principal
Distribution Amount shall be distributed in the following order of
priority;
FIRST, to the Holders of the Class A-1 Certificates until the
Certificate Principal Balance of the Class A-1 Certificates has been
reduced to zero; and
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SECOND, sequentially, to the Holders of the Class X-0, Xxxxx X-0,
Class M-3 and Class M-4 Certificates, in that order, until the
Certificate Principal Balance of each such Class has been reduced to
zero.
(ii) On each Distribution Date (a) on or after the Stepdown
Date and (b) on which a Trigger Event is not in effect, distributions
of principal to the extent of the Extra Principal Distribution Amount
shall be distributed in the following order of priority:
FIRST, the lesser of (x) the Principal Distribution Amount and (y) the
Class A-1 Principal Distribution Amount, shall be distributed to the
Holders of the Class A-1 Certificates until the Certificate Principal
Balance of the Class A-1 Certificates has been reduced to zero;
SECOND, the lesser of (x) the excess of (i) the Principal Distribution
Amount over (ii) the amount distributed to the Holders of the Class
A-1 Certificates pursuant to clause FIRST of this Section 5.01(b)(ii)
and (y) the Class M-1 Principal Distribution Amount, shall be
distributed to the Holders of the Class M-1 Certificates, until the
Certificate Principal Balance of the Class M-1 Certificates has been
reduced to zero;
THIRD, the lesser of (x) the excess of (i) the Principal Distribution
Amount over (ii) the sum of the amounts distributed to the Holders of
the Class A-1 Certificates pursuant to clause FIRST of this Section
5.01(b)(ii) and to the Holders of the Class M-1 Certificates pursuant
to clause SECOND of this Section 5.01(b)(ii) and (y) the Class M-2
Principal Distribution Amount, shall be distributed to the Holders of
the Class M-2 Certificates, until the Certificate Principal Balance of
the Class M-2 Certificates has been reduced to zero;
FOURTH, the lesser of (x) the excess of (i) the Principal Distribution
Amount over (ii) the sum of the amounts distributed to the Holders of
the Class A-1 Certificates pursuant to clause FIRST of this Section
5.01(b)(ii), to the Holders of the Class M-1 Certificates pursuant to
clause SECOND of this Section 5.01(b)(ii) and to the Holders of the
Class M-2 Certificates pursuant to clause THIRD of this Section
5.01(b)(ii) and (y) the Class M-3 Principal Distribution Amount, shall
be distributed to the Holders of the Class M-3 Certificates, until the
Certificate Principal Balance of the Class M-3 Certificates has been
reduced to zero; and
FIFTH, the lesser of (x) the excess of (i) the Principal Distribution
Amount over (ii) the sum of the amounts distributed to the Holders of
the Class A-1 Certificates pursuant to clause FIRST of this Section
5.01(b)(ii), to the Holders of the Class M-1 Certificates pursuant to
clause SECOND of this Section 5.01(b)(ii), to the Holders of the Class
M-2 Certificates pursuant to clause THIRD of this Section 5.01(b)(ii)
and to the Holders of the Class M-3 Certificates pursuant to clause
FOURTH of this Section 5.01(b)(ii) and (y) the Class M-4 Principal
Distribution Amount, shall be distributed to the Holders of the Class
M-4 Certificates, until the Certificate Principal Balance of the Class
M-4 Certificates has been reduced to zero.
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(c) On each Distribution Date, the Securities Administrator
shall withdraw any amounts then on deposit in the Distribution Account
that represent Prepayment Charges and shall distribute such amounts to
the Class P Certificateholders as described above.
(d)All distributions made with respect to each Class of
Certificates on each Distribution Date shall be allocated PRO RATA
among the outstanding Certificates in such Class based on their
respective Percentage Interests. Payments in respect of each Class of
Certificates on each Distribution Date will be made to the Holders of
the respective Class of record on the related Record Date (except as
otherwise provided in Section 5.01(e) or Section 10.01 respecting the
final distribution on such Class), based on the aggregate Percentage
Interest represented by their respective Certificates, and shall be
made by wire transfer of immediately available funds to the account of
any such Holder at a bank or other entity having appropriate facilities
therefor, if such Holder shall have so notified the Securities
Administrator in writing at least five Business Days prior to the
Record Date immediately prior to such Distribution Date and is the
registered owner of Certificates having an initial aggregate
Certificate Principal Balance that is in excess of the lesser of (i)
$5,000,000 or (ii) two-thirds of the initial Certificate Principal
Balance of such Class of Certificates, or otherwise by check mailed by
first class mail to the address of such Holder appearing in the
Certificate Register. The final distribution on each Certificate will
be made in like manner, but only upon presentment and surrender of such
Certificate at the Corporate Trust Office of the Securities
Administrator or such other location specified in the notice to
Certifcateholders of such final distribution.
Each distribution with respect to a Book-Entry Certificate
shall be paid to the Depository, as Holder thereof, and the Depository shall be
responsible for crediting the amount of such distribution to the accounts of its
Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such distribution to
the Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Certificate Owners that it represents. None of the Trustee, the
Depositor, the Servicer, the Securities Administrator or the Master Servicer
shall have any responsibility therefor except as otherwise provided by this
Agreement or applicable law.
(e) The rights of the Certificateholders to receive
distributions in respect of the Certificates, and all interests of the
Certificateholders in such distributions, shall be as set forth in this
Agreement. None of the Holders of any Class of Certificates, the
Trustee, the Servicer, the Securities Administrator or the Master
Servicer shall in any way be responsible or liable to the Holders of
any other Class of Certificates in respect of amounts properly
previously distributed on the Certificates.
(f) Except as otherwise provided in Section 10.01, whenever
the Securities Administrator expects that the final distribution with
respect to any Class of Certificates will be made on the next
Distribution Date, the Securities Administrator shall, no later than
three (3) days before the related Distribution Date, mail to each
Holder on such date of such Class of Certificates a notice to the
effect that:
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(i) the Securities Administrator expects that the final
distribution with respect to such Class of Certificates will be made
on such Distribution Date but only upon presentation and surrender
of such Certificates at the office of the Securities Administrator
therein specified, and
(ii) no interest shall accrue on such Certificates from and
after the end of the related Interest Accrual Period.
Any funds not distributed to any Holder or Holders of
Certificates of such Class on such Distribution Date because of the failure of
such Holder or Holders to tender their Certificates shall, on such date, be set
aside and held in trust by the Securities Administrator and credited to the
account of the appropriate non-tendering Holder or Holders. If any Certificates
as to which notice has been given pursuant to this Section 5.01(f) shall not
have been surrendered for cancellation within six months after the time
specified in such notice, the Securities Administrator shall mail a second
notice to the remaining non-tendering Certificateholders to surrender their
Certificates for cancellation in order to receive the final distribution with
respect thereto. If within one year after the second notice all such
Certificates shall not have been surrendered for cancellation, the Securities
Administrator shall, directly or through an agent, mail a final notice to the
remaining non-tendering Certificateholders concerning surrender of their
Certificates but shall continue to hold any remaining funds for the benefit of
non-tendering Certificateholders. The costs and expenses of maintaining the
funds in trust and of contacting such Certificateholders shall be paid out of
the assets remaining in such trust fund. If within one year after the final
notice any such Certificates shall not have been surrendered for cancellation,
the Securities Administrator shall pay to the Depositor all such amounts, and
all rights of non-tendering Certificateholders in or to such amounts shall
thereupon cease. No interest shall accrue or be payable to any Certificateholder
on any amount held in trust by the Securities Administrator as a result of such
Certificateholder's failure to surrender its Certificate(s) on the final
Distribution Date for final payment thereof in accordance with this Section
5.01(f). Any such amounts held in trust by the Securities Administrator shall be
held uninvested in an Eligible Account.
(g) Notwithstanding anything to the contrary herein, (i) in
no event shall the Certificate Principal Balance of a Class A-1
Certificate or a Mezzanine Certificate be reduced more than once in
respect of any particular amount both (a) allocated to such Certificate
in respect of Realized Losses pursuant to Section 5.04 and (b)
distributed to the Holder of such Certificate in reduction of the
Certificate Principal Balance thereof pursuant to this Section 5.01
from Net Monthly Excess Cashflow and (ii) in no event shall the
Uncertificated Balance of a REMIC Regular Interest be reduced more than
once in respect of any particular amount both (a) allocated to such
REMIC Regular Interest in respect of Realized Losses pursuant to
Section 5.04 and (b) distributed on such REMIC Regular Interest in
reduction of the Uncertificated Balance thereof pursuant to this
Section 5.01.
SECTION 5.02. STATEMENTS TO CERTIFICATEHOLDERS.
On each Distribution Date, the Securities Administrator (based
on the information set forth in the Servicer Report for such Distribution Date
and information provided by the Trustee or the counterparty to the Cap Contract
with respect to payments made pursuant to the
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Cap Contract) shall make available to each Holder of the Certificates, a
statement as to the distributions made on such Distribution Date setting forth:
(i) the amount of the distribution made on such Distribution
Date to the Holders of the Certificates of each Class allocable to
principal, and the amount of the distribution made on such
Distribution Date to the Holders of the Class P Certificates
allocable to Prepayment Charges;
(ii) the amount of the distribution made on such
Distribution Date to the Holders of the Certificates of each Class
allocable to interest;
(iii) the aggregate Servicing Fee received by the Servicer
and Master Servicing Fee received by the Master Servicer during the
related Due Period;
(iv) the aggregate amount of P&I Advances for such
Distribution Date;
(v) Reserved;
(vi) the number, aggregate principal balance, weighted
average remaining term to maturity and weighted average Mortgage
Rate of the Mortgage Loans as of the related Due Date;
(vii) the number and aggregate unpaid principal balance of
Mortgage Loans (a) delinquent 30 to 59 days, (b) delinquent 60 to 89
days, (c) delinquent 90 or more days, in each case, as of the last
day of the preceding calendar month, (d) as to which foreclosure
proceedings have been commenced and (e) with respect to which the
related Mortgagor has filed for protection under applicable
bankruptcy laws, with respect to whom bankruptcy proceedings are
pending or with respect to whom bankruptcy protection is in force;
(viii) 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 Scheduled
Principal Balance of such Mortgage Loan;
(ix) if available, 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;
(x) the aggregate amount of Principal Prepayments made
during the related Prepayment Period and the aggregate amount of any
Prepayment Charges received in respect thereof;
(xi) the aggregate amount of Realized Losses incurred during
the related Prepayment Period and the aggregate amount of Realized
Losses incurred since the Closing Date;
(xii) the aggregate amount of Extraordinary Trust Fund
Expenses withdrawn from the Distribution Account for such
Distribution Date;
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(xiii) the aggregate Certificate Principal Balance of each
Class of Certificates, after giving effect to the distributions, and
allocations of Realized Losses, made on such Distribution Date,
separately identifying any reduction thereof due to allocations of
Realized Losses;
(xiv) the Certificate Factor for each such Class of
Certificates applicable to such Distribution Date;
(xv) the Interest Distribution Amount in respect of the
Class A-1 Certificates, the Mezzanine Certificates and the Class CE
Certificates for such Distribution Date and the Interest Carry
Forward Amount, if any, with respect to the Class A-1 Certificates
and the Mezzanine Certificates on such Distribution Date, and in the
case of the Class A-1 Certificates and the Mezzanine Certificates
separately identifying any reduction thereof due to allocations of
Realized Losses, Prepayment Interest Shortfalls, Relief Act Interest
Shortfalls and Net WAC Rate Carryover Amounts;
(xvi) the aggregate amount of any Prepayment Interest
Shortfall for such Distribution Date, to the extent not covered by
payments by the Servicer pursuant to Section 3.22 or the Master
Servicer pursuant to Section 4.18;
(xvii) the aggregate amount of Relief Act Interest
Shortfalls for such Distribution Date;
(xviii) the Required Overcollateralization Amount and the
Credit Enhancement Percentage for such Distribution Date;
(xix) the Overcollateralization Increase Amount, if any, for
such Distribution Date;
(xx) the Overcollateralization Reduction Amount, if any, for
such Distribution Date;
(xxi) the Net WAC Rate Carryover Amount, if any, for such
Distribution Date;
(xxii) the Net WAC Rate Carryover Amount, if any,
outstanding after reimbursements therefor on such Distribution Date
and any amounts received under the Cap Contract;
(xxiii) the respective Pass-Through Rates applicable to the
Class A-1 Certificates, the Mezzanine Certificates and the Class CE
Certificates for such Distribution Date;
(xxiv) the amount of any deposit to the Reserve Fund
contemplated by Section 3.24(b);
(xxv) the balance of the Reserve Fund prior to the deposit
or withdrawal of any amounts on such Distribution Date;
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(xxvi) the amount of any deposit to the Reserve Fund
pursuant to clause SEVENTH of Section 5.01(a)(5);
(xxvii) the balance of the Reserve Fund after all deposits
and withdrawals on such Distribution Date;
(xxviii) the Loss Severity Percentage with respect to each
Mortgage Loan;
(xxix) the Aggregate Loss Severity Percentage; and
(xxx) the number and aggregate unpaid principal balance of
(a) Mortgage Loans with respect to which bankruptcy protection is in
force that are delinquent 60 or more days under an applicable
bankruptcy plan as of the last day of the preceding calendar month
and (b) Mortgage Loans that are the subject of forebearance plans
that are delinquent 60 or more days under an applicable forebearance
plan as of the last day of the preceding calendar month.
The Securities Administrator will make such statement (and, at
its option, any additional files containing the same information in an
alternative format) available each month to the Certificateholders and the
Rating Agencies via the Securities Administrator's internet website. The
Securities Administrator's internet website shall initially be located at
http:\\xxx.xxxxxxx.xxx and assistance in using the website can be obtained by
calling the Securities Administrator's customer service desk at 0-000-000-0000.
Parties that are unable to use the above distribution options are entitled to
have a paper copy mailed to them via first class mail by calling the customer
service desk and indicating such. The Securities Administrator shall have the
right to change the way such statements are distributed in order to make such
distribution more convenient and/or more accessible to the above parties and the
Securities Administrator shall provide timely and adequate notification to all
above parties regarding any such changes.
In the case of information furnished pursuant to subclauses
(i) and (ii) above, the amounts shall be expressed as a dollar amount per Single
Certificate of the relevant Class.
Within a reasonable period of time after the end of each
calendar year, the Securities Administrator shall furnish upon request to each
Person who at any time during the calendar year was a Holder of a Regular
Certificate a statement containing the information set forth in subclauses (i)
through (iii) above, aggregated for such calendar year or applicable portion
thereof during which such person was a Certificateholder. Such obligation of the
Securities Administrator shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Securities
Administrator pursuant to any requirements of the Code as from time to time are
in force.
Within a reasonable period of time after the end of each
calendar year, the Securities Administrator shall furnish upon request to each
Person who at any time during the calendar year was a Holder of a Residual
Certificate a statement setting forth the amount, if any, actually distributed
with respect to the Residual Certificates, as appropriate, aggregated for such
calendar year or applicable portion thereof during which such Person was a
Certificateholder.
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The Securities Administrator shall, upon request, furnish to
each Certificateholder during the term of this Agreement, such periodic,
special, or other reports or information, whether or not provided for herein, as
shall be reasonable with respect to the Certificateholder, as applicable, or
otherwise with respect to the purposes of this Agreement, all such reports or
information to be provided at the expense of the Certificateholder, in
accordance with such reasonable and explicit instructions and directions as the
Certificateholder may provide.
On each Distribution Date the Securities Administrator shall
provide Bloomberg Financial Markets, L.P. ("Bloomberg") CUSIP level factors for
each Class of Certificates as of such Distribution Date, using a format and
media mutually acceptable to the Securities Administrator and Bloomberg.
SECTION 5.03. SERVICER REPORTS; P&I ADVANCES.
(a) On or before 12:00 noon New York time on the 18th
calendar day of each month, and if the 18th calendar day is not a
Business Day, the immediately following Business Day, the Servicer
shall deliver to the Master Servicer and the Securities Administrator
by telecopy or electronic mail (or by such other means as the Servicer,
the Master Servicer and the Securities Administrator may agree from
time to time) a remittance report containing such information with
respect to the Mortgage Loans and the related Distribution Date as is
reasonably available to the Servicer as the Master Servicer or the
Securities Administrator may reasonably require so as to enable the
Master Servicer to master service the Mortgage Loans and oversee the
servicing by the Servicer and the Securities Administrator to fulfill
its obligations hereunder with respect to securities and tax reporting.
Any report delivered by the Servicer pursuant to this Section 5.03(a)
shall include the amount collected by the Servicer in respect of
Arrearages and principal due on the Mortgage Loans prior to the Cut-off
Date.
(b) The amount of P&I Advances to be made by the Servicer on
any Distribution Date shall equal, subject to Section 5.03(d), (i) the
aggregate amount of Monthly Payments (net of the related Servicing
Fees), due during the related Due Period in respect of the Mortgage
Loans, which Monthly Payments were delinquent as of the close of
business on the related Determination Date and (ii) with respect to
each REO Property, which was acquired during or prior to the related
Prepayment Period and as to which an REO Disposition did not occur
during the related Prepayment Period, an amount equal to the excess, if
any, of the REO Imputed Interest on such REO Property for the most
recently ended calendar month, over the net income from such REO
Property deposited in the Collection Account pursuant to Section 3.21
for distribution on such Distribution Date; provided, however, the
Servicer shall not be required to make P&I Advances with respect to any
Monthly Payments due on a Mortgage Loan prior to the Cut-off Date, any
Relief Act Interest Shortfalls, or with respect to Prepayment Interest
Shortfalls in excess of its obligations under Section 3.22. 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 such Balloon
Mortgage Loan.
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By 12:00 noon New York time on the Servicer Remittance Date,
the Servicer shall remit in immediately available funds to the Securities
Administrator for deposit in the Distribution Account an amount equal to the
aggregate amount of P&I 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 any Amounts Held For Future
Distribution on deposit therein (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 5.03, used by the
Servicer in discharge of any such P&I Advance) or (iii) in the form of any
combination of (i) and (ii) aggregating the total amount of P&I Advances to be
made by the Servicer with respect to the Mortgage Loans. In addition, the
Servicer shall have the right to reimburse itself for any outstanding P&I
Advance made from its own funds from Amounts Held for Future Distribution. Any
Amounts Held For Future Distribution used by the Servicer to make P&I Advances
or to reimburse itself for outstanding P&I Advances shall be appropriately
reflected in the Servicer's records and replaced by the Servicer by deposit in
the Collection Account no later than the close of business on the Servicer
Remittance Date immediately following the Due Period or Prepayment Period for
which such amounts relate. The Securities Administrator will notify the Servicer
and the Master Servicer by the close of business on the Business Day prior to
the Distribution Date in the event that the amount remitted by the Servicer to
the Securities Administrator on such date is less than the P&I Advances required
to be made by the Servicer for the related Distribution Date.
(c) The obligation of the Servicer to make such P&I Advances
is mandatory, notwithstanding any other provision of this Agreement
but subject to (d) below, and, with respect to any Mortgage Loan or
REO Property, shall continue until a Final Recovery Determination in
connection therewith or the removal thereof from the Trust Fund
pursuant to any applicable provision of this Agreement, except as
otherwise provided in this Section.
(d) Notwithstanding anything herein to the contrary, no P&I
Advance or Servicing Advance shall be required to be made hereunder
by the Servicer if such P&I Advance or Servicing Advance would, if
made, constitute a Nonrecoverable P&I Advance or Nonrecoverable
Servicing Advance, respectively. The determination by the Servicer
that it has made a Nonrecoverable P&I Advance or a Nonrecoverable
Servicing Advance or that any proposed P&I Advance or Servicing
Advance, if made, would constitute a Nonrecoverable P&I Advance or
Nonrecoverable Servicing Advance, respectively, shall be evidenced
by a certification of a Servicing Officer delivered to the Master
Servicer.
(e) Subject to and in accordance with the provisions of
Article VIII, in the event the Servicer fails to make any required
P&I Advance, then the Master Servicer (in its capacity as successor
servicer) or any other successor Servicer shall be required to make
such P&I Advance on the Distribution Date on which the Servicer was
required to make such Advance, subject to its determination of
recoverability.
SECTION 5.04. ALLOCATION OF REALIZED LOSSES.
(a) Prior to the Determination Date, the Servicer shall
determine as to each Mortgage Loan and REO Property and include in
the monthly remittance report provided to
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the Master Servicer and the Securities Administrator (substantially
in the form of Schedule 4 hereto) such information as is reasonably
available to the Servicer as the Master Servicer or the Securities
Administrator may reasonably require so as to enable the Master
Servicer to master service the Mortgage Loans and oversee the
servicing by the Servicer and the Securities Administrator to
fulfill its obligations hereunder with respect to securities and tax
reporting, which shall include, but not be limited to: (i) the total
amount of Realized Losses, if any, incurred in connection with any
Final Recovery Determinations made during the related Prepayment
Period; and (ii) the respective portions of such Realized Losses
allocable to interest and allocable to principal. Prior to each
Determination Date, the Servicer shall also determine as to each
Mortgage Loan: (i) the total amount of Realized Losses, if any,
incurred in connection with any Deficient Valuations made during the
related Prepayment Period; and (ii) the total amount of Realized
Losses, if any, incurred in connection with Debt Service Reductions
in respect of Monthly Payments due during the related Due Period.
(b) All Realized Losses on the Mortgage Loans allocated to
any REMIC I Regular Interest pursuant to Section 5.04(c) on the
Mortgage Loans shall, on any Distribution Date, first, cause a
reduction in Net Monthly Excess Cashflow for that Distribution Date
and second, cause a reduction in the Overcollateraliztion Amount for
such Distribution Date until reduced to zero. To the extent that
Realized Losses on a Distribution Date cause the aggregate
Certificate Principal Balance of the Offered Certificates after
taking into account all distributions on such Distribution Date to
exceed the aggregate Scheduled Principal Balance of the Mortgage
Loans as of the last day of the Due Period, such excess shall be
allocated by the Securities Administratior as follows; first, to the
Class M-4 Certificates, until the Certificate Principal Balance
thereof has been reduced to zero; second, to the Class M-3
Certificates, until the Certificate Principal Balance thereof has
been reduced to zero; third, to the Class M-2 Certificates, until
the Certificate Principal Balance thereof has been reduced to zero;
and fourth, to the Class M-1 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero. All Realized
Losses to be allocated to the Certificate Principal Balances of all
Classes on any Distribution Date shall be so allocated after the
actual distributions to be made on such date as provided above. All
references above to the Certificate Principal Balance of any Class
of Certificates shall be to the Certificate Principal Balance of
such Class immediately prior to the relevant Distribution Date,
before reduction thereof by any Realized Losses, in each case to be
allocated to such Class of Certificates, on such Distribution Date.
Any allocation of Realized Losses to a Mezzanine Certificate
on any Distribution Date shall be made by reducing the Certificate Principal
Balance thereof by the amount so allocated; any allocation of Realized Losses to
a Class CE Certificates shall be made by reducing the amount otherwise payable
in respect thereof pursuant to clause EIGHTH of Section 5.01(a)(5). No
allocations of any Realized Losses shall be made to the Certificate Principal
Balances of the Class A-1 Certificates or Class P Certificates.
As used herein, an allocation of a Realized Loss on a "pro
rata basis" among two or more specified Classes of Certificates means an
allocation on a pro rata basis, among the various Classes so specified, to each
such Class of Certificates on the basis of their then outstanding Certificate
Principal Balances prior to giving effect to distributions to be made on such
Distribution Date. All Realized Losses and all other losses allocated to a Class
of
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Certificates hereunder will be allocated among the, Certificates of such Class
in proportion to the Percentage Interests evidenced thereby.
In addition, in the event that the Servicer receives any
Subsequent Recoveries, the Servicer shall deposit such funds into the Collection
Account pursuant to Section 3.08. If, after taking into account such Subsequent
Recoveries, the amount of a Realized Loss is reduced, the amount of such
Subsequent Recoveries will be applied to increase the Certificate Principal
Balance of the Class of Subordinate Certificates with the highest payment
priority to which Realized Losses have been allocated, but not by more than the
amount of Realized Losses previously allocated to that Class of Subordinate
Certificates pursuant to this Section 5.04 and not previously reimbursed to such
Class of Subordinate Certificates with Net Monthly Excess Cashflow pursuant to
clause THIRD of Section 5.01(a)(5). The amount of any remaining Subsequent
Recoveries will be applied to sequentially increase the Certificate Principal
Balance of the Subordinate Certificates, beginning with the Class of Subordinate
Certificates with the next highest payment priority, up to the amount of such
Realized Losses previously allocated to such Class of Subordinate Certificates
pursuant to this Section 5.04 and not previously reimbursed to such Class of
Subordinate Certificates with Net Monthly Excess Cashflow pursuant to clause
THIRD of Section 5.01(a)(5). Holders of such Certificates will not be entitled
to any payment in respect of current interest on the amount of such increases
for any Interest Accrual Period preceding the Distribution Date on which such
increase occurs. Any such increases shall be applied to the Certificate
Principal Balance of each Subordinate Certificate of such Class in accordance
with its respective Percentage Interest.
(c) Realized Losses on the Mortgage Loans shall be allocated
by the Trustee, based solely on the instructions of the Securities
Administrator, on each Distribution Date to the following REMIC I
Regular Interests in the specified percentages, as follows: first, to
Uncertificated Interest payable to the REMIC I Regular Interest I-LTAA
and REMIC I Regular Interest I-LTZZ up to an aggregate amount equal to
the REMIC I Interest Loss Allocation Amount, 98.00% and 2.00%,
respectively; second, to the Uncertificated Balances of the REMIC I
Regular Interest I-LTAA and REMIC I Regular Interest I-LTZZ up to an
aggregate amount equal to the REMIC I Principal Loss Allocation Amount,
98.00% and 2.00%, respectively; third, to the Uncertificated Balances
of REMIC I Regular Interest I-LTAA, REMIC I Regular Interest I-LTM4 and
REMIC I Regular Interest I-LTZZ, 98.00%, 1.00% and 1.00%, respectively,
until the Uncertificated Balance of REMIC I Regular Interest I-LTM4 has
been reduced to zero; fourth, to the Uncertificated Balances of REMIC I
Regular Interest I-LTAA, REMIC I Regular Interest I-LTM3 and REMIC I
Regular Interest I-LTZZ, 98.00%, 1.00% and 1.00%, respectively, until
the Uncertificated Balance of REMIC I Regular Interest I-LTM3 has been
reduced to zero; fifth, to the Uncertificated Balances of REMIC I
Regular Interest I-LTAA, REMIC I Regular Interest I-LTM2 and REMIC I
Regular Interest I-LTZZ, 98.00%, 1.00% and 1.00%, respectively, until
the Uncertificated Balance of REMIC I Regular Interest I-LTM2 has been
reduced to zero; and sixth, to the Uncertificated Balances of REMIC I
Regular Interest I-LTAA, REMIC I Regular Interest I-LTM1 and REMIC I
Regular Interest I-LTZZ, 98.00%, 1.00% and 1.00%, respectively, until
the Uncertificated Balance of REMIC I Regular Interest I-LTM1 has been
reduced to zero.
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SECTION 5.05. COMPLIANCE WITH WITHHOLDING REQUIREMENTS.
Notwithstanding any other provision of this Agreement, the
Trustee and the Securities Administrator shall comply with all federal
withholding requirements respecting payments to Certificateholders of interest
or original issue discount that the Trustee reasonably believes are applicable
under the Code. The consent of Certificateholders shall not be required for such
withholding. In the event the Securities Administrator does withhold any amount
from interest or original issue discount payments or advances thereof to any
Certificateholder pursuant to federal withholding requirements, the Securities
Administrator shall indicate the amount withheld to such Certificateholders.
SECTION 5.06. REPORTS FILED WITH SECURITIES AND EXCHANGE
COMMISSION.
The Depositor shall prepare or cause to be prepared the
initial current report on Form 8-K. Within 15 days after each Distribution Date,
the Securities Administrator shall, in accordance with industry standards, file
with the Commission via the Electronic Data Gathering and Retrieval System
("XXXXX"), a Form 8-K (or other comparable Form containing the same or
comparable information or other information mutually agreed upon) with a copy of
the statement to be furnished to the Certificateholders for such Distribution
Date as an exhibit thereto. Prior to January 30, 2005, the Securities
Administrator shall, in accordance with industry standards, file a Form 15
Suspension Notice with respect to the Trust Fund, if applicable. Prior to (i)
March 20, 2005 and (ii) unless and until a Form 15 Suspension Notice shall have
been filed, prior to March 20th of each year thereafter, the Master Servicer
shall provide the Securities Administrator with a Master Servicer Certification,
together with a copy of the annual independent accountant's servicing report and
annual statement of compliance of the Servicer to be delivered pursuant to this
Agreement, and, if applicable, the annual independent accountant's servicing
report and annual statement of compliance to be delivered by the Master Servicer
pursuant to Sections 4.15 and 4.16. Prior to (i) March 31, 2005 and (ii) unless
and until a Form 15 Suspension Notice shall have been filed, March 31 of each
year thereafter, the Securities Administrator shall file a Form 10-K, in
substance conforming to industry standards, with respect to the Trust. Such Form
10-K shall include the Master Servicer Certification and other documentation
provided by the Master Servicer pursuant to the second preceding sentence. The
Depositor hereby grants to the Securities Administrator a limited power of
attorney to execute and file each such document on behalf of the Depositor. Such
power of attorney shall continue until either the earlier of (i) receipt by the
Securities Administrator from the Depositor of written termination of such power
of attorney and (ii) the termination of the Trust Fund. The Depositor agrees to
promptly furnish to the Securities Administrator, from time to time upon
request, such further information, reports and financial statements within its
control related to this Agreement, the Mortgage Loans as the Securities
Administrator reasonably deems appropriate to prepare and file all necessary
reports with the Commission. The Securities Administrator shall have no
responsibility to file any items other than those specified in this Section
5.06; provided, however, the Securities Administrator will cooperate with the
Depositor in connection with any additional filings with respect to the Trust
Fund as the Depositor deems necessary under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). Fees and expenses incurred by the Securities
Administrator in connection with this Section 5.06 shall not be reimbursable
from the Trust Fund.
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ARTICLE VI
THE CERTIFICATES
SECTION 6.01. THE CERTIFICATES.
(a) The Certificates in the aggregate will represent the
entire beneficial ownership interest in the Mortgage Loans and all
other assets included in REMIC I.
The Certificates will be substantially in the forms annexed
hereto as Exhibits A-1 through A-5. The Certificates of each Class will be
issuable in registered form only, in denominations of authorized Percentage
Interests as described in the definition thereof. Each Certificate will share
ratably in all rights of the related Class.
Upon original issue, the Certificates shall be executed and
authenticated by the Securities Administrator and delivered by the Trustee to
and upon the written order of the Depositor. The Certificates shall be executed
by manual or facsimile signature on behalf of the Trust by the Securities
Administrator by an authorized signatory. Certificates bearing the manual or
facsimile signatures of individuals who were at any time the proper officers of
the Securities Administrator shall bind the Trust, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Certificates or did not hold such offices at
the date of such Certificates. No Certificate shall be entitled to any benefit
under this Agreement or be valid for any purpose, unless there appears on such
Certificate a certificate of authentication substantially in the form provided
herein executed by the Securities Administrator by manual signature, and such
certificate of authentication shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication.
(b) The Class A-1 Certificates and the Mezzanine
Certificates shall initially be issued as one or more Certificates
held by the Book-Entry Custodian or, if appointed to hold such
Certificates as provided below, the Depository and registered in the
name of the Depository or its nominee and, except as provided below,
registration of such Certificates may not be transferred by the
Securities Administrator except to another Depository that agrees to
hold such Certificates for the respective Certificate Owners with
Ownership Interests therein. The Certificate Owners shall hold their
respective Ownership Interests in and to such Certificates through
the book-entry facilities of the Depository and, except as provided
below, shall not be entitled to definitive, fully registered
Certificates ("Definitive Certificates") in respect of such
Ownership Interests. All transfers by Certificate Owners of their
respective Ownership Interests in the Book-Entry Certificates shall
be made in accordance with the procedures established by the
Depository Participant or brokerage firm representing such
Certificate Owner. Each Depository Participant shall only transfer
the Ownership Interests in the Book-Entry Certificates of
Certificate Owners it represents or of brokerage firms for which it
acts as agent in accordance with the Depository's normal procedures.
The Securities Administrator is hereby initially appointed as the
Book-Entry Custodian and hereby agrees to act as such in accordance
herewith and in accordance with the agreement that it has with the
Depository authorizing it to act as such. The Book-Entry Custodian
may, and, if it is no longer qualified to act as such, the
Book-Entry Custodian shall, appoint, by a written instrument
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delivered to the Depositor, the Servicer and, if the Trustee is not
the Book-Entry Custodian, the Trustee, any other transfer agent
(including the Depository or any successor Depository) to act as
Book-Entry Custodian under such conditions as the predecessor
Book-Entry Custodian and the Depository or any successor Depository
may prescribe, provided that the predecessor Book-Entry Custodian
shall not be relieved of any of its duties or responsibilities by
reason of any such appointment of other than the Depository. If the
Securities Administrator resigns or is removed in accordance with
the terms hereof, the successor Securities Administrator or, if it
so elects, the Depository shall immediately succeed to its
predecessor's duties as Book-Entry Custodian. The Depositor shall
have the right to inspect, and to obtain copies of, any Certificates
held as Book-Entry Certificates by the Book-Entry Custodian.
(c) The Trustee, the Servicer, the Securities Administrator,
the Master Servicer and the Depositor may for all purposes
(including the making of payments due on the Book-Entry
Certificates) deal with the Depository as the authorized
representative of the Certificate Owners with respect to the
Book-Entry Certificates for the purposes of exercising the rights of
Certificateholders hereunder. The rights of Certificate Owners with
respect to the Book-Entry Certificates shall be limited to those
established by law and agreements between such Certificate Owners
and the Depository Participants and brokerage firms representing
such Certificate Owners. Multiple requests and directions from, and
votes of, the Depository as Holder of the Book-Entry Certificates
with respect to any particular matter shall not be deemed
inconsistent if they are made with respect to different Certificate
Owners. The Securities Administrator may establish a reasonable
record date in connection with solicitations of consents from or
voting by Certificateholders and shall give notice to the Depository
of such record date.
If (i)(A) the Depositor advises the Securities Administrator
in writing that the Depository is no longer willing or able to properly
discharge its responsibilities as Depository, and (B) the Depositor is unable to
locate a qualified successor, (ii) the Depositor at its option advises the
Securities Administrator in writing that it elects to terminate the book-entry
system through the Depository or (iii) after the occurrence of a Servicer Event
of Default, Certificate Owners representing in the aggregate not less than 51%
of the Ownership Interests of the Book-Entry Certificates advise the Securities
Administrator through the Depository, in writing, that the continuation of a
book-entry system through the Depository is no longer in the best interests of
the Certificate Owners, the Securities Administrator shall notify all
Certificate Owners, through the Depository, of the occurrence of any such event
and of the availability of Definitive Certificates to Certificate Owners
requesting the same. Upon surrender to the Securities Administrator of the
Book-Entry Certificates by the Book-Entry Custodian or the Depository, as
applicable, accompanied by registration instructions from the Depository for
registration of transfer, the Securities Administrator shall cause the
Definitive Certificates to be issued. Such Definitive Certificates will be
issued in minimum denominations of $10,000 except that any beneficial ownership
that was represented by a Book-Entry Certificate in an amount less than $10,000
immediately prior to the issuance of a Definitive Certificate shall be issued in
a minimum denomination equal to the amount represented by such Book-Entry
Certificate. None of the Depositor, the Servicer, the Master Servicer, the
Securities Administrator or the Trustee shall be liable for any delay in the
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Certificates all references herein to obligations imposed upon or to be
performed by the
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Depository shall be deemed to be imposed upon and performed by the Securities
Administrator, to the extent applicable with respect to such Definitive
Certificates, and the Securities Administrator shall recognize the Holders of
the Definitive Certificates as Certificateholders hereunder.
SECTION 6.02. REGISTRATION OF TRANSFER AND EXCHANGE OF
CERTIFICATES.
(a) The Securities Administrator shall cause to be kept at
one of the offices or agencies to be appointed by the Securities
Administrator in accordance with the provisions of Section 9.11, a
Certificate Register for the Certificates in which, subject to such
reasonable regulations as it may prescribe, the Securities
Administrator shall provide for the registration of Certificates and
of transfers and exchanges of Certificates as herein provided.
(b) No transfer of any Class CE Certificate, Class P
Certificate or Residual Certificate shall be made unless that
transfer is made pursuant to an effective registration statement
under the Securities Act of 1933, as amended (the "1933 Act"), and
effective registration or qualification under applicable state
securities laws, or is made in a transaction that does not require
such registration or qualification. In the event that such a
transfer of a Class CE Certificate, Class P Certificate or Residual
Certificate is to be made without registration or qualification
(other than in connection with the initial transfer of any such
Certificate by the Depositor), the Securities Administrator shall
require receipt of: (i) if such transfer is purportedly being made
in reliance upon Rule 144A under the 1933 Act, written
certifications from the Certificateholder desiring to effect the
transfer and from such Certificateholder's prospective transferee,
substantially in the form attached hereto as Exhibit B-1; (ii) if
such transfer is purportedly being made in reliance upon Rule 501(a)
under the 1933 Act, written certifications from the
Certificateholder desiring to effect the transfer and from such
Certificateholder's prospective transferee, substantially in the
form attached hereto as Exhibit B-2; (iii) if such transfer is
purportedly being made in reliance on Regulation S, a written
certification from the prospective transferee, substantially in the
form attached hereto as Exhibit B-1 and (iv) in all other cases, an
Opinion of Counsel satisfactory to the Securities Administrator that
such transfer may be made without such registration or qualification
(which Opinion of Counsel shall not be an expense of the Trust Fund
or of the Depositor, the Trustee, the Master Servicer, the
Securities Administrator or the Servicer), together with copies of
the written certification(s) of the Certificateholder desiring to
effect the transfer and/or such Certificateholder's prospective
transferee upon which such Opinion of Counsel is based, if any.
Neither of the Depositor nor the Securities Administrator is
obligated to register or qualify any such Certificates under the
1933 Act or any other securities laws or to take any action not
otherwise required under this Agreement to permit the transfer of
such Certificates without registration or qualification. Any
Certificateholder desiring to effect the transfer of any such
Certificate shall, and does hereby agree to, indemnify the Trustee,
the Depositor, the Master Servicer, the Securities Administrator and
the Servicer 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.
(c) No transfer of a Class CE Certificate, Class P
Certificate or a Residual Certificate or any interest therein shall
be made to any Plan subject to ERISA or Section 4975 of the Code,
any Person acting, directly or indirectly, on behalf of any such
Plan or any Person
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acquiring such Certificates with "Plan Assets" of a Plan within the
meaning of the Department of Labor regulation promulgated at 29
C.F.R. ss. 2510.3-101 ("Plan Assets") unless the Securities
Administrator is provided with an Opinion of Counsel on which the
Depositor, the Master Servicer, the Securities Administrator, the
Trustee and the Servicer may rely, which establishes to the
satisfaction of the Securities Administrator that the purchase of
such Certificates is permissible under applicable law, will not
constitute or result in any prohibited transaction under ERISA or
Section 4975 of the Code and will not subject the Depositor, the
Servicer, the Trustee, the Master Servicer, the Securities
Administrator or the Trust Fund to any obligation or liability
(including obligations or liabilities under ERISA or Section 4975 of
the Code) in addition to those undertaken in this Agreement, which
Opinion of Counsel shall not be an expense of the Depositor, the
Servicer, the Trustee, the Master Servicer, the Securities
Administrator or the Trust Fund. An Opinion of Counsel will not be
required in connection with the initial transfer of any such
Certificate by the Depositor to an affiliate of the Depositor (in
which case, the Depositor or any affiliate thereof shall have deemed
to have represented that such affiliate is not a Plan or a Person
investing Plan Assets) and the Securities Administrator shall be
entitled to conclusively rely upon a representation (which, upon the
request of the Securities Administrator, shall be a written
representation) from the Depositor of the status of such transferee
as an affiliate of the Depositor.
Each Transferee of a Mezzanine Certificate will be deemed to
have represented by virtue of its purchase or holding of such Certificate (or
interest therein) that either (a) such Transferee is not a Plan or purchasing
such Certificate with Plan Assets, (b) it has acquired and is holding such
Certificate in reliance on Prohibited Transaction Exemption ("PTE") 94-84 or FAN
97-03E, as amended by PTE 97-34, 62 Fed. Reg. 39021 (July 21, 1997), PTE
2000-58, 65 Fed. Reg. 67765 (November 13, 2000) and PTE 2002-41, 67 Fed. Reg.
54487 (August 22, 2002) (the "Exemption"), and that it understands that there
are certain conditions to the availability of the Exemption including that such
Certificate must be rated, at the time of purchase, not lower than "BBB-" (or
its equivalent) by a Rating Agency or (c) the following conditions are
satisfied: (i) such Transferee is an insurance company, (ii) the source of funds
used to purchase or hold such Certificate (or interest therein) is an "insurance
company general account" (as defined in PTCE 95-60, and (iii) the conditions set
forth in Sections I and III of PTCE 95-60 have been satisfied.
If any Certificate or any interest therein is acquired or held
in violation of the conditions described in this Section 6.02(c), the next
preceding permitted beneficial owner will be treated as the beneficial owner of
that Certificate, retroactive to the date of transfer to the purported
beneficial owner. Any purported beneficial owner whose acquisition or holding of
any certificate or interest therein was effected in violation of the conditions
described in this Section 6.02(c) shall indemnify and hold harmless the
Depositor, the Trustee, the Servicer, the Master Servicer, the Securities
Administrator and the Trust Fund from and against any and all liabilities,
claims, costs or expenses incurred by those parties as a result of that
acquisition or holding.
(d)(i) 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 authorized the
Securities Administrator or its designee under clause (iii)(A) below
to deliver payments to a Person other than such Person and to
negotiate the terms of any mandatory sale under clause (iii)(B)
below and to execute all instruments of Transfer and to do all other
things
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necessary in connection with any such sale. The rights of each
Person acquiring any Ownership Interest in a Residual Certificate
are expressly subject to the following provisions:
(A) Each Person holding or acquiring any Ownership
Interest in a Residual Certificate shall be a Permitted
Transferee and shall promptly notify the Securities
Administrator of any change or impending change in its status
as a Permitted Transferee.
(B) In connection with any proposed Transfer of any
Ownership Interest in a Residual Certificate, the Trustee
shall require delivery to it, and shall not register the
Transfer of any Residual Certificate until its receipt of, an
affidavit and agreement (a "Transfer Affidavit and Agreement,"
in the form attached hereto as Exhibit B-3) from the proposed
Transferee, in form and substance satisfactory to the
Securities Administrator, representing and warranting, among
other things, that such Transferee is a Permitted Transferee,
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 that is
not a Permitted Transferee, that for so long as it retains its
Ownership Interest in a Residual Certificate, it will endeavor
to remain a Permitted Transferee, and that it has reviewed the
provisions of this Section 6.02(d) and agrees to be bound by
them.
(C) Notwithstanding the delivery of a Transfer
Affidavit and Agreement by a proposed Transferee under clause
(B) above, if an authorized officer of the Securities
Administrator who is assigned to this transaction has actual
knowledge that the proposed Transferee is not a Permitted
Transferee, no Transfer of an Ownership Interest in a Residual
Certificate to such proposed Transferee shall be effected.
(D) Each Person holding or acquiring any Ownership
Interest in a Residual Certificate shall agree (x) to require
a Transfer Affidavit and Agreement from any other Person to
whom such Person attempts to transfer its Ownership Interest
in a Residual Certificate and (Y) not to transfer its
Ownership Interest unless it provides a Transferor Affidavit
(in the form attached hereto as Exhibit B-2) to the Securities
Administrator stating that, among other things, it has no
actual knowledge that such other Person is not a Permitted
Transferee.
(E) Each Person holding or acquiring an Ownership
Interest in a Residual Certificate, by purchasing an Ownership
Interest in such Certificate, agrees to give the Securities
Administrator written notice that it is a "pass-through
interest holder" within the meaning of temporary Treasury
regulation Section 1.67-3T(a)(2)(i)(A) immediately upon
acquiring an Ownership Interest in a Residual Certificate, if
it is, or is holding an Ownership Interest in a Residual
Certificate on behalf of, a "pass-through interest holder."
(ii) The Securities Administrator will register the Transfer
of any Residual Certificate only if it shall have received the
Transfer Affidavit and Agreement
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and all of such other documents as shall have been reasonably
required by the Securities Administrator as a condition to such
registration. In addition, no Transfer of a Residual Certificate
shall be made unless the Securities Administrator shall have
received a representation letter from the Transferee of such
Certificate to the effect that such Transferee is a Permitted
Transferee.
(iii) (A) If any purported Transferee shall become a Holder
of a Residual Certificate in violation of the provisions of this
Section 6.02(d), then the last preceding Permitted Transferee shall
be restored, to the extent permitted by law, to all rights as holder
thereof retroactive to the date of registration of such Transfer of
such Residual Certificate. The Securities Administrator shall be
under no liability to any Person for any registration of Transfer of
a Residual Certificate that is in fact not permitted by this Section
6.02(d) or for making any payments due on such Certificate to the
holder thereof or for taking any other action with respect to such
holder under the provisions of this Agreement.
(B) If any purported Transferee shall become
a holder of a Residual Certificate in violation of the
restrictions in this Section 6.02(d) and to the extent
that the retroactive restoration of the rights of the
holder of such Residual Certificate as described in
clause (iii)(A) above shall be invalid, illegal or
unenforceable, then the Securities Administrator shall
have the right, without notice to the holder or any
prior holder of such Residual Certificate, to sell such
Residual Certificate to a purchaser selected by the
Securities Administrator on such terms as the Securities
Administrator may choose. Such purported Transferee
shall promptly endorse and deliver each Residual
Certificate in accordance with the instructions of the
Securities Administrator. Such purchaser may be the
Securities Administrator itself or any Affiliate of the
Securities Administrator. The proceeds of such sale, net
of the commissions (which may include commissions
payable to the Securities Administrator or its
Affiliates), expenses and taxes due, if any, will be
remitted by the Securities Administrator to such
purported Transferee. The terms and conditions of any
sale under this clause (iii)(B) shall be determined in
the sole discretion of the Securities Administrator, and
the Securities Administrator shall not be liable to any
Person having an Ownership Interest in a Residual
Certificate as a result of its exercise of such
discretion.
(iv) The Securities Administrator shall make available to
the Internal Revenue Service and those Persons specified by the
REMIC Provisions all information necessary to compute any tax
imposed (A) as a result of the Transfer of an Ownership Interest in
a Residual Certificate to any Person who is a Disqualified
Organization, including the information described in Treasury
regulations sections 1.860D-1(b)(5) and 1.860E-2(a)(5) with respect
to the "excess inclusions" of such Residual Certificate and (B) as a
result of any regulated investment company, real estate investment
trust, common trust fund, partnership, trust, estate or organization
described in Section 1381 of the Code that holds an Ownership
Interest in a Residual Certificate having as among its record
holders at any time any Person which is a Disqualified Organization.
Reasonable
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compensation for providing such information may be charged or
collected by the Securities Administrator.
(v) The provisions of this Section 6.02(d) set forth prior
to this subsection (v) may be modified, added to or eliminated,
provided that there shall have been delivered to the Securities
Administrator at the expense of the party seeking to modify, add to
or eliminate any such provision the following:
(A) written notification from each Rating
Agency to the effect that the modification, addition to
or elimination of such provisions will not cause such
Rating Agency to downgrade its then-current ratings of
any Class of Certificates; and
(B) an Opinion of Counsel, in form and
substance satisfactory to the Securities Administrator,
to the effect that such modification of, addition to or
elimination of such provisions will not cause any Trust
REMIC to cease to qualify as a REMIC and will not cause
any Trust REMIC, as the case may be, to be subject to an
entity-level tax caused by the Transfer of any Residual
Certificate to a Person that is not a Permitted
Transferee or a Person other than the prospective
transferee to be subject to a REMIC-tax caused by the
Transfer of a Residual Certificate to a Person that is
not a Permitted Transferee.
(e) Subject to the preceding subsections, upon surrender for
registration of transfer of any Certificate at any office or agency of
the Securities Administrator maintained for such purpose pursuant to
Section 9.11, the Securities Administrator shall execute, authenticate
and deliver, in the name of the designated Transferee or Transferees,
one or more new Certificates of the same Class of a like aggregate
Percentage Interest.
(f) At the option of the Holder thereof, any Certificate may
be exchanged for other Certificates of the same Class with authorized
denominations and a like aggregate Percentage Interest, upon surrender
of such Certificate to be exchanged at any office or agency of the
Securities Administrator maintained for such purpose pursuant to
Section 9.11. Whenever any Certificates are so surrendered for
exchange, the Securities Administrator shall execute, authenticate and
deliver, the Certificates which the Certificateholder making the
exchange is entitled to receive. Every Certificate presented or
surrendered for transfer or exchange shall (if so required by the
Securities Administrator) be duly endorsed by, or be accompanied by a
written instrument of transfer in the form satisfactory to the
Securities Administrator duly executed by, the Holder thereof or his
attorney duly authorized in writing.
(g) No service charge to the Certificateholders shall be
made for any transfer or exchange of Certificates, but the Securities
Administrator may require payment of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any
transfer or exchange of Certificates.
(h) All Certificates surrendered for transfer and exchange
shall be canceled and destroyed by the Securities Administrator in
accordance with its customary procedures.
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SECTION 6.03. MUTILATED, DESTROYED, LOST OR STOLEN
CERTIFICATES.
If (i) any mutilated Certificate is surrendered to the
Securities Administrator, or the Securities Administrator receives evidence to
its satisfaction of the destruction, loss or theft of any Certificate and of the
ownership thereof, and (ii) there is delivered to Securities Administrator such
security or indemnity as may be required by it to save it harmless, then, in the
absence of actual knowledge by the Securities Administrator that such
Certificate has been acquired by a protected purchaser, the Securities
Administrator, shall execute, authenticate and deliver, in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of the same Class and of like denomination and Percentage Interest.
Upon the issuance of any new Certificate under this Section, the Securities
Administrator 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 Securities Administrator)
connected therewith. Any replacement Certificate issued pursuant to this Section
shall constitute complete and indefeasible evidence of ownership in the
applicable REMIC created hereunder, as if originally issued, whether or not the
lost, stolen or destroyed Certificate shall be found at any time.
SECTION 6.04. PERSONS DEEMED OWNERS.
The Depositor, the Servicer, the Trustee, the Master Servicer,
the Securities Administrator and any agent of any of them may treat the Person
in whose name any Certificate is registered as the owner of such Certificate for
the purpose of receiving distributions pursuant to Section 4.01 and for all
other purposes whatsoever, and none of the Depositor, the Servicer, the Trustee,
the Master Servicer, the Securities Administrator or any agent of any of them
shall be affected by notice to the contrary.
SECTION 6.05. CERTAIN AVAILABLE INFORMATION.
On or prior to the date of the first sale of any Class CE
Certificate, Class P Certificate or Residual Certificate to an Independent third
party, the Depositor shall provide to the Securities Administrator ten copies of
any private placement memorandum or other disclosure document used by the
Depositor in connection with the offer and sale of such Certificate. In
addition, if any such private placement memorandum or disclosure document is
revised, amended or supplemented at any time following the delivery thereof to
the Securities Administrator, the Depositor promptly shall inform the Securities
Administrator of such event and shall deliver to the Securities Administrator
ten copies of the private placement memorandum or disclosure document, as
revised, amended or supplemented. The Securities Administrator shall maintain at
its office as set forth in Section 12.05 hereof and shall make available free of
charge during normal business hours for review by any Holder of a Certificate or
any Person identified to the Securities Administrator as a prospective
transferee of a Certificate, originals or copies of the following items: (i) in
the case of a Holder or prospective transferee of a Class CE Certificate, Class
P Certificate or Residual Certificate, the related private placement memorandum
or other disclosure document relating to such Class of Certificates, in the form
most recently provided to the Securities Administrator; and (ii) in all cases,
(A) this Agreement and any amendments hereof entered into pursuant to Section
11.01, (B) all monthly statements required to be delivered to Certificateholders
of the relevant Class
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pursuant to Section 4.02 since the Closing Date, and all other notices, reports,
statements and written communications delivered to the Certificateholders of the
relevant Class pursuant to this Agreement since the Closing Date and (C) any
copies of all Officers' Certificates of the Servicer since the Closing Date
delivered to the Master Servicer to evidence such Person's determination that
any P&I Advance or Servicing Advance was, or if made, would be a Nonrecoverable
P&I Advance or Nonrecoverable Servicing Advance. Copies and mailing of any and
all of the foregoing items will be available from the Securities Administrator
upon request at the expense of the Person requesting the same.
ARTICLE VII
THE DEPOSITOR, THE SERVICER AND THE MASTER SERVICER
SECTION 7.01. LIABILITY OF THE DEPOSITOR, THE SERVICER AND THE
MASTER SERVICER.
The Depositor, the Servicer and the Master Servicer each shall
be liable in accordance herewith only to the extent of the obligations
specifically imposed by this Agreement upon them in their respective capacities
as Depositor, Servicer and Master Servicer and undertaken hereunder by the
Depositor, the Servicer and the Master Servicer herein.
SECTION 7.02. MERGER OR CONSOLIDATION OF THE DEPOSITOR, THE
SERVICER OR THE MASTER SERVICER.
Subject to the following paragraph, the Depositor will keep in
full effect its existence, rights and franchises as a corporation under the laws
of the jurisdiction of its incorporation. Subject to the following paragraph,
the Servicer will keep in full effect its existence, rights and franchises as a
federally chartered savings bank. Subject to the following paragraph, the Master
Servicer will keep in full effect its existence, rights and franchises as a
national banking association. The Depositor, the Servicer and the Master
Servicer each will obtain and preserve its qualification to do business as a
foreign corporation in each jurisdiction in which such qualification is or shall
be necessary to protect the validity and enforceability of this Agreement, the
Certificates or any of the Mortgage Loans and to perform its respective duties
under this Agreement.
The Depositor, the Servicer or the Master Servicer may be
merged or consolidated with or into any Person, or transfer all or substantially
all of its assets to any Person, in which case any Person resulting from any
merger or consolidation to which the Depositor, the Servicer or the Master
Servicer shall be a party, or any Person succeeding to the business of the
Depositor, the Servicer or the Master Servicer, shall be the successor of the
Depositor, the Servicer or the Master Servicer, as the case may be, hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding;
provided, however, that any successor of the Servicer or the Master Servicer
shall meet the eligibility requirements set forth in clauses (i) and (iii) of
the last paragraph of Section 8.02(a) or Section 7.06, as applicable.
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SECTION 7.03. LIMITATION ON LIABILITY OF THE DEPOSITOR, THE
SERVICER, THE MASTER SERVICER AND OTHERS.
None of the Depositor, the Servicer, the Securities
Administrator, the Master Servicer or any of the directors, officers, employees
or agents of the Depositor, the Servicer or the Master Servicer shall be under
any liability to the Trust Fund or the Certificateholders for any action taken
or for refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Depositor, the Servicer, the Securities Administrator, the
Master Servicer or any such person against any breach of warranties,
representations or covenants made herein or against any specific liability
imposed on any such Person pursuant hereto or against any liability which would
otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder. The Depositor, the Servicer, the Securities
Administrator, the Master Servicer and any director, officer, employee or agent
of the Depositor, the Servicer, the Securities Administrator and the Master
Servicer may rely in good faith on any document of any kind which, PRIMA FACIE,
is properly executed and submitted by any Person respecting any matters arising
hereunder. The Depositor, the Servicer, the Securities Administrator, the Master
Servicer and any director, officer, employee or agent of the Depositor, the
Servicer, the Securities Administrator or the Master 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,
the Certificates or any Credit Risk Management Agreement or any loss, liability
or expense incurred other than by reason of willful misfeasance, bad faith or
gross negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder. None of the Depositor, the
Servicer, the Securities Administrator or the Master 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 involve it in any expense or liability; provided, however, that each of
the Depositor, the Servicer, the Securities Administrator and the Master
Servicer may in its discretion undertake any such action 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. In
such event, the legal expenses and costs of such action and any liability
resulting therefrom (except any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or gross negligence in the performance of duties
hereunder or by reason of reckless disregard of obligations and duties
hereunder) shall be expenses, costs and liabilities of the Trust Fund, and the
Depositor, the Servicer, the Securities Administrator and the Master Servicer
shall be entitled to be reimbursed therefor from the Collection Account or the
Distribution Account as and to the extent provided in Article III and Article
IV, any such right of reimbursement being prior to the rights of the
Certificateholders to receive any amount in the Collection Account and the
Distribution Account.
Notwithstanding anything to the contrary contained herein, the
Servicer shall not be liable for any actions or inactions prior to the Cut-off
Date of any prior servicer of the Mortgage Loans and the Master Servicer shall
not be liable for any action or inaction of the Servicer, except to the extent
expressly provided herein, or the Credit Risk Manager.
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SECTION 7.04. LIMITATION ON RESIGNATION OF THE SERVICER.
(a) Except as expressly provided herein, the Servicer shall
neither assign all or substantially all of its rights under this
Agreement or the servicing hereunder nor delegate all or substantially
all of its duties hereunder nor sell or otherwise dispose of all or
substantially all of its property or assets without, in each case, the
prior written consent of the Master Servicer, which consent shall not
be unreasonably withheld; provided, that in each case, there must be
delivered to the Trustee and the Master Servicer a letter from each
Rating Agency to the effect that such transfer of servicing or sale or
disposition of assets will not result in a qualification, withdrawal or
downgrade of the then-current rating of any of the Certificates.
Notwithstanding the foregoing, the Servicer, without the consent of the
Trustee or the Master Servicer, may retain third-party contractors to
perform certain servicing and loan administration functions, including
without limitation hazard insurance administration, tax payment and
administration, flood certification and administration, collection
services and similar functions, PROVIDED, HOWEVER, that the retention
of such contractors by the Servicer shall not limit the obligation of
the Servicer to service the Mortgage Loans pursuant to the terms and
conditions of this Agreement. The Servicer shall not resign from the
obligations and duties hereby imposed on it except by consent of the
Master Servicer or upon determination that its duties hereunder are no
longer permissible under applicable law or as provided in Section
7.04(c). Any such determination pursuant to the preceding sentence
permitting the resignation (other than pursuant to Section 7.04(c)) of
the Servicer shall be evidenced by an Opinion of Counsel to such effect
obtained at the expense of the Servicer and delivered to the Trustee
and the Rating Agencies. No resignation of the Servicer shall become
effective until the Master Servicer or a successor Servicer shall have
assumed the Servicer's responsibilities, duties, liabilities (other
than those liabilities arising prior to the appointment of such
successor) and obligations under this Agreement.
(b) Except as expressly provided herein, the Servicer shall
not assign or transfer any of its rights, benefits or privileges
hereunder to any other Person, or delegate to or subcontract with, or
authorize or appoint any other Person to perform any of the duties,
covenants or obligations to be performed by the Servicer hereunder. The
foregoing prohibition on assignment shall not prohibit the Servicer
from designating a Sub-Servicer as payee of any indemnification amount
payable to the Servicer hereunder; provided, however, that as provided
in Section 3.02, no Sub-Servicer shall be a third-party beneficiary
hereunder and the parties hereto shall not be required to recognize any
Sub-Servicer as an indemnitee under this Agreement.
(c) Notwithstanding anything to the contrary herein, the
Servicer may pledge or assign as collateral all its rights, title and
interest under this Agreement to a lender (the "Lender"), provided,
that:
(1) upon an Event of Default and receipt of a notice of
termination by the Servicer, the Lender may direct the Servicer or
its designee to appoint a successor Servicer pursuant to the
provisions, and subject to the conditions, set forth in Section 8.02
regarding the Servicer's appointment of a successor Servicer;
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(2) the Lender's rights are subject to this Agreement;
and
(3) the Servicer shall remain subject to termination as
servicer under this Agreement pursuant to the terms hereof.
SECTION 7.05. LIMITATION ON RESIGNATION OF THE MASTER
SERVICER.
The Master Servicer shall not resign from the obligations and
duties hereby imposed on it except upon determination that its duties hereunder
are no longer permissible under applicable law. Any such determination pursuant
to the preceding sentence permitting the resignation of the Master Servicer
shall be evidenced by an Opinion of Counsel to such effect obtained at the
expense of the Master Servicer and delivered to the Trustee and the Rating
Agencies. No resignation of the Master Servicer shall become effective until the
Trustee or a successor Master Servicer meeting the criteria specified in Section
7.06 shall have assumed the Master Servicer's responsibilities, duties,
liabilities (other than those liabilities arising prior to the appointment of
such successor) and obligations under this Agreement.
SECTION 7.06. ASSIGNMENT OF MASTER SERVICING.
The Master Servicer may sell and assign its rights and
delegate its duties and obligations in its entirety as Master Servicer under
this Agreement; provided, however, that: (i) the purchaser or transferee accept
in writing such assignment and delegation and assume the obligations of the
Master Servicer hereunder (a) shall have a net worth of not less than
$15,000,000 (unless otherwise approved by each Rating Agency pursuant to clause
(ii) below); (b) shall be reasonably satisfactory to the Trustee (as evidenced
in a writing signed by the Trustee); and (c) shall execute and deliver to the
Trustee an agreement, in form and substance reasonably satisfactory to the
Trustee, which contains an assumption by such Person of the due and punctual
performance and observance of each covenant and condition to be performed or
observed by it as master servicer under this Agreement, any custodial agreement
from and after the effective date of such agreement; (ii) each Rating Agency
shall be given prior written notice of the identity of the proposed successor to
the Master Servicer and each Rating Agency's rating of the Certificates in
effect immediately prior to such assignment, sale and delegation will not be
downgraded, qualified or withdrawn as a result of such assignment, sale and
delegation, as evidenced by a letter to such effect delivered to the Master
Servicer and the Trustee; and (iii) the Master Servicer assigning and selling
the master servicing shall deliver to the Trustee an officer's certificate and
an Opinion of Independent counsel, each stating that all conditions precedent to
such action under this Agreement have been completed and such action is
permitted by and complies with the terms of this Agreement. No such assignment
or delegation shall affect any liability of the Master Servicer arising out of
acts or omissions prior to the effective date thereof.
SECTION 7.07. RIGHTS OF THE DEPOSITOR IN RESPECT OF THE
SERVICER AND THE MASTER SERVICER.
Each of the Master Servicer and the Servicer shall afford (and
any Sub-Servicing Agreement shall provide that each Sub-Servicer shall afford)
the Depositor and the Trustee, upon reasonable notice, during normal business
hours, access to all records maintained by the Master
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Servicer or the Servicer (and any such Sub-Servicer) in respect of the
Servicer's rights and obligations hereunder and access to officers of the Master
Servicer or the Servicer (and those of any such Sub-Servicer) responsible for
such obligations, and the Master Servicer shall have access to all such records
maintained by the Servicer and any Sub-Servicers. Upon request, each of the
Master Servicer and the Servicer shall furnish to the Depositor and the Trustee
its (and any such Sub-Servicer's) most recent financial statements and such
other information relating to the Master Servicer's or the Servicer's capacity
to perform its obligations under this Agreement as it possesses (and that any
such Sub-Servicer possesses). To the extent such information is not otherwise
available to the public, the Depositor and the Trustee shall not disseminate any
information obtained pursuant to the preceding two sentences without the Master
Servicer's or the Servicer's written consent, except as required pursuant to
this Agreement or to the extent that it is appropriate to do so (i) to its legal
counsel, auditors, taxing authorities or other governmental agencies and the
Certificateholders, (ii) pursuant to any law, rule, regulation, order, judgment,
writ, injunction or decree of any court or governmental authority having
jurisdiction over the Depositor and the Trustee or the Trust Fund, and in any
case, the Depositor or the Trustee, (iii) disclosure of any and all information
that is or becomes publicly known, or information obtained by the Trustee from
sources other than the Depositor, the Servicer or the Master Servicer, (iv)
disclosure as required pursuant to this Agreement or (v) disclosure of any and
all information (A) in any preliminary or final offering circular, registration
statement or contract or other document pertaining to the transactions
contemplated by the Agreement approved in advance by the Depositor, the Servicer
or the Master Servicer or (B) to any affiliate, independent or internal auditor,
agent, employee or attorney of the Trustee having a need to know the same,
provided that the Trustee advises such recipient of the confidential nature of
the information being disclosed, shall use its best efforts to assure the
confidentiality of any such disseminated non-public information. Nothing in this
Section 7.07 shall limit the obligation of the Servicer to comply with any
applicable law prohibiting disclosure of information regarding the Mortgagors
and the failure of the Servicer to provide access as provided in this Section
7.07 as a result of such obligation shall not constitute a breach of this
Section. Nothing in this Section 7.07 shall require the Servicer to collect,
create, collate or otherwise generate any information that it does not generate
in its usual course of business. The Servicer shall not be required to make
copies of or ship documents to any party unless provisions have been made for
the reimbursement of the costs thereof. The Depositor may, but is not obligated
to, enforce the obligations of the Master Servicer and the Servicer under this
Agreement and may, but is not obligated to, perform, or cause a designee to
perform, any defaulted obligation of the Master Servicer or the Servicer under
this Agreement or exercise the rights of the Master Servicer or the Servicer
under this Agreement; provided that neither the Master Servicer nor the Servicer
shall be relieved of any of its obligations under this Agreement by virtue of
such performance by the Depositor or its designee. The Depositor shall not have
any responsibility or liability for any action or failure to act by the Master
Servicer or the Servicer and is not obligated to supervise the performance of
the Master Servicer or the Servicer under this Agreement or otherwise.
SECTION 7.08. DUTIES OF THE CREDIT RISK MANAGER.
For and on behalf of the Depositor, the Credit Risk Manager
will provide reports and recommendations concerning certain delinquent and
defaulted Mortgage Loans, and as to the collection of any Prepayment Charges
with respect to the Mortgage Loans. Such reports and recommendations will be
based upon information provided to the Credit Risk Manager pursuant
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to the Credit Risk Management Agreements, and the Credit Risk Manager shall look
solely to the Servicer and/or Master Servicer for all information and data
(including loss and delinquency information and data) relating to the servicing
of the related Mortgage Loans.
SECTION 7.09. LIMITATION UPON LIABILITY OF THE CREDIT RISK
MANAGER.
Neither the Credit Risk Manager, nor any of its directors, officers, employees,
or agents shall be under any liability to the Trustee, the Certificateholders,
or the Depositor for any action taken or for refraining from the taking of any
action made in good faith pursuant to this Agreement, in reliance upon
information provided by the Servicer and/or Master Servicer under the related
Credit Risk Management Agreement, or for errors in judgment; provided, however,
that this provision shall not protect the Credit Risk Manager or any such person
against liability that would otherwise be imposed by reason of willful
malfeasance or bad faith in its performance of its duties. The Credit Risk
Manager and any director, officer, employee, or agent of the Credit Risk Manager
may rely in good faith on any document of any kind PRIMA FACIE properly executed
and submitted by any Person respecting any matters arising hereunder or under
the related Credit Risk Management Agreement, and may rely in good faith upon
the accuracy of information furnished by the Servicer and/or Master Servicer
pursuant to the related Credit Risk Management Agreement in the performance of
its duties thereunder and hereunder. The Credit Risk Manager shall be held
harmless and indemnified by the Trust Fund for any claims, costs or liability
(each a "Claim") arising out of or related in any way to the performance of its
duties hereunder absent bad faith, willful misfeasance or gross negligence on
the part of the Credit Risk Manager with respect to the applicable Claim and the
legal expenses for any applicable Claim shall be expenses, costs and liabilities
of the Trust Fund.
SECTION 7.10. REMOVAL OF THE CREDIT RISK MANAGER.
So long as Deutsche Bank Securities Inc. is the Holder of the
Class CE Certificate it may, at its option, terminate the Credit Risk Manager if
the Credit Risk Manager breaches its obligations under the Credit Risk
Management Agreements in any material respect and has not cured such breach as
promptly as practicable but in no event later than 30 days after receiving
written notice of such breach. In the event that a party other than Deutsche
Bank Securities Inc. is the Holder of the Class CE Certificate, the Holder of
the Class CE Certificate shall not have such termination right. In addition, the
Credit Risk Manager may be removed as Credit Risk Manager under both Credit Risk
Management Agreements by Certificateholders holding not less than 66 2/3% of the
Voting Rights in the Trust Fund, in the exercise of its or their sole
discretion. Upon the termination of the Credit Risk Manager by the
Certificateholders or Deutsche Bank Securities Inc. as provided above, the
Certificateholders or Deutsche Bank Securities Inc., as applicable, shall
provide written notice of the Credit Risk Manager's removal to the Trustee. Upon
receipt of such notice, the Trustee shall provide written notice to the Credit
Risk Manager of its removal, which shall be effective upon receipt of such
notice by the Credit Risk Manager with a copy to the Securities Administrator
and the Master Servicer.
Upon the termination of the Credit Risk Manager by the Holder
of the Class CE Certificate as provided above, the Holder of the Class CE
Certificate may, at its option, appoint a successor Credit Risk Manager. If the
Holder of the Class CE Certificate fails to appoint a successor Credit Risk
Manager, the Depositor may appoint a
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successor Credit Risk Manager. Upon the termination of the Credit Risk Manager
by the Certificateholders as provided above, the Depositor shall appoint a
successor Credit Risk Manager. Notwithstanding the foregoing, the termination of
the Credit Risk Manager pursuant to this Section shall not become effective
until the appointment of a successor Credit Risk Manager.
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ARTICLE VIII
DEFAULT
SECTION 8.01. SERVICER EVENTS OF DEFAULT.
(a) "Servicer Event of Default," wherever used herein, means
any one of the following events:
(i) any failure by the Servicer to remit to the Securities
Administrator for distribution to the Certificateholders any payment
(other than a P&I Advance required to be made from its own funds on any
Servicer Remittance Date pursuant to Section 5.03) required to be made
under the terms of the Certificates and this Agreement which continues
unremedied for a period of one Business Day after the date upon which
written notice of such failure, requiring the same to be remedied,
shall have been given to the Servicer by the Depositor or the Trustee
(in which case notice shall be provided by telecopy), or to the
Servicer, the Depositor, the Trustee and by the Holders of Certificates
entitled to at least 25% of the Voting Rights; or
(ii) any failure on the part of the Servicer duly to observe
or perform in any material respect any other of the covenants or
agreements on the part of the Servicer contained in this Agreement, or
the material breach by the Servicer of any representation and warranty
contained in Section 2.05, which continues unremedied for a period of
30 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the
Servicer by the Depositor or the Trustee or to the Servicer, the
Depositor and the Trustee by the Holders of Certificates entitled to at
least 25% of the Voting Rights; provided, however, that in the case of
a failure that cannot be cured within thirty (30) days, the cure period
may be extended for an additional thirty (30) days if the Servicer can
demonstrate to the reasonable satisfaction of the Trustee that the
Servicer is diligently pursuing remedial action; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises in an involuntary case
under any present or future federal or state bankruptcy, insolvency or
similar law or the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceeding, or for the winding-up or
liquidation of its affairs, shall have been entered against the
Servicer and such decree or order shall have remained in force
undischarged or unstayed for a period of 90 days; or
(iv) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshalling of assets and liabilities or similar proceedings
of or relating to it or of or relating to all or substantially all of
its property; or
(v) the Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take
advantage of any applicable insolvency or reorganization statute, make
an assignment for the benefit of its creditors, or voluntarily suspend
payment of its obligations;
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(vi) failure by the Servicer to duly perform, within the
required time period, its obligations under Section 3.17, 3.18 or 3.19
which failure continues unremedied for a period of ten (10) days after
the date on which written notice of such failure, requiring the same to
be remedied, shall have been given to the Servicer by any party to this
Agreement; or
(vii) any failure of the Servicer to make any P&I Advance on
any Servicer Remittance Date required to be made from its own funds
pursuant to Section 5.03 which continues unremedied until 3:00 p.m. New
York time on the Business Day immediately following the Servicer
Remittance Date.
If a Servicer Event of Default described in clauses (i) through (vi) of this
Section shall occur, then, and in each and every such case, so long as such
Servicer Event of Default shall not have been remedied, the Depositor or the
Trustee may, and at the written direction of the Holders of Certificates
entitled to at least 51% of Voting Rights, the Trustee shall, by notice in
writing to the Servicer (and to the Depositor if given by the Trustee or to the
Trustee if given by the Depositor) with a copy to the Master Servicer and each
Rating Agency, terminate all of the rights and obligations of the Servicer in
its capacity as the Servicer under this Agreement, to the extent permitted by
law, and in and to the Mortgage Loans and the proceeds thereof. If a Servicer
Event of Default described in clause (vii) hereof shall occur, the Trustee
shall, by notice in writing to the Servicer, the Depositor and the Master
Servicer, terminate all of the rights and obligations of the Servicer in its
capacity as the Servicer under this Agreement and in and to the Mortgage Loans
and the proceeds thereof. Subject to Section 8.02, on or after the receipt by
the Servicer of such written notice, all authority and power of the Servicer
under this Agreement, whether with respect to the Certificates (other than as a
Holder of any Certificate) or the Mortgage Loans or otherwise, shall pass to and
be vested in the Master Servicer pursuant to and under this Section, and,
without limitation, the Master Servicer is hereby authorized and empowered, as
attorney-in-fact or otherwise, to execute and deliver, on behalf of and at the
expense of the Servicer, any and all documents and other instruments and to do
or accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement or assignment of the Mortgage Loans and related documents, or
otherwise. The Servicer agrees promptly (and in any event no later than ten
Business Days subsequent to such notice) to provide the Master Servicer with all
documents and records requested by it to enable it to assume the Servicer's
functions under this Agreement, and to cooperate with the Master Servicer in
effecting the termination of the Servicer's responsibilities and rights under
this Agreement, including, without limitation, the transfer within one Business
Day to the Master Servicer for administration by it of all cash amounts which at
the time shall be or should have been credited by the Servicer to the Collection
Account held by or on behalf of the Servicer or thereafter be received with
respect to the Mortgage Loans or any REO Property (provided, however, that the
Servicer shall continue to be entitled to receive all amounts accrued or owing
to it under this Agreement on or prior to the date of such termination, whether
in respect of P&I Advances, Servicing Advances, accrued and unpaid Servicing
Fees or otherwise, and shall continue to be entitled to the benefits of Section
7.03, notwithstanding any such termination, with respect to events occurring
prior to such termination). For purposes of this Section 8.01(a), the Trustee
shall not be deemed to have knowledge of a Servicer Event of Default unless a
Responsible Officer of the Trustee assigned to and working in the Trustee's
Corporate Trust Office has actual knowledge thereof or unless written notice of
any event which is in fact such a
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Servicer Event of Default is received by the Trustee at its Corporate Trust
Office and such notice references the Certificates, the Trust or this Agreement.
The Trustee shall promptly notify the Master Servicer and the Rating Agencies of
the occurrence of a Servicer Event of Default of which it has knowledge as
provided above.
The Master Servicer shall be entitled to be reimbursed by the
Servicer (or from amounts on deposit in the Distribution Account if the Servicer
is unable to fulfill its obligations hereunder) for all reasonable out-of-pocket
or third party costs associated with the transfer of servicing from the
predecessor Servicer (or if the predecessor Servicer is the Master Servicer,
from the Servicer immediately preceding the Master Servicer), including without
limitation, any reasonable out-of-pocket or third party costs or expenses
associated with the complete transfer of all servicing data and the completion,
correction or manipulation of such servicing data as may be required by the
Master Servicer to correct any errors or insufficiencies in the servicing data
or otherwise to enable the Master Servicer to service the Mortgage Loans
properly and effectively, upon presentation of reasonable documentation of such
costs and expenses.
(b) "Master Servicer Event of Default," wherever used
herein, means any one of the following events:
(i) any failure on the part of the Master Servicer duly to
observe or perform in any material respect any other of the
covenants or agreements on the part of the Master Servicer contained
in this Agreement, or the breach by the Master Servicer of any
representation and warranty contained in Section 2.04, which
continues unremedied for a period of 30 days after the date on which
written notice of such failure, requiring the same to be remedied,
shall have been given to the Master Servicer by the Depositor or the
Trustee or to the Master Servicer, the Depositor and the Trustee by
the Holders of Certificates entitled to at least 25% of the Voting
Rights; or
(ii) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises in an involuntary case
under any present or future federal or state bankruptcy, insolvency
or similar law or the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceeding, or for the winding-up
or liquidation of its affairs, shall have been entered against the
Master Servicer and such decree or order shall have remained in
force undischarged or unstayed for a period of 90 days; or
(iii) the Master Servicer shall consent to the appointment
of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to it or of or relating to all or
substantially all of its property; or
(iv) the Master Servicer shall admit in writing its
inability to pay its debts generally as they become due, file a
petition to take advantage of any applicable insolvency or
reorganization statute, make an assignment for the benefit of its
creditors, or voluntarily suspend payment of its obligations.
If a Master Servicer Event of Default shall occur, then, and in each and every
such case, so long as such Master Servicer Event of Default shall not have been
remedied, the Depositor or the
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Trustee may, and at the written direction of the Holders of Certificates
entitled to at least 51% of Voting Rights, the Trustee shall, by notice in
writing to the Master Servicer (and to the Depositor if given by the Trustee or
to the Trustee if given by the Depositor) with a copy to each Rating Agency,
terminate all of the rights and obligations of the Master Servicer in its
capacity as Master Servicer under this Agreement, to the extent permitted by
law, and in and to the Mortgage Loans and the proceeds thereof. On or after the
receipt by the Master Servicer of such written notice, all authority and power
of the Master Servicer under this Agreement, whether with respect to the
Certificates (other than as a Holder of any Certificate) or the Mortgage Loans
or otherwise including, without limitation, the compensation payable to the
Master Servicer under this Agreement, 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, as attorney-in-fact or otherwise, to execute
and deliver, on behalf of and at the expense of the Master Servicer, any and all
documents and other instruments and to do or accomplish all other acts or things
necessary or appropriate to effect the purposes of such notice of termination,
whether to complete the transfer and endorsement or assignment of the Mortgage
Loans and related documents, or otherwise. The Master Servicer agrees promptly
(and in any event no later than ten Business Days subsequent to such notice) to
provide the Trustee with all documents and records requested by it to enable it
to assume the Master Servicer's functions under this Agreement, and to cooperate
with the Trustee in effecting the termination of the Master Servicer's
responsibilities and rights under this Agreement (provided, however, that the
Master Servicer shall continue to be entitled to receive all amounts accrued or
owing to it under this Agreement on or prior to the date of such termination and
shall continue to be entitled to the benefits of Section 7.03, notwithstanding
any such termination, with respect to events occurring prior to such
termination). For purposes of this Section 8.01(b), the Trustee shall not be
deemed to have knowledge of a Master Servicer Event of Default unless a
Responsible Officer of the Trustee assigned to and working in the Trustee's
Corporate Trust Office has actual knowledge thereof or unless written notice of
any event which is in fact such a Master Servicer Event of Default is received
by the Trustee and such notice references the Certificates, the Trust or this
Agreement. The Trustee shall promptly notify the Rating Agencies of the
occurrence of a Master Servicer Event of Default of which it has knowledge as
provided above.
To the extent that the costs and expenses of the Trustee
related to the termination of the Master Servicer, appointment of a successor
Master Servicer or the transfer and assumption of the master servicing by the
Trustee (including, without limitation, (i) all legal costs and expenses and all
due diligence costs and expenses associated with an evaluation of the potential
termination of the Master Servicer as a result of a Master Servicer Event of
Default and (ii) all costs and expenses associated with the complete transfer of
the master servicing, including all servicing files and all servicing data and
the completion, correction or manipulation of such servicing data as may be
required by the successor Master Servicer to correct any errors or
insufficiencies in the servicing data or otherwise to enable the successor
Master Servicer to master service the Mortgage Loans in accordance with this
Agreement) are not fully and timely reimbursed by the terminated Master
Servicer, the Trustee shall be entitled to reimbursement of such costs and
expenses from the Distribution Account.
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SECTION 8.02. MASTER SERVICER TO ACT; APPOINTMENT OF SUCCESSOR.
(a) On and after the time the Servicer receives a notice of
termination, the Master Servicer 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 all the
responsibilities, duties and liabilities relating thereto and arising
thereafter shall be assumed by the Master Servicer (except for any
representations or warranties of the Servicer under this Agreement, the
responsibilities, duties and liabilities contained in Section 2.03 and
the obligation to deposit amounts in respect of losses pursuant to
Section 3.10(b)) by the terms and provisions hereof including, without
limitation, the Servicer's obligations to make P&I Advances pursuant to
Section 5.03; provided, however, that if the Master Servicer is
prohibited by law or regulation from obligating itself to make advances
regarding delinquent mortgage loans, then the Master Servicer shall not
be obligated to make P&I Advances pursuant to Section 5.03; and
provided further, that any failure to perform such duties or
responsibilities caused by the Servicer's failure to provide
information required by Section 8.01 shall not be considered a default
by the Master Servicer as successor to the Servicer hereunder;
provided, however, that (1) it is understood and acknowledged by the
parties hereto that there will be a period of transition (not to exceed
120 days) before the actual servicing functions can be fully
transferred to the Master Servicer or any successor Servicer appointed
in accordance with the following provisions and (2) any failure to
perform such duties or responsibilities caused by the Servicer's
failure to provide information required by Section 8.01 shall not be
considered a default by the Master Servicer as successor to the
Servicer hereunder. As compensation therefor, the Master Servicer shall
be entitled to the Servicing Fee and all funds relating to the Mortgage
Loans to which the Servicer would have been entitled if it had
continued to act hereunder. Notwithstanding the above and subject to
the immediately following paragraph, the Master Servicer may, if it
shall be unwilling to so act, or shall, if it is unable to so act
promptly appoint or petition a court of competent jurisdiction to
appoint, a Person that satisfies the eligibility criteria set forth
below as the successor to the Servicer under this Agreement in the
assumption of all or any part of the responsibilities, duties or
liabilities of the Servicer under this Agreement.
Notwithstanding any provision in this Agreement to the
contrary, for a period of 30 days following the date on which the Servicer
shall have received a notice of termination pursuant to Section 8.01, the
Servicer or its designee may appoint a successor Servicer that satisfies the
eligibility criteria of a successor Servicer set forth below, which
appointment shall be subject to the consent of the Depositor, the Seller, the
Master Servicer, and the Trustee, which consent shall not be unreasonably
withheld or delayed; provided that such successor Servicer agrees to fully
effect the servicing transfer within 120 days following the termination of
the Servicer and to make all P&I Advances that would otherwise be made by the
Master Servicer under Section 8.01 as of the date of such appointment, and to
reimburse the Servicer and/or the Master Servicer for any xxxxxxxxxxxx X&X
Advances they have made and any reimbursable expenses that they may have
incurred in connection with this Section 8.02. Any proceeds received in
connection with the appointment of such successor Servicer shall be the
property of the Servicer or its designee. This 30-day period shall terminate
immediately (i) at the close of business on the second Business Day of such
30-day period if (A) the Servicer was terminated because of an Event of
Default described in Section 8.01 (a)(vii) for failing to make a required P&I
Advance, and (B) the Servicer shall have failed to make (or cause to be
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made) such P&I Advance, or shall fail to reimburse (or cause to be
reimbursed) the Master Servicer for a P&I Advance made by the Master
Servicer, by the close of business on such second Business Day, or (ii) at
the close of business on the second Business Day following the date (if any)
during such 30-day period on which a P&I Advance is due to be made, if the
Servicer shall have failed to make (or caused to be made) such P&I Advance,
or the Servicer shall have failed to reimburse (or cause to be reimbursed)
the Master Servicer for such P&I Advance, by the close of business on such
second Business Day.
Notwithstanding anything herein to the contrary, in no event
shall the Trustee or the Master Servicer be liable for any Servicing Fee or for
any differential in the amount of the Servicing Fee paid hereunder and the
amount necessary to induce any successor Servicer to act as successor Servicer
under this Agreement and the transactions set forth or provided for herein.
Any successor Servicer appointed under this Agreement must (i)
be an established mortgage loan servicing institution that is a Xxxxxx Xxx and
Xxxxxxx Mac approved seller/servicer, (ii) be approved by each Rating Agency by
a written confirmation from each Rating Agency that the appointment of such
successor Servicer would not result in the reduction or withdrawal of the then
current ratings of any outstanding Class of Certificates, (iii) have a net worth
of not less than $15,000,000 and (iv) assume all the responsibilities, duties or
liabilities of the Servicer (other than liabilities of the Servicer hereunder
incurred prior to termination of the Servicer under Section 8.01 herein) under
this Agreement as if originally named as a party to this Agreement.
(b)(1) All servicing transfer costs (including, without
limitation, servicing transfer costs of the type described in Section
8.02(a) and incurred by the Trustee, the Master Servicer and any
successor Servicer under paragraph (b)(2) below) shall be paid by the
terminated Servicer upon presentation of reasonable documentation of
such costs, and if such predecessor or initial Servicer, as applicable,
defaults in its obligation to pay such costs, the successor Servicer,
the Master Servicer and the Trustee shall be entitled to reimbursement
therefor from the assets of the Trust Fund.
(2) No appointment of a successor to the Servicer under this
Agreement shall be effective until the assumption by the successor of
all of the Servicer's responsibilities, duties and liabilities
hereunder. In connection with such appointment and assumption described
herein, the Trustee may make such arrangements for the compensation of
such successor out of payments on Mortgage Loans as it and such
successor shall agree; PROVIDED, HOWEVER, that no such compensation
shall be in excess of that permitted the Servicer as such hereunder.
The Depositor, the Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any
such succession. Pending appointment of a successor to the Servicer
under this Agreement, the Master Servicer shall act in such capacity as
hereinabove provided.
SECTION 8.03. NOTIFICATION TO CERTIFICATEHOLDERS.
(a) Upon any termination of the Servicer or the Master
Servicer pursuant to Section 8.01(a) or (b) or any appointment of a
successor to the Servicer or the Master Servicer
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pursuant to Section 8.02, the Trustee shall give prompt written notice
thereof to the Certificateholders at their respective addresses
appearing in the Certificate Register.
(b) Not later than the later of 60 days after the occurrence
of any event, which constitutes or which, with notice or lapse of time
or both, would constitute a Servicer Event of Default or a Master
Servicer Event of Default or five 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 Holders of Certificates notice of
each such occurrence, unless such default or Servicer Event of Default
or Master Servicer Event of Default shall have been cured or waived.
SECTION 8.04. WAIVER OF SERVICER EVENTS OF DEFAULT.
The Holders representing at least 66% of the Voting Rights
evidenced by all Classes of Certificates affected by any default, Servicer Event
of Default or Master Servicer Event of Default hereunder may waive such default,
Servicer Event of Default or Master Servicer Event of Default; PROVIDED,
HOWEVER, that a Servicer Event of Default under clause (i) or (vii) of Section
8.01(a) may be waived only by all of the Holders of the Regular Certificates.
Upon any such waiver of a default, Servicer Event of Default or Master Servicer
Event of Default, such default, Servicer Event of Default or Master Servicer
Event of Default shall cease to exist and shall be deemed to have been remedied
for every purpose hereunder. No such waiver shall extend to any subsequent or
other default, Servicer Event of Default or Master Servicer Event of Default or
impair any right consequent thereon except to the extent expressly so waived.
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ARTICLE IX
CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR
SECTION 9.01. DUTIES OF TRUSTEE AND SECURITIES ADMINISTRATOR.
The Trustee, prior to the occurrence of a Master Servicer
Event of Default and after the curing or waiver of all Master Servicer Events of
Default which may have occurred, and the Securities Administrator each undertake
to perform such duties and only such duties as are specifically set forth in
this Agreement as duties of the Trustee and the Securities Administrator,
respectively. During the continuance of a Master Servicer Event of Default, 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 its exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs. Any permissive right of the Trustee enumerated in
this Agreement shall not be construed as a duty.
Each of the Trustee and the Securities Administrator, upon
receipt of all resolutions, certificates, statements, opinions, reports,
documents, orders or other instruments furnished to it, 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. If any such instrument is found not to conform to the requirements of
this Agreement in a material manner, the Trustee or the Securities
Administrator, as the case may be, shall take such action as it deems
appropriate to have the instrument corrected, and if the instrument is not
corrected to its satisfaction, the Securities Administrator will provide notice
to the Trustee thereof and the Trustee will provide notice to the
Certificateholders.
The Trustee shall promptly remit to the Servicer any
complaint, claim, demand, notice or other document (collectively, the "Notices")
delivered to the Trustee as a consequence of the assignment of any Mortgage Loan
hereunder and relating to the servicing of the Mortgage Loans; provided than any
such notice (i) is delivered to the Trustee at its Corporate Trust Office, (ii)
contains information sufficient to permit the Trustee to make a determination
that the real property to which such document relates is a Mortgaged Property.
The Trustee shall have no duty hereunder with respect to any Notice it may
receive or which may be alleged to have been delivered to or served upon it
unless such Notice is delivered to it or served upon it at its Corporate Trust
Office and such Notice contains the information required pursuant to clause (ii)
of the preceding sentence.
No provision of this Agreement shall be construed to relieve
the Trustee or the Securities Administrator 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 Master Servicer Event of
Default, and after the curing or waiver of all such Master Servicer
Events of Default which may have occurred with respect to the Trustee
and at all times with respect to the Securities Administrator, the
duties and obligations of the Trustee shall be determined solely by the
express provisions of this Agreement, neither the Trustee nor the
Securities Administrator shall be liable except for the performance of
such duties and obligations as are
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specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee or
the Securities Administrator and, in the absence of bad faith on the
part of the Trustee or the Securities Administrator, respectively, the
Trustee or the Securities Administrator, respectively, 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 or the Securities Administrator, respectively, that
conform to the requirements of this Agreement;
(ii) Neither the Trustee nor the Securities Administrator
shall be liable for an error of judgment made in good faith by a
Responsible Officer or Responsible Officers of the Trustee or an
officer or officers of the Securities Administrator, respectively,
unless it shall be proved that the Trustee or the Securities
Administrator, respectively, was negligent in ascertaining the
pertinent facts; and
(iii) Neither the Trustee nor the Securities Administrator
shall be liable with respect to any action taken, suffered or omitted
to be taken by it in good faith in accordance with the direction of the
Holders of Certificates entitled to at least 25% of the Voting Rights
relating to the time, method and place of conducting any proceeding for
any remedy available to the Trustee or the Securities Administrator or
exercising any trust or power conferred upon the Trustee or the
Securities Administrator under this Agreement.
SECTION 9.02. CERTAIN MATTERS AFFECTING TRUSTEE AND SECURITIES
ADMINISTRATOR.
(a) Except as otherwise provided in Section 9.01:
(i)The Trustee and the Securities Administrator may request
and rely upon and shall be protected in acting or refraining from
acting upon any resolution, Officers' Certificate, certificate of
auditors or any other certificate, statement, instrument, opinion,
report, notice, request, consent, order, appraisal, bond or other paper
or document reasonably believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(ii) The Trustee and the Securities Administrator may
consult with counsel of its selection and any advice of such counsel or
any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such advice or Opinion
of Counsel;
(iii) Neither the Trustee nor the Securities Administrator
shall be under any obligation to exercise any of the trusts or powers
vested in it by this Agreement or to institute, conduct or defend any
litigation hereunder or in relation hereto at the request, order or
direction of any of the Certificateholders, pursuant to the provisions
of this Agreement, unless such Certificateholders shall have offered to
the Trustee or the Securities Administrator, as the case may be,
reasonable security or indemnity satisfactory to it against the costs,
expenses and liabilities which may be incurred therein or thereby;
nothing contained herein shall, however, relieve the Trustee of the
obligation,
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upon the occurrence of a Master Servicer Event of Default (which has
not been cured or waived), to exercise such of the rights and powers
vested in it by this Agreement, and to use the same degree of care and
skill in their exercise as a prudent person would exercise or use under
the circumstances in the conduct of such person's own affairs;
(iv) Neither the Trustee nor the Securities Administrator
shall be liable for any action taken, suffered or omitted by it in good
faith and believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Agreement;
(v) Prior to the occurrence of a Master Servicer Event of
Default hereunder and after the curing or waiver of all Master Servicer
Events of Default which may have occurred with respect to the Trustee
and at all times with respect to the Securities Administrator, neither
the Trustee nor the Securities Administrator shall be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, bond or other paper or document, unless
requested in writing to do so by the Holders of Certificates entitled
to at least 25% of the Voting Rights; PROVIDED, HOWEVER, that if the
payment within a reasonable time to the Trustee or the Securities
Administrator 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 or the Securities Administrator, as applicable, not
reasonably assured to the Trustee or the Securities Administrator by
such Certificateholders, the Trustee or the Securities Administrator,
as applicable, may require reasonable indemnity satisfactory to it
against such expense, or liability from such Certificateholders as a
condition to taking any such action;
(vi) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder;
(vii) The Trustee shall not be liable for any loss resulting
from the investment of funds held in the Collection Account, for any
loss resulting from the investment of funds held in the Reserve Fund or
for any loss resulting from the redemption or sale of any such
investment as therein authorized;
(viii) The Trustee shall not be deemed to have notice of any
default, Master Servicer Event of Default or Servicer Event of Default
unless a Responsible Officer of the Trustee has actual knowledge
thereof or unless written notice of any event which is in fact such a
default is received by a Responsible Officer of the Trustee at the
Corporate Trust Office of the Trustee, and such notice references the
Certificates and this Agreement; and
(ix) The rights, privileges, protections, immunities and
benefits given to the Trustee, including, without limitation, its right
to be indemnified, are extended to, and shall be enforceable by, each
agent, custodian and other Person employed to act hereunder.
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(b) All rights of action under this Agreement or under any
of the Certificates, enforceable by the Trustee, may be enforced by it
without the possession of any of the Certificates, or the production
thereof at the trial or other proceeding relating thereto, and any such
suit, action or proceeding instituted by the Trustee shall be brought
in its name for the benefit of all the Holders of such Certificates,
subject to the provisions of this Agreement.
(c) The Trustee is hereby directed by the Depositor to
execute the Cap Contract on behalf of the Trust Fund in the form
presented to it by the Depositor and shall have no responsibility for
the contents of the Cap Contract, including, without limitation, the
representations and warranties contained therein. Any funds payable by
the Trustee under the Cap Contract at closing shall be paid by the
Depositor. Notwithstanding anything to the contrary contained herein or
in the Cap Contract, the Trustee shall not be required to make any
payments to the counterparty under the Cap Contract.
(d) None of the Securities Administrator, the Master
Servicer, the Servicer, the Seller, the Depositor, the Custodian or the
Trustee shall be responsible for the acts or omissions of the others,
it being understood that this Agreement shall not be construed to
render those partners joint venturers or agents of one another.
SECTION 9.03. TRUSTEE AND SECURITIES ADMINISTRATOR NOT LIABLE
FOR CERTIFICATES OR MORTGAGE LOANS.
The recitals contained herein and in the Certificates (other
than the signature of the Securities Administrator, the authentication of the
Securities Administrator on the Certificates, the acknowledgments of the Trustee
contained in Article II and the representations and warranties of the Trustee in
Section 9.12) shall be taken as the statements of the Depositor and neither the
Trustee nor the Securities Administrator assumes any responsibility for their
correctness. Neither the Trustee nor the Securities Administrator makes any
representations or warranties as to the validity or sufficiency of this
Agreement (other than as specifically set forth in Section 9.12) or of the
Certificates (other than the signature of the Securities Administrator and
authentication of the Securities Administrator on the Certificates) or of any
Mortgage Loan or related document. The Trustee and the Securities Administrator
shall not be accountable for the use or application by the Depositor of any of
the Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Depositor or the Master Servicer in respect
of the Mortgage Loans or deposited in or withdrawn from the Collection Account
by the Servicer, other than with respect to the Securities Administrator any
funds held by it or on behalf of the Trustee in accordance with Section 3.23 and
3.24.
SECTION 9.04. TRUSTEE AND SECURITIES ADMINISTRATOR MAY OWN
CERTIFICATES.
Each of the Trustee and the Securities Administrator in its
individual capacity or any other capacity may become the owner or pledgee of
Certificates and may transact business with other interested parties and their
Affiliates with the same rights it would have if it were not Trustee or the
Securities Administrator.
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SECTION 9.05. FEES AND EXPENSES OF TRUSTEE AND SECURITIES
ADMINISTRATOR.
The fees of the Trustee and the Securities Administrator
hereunder and of Xxxxx Fargo under the Custodial Agreement shall be paid in
accordance with a side letter agreement with the Master Servicer and at the sole
expense of the Master Servicer. In addition, the Trustee, the Securities
Administrator, the Custodian and any director, officer, employee or agent of the
Trustee, the Securities Administrator and the Custodian shall be indemnified by
the Trust and held harmless against any loss, liability or expense (including
reasonable attorney's fees and expenses) incurred by the Trustee, the Custodian
or the Securities Administrator in connection with any claim or legal action or
any pending or threatened claim or legal action arising out of or in connection
with the acceptance or administration of its respective obligations and duties
under this Agreement, including the Cap Contract and any and all other
agreements related hereto, other than any loss, liability or expense (i) for
which the Trustee is indemnified by the Master Servicer or any Servicer, (ii)
that constitutes a specific liability of the Trustee or the Securities
Administrator pursuant to Section 11.01(g) or (iii) any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence in
the performance of duties hereunder by the Trustee or the Securities
Administrator or by reason of reckless disregard of obligations and duties
hereunder. In no event shall the Trustee or the Securities Administrator be
liable for special, indirect or consequential loss or damage of any kind
whatsoever (including but not limited to lost profits), even if it has been
advised of the likelihood of such loss or damage and regardless of the form of
action. The Master Servicer agrees to indemnify the Trustee, from, and hold the
Trustee harmless against, any loss, liability or expense (including reasonable
attorney's fees and expenses) incurred by the Trustee by reason of the Master
Servicer's willful misfeasance, bad faith or gross negligence in the performance
of its duties under this Agreement or by reason of the Master Servicer's
reckless disregard of its obligations and duties under this Agreement. In
addition, the Seller agrees to indemnify the Trustee for, and to hold the
Trustee harmless against, any loss, liability or expense arising out of, or in
connection with, the provisions set forth in the last paragraph of Section 2.01,
including, without limitation, all costs, liabilities and expenses (including
reasonable legal fees and expenses) of investigating and defending itself
against any claim, action or proceeding, pending or threatened, relating to the
provisions of such paragraph. The indemnities in this Section 9.05 shall survive
the termination or discharge of this Agreement and the resignation or removal of
the Master Servicer, the Trustee, the Securities Administrator or the Custodian.
Any payment hereunder made by the Master Servicer to the Trustee shall be from
the Master Servicer's own funds, without reimbursement from REMIC I therefor.
SECTION 9.06. ELIGIBILITY REQUIREMENTS FOR TRUSTEE AND
SECURITIES ADMINISTRATOR.
The Trustee and the Securities Administrator shall at all
times be a corporation or an association (other than the Depositor, the Seller,
the Master Servicer or any Affiliate of the foregoing) organized and doing
business under the laws of any state or the United States of America, authorized
under such laws to exercise corporate trust powers, having a combined capital
and surplus of at least $50,000,000 (or a member of a bank holding company whose
capital and surplus is at least $50,000,000) and subject to supervision or
examination by federal or state authority. If such corporation or association
publishes reports of conditions at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining
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authority, then for the purposes of this Section the combined capital and
surplus of such corporation or association shall be deemed to be its combined
capital and surplus as set forth in its most recent report of conditions so
published. In case at any time the Trustee or the Securities Administrator, as
applicable, shall cease to be eligible in accordance with the provisions of this
Section, the Trustee or the Securities Administrator, as applicable, shall
resign immediately in the manner and with the effect specified in Section 9.07.
Additionally, the Securities Administrator (i) may not be an
Originator, Master Servicer, Servicer, the Depositor or an affiliate of the
Depositor unless the Securities Administrator is in an institutional trust
department, (ii) must be authorized to exercise corporate trust powers under the
laws of its jurisdiction of organization, and (iii) must be rated at least
"A/F1" by Fitch, if Fitch is a Rating Agency, or the equivalent rating by S&P
(or such rating acceptable to Fitch pursuant to a rating confirmation). If no
successor securities administrator shall have been appointed and shall have
accepted appointment within 60 days after Xxxxx Fargo Bank, N.A., as Securities
Administrator, ceases to be the securities administrator pursuant to this
Section 9.06, then the Trustee shall perform the duties of the Securities
Administrator pursuant to this Agreement. The Trustee shall notify the Rating
Agencies of any change of Securities Administrator. Notwithstanding the above,
the Trustee may, if it shall be unwilling to so act, or shall, if it is unable
to so act, promptly appoint or petition a court of competent jurisdiction to
appoint, a Person that satisfies the eligibility criteria set forth herein as
the Trustee under this Agreement in the assumption of all or any part of the
responsibilities, duties or liabilities of the Trustee under this Agreement.
SECTION 9.07. RESIGNATION AND REMOVAL OF TRUSTEE AND
SECURITIES ADMINISTRATOR.
The Trustee and the Securities Administrator may at any time
resign and be discharged from the trust hereby created by giving written notice
thereof to the Depositor, to the Master Servicer, to the Securities
Administrator (or the Trustee, if the Securities Administrator resigns) and to
the Certificateholders. Upon receiving such notice of resignation, the Depositor
shall promptly appoint a successor trustee or successor securities administrator
by written instrument, in duplicate, which instrument shall be delivered to the
resigning Trustee or Securities Administrator, as applicable, and to the
successor trustee or successor securities administrator, as applicable. A copy
of such instrument shall be delivered to the Certificateholders, the Trustee,
the Securities Administrator and the Master Servicer by the Depositor. If no
successor trustee or successor securities administrator shall have been so
appointed and have accepted appointment within 30 days after the giving of such
notice of resignation, the resigning Trustee or Securities Administrator, as the
case may be, may, at the expense of the Trust Fund, petition any court of
competent jurisdiction for the appointment of a successor trustee, successor
securities administrator, Trustee or Securities Administrator, as applicable.
If at any time the Trustee or the Securities Administrator
shall cease to be eligible in accordance with the provisions of Section 9.06 and
shall fail to resign after written request therefor by the Depositor, or if at
any time the Trustee or the Securities Administrator shall become incapable of
acting, or shall be adjudged bankrupt or insolvent, or a receiver of the Trustee
or the Securities Administrator or of its property shall be appointed, or any
public officer
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shall take charge or control of the Trustee or the Securities Administrator or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Depositor may remove the Trustee or the Securities
Administrator, as applicable and appoint a successor trustee or successor
securities administrator, as applicable, by written instrument, in duplicate,
which instrument shall be delivered to the Trustee or the Securities
Administrator so removed and to the successor trustee or successor securities
administrator. A copy of such instrument shall be delivered to the
Certificateholders, the Trustee, the Securities Administrator and the Master
Servicer by the Depositor.
The Holders of Certificates entitled to at least 51% of the
Voting Rights may at any time remove the Trustee or the Securities Administrator
and appoint a successor trustee or successor securities administrator by written
instrument or instruments, in triplicate, signed by such Holders or their
attorneys-in-fact duly authorized, one complete set of which instruments shall
be delivered to the Depositor, one complete set to the Trustee or the Securities
Administrator so removed and one complete set to the successor so appointed. A
copy of such instrument shall be delivered to the Certificateholders, the
Trustee (in the case of the removal of the Securities Administrator), the
Securities Administrator (in the case of the removal of the Trustee) and the
Master Servicer by the Depositor.
Any resignation or removal of the Trustee or the Securities
Administrator and appointment of a successor trustee or successor securities
administrator pursuant to any of the provisions of this Section shall not become
effective until acceptance of appointment by the successor trustee or successor
securities administrator, as applicable, as provided in Section 8.08.
Notwithstanding anything to the contrary contained herein, the
Master Servicer and the Securities Administrator shall at all times be the same
Person.
SECTION 9.08. SUCCESSOR TRUSTEE OR SECURITIES ADMINISTRATOR.
Any successor trustee or successor securities administrator
appointed as provided in Section 9.07 shall execute, acknowledge and deliver to
the Depositor and its predecessor trustee or predecessor securities
administrator an instrument accepting such appointment hereunder, and thereupon
the resignation or removal of the predecessor trustee or predecessor securities
administrator shall become effective and such successor trustee or successor
securities administrator without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with the like effect as if originally named as trustee or
securities administrator herein. The predecessor trustee or predecessor
securities administrator shall deliver to the successor trustee or successor
securities administrator all Mortgage Loan Documents and related documents and
statements to the extent held by it hereunder, as well as all moneys, held by it
hereunder, and the Depositor and the predecessor trustee or predecessor
securities administrator shall execute and deliver such instruments and do such
other things as may reasonably be required for more fully and certainly vesting
and confirming in the successor trustee or successor securities administrator
all such rights, powers, duties and obligations.
No successor trustee or successor securities administrator
shall accept appointment as provided in this Section unless at the time of such
acceptance such successor
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trustee or successor securities administrator shall be eligible under the
provisions of Section 8.06 and the appointment of such successor trustee or
successor securities administrator shall not result in a downgrading of any
Class of Certificates by any Rating Agency, as evidenced by a letter from each
Rating Agency.
Upon acceptance of appointment by a successor trustee or
successor securities administrator as provided in this Section, the Depositor
shall mail notice of the succession of such trustee hereunder to all Holders of
Certificates at their addresses as shown in the Certificate Register. If the
Depositor fails to mail such notice within 10 days after acceptance of
appointment by the successor trustee or successor securities administrator, the
successor trustee or successor securities administrator shall cause such notice
to be mailed at the expense of the Depositor.
SECTION 9.09. MERGER OR CONSOLIDATION OF TRUSTEE OR SECURITIES
ADMINISTRATOR.
Any corporation or association into which the Trustee or the
Securities Administrator may be merged or converted or with which it may be
consolidated or any corporation or association resulting from any merger,
conversion or consolidation to which the Trustee or the Securities Administrator
shall be a party, or any corporation or association succeeding to the business
of the Trustee or the Securities Administrator shall be the successor of the
Trustee or the Securities Administrator hereunder, provided such corporation or
association shall be eligible under the provisions of Section 8.06, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
SECTION 9.10. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions hereof, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the REMIC I or property securing the same may at the time be located,
the Trustee shall have the power and shall execute and deliver all instruments
to appoint one or more Persons approved by the Trustee to act as co-trustee or
co-trustees, jointly with the Trustee, or separate trustee or separate trustees,
of all or any part of REMIC I, and to vest in such Person or Persons, in such
capacity, and for the benefit of the Holders of the Certificates, such title to
REMIC I, or any part thereof, and, subject to the other provisions of this
Section 9.10, such powers, duties, obligations, rights and trusts as the Trustee
may consider necessary or desirable. No co-trustee or separate trustee hereunder
shall be required to meet the terms of eligibility as a successor trustee under
Section 9.06 hereunder and no notice to Holders of Certificates of the
appointment of co-trustee(s) or separate trustee(s) shall be required under
Section 8.08 hereof.
In the case of any appointment of a co-trustee or separate
trustee pursuant to this Section 9.10 all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed by the Trustee (whether as
Trustee hereunder or as successor to a defaulting Master Servicer hereunder),
the Trustee shall be incompetent or
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unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to REMIC I or any portion
thereof in any such jurisdiction) shall be exercised and performed by such
separate trustee or co-trustee at the direction of the Trustee.
Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article IX. Each separate trustee and co-trustee, upon
its acceptance of the trust conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee, or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Every such instrument shall be filed with the
Trustee.
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 or co-trustee.
SECTION 9.11. APPOINTMENT OF OFFICE OR AGENCY.
The Certificates may be surrendered for registration of
transfer or exchange at the Securities Administrator's office located at Sixth
and Marquette, Xxxxxxxxxxx, Xxxxxxxxx 00000, and presented for final
distribution at the Corporate Trust Office of the Securities Administrator where
notices and demands to or upon the Securities Administrator in respect of the
Certificates and this Agreement may be served.
SECTION 9.12. REPRESENTATIONS AND WARRANTIES.
The Trustee hereby represents and warrants to the Master
Servicer, the Securities Administrator, the Servicer and the Depositor as
applicable, as of the Closing Date, that:
(i) It is a national banking association duly organized,
validly existing and in good standing under the laws of the United
States.
(ii) The execution and delivery of this Agreement by it, and
the performance and compliance with the terms of this Agreement by it,
will not violate its articles of association or bylaws or constitute a
default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in the breach of, any
material agreement or other instrument to which it is a party or which
is applicable to it or any of its assets.
(iii) It has the full power and authority to enter into and
consummate all transactions contemplated by this Agreement, has duly
authorized the execution, delivery and performance of this Agreement,
and has duly executed and delivered this Agreement.
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(iv) This Agreement, assuming due authorization, execution
and delivery by the other parties hereto, constitutes a valid, legal
and binding obligation of it, enforceable against it in accordance with
the terms hereof, subject to (A) applicable bankruptcy, insolvency,
receivership, reorganization, moratorium and other laws affecting the
enforcement of creditors' rights generally, and (B) general principles
of equity, regardless of whether such enforcement is considered in a
proceeding in equity or at law.
(v) It is not in violation of, and its execution and
delivery of this Agreement and its performance and compliance with the
terms of this Agreement will not constitute a violation of, any law,
any order or decree of any court or arbiter, or any order, regulation
or demand of any federal, state or local governmental or regulatory
authority, which violation, in its good faith and reasonable judgment,
is likely to affect materially and adversely either the ability of it
to perform its obligations under this Agreement or its financial
condition.
(vi) No litigation is pending or, to the best of its
knowledge, threatened against it, which would prohibit it from entering
into this Agreement or, in its good faith reasonable judgment, is
likely to materially and adversely affect either the ability of it to
perform its obligations under this Agreement or its financial
condition.
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ARTICLE X
TERMINATION
XXXXXXX 00.00. XXXXXXXXXXX XXXX XXXXXXXXXX OR LIQUIDATION OF
ALL MORTGAGE LOANS.
(a) Subject to Section 10.02, the respective obligations and
responsibilities under this Agreement of the Depositor, the Master
Servicer, the Securities Administrator, the Servicer and the Trustee
(other than the obligations of the Master Servicer to the Trustee
pursuant to Section 9.05 and of the Servicer to make remittances to the
Securities Administrator and the Securities Administrator to make
payments in respect of the REMIC I Regular Interests, REMIC I Regular
Interests or the Classes of Certificates as hereinafter set forth)
shall terminate upon payment to the Certificateholders and the deposit
of all amounts held by or on behalf of the Trustee and required
hereunder to be so paid or deposited on the Distribution Date
coinciding with or following the earlier to occur of (i) the purchase
by the Terminator (as defined below) of all Mortgage Loans and each REO
Property remaining in REMIC I and (ii) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage
Loan or REO Property remaining in REMIC I; PROVIDED, HOWEVER, that in
no event shall the trust created hereby continue beyond the expiration
of 21 years from the death of the last survivor of the descendants of
Xxxxxx X. Xxxxxxx, the late ambassador of the United States to the
Court of St. Xxxxx, living on the date hereof. The purchase by the
Terminator of all Mortgage Loans and each REO Property remaining in
REMIC I shall be at a price (the "Termination Price") equal to the sum
of (i) the greater of (A) the aggregate Purchase Price of all the
Mortgage Loans included in REMIC I, plus the appraised value of each
REO Property, if any, included in REMIC I, such appraisal to be
conducted by an appraiser mutually agreed upon by the Terminator and
the Trustee in their reasonable discretion and (B) the aggregate fair
market value of all of the assets of REMIC I (as determined by the
Terminator and the Trustee, as of the close of business on the third
Business Day next preceding the date upon which notice of any such
termination is furnished to Certificateholders pursuant to the third
paragraph of this Section 10.01) plus (ii) any amounts due the Servicer
and the Master Servicer in respect of unpaid Servicing Fees, Master
Servicing Fees and outstanding P&I Advances and Servicing Advances.
(b) The Master Servicer or, if the Master Servicer fails to
exercise such optional termination right, the Servicer (either the
Master Servicer or the Servicer, the "Terminator") shall have the right
to purchase all of the Mortgage Loans and each REO Property remaining
in REMIC I pursuant to clause (i) of the preceding paragraph no later
than the Determination Date in the month immediately preceding the
Distribution Date on which the Certificates will be retired; provided,
however, that the Terminator may elect to purchase all of the Mortgage
Loans and each REO Property remaining in REMIC I pursuant to clause (i)
above only if the aggregate Scheduled Principal Balance of the Mortgage
Loans and each REO Property remaining in the Trust Fund at the time of
such election is reduced to less than 10% of the aggregate Scheduled
Principal Balance of the Mortgage Loans as of the Cut-off Date. By
acceptance of the Residual Certificates, the Holder of the Residual
Certificates agrees, in connection with any termination hereunder, to
assign and transfer any portion of the Termination Price in excess of
par, and to the extent received in respect of such termination, to
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pay any such amounts to the Holders of the Class CE Certificates.
Notwithstanding the foregoing, the optional termination right may only
be exercised by the Servicer if (i) it receives written notification
from the Master Servicer that it will not exercise such optional
termination right, (ii) it provides written notice to the Authorized
Officers of the Seller that it intends to exercise such optional
termination right and (iii) it receives written authorization from the
Authorized Officers of the Seller to exercise such optional termination
right.
(c) Notice of the liquidation of the Certificates shall be
given promptly by the Securities Administrator by letter to the
Certificateholders mailed (a) in the event such notice is given in
connection with the purchase of the Mortgage Loans and each REO
Property by the Terminator, not earlier than the 15th day and not later
than the 25th day of the month next preceding the month of the final
distribution on the Certificates or (b) otherwise during the month of
such final distribution on or before the Determination Date in such
month, in each case specifying (i) the Distribution Date upon which the
Trust Fund will terminate and the final payment in respect of the REMIC
I Regular Interests, REMIC I Regular Interests or the Certificates will
be made upon presentation and surrender of the related Certificates at
the office of the Securities Administrator therein designated, (ii) the
amount of any such final payment, (iii) that no interest shall accrue
in respect of the REMIC I Regular Interests, REMIC I Regular Interests
or Certificates from and after the Interest Accrual Period relating to
the final Distribution Date therefor and (iv) that the Record Date
otherwise applicable to such Distribution Date is not applicable,
payments being made only upon presentation and surrender of the
Certificates at the office of the Securities Administrator. In the
event such notice is given in connection with the purchase of all of
the Mortgage Loans and each REO Property remaining in REMIC I by the
Terminator, the Terminator shall deliver to the Securities
Administrator for deposit in the Distribution Account not later than
the Business Day prior to the Distribution Date on which the final
distribution on the Certificates an amount in immediately available
funds equal to the above-described Termination Price. The Securities
Administrator shall remit to the Servicer, the Master Servicer, the
Trustee and the Custodian from such funds deposited in the Distribution
Account (i) any amounts which the Servicer would be permitted to
withdraw and retain from the Collection Account pursuant to Section
3.09 as if such funds had been deposited therein (including all unpaid
Servicing Fees and all outstanding P&I Advances and Servicing Advances)
and (ii) any other amounts otherwise payable by the Securities
Administrator to the Master Servicer, the Trustee, the Custodian and
the Servicer from amounts on deposit in the Distribution Account
pursuant to the terms of this Agreement prior to making any final
distributions pursuant to Section 10.01(d) below. Upon certification to
the Trustee by the Securities Administrator of the making of such final
deposit, the Trustee shall promptly release or cause to be released to
the Terminator the Mortgage Files for the remaining Mortgage Loans, and
Trustee shall execute all assignments, endorsements and other
instruments delivered to it and necessary to effectuate such transfer.
(d) Upon presentation of the Certificates by the
Certificateholders on the final Distribution Date, the Securities
Administrator shall distribute to each Certificateholder so presenting
and surrendering its Certificates the amount otherwise distributable on
such Distribution Date in accordance with Section 5.01 in respect of
the Certificates so presented and surrendered. Any funds not
distributed to any Holder or Holders of Certificates being retired on
such Distribution Date because of the failure of such Holder or Holders
to tender their Certificates shall, on such date, be set aside and held
in trust and credited to the account
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of the appropriate non-tendering Holder or Holders. If any Certificates
as to which notice has been given pursuant to this Section 10.01 shall
not have been surrendered for cancellation within six months after the
time specified in such notice, the Securities Administrator shall mail
a second notice to the remaining non-tendering Certificateholders to
surrender their Certificates for cancellation in order to receive the
final distribution with respect thereto. If within one year after the
second notice all such Certificates shall not have been surrendered for
cancellation, the Securities Administrator shall, directly or through
an agent, mail a final notice to the remaining non-tendering
Certificateholders concerning surrender of their Certificates. The
costs and expenses of maintaining the funds in trust and of contacting
such Certificateholders shall be paid out of the assets remaining in
the trust funds. If within one year after the final notice any such
Certificates shall not have been surrendered for cancellation, the
Securities Administrator shall pay to the Depositor all such amounts,
and all rights of non-tendering Certificateholders in or to such
amounts shall thereupon cease. No interest shall accrue or be payable
to any Certificateholder on any amount held in trust by the Securities
Administrator as a result of such Certificateholder's failure to
surrender its Certificate(s) on the final Distribution Date for final
payment thereof in accordance with this Section 10.01. Any such amounts
held in trust by the Securities Administrator shall be held uninvested
in an Eligible Account.
SECTION 10.02. ADDITIONAL TERMINATION REQUIREMENTS.
(a) In the event that the Terminator purchases all the
Mortgage Loans and each REO Property or the final payment on or other
liquidation of the last Mortgage Loan or REO Property remaining in
REMIC I pursuant to Section 10.01, the Trust Fund shall be terminated
in accordance with the following additional requirements:
(i) The Trustee shall specify the first day in the 90-day
liquidation period in a statement attached to each Trust REMIC's
final Tax Return pursuant to Treasury regulation Section 1.860F-1
and shall satisfy all requirements of a qualified liquidation under
Section 860F of the Code and any regulations thereunder, as
evidenced by an Opinion of Counsel obtained by and at the expense of
the Terminator;
(ii) During such 90-day liquidation period and, at or prior
to the time of making of the final payment on the Certificates, the
Trustee shall sell all of the assets of REMIC I to the Terminator
for cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Securities Administrator shall distribute or
credit, or cause to be distributed or credited, to the Holders of
the Residual Certificates all cash on hand in the Trust Fund (other
than cash retained to meet claims), and the Trust Fund shall
terminate at that time.
(b) At the expense of the requesting Terminator (or, if the
Trust Fund is being terminated as a result of the occurrence of the
event described in clause (ii) of the first paragraph of Section
10.01, at the expense of the Trust Fund), the Terminator shall
prepare or cause to be prepared the documentation required in
connection with the adoption of a plan of liquidation of each Trust
REMIC pursuant to this Section 10.02.
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(c) By their acceptance of Certificates, the Holders thereof
hereby agree to authorize the Trustee to specify the 90-day liquidation
period for each Trust REMIC, which authorization shall be binding upon
all successor Certificateholders.
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ARTICLE XI
REMIC PROVISIONS
SECTION 11.01. REMIC ADMINISTRATION.
(a) The Trustee shall elect to treat each Trust REMIC as a
REMIC under the Code and, if necessary, under applicable state law.
Each such election will be made by the Securities Administrator on Form
1066 or other appropriate federal tax or information return or any
appropriate state return for the taxable year ending on the last day of
the calendar year in which the Certificates are issued. For the
purposes of the REMIC election in respect of REMIC I, the REMIC I
Regular Interests shall be designated as the Regular Interests in REMIC
I and the Class R-I Interest shall be designated as the Residual
Interests in REMIC I. The Class A-1 Certificates and the Mezzanine
Certificates (exclusive of any right to receive payments from the
Reserve Fund), the Class P Certificates and the Class CE Certificates
shall be designated as the Regular Interests in REMIC II and the Class
R-II Interest shall be designated as the Residual Interests in REMIC
II. The Trustee shall not permit the creation of any "interests" in
each Trust REMIC (within the meaning of Section 860G of the Code) other
than the REMIC I Regular Interests and the interests represented by the
Certificates.
(b) The Closing Date is hereby designated as the "Startup
Day" of each Trust REMIC within the meaning of Section 860G(a)(9) of
the Code.
(c) The Securities Administrator shall be reimbursed for any
and all expenses relating to any tax audit of the Trust Fund
(including, but not limited to, any professional fees or any
administrative or judicial proceedings with respect to each Trust REMIC
that involve the Internal Revenue Service or state tax authorities),
including the expense of obtaining any tax related Opinion of Counsel
except as specified herein. The Securities Administrator, as agent for
each Trust REMIC's tax matters person shall (i) act on behalf of the
Trust Fund in relation to any tax matter or controversy involving any
Trust REMIC and (ii) represent the Trust Fund in any administrative or
judicial proceeding relating to an examination or audit by any
governmental taxing authority with respect thereto. The holder of the
largest Percentage Interest of each Class of Residual Certificates
shall be designated, in the manner provided under Treasury regulations
section 1.860F-4(d) and Treasury regulations section 301.6231(a)(7)-1,
as the tax matters person of the related REMIC created hereunder. By
their acceptance thereof, the holder of the largest Percentage Interest
of the Residual Certificates hereby agrees to irrevocably appoint the
Securities Administrator or an Affiliate as its agent to perform all of
the duties of the tax matters person for the Trust Fund.
(d) The Securities Administrator shall prepare and file and
the Trustee shall sign all of the Tax Returns in respect of each REMIC
created hereunder. The expenses of preparing and filing such returns
shall be borne by the Securities Administrator without any right of
reimbursement therefor.
(e) The Securities Administrator shall perform on behalf of
each Trust REMIC all reporting and other tax compliance duties that are
the responsibility of such
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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, as required by the Code, the REMIC
Provisions or other such compliance guidance, the Securities
Administrator shall provide (i) to any Transferor of a Residual
Certificate such information as is necessary for the application of any
tax relating to the transfer of a Residual Certificate to any Person
who is not a Permitted Transferee upon receipt of additional reasonable
compensation, (ii) to the Certificateholders such information or
reports as are required by the Code or the REMIC Provisions including
reports relating to interest, original issue discount and market
discount or premium (using the Prepayment Assumption as required) and
(iii) to the Internal Revenue Service the name, title, address and
telephone number of the person who will serve as the representative of
each Trust REMIC. The Depositor shall provide or cause to be provided
to the Securities Administrator, within ten (10) days after the Closing
Date, all information or data that the Securities Administrator
reasonably determines to be relevant for tax purposes as to the
valuations and issue prices of the Certificates, including, without
limitation, the price, yield, prepayment assumption and projected cash
flow of the Certificates.
(f) To the extent in the control of the Trustee or the
Securities Administrator, each such Person (i) shall take such action
and shall cause each REMIC created hereunder to take such action as
shall be necessary to create or maintain the status thereof as a REMIC
under the REMIC Provisions, (ii) shall not take any action, cause the
Trust Fund 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 (A) endanger the status of each Trust
REMIC as a REMIC or (B) result in the imposition of a tax upon the
Trust Fund (including but not limited to the tax on prohibited
transactions as defined in Section 860F(a)(2) of the Code and the tax
on contributions to a REMIC set forth in Section 860G(d) of the Code)
(either such event, an "Adverse REMIC Event") unless such action or
inaction is permitted under this Agreement or the Trustee and the
Securities Administrator have received an Opinion of Counsel, addressed
to the them (at the expense of the party seeking to take such action
but in no event at the expense of the Trustee or the Securities
Administrator) to the effect that the contemplated action will not,
with respect to any Trust REMIC, endanger such status or result in the
imposition of such a tax, nor (iii) shall the Securities Administrator
take or fail to take any action (whether or not authorized hereunder)
as to which the Trustee has advised it in writing that it has received
an Opinion of Counsel to the effect that an Adverse REMIC Event could
occur with respect to such action; provided that the Securities
Administrator may conclusively rely on such Opinion of Counsel and
shall incur no liability for its action or failure to act in accordance
with such Opinion of Counsel. In addition, prior to taking any action
with respect to any Trust REMIC or the respective assets of each, or
causing any Trust REMIC to take any action, which is not contemplated
under the terms of this Agreement, the Securities Administrator will
consult with the Trustee or its designee, in writing, with respect to
whether such action could cause an Adverse REMIC Event to occur with
respect to any Trust REMIC, and the Securities Administrator shall not
take any such action or cause any Trust REMIC to take any such action
as to which the Trustee has advised it in writing that an Adverse REMIC
Event could occur. The Trustee may consult with counsel to make such
written advice, and the cost of same shall be home by the party seeking
to take the action not permitted by this Agreement, but in no event
shall such cost be an expense of the Trustee.
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(g) In the event that any tax is imposed on "prohibited
transactions" of any REMIC created hereunder as defined in Section
860F(a)(2) of the Code, on the "net income from foreclosure property"
of such REMIC as defined in Section 860G(c) of the Code, on any
contributions to any such REMIC after the Startup Day therefor pursuant
to Section 860G(d) of the Code, or any other tax is imposed by the Code
or any applicable provisions of state or local tax laws, such tax shall
be charged (i) to the Trustee pursuant to Section 11.03, if such tax
arises out of or results from a breach by the Trustee of any of its
obligations under this Article XI, (ii) to the Securities Administrator
pursuant to Section 11.03, if such tax arises out of or results from a
breach by the Securities Administrator of any of its obligations under
this Article XI, (iii) to the Master Servicer pursuant to Section
11.03, if such tax arises out of or results from a breach by the Master
Servicer of any of its obligations under Article IV or under this
Article XI, (iv) to the Servicer pursuant to Section 11.03, if such tax
arises out of or results from a breach by the Servicer of any of its
obligations under Article III or under this Article XI, or (v) in all
other cases, against amounts on deposit in the Distribution Account and
shall be paid by withdrawal therefrom.
(h) The Securities Administrator shall, for federal income
tax purposes, maintain books and records with respect to each Trust
REMIC on a calendar year and on an accrual basis.
(i) Following the Startup Day, neither the Securities
Administrator nor the Trustee shall accept any contributions of assets
to any Trust REMIC other than in connection with any Qualified
Substitute Mortgage Loan delivered in accordance with Section 2.03
unless it shall have received an Opinion of Counsel to the effect that
the inclusion of such assets in the Trust Fund will not cause the
related REMIC to fail to qualify as a REMIC at any time that any
Certificates are outstanding or subject such REMIC to any tax under the
REMIC Provisions or other applicable provisions of federal, state and
local law or ordinances.
(j) Neither the Trustee nor the Securities Administrator
shall knowingly enter into any arrangement by which any Trust REMIC
will receive a fee or other compensation for services nor permit either
REMIC to receive any income from assets other than "qualified
mortgages" as defined in Section 860G(a)(3) of the Code or "permitted
investments" as defined in Section 860G(a)(5) of the Code.
(k) The Securities Administrator shall apply for an employer
identification number with the Internal Revenue Service via a Form SS-4
or other comparable method for each REMIC. In connection with the
foregoing, the Securities Administrator shall provide the name and
address of the person who can be contacted to obtain information
required to be reported to the holders of Regular Interests in each
REMIC as required by IRS Form 8811.
SECTION 11.02. PROHIBITED TRANSACTIONS AND ACTIVITIES.
None of the Depositor, the Servicer, the Securities
Administrator, the Master Servicer or the Trustee shall sell, dispose of or
substitute for any of the Mortgage Loans (except in connection with (i) the
foreclosure of a Mortgage Loan, including but not limited to, the acquisition or
sale of a Mortgaged Property acquired by deed in lieu of foreclosure, (ii) the
bankruptcy of REMIC I, (iii) the termination of REMIC I pursuant to Article X of
this
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Agreement, (iv) a substitution pursuant to Article II of this Agreement or
(v) a purchase of Mortgage Loans pursuant to Article II of this Agreement), nor
acquire any assets for any Trust REMIC (other than REO Property acquired in
respect of a defaulted Mortgage Loan), nor sell or dispose of any investments in
the Collection Account or the Distribution Account for gain, nor accept any
contributions to any Trust REMIC after the Closing Date (other than a Qualified
Substitute Mortgage Loan delivered in accordance with Section 2.03), unless it
has received an Opinion of Counsel, addressed to the Trustee and the Securities
Administrator (at the expense of the party seeking to cause such sale,
disposition, substitution, acquisition or contribution but in no event at the
expense of the Trustee) that such sale, disposition, substitution, acquisition
or contribution will not (a) affect adversely the status of any Trust REMIC as a
REMIC or (b) cause any Trust REMIC to be subject to a tax on "prohibited
transactions" or "contributions" pursuant to the REMIC Provisions.
SECTION 11.03. INDEMNIFICATION.
(a) The Trustee agrees to be liable for any taxes and costs
incurred by the Trust Fund, the Depositor, the Master Servicer, the
Securities Administrator or the Servicer including, without limitation,
any reasonable attorneys fees imposed on or incurred by the Trust Fund,
the Depositor, the Master Servicer, the Securities Administrator or the
Servicer as a result of the Trustee's failure to perform its covenants
set forth in this Article XI in accordance with the standard of care of
the Trustee set forth in this Agreement.
(b) The Servicer agrees to indemnify the Trust Fund, the
Depositor, the Master Servicer, the Securities Administrator and the
Trustee for any taxes and costs including any reasonable attorneys'
fees imposed on or incurred by the Trust Fund, the Depositor, the
Master Servicer, the Securities Administrator or the Trustee, as a
result of the Servicer's failure to perform its covenants set forth in
Article III in accordance with the standard of care of the Servicer set
forth in this Agreement.
(c) The Master Servicer agrees to indemnify the Trust Fund,
the Depositor, the Servicer and the Trustee for any taxes and costs
including any reasonable attorneys' fees imposed on or incurred by the
Trust Fund, the Depositor, the Servicer or the Trustee, as a result of
the Master Servicer's failure to perform its covenants set forth in
Article IV in accordance with the standard of care of the Master
Servicer set forth in this Agreement.
(d) The Securities Administrator agrees to be liable for any
taxes and costs incurred by the Trust Fund, the Depositor, the Servicer
or the Trustee including any reasonable attorneys' fees imposed on or
incurred by the Trust Fund, the Depositor, the Servicer or the Trustee
as a result of the Securities Administrator's failure to perform its
covenants set forth in this Article XI in accordance with the standard
of care of the Securities Administrator set forth in this Agreement.
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ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.01. AMENDMENT.
This Agreement may be amended from time to time by the
Depositor, the Servicer, the Master Servicer, the Securities Administrator and
the Trustee, but without the consent of any of the Certificateholders, (i) to
cure any ambiguity or defect, (ii) to correct, modify or supplement any
provisions herein (including to give effect to the expectations of
Certificateholders), 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 that such action
shall not, as evidenced by an Opinion of Counsel delivered to the Trustee,
adversely affect in any material respect the interests of any Certificateholder;
provided that any such amendment shall be deemed not to adversely affect in any
material respect the interests of the Certificateholders and no such Opinion of
Counsel shall be required if the Person requesting such amendment obtains a
letter from each Rating Agency stating that such amendment would not result in
the downgrading or withdrawal of the respective ratings then assigned to the
Certificates. No amendment shall be deemed to adversely affect in any material
respect the interests of any Certificateholder who shall have consented thereto,
and no Opinion of Counsel shall be required to address the effect of any such
amendment on any such consenting Certificateholder.
This Agreement may also be amended from time to time by the
Depositor, the Servicer, the Master Servicer, the Securities Administrator and
the Trustee with the consent of the Holders of Certificates entitled to at least
66% of the Voting Rights 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 shall (i) reduce in any manner the amount of, or
delay the timing of, payments received on Mortgage Loans which are required to
be distributed on any Certificate without the consent of the Holder of such
Certificate, (ii) adversely affect in any material respect the interests of the
Holders of any Class of Certificates in a manner, other than as described in
(i), without the consent of the Holders of Certificates of such Class evidencing
at least 66% of the Voting Rights allocated to such Class, or (iii) modify the
consents required by the immediately preceding clauses (i) and (ii) without the
consent of the Holders of all Certificates then outstanding. Notwithstanding any
other provision of this Agreement, for purposes of the giving or withholding of
consents pursuant to this Section 12.01, Certificates registered in the name of
the Depositor or a Servicer or any Affiliate thereof shall be entitled to Voting
Rights with respect to matters affecting such Certificates. Without limiting the
generality of the foregoing, any amendment to this Agreement required in
connection with the compliance with or the clarification of any reporting
obligations described in Section 5.06 hereof shall not require the consent of
any Certificateholder and without the need for any Opinion of Counsel or Rating
Agency confirmation.
Notwithstanding any contrary provision of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel to the effect that such amendment is
permitted hereunder and will not result in the
151
imposition of any tax on any Trust REMIC pursuant to the REMIC Provisions or
cause any Trust REMIC to fail to qualify as a REMIC at any time that any
Certificates are outstanding and that such amendment is authorized or permitted
by this Agreement.
Promptly after the execution of any such amendment the Trustee
shall furnish a copy of such amendment to each Certificateholder.
It shall not be necessary for the consent of
Certificateholders under this Section 12.01 to approve the particular form of
any proposed amendment, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable regulations as the Trustee may prescribe.
The cost of any Opinion of Counsel to be delivered pursuant to
this Section 12.01 shall be borne by the Person seeking the related amendment,
but in no event shall such Opinion of Counsel be an expense of the Trustee .
The Trustee may, but shall not be obligated to enter into any
amendment pursuant to this Section that affects its rights, duties and
immunities under this Agreement or otherwise.
SECTION 12.02. 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 Depositor at the expense of the Certificateholders, but only
upon direction of the Trustee 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
constitute but one and the same instrument.
SECTION 12.03. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS.
The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of the
Trust Fund, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
No Certificateholder shall have any right to vote (except as
expressly provided for herein) or in any manner otherwise control the operation
and management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of any 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
152
liability to any third person by reason of any action taken by the parties to
this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of default
and of the continuance thereof, as hereinbefore provided, and unless also the
Holders of Certificates entitled to at least 25% of the Voting Rights shall have
made written request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby, and the Trustee, for 15 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding. It is
understood and intended, and expressly covenanted by each Certificateholder with
every other Certificateholder. and the Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatsoever 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, 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, each and every Certificateholder
and the Trustee shall be entitled to such relief as can be given either at law
or in equity.
SECTION 12.04. GOVERNING LAW.
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 without regard to
conflicts of laws principles thereof.
SECTION 12.05. NOTICES.
All directions, demands and notices hereunder shall be in
writing and shall be deemed to have been duly given when received if sent by
facsimile, receipt confirmed, if personally delivered at or mailed by first
class mail, postage prepaid, or by express delivery service or delivered in any
other manner specified herein, to (a) in the case of the Depositor, ACE
Securities Corp., AMACAR GROUP, 0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxxx,
Xxxxx Xxxxxxxx 00000, Attention: Xxxxxxx Xxxxxxx (telecopy number:(704)
365-1362), or such other address or telecopy number as may hereafter be
furnished to the Servicer, the Master Servicer, the Securities Administrator and
the Trustee in writing by the Depositor, (b) in the case of the Servicer, Ocwen
Federal Bank FSB, 1675 Palm Beach Xxxxx Xxxxxxxxx, Xxxxx 00X, Xxxx Xxxx Xxxxx,
Xxxxxxx 00000, Attention: Secretary (telecopy number: (000) 000-0000), or such
other address or telecopy number as may hereafter be furnished to the Trustee,
the Master Servicer, the Securities Administrator and the Depositor in writing
by the Servicer, (c) in the case of the Master Servicer and the Securities
Administrator, X.X. Xxx 00, Xxxxxxxx, Xxxxxxxx 00000 and for overnight delivery
to 0000 Xxx Xxxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000, Attention: Ace Securities
Corp., 2004-SD1 (telecopy number: (000) 000-0000), or such other address or
telecopy number as may hereafter be furnished to the Trustee, the Depositor and
the
153
Servicer in writing by the Master Servicer or the Securities Administrator
and (d) in the case of the Trustee, at the Corporate Trust Office or such other
address or telecopy number as the Trustee may hereafter be furnish to the
Servicer, the Master Servicer, the Securities Administrator and the Depositor in
writing by the Trustee. Any notice required or permitted to be given to a
Certificateholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given when mailed, whether or not the
Certificateholder receives such notice. A copy of any notice required to be
telecopied hereunder also shall be mailed to the appropriate party in the manner
set forth above.
SECTION 12.06. SEVERABILITY OF PROVISIONS.
If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall be for any reason whatsoever held invalid, then
such covenants, agreements, provisions or terms shall be deemed severable from
the remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions of
this Agreement or of the Certificates or the rights of the Holders thereof.
SECTION 12.07. NOTICE TO RATING AGENCIES.
The Trustee shall use its best efforts promptly to provide
notice to the Rating Agencies with respect to each of the following of which a
Responsible Officer has actual knowledge:
1. Any material change or amendment to this Agreement;
2. The occurrence of any Servicer Event of Default or Master
Servicer Event of Default that has not been cured or waived;
3. The resignation or termination of the Servicer, the Master
Servicer or the Trustee;
4. The repurchase or substitution of Mortgage Loans pursuant
to or as contemplated by Section 2.03;
5. The final payment to the Holders of any Class of
Certificates;
6. Any change in the location of the Distribution Account; and
7. Any event that would result in the inability of the Trustee
as successor Servicer to make advances regarding delinquent Mortgage
Loans.
In addition, the Securities Administrator shall promptly make
available to each Rating Agency copies of each report to Certificateholders
described in Section 5.02.
The Servicer shall make available to each Rating Agency copies
of the following:
1. Each annual statement as to compliance described in Section
3.17;
154
2. Each annual independent public accountants' servicing
report described in Section 3.18; and
3. Any change in the location of the Collection Account.
Any such notice pursuant to this Section 12.07 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 Standard & Poor's, a division of the XxXxxx-Xxxx Companies, Inc., 00 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 and to Fitch Ratings, 0 Xxxxx Xxxxxx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000 or such other addresses as the Rating Agencies may
designate in writing to the parties hereto.
SECTION 12.08. 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 12.09. GRANT OF SECURITY INTEREST.
It is the express intent of the parties hereto that the
conveyance of the Mortgage Loans by the Depositor to the Trustee, on behalf of
the Trust and for the benefit of the Certificateholders, be, and be construed
as, a sale of the Mortgage Loans by the Depositor and not a pledge of the
Mortgage Loans to secure a debt or other obligation of the Depositor. However,
in the event that, notwithstanding the aforementioned intent of the parties, the
Mortgage Loans are held to be property of the Depositor, then, (a) it is the
express intent of the parties that such conveyance be deemed a pledge of the
Mortgage Loans by the Depositor to the Trustee, on behalf of the Trust and for
the benefit of the Certificateholders, to secure a debt or other obligation of
the Depositor and (b)(1) this Agreement shall also be deemed to be a security
agreement within the meaning of Articles 8 and 9 of the Uniform Commercial Code
as in effect from time to time in the State of New York; (2) the conveyance
provided for in Section 2.01 shall be deemed to be a grant by the Depositor to
the Trustee, on behalf of the Trust and for the benefit of the
Certificateholders, of a security interest in all of the Depositor's right,
title and interest in and to the Mortgage Loans and all amounts payable to the
holders of the Mortgage Loans in accordance with the terms thereof and all
proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities or other property, including without limitation
all amounts, other than investment earnings, from time to time held or invested
in the Collection Account and the Distribution Account, whether in the form of
cash, instruments, securities or other property; (3) the obligations secured by
such security agreement shall be deemed to be all of the Depositor's obligations
under this Agreement, including the obligation to provide to the
Certificateholders the benefits of this Agreement relating to the Mortgage Loans
and the Trust Fund; and (4) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed notifications to, or acknowledgments, receipts or confirmations
from, financial intermediaries, bailees or agents (as applicable) of the Trustee
for the purpose of perfecting such security interest under applicable law.
Accordingly, the Depositor hereby grants to the Trustee, on behalf of the Trust
and for the benefit of the Certificateholders, a security interest in the
Mortgage Loans and all other property described in clause (2) of the preceding
sentence, for the
155
purpose of securing to the Trustee the performance by the Depositor of the
obligations described in clause (3) of the preceding sentence. Notwithstanding
the foregoing, the parties hereto intend the conveyance pursuant to Section 2.01
to be a true, absolute and unconditional sale of the Mortgage Loans and assets
constituting the Trust Fund by the Depositor to the Trustee, on behalf of the
Trust and for the benefit of the Certificateholders.
SECTION 12.10. SURVIVAL OF INDEMNIFICATION.
Any and all indemnities to be provided by any party to this
Agreement shall survive the termination and resignation of any party hereto and
the termination of this Agreement.
156
IN WITNESS WHEREOF, the Depositor, the Servicer, the Master
Servicer, the Securities Administrator and the Trustee have caused their names
to be signed hereto by their respective officers thereunto duly authorized, in
each case as of the day and year first above written.
ACE SECURITIES CORP.,
as Depositor
By:
--------------------------------------------------
Name:
Title:
By:
-----------------------------------------
Name:
Title:
OCWEN FEDERAL BANK FSB,
as Servicer
By:
--------------------------------------------------
Name:
Title:
HSBC BANK USA, NATIONAL ASSOCIATION
not in its individual capacity but solely as Trustee
By:
--------------------------------------------------
Name:
Title:
XXXXX FARGO BANK, N.A.
as Master Servicer and Securities Administrator
By:
--------------------------------------------------
Name:
Title:
For purposes of Sections 7.08, 7.09 and 7.10:
RISK MANAGEMENT GROUP, LLC
By:
--------------------------------------------------
Name:
Title:
ACKNOWLEDGED AND AGREED FOR PURPOSES OF SECTION 9.05:
DB STRUCTURED PRODUCTS, INC
By:
--------------------------------------------------
Name:
Title:
By:
--------------------------------------------------
Name:
Title:
STATE OF )
) ss.:
COUNTY OF )
On the ___ day of September 2004, before me, a notary public
in and for said State, personally appeared _____________________ known to me to
be a _____________________ of ACE Securities Corp., one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
-----------------------------------
Notary Public
[Notarial Seal] My commission expires
STATE OF )
) ss.:
COUNTY OF )
On the __ day of September 2004, before me, a notary public in
and for said State, personally appeared ___________________________ known to me
to be a ____________________ of ACE Securities Corp., one of the corporations
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
-----------------------------------
Notary Public
[Notarial Seal] My commission expires
STATE OF )
) ss.:
COUNTY OF )
On the ___ day of September 2004, before me, a notary public
in and for said State, personally appeared _______________ known to me to be a
_______________ of ________________, the Ocwen Federal Bank FSB, a federally
chartered savings bank that executed the within instrument, and also known to me
to be the person who executed it on behalf of said federally chartered savings
bank, and acknowledged to me that such federally chartered savings bank executed
the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
-----------------------------------
Notary Public
[Notarial Seal] My commission expires
STATE OF )
) ss.:
COUNTY OF )
On the ___ day of September 2004, before me, a notary public
in and for said State, personally appeared ____________________, known to me to
be a __________________ of Xxxxx Fargo Bank, N.A., a national banking
association that executed the within instrument, and also known to me to be the
person who executed it on behalf of said national banking 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
[Notarial Seal]
STATE OF )
) ss.:
COUNTY OF )
On the ___ day of September 2004, before me, a notary public
in and for said State, personally appeared ____________________, known to me to
be a __________________ of HSBC Bank USA, 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 national banking association,
and acknowledged to me that such national banking association executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
-----------------------------------
Notary Public
[Notarial Seal]
EXHIBIT A-1
-----------
FORM OF CLASS A-1 CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986 (THE "CODE").
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO THE DEPOSITOR OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE &
CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
Series 2004-SD1, Class A-1 Aggregate Certificate Principal Balance of the
Class A-1 Certificates as of the Issue Date: $
Pass-Through Rate: Variable Denomination: $
Date of Pooling and Servicing Agreement and Master Servicer: Xxxxx Fargo Bank, N.A.
Cut-off Date: September 1, 2004
First Distribution Date: October 25, 2004 Trustee: HSBC Bank USA, National Association
No.__ Issue Date: September 30, 2004
CUSIP:________________
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS THAN
THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS CERTIFICATE.
A-1-2
ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2004-SD1
ASSET BACKED PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family, fixed and
adjustable-rate first and second lien mortgage loans (the "Mortgage Loans")
formed and sold by
ACE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
IN ACE SECURITIES CORP., THE MASTER SERVICER, THE SECURITIES
ADMINISTRATOR, THE SERVICER, THE TRUSTEE OR ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE
UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that ________________ is the registered owner
of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class A-1
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class A-1 Certificates in REMIC II created pursuant to a
Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among ACE Securities Corp. as depositor (hereinafter called the "Depositor",
which term includes any successor entity under the Agreement), Xxxxx Fargo Bank,
N.A. as master servicer (the "Master Servicer") and securities administrator
(the "Securities Administrator"), Ocwen Federal Bank FSB as servicer (the
"Servicer") and HSBC Bank USA, National Association as trustee (the "Trustee"),
a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following such 25th day (a "Distribution Date"),
commencing on the First Distribution Date specified above, to the Person in
whose name this Certificate is registered on the Business Day immediately
preceding such Distribution Date (the "Record Date"), in an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the amount
required to be distributed to the Holders of Class A-1 Certificates on such
Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Securities Administrator by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Securities
Administrator in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and is the registered owner of Class
A-1 Certificates the aggregate initial Certificate Principal Balance of which is
in excess of the lesser of (i)
A-1-3
$5,000,000 or (ii) two-thirds of the aggregate initial Certificate Principal
Balance of the Class A-1 Certificates, or otherwise 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. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Securities Administrator of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Securities Administrator for that purpose as provided in the Agreement.
The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
be a rate per annum equal to the lesser of (i) One-Month LIBOR plus [_____]%, in
the case of each Distribution Date through and including the Distribution Date
on which the aggregate principal balance of the Mortgage Loans (and properties
acquired in respect thereof) remaining in the Trust Fund is reduced to less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date, or One-Month LIBOR plus [_____]%, in the case of any Distribution Date
thereafter and (ii) the applicable Net WAC Pass-Through Rate for such
Distribution Date.
This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificate of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans and payments received
pursuant to the Cap Contract, all as more specifically set forth herein and in
the Agreement. As provided in the Agreement, withdrawals from the Collection
Account and the Distribution Account may be made from time to time for purposes
other than distributions to Certificateholders, such purposes including
reimbursement of advances made, or certain expenses incurred, with respect to
the Mortgage Loans.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trustee, the Securities
Administrator, the Servicer and the rights of the Certificateholders under the
Agreement at any time by the Depositor, the Master Servicer, the Trustee, the
Securities Administrator and the Servicer with the consent of the Holders of
Certificates entitled to at least 66% of the Voting Rights. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Securities Administrator
as provided in the Agreement, duly endorsed by, or accompanied by an
A-1-4
assignment in the form below or other written instrument of transfer in form
satisfactory to the Securities Administrator duly executed by, the Holder hereof
or such Holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of the same Class in authorized denominations evidencing the
same aggregate Percentage Interest will be issued to the designated transferee
or transferees.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Securities Administrator may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any transfer or exchange of
Certificates.
The Depositor, the Master Servicer, the Trustee, the
Securities Administrator, the Servicer and any agent of the Depositor, the
Master Servicer, the Trustee, the Securities Administrator or the Servicer may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Depositor, the Master Servicer, the
Trustee, the Securities Administrator, the Servicer nor any such agent shall be
affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Securities Administrator and required to be paid to them
pursuant to the Agreement following the earlier of (i) the final payment or
other liquidation (or any advance with respect thereto) of the last Mortgage
Loan remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.
The recitals contained herein shall be taken as statements of
the Depositor and neither the Trustee nor the Securities Administrator assumes
any responsibility for their correctness.
Unless the certificate of authentication hereon has been
executed by the Securities Administrator, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
A-1-5
IN WITNESS WHEREOF, the Securities Administrator has caused
this Certificate to be duly executed.
Dated:
XXXXX FARGO BANK, N.A.
as Securities Administrator
By:
-----------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class A-1 Certificates referred to in the
within-mentioned Agreement.
XXXXX FARGO BANK, N.A.
as Securities Administrator
By:
-----------------------------------
Authorized Signatory
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
-----------------
(Cust) (Minor)
under Uniform Gifts
to Minors Act
TEN ENT - as tenants by the entireties ________________
(State)
JT TEN - as joint tenants with right
if survivorship and not as
tenants in common
Additional abbreviations may also be used though not in
the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto _________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Asset Backed
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Trustee or the Securities
Administrator to issue a new Certificate of a like Percentage Interest and Class
to the above named assignee and deliver such Certificate to the following
address:
_____________________________________________________________________________
_____________________________________________________________________________.
Dated:
________________________________________
Signature by or on behalf of assignor
______________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
-------------------------
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to
_______________________________________________________________ for the account
of ______________________________________________________________, account
number ____________________, or, if mailed by check, to _______________________
_____________________________________________________________________________.
Applicable statements should be mailed to ______________________________________
_____________________________________________________________________________.
This information is provided by _______________________________________________,
the assignee named above, or ____________________________________, as its agent.
EXHIBIT A-2
FORM OF CLASS M-[1][2][3][4] CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986 (THE "CODE").
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY TO THE DEPOSITOR OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1 CERTIFICATES [[,/AND]
CLASS M-1 CERTIFICATES [,/AND] CLASS M-2 CERTIFICATES[,/AND] CLASS M-3
CERTIFICATES] TO THE EXTENT DESCRIBED IN THE AGREEMENT REFERRED TO
HEREIN.
ANY TRANSFEREE OF THIS CERTIFICATE SHALL BE DEEMED TO MAKE THE
REPRESENTATIONS SET FORTH IN SECTION 6.02(C) OF THE AGREEMENT REFERRED
TO HEREIN.
THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DECREASED
BY THE PRINCIPAL PAYMENTS HEREON AND REALIZED LOSSES ALLOCABLE HERETO
AS DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN. ACCORDINGLY,
FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE CERTIFICATE
PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DIFFERENT FROM THE
DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY
ASCERTAIN ITS CERTIFICATE PRINCIPAL BALANCE BY INQUIRY OF THE
SECURITIES ADMINISTRATOR NAMED HEREIN.
Series 2004-SD1, Class M-[1][2][3][4] Aggregate Certificate Principal Balance of the
Class M-[1][2][3][4] Certificates as of the Issue
Date: $______________
Pass-Through Rate: Variable Denomination: $______________
Date of Pooling and Servicing Agreement Master Servicer: Xxxxx Fargo Bank, N.A.
and Cut-off Date: September 1, 2004
First Distribution Date: October 25, 2004 Trustee: HSBC Bank USA, National Association
No.___ Issue Date: September 30, 2004
CUSIP:_________________
A-2-2
ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2004-SD1
ASSET BACKED PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family, fixed and
adjustable-rate first and second lien mortgage loans (the "Mortgage Loans")
formed and sold by
ACE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ACE
SECURITIES CORP., THE MASTER SERVICER, THE SECURITIES ADMINISTRATOR,
THE SERVICER, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that _____________________ is the registered
owner of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class
M-[1][2][3][4] Certificates as of the Issue Date) in that certain beneficial
ownership interest evidenced by all the Class M-[1][2][3][4] Certificates in
REMIC II created pursuant to a Pooling and Servicing Agreement, dated as
specified above (the "Agreement"), among ACE Securities Corp. as depositor
(hereinafter called the "Depositor", which term includes any successor entity
under the Agreement), Xxxxx Fargo Bank, N.A. as master servicer (the "Master
Servicer") and securities administrator (the "Securities Administrator"), Ocwen
Federal Bank FSB as servicer (the "Servicer") and HSBC Bank USA, National
Association as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following such 25th day (a "Distribution Date"),
commencing on the First Distribution Date specified above, to the Person in
whose name this Certificate is registered on the Business Day immediately
preceding such Distribution Date (the "Record Date"), in an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the amount
required to be distributed to the Holders of Class M-[1][2][3][4] Certificates
on such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Securities Administrator by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Securities
Administrator in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and is the registered owner of Class
M-[1][2][3][4]
A-2-3
Certificates the aggregate initial Certificate Principal Balance of which is in
excess of the lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate
initial Certificate Principal Balance of the Class M-[1][2][3][4] Certificates,
or otherwise 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. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Securities Administrator of the pendency of
such distribution and only upon presentation and surrender of this Certificate
at the office or agency appointed by the Securities Administrator for that
purpose as provided in the Agreement.
The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) One-Month LIBOR plus [____]% ,
in the case of each Distribution Date through and including the Distribution
Date on which the aggregate principal balance of the Mortgage Loans (and
properties acquired in respect thereof) remaining in the Trust Fund is reduced
to less than 10% of the aggregate principal balance of the Mortgage Loans as of
the Cut-off Date, or One-Month LIBOR plus [____]%, in the case of any
Distribution Date thereafter and (ii) the applicable Net WAC Pass-Through Rate
for such Distribution Date.
This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificate of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans and payments received
pursuant to the Cap Contract, all as more specifically set forth herein and in
the Agreement. As provided in the Agreement, withdrawals from the Collection
Account and the Distribution Account may be made from time to time for purposes
other than distributions to Certificateholders, such purposes including
reimbursement of advances made, or certain expenses incurred, with respect to
the Mortgage Loans.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trustee, the Securities
Administrator, the Servicer and the rights of the Certificateholders under the
Agreement at any time by the Depositor, the Master Servicer, the Trustee, the
Securities Administrator and the Servicer with the consent of the Holders of
Certificates entitled to at least 66% of the Voting Rights. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this
A-2-4
Certificate for registration of transfer at the offices or agencies appointed by
the Securities Administrator as provided in the Agreement, duly endorsed by, or
accompanied by an assignment in the form below or other written instrument of
transfer in form satisfactory to the Securities Administrator duly executed by,
the Holder hereof or such Holder's attorney duly authorized in writing, and
thereupon one or more new Certificates of the same Class in authorized
denominations evidencing the same aggregate Percentage Interest will be issued
to the designated transferee or transferees.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
Any transferee of this Certificate shall be deemed to make the
representations set forth in Section 6.02(c) of the Agreement.
No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Securities Administrator may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any transfer or exchange of
Certificates.
The Depositor, the Master Servicer, the Trustee, the
Securities Administrator, the Servicer and any agent of the Depositor, the
Master Servicer, the Trustee, the Securities Administrator or the Servicer may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Depositor, the Master Servicer, the
Trustee, the Securities Administrator, the Servicer nor any such agent shall be
affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Securities Administrator and required to be paid to them
pursuant to the Agreement following the earlier of (i) the final payment or
other liquidation (or any advance with respect thereto) of the last Mortgage
Loan remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.
The recitals contained herein shall be taken as statements of
the Depositor and neither the Trustee nor the Securities Administrator assume
any responsibility for their correctness.
A-2-5
Unless the certificate of authentication hereon has been
executed by the Securities Administrator by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
A-2-6
IN WITNESS WHEREOF, the Securities Administrator has caused
this Certificate to be duly executed.
Dated:
XXXXX FARGO BANK, N.A.
as Securities Administrator
By:____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class M-[1][2][3][4] Certificates referred
to in the within-mentioned Agreement.
XXXXX FARGO BANK, N.A.
as Securities Administrator
By:____________________________________
Authorized Signatory
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
-------------------
(Cust) (Minor)
under Uniform Gifts
to Minors Act
TEN ENT - as tenants by the entireties ________________
(State)
JT TEN - as joint tenants with right
if survivorship and not as
tenants in common
Additional abbreviations may also be used though not in
the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto _________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee)
a Percentage Interest equal to _____% evidenced by the within Asset Backed
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Securities Administrator to issue a
new Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address:
_____________________________________________________________________________
_____________________________________________________________________________.
Dated:
---------------------------------------
Signature by or on behalf of assignor
---------------------------------------
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to
_______________________________________________________________ for the account
of ______________________________________________________________, account
number ____________________, or, if mailed by check, to _______________________
_____________________________________________________________________________.
Applicable statements should be mailed to ___________________________________
_____________________________________________________________________________.
This information is provided by _______________________________________________,
the assignee named above, or ____________________________________, as its agent.
EXHIBIT A-3
-----------
FORM OF CLASS CE CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1 CERTIFICATES AND THE
MEZZANINE CERTIFICATES TO THE EXTENT DESCRIBED IN THE AGREEMENT
REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY STATE
SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE,
AGREES THAT THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND
OTHER APPLICABLE LAWS AND (1) OUTSIDE OF THE UNITED STATES WITHIN THE
MEANING OF AND IN COMPLIANCE WITH REGULATION S UNDER THE ACT
("REGULATION S"), OR (2) WITHIN THE UNITED STATES TO (A) "QUALIFIED
INSTITUTIONAL BUYERS" WITHIN THE MEANING OF AND IN COMPLIANCE WITH RULE
144A UNDER THE ACT ("RULE 144A") OR (B) TO INSTITUTIONAL INVESTORS THAT
ARE "ACCREDITED INVESTORS" WITHIN THE MEANING OF RULE 501(A)(1), (2),
(3) OR (7) OF "REGULATION D" UNDER THE ACT.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE REGISTERED EXCEPT
IN COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS THE
TRANSFEREE PROVIDES A CERTIFICATION PURSUANT TO SECTION 6.02(C) OF THE
AGREEMENT.
Series 2004-SD1, Class CE Aggregate Certificate Principal Balance of
the Class CE Certificates as of the
Issue Date: $_____________
Pass-Through Rate: Variable Denomination: $_________________
Cut-off Date and date of Pooling and Servicing Agreement: Master Servicer: Xxxxx Fargo Bank, N.A.
September 1, 2004
First Distribution Date: October 25, 2004 Trustee: HSBC Bank USA, National Association
No. __ Issue Date: September 30, 2004
ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2004-SD1
ASSET BACKED PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family, fixed and
adjustable-rate, first and second lien mortgage loans (the "Mortgage Loans")
formed and sold by
ACE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ACE
SECURITIES CORP., THE MASTER SERVICER, THE SECURITIES ADMINISTRATOR,
THE SERVICER, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that ________________ is the registered owner
of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class CE
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class CE Certificates in REMIC II created pursuant to a
Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among ACE Securities Corp. as depositor (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), Xxxxx Fargo Bank,
N.A. as master servicer (the "Master Servicer") and securities administrator
(the "Securities Administrator"), Ocwen Federal Bank
A-3-2
FSB as servicer (the "Servicer") and HSBC Bank USA, National Association as
trustee (the "Trustee"), a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, the capitalized
terms used herein have the meanings assigned in the Agreement. This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following such 25th day (a "Distribution Date"),
commencing on the First Distribution Date specified above, to the Person in
whose name this Certificate is registered on the last Business Day of the
calendar month immediately preceding the month in which the related Distribution
Date occurs (the "Record Date"), in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to the Holders of Class CE Certificates on such Distribution Date
pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Securities Administrator by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Securities
Administrator in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and is the registered owner of Class
CE Certificates the aggregate initial Certificate Principal Balance of which is
in excess of the lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate
initial Certificate Principal Balance of the Class CE Certificates, or otherwise
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.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Securities Administrator of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Securities Administrator for that purpose as
provided in the Agreement.
This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificate of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trustee, the Securities
Administrator, the Servicer and the rights of the Certificateholders
A-3-3
under the Agreement at any time by the Depositor, the Master Servicer, the
Trustee, the Securities Administrator and the Servicer with the consent of the
Holders of Certificates entitled to at least 66% of the Voting Rights. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Securities Administrator
as provided in the Agreement, duly endorsed by, or accompanied by an assignment
in the form below or other written instrument of transfer in form satisfactory
to the Securities Administrator duly executed by, the Holder hereof or such
Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Securities Administrator shall require
receipt of (i) if such transfer is purportedly being made in reliance upon Rule
144A under the 1933 Act, written certifications from the Holder of the
Certificate desiring to effect the transfer, and from such Holder's prospective
transferee, substantially in the forms attached to the Agreement as Exhibit B-1,
(ii) if such transfer is purportedly being made in reliance upon Rule 501(a)
under the 1933 Act, written certifications from the Holder of the Certificate
desiring to effect the transfer and from such Holder's prospective transferee,
substantially in the form attached to the Agreement as Exhibit B-2 and (iii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee, the
Master Servicer or the Securities Administrator in their respective capacities
as such), together with copies of the written certification(s) of the Holder of
the Certificate desiring to effect the transfer and/or such Holder's prospective
transferee upon which such Opinion of Counsel is based. None of the Depositor,
the Trustee or the Securities Administrator is obligated to register or qualify
the Class of Certificates specified on the face hereof under the 1933 Act or any
other securities law or to take any action not otherwise required under the
Agreement to permit the transfer of such Certificates without registration or
qualification. Any Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Depositor, the Master Servicer
and the Securities Administrator against any liability that may result if the
transfer is not so exempt or is not made in accordance with such federal and
state laws.
A-3-4
No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person using "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 6.02(c) of the Agreement.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Securities Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee, the
Securities Administrator, the Servicer and any agent of the Depositor, the
Master Servicer, the Trustee, the Securities Administrator or the Servicer may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Depositor, the Master Servicer, the
Trustee, the Securities Administrator, the Servicer nor any such agent shall be
affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Securities Administrator and required to be paid to them
pursuant to the Agreement following the earlier of (i) the final payment or
other liquidation (or any advance with respect thereto) of the last Mortgage
Loan remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.
The recitals contained herein shall be taken as statements of
the Depositor and neither the Trustee nor the Securities Administrator assume
any responsibility for their correctness.
Unless the certificate of authentication hereon has been
executed by the Securities Administrator, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
A-3-5
IN WITNESS WHEREOF, the Securities Administrator has caused
this Certificate to be duly executed.
Dated:
XXXXX FARGO BANK, N.A.
as Securities Administrator
By:___________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class CE Certificates referred to in the
within-mentioned Agreement.
XXXXX FARGO BANK, N.A.
as Securities Administrator
By:___________________________________
Authorized Officer
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
-------------------
(Cust) (Minor)
under Uniform Gifts
to Minors Act
TEN ENT - as tenants by the entireties ________________
(State)
JT TEN - as joint tenants with right
if survivorship and not as
tenants in common
Additional abbreviations may also be used though not in
the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto _________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Asset Backed
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Securities Administrator to issue a
new Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address:
_____________________________________________________________________________
_____________________________________________________________________________.
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
-------------------------
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
for the account of ____________________________________________________________,
account number ____________________, or, if mailed by check, to _____________
_____________________________________________________________________________.
Applicable statements should be mailed to ____________________________________
_____________________________________________________________________________.
This information is provided by _______________________________________________,
the assignee named above, or ____________________________________, as its agent.
EXHIBIT A-4
-----------
CLASS P CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY STATE
SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE,
AGREES THAT THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND
OTHER APPLICABLE LAWS AND (1) OUTSIDE OF THE UNITED STATES WITHIN THE
MEANING OF AND IN COMPLIANCE WITH REGULATION S UNDER THE ACT
("REGULATION S"), OR (2) WITHIN THE UNITED STATES TO (A) "QUALIFIED
INSTITUTIONAL BUYERS" WITHIN THE MEANING OF AND IN COMPLIANCE WITH RULE
144A UNDER THE ACT ("RULE 144A") OR (B) TO INSTITUTIONAL INVESTORS THAT
ARE "ACCREDITED INVESTORS" WITHIN THE MEANING OF RULE 501(A)(1), (2),
(3) OR (7) OF "REGULATION D" UNDER THE ACT.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE REGISTERED EXCEPT
IN COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS THE
TRANSFEREE PROVIDES A CERTIFICATION PURSUANT TO SECTION 6.02(C) OF THE
AGREEMENT.
Series 2004-SD1, Class P Aggregate Certificate Principal Balance of the Class
P Certificates as of the Issue Date: $100.00
Cut-off Date and date of Pooling and Servicing Agreement: Denomination: $100.00
September 1, 2004
First Distribution Date: October 25, 2004 Master Servicer: Xxxxx Fargo Bank, N.A.
No. __ Trustee: HSBC Bank USA, National Association
Issue Date: September 30, 2004
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
CERTIFICATE.
A-4-2
ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2004-SD1
ASSET BACKED PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family, fixed and
adjustable-rate, first and second lien mortgage loans (the "Mortgage Loans")
formed and sold by
ACE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ACE
SECURITIES CORP., THE MASTER SERVICER, THE SECURITIES ADMINISTRATOR,
THE SERVICER, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that____________________ is the registered
owner of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class P
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class P Certificates in REMIC II created pursuant to a
Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among ACE Securities Corp. as depositor (hereinafter called the "Depositor",
which term includes any successor entity under the Agreement), Xxxxx Fargo Bank,
N.A. as master servicer (the "Master Servicer"), and securities administrator
(the "Securities Administrator"), Ocwen Federal Bank FSB as servicer (the
"Servicer") and HSBC Bank USA, National Association as trustee (the "Trustee"),
a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following such 25th day (a "Distribution Date"),
commencing on the First Distribution Date specified above, to the Person in
whose name this Certificate is registered on the last Business Day of the
calendar month immediately preceding the month in which the related Distribution
Date occurs (the "Record Date"), in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to the Holders of Class P Certificates on such Distribution Date
pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Securities Administrator by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Securities
Administrator in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and is the registered owner of Class
P Certificates
A-4-3
the aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance of the Class P Certificates, or otherwise 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. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Securities Administrator of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Securities Administrator for that purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificate of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trustee, the Securities
Administrator, the Servicer and the rights of the Certificateholders under the
Agreement at any time by the Depositor, the Master Servicer, the Trustee, the
Securities Administrator and the Servicer with the consent of the Holders of
Certificates entitled to at least 66% of the Voting Rights. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Securities Administrator
as provided in the Agreement, duly endorsed by, or accompanied by an assignment
in the form below or other written instrument of transfer in form satisfactory
to the Securities Administrator duly executed by, the Holder hereof or such
Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933
A-4-4
Act"), and an effective registration or qualification under applicable state
securities laws, or is made in a transaction that does not require such
registration or qualification. In the event that such a transfer of this
Certificate is to be made without registration or qualification, the Securities
Administrator shall require receipt of (i) if such transfer is purportedly being
made in reliance upon Rule 144A under the 1933 Act, written certifications from
the Holder of the Certificate desiring to effect the transfer, and from such
Holder's prospective transferee, substantially in the forms attached to the
Agreement as Exhibit B-1, (ii) if such transfer is purportedly being made in
reliance upon Rule 501(a) under the 1933 Act, written certifications from the
Holder of the Certificate desiring to effect the transfer and from such Holder's
prospective transferee, substantially in the form attached to the Agreement as
Exhibit B-2 and (iii) in all other cases, an Opinion of Counsel satisfactory to
it that such transfer may be made without such registration or qualification
(which Opinion of Counsel shall not be an expense of the Trust Fund or of the
Depositor, the Trustee, the Master Servicer or the Securities Administrator in
their respective capacities as such), together with copies of the written
certification(s) of the Holder of the Certificate desiring to effect the
transfer and/or such Holder's prospective transferee upon which such Opinion of
Counsel is based. None of the Depositor, the Trustee or the Securities
Administrator is obligated to register or qualify the Class of Certificates
specified on the face hereof under the 1933 Act or any other securities law or
to take any action not otherwise required under the Agreement to permit the
transfer of such Certificates without registration or qualification. Any Holder
desiring to effect a transfer of this Certificate shall be required to indemnify
the Trustee, the Depositor, the Master Servicer and the Securities Administrator
against any liability that may result if the transfer is not so exempt or is not
made in accordance with such federal and state laws.
No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person using "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 6.02(c) of the Agreement.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Securities Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee, the
Securities Administrator, the Servicer and any agent of the Depositor, the
Master Servicer, the Trustee, the Securities Administrator or the Servicer may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Depositor, the Master Servicer, the
Trustee, the Securities Administrator, the Servicer nor any such agent shall be
affected by notice to the contrary.
A-4-5
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Securities Administrator and required to be paid to them
pursuant to the Agreement following the earlier of (i) the final payment or
other liquidation (or any advance with respect thereto) of the last Mortgage
Loan remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.
The recitals contained herein shall be taken as statements of
the Depositor and neither the Trustee nor the Securities Administrator assume
any responsibility for their correctness.
Unless the certificate of authentication hereon has been
executed by the Securities Administrator, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
A-4-6
IN WITNESS WHEREOF, the Securities Administrator has caused
this Certificate to be duly executed.
Dated:
XXXXX FARGO BANK, N.A.
as Securities Administrator
By:________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class P Certificates referred to in the
within-mentioned Agreement.
XXXXX FARGO BANK, N.A.
as Securities Administrator
By:________________________________
Authorized Officer
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
(Cust) (Minor)
under Uniform Gifts
to Minors Act
TEN ENT - as tenants by the entireties ________________
(State)
JT TEN - as joint tenants with right
if survivorship and not as
tenants in common
Additional abbreviations may also be used though not in
the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto _________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Asset Backed
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Securities Administrator to issue a
new Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address:
_____________________________________________________________________________
_____________________________________________________________________________.
Dated:
____________________________________
Signature by or on behalf of assignor
____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
-------------------------
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
for the account of ____________________________________________________________,
account number ____________________, or, if mailed by check, to _______________
_____________________________________________________________________________.
Applicable statements should be mailed to ____________________________________
_____________________________________________________________________________.
This information is provided by ______________________________________________,
the assignee named above, or ___________________________________, as its agent.
EXHIBIT A-5
-----------
FORM OF CLASS R CERTIFICATE
THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A NON-UNITED STATES PERSON.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS THE SOLE "RESIDUAL INTEREST" IN EACH "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" ("REMIC"), AS THOSE TERMS ARE DEFINED,
RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986 (THE "CODE").
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE
MADE ONLY IN ACCORDANCE WITH THE PROVISIONS OF SECTION 6.02 OF THE
AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT
TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE
EXEMPT FROM REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW
AND IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 6.02 OF
THE AGREEMENT.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE REGISTERED EXCEPT
IN COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE
MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (I) AN AFFIDAVIT TO THE
SECURITIES ADMINISTRATOR THAT (A) SUCH TRANSFEREE IS NOT (1) THE UNITED
STATES OR ANY POSSESSION THEREOF, ANY STATE OR POLITICAL SUBDIVISION
THEREOF, ANY FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR ANY
AGENCY OR INSTRUMENTALITY OF ANY OF THE FOREGOING, (2) ANY ORGANIZATION
(OTHER THAN A COOPERATIVE DESCRIBED IN SECTION 521 OF THE CODE) THAT 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,
(3) ANY ORGANIZATION DESCRIBED IN
SECTION 1381(A)(2)(C) OF THE CODE (ANY SUCH PERSON DESCRIBED IN THE
FOREGOING CLAUSES (1), (2) OR (3) SHALL HEREINAFTER BE REFERRED TO AS A
"DISQUALIFIED ORGANIZATION") OR (4) AN AGENT OF A DISQUALIFIED
ORGANIZATION AND (B) NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE
ASSESSMENT OR COLLECTION OF TAX, AND (II) SUCH TRANSFEREE SATISFIES
CERTAIN ADDITIONAL CONDITIONS RELATING TO THE FINANCIAL CONDITION OF
THE PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE
CERTIFICATE REGISTER OF ANY TRANSFER, SALE OR OTHER DISPOSITION OF THIS
CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR AN AGENT OF A
DISQUALIFIED ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE OF
NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED
TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT
LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE. EACH
HOLDER OF THIS CERTIFICATE BY ACCEPTANCE HEREOF SHALL BE DEEMED TO HAVE
CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH AND THE PROVISIONS OF
SECTION 6.02(D) OF THE AGREEMENT REFERRED TO HEREIN. ANY PERSON THAT IS
A DISQUALIFIED ORGANIZATION IS PROHIBITED FROM ACQUIRING BENEFICIAL
OWNERSHIP OF THIS CERTIFICATE.
Series 2004-SD1, Class R Aggregate Percentage Interest of the Class R
Certificates as of the Issue Date: 100.00%
Date of Pooling and Servicing Agreement Master Servicer: Xxxxx Fargo Bank, N.A.
and Cut-off Date: September 1, 2004
First Distribution Date: October 25, 2004 Trustee: HSBC Bank USA, National Association
No __ Issue Date: September 30, 2004
A-5-2
ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2004-SD1
ASSET BACKED PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family, fixed and
adjustable-rate first and second lien mortgage loans (the "Mortgage Loans")
formed and sold by
ACE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ACE
SECURITIES CORP., THE MASTER SERVICER, THE SECURITIES ADMINISTRATOR,
THE SERVICER, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
A-5-3
This certifies that _______________ is the registered owner of
a Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class R Certificates as of
the Issue Date) in that certain beneficial ownership interest evidenced by all
the Class R Certificates in REMIC II created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among ACE Securities
Corp. as depositor (hereinafter called the "Depositor", which term includes any
successor entity under the Agreement), Xxxxx Fargo Bank, N.A. as master servicer
(the "Master Servicer") and securities administrator (the "Securities
Administrator"), Ocwen Federal Bank FSB as the servicer (the "Servicer") and
HSBC Bank USA, National Association as trustee (the "Trustee"), a summary of
certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class R Certificates on such Distribution
Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Securities Administrator by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Securities
Administrator in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and is the registered owner of Class
R Certificates, or otherwise 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. Notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Securities Administrator of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency appointed by the Securities Administrator
for that purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificate of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
A-5-4
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trustee, the Securities
Administrator, the Servicer and the rights of the Certificateholders under the
Agreement at any time by the Depositor, the Master Servicer, the Trustee, the
Securities Administrator and the Servicer with the consent of the Holders of
Certificates entitled to at least 66% of the Voting Rights. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Securities Administrator
as provided in the Agreement, duly endorsed by, or accompanied by an assignment
in the form below or other written instrument of transfer in form satisfactory
to the Securities Administrator duly executed by, the Holder hereof or such
Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Securities Administrator shall require
receipt of (i) if such transfer is purportedly being made in reliance upon Rule
144A under the 1933 Act, written certifications from the Holder of the
Certificate desiring to effect the transfer, and from such Holder's prospective
transferee, substantially in the forms attached to the Agreement as Exhibit B-1,
and (ii) in all other cases, an Opinion of Counsel satisfactory to it that such
transfer may be made without such registration or qualification (which Opinion
of Counsel shall not be an expense of the Trust Fund or of the Depositor, the
Trustee, the Master Servicer or the Securities Administrator in their respective
capacities as such), together with copies of the written certification(s) of the
Holder of the Certificate desiring to effect the transfer and/or such Holder's
prospective transferee upon which such Opinion of Counsel is based. None of the
Depositor, the Trustee or the Securities
A-5-5
Administrator is obligated to register or qualify the Class of Certificates
specified on the face hereof under the 1933 Act or any other securities law or
to take any action not otherwise required under the Agreement to permit the
transfer of such Certificates without registration or qualification. Any Holder
desiring to effect a transfer of this Certificate shall be required to indemnify
the Trustee, the Depositor, the Master Servicer and the Securities Administrator
against any liability that may result if the transfer is not so exempt or is not
made in accordance with such federal and state laws.
No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person using "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 6.02 of the Agreement.
Prior to registration of any transfer, sale or other
disposition of this Certificate, the proposed transferee shall provide to the
Securities Administrator (i) an affidavit to the effect that such transferee is
any Person other than a Disqualified Organization or the agent (including a
broker, nominee or middleman) of a Disqualified Organization, and (ii) a
certificate that acknowledges that (A) the Class R Certificates have been
designated as representing the beneficial ownership of the residual interests in
each of REMIC I and REMIC II, (B) it will include in its income a PRO RATA share
of the net income of the Trust Fund and that such income may be an "excess
inclusion," as defined in the Code, that, with certain exceptions, cannot be
offset by other losses or benefits from any tax exemption, and (C) it expects to
have the financial means to satisfy all of its tax obligations including those
relating to holding the Class R Certificates. Notwithstanding the registration
in the Certificate Register of any transfer, sale or other disposition of this
Certificate to a Disqualified Organization or an agent (including a broker,
nominee or middleman) of a Disqualified Organization, such registration shall be
deemed to be of no legal force or effect whatsoever and such Person shall not be
deemed to be a Certificateholder for any purpose, including, but not limited to,
the receipt of distributions in respect of this Certificate.
The Holder of this Certificate, by its acceptance hereof,
shall be deemed to have consented to the provisions of Section 6.02 of the
Agreement and to any amendment of the Agreement deemed necessary by counsel of
the Depositor to ensure that the transfer of this Certificate to any Person
other than a Permitted Transferee or any other Person will not cause any portion
of the Trust Fund to cease to qualify as a REMIC or cause the imposition of a
tax upon any REMIC.
No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Securities Administrator may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any transfer or exchange of
Certificates.
The Depositor, the Master Servicer, the Trustee, the
Securities Administrator, the Servicer and any agent of the Depositor, the
Master Servicer, the Trustee, the Securities Administrator or the Servicer may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Depositor, the Master Servicer, the
Trustee,
A-5-6
the Securities Administrator, the Servicer nor any such agent shall be affected
by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Securities Administrator and required to be paid to them
pursuant to the Agreement following the earlier of (i) the final payment or
other liquidation (or any advance with respect thereto) of the last Mortgage
Loan remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.
The recitals contained herein shall be taken as statements of
the Depositor and neither the Trustee nor the Securities Administrator assume
any responsibility for their correctness.
Unless the certificate of authentication hereon has been
executed by the Securities Administrator, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
A-5-7
IN WITNESS WHEREOF, the Securities Administrator has caused
this Certificate to be duly executed.
Dated:
XXXXX FARGO BANK, N.A.
as Securities Administrator
By:____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class R Certificates referred to in the
within-mentioned Agreement.
XXXXX FARGO BANK, N.A.
as Securities Administrator
By:____________________________________
Authorized Signatory
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
-------------------
(Cust) (Minor)
under Uniform Gifts
to Minors Act
TEN ENT - as tenants by the entireties ________________
(State)
JT TEN - as joint tenants with right
if survivorship and not as
tenants in common
Additional abbreviations may also be used though not in
the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto _________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to _____% evidenced by the within Asset Backed
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Securities Administrator to issue a
new Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address:
_____________________________________________________________________________
_____________________________________________________________________________.
Dated:
----------------------------------------
Signature by or on behalf of assignor
----------------------------------------
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
for the account of ____________________________________________________________,
account number ____________________, or, if mailed by check, to _______________
_____________________________________________________________________________.
Applicable statements should be mailed to ____________________________________
_____________________________________________________________________________.
This information is provided by _______________________________________________,
the assignee named above, or ____________________________________, as its agent.
EXHIBIT B-1
FORM OF TRANSFEROR REPRESENTATION LETTER
[Date]
Xxxxx Fargo Bank, N.A.
Sixth and Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Corporate Trust ACE 2004-SD1
Re: Ace Securities Corp. Home Equity Loan Trust, Series 2004-SD1
Asset Backed Pass-Through Certificates
Class CE, Class P and Class R Certificates
------------------------------------------------------------
Ladies and Gentlemen:
In connection with the transfer by ______________________ (the
"Transferor") to ___________________ (the "Transferee") of the captioned
mortgage pass-through certificates (the "Certificates"), the Transferor hereby
certifies as follows:
Neither the Transferor nor anyone acting on its behalf has (a)
offered, pledged, sold, disposed of or otherwise transferred any Certificate,
any interest in any Certificate or any other similar security to any person in
any manner, (b) has solicited any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c) has
otherwise approached or negotiated with respect to any Certificate, any interest
in any Certificate or any other similar security with any person in any manner,
(d) has made any general solicitation by means of general advertising or in any
other manner, (e) has taken any other action, that (in the case of each of
subclauses (a) through (e) above) would constitute a distribution of the
Certificates under the Securities Act of 1933, as amended (the "1933 Act"), or
would render the disposition of any Certificate a violation of Section 5 of the
1933 Act or any state securities law or would require registration or
qualification pursuant thereto. The Transferor will not act, nor has it
authorized or will it authorize any person to act, in any manner set forth in
the foregoing sentence with respect to any Certificate. The Transferor will not
sell or otherwise transfer any of the Certificates, except in compliance with
the provisions of that certain Pooling and Servicing Agreement, dated as of
September 1, 2004, among ACE Securities Corp. as Depositor, Ocwen Federal Bank
FSB as Servicer, Xxxxx Fargo Bank, N.A. as Master Servicer and Securities
Administrator and HSBC Bank USA, National Association as trustee (the "Pooling
and Servicing Agreement"), pursuant to which Pooling and Servicing Agreement the
Certificates were issued.
B-1-1
Capitalized terms used but not defined herein shall have the
meanings assigned thereto in the Pooling and Servicing Agreement.
Very truly yours,
[Transferor]
By:
------------------------------
Name:
Title:
B-1-2
FORM OF TRANSFEREE REPRESENTATION LETTER
[Date]
Xxxxx Fargo Bank, N.A.
Sixth and Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Corporate Trust ACE 2004-SD1
Re: Ace Securities Corp. Home Equity Loan Trust,
Series 2004-SD1
Asset Backed Pass-Through Certificates
Class CE, Class P and Class R Certificates
-------------------------------------------------
Ladies and Gentlemen:
In connection with the purchase from
______________________________ (the "Transferor") on the date hereof of the
captioned trust certificates (the "Certificates"), (the "Transferee") hereby
certifies as follows:
1. The Transferee is a "qualified institutional
buyer" as that term is defined in Rule 144A ("Rule 144A")
under the Securities Act of 1933 (the "1933 Act") and has
completed either of the forms of certification to that effect
attached hereto as Annex 1 or Annex 2. The Transferee is aware
that the sale to it is being made in reliance on Rule 144A.
The Transferee is acquiring the Certificates for its own
account or for the account of a qualified institutional buyer,
and understands that such Certificate may be resold, pledged
or transferred only (i) to a person reasonably believed to be
a qualified institutional buyer that purchases for its own
account or for the account of a qualified institutional buyer
to whom notice is given that the resale, pledge or transfer is
being made in reliance on Rule 144A, or (ii) pursuant to
another exemption from registration under the 1933 Act.
2. The Transferee has been furnished with all
information regarding (a) the Certificates and distributions
thereon, (b) the nature, performance and servicing of the
Mortgage Loans, (c) the Pooling and Servicing Agreement
referred to below, and (d) any credit enhancement mechanism
associated with the Certificates, that it has requested.
3. The Transferee: (a) is not an employee benefit or other plan subject to the
prohibited transaction provisions of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA), or Section 4975 of the Internal Revenue Code of
1986, as amended (the "Code") (each, a "Plan"), or any other person (including
an investment manager, a named fiduciary or a trustee of any Plan) acting,
directly or indirectly, on behalf of or purchasing any Certificate with "plan
assets" of any Plan within the meaning of the Department of Labor ("DOL")
regulation at 29 C.F.R. ss.12510.3-101 or (b) has provided the Securities
Administrator with an opinion of counsel on which the Trustee, the Depositor,
the Master Servicer, the Securities Administrator and the Servicer may rely,
acceptable to and in form and substance satisfactory to the Trustee to the
effect that the purchase of Certificates is permissible under applicable law,
will not constitute
B-1-3
or result in any non-exempt prohibited transaction under ERISA or Section 4975
of the Code and will not subject the Trust Fund, the Trustee, the Depositor, the
Master Servicer, the Securities Administrator or the Servicer to any obligation
or liability (including obligations or liabilities under ERISA or Section 4975
of the Code) in addition to those undertaken in the Pooling and Servicing
Agreement.
In addition, the Transferee hereby certifies, represents and
warrants to, and covenants with, the Depositor, the Trustee, the Securities
Administrator, the Master Servicer and the Servicer that the Transferee will not
transfer such Certificates to any Plan or person unless such Plan or person
meets the requirements set forth in paragraph 3 above.
All capitalized terms used but not otherwise defined herein
have the respective meanings assigned thereto in the Pooling and Servicing
Agreement, dated as of September 1, 2004, among ACE Securities Corp. as
Depositor, Xxxxx Fargo Bank, N.A. as Master Servicer and Securities
Administrator, Ocwen Federal Bank FSB as Servicer and HSBC Bank USA, National
Association as Trustee, pursuant to which the Certificates were issued.
[TRANSFEREE]
By:
----------------------------
Name:
Title:
X-0-0
XXXXX 0 XX XXXXXXX X-0
----------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Transferees Other Than Registered Investment Companies]
The undersigned hereby certifies as follows to [name of
Transferor] (the "Transferor") and Xxxxx Fargo Bank, N.A., as Securities
Administrator, with respect to the asset backed pass-through certificates (the
"Certificates") described in the Transferee Certificate to which this
certification relates and to which this certification is an Annex:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
entity purchasing the Certificates (the "Transferee").
2. In connection with purchases by the Transferee, the
Transferee is a "qualified institutional buyer" as that term is defined in Rule
144A under the Securities Act of 1933 ("Rule 144A") because (i) the Transferee
owned and/or invested on a discretionary basis $________________(1) in
securities (except for the excluded securities referred to below) as of the end
of the Transferee's most recent fiscal year (such amount being calculated in
accordance with Rule 144A) and (ii) the Transferee satisfies the criteria in the
category marked below.
___ CORPORATION, ETC. The Transferee is a corporation (other than
a bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or any
organization described in Section 501(c)(3) of the Internal
Revenue Code of 1986.
___ BANK. The Transferee (a) is a national bank or banking
institution organized under the laws of any State, territory
or the District of Columbia, the business of which is
substantially confined to banking and is supervised by the
State or territorial banking commission or similar official or
is a foreign bank or equivalent institution, and (b) has an
audited net worth of at least $25,000,000 as demonstrated in
its latest annual financial statements, A COPY OF WHICH IS
ATTACHED HERETO.
___ SAVINGS AND LOAN. The Transferee (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is
supervised and examined by a State or Federal authority having
supervision over any such institutions or is a foreign savings
and loan association or equivalent institution and (b) has an
audited net worth of at least $25,000,000 as demonstrated in
its latest annual financial statements, A COPY OF WHICH IS
ATTACHED HERETO.
----------
(1) Transferee must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Transferee is a dealer, and, in that
case, Transferee must own and/or invest on a discretionary basis at least
$10,000,000 in securities.
B-1-5
___ BROKER-DEALER. The Transferee is a dealer registered pursuant
to Section 15 of the Securities Exchange Act of 1934.
___ INSURANCE COMPANY. The Transferee is an insurance company
whose primary and predominant business activity is the writing
of insurance or the reinsuring of risks underwritten by
insurance companies and which is subject to supervision by the
insurance commissioner or a similar official or agency of a
State, territory or the District of Columbia.
___ STATE OR LOCAL PLAN. The Transferee is a plan established and
maintained by a State, its political subdivisions, or any
agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees.
___ ERISA PLAN. The Transferee is an employee benefit plan within
the meaning of Title I of the Employee Retirement Income
Security Act of 1974.
___ INVESTMENT ADVISOR The Transferee is an investment advisor
registered under the Investment Advisers Act of 1940.
3. The term "SECURITIES" as used herein DOES NOT INCLUDE (i)
securities of issuers that are affiliated with the Transferee, (ii) securities
that are part of an unsold allotment to or subscription by the Transferee, if
the Transferee is a dealer, (iii) securities issued or guaranteed by the U.S. or
any instrumentality thereof, (iv) bank deposit notes and certificates of
deposit, (v) loan participations, (vi) repurchase agreements, (vii) securities
owned but subject to a repurchase agreement and (viii) currency, interest rate
and commodity swaps.
4. For purposes of determining the aggregate amount of
securities owned and/or invested on a discretionary basis by the Transferee, the
Transferee used the cost of such securities to the Transferee and did not
include any of the securities referred to in the preceding paragraph. Further,
in determining such aggregate amount, the Transferee may have included
securities owned by subsidiaries of the Transferee, but only if such
subsidiaries are consolidated with the Transferee in its financial statements
prepared in accordance with generally accepted accounting principles and if the
investments of such subsidiaries are managed under the Transferee's direction.
However, such securities were not included if the Transferee is a
majority-owned, consolidated subsidiary of another enterprise and the Transferee
is not itself a reporting company under the Securities Exchange Act of 1934.
5. The Transferee acknowledges that it is familiar with Rule
144A and understands that the Transferor and other parties related to the
Certificates are relying and will continue to rely on the statements made herein
because one or more sales to the Transferee may be in reliance on Rule 144A.
___ ___ Will the Transferee be purchasing the Certificates
Yes No only for the Transferee's own account?
6. If the answer to the foregoing question is "no", the
Transferee agrees that, in connection with any purchase of securities sold to
the Transferee for the account of a third party (including any separate account)
in reliance on Rule 144A, the Transferee will only
B-1-6
purchase for the account of a third party that at the time is a "qualified
institutional buyer" within the meaning of Rule 144A. In addition, the
Transferee agrees that the Transferee will not purchase securities for a third
party unless the Transferee has obtained a current representation letter from
such third party or taken other appropriate steps contemplated by Rule 144A to
conclude that such third party independently meets the definition of "qualified
institutional buyer" set forth in Rule 144A.
7. The Transferee will notify each of the parties to which
this certification is made of any changes in the information and conclusions
herein. Until such notice is given, the Transferee's purchase of the
Certificates will constitute a reaffirmation of this certification as of the
date of such purchase. In addition, if the Transferee is a bank or savings and
loan as provided above, the Transferee agrees that it will furnish to such
parties updated annual financial statements promptly after they become
available.
Dated:
---------------------------------------------
Print Name of Transferee
By:
-------------------------------------------
Name:
Title:
X-0-0
XXXXX 0 XX XXXXXXX X-0
----------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Transferees That Are Registered Investment Companies]
The undersigned hereby certifies as follows to [name of
Transferor] (the "Transferor") and Xxxxx Fargo Bank, N.A., as Securities
Administrator, with respect to the asset backed pass-through certificates (the
"Certificates") described in the Transferee Certificate to which this
certification relates and to which this certification is an Annex:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the entity purchasing the
Certificates (the "Transferee") or, if the Transferee is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933 ("Rule 144A") because the Transferee is part of a Family of
Investment Companies (as defined below), is such an officer of the investment
adviser (the "Adviser").
2. In connection with purchases by the Transferee, the
Transferee is a "qualified institutional buyer" as defined in Rule 144A because
(i) the Transferee is an investment company registered under the Investment
Company Act of 1940, and (ii) as marked below, the Transferee alone, or the
Transferee's Family of Investment Companies, owned at least $100,000,000 in
securities (other than the excluded securities referred to below) as of the end
of the Transferee's most recent fiscal year. For purposes of determining the
amount of securities owned by the Transferee or the Transferee's Family of
Investment Companies, the cost of such securities was used.
___ The Transferee owned $________________________ in securities
(other than the excluded securities referred to below) as of
the end of the Transferee's most recent fiscal year (such
amount being calculated in accordance with Rule 144A).
___ The Transferee is part of a Family of Investment Companies
which owned in the aggregate $_______________ in securities
(other than the excluded securities referred to below) as of
the end of the Transferee's most recent fiscal year (such
amount being calculated in accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein
means two or more registered investment companies (or series thereof) that have
the same investment adviser or investment advisers that are affiliated (by
virtue of being majority owned subsidiaries of the same parent or because one
investment adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Transferee or are part of the
Transferee's Family of Investment Companies, (ii) securities issued or
guaranteed by the U.S. or any instrumentality thereof, (iii) bank deposit notes
and certificates of deposit, (iv) loan participations, (v) repurchase
agreements, (vi) securities owned but subject to a repurchase agreement and
(vii) currency, interest rate and commodity swaps.
B-1-8
5. The Transferee is familiar with Rule 144A and understands
that the parties to which this certification is being made are relying and will
continue to rely on the statements made herein because one or more sales to the
Transferee will be in reliance on Rule 144A. In addition, the Transferee will
only purchase for the Transferee's own account.
6. The undersigned will notify the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice, the Transferee's purchase of the Certificates will constitute
a reaffirmation of this certification by the undersigned as of the date of such
purchase.
Dated:
-------------------------------------------
Print Name of Transferee or Advisor
By:
----------------------------------------
Name:
Title:
IF AN ADVISER:
-------------------------------------------
Print Name of Transferee
B-1-9
FORM OF TRANSFEREE REPRESENTATION LETTER
The undersigned hereby certifies on behalf of the purchaser
named below (the "Purchaser") as follows:
1. I am an executive officer of the Purchaser.
2. The Purchaser is a "qualified institutional buyer", as
defined in Rule 144A, ("Rule 144A") under the Securities Act of 1933,
as amended.
3. As of the date specified below (which is not earlier than
the last day of the Purchaser's most recent fiscal year), the amount of
"securities", computed for purposes of Rule 144A, owned and invested on
a discretionary basis by the Purchaser was in excess of $100,000,000.
Name of Purchaser
--------------------------------------------------------------
By: (Signature)
---------------------------------------------------------------
Name of Signatory
--------------------------------------------------------------
Title
--------------------------------------------------------------------------
Date of this certificate
-------------------------------------------------------
Date of information provided in paragraph 3
------------------------------------
X-0-00
XXXXXXX X-0
-----------
FORM OF TRANSFEROR REPRESENTATION LETTER
____________, 20__
Xxxxx Fargo Bank, N.A.
Sixth and Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Corporate Trust ACE 2004-SD1
Re: Ace Securities Corp. Home Equity Loan Trust,
Series 2004-SD1
Asset Backed Pass-Through Certificates,
Class CE, Class P and Class R Certificates
---------------------------------------------------
Ladies and Gentlemen:
In connection with the transfer by ________________ (the
"Transferor") to __________________________ (the "Transferee") of the captioned
mortgage pass-through certificates (the "Certificates"), the Transferor hereby
certifies as follows:
Neither the Seller nor anyone acting on its behalf has (a)
offered, pledged, sold, disposed of or otherwise transferred any Certificate,
any interest in any Certificate or any other similar security to any person in
any manner, (b) has solicited any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c) has
otherwise approached or negotiated with respect to any Certificate, any interest
in any Certificate or any other similar security with any person in any manner,
(d) has made any general solicitation by means of general advertising or in any
other manner, or (e) has taken any other action, that (as to any of (a) through
(e) above) would constitute a distribution of the Certificates under the
Securities Act of 1933 (the "Act'), that would render the disposition of any
Certificate a violation of Section 5 of the Act or any state securities law, or
that would require registration or qualification pursuant thereto. The Seller
will not act, in any manner set forth in the foregoing sentence with respect to
any Certificate. The Seller has not and will not sell or otherwise transfer any
of the Certificates, except in compliance with the provisions of the Pooling and
Servicing Agreement.
Very truly yours,
-----------------------------------
(Transferor)
By:
--------------------------------
Name:
Title:
B-2-1
FORM OF TRANSFEREE LETTER
_______________, 20__
Xxxxx Fargo Bank, N.A.
Sixth and Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Corporate Trust ACE 2004-SD1
Re: Ace Securities Corp. Home Equity Loan Trust,
Series 2004-SD1
Asset Backed Pass-Through Certificates,
Class CE, Class P and Class R Certificates
---------------------------------------------------
Ladies and Gentlemen:
In connection with the transfer by ______________________ (the
"Transferor") to __________________________ (the "Transferee") of the captioned
mortgage pass-through certificates (the "Certificates"), the Transferee hereby
certifies as follows:
1. The Transferee understands that (a) the Certificates have
not been and will not be registered or qualified under the Securities
Act of 1933, as amended (the "Act") or any state securities law, (b)
the Depositor is not required to so register or qualify the
Certificates, (c) the Certificates may be resold only if registered and
qualified pursuant to the provisions of the Act or any state securities
law, or if an exemption from such registration and qualification is
available, (d) the Pooling and Servicing Agreement contains
restrictions regarding the transfer of the Certificates and (e) the
Certificates will bear a legend to the foregoing effect.
2. The Transferee is acquiring the Certificates for its own
account for investment only and not with a view to or for sale in
connection with any distribution thereof in any manner that would
violate the Act or any applicable state securities laws.
3. The Transferee is (a) a substantial, sophisticated
institutional investor having such knowledge and experience in
financial and business matters, and, in particular, in such matters
related to securities similar to the Certificates, such that it is
capable of evaluating the merits and risks of investment in the
Certificates, (b) able to bear the economic risks of such an investment
and (c) an "accredited investor" within the meaning of Rule 501(a)
promulgated pursuant to the Act.
4. The Transferee has been furnished with, and has had an
opportunity to review (a) a copy of the Pooling and Servicing Agreement
and (b) such other information concerning the Certificates, the
Mortgage Loans and the Depositor as has been requested by the
Transferee from the Depositor or the Transferor and is relevant to the
Transferee's decision to purchase the Certificates. The Transferee has
had any questions arising from such review answered by the Depositor or
the Transferor to the satisfaction of the Transferee.
B-2-2
5. The Transferee has not and will not nor has it authorized
or will it authorize any person to (a) offer, pledge, sell, dispose of
or otherwise transfer any Certificate, any interest in any Certificate
or any other similar security to any person in any manner, (b) solicit
any offer to buy or to accept a pledge, disposition of other transfer
of any Certificate, any interest in any Certificate or any other
similar security from any person in any manner, (c) otherwise approach
or negotiate with respect to any Certificate, any interest in any
Certificate or any other similar security with any person in any
manner, (d) make any general solicitation by means of general
advertising or in any other manner or (e) take any other action, that
(as to any of (a) through (e) above) would constitute a distribution of
any Certificate under the Act, that would render the disposition of any
Certificate a violation of Section 5 of the 1933 Act or any state
securities law, or that would require registration or qualification
pursuant thereto. The Transferee will not sell or otherwise transfer
any of the Certificates, except in compliance with the provisions of
the Pooling and Servicing Agreement.
6. The Transferee: (a) is not an employee benefit or other
plan subject to the prohibited transaction provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or
Section 4975 of the Internal Revenue Code of 1986, as amended (the
"Code") (each, a "Plan"), or any other person (including an investment
manager, a named fiduciary or a trustee of any Plan) acting, directly
or indirectly, on behalf of or purchasing any Certificate with "plan
assets" of any Plan within the meaning of the Department of Labor
("DOL") regulation at 29 C.F.R. ss.12510.3-101 or (b) has provided the
Trustee with an opinion of counsel on which the Depositor, the Master
Servicer, the Securities Administrator, the Trustee and the Servicer
may rely, acceptable to and in form and substance satisfactory to the
Trustee to the effect that the purchase of Certificates is permissible
under applicable law, will not constitute or result in any non-exempt
prohibited transaction under ERISA or Section 4975 of the Code and will
not subject the Trust Fund, the Trustee, the Master Servicer, the
Securities Administrator, the Depositor or the Servicer to any
obligation or liability (including obligations or liabilities under
ERISA or Section 4975 of the Code) in addition to those undertaken in
the Pooling and Servicing Agreement.
In addition, the Transferee hereby certifies, represents and
warrants to, and covenants with, the Depositor, the Trustee, the Securities
Administrator, the Master Servicer and the Servicer that the Transferee will not
transfer such Certificates to any Plan or person unless such Plan or person
meets the requirements set forth in paragraph 6 above.
Very truly yours,
By:
-------------------------------
Name:
Title:
X-0-0
XXXXXXX X-0
-----------
TRANSFER AFFIDAVIT AND AGREEMENT
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
___________________________ being duly sworn, deposes, represents and
warrants as follows:
1. I am a _____________________ of _____________________________
(the "Owner") a corporation duly organized and existing under
the laws of _________________________, the record owner of Ace
Securities Corp. Home Equity Loan Trust, Series 2004-SD1 Asset
Backed Pass-Through Certificates, Class R Certificates (the
"Class R Certificates"), on behalf of whom I make this
affidavit and agreement. Capitalized terms used but not
defined herein have the respective meanings assigned thereto
in the Pooling and Servicing Agreement pursuant to which the
Class R Certificates were issued.
2. The Owner (i) is and will be a "Permitted Transferee" as of
____________________. ____ and (ii) is acquiring the Class R
Certificates for its own account or for the account of another
Owner from which it has received an affidavit in substantially
the same form as this affidavit. A "Permitted Transferee" is
any person other than a "disqualified organization" or a
possession of the United States. For this purpose, a
"disqualified organization" means the United States, any state
or political subdivision thereof, any agency or
instrumentality of any of the foregoing (other than an
instrumentality all of the activities of which are subject to
tax and, except for the Federal Home Loan Mortgage
Corporation, a majority of whose board of directors is not
selected by any such governmental entity) or any foreign
government, international organization or any agency or
instrumentality of such foreign government or organization,
any real electric or telephone cooperative, or any
organization (other than certain farmers' cooperatives) that
is generally exempt from federal income tax unless such
organization is subject to the tax on unrelated business
taxable income.
3. The Owner is aware (i) of the tax that would be imposed on
transfers of the Class R Certificates to disqualified
organizations under the Internal Revenue Code of 1986 that
applies to all transfers of the Class R Certificates after
April 31, 1988; (ii) that such tax would be on the transferor
or, if such transfer is through an agent (which person
includes a broker, nominee or middleman) for a non-Permitted
Transferee, on the agent; (iii) that the person otherwise
liable for the tax shall be relieved of liability for the tax
if the transferee furnishes to such person an affidavit that
the transferee is a Permitted Transferee and, at the time of
transfer, such person does not have actual knowledge that the
affidavit is false; and (iv) that each of the Class R
Certificates may be a "noneconomic residual interest" within
the meaning of proposed Treasury regulations promulgated under
the Code
B-3-1
and that the transferor of a "noneconomic residual interest"
will remain liable for any taxes due with respect to the
income on such residual interest, unless no significant
purpose of the transfer is to impede the assessment or
collection of tax.
4. The Owner is aware of the tax imposed on a "pass-through
entity" holding the Class R Certificates if, at any time
during the taxable year of the pass-through entity, a
non-Permitted Transferee is the record holder of an interest
in such entity. (For this purpose, a "pass-through entity"
includes a regulated investment company, a real estate
investment trust or common trust fund, a partnership, trust or
estate, and certain cooperatives.)
5. The Owner is aware that the Securities Administrator will not
register the transfer of any Class R Certificate unless the
transferee, or the transferee's agent, delivers to the
Securities Administrator, among other things, an affidavit in
substantially the same form as this affidavit. The Owner
expressly agrees that it will not consummate any such transfer
if it knows or believes that any of the representations
contained in such affidavit and agreement are false.
6. The Owner consents to any additional restrictions or
arrangements that shall be deemed necessary upon advice of
counsel to constitute a reasonable arrangement to ensure that
the Class R Certificates will only be owned, directly or
indirectly, by an Owner that is a Permitted Transferee.
7. The Owner's taxpayer identification number is _______________.
8. The Owner has reviewed the restrictions set forth on the face
of the Class R Certificates and the provisions of Section
6.02(d) of the Pooling and Servicing Agreement under which the
Class R Certificates were issued (in particular, clauses
(iii)(A) and (iii)(B) of Section 6.02(d) which authorize the
Securities Administrator to deliver payments to a person other
than the Owner and negotiate a mandatory sale by the
Securities Administrator in the event that the Owner holds
such Certificate in violation of Section 6.02(d)); and that
the Owner expressly agrees to be bound by and to comply with
such restrictions and provisions.
9. The Owner is not acquiring and will not transfer the Class R
Certificates in order to impede the assessment or collection
of any tax.
10. The Owner anticipates that it will, so long as it holds the
Class R Certificates, have sufficient assets to pay any taxes
owed by the holder of such Class R Certificates, and hereby
represents to and for the benefit of the person from whom it
acquired the Class R Certificates that the Owner intends to
pay taxes associated with holding such Class R Certificates as
they become due, fully understanding that it may incur tax
liabilities in excess of any cash flows generated by the Class
R Certificates.
B-3-2
11. The Owner has no present knowledge that it may become
insolvent or subject to a bankruptcy proceeding for so long as
it holds the Class R Certificates.
12. The Owner has no present knowledge or expectation that it will
be unable to pay any United States taxes owed by it so long as
any of the Certificates remain outstanding.
13. The Owner is not acquiring the Class R Certificates with the
intent to transfer the Class R Certificates to any person or
entity that will not have sufficient assets to pay any taxes
owed by the holder of such Class R Certificates, or that may
become insolvent or subject to a bankruptcy proceeding, for so
long as the Class R Certificates remain outstanding.
14. The Owner will, in connection with any transfer that it makes
of the Class R Certificates, obtain from its transferee the
representations required by Section 6.02(d) of the Pooling and
Servicing Agreement under which the Class R Certificate were
issued and will not consummate any such transfer if it knows,
or knows facts that should lead it to believe, that any such
representations are false.
15. The Owner will, in connection with any transfer that it makes
of the Class R Certificates, deliver to the Securities
Administrator an affidavit, which represents and warrants that
it is not transferring the Class R Certificates to impede the
assessment or collection of any tax and that it has no actual
knowledge that the proposed transferee: (i) has insufficient
assets to pay any taxes owed by such transferee as holder of
the Class R Certificates; (ii) may become insolvent or subject
to a bankruptcy proceeding for so long as the Class R
Certificates remains outstanding; and (iii) is not a
"Permitted Transferee".
16. The Owner is a citizen or resident of the United States, a
corporation, partnership or other entity created or organized
in, or under the laws of, the United States or any political
subdivision thereof, or an estate or trust whose income from
sources without the United States may be included in gross
income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or
business within the United States.
17. The Owner of the Class R Certificate, hereby agrees that in
the event that the Trust Fund created by the Pooling and
Servicing Agreement is terminated pursuant to Section 10.01
thereof, the undersigned shall assign and transfer to the
Holders of the Class CE and the Class P Certificates any
amounts in excess of par received in connection with such
termination. Accordingly, in the event of such termination,
the Securities Administrator is hereby authorized to withhold
any such amounts in excess of par and to pay such amounts
directly to the Holders of the Class CE and the Class P
Certificates. This agreement shall bind and be enforceable
against any successor, transferee or assigned of the
undersigned in the Class R Certificate. In connection with any
transfer of the Class R Certificate, the Owner shall obtain an
agreement substantially similar to this clause from any
subsequent owner.
B-3-3
IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its [Vice] President, attested by its [Assistant] Secretary, this ____ day of
_________________, ____.
[OWNER]
By:
---------------------------------
Name:
Title: [Vice] President
ATTEST:
By:
Name:
Title: [Assistant] Secretary
Personally appeared before me the above-named _______________,
known or proved to me to be the same person who executed the foregoing
instrument and to be a [Vice] President of the Owner, and acknowledged to me
that [he/she] executed the same as [his/her] free act and deed and the free act
and deed of the Owner.
Subscribed and sworn before me this ______________ day of
__________, ____.
--------------------------------
Notary Public
County of
-----------------------
State of
-----------------------
My Commission expires:
B-3-4
FORM OF TRANSFEROR AFFIDAVIT
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
_________________________, being duly sworn, deposes,
represents and warrants as follows:
1. I am a ____________________ of _________________________
(the "Owner"), a corporation duly organized and existing under the laws of
_____________, on behalf of whom I make this affidavit.
2. The Owner is not transferring the Class R Certificates (the
"Residual Certificates") to impede the assessment or collection of any tax.
3. The Owner has no actual knowledge that the Person that is
the proposed transferee (the "Purchaser") of the Residual Certificates: (i) has
insufficient assets to pay any taxes owed by such proposed transferee as holder
of the Residual Certificates; (ii) may become insolvent or subject to a
bankruptcy proceeding for so long as the Residual Certificates remain
outstanding and (iii) is not a Permitted Transferee.
4. The Owner understands that the Purchaser has delivered to
the Trustee or a transfer affidavit and agreement in the form attached to the
Pooling and Servicing Agreement as Exhibit B-2. The Owner does not know or
believe that any representation contained therein is false.
5. At the time of transfer, the Owner has conducted a
reasonable investigation of the financial condition of the Purchaser as
contemplated by Treasury Regulations Section 1.860E-1(c)(4)(i) and, as a result
of that investigation, the Owner has determined that the Purchaser has
historically paid its debts as they became due and has found no significant
evidence to indicate that the Purchaser will not continue to pay its debts as
they become due in the future. The Owner understands that the transfer of a
Residual Certificate may not be respected for United States income tax purposes
(and the Owner may continue to be liable for United States income taxes
associated therewith) unless the Owner has conducted such an investigation.
6. Capitalized terms not otherwise defined herein shall have
the meanings ascribed to them in the Pooling and Servicing Agreement.
B-3-5
IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its [Vice] President, attested by its [Assistant] Secretary, this ____ day of
________________, ____.
[OWNER]
By:
---------------------------------
Name:
Title: [Vice] President
ATTEST:
By:
----------------------------------
Name:
Title. [Assistant] Secretary
Personally appeared before me the above-named _______________,
known or proved to me to be the same person who executed the foregoing
instrument and to be a [Vice] President of the Owner, and acknowledged to me
that [he/she] executed the same as [his/her] free act and deed and the free act
and deed of the Owner.
Subscribed and sworn before me this ______ day of
_____________, ____.
-----------------------------------
Notary Public
County of
-------------------------
State of
-------------------------
My Commission expires:
B-3-6
EXHIBIT C
FORM OF SERVICER CERTIFICATION
Re: __________ (the "Trust")
Mortgage Pass-Through Certificates, Series 2004-SD1
I, [identify the certifying individual], certify to ACE Securities Corp. (the
"Depositor"), HSBC Bank USA, National Association (the "Trustee") and Xxxxx
Fargo Bank, National Association (the "Master Servicer"), and their respective
officers, directors and affiliates, and with the knowledge and intent that they
will rely upon this certification, that:
1. Based on my knowledge, the information in the Annual Statement
of Compliance, the Annual Independent Public Accountant's
Servicing Report and all servicing reports, officer's
certificates and other information relating to the servicing
of the Mortgage Loans submitted to the Master Servicer taken
as a whole, does not contain any untrue statement of a
material fact or omit to state a material fact (constituting
information required to be provided by Ocwen Federal Bank FSB
(the "Servicer") under the Agreement) necessary to make the
statements made, in light of the circumstances under which
such statements were made, not misleading as of the date of
this certification.
2. Based on my knowledge, the servicing information required to
be provided to Master Servicer by the Servicer under the
Agreement has been provided to the Master Servicer.
3. I am responsible for reviewing the activities performed by the
Servicer under the Agreement and based upon my knowledge and
the review required by the Agreement, and except as disclosed
in the Annual Statement of Compliance or the Annual
Independent Public Accountant's Servicing Report submitted to
the Master Servicer, the Servicer has fulfilled its
obligations under the Agreement; and
4. I have disclosed to the Master Servicer all significant
deficiencies relating to the servicer's compliance with the
minimum servicing standards in accordance with a review
conducted in compliance with the Uniform Single Attestation
Program for Mortgage Bankers or similar standard as set forth
in the pooling and servicing agreement.
Capitalized terms used and not otherwise defined herein have the meanings
assigned thereto in the Pooling and Servicing Agreement, dated as of September
1, 2004, among ACE Securities Corp., Ocwen Federal Bank FSB, Xxxxx Fargo Bank,
N.A. and HSBC Bank USA, National Association
C-1
Date:
---------------------------------
--------------------------------------
[Signature]
--------------------------------------
[Title]
C-2
EXHIBIT D
FORM OF POWER OF ATTORNEY
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO
Ocwen Federal Bank FSB
0000 Xxxx Xxxxx Xxxxxxxxx, Xxxxx 00X
Xxxx Xxxx Xxxxx, Xxxxxxx 00000
Attn: _________________________________
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that __________________, having its principal
place of business at _________________________, as Trustee (the "Trustee")
pursuant to that Pooling and Servicing Agreement among
____________________________(the "Depositor"), Ocwen Federal Bank FSB (the
"Servicer"), and the Trustee, dated as of September 1, 2004 (the "Pooling and
Servicing Agreement"), hereby constitutes and appoints the Servicer, by and
through the Servicer's officers, the Trustee's true and lawful Attorney-in-Fact,
in the Trustee's name, place and stead and for the Trustee's benefit, in
connection with all mortgage loans serviced by the Servicer pursuant to the
Pooling and Servicing Agreement for the purpose of performing all acts and
executing all documents in the name of the Trustee as may be customarily and
reasonably necessary and appropriate to effectuate the following enumerated
transactions in respect of any of the mortgages or deeds of trust (the
"Mortgages" and the "Deeds of Trust", respectively) and promissory notes secured
thereby (the "Mortgage Notes") for which the undersigned is acting as Trustee
for various certificateholders (whether the undersigned is named therein as
mortgagee or beneficiary or has become mortgagee by virtue of endorsement of the
Mortgage Note secured by any such Mortgage or Deed of Trust) and for which the
Servicer is acting as servicer, all subject to the terms of the Pooling and
Servicing Agreement.
This appointment shall apply to the following enumerated transactions only:
1. The modification or re-recording of a Mortgage or Deed of
Trust, where said modification or re-recordings is for the
purpose of correcting the Mortgage or Deed of Trust to conform
same to the original intent of the parties thereto or to
correct title errors discovered after such title insurance was
issued and said modification or re-recording, in either
instance, does not adversely affect the lien of the Mortgage
or Deed of Trust as insured.
2. The subordination of the lien of a Mortgage or Deed of Trust
to an easement in favor of a public utility company of a
government agency or unit with powers of eminent domain; this
section shall include, without limitation, the execution of
partial satisfactions/releases, partial reconveyances or the
execution or requests to trustees to accomplish same.
D-1
3. The conveyance of the properties to the mortgage insurer, or
the closing of the title to the property to be acquired as
real estate owned, or conveyance of title to real estate
owned.
4. The completion of loan assumption agreements.
5. The full satisfaction/release of a Mortgage or Deed of Trust
or full conveyance upon payment and discharge of all sums
secured thereby, including, without limitation, cancellation
of the related Mortgage Note.
6. The assignment of any Mortgage or Deed of Trust and the
related Mortgage Note, in connection with the repurchase of
the mortgage loan secured and evidenced thereby.
7. The full assignment of a Mortgage or Deed of Trust upon
payment and discharge of all sums secured thereby in
conjunction with the refinancing thereof, including, without
limitation, the assignment of the related Mortgage Note.
8. With respect to a Mortgage or Deed of Trust, the foreclosure,
the taking of a deed in lieu of foreclosure, or the completion
of judicial or non-judicial foreclosure or termination,
cancellation or rescission of any such foreclosure, including,
without limitation, any and all of the following acts:
a. the substitution of trustee(s) serving under a Deed
of Trust, in accordance with state law and the Deed
of Trust;
b. the preparation and issuance of statements of breach
or non-performance;
c. the preparation and filing of notices of default
and/or notices of sale;
d. the cancellation/rescission of notices of default
and/or notices of sale;
e. the taking of a deed in lieu of foreclosure; and
f. the preparation and execution of such other documents
and performance of such other actions as may be
necessary under the terms of the Mortgage, Deed of
Trust or state law to expeditiously complete said
transactions in paragraphs 8.a. through 8.e., above.
The undersigned gives said Attorney-in-Fact full power and authority to execute
such instruments and to do and perform all and every act and thing necessary and
proper to carry into effect the power or powers granted by or under this Limited
Power of Attorney as fully as the undersigned might or could do, and hereby does
ratify and confirm to all that said Attorney-in-Fact shall lawfully do or cause
to be done by authority hereof.
Third parties without actual notice may rely upon the exercise of the power
granted under this Limited Power of attorney; and may be satisfied that this
Limited Power of Attorney shall
D-2
continue in full force and effect and has not been revoked unless an instrument
of revocation has been made in writing by the undersigned.
IN WITNESS WHEREOF, as Trustee pursuant to that Pooling and Servicing Agreement
among the Depositor, the Servicer, and the Trustee, dated as of 1, 200__ (
Mortgage Loan Asset Backed Certificates, Series 200__-___), has caused its
corporate seal to be hereto affixed and these presents to be signed and
acknowledged in its name and behalf by its duly elected and authorized Vice
President this day of , 200__.
__________________________________
as Trustee for _____ Mortgage Loan Asset
Backed Certificates, Series 200__-___
By ________________________________________
STATE OF __________________
COUNTY OF _________________
On ___________ ________ , 200__, before me, the undersigned, a Notary Public in
and for said state, personally appeared , Vice President of as Trustee for
Mortgage Loan Asset Backed Certificates, Series 200__-___, personally known to
me to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed that same in his/her authorized
capacity, and that by his/her signature on the instrument the entity upon behalf
of which the person acted and executed the instrument.
WITESS my hand and official seal.
(SEAL)
____________________________________
Notary Public
My Commission Expires ________________________
D-3
SCHEDULE 1
MORTGAGE LOAN SCHEDULE
SCHEDULE 2
PREPAYMENT CHARGE SCHEDULE
SCHEDULE 3
STANDARD FILE LAYOUT- DELINQUENCY REPORTING
EXHIBIT 1: STANDARD FILE LAYOUT - DELINQUENCY REPORTING
--------------------------------------------- -------------------------------------------------------------- -------- --------------
COLUMN/HEADER NAME DESCRIPTION DECIMAL FORMAT COMMENT
--------------------------------------------- -------------------------------------------------------------- -------- --------------
SERVICER_LOAN_NBR A unique number assigned to a loan by the Servicer. This
may be different than the LOAN_NBR
--------------------------------------------- -------------------------------------------------------------- -------- --------------
LOAN_NBR A unique identifier assigned to each loan by the originator.
--------------------------------------------- -------------------------------------------------------------- -------- --------------
CLIENT_NBR Servicer Client Number
--------------------------------------------- -------------------------------------------------------------- -------- --------------
SERV_INVESTOR_NBR Contains a unique number as
assigned by an external servicer
to identify a group of loans in
their system.
--------------------------------------------- -------------------------------------------------------------- -------- --------------
BORROWER_FIRST_NAME First Name of the Borrower.
--------------------------------------------- -------------------------------------------------------------- -------- --------------
BORROWER_LAST_NAME Last name of the borrower.
--------------------------------------------- -------------------------------------------------------------- -------- --------------
XXXX_XXXXXXX Xxxxxx Name and Number of Property
--------------------------------------------- -------------------------------------------------------------- -------- --------------
PROP_STATE The state where the property located.
--------------------------------------------- -------------------------------------------------------------- -------- --------------
PROP_ZIP Zip code where the property is located.
--------------------------------------------- -------------------------------------------------------------- -------- --------------
BORR_NEXT_PAY_DUE_DATE The date that the borrower's next
payment is due to the MM/DD/YYYY
servicer at the end of processing
cycle, as reported by Servicer.
--------------------------------------------- -------------------------------------------------------------- -------- --------------
LOAN_TYPE Loan Type (i.e. FHA, VA, Conv)
--------------------------------------------- -------------------------------------------------------------- -------- --------------
BANKRUPTCY_FILED_DATE The date a particular bankruptcy claim was filed. MM/DD/YYYY
--------------------------------------------- -------------------------------------------------------------- -------- --------------
BANKRUPTCY_CHAPTER_CODE The chapter under which the bankruptcy was filed.
--------------------------------------------- -------------------------------------------------------------- -------- --------------
BANKRUPTCY_CASE_NBR The case number assigned by the court to the bankruptcy
filing.
--------------------------------------------- -------------------------------------------------------------- -------- --------------
POST_PETITION_DUE_DATE The payment due date once the bankruptcy has been approved MM/DD/YYYY
by the courts
--------------------------------------------- -------------------------------------------------------------- -------- --------------
--------------------------------------------- -------------------------------------------------------------- -------- --------------
BANKRUPTCY_DCHRG_DISM_DATE The Date The Loan Is Removed From Bankruptcy. Either by MM/DD/YYYY
Dismissal, Discharged and/or a Motion For Relief Was
Granted.
--------------------------------------------- -------------------------------------------------------------- -------- --------------
LOSS_MIT_APPR_DATE The Date The Loss Mitigation Was Approved By The Servicer MM/DD/YYYY
--------------------------------------------- -------------------------------------------------------------- -------- --------------
LOSS_MIT_TYPE The Type Of Loss Mitigation Approved For A Loan Such As;
--------------------------------------------- -------------------------------------------------------------- -------- --------------
LOSS_MIT_EST_COMP_DATE The Date The Loss Mitigation /Plan Is Scheduled To End/Close MM/DD/YYYY
--------------------------------------------- -------------------------------------------------------------- -------- --------------
LOSS_MIT_ACT_COMP_DATE The Date The Loss Mitigation Is Actually Completed MM/DD/YYYY
--------------------------------------------- -------------------------------------------------------------- -------- --------------
FRCLSR_APPROVED_DATE The date DA Admin sends a letter
to the servicer with MM/DD/YYYY
instructions to begin foreclosure
proceedings.
--------------------------------------------- -------------------------------------------------------------- -------- --------------
ATTORNEY_REFERRAL_DATE Date File Was Referred To Attorney to Pursue Foreclosure MM/DD/YYYY
--------------------------------------------- -------------------------------------------------------------- -------- --------------
FIRST_LEGAL_DATE Notice of 1st legal filed by an Attorney in a Foreclosure MM/DD/YYYY
Action
--------------------------------------------- -------------------------------------------------------------- -------- --------------
FRCLSR_SALE_EXPECTED_DATE The date by which a foreclosure sale is expected to occur. MM/DD/YYYY
--------------------------------------------- -------------------------------------------------------------- -------- --------------
FRCLSR_SALE_DATE The actual date of the foreclosure sale. MM/DD/YYYY
--------------------------------------------- -------------------------------------------------------------- -------- --------------
FRCLSR_SALE_AMT The amount a property sold for at the foreclosure sale. 2 No commas(,)
or dollar
signs ($)
--------------------------------------------- -------------------------------------------------------------- -------- --------------
EVICTION_START_DATE The date the servicer initiates eviction of the borrower. MM/DD/YYYY
--------------------------------------------- -------------------------------------------------------------- -------- --------------
EVICTION_COMPLETED_DATE The date the court revokes legal
possession of the property
MM/DD/YYYY from the borrower.
--------------------------------------------- -------------------------------------------------------------- -------- --------------
LIST_PRICE The price at which an REO property is marketed. 2 No commas(,)
or dollar
signs ($)
--------------------------------------------- -------------------------------------------------------------- -------- --------------
LIST_DATE The date an REO property is listed at a particular price. MM/DD/YYYY
--------------------------------------------- -------------------------------------------------------------- -------- --------------
OFFER_AMT The dollar value of an offer for an REO property. 2 No commas(,)
or dollar
signs ($)
--------------------------------------------- -------------------------------------------------------------- -------- --------------
--------------------------------------------- -------------------------------------------------------------- -------- --------------
COLUMN/HEADER NAME DESCRIPTION DECIMAL FORMAT COMMENT
--------------------------------------------- -------------------------------------------------------------- -------- --------------
--------------------------------------------- -------------------------------------------------------------- -------- --------------
OFFER_DATE_TIME The date an offer is received by DA Admin or by the Servicer. MM/DD/YYYY
--------------------------------------------- -------------------------------------------------------------- -------- --------------
REO_CLOSING_DATE The date the REO sale of the property is scheduled to close. MM/DD/YYYY
--------------------------------------------- -------------------------------------------------------------- -------- --------------
REO_ACTUAL_CLOSING_DATE Actual Date Of REO Sale MM/DD/YYYY
--------------------------------------------- -------------------------------------------------------------- -------- --------------
OCCUPANT_CODE Classification of how the property is occupied.
--------------------------------------------- -------------------------------------------------------------- -------- --------------
PROP_CONDITION_CODE A code that indicates the condition of the property.
--------------------------------------------- -------------------------------------------------------------- -------- --------------
PROP_INSPECTION_DATE The date a property inspection is performed. MM/DD/YYYY
--------------------------------------------- -------------------------------------------------------------- -------- --------------
APPRAISAL_DATE The date the appraisal was done. MM/DD/YYYY
--------------------------------------------- -------------------------------------------------------------- -------- --------------
CURR_PROP_VAL The current "as is" value of the property based on brokers 2
price opinion or appraisal.
--------------------------------------------- -------------------------------------------------------------- -------- --------------
REPAIRED_PROP_VAL The amount the property would be
worth if repairs are 2 completed
pursuant to a broker's price
opinion or appraisal.
--------------------------------------------- -------------------------------------------------------------- -------- --------------
IF APPLICABLE:
--------------------------------------------- -------------------------------------------------------------- -------- --------------
DELINQ_STATUS_CODE FNMA Code Describing Status of Loan
--------------------------------------------- -------------------------------------------------------------- -------- --------------
DELINQ_REASON_CODE The circumstances which caused a
borrower to stop paying on a loan.
Code indicates the reason why the
loan is in default for this cycle.
--------------------------------------------- -------------------------------------------------------------- -------- --------------
MI_CLAIM_FILED_DATE Date Mortgage Insurance Claim Was Filed With Mortgage MM/DD/YYYY
Insurance Company.
--------------------------------------------- -------------------------------------------------------------- -------- --------------
MI_CLAIM_AMT Amount of Mortgage Insurance Claim Filed No commas(,)
or dollar
signs ($)
--------------------------------------------- -------------------------------------------------------------- -------- --------------
MI_CLAIM_PAID_DATE Date Mortgage Insurance Company Disbursed Claim Payment MM/DD/YYYY
--------------------------------------------- -------------------------------------------------------------- -------- --------------
MI_CLAIM_AMT_PAID Amount Mortgage Insurance Company Paid On Claim 2 No commas(,)
or dollar
signs ($)
--------------------------------------------- -------------------------------------------------------------- -------- --------------
POOL_CLAIM_FILED_DATE Date Claim Was Filed With Pool Insurance Company MM/DD/YYYY
--------------------------------------------- -------------------------------------------------------------- -------- --------------
POOL_CLAIM_AMT Amount of Claim Filed With Pool Insurance Company 2 No commas(,)
or dollar
signs ($)
--------------------------------------------- -------------------------------------------------------------- -------- --------------
POOL_CLAIM_PAID_DATE Date Claim Was Settled and The Check Was Issued By The Pool MM/DD/YYYY
Insurer
--------------------------------------------- -------------------------------------------------------------- -------- --------------
POOL_CLAIM_AMT_PAID Amount Paid On Claim By Pool Insurance Company 2 No commas(,)
or dollar
signs ($)
--------------------------------------------- -------------------------------------------------------------- -------- --------------
FHA_PART_A_CLAIM_FILED_DATE Date FHA Part A Claim Was Filed With HUD MM/DD/YYYY
--------------------------------------------- -------------------------------------------------------------- -------- --------------
FHA_PART_A_CLAIM_AMT Amount of FHA Part A Claim Filed 2 No commas(,)
or dollar
signs ($)
--------------------------------------------- -------------------------------------------------------------- -------- --------------
FHA_PART_A_CLAIM_PAID_DATE Date HUD Disbursed Part A Claim Payment MM/DD/YYYY
--------------------------------------------- -------------------------------------------------------------- -------- --------------
FHA_PART_A_CLAIM_PAID_AMT Amount HUD Paid on Part A Claim 2 No commas(,)
or dollar
signs ($)
--------------------------------------------- -------------------------------------------------------------- -------- --------------
FHA_PART_B_CLAIM_FILED_DATE Date FHA Part B Claim Was Filed With HUD MM/DD/YYYY
--------------------------------------------- -------------------------------------------------------------- -------- --------------
FHA_PART_B_CLAIM_AMT Amount of FHA Part B Claim Filed 2 No commas(,)
or dollar
signs ($)
--------------------------------------------- -------------------------------------------------------------- -------- --------------
FHA_PART_B_CLAIM_PAID_DATE Date HUD Disbursed Part B Claim Payment MM/DD/YYYY
--------------------------------------------- -------------------------------------------------------------- -------- --------------
FHA_PART_B_CLAIM_PAID_AMT Amount HUD Paid on Part B Claim 2 No commas(,)
or dollar
signs ($)
--------------------------------------------- -------------------------------------------------------------- -------- --------------
VA_CLAIM_FILED_DATE Date VA Claim Was Filed With the Veterans Admin MM/DD/YYYY
--------------------------------------------- -------------------------------------------------------------- -------- --------------
VA_CLAIM_PAID_DATE Date Veterans Admin. Disbursed VA Claim Payment MM/DD/YYYY
--------------------------------------------- -------------------------------------------------------------- -------- --------------
VA_CLAIM_PAID_AMT Amount Veterans Admin. Paid on VA Claim 2 No commas(,)
or dollar
signs ($)
--------------------------------------------- -------------------------------------------------------------- -------- --------------
EXHIBIT 2: STANDARD FILE CODES - DELINQUENCY REPORTING
The LOSS MIT TYPE field should show the approved Loss Mitigation Code as
follows:
o ASUM- Approved Assumption
o BAP- Borrower Assistance Program
o CO- Charge Off
o DIL- Deed-in-Lieu
o FFA- Formal Forbearance Agreement
o MOD- Loan Modification
o PRE- Pre-Sale
o SS- Short Sale
o MISC- Anything else approved by the PMI or Pool Insurer
NOTE: Xxxxx Fargo Bank will accept alternative Loss Mitigation Types to those
above, provided that they are consistent with industry standards. If Loss
Mitigation Types other than those above are used, the Servicer must supply Xxxxx
Fargo Bank with a description of each of the Loss Mitigation Types prior to
sending the file.
The OCCUPANT CODE field should show the current status of the property code as
follows:
o Mortgagor
o Tenant
o Unknown
o Vacant
The PROPERTY CONDITION field should show the last reported condition of the
property as follows:
o Damaged
o Excellent
o Fair
o Gone
o Good
o Poor
o Special Hazard
o Unknown
EXHIBIT 2: STANDARD FILE CODES - DELINQUENCY REPORTING, CONTINUED
The FNMA DELINQUENT REASON CODE field should show the Reason for Delinquency as
follows:
----------------- --------------------------------------------
DELINQUENCY CODE DELINQUENCY DESCRIPTION
----------------- --------------------------------------------
001 FNMA-Death of principal mortgagor
----------------- --------------------------------------------
002 FNMA-Illness of principal mortgagor
----------------- --------------------------------------------
003 FNMA-Illness of mortgagor's family member
----------------- --------------------------------------------
004 FNMA-Death of mortgagor's family member
----------------- --------------------------------------------
005 FNMA-Marital difficulties
----------------- --------------------------------------------
006 FNMA-Curtailment of income
----------------- --------------------------------------------
007 FNMA-Excessive Obligation
----------------- --------------------------------------------
008 FNMA-Abandonment of property
----------------- --------------------------------------------
009 FNMA-Distant employee transfer
----------------- --------------------------------------------
011 FNMA-Property problem
----------------- --------------------------------------------
012 FNMA-Inability to sell property
----------------- --------------------------------------------
013 FNMA-Inability to rent property
----------------- --------------------------------------------
014 FNMA-Military Service
----------------- --------------------------------------------
015 FNMA-Other
----------------- --------------------------------------------
016 FNMA-Unemployment
----------------- --------------------------------------------
017 FNMA-Business failure
----------------- --------------------------------------------
019 FNMA-Casualty loss
----------------- --------------------------------------------
022 FNMA-Energy environment costs
----------------- --------------------------------------------
023 FNMA-Servicing problems
----------------- --------------------------------------------
026 FNMA-Payment adjustment
----------------- --------------------------------------------
027 FNMA-Payment dispute
----------------- --------------------------------------------
029 FNMA-Transfer of ownership pending
----------------- --------------------------------------------
030 FNMA-Fraud
----------------- --------------------------------------------
031 FNMA-Unable to contact borrower
----------------- --------------------------------------------
INC FNMA-Incarceration
----------------- --------------------------------------------
EXHIBIT 2: STANDARD FILE CODES - DELINQUENCY REPORTING, CONTINUED
The FNMA DELINQUENT STATUS CODE field should show the Status of Default as
follows:
------------------ -------------------------------------------
STATUS CODE STATUS DESCRIPTION
------------------ -------------------------------------------
09 Forbearance
------------------ -------------------------------------------
17 Pre-foreclosure Sale Closing Plan Accepted
------------------ -------------------------------------------
24 Government Seizure
------------------ -------------------------------------------
26 Refinance
------------------ -------------------------------------------
27 Assumption
------------------ -------------------------------------------
28 Modification
------------------ -------------------------------------------
29 Charge-Off
------------------ -------------------------------------------
30 Third Party Sale
------------------ -------------------------------------------
31 Probate
------------------ -------------------------------------------
32 Military Indulgence
------------------ -------------------------------------------
43 Foreclosure Started
------------------ -------------------------------------------
44 Deed-in-Lieu Started
------------------ -------------------------------------------
49 Assignment Completed
------------------ -------------------------------------------
61 Second Lien Considerations
------------------ -------------------------------------------
62 Veteran's Affairs-No Bid
------------------ -------------------------------------------
63 Veteran's Affairs-Refund
------------------ -------------------------------------------
64 Veteran's Affairs-Buydown
------------------ -------------------------------------------
65 Chapter 7 Bankruptcy
------------------ -------------------------------------------
66 Chapter 11 Bankruptcy
------------------ -------------------------------------------
67 Chapter 13 Bankruptcy
------------------ -------------------------------------------
EXHIBIT 3: CALCULATION OF REALIZED LOSS/GAIN FORM 332- INSTRUCTION SHEET
1. The numbers on the form correspond with the numbers listed below.
Liquidation and Acquisition Expenses:
-------------------------------------
1. The Actual Unpaid Principal Balance of the Mortgage Loan. For
documentation, an Amortization Schedule from date of default
through liquidation breaking out the net interest and
servicing fees advanced is required.
2. The Total Interest Due less the aggregate amount of servicing
fee that would have been earned if all delinquent payments had
been made as agreed. For documentation, an Amortization
Schedule from date of default through liquidation breaking out
the net interest and servicing fees advanced is required.
3. Accrued Servicing Fees based upon the Scheduled Principal
Balance of the Mortgage Loan as calculated on a monthly basis.
For documentation, an Amortization Schedule from date of
default through liquidation breaking out the net interest and
servicing fees advanced is required.
4-12. Complete as applicable. All line entries must be supported by
copies of appropriate statements, vouchers, receipts, bills,
canceled checks, etc., to document the expense. Entries not
properly documented will not be reimbursed to the Servicer.
13. The total of lines 1 through 12.
2. Credits:
14-21. Complete as applicable. All line entries must be supported by
copies of the appropriate claims forms, EOBs, HUD-1 and/or
other proceeds verification, statements, payment checks, etc.
to document the credit. If the Mortgage Loan is subject to a
Bankruptcy Deficiency, the difference between the Unpaid
Principal Balance of the Note prior to the Bankruptcy
Deficiency and the Unpaid Principal Balance as reduced by the
Bankruptcy Deficiency should be input on line 20.
22. The total of lines 14 through 21.
Please note: For HUD/VA loans, use line (15) for Part A/Initial
proceeds and line (16) for Part B/Supplemental proceeds.
3. Total Realized Loss (or Amount of Any Gain)
23. The total derived from subtracting line 22 from 13. If the
amount represents a realized gain, show the amount in
parenthesis ( ).
EXHIBIT 3A: CALCULATION OF REALIZED LOSS/GAIN FORM 332
XXXXX FARGO BANK, N.A.
CALCULATION OF REALIZED LOSS/GAIN
Prepared by: __________________ Date: _______________
Phone: ______________________ Email Address:_____________________
---------------------------- -------------------------- -----------------------------
Servicer Loan No. Servicer Name Servicer Address
---------------------------- -------------------------- -----------------------------
XXXXX FARGO BANK, N.A. Loan No._____________________________
Borrower's Name:________________________________________________________
Property Address:________________________________________________________________
LIQUIDATION AND ACQUISITION EXPENSES:
(1) Actual Unpaid Principal Balance of Mortgage Loan $ ______________ (1)
(2) Interest accrued at Net Rate ________________(2)
(3) Accrued Servicing Fees ________________(3)
(4) Attorney's Fees ________________(4)
(5) Taxes ________________(5)
(6) Property Maintenance ________________(6)
(7) MI/Hazard Insurance Premiums ________________(7)
(8) Utility Expenses ________________(8)
(9) Appraisal/BPO ________________(9)
(10) Property Inspections ________________(10)
(11) FC Costs/Other Legal Expenses ________________(11)
(12) Other (itemize) $________________(12)
Cash for Keys__________________________ ________________
HOA/Condo Fees_______________________ ________________
______________________________________ ________________
______________________________________ ________________
TOTAL EXPENSES $ _______________(13)
CREDITS:
(14) Escrow Balance $ _______________(14)
(15) HIP Refund ________________ (15)
(16) Rental Receipts ________________ (16)
(17) Hazard Loss Proceeds ________________ (17)
(18) Primary Mortgage Insurance Proceeds ________________ (18)
(19) Pool Insurance Proceeds ________________ (19)
(20) Proceeds from Sale of Acquired Property ________________ (20)
(21) Other (itemize) ________________ (21)
_________________________________________ ________________
_________________________________________ ________________
TOTAL CREDITS $________________(22)
TOTAL REALIZED LOSS (OR AMOUNT OF GAIN) $________________(23)
SCHEDULE 4
STANDARD FILE LAYOUT- SCHEDULED/SCHEDULED
EXHIBIT 1: STANDARD FILE LAYOUT - SCHEDULED/SCHEDULED
------------------------------- -------------------------------------------------- ----------- ------------------------------------
COLUMN NAME DESCRIPTION DECIMAL FORMAT COMMENT
------------------------------- -------------------------------------------------- ----------- ------------------------------------
LOAN_NBR Loan Number assigned by investor Text up to 10 digits
------------------------------- -------------------------------------------------- ----------- ------------------------------------
SERVICER LOAN_NBR Servicer Loan Number Text up to 10 digits
------------------------------- -------------------------------------------------- ----------- ------------------------------------
BORROWER_NAME Mortgagor name assigned to Note Max length of 30
------------------------------- -------------------------------------------------- ----------- ------------------------------------
SCHED_PMT_AMT P&I constant 2 No commas(,) or dollar signs ($)
------------------------------- -------------------------------------------------- ----------- ------------------------------------
NOTE_INT_RATE Gross Interest Rate 4 Max length of 6
------------------------------- -------------------------------------------------- ----------- ------------------------------------
NET_RATE Gross Interest Rate less the Service Fee Rate 4 Max length of 6
------------------------------- -------------------------------------------------- ----------- ------------------------------------
SERV_FEE_RATE Service Fee Rate 4 Max length of 6
------------------------------- -------------------------------------------------- ----------- ------------------------------------
NEW_PAY_AMT ARM loan's forecasted P&I constant 2 No commas(,) or dollar signs ($)
------------------------------- -------------------------------------------------- ----------- ------------------------------------
NEW_LOAN_RATE ARM loan's forecasted Gross Interest Rate 4 Max length of 6
------------------------------- -------------------------------------------------- ----------- ------------------------------------
ARM_INDEX_RATE ARM loan's index Rate used 4 Max length of 6
------------------------------- -------------------------------------------------- ----------- ------------------------------------
ACTL_BEG_BAL Beginning Actual Balance 2 No commas(,) or dollar signs ($)
------------------------------- -------------------------------------------------- ----------- ------------------------------------
ACTL_END_BAL Ending Actual Balance 2 No commas(,) or dollar signs ($)
------------------------------- -------------------------------------------------- ----------- ------------------------------------
NEXT_DUE_DATE Borrower's next due date MM/DD/YYYY
------------------------------- -------------------------------------------------- ----------- ------------------------------------
CURT_AMT_1 Curtailment Amount 2 No commas(,) or dollar signs ($)
------------------------------- -------------------------------------------------- ----------- ------------------------------------
CURT_DATE_1 Due date Curtailment was applied to MM/DD/YYYY
------------------------------- -------------------------------------------------- ----------- ------------------------------------
CURT_ADJ_ AMT_1 Curtailment Interest if applicable 2 No commas(,) or dollar signs ($)
------------------------------- -------------------------------------------------- ----------- ------------------------------------
CURT_AMT_2 Curtailment Amount 2 2 No commas(,) or dollar signs ($)
------------------------------- -------------------------------------------------- ----------- ------------------------------------
CURT_DATE_2 Due date Curtailment was applied to MM/DD/YYYY
------------------------------- -------------------------------------------------- ----------- ------------------------------------
CURT_ADJ_ AMT2 Curtailment Interest if applicable 2 No commas(,) or dollar signs ($)
------------------------------- -------------------------------------------------- ----------- ------------------------------------
CURT_AMT_3 Curtailment Amount 3 2 No commas(,) or dollar signs ($)
------------------------------- -------------------------------------------------- ----------- ------------------------------------
CURT_DATE_3 Due date Curtailment was applied to MM/DD/YYYY
------------------------------- -------------------------------------------------- ----------- ------------------------------------
CURT_ADJ_AMT3 Curtailment Interest, if applicable 2 No commas(,) or dollar signs ($)
------------------------------- -------------------------------------------------- ----------- ------------------------------------
SCHED_BEG_BAL Beginning Scheduled Balance 2 No commas(,) or dollar signs ($)
------------------------------- -------------------------------------------------- ----------- ------------------------------------
SCHED_END_BAL Ending Scheduled Balance 2 No commas(,) or dollar signs ($)
------------------------------- -------------------------------------------------- ----------- ------------------------------------
SCHED_PRIN_AMT Scheduled Principal portion of P&I 2 No commas(,) or dollar signs ($)
------------------------------- -------------------------------------------------- ----------- ------------------------------------
Scheduled Net Interest (less Service Fee)
SCHED_NET_INT portion of P&I 2 No commas(,) or dollar signs ($)
------------------------------- -------------------------------------------------- ----------- ------------------------------------
Liquidation Principal Amt to bring balance to
LIQ_AMT zero 2 No commas(,) or dollar signs ($)
------------------------------- -------------------------------------------------- ----------- ------------------------------------
PIF_DATE Liquidation Date MM/DD/YYYY
------------------------------- -------------------------------------------------- ----------- ------------------------------------
ACTION_CODE Either 60 for liquidation or 65 for Repurchase Max length of 2
------------------------------- -------------------------------------------------- ----------- ------------------------------------
PRIN_ADJ_AMT Principal Adjustments made to loan, if applicable 2 No commas(,) or dollar signs ($)
------------------------------- -------------------------------------------------- ----------- ------------------------------------
INT_ADJ_AMT Interest Adjustment made to loan, if applicable 2 No commas(,) or dollar signs ($)
------------------------------- -------------------------------------------------- ----------- ------------------------------------
PREPAYMENT PENALTY AMT Prepayment penalty amount, if applicable 2 No commas(,) or dollar signs ($)
------------------------------- -------------------------------------------------- ----------- ------------------------------------
Soldier and Sailor Adjustment amount, if
SOILDER_SAILOR ADJ AMT applicable 2 No commas(,) or dollar signs ($)
------------------------------- -------------------------------------------------- ----------- ------------------------------------
NON ADV LOAN AMT Non Recoverable Loan Amount, if applicable 2 No commas(,) or dollar signs ($)
------------------------------- -------------------------------------------------- ----------- ------------------------------------
SCHEDULE 5
Schedule of Servicing Advances made prior to the Cut-off Date
