EXHIBIT 99.5
CWHEQ, INC.,
Depositor
COUNTRYWIDE HOME LOANS, INC.,
Seller
PARK GRANADA LLC,
Seller
PARK MONACO INC.,
Seller
PARK SIENNA LLC,
Seller
COUNTRYWIDE HOME LOANS SERVICING LP,
Master Servicer
and
THE BANK OF NEW YORK,
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of August 1, 2006
HOME EQUITY LOAN ASSET BACKED CERTIFICATES, SERIES 2006-S4
Table of Contents
Page
ARTICLE I. DEFINITIONS 5
Section 1.01 Defined Terms...................................................................................5
Section 1.02 Certain Interpretive Provisions................................................................40
ARTICLE II. CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES 41
Section 2.01 Conveyance of Mortgage Loans...................................................................41
Section 2.02 Acceptance by Trustee of the Mortgage Loans....................................................48
Section 2.03 Representations, Warranties and Covenants of the Master Servicer and the Sellers...............54
Section 2.04 Representations and Warranties of the Depositor................................................71
Section 2.05 Delivery of Opinion of Counsel in Connection with Substitutions and Repurchases................72
Section 2.06 Authentication and Delivery of Certificates....................................................73
Section 2.07 Covenants of the Master Servicer...............................................................73
Section 2.08 Sponsor Loss Coverage Obligation...............................................................74
ARTICLE III. ADMINISTRATION AND SERVICING OF MORTGAGE LOANS 74
Section 3.01 Master Servicer to Service Mortgage Loans......................................................74
Section 3.02 Subservicing; Enforcement of the Obligations of Master Servicer................................76
Section 3.03 Rights of the Depositor, the Sellers, the Certificateholders, the NIM Insurer, the
Certificate Insurer and the Trustee in Respect of the Master Servicer..........................77
Section 3.04 Trustee to Act as Master Servicer..............................................................77
Section 3.05 Collection of Mortgage Loan Payments; Certificate Account; Distribution Account;
Pre-Funding Account; Seller Shortfall Interest Requirement; Premium Account....................78
Section 3.06 Collection of Taxes, Assessments and Similar Items; Escrow Accounts............................82
Section 3.07 Access to Certain Documentation and Information Regarding the Mortgage Loans...................82
Section 3.08 Permitted Withdrawals from the Certificate Account, Distribution Account, Carryover
Reserve Fund and the Principal Reserve Fund....................................................83
Section 3.09 [Reserved].....................................................................................86
Section 3.10 Maintenance of Hazard Insurance................................................................86
Section 3.11 Enforcement of Due-On-Sale Clauses; Assumption Agreements......................................87
Section 3.12 Realization Upon Defaulted Mortgage Loans; Determination of Excess Proceeds and
Realized Losses; Repurchase of Certain Mortgage Loans..........................................88
Section 3.13 Trustee to Cooperate; Release of Mortgage Files................................................91
Section 3.14 Documents, Records and Funds in Possession of Master Servicer to be Held for the
Trustee........................................................................................92
Section 3.15 Servicing Compensation.........................................................................93
Section 3.16 Access to Certain Documentation................................................................93
Section 3.17 Annual Statement as to Compliance..............................................................94
Section 3.18 The Corridor Contract..........................................................................94
Section 3.19 [Reserved].....................................................................................95
Section 3.20 Prepayment Charges.............................................................................95
ARTICLE IV. DISTRIBUTIONS AND ADVANCES BY THE MASTER SERVICER 96
Section 4.01 Advances; Remittance Reports...................................................................96
Section 4.02 Reduction of Servicing Compensation in Connection with Prepayment Interest Shortfalls..........98
Section 4.03 [Reserved].....................................................................................98
Section 4.04 Distributions..................................................................................98
Section 4.05 Monthly Statements to Certificateholders......................................................102
Section 4.06 Certificate Insurance Policy; Rights of the Certificate Insurer...............................103
Section 4.07 Termination of the Credit Insurance Policy....................................................107
Section 4.08 Carryover Reserve Fund........................................................................107
ARTICLE V. THE CERTIFICATES 109
Section 5.01 The Certificates..............................................................................109
Section 5.02 Certificate Register; Registration of Transfer and Exchange of Certificates...................110
Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates.............................................114
Section 5.04 Persons Deemed Owners.........................................................................114
Section 5.05 Access to List of Certificateholders' Names and Addresses.....................................114
Section 5.06 Book-Entry Certificates.......................................................................115
Section 5.07 Notices to Depository.........................................................................116
Section 5.08 Definitive Certificates.......................................................................116
Section 5.09 Maintenance of Office or Agency...............................................................116
ARTICLE VI. THE DEPOSITOR, THE MASTER SERVICER AND THE SELLERS 117
Section 6.01 Respective Liabilities of the Depositor, the Master Servicer and the Sellers..................117
Section 6.02 Merger or Consolidation of the Depositor, the Master Servicer or the Sellers..................117
Section 6.03 Limitation on Liability of the Depositor, the Sellers, the Master Servicer, the NIM
Insurer and Others............................................................................117
Section 6.04 Limitation on Resignation of Master Servicer..................................................118
Section 6.05 Errors and Omissions Insurance; Fidelity Bonds................................................119
ARTICLE VII. DEFAULT; TERMINATION OF MASTER SERVICER 119
Section 7.01 Events of Default.............................................................................119
Section 7.02 Trustee to Act; Appointment of Successor......................................................121
Section 7.03 Notification to Certificateholders............................................................123
ARTICLE VIII. CONCERNING THE TRUSTEE 123
Section 8.01 Duties of Trustee.............................................................................123
Section 8.02 Certain Matters Affecting the Trustee.........................................................125
Section 8.03 Trustee Not Liable for Mortgage Loans.........................................................126
Section 8.04 Trustee May Own Certificates..................................................................126
Section 8.05 Master Servicer to Pay Trustee's Fees and Expenses............................................126
Section 8.06 Eligibility Requirements for Trustee..........................................................127
Section 8.07 Resignation and Removal of Trustee............................................................127
Section 8.08 Successor Trustee.............................................................................128
Section 8.09 Merger or Consolidation of Trustee............................................................129
Section 8.10 Appointment of Co-Trustee or Separate Trustee.................................................129
Section 8.11 Tax Matters...................................................................................131
Section 8.12 Access to Records of the Trustee..............................................................133
Section 8.13 Suits for Enforcement.........................................................................133
Section 8.14 Monitoring of Significance Percentage.........................................................134
ARTICLE IX. TERMINATION 134
Section 9.01 Termination upon Liquidation or Repurchase of all Mortgage Loans..............................134
Section 9.02 Final Distribution on the Certificates........................................................135
Section 9.03 Additional Termination Requirements...........................................................137
ARTICLE X. MISCELLANEOUS PROVISIONS 138
Section 10.01 Amendment.....................................................................................138
Section 10.02 Recordation of Agreement; Counterparts........................................................140
Section 10.03 Governing Law.................................................................................140
Section 10.04 Intention of Parties..........................................................................140
Section 10.05 Notices.......................................................................................142
Section 10.06 Severability of Provisions....................................................................143
Section 10.07 Assignment....................................................................................143
Section 10.08 Limitation on Rights of Certificateholders....................................................143
Section 10.09 Inspection and Audit Rights...................................................................144
Section 10.10 Certificates Nonassessable and Fully Paid.....................................................144
Section 10.11 Rights of NIM Insurer.........................................................................144
ARTICLE XI. EXCHANGE ACT REPORTING 146
Section 11.01 Filing Obligations............................................................................146
Section 11.02 Form 10-D Filings.............................................................................146
Section 11.03 Form 8-K Filings..............................................................................147
Section 11.04 Form 10-K Filings.............................................................................147
Section 11.05 Xxxxxxxx-Xxxxx Certification..................................................................148
Section 11.06 Form 15 Filing................................................................................149
Section 11.07 Report on Assessment of Compliance and Attestation............................................149
Section 11.08 Use of Subservicers and Subcontractors........................................................150
Section 11.09 Amendments....................................................................................151
Section 11.10 Reconciliation of Accounts....................................................................151
Exhibits
EXHIBIT A Forms of Certificates
EXHIBIT A-1 Form of Class A-1 Certificate
EXHIBIT A-2 Form of Class A-2 Certificate
EXHIBIT A-3 Form of Class A-3 Certificate
EXHIBIT A-4 Form of Class A-4 Certificate
EXHIBIT A-5 Form of Class A-5 Certificate
EXHIBIT A-6 Form of Class A-6 Certificate
EXHIBIT B Form of Class P Certificate EXHIBIT C Form of Class C Certificate
EXHIBIT D Form of Class A-R Certificate
EXHIBIT E Form of Tax Matters Person Certificate
EXHIBIT F Mortgage Loan Schedule
EXHIBIT F-1 List of Mortgage Loans
EXHIBIT F-2 Mortgage Loans for which All or a Portion of a
Related Mortgage File is not Delivered to the
Trustee on or prior to the Closing Date
EXHIBIT G Forms of Certification of Trustee
EXHIBIT G-1 Form of Initial Certification of Trustee (Initial Mortgage Loans)
EXHIBIT G-2 Form of Interim Certification of Trustee
EXHIBIT G-3 Form of Delay Delivery Certification
EXHIBIT G-4 Form of Initial Certification of Trustee (Subsequent Mortgage Loans)
EXHIBIT H Form of Final Certification of Trustee
EXHIBIT I Transfer Affidavit for Class A-R Certificates
EXHIBIT J-1 Form of Transferor Certificate for Class A-R Certificates
EXHIBIT J-2 Form of Transferor Certificate for Private Certificates
EXHIBIT K Form of Investment Letter (Non-Rule 144A)
EXHIBIT L Form of Rule 144A Letter
EXHIBIT M Form of Request for Document Release
EXHIBIT N Form of Request for File Release
EXHIBIT O Copy of Depository Agreement
EXHIBIT P Form of Subsequent Transfer Agreement
EXHIBIT Q Form of Class A-1 Corridor Contract
EXHIBIT R Form of Certificate Insurance Policy
EXHIBIT S-1 Form of Corridor Contract Assignment Agreement
EXHIBIT S-2 Form of Corridor Contract Administration Agreement
EXHIBIT T Officer's Certificate with respect to Prepayments
EXHIBIT U [Reserved]
EXHIBIT V-1 [Reserved]
EXHIBIT V-2 [Reserved]
EXHIBIT V-3 [Reserved]
EXHIBIT W Form of Monthly Statement
EXHIBIT X-1 Form of Performance Certification (Subservicer)
EXHIBIT X-2 Form of Performance Certification (Trustee)
EXHIBIT Y Form of Servicing Criteria to be Addressed in Assessment of
Compliance Statement
EXHIBIT Z List of Item 1119 Parties
EXHIBIT AA Form of Xxxxxxxx-Xxxxx Certification (Replacement Master Servicer)
SCHEDULE I Prepayment Charge Schedule and Prepayment Charge Summary
SCHEDULE II Collateral Schedule
POOLING AND SERVICING AGREEMENT, dated as of August 1, 2006, by
and among CWHEQ, INC., a Delaware corporation, as depositor (the "Depositor"),
COUNTRYWIDE HOME LOANS, INC., a New York corporation, as seller ("CHL" or a
"Seller"), PARK GRANADA LLC, a Delaware corporation, as a seller ("Park
Granada" or a "Seller"), PARK MONACO INC., a Delaware corporation, as a seller
("Park Monaco" or a "Seller"), PARK SIENNA LLC, a Delaware limited liability
company, as a seller ("Park Sienna" or a "Seller", and together with CHL, Park
Granada and Park Monaco, the "Sellers"), COUNTRYWIDE HOME LOANS SERVICING LP,
a Texas limited partnership, as master servicer (the "Master Servicer"), and
THE BANK OF NEW YORK, a New York banking corporation, as trustee (the
"Trustee").
PRELIMINARY STATEMENT
The Depositor is the owner of the Trust Fund that is hereby conveyed to
the Trustee in return for the Certificates. As provided herein, the Trustee
will elect that the Trust Fund (excluding the Carryover Reserve Fund, the
assets held in the Pre-Funding Account and the Trust Fund's rights with
respect to payments received under the Corridor Contract) be treated for
federal income tax purposes as two real estate mortgage investment conduits
(each a "REMIC" or, in the alternative, the "Subsidiary REMIC" and the "Master
REMIC"). The Subsidiary REMIC will hold as assets all property of the Trust,
other than the Carryover Reserve Fund, the Pre-Funding Account and the Trust
Fund's rights with respect to payments received under the Corridor Contract,
and will be evidenced by (i) the Subsidiary REMIC Regular Interests, which
will be uncertificated and will represent the "REMIC regular interests" in the
Subsidiary REMIC, and (ii) the Class S-A-R Interest, which will represent the
"REMIC residual interest" in the Subsidiary REMIC. The Master REMIC will hold
as assets the Subsidiary REMIC Regular Interests and will be evidenced by the
Certificates, each of which (other than the Class A-R Certificate) will
represent ownership of one or more REMIC regular interests in the Master
REMIC. The Class A-R Certificate will represent ownership of the sole Class of
the REMIC residual interest in each REMIC created hereunder. The latest
possible maturity date, for federal income tax purposes, of all REMIC regular
interests created herein shall be the Latest Possible Maturity Date.
The Subsidiary REMIC
The Subsidiary REMIC Regular Interests will have the principal balances,
pass-through rates and corresponding Classes of Certificates as set forth in
the following table:
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Corresponding
Subsidiary REMIC Initial Principal Pass-Through Class of
Regular Interests Balance Rate Certificates
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SR-A-1................ (1) (2) A-1
SR-A-2................ (1) (2) A-2
SR-A-3................ (1) (2) A-3
SR-A-4................ (1) (2) A-4
SR-A-5................ (1) (2) A-5
SR-A-6................ (1) (2) A-6
SR-C.................. (3) (2) C
SR-$100............... $100.00 (4) N/A
SR-P.................. $100.00 (4) P
SR-A-R................ (5) (5) N/A
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(1) The Class SR-A-1 Interest, Class SR-A-2 Interest, Class SR-A-3 Interest,
Class SR-A-4 Interest, Class SR-A-5 Interest and Class SR-A-6 Interest
(the "Accretion Directed Classes") will each have a principal balance
that is equal to 100% of its Corresponding Class of Certificates and on
each Distribution Date, interest, principal payments and Realized Losses
shall be allocated so as to cause each of the Accretion Directed Classes
to continue to equal 100% of its Corresponding Class of Certificates.
(2) The interest rate with respect to any Distribution Date (and the related
Interest Accrual Period) for this Subsidiary REMIC Interest is a per
annum rate equal to the weighted average Adjusted Net Mortgage Rate of
the Mortgage Loans.
(3) The SR-C Interest shall have a principal balance equal to the initial
Mortgage Loan overcollateralization. The initial Mortgage Loan
overcollateralization is the excess of Cut-off Date Principal Balance of
the Mortgage Loans over the aggregate Certificate Principal Balance of
the Class A Certificates.
(4) The SR-$100 Interest and the Class SR-P Interest do not pay any
interest. All Prepayment Charges are allocated to the Class SR-P
Interest.
(5) The Class SR-A-R Interest is the sole class of residual interest in the
Subsidiary REMIC. It has no principal balance and pays no principal or
interest.
On each Distribution Date, the Interest Funds, the Principal Distribution
Amount and the Prepayment Charges payable with respect to the Mortgage Loans
will be payable with respect to the Subsidiary REMIC Regular Interests in the
following manner:
(1) Interest. Interest is to be distributed with respect to each
Subsidiary REMIC Interest at the rate or according to the formulas
described above.
(2) Prepayment Charges. All Prepayment Charges are allocated to the
Class SR-P Interest.
(3) Principal. Principal shall be allocated among the Subsidiary REMIC
Interests according to the formulas described above.
The Master REMIC
The following table specifies the class designation, pass through rate,
and principal amount for each class of Master REMIC Interest:
-------------------------------------------------------------------------------
Class Original Certificate Pass-Through
Principal Balance Rate
-------------------------------------------------------------------------------
A-1...................... $ 437,259,000 (1)
A-2...................... $ 98,131,000 (2)
A-3...................... $ 200,037,000 (2)
A-4...................... $ 85,036,000 (2)
A-5...................... $ 79,537,000 (2)
A-6...................... $ 100,000,000 (2)
C........................ (3) (4)
A-R...................... $ 100 (5)
P........................ $ 100 (6)
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(1) The Pass-Through Rate for the Class A-1 Certificates for the Accrual
Period for any Distribution Date will be equal to the lesser of (a) One-Month
LIBOR plus the applicable Pass-Through Margin, and (b) the Net Rate Cap.
(2) The Pass-Through Rates for the Class A-2, Class A-3, Class A-4,
Class A-5 and Class A-6 Certificates for the Accrual Period for any
Distribution Date will be equal to the lesser of (a) the per annum fixed rate
for the Class set forth in the table below and (b) the Net Rate Cap.
Class of Certificates Pass-Through Rate
--------------------- -----------------
Class A-2........................... 5.661%
Class A-3........................... 5.804%
Class A-4........................... 5.932%
Class A-5........................... 6.236%
Class A-6........................... 5.834%
(3) For federal income tax purposes, the Class C Certificates shall have
a Certificate Principal Balance equal to the Overcollateralized Amount.
(4) For each Accrual Period the Class C Certificates are entitled to an
amount (the "Class C Distributable Amount") equal to the sum of a (i)
specified portion of the interest on the Subsidiary REMIC Interests (other
than the SR-P Interest, the SR-$100 Interest and the SR-C Interest) equal to
the excess of the interest rate in respect of Subsidiary REMIC Interests over
the Pass-Through Rate of the Corresponding Class of Certificates of such
Subsidiary REMIC Interest and (ii) all accruals of interest and collections of
scheduled principal and principal payments allocated to the SR-C Interest. The
Pass-Through Rate of the Class C Certificates shall be a rate sufficient to
entitle it to an amount equal to all interest accrued on the Mortgage Loans
less the interest accrued on the other interests issued by the Master REMIC.
The Class C Distributable Amount for any Distribution Date is payable from
current interest on the Mortgage Loans to the extent not used to increase
overcollateralization and any related amount of overcollateralization released
for that Distribution Date.
(5) The Class A-R Certificates represent the sole class of residual
interest in each REMIC created hereunder. The Class A-R Certificates are not
entitled to distributions of interest. On the first Distribution Date, the
Class A-R Certificates are entitled to receive $100.00 from the Principal
Reserve Fund.
(6) For any Distribution Date, the Class P Certificates are entitled to
all Prepayment Charges collected during the related Prepayment Period and all
the Master Servicer Prepayment Charge Amount. On the Class P Principal
Distribution Date, the Class P Certificates are entitled to receive $100.00
from the Principal Reserve Fund.
The foregoing REMIC structure is intended to cause all of the cash from
the Mortgage Loans to flow through to the Master REMIC as cash flow on a REMIC
regular interest, without creating any shortfall--actual or potential (other
than for credit losses) to any REMIC regular interest.
For any purpose for which the interest rate in respect of any Subsidiary
REMIC regular interest created hereunder is calculated, the interest rate on
the Mortgage Loans shall be appropriately adjusted to account for the
difference between the monthly day count convention of the Mortgage Loans and
the monthly day count convention of the regular interests issued by each of
the REMICs. For purposes of calculating the interest rates for each of the
interests issued by REMIC, such rates shall be adjusted to equal a monthly day
count convention based on a 30 day month for each Interest Period and a
360-day year so that the Mortgage Loans and all regular interests will be
using the same monthly day count convention.
No monies will be remitted by CHL to the Trustee for deposit in the
Pre-Funding Account. Consequently, all references to or provisions herein
regarding the Funding Period, Pre-Funding Amount, Pre-Funding Account, Seller
Shortfall Interest Requirement, Subsequent Certificate Account Deposit,
Subsequent Cut-off Date, Subsequent Mortgage Loan, Subsequent Transfer
Agreement, Subsequent Transfer Date, Subsequent Transfer Date Purchase Amount
and Subsequent Transfer Date Transfer Amount are inapplicable.
ARTICLE I.
DEFINITIONS
-----------
Section 1.01 Defined Terms.
-------------
Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the following
meanings:
Account: Any Escrow Account, the Certificate Account, the
Distribution Account or any other account related to the Trust Fund or the
Mortgage Loans.
Accrual Period: With respect to any Distribution Date and
each Class of Adjustable Rate Certificates, the period commencing on the
immediately preceding Distribution Date (or, in the case of the first
Distribution Date, the Closing Date) and ending on the day immediately
preceding such Distribution Date. With respect to any Distribution Date and
each Class of Fixed Rate Certificates and the Class C Certificates, the
calendar month preceding the month in which such Distribution Date occurs. All
calculations of interest on the Adjustable Rate Certificates will be made on
the basis of the actual number of days elapsed in the related Accrual Period
and on a 360-day year. All calculations of interest on each Class of Fixed
Rate Certificates and the Class C Certificates will be made on the basis of a
360-day year consisting of twelve 30-day months.
Adjustable Rate Certificates: The Class A-1 Certificates.
Adjusted Net Mortgage Rate: As to each Mortgage Loan, the
Mortgage Rate less the related Expense Fee Rate.
Advance: The aggregate of the advances required to be made by
the Master Servicer with respect to any Distribution Date pursuant to Section
4.01, the amount of any such advances being equal to the aggregate of payments
of principal of, and interest on the Stated Principal Balance of, the Mortgage
Loans (net of the Servicing Fees) that were due on the related Due Date and
not received by the Master Servicer as of the close of business on the related
Determination Date including an amount equivalent to interest on the Stated
Principal Balance of each Mortgage Loan as to which the related Mortgaged
Property is an REO Property or as to which the related Mortgaged Property has
been liquidated but such Mortgage Loan has not yet become a Liquidated
Mortgage Loan; provided, however, that the net monthly rental income (if any)
from such REO Property deposited in the Certificate Account for such
Distribution Date pursuant to Section 3.12 may be used to offset such Advance
for the related REO Property; provided, further, that for the avoidance of
doubt, no Advances shall be required to be made in respect of any Liquidated
Mortgage Loan.
Agreement: This Pooling and Servicing Agreement and any and
all amendments or supplements hereto made in accordance with the terms herein.
Ambac: Ambac Assurance Corporation, organized and created
under the laws of the State of Wisconsin, or any successor thereto.
Amount Held for Future Distribution: As to any Distribution
Date, the aggregate amount held in the Certificate Account at the close of
business on the immediately preceding Determination Date on account of (i) all
Scheduled Payments or portions thereof received in respect of the Mortgage
Loans due after the related Due Date, (ii) Principal Prepayments received in
respect of such Mortgage Loans after the last day of the related Prepayment
Period and (iii) Liquidation Proceeds and Subsequent Recoveries received in
respect of such Mortgage Loans after the last day of the related Due Period.
Applied Realized Loss Amount: With respect to any
Distribution Date, the amount, if any, by which, the aggregate Certificate
Principal Balance of the Certificates (after all distributions of principal on
such Distribution Date) exceeds the sum of (x) the Stated Principal Balance of
the Mortgage Loans for such Distribution Date and (y) the amount on deposit in
the Pre-Funding Account.
Appraised Value: The appraised value of the Mortgaged
Property based upon the appraisal made for the originator of the related
Mortgage Loan by an independent fee appraiser at the time of the origination
of the related Mortgage Loan, or the sales price of the Mortgaged Property at
the time of such origination, whichever is less, or with respect to any
Mortgage Loan originated in connection with a refinancing, the appraised value
of the Mortgaged Property based upon the appraisal made at the time of such
refinancing.
Bankruptcy Code: Title 11 of the United States Code.
Book-Entry Certificates: Any of the Certificates that shall
be registered in the name of the Depository or its nominee, the ownership of
which is reflected on the books of the Depository or on the books of a person
maintaining an account with the Depository (directly, as a "Depository
Participant", or indirectly, as an indirect participant in accordance with the
rules of the Depository and as described in Section 5.06). As of the Closing
Date, each Class of Interest-Bearing Certificates constitutes a Class of
Book-Entry Certificates.
Business Day: Any day other than (i) a Saturday or a Sunday
or (ii) a day on which the Certificate Insurer or banking institutions in the
State of New York or California or the city in which the Corporate Trust
Office of the Trustee is located are authorized or obligated by law or
executive order to be closed.
Carryover Reserve Fund: The separate Eligible Account
created and initially maintained by the Trustee pursuant to Section 4.07 in
the name of the Trustee for the benefit of the Certificateholders and
designated "The Bank of New York in trust for registered Holders of CWHEQ,
Inc., Home Equity Loan Asset Backed Certificates, Series 2006-S4". Funds in
the Carryover Reserve Fund shall be held in trust for the Certificateholders
for the uses and purposes set forth in this Agreement.
Certificate: Any one of the certificates of any Class
executed and authenticated by the Trustee in substantially the forms attached
hereto as Exhibits A-1 through A-6, Exhibit B, Exhibit C and Exhibit D.
Certificate Account: The separate Eligible Account created
and initially maintained by the Master Servicer pursuant to Section 3.05(b)
with a depository institution in the
name of the Master Servicer for the benefit of the Trustee on behalf of the
Certificateholders and the Certificate Insurer and designated "Countrywide
Home Loans Servicing LP in trust for registered Holders of CWHEQ, Inc., Home
Equity Loan Asset Backed Certificates, Series 2006-S4". Funds in the
Certificate Account shall be held in trust for the Certificateholders for the
uses and purposes set forth in this Agreement.
Certificate Insurance Policy: The irrevocable Certificate
Guaranty Insurance Policy, No. AB1023BE, including any endorsements thereto,
issued by Ambac with respect to the Class A Certificates, in the form attached
hereto as Exhibit R.
Certificate Insurance Policy Premium Rate: 0.130% per annum.
Certificate Insurance Premium: For any Distribution Date, an
amount equal to the product of (x) the Certificate Insurance Policy Premium
Rate and (y) the aggregate Certificate Principal Balance of the Class A
Certificates on each Distribution Date (after giving effect to any
distributions of principal to be made on such Distribution Date). The
Certificate Insurance Premium shall be computed on the basis of a 360-day year
consisting of twelve 30-day months.
Certificate Insurance Reimbursement Amount: As to any
Distribution Date, (i) all Insured Payments paid by the Certificate Insurer
for which the Certificate Insurer has not been reimbursed prior to such
Distribution Date pursuant to Section 4.04 hereof, plus (ii) interest accrued
on such Insured Payments not previously repaid, calculated at the Late Payment
Rate from the date the Insured Payments were made, plus (iii) any other
amounts then due and owing to the Certificate Insurer pursuant to the
Insurance and Indemnity Agreement plus interest accrued on such amount not
previously reimbursed calculated at the Late Payment Rate.
Certificate Insurer: Ambac in its capacity as insurer under
the Certificate Insurance Policy, and any permitted successor or assign.
Certificate Insurer Contact Person: The officer designated
by the Master Servicer to provide information to the Certificate Insurer
pursuant to Section 4.06(i).
Certificate Insurer Default: As defined in Section 4.06(l).
Certificate Owner: With respect to a Book-Entry Certificate,
the person that is the beneficial owner of such Book-Entry Certificate.
Certificate Principal Balance: As to any Certificate (other
than the Class C Certificates) and as of any Distribution Date, the Initial
Certificate Principal Balance of such Certificate (A) less the sum of (i) all
amounts distributed with respect to such Certificate in reduction of the
Certificate Principal Balance thereof on previous Distribution Dates pursuant
to Section 4.04(b), (ii) with respect to the Class A Certificates only,
payments under the Certificate Insurance Policy relating to principal (except
that any payment under the Certificate Insurance Policy with respect to an
Applied Realized Loss Amount allocated to the Class A Certificates shall not
result in a further reduction of the Certificate Principal Balance of the
Class A Certificates) and (iii) any Applied Realized Loss Amounts allocated to
such Certificate on previous Distribution Dates pursuant to Section 4.04(g),
and (B) increased by any Subsequent Recoveries allocated to such Certificate
pursuant to Section 4.04(h) on such Distribution Date.
References herein to the Certificate Principal Balance of a Class of
Certificates shall mean the Certificate Principal Balances of all Certificates
in such Class. The Class C Certificates do not have a Certificate Principal
Balance. With respect to any Certificate (other than the Class C Certificates)
of a Class and any Distribution Date, the portion of the Certificate Principal
Balance of such Class represented by such Certificate equal to the product of
the Percentage Interest evidenced by such Certificate and the Certificate
Principal Balance of such Class. Exclusively for the purpose of determining
any subrogation rights of the Certificate Insurer arising under Section 4.06
hereof, the "Certificate Principal Balance" of the Class A Certificates shall
not be reduced by the amount of any payments made by the Certificate Insurer
in respect of principal on such Certificates under the Certificate Insurance
Policy, except to the extent such payment shall have been reimbursed to the
Certificate Insurer pursuant to the provisions of this Agreement.
Certificate Register: The register maintained pursuant to
Section 5.02 hereof.
Certificateholder or Holder: The person in whose name a
Certificate is registered in the Certificate Register (initially, Cede & Co.,
as nominee for the Depository, in the case of any Class of Book-Entry
Certificates), except that solely for the purpose of giving any consent
pursuant to this Agreement, any Certificate registered in the name of the
Depositor or any affiliate of the Depositor shall be deemed not to be
Outstanding and the Voting Interest evidenced thereby shall not be taken into
account in determining whether the requisite amount of Voting Interests
necessary to effect such consent has been obtained; provided that if any such
Person (including the Depositor) owns 100% of the Voting Interests evidenced
by a Class of Certificates, such Certificates shall be deemed to be
Outstanding for purposes of any provision hereof (other than the second
sentence of Section 10.01 hereof) that requires the consent of the Holders of
Certificates of a particular Class as a condition to the taking of any action
hereunder. The Trustee is entitled to rely conclusively on a certification of
the Depositor or any affiliate of the Depositor in determining which
Certificates are registered in the name of an affiliate of the Depositor.
Certification Party: As defined in Section 11.05.
Certifying Person: As defined in Section 11.05.
CHL: Countrywide Home Loans, Inc., a New York corporation,
and its successors and assigns.
CHL Mortgage Loans: The Mortgage Loans identified as such on
the Mortgage Loan Schedule for which CHL is the applicable Seller.
Class: All Certificates bearing the same Class designation
as set forth in Section 5.01 hereof.
Class A Certificates: Collectively, the Class A-1, Class
A-2, Class A-3, Class A-4, Class A-5 and Class A-6 Certificates.
Class A Available Funds: With respect to any Class of Class
A Certificates and any Distribution Date, funds allocated from amounts
available pursuant to this Agreement to
make distributions on that Class of Class A Certificates on such Distribution
Date, other than any Insured Payments.
Class A Insurance Payments Account: The separate Eligible
Account created and maintained by the Trustee pursuant to Section 4.06(c) in
the name of the Trustee for the benefit of the Class A Certificateholders and
designated "The Bank of New York in trust for registered holders of CWHEQ,
Inc., Home Equity Loan Asset Backed Certificates, Series 2006-S4, Class A
Certificates." Funds in the Class A Insurance Payments Account shall be held
in trust for the Class A Certificateholders for the uses and purposes set
forth in this Agreement.
Class A Principal Distribution Amount: With respect to any
Distribution Date, the excess of (x) the aggregate Certificate Principal
Balance of the Class A Certificates immediately prior to that Distribution
Date, over (y) the aggregate Stated Principal Balance of the Mortgage Loans
for that Distribution Date minus the Overcollateralization Target Amount for
such Distribution Date.
Class A-1 Certificate: Any Certificate designated as a
"Class A-1 Certificate" on the face thereof, in the form of Exhibit A-1
hereto, representing the right to distributions as set forth herein.
Class A-2 Certificate: Any Certificate designated as a
"Class A-2 Certificate" on the face thereof, in the form of Exhibit A-2
hereto, representing the right to distributions as set forth herein.
Class A-3 Certificate: Any Certificate designated as a
"Class A-3 Certificate" on the face thereof, in the form of Exhibit A-3
hereto, representing the right to distributions as set forth herein.
Class A-4 Certificate: Any Certificate designated as a
"Class A-4 Certificate" on the face thereof, in the form of Exhibit A-4
hereto, representing the right to distributions as set forth herein.
Class A-5 Certificate: Any Certificate designated as a
"Class A-5 Certificate" on the face thereof, in the form of Exhibit A-5
hereto, representing the right to distributions as set forth herein.
Class A-6 Certificate: Any Certificate designated as a
"Class A-6 Certificate" on the face thereof, in the form of Exhibit A-6
hereto, representing the right to distributions as set forth herein.
Class A-6 Portion: With respect to any Distribution Date, a
percentage, expressed as a fraction, the numerator of which is the Certificate
Principal Balance of the Class A-6 Certificates immediately prior to such
Distribution Date and the denominator of which is the aggregate Certificate
Principal Balance of all Classes of the Class A Certificates immediately prior
to such Distribution Date.
Class A-R Certificate: Any Certificate designated as a
"Class A-R Certificate" on the face thereof, in the form of Exhibit D hereto
or, in the case of the Tax Matters Person
Certificate, Exhibit E hereto, in either case representing the right to
distributions as set forth herein.
Class C Certificate: Any Certificate designated as a "Class
C Certificate" on the face thereof, in the form of Exhibit C hereto,
representing the right to distributions as set forth herein.
Class C Distributable Amount: As defined in the Preliminary
Statement.
Class P Certificate: Any Certificate designated as a "Class
P Certificate" on the face thereof, in the form of Exhibit B hereto,
representing the right to distributions as set forth herein.
Class P Principal Distribution Date: The first Distribution
Date that occurs after the end of the latest Prepayment Charge Period for all
Mortgage Loans that have a Prepayment Charge Period.
Closing Date: September 8, 2006.
Code: The Internal Revenue Code of 1986, including any
successor or amendatory provisions.
Collateral Schedule: Schedule II hereto.
Combined Loan-to-Value Ratio: The fraction, expressed as a
percentage, the numerator of which is the sum of (x) original principal
balance of the related Mortgage Loan and (y) the outstanding principal balance
of any senior mortgage loans at the date of origination of the related
Mortgage Loan and the denominator of which is the Appraised Value of the
related Mortgaged Property.
Commission: The U.S. Securities and Exchange Commission.
Compensating Interest: With respect to the Mortgage Loans
and any Distribution Date, an amount equal to the lesser of (x) one-half of
the Servicing Fee for the related Due Period and (y) the aggregate Prepayment
Interest Shortfalls for such Distribution Date.
Confirmation: The confirmation, reference number
2000005079722 / 200005079723, with a trade date of August 28, 2006 evidencing
a transaction between the Corridor Contract Counterparty and CHL relating to
the Corridor Contract.
Corporate Trust Office: The designated office of the Trustee
in the State of New York where at any particular time its corporate trust
business with respect to this Agreement shall be administered, which office at
the date of the execution of this Agreement is located at 000 Xxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000 (Attention: Corporate Trust MBS Administration),
telephone: (000) 000-0000, facsimile: (000) 000-0000.
Corridor Contract: With respect to the Class A-1
Certificates, the transaction evidenced by the Confirmation (as assigned to
the Corridor Contract Administrator pursuant to the Corridor Contract
Assignment Agreement), a form of which is attached hereto as Exhibit Q.
Corridor Contract Administration Agreement: The corridor
contract administration agreement dated as of the Closing Date among CHL, the
Trustee and the Corridor Contract Administrator, a form of which is attached
hereto as Exhibit S-2.
Corridor Contract Administrator: The Bank of New York, in
its capacity as corridor contract administrator under the Corridor Contract
Administration Agreement.
Corridor Contract Assignment Agreement: The Assignment
Agreement dated as of the Closing Date among CHL, the Corridor Contract
Administrator and the Corridor Contract Counterparty, a form of which is
attached hereto as Exhibit S-1.
Corridor Contract Counterparty: JPMorgan Chase Bank, N.A.
Corridor Contract Termination Date: The Distribution Date
in August 2008.
Covered Certificates: The Class A-1 Certificates.
Covered Loan: A Mortgage Loan listed on the Mortgage
Loan Schedule as being covered by the
Credit Insurance Policy.
Credit Bureau Risk Score: A statistical credit score
obtained by CHL in connection with the
origination of a Mortgage Loan.
Credit Insurance Policy: The Credit Insurance Policy
issued by the Credit Insurer with respect to certain Mortgage Loans identified
in the Mortgage Loan Schedule.
Credit Insurance Premium: For any Distribution Date, the fee
payable to the Credit Insurer equal to the product of (x) the Credit Insurance
Premium Rate and (y) the aggregate Stated Principal Balance of the Covered
Loans for the Distribution Date, computed on the basis of a 360-day year
consisting of twelve 30-day months.
Credit Insurance Premium Rate: With respect to a Covered
Loan and any Distribution Date, 1.0442% per annum.
Credit Insurer: Old Republic Insurance Company, or
any replacement Credit Insurer, as applicable.
Current Interest: With respect to each Class of
Interest-Bearing Certificates and each Distribution Date, the interest accrued
at the applicable Pass-Through Rate for the applicable Accrual Period on the
Certificate Principal Balance or Notional Amount of such Class immediately
prior to such Distribution Date.
Cut-off Date: When used with respect to any Mortgage Loan
the "Cut-off Date" shall mean the Initial Cut-off Date or the related
Subsequent Cut-off Date, as the case may be.
Cut-off Date Principal Balance: As to any Mortgage Loan, the
unpaid principal balance thereof as of the close of business on the Cut-off
Date after application of all payments of principal due on or prior to the
Cut-off Date, whether or not received, and all Principal Prepayments received
on or prior to the Cut-off Date, but without giving effect to any installments
of principal received in respect of Due Dates after the Cut-off Date.
Debt Service Reduction: With respect to any Mortgage Loan, a
reduction by a court of competent jurisdiction in a proceeding under the
Bankruptcy Code in the Scheduled Payment for such Mortgage Loan that became
final and non-appealable, except such a reduction resulting from a Deficient
Valuation or any other reduction that results in a permanent forgiveness of
principal.
Deficiency Amount: With respect to:
(a) each Distribution Date prior to the Final Scheduled
Distribution Date, an amount equal to the sum of (i) the excess, if any, of
(a) the aggregate amount of Current Interest on the Class A Certificates net
of any interest shortfalls resulting from Prepayment Interest Shortfalls and
any interest shortfalls resulting from the application of the Relief Act, or
similar state or local laws, over (b) the Class A Available Funds for such
Distribution Date, and (ii) the excess, if any, of (A) the aggregate
Certificate Principal Balance of the Class A Certificates over (B) the sum of
the aggregate Stated Principal Balance of the Mortgage Loans and any amount on
deposit in the Pre-Funding Account, in each case taking into account all
distributions to be made on such Distribution Date;
(b) the Final Scheduled Distribution Date for the Class A
Certificates, an amount equal to the sum of (i) the excess, if any, of (a) the
aggregate amount of Current Interest on the Class A Certificates net of any
interest shortfalls resulting from Prepayment Interest Shortfalls and any
interest shortfalls resulting from the application of the Relief Act, or
similar state or local laws over (b) the Class A Available Funds for such
Distribution Date and (ii) the aggregate Certificate Principal Balance of the
Class A Certificates on such Final Scheduled Distribution Date (after taking
into account all distributions of Class A Available Funds to be made to the
Class A Certificates on such Distribution Date); and
(c) any date on which the acceleration of the Class A
Certificates has been directed or consented to by the Certificate Insurer, the
excess of (i) the amount required to pay the aggregate outstanding Certificate
Principal Balance of the Class A Certificates in full, together with accrued
and unpaid interest thereon through the date of payment of the Class A
Certificates over (ii) the Class A Available Funds for that Distribution Date.
Deficient Valuation: With respect to any Mortgage Loan, a
valuation by a court of competent jurisdiction of the Mortgaged Property in an
amount less than the then outstanding indebtedness under such Mortgage Loan,
or any reduction in the amount of principal to be paid in connection with any
Scheduled Payment that results in a permanent forgiveness of principal, which
valuation or reduction results from an order of such court that is final and
non-appealable in a proceeding under the Bankruptcy Code.
Definitive Certificates: As defined in Section 5.06.
Delay Delivery Mortgage Loans: (i) The Initial Mortgage
Loans identified on the schedule of Mortgage Loans hereto set forth on Exhibit
F-2 hereof for which all or a portion of a related Mortgage File is not
delivered to the Trustee on or prior to the Closing Date, and (ii) the
Subsequent Mortgage Loans identified on the schedule of Subsequent Mortgage
Loans set forth in Annex A to each related Subsequent Transfer Agreement for
which all or a portion of the related Mortgage File is not delivered to the
Trustee on or prior to the related Subsequent Transfer Date. The Depositor
shall deliver (or cause delivery of) the Mortgage Files to the Trustee: (A)
with respect to at least 50% of the Initial Mortgage Loans, not later than the
Closing Date and with respect to at least 10% of the Subsequent Mortgage Loans
conveyed on a Subsequent Transfer Date, not later than such Subsequent
Transfer Date, (B) with respect to at least an additional 40% of the Initial
Mortgage Loans, not later than 20 days after the Closing Date, and not later
than 20 days after the relevant Subsequent Transfer Date with respect to the
remaining Subsequent Mortgage Loans conveyed on such Subsequent Transfer Date,
and (C) with respect to the remaining Initial Mortgage Loans, not later than
thirty days after the Closing Date. To the extent that Countrywide Home Loans,
Inc. shall be in possession of any Mortgage Files with respect to any Delay
Delivery Mortgage Loan, until delivery of such Mortgage File to the Trustee as
provided in Section 2.01, Countrywide Home Loans, Inc. shall hold such files
as agent and in trust for the Trustee.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be
replaced by a Replacement Mortgage
Loan.
Denomination: With respect to each Certificate, the amount
set forth on the face thereof as the "Initial Certificate Balance of this
Certificate" or, if not the foregoing, the Percentage Interest appearing on
the face thereof, as applicable.
Depositor: CWHEQ, Inc., a Delaware corporation, or its
successor in interest.
Depository: The initial Depository shall be The Depository
Trust Company, the nominee of which is Cede & Co., or any other organization
registered as a "clearing agency" pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended. The Depository shall initially be the
registered Holder of the Book-Entry Certificates. The Depository shall at all
times be a "clearing corporation" as defined in Section 8-102(a)(5) of the
Uniform Commercial Code of the State of New York.
Depository Agreement: With respect to the Book-Entry
Certificates, the agreement among the Depositor and the initial Depository,
dated as of the Closing Date, substantially in the form of Exhibit O.
Depository Participant: A broker, dealer, bank or other
financial institution or other person for whom from time to time a Depository
effects book-entry transfers and pledges of securities deposited with the
Depository.
Determination Date: With respect to any Distribution Date,
the 22nd day of the month of such Distribution Date or, if such 22nd day is
not a Business Day, the immediately preceding Business Day; provided that the
Determination Date in each month will be at least two Business Days before the
Distribution Date.
Distribution Account: The separate Eligible Account created
and maintained by the Trustee pursuant to Section 3.05(c) in the name of the
Trustee for the benefit of the Certificateholders and the Certificate Insurer
and designated "The Bank of New York, in trust for registered Holders of
CWHEQ, Inc., Home Equity Loan Asset Backed Certificates, Series 2006-S4".
Funds in the Distribution Account shall be held in trust for the
Certificateholders for the uses and purposes set forth in this Agreement.
Distribution Account Deposit Date: As to any Distribution
Date, 1:00 p.m. Pacific time on the Business Day immediately preceding such
Distribution Date.
Distribution Date: The 25th day of each month, or if such
day is not a Business Day, on the first Business Day thereafter, commencing in
September 2006.
Due Date: With respect to any Mortgage Loan and Due Period,
the due date for Scheduled Payments of interest and/or principal on that
Mortgage Loan occurring in such Due Period as provided in the related Mortgage
Note.
Due for Payment: With respect to an Insured Amount, the
Distribution Date on which Insured Amounts are due and payable pursuant to the
terms of this Agreement.
Due Period: With respect to any Distribution Date, the
period beginning on the second day of the calendar month preceding the
calendar month in which such Distribution Date occurs and ending on the first
day of the month in which such Distribution Date occurs.
XXXXX: The Commission's Electronic Data Gathering, Analysis,
and Retrieval system.
Eligible Account: Any of (i) an account or accounts
maintained with a federal or state chartered depository institution or trust
company, the long-term unsecured debt obligations and short-term unsecured
debt obligations of which (or, in the case of a depository institution or
trust company that is the principal subsidiary of a holding company, the debt
obligations of such holding company, if Xxxxx'x is not a Rating Agency) are
rated by each Rating Agency in one of its two highest long-term and its
highest short-term rating categories respectively, at the time any amounts are
held on deposit therein, or (ii) an account or accounts in a depository
institution or trust company in which such accounts are insured by the FDIC
(to the limits established by the FDIC) and the uninsured deposits in which
accounts are otherwise secured such that, as evidenced by an Opinion of
Counsel delivered to the Trustee and to each Rating Agency, the
Certificateholders have a claim with respect to the funds in such account or a
perfected first priority security interest against any collateral (which shall
be limited to Permitted Investments) securing such funds that is superior to
claims of any other depositors or creditors of the depository institution or
trust company in which such account is maintained, or (iii) a trust account or
accounts maintained with the corporate trust department of a federal or state
chartered depository institution or trust company having capital and surplus
of not less than $50,000,000, acting in its fiduciary capacity or (iv) any
other account acceptable to the Rating Agencies without reduction or
withdrawal of their then-current ratings of the Certificates (without regard
to the Certificate Insurance Policy, in the case of the Class A Certificates)
as evidenced by a
letter from each Rating Agency to the Trustee. Eligible Accounts may bear
interest, and may include, if otherwise qualified under this definition,
accounts maintained with the Trustee.
Eligible Repurchase Month: As defined in Section 3.12(d)
hereof.
ERISA: The Employee Retirement Income Security Act of 1974,
as amended.
ERISA-Qualifying Underwriting: A best efforts or firm
commitment underwriting or private placement that meets the applicable
requirements of the Underwriter's Exemption.
ERISA-Restricted Certificates: The Class A-R Certificates,
Class P Certificates, Class C Certificates and Certificates of any Class that
does not have or no longer has a rating of at least BBB- or its equivalent
from at least one Rating Agency.
Escrow Account: As defined in Section 3.06 hereof.
Event of Default: As defined in Section 7.01 hereof.
Excess Cashflow: With respect to any Distribution Date the
sum of (i) the amount remaining after the distribution of interest to
Certificateholders for such Distribution Date, pursuant to Section 4.04(a)(v),
(ii) the amount remaining after the distribution of principal to
Certificateholders for such Distribution Date, pursuant to Section 4.04(b)(iv)
and (iii) the Overcollateralization Reduction Amount for such Distribution
Date.
Excess Overcollateralization Amount: With respect to any
Distribution Date, the excess, if any, of the Overcollateralized Amount for
such Distribution Date over the Overcollateralization Target Amount for such
Distribution Date.
Excess Proceeds: With respect to any Liquidated Mortgage
Loan, the amount, if any, by which the sum of any Liquidation Proceeds and
Subsequent Recoveries are in excess of the sum of (i) the unpaid principal
balance of such Liquidated Mortgage Loan as of the date of liquidation of such
Liquidated Mortgage Loan plus (ii) interest at the Mortgage Rate from the Due
Date as to which interest was last paid or advanced to Certificateholders (and
not reimbursed to the Master Servicer) up to the Due Date in the month in
which Liquidation Proceeds are required to be distributed on the Stated
Principal Balance of such Liquidated Mortgage Loan outstanding during each Due
Period as to which such interest was not paid or advanced.
Exchange Act: The Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
Exchange Act Reports: Any reports on Form 10-D, Form 8-K and
Form 10-K required to be filed by the Depositor with respect to the Trust Fund
under the Exchange Act.
Expense Fee Rate: With respect to any Mortgage Loan, the sum
of (i) the Servicing Fee Rate, (ii) the Trustee Fee Rate and (iii) with
respect to any Covered Loan, the Credit Insurance Premium Rate.
Extra Principal Distribution Amount: With respect to any
Distribution Date, the lesser of (1) the Overcollateralization Deficiency
Amount for such Distribution Date and (2) the Excess Cashflow available for
payment thereof for such Distribution Date.
Xxxxxx Xxx: The Federal National Mortgage Association, a
federally chartered and privately owned corporation organized and existing
under the Federal National Mortgage Association Charter Act, or any successor
thereto.
FDIC: The Federal Deposit Insurance Corporation, or any
successor thereto.
Final Scheduled Distribution Date: With respect to the Class
A Certificates and the Certificate Insurance Policy, the Distribution Date
occurring in the month following the month of the scheduled maturity date of
the Mortgage Loan having the latest scheduled maturity date including any
Subsequent Mortgage Loans, if any.
Fixed Rate Certificates: The Class A-2, Class A-3,
Class A-4, Class A-5 and Class A-6 Certificates.
Form 10-D Disclosure Item: With respect to any Person, any
material litigation or governmental proceedings pending against such Person,
or against any of the Trust Fund, the Depositor, the Trustee, any co-trustee,
the Master Servicer or any Subservicer, if such Person has actual knowledge
thereof.
Form 10-K Disclosure Item: With respect to any Person, (a)
Form 10-D Disclosure Item, and (b) any affiliations or relationships between
such Person and any Item 1119 Party.
Xxxxxxx Mac: The Federal Home Loan Mortgage Corporation, a
corporate instrumentality of the United States created and existing under
Title III of the Emergency Home Finance Act of 1970, as amended, or any
successor thereto.
Funding Period: The period from the Closing Date to and
including the earlier to occur of (x) the date the amount in the Pre-Funding
Account is less than $40,000 and (y) September 30, 2006.
Initial Certificate Account Deposit: An amount equal to the
aggregate of all amounts in respect of (i) principal of the Initial Mortgage
Loans due after the Initial Cut-off Date and received by the Master Servicer
before the Closing Date and not applied in computing the Cut-off Date
Principal Balance thereof and (ii) interest on the Initial Mortgage Loans due
after the Initial Cut-off Date and received by the Master Servicer before the
Closing Date.
Initial Certificate Principal Balance: With respect to any
Certificate (other than the Class C Certificates) the Certificate Principal
Balance of such Certificate or any predecessor Certificate on the Closing
Date.
Initial Cut-off Date: In the case of any Initial Mortgage
Loan, the later of (x) August 1, 2006 and (y) the date of origination of such
Mortgage Loan.
Initial Mortgage Loan: A Mortgage Loan conveyed to the
Trustee on the Closing Date pursuant to this Agreement as identified on the
Mortgage Loan Schedule delivered to the Trustee on the Closing Date.
Insolvency Proceeding: As defined in Section 4.06(h).
Insurance and Indemnity Agreement: The Insurance and
Indemnity Agreement, dated as of the Closing Date, by and among the
Certificate Insurer, as insurer, the Depositor, as depositor, Countrywide, as
sponsor and a seller, the Master Servicer, as master servicer, and the
Trustee, as trustee.
Insurance Policy: With respect to any Mortgage Loan included
in the Trust Fund, any insurance policy, including the Credit Insurance
Policy, including all riders and endorsements thereto in effect with respect
to such Mortgage Loan, including any replacement policy or policies for any
Insurance Policy.
Insurance Proceeds: Proceeds paid in respect of the Mortgage
Loans (other than by the Certificate Insurer under the Certificate Insurance
Policy) pursuant to any Insurance Policy or any other insurance policy
covering a Mortgage Loan, to the extent such proceeds are payable to the
mortgagee under the Mortgage, the Master Servicer or the trustee under the
deed of trust and are not applied to the restoration of the related Mortgaged
Property or released to the Mortgagor in accordance with the procedures that
the Master Servicer would follow in servicing mortgage loans held for its own
account, in each case other than any amount included in such Insurance
Proceeds in respect of Insured Expenses and received either prior to or in
connection with such Mortgage Loan becoming a Liquidated Mortgage Loan.
Insured Amounts: With respect to any Class of Class A
Certificates and any Distribution Date, the Deficiency Amount for such Class
and Distribution Date.
Insured Expenses: Expenses covered by an Insurance Policy or
any other insurance policy with respect to the Mortgage Loans.
Insured Payments: With respect to any Distribution Date, the
aggregate amount actually paid by the Certificate Insurer to the Trustee in
respect of (i) Insured Amounts for a Distribution Date and (ii) Preference
Amounts for any given Business Day.
Interest-Bearing Certificates: The Class A Certificates.
Interest Carry Forward Amount: With respect to each Class of
Interest-Bearing Certificates and each Distribution Date, the excess of (i)
the Current Interest for such Class with respect to prior Distribution Dates
over (ii) the amount actually distributed to such Class with respect to
interest on such prior Distribution Dates.
Interest Determination Date: With respect to the Adjustable
Rate Certificates, the second LIBOR Business Day preceding the commencement of
each Accrual Period.
Interest Funds: With respect to any Distribution Date, (x)
the Interest Remittance Amount for such Distribution Date, less (y) the sum of
(i) the Trustee Fee for such Distribution Date and (ii) the Credit Insurance
Premium for such Distribution Date.
Interest Remittance Amount: With respect to any Distribution
Date, (x) the sum, without duplication, of (i) all scheduled interest
collected during the related Due Period with respect to the Mortgage Loans
less the Servicing Fee, (ii) all interest on Principal Prepayments received
during the related Prepayment Period with respect to the Mortgage Loans, other
than Prepayment Interest Excess, (iii) all Advances relating to interest with
respect to the Mortgage Loans, (iv) all Compensating Interest with respect to
the Mortgage Loans, (v) Liquidation Proceeds with respect to the Mortgage
Loans collected during the related Due Period (to the extent such Liquidation
Proceeds relate to interest), (vi) any payments received under the Credit
Insurance Policy attributable to interest for the related Due Period, (vii)
any Loss Coverage Payment attributable to interest for the related Due Period
and (viii) the Seller Shortfall Interest Requirement, if any, less (y) all
reimbursements to the Master Servicer during the related Due Period for
Advances of interest previously made.
Investment Letter: As defined in Section 5.02(b).
Item 1119 Party: The Depositor, any Seller, the Master
Servicer, the Trustee, any Subservicer, any originator identified in the
Prospectus Supplement, the Credit Insurer and the Corridor Contract
Counterparty, and any other material transaction party, as identified in
Exhibit Z hereto, as updated pursuant to Section 11.04.
Late Payment Rate: With respect to any Distribution Date,
the lesser of (i) the greater of (a) the rate of interest, as it is publicly
announced by Citibank, N.A. at its principal office in New York, New York as
its prime rate (any change in the prime rate of interest to be effective on
the date the change is announced by Citibank, N.A.) plus 2% and (b) the then
applicable highest rate of interest on any of the Class A Certificates and
(ii) the maximum rate permissible under applicable usury or similar laws
limiting interest rates. The Late Payment Rate shall be computed on the basis
of the actual number of days elapsed over a year of 360 days.
Latest Possible Maturity Date: The Distribution Date
following the third anniversary of the scheduled maturity date of the Mortgage
Loan having the latest scheduled maturity date as of the Cut-off Date.
LIBOR Business Day: Any day on which banks in the City of
London, England and New York City, U.S.A. are open and conducting transactions
in foreign currency and exchange.
Limited Exchange Act Reporting Obligations: The obligations
of the Master Servicer under Section 3.17(b), Section 6.02 and Section 6.04
with respect to notice and information to be provided to the Depositor and
Article XI (except Section 11.07(a)(1) and (2)).
Liquidated Mortgage Loan: With respect to any Distribution
Date, a defaulted Mortgage Loan that has been liquidated through deed-in-lieu
of foreclosure, foreclosure sale, trustee's sale or other realization as
provided by applicable law governing the real property
subject to the related Mortgage and any security agreements and as to which
the Master Servicer has certified in the related Prepayment Period that it has
received all amounts it expects to receive in connection with such
liquidation.
Liquidation Proceeds: Amounts, including Insurance Proceeds,
received in connection with the partial or complete liquidation of Mortgage
Loans, whether through trustee's sale, foreclosure sale or otherwise or
amounts received in connection with any condemnation or partial release of a
Mortgaged Property and any other proceeds received in connection with an REO
Property received in connection with or prior to such Mortgage Loan becoming a
Liquidated Mortgage Loan (other than the amount of such net proceeds
representing any profit realized by the Master Servicer in connection with the
disposition of any such properties), less the sum of related unreimbursed
Advances, Servicing Fees and Servicing Advances.
Loan Number and Borrower Identification Mortgage Loan
Schedule: With respect to any Subsequent Transfer Date, the Loan Number and
Borrower Identification Mortgage Loan Schedule delivered in connection with
such Subsequent Transfer Date pursuant to Section 2.01(f). Each Loan Number
and Borrower Identification Mortgage Loan Schedule shall contain the
information specified in the definition of "Mortgage Loan Schedule" with
respect to the Subsequent Mortgage Loans conveyed on such Subsequent Transfer
Date, and each Loan Number and Borrower Identification Mortgage Loan Schedule
shall be deemed to be included in the Mortgage Loan Schedule.
Loss Coverage Payment: With respect to any Distribution Date
on or prior to the Distribution Date on which the Sponsor Loss Coverage Amount
is reduced to zero, the amount of Realized Losses on the Covered Loans with
respect to which a claim for payment was denied by the Credit Insurer due to
an exclusion in the Credit Insurance Policy but for which there are no
breaches of the representations and warranties set forth in Section 2.03 with
respect to such Covered Loans. Notwithstanding the preceding sentence, with
respect to the Distribution Date on which the amount described in the
preceding sentence exceeds the Sponsor Loss Coverage Amount, the Loss Coverage
Payment for such Distribution Date shall be the Sponsor Loss Coverage Amount.
Majority Holder: The Holders of Certificates evidencing at
least 51% of the Voting Rights allocated to such Class of Certificates.
Master Servicer: Countrywide Home Loans Servicing LP, a
Texas limited partnership, and its successors and assigns, in its capacity as
master servicer hereunder.
Master Servicer Advance Date: As to any Distribution
Date, the Business Day immediately preceding such Distribution Date.
Master Servicer Prepayment Charge Payment Amount: The
amounts (i) payable by the Master Servicer in respect of any Prepayment
Charges waived other than in accordance with the standard set forth in the
first sentence of Section 3.20(a), or (ii) collected from the Master Servicer
in respect of a remedy for the breach of the representation made by CHL set
forth in Section 3.20(c).
MERS: Mortgage Electronic Registration Systems, Inc.,
a corporation organized and existing
under the laws of the State of Delaware, or any successor thereto.
MERS Mortgage Loan: Any Mortgage Loan registered with MERS
on the MERS(R) System.
MERS(R) System: The system of recording transfers of
mortgages electronically maintained by MERS.
MIN: The Mortgage Identification Number for any MERS
Mortgage Loan.
Modified Mortgage Loan: As defined in Section 3.12(a).
MOM Loan: Any Mortgage Loan, as to which MERS is acting as
mortgagee, solely as nominee for the originator of such Mortgage Loan and its
successors and assigns.
Monthly Statement: The statement delivered to the
Certificateholders pursuant to Section 4.05.
Moody's: Xxxxx'x Investors Service, Inc. and its successors.
Mortgage: The mortgage, deed of trust or other instrument
creating a second lien on or second priority ownership interest in an estate
in fee simple in real property securing a Mortgage Note.
Mortgage File: The mortgage documents listed in Section 2.01
hereof pertaining to a particular Mortgage Loan and any additional documents
delivered to the Trustee to be added to the Mortgage File pursuant to this
Agreement.
Mortgage Loan Schedule: The list of Mortgage Loans (as from
time to time amended by the Master Servicer to reflect the deletion of
Liquidated Mortgage Loans and Deleted Mortgage Loans and the addition of (x)
Replacement Mortgage Loans pursuant to the provisions of this Agreement and
(y) Subsequent Mortgage Loans pursuant to the provisions of this Agreement and
any Subsequent Transfer Agreement) transferred to the Trustee as part of the
Trust Fund and from time to time subject to this Agreement, attached hereto as
Exhibit F-1, setting forth in the following information with respect to each
Mortgage Loan:
(i) the loan number;
(ii) [Reserved];
(iii) the Appraised Value;
(iv) the Mortgage Rate;
(v) the maturity date;
(vi) the original principal balance;
(vii) the Cut-off Date Principal Balance;
(viii) the first payment date of the Mortgage
Loan;
(ix) the Scheduled Payment in effect as of the
Cut-off Date;
(x) the Combined Loan-to-Value Ratio at
origination;
(xi) a code indicating whether the residential
dwelling at the time of origination was
represented to be owner-occupied;
(xii) a code indicating whether the residential
dwelling is either (a) a detached
single-family dwelling, (b) a two-family
residential property, (c) a three-family
residential property, (d) a four-family
residential property, (e) planned unit
development, (f) a low-rise condominium
unit, (g) a high-rise condominium unit or
(h) manufactured housing;
(xiii) the purpose of the Mortgage Loan;
(xiv) a code indicating if such Mortgage Loan is
a Covered Loan, if applicable; and
(xv) a code indicating whether the Mortgage
Loan is a CHL Mortgage Loan, a Park
Granada Mortgage Loan, a Park Monaco
Mortgage Loan or a Park Sienna Mortgage
Loan.
Such schedule shall also set forth the total of the amounts described under
(vii) above for all of the Mortgage Loans. The Mortgage Loan Schedule shall be
deemed to include each Loan Number and Borrower Identification Mortgage Loan
Schedule delivered pursuant to Section 2.01(f) and all the related Subsequent
Mortgage Loans and Subsequent Mortgage Loan information included therein.
Mortgage Loans: Such of the mortgage loans transferred and
assigned to the Trustee pursuant to the provisions hereof and any Subsequent
Transfer Agreement as from time to time are held as part of the Trust Fund
(including any REO Property), the mortgage loans so held being identified in
the Mortgage Loan Schedule, notwithstanding foreclosure or other acquisition
of title of the related Mortgaged Property. Any mortgage loan that was
intended by the parties hereto to be transferred to the Trust Fund as
indicated by such Mortgage Loan Schedule which is in fact not so transferred
for any reason, including a breach of the representation contained in Section
2.02 hereof, shall continue to be a Mortgage Loan hereunder until the Purchase
Price with respect thereto has been paid to the Trust Fund.
Mortgage Note: The original executed note or other evidence
of indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage
Loan.
Mortgage Pool: The aggregate of the Mortgage Loans
identified in the Mortgage Loan Schedule.
Mortgage Rate: The annual rate of interest borne by
a Mortgage Note as set forth in the Mortgage Loan Schedule.
Mortgaged Property: The underlying property securing a
Mortgage Loan.
Mortgagor: The obligors on a Mortgage Note.
NAS Factor: For any Distribution Date set forth below, the
percentage set forth in the following table:
Distribution Date Percentage
------------------------------------ ---------------------
September 2006 -- August 2009 0%
September 2009 -- August 2011 45%
September 2011 -- August 2012 80%
September 2012 -- August 2013 100%
September 2013 and thereafter 300%
NAS Principal Distribution Amount: For any Distribution
Date, an amount equal to the product of (i) the Class A-6 Portion for such
Distribution Date, (ii) any amounts distributed to the Class A Certificates
pursuant to Section 4.04(b)(ii) for such Distribution Date and (iii) the NAS
Factor for such Distribution Date.
Net Mortgage Rate: As to each Mortgage Loan, and at any
time, the per annum rate equal to the Mortgage Rate less the Servicing Fee
Rate.
Net Rate Cap: For each Distribution Date, (1) the weighted
average Adjusted Net Mortgage Rate of the Mortgage Loans as of the first day
of the related Due Period (after giving effect to Principal Prepayments
received during the Prepayment Period that ends during such Due Period), less
(2) the Certificate Insurance Policy Premium Rate, multiplied by a fraction,
the numerator of which is (a) the aggregate Certificate Principal Balance of
the Class A Certificates and the denominator of which is (b) the aggregate
Stated Principal Balance of the Mortgage Loans as of the first day of the
related Due Period (after giving effect to Principal Prepayments received
during the Prepayment Period that ends during such Due Period) plus any
amounts on deposit in the Pre-Funding Account as of the first day of that Due
Period. The Net Rate Cap shall be adjusted in the case of the Class A-1
Certificates only, to an effective rate reflecting the calculation of interest
on the basis of the actual number of days elapsed during the related Accrual
Period and a 360-day year.
Net Rate Carryover: With respect to any Class of Class A
Certificates and any Distribution Date, the sum of (A) the excess of (i) the
amount of interest that such Class would otherwise have accrued for such
Distribution Date had the Pass-Through Rate for such Class and the related
Accrual Period not been determined based on the Net Rate Cap, over (ii) the
amount of interest accrued on such Class at the applicable Net Rate Cap for
such Distribution Date and (B) the Net Rate Carryover for such Class for all
previous Distribution Dates not previously paid
pursuant to Section 4.04, together with interest thereon at the
then-applicable Pass-Through Rate for such Class, without giving effect to the
applicable Net Rate Cap.
NIM Insurer: Any insurer guarantying at the request of CHL
certain payments under notes backed or secured by the Class C and/or Class P
Certificates.
Nonrecoverable Advance: Any portion of an Advance previously
made or proposed to be made by the Master Servicer that, in the good faith
judgment of the Master Servicer, will not or, in the case of a current
delinquency, would not, be ultimately recoverable by the Master Servicer from
the related Mortgagor, related Liquidation Proceeds or otherwise.
Non-United States Person: A Person that is not a citizen or
resident of the United States, a corporation, partnership, or other entity
(treated as a corporation or a partnership for federal income tax purposes)
created or organized in or under the laws of the United States, any state
thereof or the District of Columbia, an estate whose income from sources
without the United States is includible in gross income for United States
federal income tax purposes regardless of its connection with the conduct of a
trade or business within the United States, or a trust if a court within the
United States is able to exercise primary supervision over the administration
of the trust and one or more United States persons have authority to control
all substantial decisions of the trustor.
Notional Amount: Not applicable.
Officer's Certificate: A certificate (i) in the case of the
Depositor, signed by the Chairman of the Board, the Vice Chairman of the
Board, the President, a Managing Director, a Vice President (however
denominated), an Assistant Vice President, the Treasurer, the Secretary, or
one of the Assistant Treasurers or Assistant Secretaries of the Depositor,
(ii) in the case of the Master Servicer, signed by the President, an Executive
Vice President, a Vice President, an Assistant Vice President, the Treasurer,
or one of the Assistant Treasurers or Assistant Secretaries of Countrywide GP,
Inc., its general partner, (iii) if provided for in this Agreement, signed by
a Servicing Officer, as the case may be, and delivered to the Depositor and
the Trustee, as the case may be, as required by this Agreement, or (iv) in the
case of any other Person, signed by an authorized officer of such Person.
One-Month LIBOR: With respect to any Accrual Period for the
Adjustable Rate Certificates, the rate determined by the Trustee on the
related Interest Determination Date on the basis of the rate for U.S. dollar
deposits for one month as quoted on the Bloomberg Terminal on such Interest
Determination Date. If such rate is not quoted on the Bloomberg Terminal (or
if such service is no longer offered, such other service for displaying
One-Month LIBOR or comparable rates as may be reasonably selected by the
Trustee), One-Month LIBOR for the applicable Accrual Period for the Adjustable
Rate Certificates will be the Reference Bank Rate. If no such quotations can
be obtained by the Trustee and no Reference Bank Rate is available, One-Month
LIBOR will be One-Month LIBOR applicable to the preceding Accrual Period for
the Adjustable Rate Certificates.
Opinion of Counsel: A written opinion of counsel, who may be
counsel for the Depositor or the Master Servicer, reasonably acceptable to
each addressee of such opinion;
provided that with respect to Section 6.04 or 10.01, or the interpretation or
application of the REMIC Provisions, such counsel must (i) in fact be
independent of the Depositor and the Master Servicer, (ii) not have any direct
financial interest in the Depositor or the Master Servicer or in any affiliate
of either and (iii) not be connected with the Depositor or the Master Servicer
as an officer, employee, promoter, underwriter, trustee, partner, director or
person performing similar functions.
Optional Termination: The termination of the Trust Fund
provided hereunder pursuant to the purchase of the Mortgage Loans pursuant to
clause (a) of the first sentence of Section 9.01 hereof.
Optional Termination Date: The first Distribution Date on
which the aggregate Stated Principal Balance of the Mortgage Loans is less
than or equal to 10% of the sum of the aggregate Cut-off Date Principal
Balance of the Initial Mortgage Loans and the Pre-Funded Amount.
Original Value: The value of the property underlying a
Mortgage Loan based, in the case of the purchase of the underlying Mortgaged
Property, on the lower of an appraisal satisfactory to the Master Servicer or
the sales price of such property or, in the case of a refinancing, on an
appraisal satisfactory to the Master Servicer.
OTS: The Office of Thrift Supervision.
Outstanding: With respect to the Certificates as
of any date of determination, all Certificates theretofore executed and
authenticated under this Agreement except:
(i) Certificates theretofore canceled by the
Trustee or delivered to the Trustee for cancellation; and
(ii) Certificates in exchange for which or in lieu
of which other Certificates have been executed and delivered
by the Trustee pursuant to this Agreement.
Outstanding Mortgage Loan: As of any Distribution Date, a
Mortgage Loan with a Stated Principal Balance greater than zero that was not
the subject of a Principal Prepayment in full, and that did not become a
Liquidated Mortgage Loan, prior to the end of the related Prepayment Period.
Overcollateralization Deficiency Amount: With respect to any
Distribution Date, the amount, if any, by which the Overcollateralization
Target Amount exceeds the Overcollateralized Amount on such Distribution Date
(after giving effect to the distribution of the Principal Distribution Amount
(other than the portion thereof consisting of the Extra Principal Distribution
Amount) on such Distribution Date).
Overcollateralization Reduction Amount: With respect to any
Distribution Date, an amount equal to the lesser of (i) the Excess
Overcollateralization Amount for such Distribution Date and (ii) the Principal
Remittance Amount for such Distribution Date.
Overcollateralization Target Amount: With respect to any
Distribution Date (a) through the Distribution Date in February 2007, $0, and
(b) after the Distribution Date in February 2007, an amount equal to 0.50% of
the sum of the aggregate Cut-off Date Principal Balance of the Initial
Mortgage Loans and the Pre-Funded Amount.
Overcollateralized Amount: With respect to any Distribution
Date, the amount, if any, by which (x) the sum of the aggregate Stated
Principal Balance of the Mortgage Loans for such Distribution Date and any
amount on deposit in the Pre-Funding Account exceeds (y) the aggregate
Certificate Principal Balance of the Class A Certificates as of such
Distribution Date (after giving effect to distribution of the Principal
Remittance Amount to be made on such Distribution Date and, in the case of the
Distribution Date immediately following the end of the Funding Period, any
amounts to be released from the Pre-Funding Account).
Ownership Interest: As to any Certificate, any ownership
interest in such Certificate including any interest in such Certificate as the
Holder thereof and any other interest therein, whether direct or indirect,
legal or beneficial.
Park Granada: Park Granada LLC, a Delaware limited
liability company, and its successors and assigns.
Park Granada Mortgage Loans: The Mortgage Loans
identified as such on the Mortgage Loan Schedule for which Park Granada is the
applicable Seller.
Park Monaco: Park Monaco Inc., a Delaware corporation,
and its successors and assigns.
Park Monaco Mortgage Loans: The Mortgage Loans
identified as such on the Mortgage Loan Schedule for which Park Monaco is the
applicable Seller.
Park Sienna: Park Sienna LLC, a Delaware limited liability
company, and its successors and assigns.
Park Sienna Mortgage Loans: The Mortgage Loans
identified as such on the Mortgage Loan Schedule for which Park Sienna is the
applicable Seller.
Pass-Through Margin: With respect to any Distribution Date
and the Class A-1 Certificates, 0.110% per annum.
Pass-Through Rate: With respect to any Accrual Period and
each Class of Interest-Bearing Certificates, the per annum rate set forth or
calculated in the manner described in the Preliminary Statement.
Percentage Interest: With respect to any Interest-Bearing
Certificate, a fraction, expressed as a percentage, the numerator of which is
the Certificate Principal Balance represented by such Certificate and the
denominator of which is the aggregate Certificate Principal Balance of the
related Class. With respect to the Class C, Class P and Class A-R
Certificates, the portion of the Class evidenced thereby, expressed as a
percentage, as stated on
the face of such Certificate or equal to the percentage obtained by dividing the
Denomination of such Certificate by the
aggregate of the Denominations of all Certificates of the same Class.
Performance Certification: As defined in Section 11.05.
Permitted Investments: At any time, any one or more
of the following obligations and
securities:
(i) obligations of the United States or any agency
thereof, provided such obligations are backed by the full
faith and credit of the United States;
(ii) general obligations of or obligations
guaranteed by any state of the United States or the District
of Columbia receiving the highest long-term debt rating of
each Rating Agency, or such lower rating as each Rating
Agency has confirmed in writing is sufficient for the
ratings originally assigned to the Certificates by such
Rating Agency (without regard to the Certificate Insurance
Policy, in the case of the Class A Certificates);
(iii) commercial or finance company paper which is
then receiving the highest commercial or finance company
paper rating of each Rating Agency, or such lower rating as
each Rating Agency has confirmed in writing is sufficient
for the ratings originally assigned to the Certificates by
such Rating Agency (without regard to the Certificate
Insurance Policy, in the case of the Class A Certificates);
(iv) certificates of deposit, demand or time
deposits, or bankers' acceptances issued by any depository
institution or trust company incorporated under the laws of
the United States or of any state thereof and subject to
supervision and examination by federal and/or state banking
authorities, provided that the commercial paper and/or long
term unsecured debt obligations of such depository
institution or trust company (or in the case of the
principal depository institution in a holding company
system, the commercial paper or long-term unsecured debt
obligations of such holding company, but only if Xxxxx'x is
not a Rating Agency) are then rated one of the two highest
long-term and the highest short-term ratings of each such
Rating Agency for such securities, or such lower ratings as
each Rating Agency has confirmed in writing is sufficient
for the ratings originally assigned to the Certificates by
such Rating Agency (without regard to the Certificate
Insurance Policy, in the case of the Class A Certificates);
(v) repurchase obligations with respect to any
security described in clauses (i) and (ii) above, in either
case entered into with a depository institution or trust
company (acting as principal) described in clause (iv)
above;
(vi) securities (other than stripped bonds,
stripped coupons or instruments sold at a purchase price in
excess of 115% of the face amount thereof) bearing interest
or sold at a discount issued by any corporation incorporated
under the laws of the United States or any state thereof
which, at the time of such investment, have one of the two
highest long term ratings of each Rating Agency (except (x)
if the Rating Agency is Xxxxx'x, such rating shall be the
highest
commercial paper rating of S&P for any such securities) and
(y), or such lower rating as each Rating Agency has
confirmed in writing is sufficient for the ratings
originally assigned to the Certificates by such Rating
Agency (without regard to the Certificate Insurance Policy,
in the case of the Class A Certificates);
(vii) interests in any money market fund which at
the date of acquisition of the interests in such fund and
throughout the time such interests are held in such fund has
the highest applicable long term rating by each Rating
Agency or such lower rating as each Rating Agency has
confirmed in writing is sufficient for the ratings
originally assigned to the Certificates by such Rating
Agency (without regard to the Certificate Insurance Policy,
in the case of the Class A Certificates);
(viii) short term investment funds sponsored by any
trust company or national banking association incorporated
under the laws of the United States or any state thereof
which on the date of acquisition has been rated by each
Rating Agency in their respective highest applicable rating
category or such lower rating as each Rating Agency has
confirmed in writing is sufficient for the ratings
originally assigned to the Certificates by such Rating
Agency (without regard to the Certificate Insurance Policy,
in the case of the Class A Certificates); and
(ix) such other relatively risk free investments
having a specified stated maturity and bearing interest or
sold at a discount acceptable to each Rating Agency as will
not result in the downgrading or withdrawal of the rating
then assigned to the Certificates by any Rating Agency
(without regard to the Certificate Insurance Policy, in the
case of the Class A Certificates), as evidenced by a signed
writing delivered by each Rating Agency, and reasonably
acceptable to the NIM Insurer, as evidenced by a signed
writing delivered by the NIM Insurer and the Certificate
Insurer;
provided, that no such instrument shall be a Permitted Investment if such
instrument (i) evidences the right to receive interest only payments with
respect to the obligations underlying such instrument, (ii) is purchased at a
premium or (iii) is purchased at a deep discount; provided further that no
such instrument shall be a Permitted Investment (A) if such instrument
evidences principal and interest payments derived from obligations underlying
such instrument and the interest payments with respect to such instrument
provide a yield to maturity of greater than 120% of the yield to maturity at
par of such underlying obligations, or (B) if it may be redeemed at a price
below the purchase price (the foregoing clause (B) not to apply to investments
in units of money market funds pursuant to clause (vii) above); provided
further that no amount beneficially owned by any REMIC (including, without
limitation, any amounts collected by the Master Servicer but not yet deposited
in the Certificate Account) may be invested in investments (other than money
market funds) treated as equity interests for Federal income tax purposes,
unless the Master Servicer shall receive an Opinion of Counsel, at the expense
of Master Servicer, to the effect that such investment will not adversely
affect the status of any such REMIC as a REMIC under the Code or result in
imposition of a tax on any such REMIC. Permitted Investments that are subject
to prepayment or call may not be purchased at a price in excess of par.
Permitted Transferee: Any Person other than (i) the United
States, any State or political subdivision thereof, or any agency or
instrumentality of any of the foregoing, (ii) a foreign government,
International Organization or any agency or instrumentality of either of the
foregoing, (iii) an organization (except certain farmers' cooperatives
described in section 521 of the Code) that is exempt from tax imposed by
Chapter 1 of the Code (including the tax imposed by section 511 of the Code on
unrelated business taxable income) on any excess inclusions (as defined in
section 860E(c)(1) of the Code) with respect to any Class A-R Certificate,
(iv) rural electric and telephone cooperatives described in section
1381(a)(2)(C) of the Code, (v) an "electing large partnership" as defined in
section 775 of the Code, (vi) a Person that is not a citizen or resident of
the United States, a corporation, partnership, or other entity (treated as a
corporation or a partnership for federal income tax purposes) created or
organized in or under the laws of the United States, any state thereof or the
District of Columbia, or an estate whose income from sources without the
United States is includible in gross income for United States federal income
tax purposes regardless of its connection with the conduct of a trade or
business within the United States, or a trust if a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more United States Persons have authority to control all
substantial decisions of the trustor unless such Person has furnished the
transferor and the Trustee with a duly completed Internal Revenue Service Form
W-8ECI, and (vii) any other Person so designated by the Trustee based upon an
Opinion of Counsel that the Transfer of an Ownership Interest in a Class A-R
Certificate to such Person may cause any REMIC formed hereunder to fail to
qualify as a REMIC at any time that any Certificates are Outstanding. The
terms "United States," "State" and "International Organization" shall have the
meanings set forth in section 7701 of the Code or successor provisions. A
corporation will not be treated as an instrumentality of the United States or
of any State or political subdivision thereof for these purposes if all of its
activities are subject to tax and, with the exception of the Federal Home Loan
Mortgage Corporation, a majority of its board of directors is not selected by
such government unit.
Person: Any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government, or any agency or political
subdivision thereof.
Plan: An "employee benefit plan" as defined in section 3(3)
of ERISA that is subject to Title I of ERISA, a "plan" as defined in section
4975 of the Code that is subject to section 4975 of the Code, or any Person
investing on behalf of or with plan assets (as defined in 29 CFR ss.2510.3-101
or otherwise under ERISA) of such an employee benefit plan or plan.
Pool Stated Principal Balance: The aggregate of the Stated
Principal Balances of the Mortgage Loans which were Outstanding Mortgage
Loans.
Pre-Funded Amount: $0.
Pre-Funding Account: The separate Eligible Account created
and maintained by the Trustee pursuant to Section 3.05 in the name of the
Trustee for the benefit of the Certificateholders and the Certificate Insurer
and designated "The Bank of New York, in trust for registered holders of
CWHEQ, Inc., Home Equity Loan Asset Backed Certificates, Series 2006-S4."
Funds in the Pre-Funding Account shall be held in trust for the
Certificateholders for the
uses and purposes set forth in this Agreement and shall not be a part of any
REMIC created hereunder, provided, however that any investment income earned
from Permitted Investments made with funds in the Pre-Funding Account will be
for the account of CHL.
Preference Amount: Any payment of principal or interest on a
Class A Certificate which has become Due for Payment and which was made to a
Holder by or on behalf of the Trust, which has been deemed a preferential
transfer and was previously recovered from the Holder pursuant to the United
States Bankruptcy Code in accordance with a final, non-appealable order of a
court of competent jurisdiction.
Preference Claim: As defined in Section 4.06(h).
Premium Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3.05 in the name of the Trustee
for the benefit of the Certificateholders and the Certificate Insurer and
designated "The Bank of New York, in trust for registered holders of CWHEQ,
Inc., Home Equity Loan Asset Backed Certificates, Series 2006-S4." Funds in
the Premium Account shall be held in trust for the Certificateholders and the
Certificate Insurer for the uses and purposes set forth in this Agreement.
Prepayment Assumption: The applicable rate of prepayment, as
described in the Prospectus Supplement relating to the Certificates.
Prepayment Charge: With respect to any Mortgage Loan, the
charges or premiums, if any, due in connection with a full or partial
prepayment of such Mortgage Loan within the related Prepayment Charge Period
in accordance with the terms thereof (other than any Master Servicer
Prepayment Charge Payment Amount).
Prepayment Charge Period: With respect to any Mortgage Loan,
the period of time during which a Prepayment Charge may be imposed.
Prepayment Charge Schedule: As of the Initial Cut-off Date
with respect to each Initial Mortgage Loan and as of the Subsequent Cut-off
Date with respect to each Subsequent Mortgage Loan, a list attached hereto as
Schedule I (including the Prepayment Charge Summary attached thereto), setting
forth the following information with respect to each Prepayment Charge:
(i) the Mortgage Loan identifying number;
(ii) a code indicating the type of Prepayment
Charge;
(iii) the state of origination of the related
Mortgage Loan;
(iv) the date on which the first monthly payment
was due on the related Mortgage Loan;
(v) the term of the related Prepayment Charge; and
(vi) the principal balance of the related Mortgage
Loan as of the Cut-off Date.
As of the Closing Date, the Prepayment Charge Schedule shall
contain the necessary information for each Initial Mortgage Loan. The
Prepayment Charge Schedule shall be amended by the Master Servicer upon the
sale of any Subsequent Mortgage Loans to the Trust Fund. In addition, the
Prepayment Charge Schedule shall be amended from time to time by the Master
Servicer in accordance with the provisions of this Agreement and a copy of
each related amendment shall be furnished by the Master Servicer to the Class
P and Class C Certificateholders and the NIM Insurer.
Prepayment Interest Excess: With respect to any Distribution
Date, for each Mortgage Loan that was the subject of a Principal Prepayment
during the period from the related Due Date to the end of the related
Prepayment Period, any payment of interest received in connection therewith
(net of any applicable Servicing Fee) representing interest accrued for any
portion of such month of receipt.
Prepayment Interest Shortfall: With respect to any
Distribution Date, for each Mortgage Loan that was the subject of a partial
Principal Prepayment or a Principal Prepayment in full during the period from
the beginning of the related Prepayment Period to the Due Date in such
Prepayment Period (other than a Principal Prepayment in full resulting from
the purchase of a Mortgage Loan pursuant to Section 2.02, 2.03, 2.04, 3.12 or
9.01 hereof) and for each Mortgage Loan that became a Liquidated Mortgage Loan
during the related Due Period, the amount, if any, by which (i) one month's
interest at the applicable Net Mortgage Rate on the Stated Principal Balance
of such Mortgage Loan immediately prior to such prepayment (or liquidation) or
in the case of a partial Principal Prepayment on the amount of such prepayment
(or Liquidation Proceeds) exceeds (ii) the amount of interest paid or
collected in connection with such Principal Prepayment or such Liquidation
Proceeds.
Prepayment Period: As to any Distribution Date and related
Due Date, the period beginning with the opening of business on the sixteenth
day of the calendar month preceding the month in which such Distribution Date
occurs (or, with respect to the first Distribution Date, the period beginning
with the opening of business on the day immediately following the Initial
Cut-off Date) and ending on the close of business on the fifteenth day of the
month in which such Distribution Date occurs.
Prime Rate: The prime commercial lending rate of The Bank of
New York, as publicly announced to be in effect from time to time. The Prime
Rate shall be adjusted automatically, without notice, on the effective date of
any change in such prime commercial lending rate. The Prime Rate is not
necessarily The Bank of New York's lowest rate of interest.
Principal Distribution Amount: With respect to each
Distribution Date, the sum of (i) the Principal Remittance Amount for such
Distribution Date, (ii) the Extra Principal Distribution Amount for such
Distribution Date, and (iii) with respect to the Distribution Date immediately
following the end of the Funding Period, the amount, if any, remaining in the
Pre-Funding Account at the end of the Funding Period (net of any investment
income therefrom), minus (iv) the Overcollateralization Reduction Amount for
such Distribution Date.
Principal Prepayment: Any Mortgagor payment or other
recovery of (or proceeds with respect to) principal on a Mortgage Loan
(including loans purchased or repurchased under Sections 2.02, 2.03, 2.04,
3.12 and 9.01 hereof) that is received in advance of its scheduled Due Date to
the extent it is not accompanied by an amount as to interest representing
scheduled interest due on any date or dates in any month or months subsequent
to the month of prepayment. Partial Principal Prepayments shall be applied by
the Master Servicer in accordance with the terms of the related Mortgage Note.
Principal Remittance Amount: With respect to any
Distribution Date, (a) the sum, without duplication, of: (i) the scheduled
principal collected with respect to the Mortgage Loans during the related Due
Period or advanced with respect to such Distribution Date, (ii) Principal
Prepayments collected in the related Prepayment Period with respect to the
Mortgage Loans, (iii) the Stated Principal Balance of each Mortgage Loan that
was repurchased by a Seller or purchased by the Master Servicer with respect
to such Distribution Date, (iv) the amount, if any, by which the aggregate
unpaid principal balance of any Replacement Mortgage Loans delivered by the
Sellers in connection with a substitution of a Mortgage Loan is less than the
aggregate unpaid principal balance of any Deleted Mortgage Loans, (v) any
payments received under the Credit Insurance Policy attributable to principal
for the related Due Period, (vi) any Loss Coverage Payment attributable to
principal for the related Due Period, and (vii) all Liquidation Proceeds (to
the extent such Liquidation Proceeds related to principal) and Subsequent
Recoveries collected during the related Due Period; less (b) all Advances
relating to principal and certain expenses reimbursable pursuant to Section
6.03 and reimbursed during the related Due Period.
Principal Reserve Fund: The separate Eligible Account
created and initially maintained by the Trustee pursuant to Section 3.08 in
the name of the Trustee for the benefit of the Certificateholders and
designated "The Bank of New York in trust for registered Holders of CWHEQ,
Inc., Home Equity Loan Asset Backed Certificates, Series 2006-S4". Funds in
the Principal Reserve Fund shall be held in trust for the Certificateholders
for the uses and purposes set forth in this Agreement.
Private Certificates: The Class C and Class P Certificates.
Prospectus: The prospectus dated August 9, 2006, relating
to asset backed securities to be sold by the Depositor.
Prospectus Supplement: The prospectus supplement dated
September 7, 2006, relating to the public offering of the certain Classes of
Certificates offered thereby.
PTCE 95-60: As defined in Section 5.02(b).
PUD: A Planned Unit Development.
Purchase Price: With respect to any Mortgage Loan (x)
required to be (1) repurchased by a Seller or purchased by the Master
Servicer, as applicable, pursuant to Section 2.02, 2.03 or 3.12 hereof or (2)
repurchased by the Depositor pursuant to Section 2.04 hereof, or (y) that the
Master Servicer has a right to purchase pursuant to Section 3.12 hereof, an
amount equal to the sum of (i) 100% of the unpaid principal balance (or, if
such purchase or repurchase,
as the case may be, is effected by the Master Servicer, the Stated Principal
Balance) of the Mortgage Loan as of the date of such purchase, (ii) accrued
interest thereon at the applicable Mortgage Rate (or, if such purchase or
repurchase, as the case may be, is effected by the Master Servicer, at the Net
Mortgage Rate) from (a) the date through which interest was last paid by the
Mortgagor (or, if such purchase or repurchase, as the case may be, is effected
by the Master Servicer, the date through which interest was last advanced and
not reimbursed by the Master Servicer) to (b) the Due Date in the month in
which the Purchase Price is to be distributed to Certificateholders and (iii)
any costs, expenses and damages incurred by the Trust Fund resulting from any
violation of any predatory or abusive lending law in connection with such
Mortgage Loan.
Rating Agency: Each of Xxxxx'x and S&P. If any such
organization or its successor is no longer in existence, "Rating Agency" shall
be a nationally recognized statistical rating organization, or other
comparable Person identified as a "Rating Agency" in the Underwriter's
Exemption, designated by the Depositor, notice of which designation shall be
given to the Trustee. References herein to a given rating category of a Rating
Agency shall mean such rating category without giving effect to any modifiers.
Realized Loss: With respect to each Liquidated Mortgage
Loan, an amount (not less than zero or more than the Stated Principal Balance
of the Mortgage Loan) as of the date of such liquidation, equal to (i) the
Stated Principal Balance of such Liquidated Mortgage Loan as of the date of
such liquidation, minus (ii) the Liquidation Proceeds, if any, received in
connection with such liquidation during the month in which such liquidation
occurs, to the extent applied as recoveries of principal of the Liquidated
Mortgage Loan. With respect to each Mortgage Loan that has become the subject
of a Deficient Valuation, (i) if the value of the related Mortgaged Property
was reduced below the principal balance of the related Mortgage Note, the
amount by which the value of the Mortgaged Property was reduced below the
principal balance of the related Mortgage Note, and (ii) if the principal
amount due under the related Mortgage Note has been reduced, 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.
Record Date: With respect to any Distribution Date and the
Adjustable-Rate Certificates, the Business Day immediately preceding such
Distribution Date, or if such Certificates are no longer Book-Entry
Certificates, the last Business Day of the month preceding the month of such
Distribution Date. With respect to the Fixed-Rate Certificates and the Class
A-R, Class C and Class P Certificates, the last Business Day of the month
preceding the month of a Distribution Date.
Reference Bank Rate: With respect to any Accrual Period, the
arithmetic mean (rounded upwards, if necessary, to the nearest whole multiple
of 0.03125%) of the offered rates for United States dollar deposits for one
month that are quoted by the Reference Banks as of 11:00 a.m., New York City
time, on the related Interest Determination Date to prime banks in the London
interbank market for a period of one month in amounts approximately equal to
the outstanding aggregate Certificate Principal Balance of the Adjustable-Rate
Certificates on such Interest Determination Date, provided that at least two
such Reference Banks provide such rate. If fewer than two offered rates
appear, the Reference Bank Rate will be the arithmetic mean
(rounded upwards, if necessary, to the nearest whole multiple of 0.03125%) of
the rates quoted by one or more major banks in New York City, selected by the
Trustee, as of 11:00 a.m., New York City time, on such date for loans in U.S.
dollars to leading European banks for a period of one month in amounts
approximately equal to the aggregate Certificate Principal Balance of the
Adjustable-Rate Certificates on such Interest Determination Date.
Reference Banks: Barclays Bank PLC, Deutsche Bank and
NatWest, N.A., provided that if any of the foregoing banks are not suitable to
serve as a Reference Bank, then any leading banks selected by the Trustee
which are engaged in transactions in Eurodollar deposits in the international
Eurocurrency market (i) with an established place of business in London,
England, (ii) not controlling, under the control of or under common control
with the Depositor, CHL or the Master Servicer and (iii) which have been
designated as such by the Trustee.
Refinancing Mortgage Loan: Any Mortgage Loan originated in
connection with the refinancing of an existing mortgage loan.
Regular Certificate: Any Certificate other than the Class
A-R Certificates.
Regulation AB: Subpart 229.1100 - Asset Backed
Securities (Regulation AB), 17 C.F.R. ss.ss.229.1100-229.1123, as such may be
amended from time to time, and subject to such clarification and
interpretation as have been provided by the Commission in the adopting release
(Asset Backed Securities, Securities Act Release No. 33-8518, 70 Fed. Reg.
1,506, 1,531 (Jan. 7, 2005)) or by the staff of the Commission, or as may be
provided by the Commission or its staff from time to time and publicly
available.
Relief Act: The Servicemembers Civil Relief Act.
REMIC Provisions: Provisions of the federal income tax law
relating to real estate mortgage investment conduits which appear at section
860A through 860G of Subchapter M of Chapter 1 of the Code, and related
provisions, and regulations and rulings promulgated thereunder, as the
foregoing may be in effect from time to time.
Remittance Report: A report prepared by the Master Servicer
and delivered to the Trustee and the NIM Insurer in accordance with Section
4.04.
REO Property: A Mortgaged Property acquired by the Master
Servicer through foreclosure or deed-in-lieu of foreclosure in connection with
a defaulted Mortgage Loan.
Replacement Mortgage Loan: A Mortgage Loan substituted by a
Seller for a Deleted Mortgage Loan which must, on the date of such
substitution, as confirmed in a Request for File Release, (i) have a Stated
Principal Balance, after deduction of the principal portion of the Scheduled
Payment due in the month of substitution, not in excess of, and not less than
90% of the Stated Principal Balance of the Deleted Mortgage Loan; (ii) have
the same or higher credit quality characteristics than that of the Deleted
Mortgage Loan; (iii) be accruing interest at a rate not more than 1% per annum
higher or lower than that of the Deleted Mortgage Loan; (iv) have a Combined
Loan-to-Value Ratio no higher than that of the Deleted Mortgage Loan; (v) have
a remaining term to maturity not greater than (and not more than one year less
than) that of the
Deleted Mortgage Loan; (vi) not permit conversion of the Mortgage Rate from a
fixed rate to a variable rate; (vii) provide for a Prepayment Charge on terms
substantially similar to those of the Prepayment Charge, if any, of the
Deleted Mortgage Loan; (viii) have the same occupancy type and lien priority
as the Deleted Mortgage Loan; and (ix) comply with each representation and
warranty set forth in Section 2.03 as of the date of substitution; provided,
however, that notwithstanding the foregoing, to the extent that compliance
with clause (ix) of this definition would cause a proposed Replacement
Mortgage Loan to fail to comply with one or more of clauses (i), (iii), (vii)
and/or (viii) of this definition, then such proposed Replacement Mortgage Loan
must comply with clause (ix) and need not comply with one or more of clauses
(i), (iii), (vii) and/or (viii), to the extent, and only to the extent,
necessary to assure that the Replacement Mortgage Loan otherwise complies with
clause (ix).
Reportable Event: Any event required to be reported on Form
8-K, and in any event, the following:
(a) entry into a definitive agreement related to the Trust
Fund, the Certificates or the Mortgage Loans, or an amendment to a Transaction
Document, even if the Depositor is not a party to such agreement (e.g., a
servicing agreement with a servicer contemplated by Item 1108(a)(3) of
Regulation AB);
(b) termination of a Transaction Document (other than by
expiration of the agreement on its stated termination date or as a result of
all parties completing their obligations under such agreement), even if the
Depositor is not a party to such agreement (e.g., a servicing agreement with a
servicer contemplated by Item 1108(a)(3) of Regulation AB);
(c) with respect to the Master Servicer only, if the Master
Servicer becomes aware of any bankruptcy or receivership with respect to CHL,
the Depositor, the Master Servicer, any Subservicer, the Trustee, the Corridor
Contract Counterparty, any enhancement or support provider contemplated by
Items 1114(b) or 1115 of Regulation AB, or any other material party
contemplated by Item 1101(d)(1) of Regulation AB;
(d) with respect to the Trustee, the Master Servicer and the
Depositor only, the occurrence of an early amortization, performance trigger
or other event, including an Event of Default under this Agreement;
(e) any amendment to this Agreement;
(f) the resignation, removal, replacement, substitution of
the Master Servicer, any Subservicer, the Trustee or any co-trustee;
(g) with respect to the Master Servicer only, if the Master
Servicer becomes aware that (i) any material enhancement or support specified
in Item 1114(a)(1) through (3) of Regulation AB or Item 1115 of Regulation AB
that was previously applicable regarding one or more classes of the
Certificates has terminated other than by expiration of the contract on its
stated termination date or as a result of all parties completing their
obligations under such agreement; (ii) any material enhancement specified in
Item 1114(a)(1)
through (3) of Regulation AB or Item 1115 of Regulation AB has been added with
respect to one or more classes of the Certificates; or (iii) any existing
material enhancement or support specified in Item 1114(a)(1) through (3) of
Regulation AB or Item 1115 of Regulation AB with respect to one or more
classes of the Certificates has been materially amended or modified; and
(h) with respect to the Trustee, the Master Servicer and the
Depositor only, a required distribution to Holders of the Certificates is not
made as of the required Distribution Date under this Agreement.
Reporting Subcontractor: With respect to the Master Servicer
or the Trustee, any Subcontractor determined by such Person pursuant to
Section 11.08(b) to be "participating in the servicing function" within the
meaning of Item 1122 of Regulation AB. References to a Reporting Subcontractor
shall refer only to the Subcontractor of such Person and shall not refer to
Subcontractors generally.
Representing Party: As defined in Section 2.03(f).
Request for Document Release: A Request for Document Release
submitted by the Master Servicer to the Trustee, substantially in the form of
Exhibit M.
Request for File Release: A Request for File Release
submitted by the Master Servicer to the Trustee, substantially in the form of
Exhibit N.
Required Carryover Reserve Fund Deposit: With respect to any
Distribution Date, an amount equal to the excess of (i) $1,000 over (ii) the
amount of funds on deposit in the Carryover Reserve Fund.
Required Insurance Policy: With respect to any Mortgage
Loan, any insurance policy that is required to be maintained from time to time
under this Agreement, including with respect to the Covered Loans, the Credit
Insurance Policy.
Responsible Officer: When used with respect to the Trustee,
any Vice President, any Assistant Vice President, the Secretary, any Assistant
Secretary, any Trust Officer or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also to whom, with respect to a particular matter, such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
Rule 144A: Rule 144A under the Securities Act.
Rule 144A Letter: As defined in Section 5.02(b).
S&P: Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc. and its successors.
Xxxxxxxx-Xxxxx Certification: As defined in Section 11.05.
Scheduled Payment: With respect to any Mortgage Loan, the
scheduled monthly payment of principal and/or interest due on any Due Date on
such Mortgage Loan which is payable by the related Mortgagor from time to time
under the related Mortgage Note,
determined: (a) after giving effect to (i) any Deficient Valuation and/or Debt
Service Reduction with respect to such Mortgage Loan and (ii) any reduction in
the amount of interest collectible from the related Mortgagor pursuant to the
Relief Act or any similar state or local law; (b) without giving effect to any
extension granted or agreed to by the Master Servicer pursuant to Section
3.05(a); and (c) on the assumption that all other amounts, if any, due under
such Mortgage Loan are paid when due.
Securities Act: The Securities Act of 1933, as amended.
Seller Shortfall Interest Requirement: $0.
Sellers: CHL, in its capacity as seller of the CHL Mortgage
Loans to the Depositor, Park Granada, in its capacity as seller of the Park
Granada Mortgage Loans to the Depositor, Park Monaco, in its capacity as
seller of the Park Monaco Mortgage Loans to the Depositor and Park Sienna, in
its capacity as seller of the Park Sienna Mortgage Loans to the Depositor.
Servicing Advances: All customary, reasonable and necessary
"out of pocket" costs and expenses incurred in the performance by the Master
Servicer of its servicing obligations hereunder, 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
foreclosures, (iii) the management and liquidation of any REO Property and
(iv) compliance with the obligations under Section 3.10.
Servicing Criteria: The "servicing criteria" set forth in
Item 1122(d) of Regulation AB. Servicing Fee: As to each Mortgage Loan and any
Distribution Date, an amount equal to one month's interest at the Servicing
Fee Rate on the Stated Principal Balance of such Mortgage Loan for the
preceding Distribution Date or, in the event of any payment of interest that
accompanies a Principal Prepayment in full made by the Mortgagor, interest at
the Servicing Fee Rate on the Stated Principal Balance of such Mortgage Loan
for the period covered by such payment of interest.
Servicing Fee Rate: With respect to each Mortgage Loan,
0.50% per annum.
Servicing Officer: Any officer of the Master Servicer
involved in, or responsible for, the administration and servicing of the
Mortgage Loans whose name and facsimile signature appear on a list of
servicing officers furnished to the Trustee by the Master Servicer on the
Closing Date pursuant to this Agreement, as such list may from time to time be
amended.
Sixty-Day Delinquency Rate: With respect to any Distribution
Date, a fraction, expressed as a percentage, the numerator of which is the
aggregate Stated Principal Balance for such Distribution Date of all Mortgage
Loans 60 or more days delinquent as of the close of business on the last day
of the calendar month preceding such Distribution Date (including Mortgage
Loans in foreclosure, bankruptcy and REO Properties) and the denominator of
which is the aggregate Stated Principal Balance for such Distribution Date of
all Mortgage Loans.
Sponsor Loss Coverage Amount: With respect to any
Distribution Date, the amount by which 1.00% of the sum of the aggregate
Cut-off Date Principal Balance of the Initial Mortgage Loans and the
Pre-Funded Amount exceeds the aggregate amount of Loss Coverage Payments, if
any, made prior to such Distribution Date.
Sponsor Loss Coverage Obligation: The obligation of CHL
described in Section 2.08 with respect to Loss Coverage Payments.
Stated Principal Balance: With respect to any Mortgage Loan
or related REO Property (i) as of the Cut-off Date, the unpaid principal
balance of the Mortgage Loan as of such date (before any adjustment to the
amortization schedule for any moratorium or similar waiver or grace period),
after giving effect to any partial prepayments or Liquidation Proceeds
received prior to such date and to the payment of principal due on or prior to
such date and irrespective any delinquency in payment by the related
Mortgagor, and (ii) as of any other Distribution Date, the Stated Principal
Balance of the Mortgage Loan as of its Cut-off Date, minus the sum of (a) the
principal portion of the Scheduled Payments (x) due with respect to such
Mortgage Loan during each Due Period ending prior to such Distribution Date
and (y) that were received by the Master Servicer as of the close of business
on the Determination Date related to such Distribution Date or with respect to
which Advances were made as of the Master Servicer Advance Date related to
such Distribution Date, (b) all Principal Prepayments with respect to such
Mortgage Loan received by the Master Servicer during each Prepayment Period
ending prior to such Distribution Date, (c) all Liquidation Proceeds collected
with respect to such Mortgage Loan during each Due Period ending prior to such
Distribution Date, to the extent applied by the Master Servicer as recoveries
of principal in accordance with Section 3.12 and (d) any Realized Loss
previously incurred in connection with a Deficient Valuation. The Stated
Principal Balance of any Mortgage Loan that becomes a Liquidated Mortgage Loan
will be zero on each date following the Due Period in which such Mortgage Loan
becomes a Liquidated Mortgage Loan. References herein to the Stated Principal
Balance of the Mortgage Loans at any time shall mean the aggregate Stated
Principal Balance of all Mortgage Loans in the Trust Fund as of such time.
Subcontractor: Any vendor, subcontractor or other Person
that is not responsible for the overall servicing (as "servicing" is commonly
understood by participants in the mortgage-backed securities market) of
Mortgage Loans but performs one or more discrete functions identified in Item
1122(d) of Regulation AB with respect to the Mortgage Loans under the
direction or authority of the Master Servicer or a Subservicer or the Trustee,
as the case may be.
Subsequent Certificate Account Deposit: With respect to any
Subsequent Transfer Date, an amount equal to the aggregate of all amounts in
respect of (i) principal of the related Subsequent Mortgage Loans due after
the related Subsequent Cut-off Date and received by the Master Servicer on or
before such Subsequent Transfer Date and not applied in computing the Cut-off
Date Principal Balance thereof and (ii) interest on the such Subsequent
Mortgage Loans due after such Subsequent Cut-off Date and received by the
Master Servicer on or before the Subsequent Transfer Date.
Subsequent Cut-off Date: In the case of any Subsequent
Mortgage Loan, the later of (x) the first day of the month of the related
Subsequent Transfer Date and (y) the date of origination of such Subsequent
Mortgage Loan.
Subsequent Mortgage Loan: Any Mortgage Loan conveyed to the
Trustee on a Subsequent Transfer Date, and listed on the related Loan Number
and Borrower Identification Mortgage Loan Schedule delivered pursuant to
Section 2.01(f). When used with respect to a single Subsequent Transfer Date,
"Subsequent Mortgage Loan" shall mean a Subsequent Mortgage Loan conveyed to
the Trustee on such Subsequent Transfer Date.
Subsequent Recoveries: As to any Distribution Date, with
respect to a Liquidated Mortgage Loan that resulted in a Realized Loss in a
prior calendar month, unexpected amounts received by the Master Servicer (net
of any related expenses permitted to be reimbursed pursuant to Section 3.08
and 3.12) specifically related to such Liquidated Mortgage Loan after the
classification of such Mortgage Loan as a Liquidated Mortgage Loan.
Subsequent Transfer Agreement: A Subsequent Transfer
Agreement substantially in the form of Exhibit P hereto, executed and
delivered by the Sellers, the Depositor and the Trustee as provided in Section
2.01(d).
Subsequent Transfer Date: For any Subsequent Transfer
Agreement, the "Subsequent Transfer Date" identified in such Subsequent
Transfer Agreement; provided, however, the Subsequent Transfer Date for any
Subsequent Transfer Agreement must be a Business Day and may not be a date
earlier than the date on which the Subsequent Transfer Agreement is executed
and delivered by the parties thereto pursuant to Section 2.01(d).
Subsequent Transfer Date Purchase Amount: With respect to
any Subsequent Transfer Date, the "Subsequent Transfer Date Purchase Amount"
identified in the related Subsequent Transfer Agreement which shall be an
estimate of the aggregate Stated Principal Balances of the Subsequent Mortgage
Loans identified in such Subsequent Transfer Agreement.
Subsequent Transfer Date Transfer Amount: With respect to
any Subsequent Transfer Date, an amount equal to the lesser of (i) the
aggregate Stated Principal Balances as of the related Subsequent Cut-off Dates
of the Subsequent Mortgage Loans conveyed on such Subsequent Transfer Date, as
listed on the related Loan Number and Borrower Identification Mortgage Loan
Schedule delivered pursuant to Section 2.01(f) and (ii) the amount on deposit
in the Pre-Funding Account.
Subservicer: As defined in Section 3.02(a).
Subservicing Agreement: As defined in Section 3.02(a).
Substitution Adjustment Amount: The meaning ascribed to
such term pursuant to Section 2.03(f).
Substitution Amount: With respect to any Mortgage Loan
substituted pursuant to Section 2.03(f), the excess of (x) the principal
balance of the Mortgage Loan that is substituted
for, over (y) the principal balance of the related substitute Mortgage Loan,
each balance being determined as of the date of substitution.
Tax Matters Person: The person designated as "tax matters
person" in the manner provided under Treasury regulation ss. 1.860F-4(d) and
Treasury regulation ss. 301.6231(a)(7)-1. Initially, this person shall be the
Trustee.
Tax Matters Person Certificate: The Class A-R Certificate
with a Denomination of $0.05 and in the form of Exhibit E hereto.
Terminator: As defined in Section 9.01.
Transaction Documents: This Agreement, the Corridor
Contract, the Corridor Contract Administration Agreement, the Credit Insurance
Policy, the Certificate Insurance Policy, the Insurance and Indemnity
Agreement and any other document or agreement entered into in connection with
the Trust Fund, the Certificates or the Mortgage Loans.
Transfer: Any direct or indirect transfer or sale of any
Ownership Interest in a Certificate.
Transfer Affidavit: As defined in Section 5.02(c).
Transferor Certificate: As defined in Section 5.02(b).
Trust Fund: The corpus of the trust created hereunder
consisting of (i) the Mortgage Loans and all interest and principal received
on or with respect thereto after the Cut-off Date to the extent not applied in
computing the Cut-off Date Principal Balance thereof, exclusive of interest
not required to be deposited in the Certificate Account pursuant to Section
3.05(b)(2); (ii) the Certificate Account, the Distribution Account, the
Principal Reserve Fund, the Carryover Reserve Fund, the Pre-Funding Account,
the Premium Account and all amounts deposited therein pursuant to the
applicable provisions of this Agreement; (iii) the rights to receive certain
proceeds of the Corridor Contract as provided in the Corridor Contract
Administration Agreement; (iv) property that secured a Mortgage Loan and has
been acquired by foreclosure, deed in lieu of foreclosure or otherwise; (v)
the mortgagee's rights under the Insurance Policies with respect to the
Mortgage Loan; (vi) rights under the Credit Insurance Policy; (vii) the rights
of the Trustee for the benefit of the Class A Certificateholders under the
Certificate Insurance Policy; and (vi) all proceeds of the conversion,
voluntary or involuntary, of any of the foregoing into cash or other liquid
property.
Trustee: The Bank of New York, a New York banking
corporation, not in its individual capacity, but solely in its capacity as
trustee for the benefit of the Certificateholders under this Agreement, and
any successor thereto, and any corporation or national banking association
resulting from or surviving any consolidation or merger to which it or its
successors may be a party and any successor trustee as may from time to time
be serving as successor trustee hereunder.
Trustee Advance Notice: As defined in Section 4.01(d).
Trustee Advance Rate: With respect to any Advance made by
the Trustee pursuant to Section 4.01(d), a per annum rate of interest
determined as of the date of such Advance equal to the Prime Rate in effect on
such date plus 5.00%.
Trustee Fee: As to any Distribution Date, an amount equal to
one-twelfth of the Trustee Fee Rate multiplied by the sum of (i) the Pool
Stated Principal Balance and (ii) any amounts remaining in the Pre-Funding
Account (excluding any investment earnings thereon) with respect to such
Distribution Date.
Trustee Fee Rate: With respect to each Mortgage Loan, the
per annum rate agreed upon in writing on or prior to the Closing Date by the
Trustee and the Depositor, which is 0.009% per annum.
Underwriter's Exemption: Prohibited Transaction Exemption
2002-41, 67 Fed. Reg. 54487 (2002), as amended (or any successor thereto), or
any substantially similar administrative exemption granted by the U.S.
Department of Labor.
Underwriters: Countrywide Securities Corporation, Bear,
Xxxxxxx & Co Inc. and Credit Suisse Securities (USA) LLC.
Unpaid Realized Loss Amount: For any Class of Certificates
and any Distribution Date, (x) the portion of the aggregate Applied Realized
Loss Amount allocated to that Class and remaining unpaid (in the case of any
Class of Class A Certificates, without regard to any payment made by the
Certificate Insurer in respect of that Class under the Certificate Insurance
Policy) minus (y) (1) any increase in the Certificate Principal Balance of
that Class due to the allocation of Subsequent Recoveries to the Certificate
Principal Balance of that Class pursuant to Section 4.04(h) or (2) in the case
of any Class of Class A Certificates, the amount of any Subsequent Recovery
paid to the Certificate Insurer in respect of that Class.
Voting Rights: The voting rights of all the Certificates
that are allocated to any Certificates for purposes of the voting provisions
hereunder. Voting Rights allocated to each Class of Certificates shall be
allocated 97% to the Certificates other than the Class A-R, Class C and Class
P Certificates (with the allocation among the Certificates to be in proportion
to the Certificate Principal Balance of each Class relative to the Certificate
Principal Balance of all other such Classes), and 1% to each of the Class A-R,
Class C and Class P Certificates. Voting Rights will be allocated among the
Certificates of each such Class in accordance with their respective Percentage
Interests. Notwithstanding any of the foregoing, on any date on which any
Class A Certificates are outstanding or any amounts are owed the Certificate
Insurer under this Agreement, unless a Certificate Insurer Default shall have
occurred and be continuing, the Certificate Insurer will be entitled to
exercise the Voting Rights of the Class A Certificateholders, without the
consent of the Class A Certificateholders, and the Class A Certificateholders
may exercise such rights only with the prior written consent of the
Certificate Insurer.
Section 1.02 Certain Interpretive Provisions.
All terms defined in this Agreement shall have the defined
meanings when used in any certificate, agreement or other document delivered
pursuant hereto unless otherwise
defined therein. For purposes of this Agreement and all such certificates and
other documents, unless the context otherwise requires: (a) accounting terms
not otherwise defined in this Agreement, and accounting terms partly defined
in this Agreement to the extent not defined, shall have the respective
meanings given to them under generally accepted accounting principles; (b) the
words "hereof," "herein" and "hereunder" and words of similar import refer to
this Agreement (or the certificate, agreement or other document in which they
are used) as a whole and not to any particular provision of this Agreement (or
such certificate, agreement or document); (c) references to any Section,
Schedule or Exhibit are references to Sections, Schedules and Exhibits in or
to this Agreement, and references to any paragraph, subsection, clause or
other subdivision within any Section or definition refer to such paragraph,
subsection, clause or other subdivision of such Section or definition; (d) the
term "including" means "including without limitation"; (e) references to any
law or regulation refer to that law or regulation as amended from time to time
and include any successor law or regulation; (f) references to any agreement
refer to that agreement as amended from time to time; (g) references to any
Person include that Person's permitted successors and assigns; and (h) a
Mortgage Loan is "30 days delinquent" if a Scheduled Payment has not been
received by the close of business on the Due Date on which the next Scheduled
Payment is due. Similarly for "60 days delinquent," "90 days delinquent" and
so on.
ARTICLE II.
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
Section 2.01 Conveyance of Mortgage Loans.
(a) Each Seller hereby sells, transfers, assigns, sets over
and otherwise conveys to the Depositor, without recourse, all the right, title
and interest of such Seller in and to the applicable Initial Mortgage Loans,
including all interest and principal received and receivable by such Seller on
or with respect to applicable Initial Mortgage Loans after the Initial Cut-off
Date (to the extent not applied in computing the Cut-off Date Principal
Balance thereof) or deposited into the Certificate Account by the Master
Servicer on behalf of such Seller as part of the Initial Certificate Account
Deposit as provided in this Agreement, other than principal due on the
applicable Initial Mortgage Loans on or prior to the Initial Cut-off Date and
interest accruing prior to the Initial Cut-off Date. The Master Servicer
confirms that, on behalf of the Sellers, concurrently with the transfer and
assignment, it has deposited into the Certificate Account the Initial
Certificate Account Deposit. On the Closing Date, CHL, as a Seller, shall
deposit $301.24 into the Distribution Account for distribution as part of the
Principal Remittance Amount on the first Distribution Date.
Immediately upon the conveyance of the Initial Mortgage
Loans referred to in the preceding paragraph, the Depositor (i) sells,
transfers, assigns, sets over and otherwise conveys to the Trustee for benefit
of the Certificateholders and the Certificate Insurer, without recourse, all
right title and interest in the Initial Mortgage Loans and (ii) causes the
Certificate Insurer to deliver the Certificate Insurance Policy to the
Trustee.
CHL further agrees (x) to cause The Bank of New York to
enter into the Corridor Contract Administration Agreement as Corridor Contract
Administrator and (y) to assign all of
its right, title and interest in and to the interest rate corridor transaction
evidenced by each Confirmation, and to cause all of its obligations in respect
of such transaction to be assumed by, the Corridor Contract Administrator, on
the terms and conditions set forth in the Corridor Contract Assignment
Agreement.
(b) Subject to the execution and delivery of the related
Subsequent Transfer Agreement as provided by Section 2.01(d) and the terms and
conditions of this Agreement, each Seller sells, transfers, assigns, sets over
and otherwise conveys to the Depositor, without recourse, on each Subsequent
Transfer Date, all the right, title and interest of such Seller in and to the
related Subsequent Mortgage Loans, including all interest and principal
received and receivable by such Seller on or with respect to such Subsequent
Mortgage Loans after the related Subsequent Cut-off Date (to the extent not
applied in computing the Cut-off Date Principal Balance thereof) or deposited
into the Certificate Account by the Master Servicer on behalf of such Seller
as part of any related Subsequent Certificate Account Deposit as provided in
this Agreement, other than principal due on such Subsequent Mortgage Loans on
or prior to the related Subsequent Cut-off Date and interest accruing prior to
the related Subsequent Cut-off Date.
Immediately upon the conveyance of the Subsequent Mortgage
Loans referred to in the preceding paragraph, the Depositor sells, transfers,
assigns, sets over and otherwise conveys to the Trustee for benefit of the
Certificateholders and the Certificate Insurer, without recourse, all right
title and interest in the Subsequent Mortgage Loans.
(c) Each Seller has entered into this Agreement in
consideration for the purchase of the Mortgage Loans by the Depositor and has
agreed to take the actions specified herein. The Depositor, concurrently with
the execution and delivery of this Agreement, hereby sells, transfers, assigns
and otherwise conveys to the Trustee for the use and benefit of the
Certificateholders, without recourse, all right title and interest in the
portion of the Trust Fund not otherwise conveyed to the Trustee pursuant to
Section 2.01(a) or (b).
(d) On any Business Day during the Funding Period designated
by CHL to the Trustee, the Sellers, the Depositor and the Trustee shall
complete, execute and deliver a Subsequent Transfer Agreement. After the
execution and delivery of such Subsequent Transfer Agreement, on the
Subsequent Transfer Date, the Trustee shall set aside in the Pre-Funding
Account an amount equal to the related Subsequent Transfer Date Purchase
Amount.
(e) The transfer of Subsequent Mortgage Loans on the
Subsequent Transfer Date is subject to the satisfaction of each of the
following conditions:
(1) the Trustee, the Underwriters and the
Certificate Insurer will be provided Opinions of Counsel addressed to
the Rating Agencies as with respect to the sale of the Subsequent
Mortgage Loans conveyed on such Subsequent Transfer Date (such
opinions being substantially similar to the opinions delivered on the
Closing Date to the Rating Agencies and the Certificate Insurer with
respect to the sale of the Initial Mortgage Loans on the Closing
Date), to be delivered as provided in Section 2.01(f);
(2) the execution and delivery of such Subsequent
Transfer Agreement or conveyance of the related Subsequent Mortgage
Loans does not result in a reduction or withdrawal of any ratings
assigned to the Certificates by the Rating Agencies (without regard
to the Certificate Insurance Policy, in the case of the Class A
Certificates);
(3) the Depositor shall deliver to the Trustee an
Officer's Certificate confirming the satisfaction of each of the
conditions set forth in this Section 2.01(e) required to be satisfied
by such Subsequent Transfer Date;
(4) each Subsequent Mortgage Loan conveyed on such
Subsequent Transfer Date satisfies the representations and warranties
applicable to it under this Agreement, provided, however, that with
respect to a breach of a representation and warranty with respect to
a Subsequent Mortgage Loan set forth in this clause (4), the
obligation under Section 2.03(f) of this Agreement of the applicable
Seller, to cure, repurchase or replace such Subsequent Mortgage Loan
shall constitute the sole remedy against such Seller respecting such
breach available to Certificateholders, the Depositor, the
Certificate Insurer or the Trustee;
(5) the Subsequent Mortgage Loans conveyed on such
Subsequent Transfer Date were selected in a manner reasonably
believed not to be adverse to the interests of the Certificateholders
or the Certificate Insurer;
(6) no Subsequent Mortgage Loan conveyed on such
Subsequent Transfer Date was 30 or more days delinquent as of the
related Cut-off Date;
(7) following the conveyance of the Subsequent
Mortgage Loans on such Subsequent Transfer Date, the characteristics
of the Mortgage Loans will not vary by more than the amount specified
below from the characteristics listed below; provided that for the
purpose of making such calculations, the characteristics for any
Initial Mortgage Loan made will be taken as of the Initial Cut-off
Date and the characteristics for any Subsequent Mortgage Loans will
be taken as of the Subsequent Cut-off Date;
Permitted
Variance
Characteristic Value or Range
------------------------- ----- -----------
Average Stated Principal Balance.......................... N/A 5%
Weighted Average Mortgage Rate............................ N/A 0.10%
Weighted Average Original Combined Loan-to-Value Ratio.... N/A 1.00%
Weighted Average Remaining Term to Maturity............... N/A 3 months
Weighted Average FICO Score............................... N/A 5 points
Occupancy Type - Investment Properties.................... N/A 1.00%
Purpose - Cash Out........................................ N/A 1.00% higher
2.00% lower
(8) none of the Sellers or the Depositor is
insolvent and neither of the Sellers nor the Depositor will be
rendered insolvent by the conveyance of Subsequent Mortgage Loans on
such Subsequent Transfer Date; and
(9) the Trustee, the Underwriters and the
Certificate Insurer will be provided with an Opinion of Counsel,
which Opinion of Counsel shall not be at the expense of either the
Trustee or the Trust Fund, addressed to the Trustee, to the effect
that such purchase of Subsequent Mortgage Loans will not (i) result
in the imposition of the tax on "prohibited transactions" on the
Trust Fund or contributions after the Startup Date, as defined in
Sections 860F(a)(2) and 860G(d) of the Code, respectively or (ii)
cause any REMIC formed hereunder to fail to qualify as a REMIC, such
opinion to be delivered as provided in Section 2.01(f).
The Trustee shall not be required to investigate or
otherwise verify compliance with these conditions, except for its own receipt
of documents specified above, and shall be entitled to rely on the required
Officer's Certificate.
(f) Within six Business Days after each Subsequent Transfer
Date, upon (1) delivery to the Trustee and the Certificate Insurer by the
Depositor of the Opinions of Counsel referred to in Section 2.01(e)(1) and
(e)(9), (2) delivery to the Trustee by CHL (on behalf of each Seller) of a
Loan Number and Borrower Identification Mortgage Loan Schedule reflecting the
Subsequent Mortgage Loans conveyed on such Subsequent Transfer Date, (3)
deposit in the Certificate Account by the Master Servicer on behalf of the
Sellers of the applicable Subsequent Certificate Account Deposit, and (4)
delivery to the Trustee by the Depositor of an Officer's Certificate
confirming the satisfaction of each of the conditions precedent set forth in
this Section 2.01(f), the Trustee shall pay the applicable Seller the
Subsequent Transfer Date Transfer Amount from such funds that were set aside
in the Pre-Funding Account pursuant to Section 2.01(d). The positive
difference, if any, between the Subsequent Transfer Date Transfer Amount and
the Subsequent Transfer Date Purchase Amount shall be re-invested by the
Trustee in the Pre-Funding Account.
The Trustee shall not be required to investigate or
otherwise verify compliance with the conditions set forth in the preceding
paragraph, except for its own receipt of documents specified above, and shall
be entitled to rely on the required Officer's Certificate.
Within thirty days after each Subsequent Transfer Date, the
Depositor shall deliver to the Trustee and the Certificate Insurer a letter of
a nationally recognized firm of independent public accountants stating whether
or not the Subsequent Mortgage Loans conveyed on such Subsequent Transfer Date
conform to the characteristics described in Section 2.01(e)(6) and (7).
(g) In connection with the transfer and assignment of each
Mortgage Loan, the Depositor has delivered to, and deposited with, the Trustee
(or, in the case of the Delay Delivery Mortgage Loans, will deliver to, and
deposit with, the Trustee within the time periods specified in the definition
of Delay Delivery Mortgage Loans) (except as provided in clause (vi) below)
for the benefit of the Certificateholders, the following documents or
instruments with
respect to each such Mortgage Loan so assigned (with respect to each Mortgage
Loan, clause (i) through (vi) below, together, the "Mortgage File" for each
such Mortgage Loan):
(i) the original Mortgage Note, endorsed by manual
or facsimile signature in blank in the following form: "Pay
to the order of ________________ without recourse", with all
intervening endorsements that show a complete chain of
endorsement from the originator to the Person endorsing the
Mortgage Note (each such endorsement being sufficient to
transfer all right, title and interest of the party so
endorsing, as noteholder or assignee thereof, in and to that
Mortgage Note), or, if the original Mortgage Note has been
lost or destroyed and not replaced, an original lost note
affidavit, stating that the original Mortgage Note was lost
or destroyed, together with a copy of the related Mortgage
Note and all such intervening endorsements;
(ii) in the case of each Mortgage Loan that is not
a MERS Mortgage Loan, the original recorded Mortgage or a
copy of such Mortgage, with recording information, and in
the case of each MERS Mortgage Loan, the original Mortgage
or a copy of such Mortgage, with recording information,
noting the presence of the MIN of the Mortgage Loan and
language indicating that the Mortgage Loan is a MOM Loan if
the Mortgage Loan is a MOM Loan, with evidence of recording
indicated thereon, or a copy of the Mortgage certified by
the public recording office in which such Mortgage has been
recorded;
(iii) in the case of each Mortgage Loan that is not
a MERS Mortgage Loan, a duly executed assignment of the
Mortgage to "Home Equity Loan Asset Backed Certificates,
Series 2006-S4, CWHEQ, Inc., by The Bank of New York, a New
York banking corporation, as trustee under the Pooling and
Servicing Agreement dated as of August 1, 2006, without
recourse" or a copy of such assignment, with recording
information, (each such assignment, when duly and validly
completed, to be in recordable form and sufficient to effect
the assignment of and transfer to the assignee thereof,
under the Mortgage to which such assignment relates);
(iv) the original recorded assignment or
assignments of the Mortgage or a copy of such assignments,
with recording information, together with all interim
recorded assignments of such Mortgage or a copy of such
assignments, with recording information (in each case noting
the presence of a MIN in the case of each MERS Mortgage
Loan);
(v) the original or copies of each assumption,
modification, written assurance or substitution agreement,
if any; and
(vi) the original or duplicate original lender's
title policy or a copy of lender's title policy or a
printout of the electronic equivalent and all riders thereto
or, in the event such original title policy has not been
received from the insurer, such original or duplicate
original lender's title policy and all riders thereto shall
be delivered within one year of the Closing Date.
In addition, in connection with the assignment of any MERS
Mortgage Loan, each Seller agrees that it will cause, at such Seller's own
expense, the MERS(R) System to indicate (and provide evidence to the Trustee
that it has done so) that such Mortgage Loans have been assigned by such
Seller to the Trustee in accordance with this Agreement for the benefit of the
Certificateholders by including (or deleting, in the case of Mortgage Loans
which are repurchased in accordance with this Agreement) in such computer
files (a) the code "[IDENTIFY TRUSTEE SPECIFIC CODE]" in the field "[IDENTIFY
THE FIELD NAME FOR TRUSTEE]" which identifies the Trustee and (b) the code
"[IDENTIFY SERIES SPECIFIC CODE NUMBER]" in the field "Pool Field" which
identifies the series of the Certificates issued in connection with such
Mortgage Loans. The Sellers further agree that they will not, and will not
permit the Master Servicer to, and the Master Servicer agrees that it will
not, alter the codes referenced in this paragraph with respect to any Mortgage
Loan during the term of this Agreement unless and until such Mortgage Loan is
repurchased in accordance with the terms of this Agreement.
In the event that in connection with any Mortgage Loan that
is not a MERS Mortgage Loan a Seller cannot deliver the original recorded
Mortgage or all interim recorded assignments of the Mortgage satisfying the
requirements of clause (ii), (iii) or (iv) concurrently with the execution and
delivery hereof, such Seller shall deliver or cause to be delivered to the
Trustee a true copy of such Mortgage and of each such undelivered interim
assignment of the Mortgage each certified by such Seller, the applicable title
company, escrow agent or attorney, or the originator of such Mortgage, as the
case may be, to be a true and complete copy of the original Mortgage or
assignment of Mortgage submitted for recording. For any such Mortgage Loan
that is not a MERS Mortgage Loan each Seller shall promptly deliver or cause
to be delivered to the Trustee such original Mortgage and such assignment or
assignments with evidence of recording indicated thereon upon receipt thereof
from the public recording official, or a copy thereof, certified, if
appropriate, by the relevant recording office, but in no event shall any such
delivery be made later than 270 days following the Closing Date; provided that
in the event that by such date such Seller is unable to deliver or cause to be
delivered each such Mortgage and each interim assignment by reason of the fact
that any such documents have not been returned by the appropriate recording
office, or, in the case of each interim assignment, because the related
Mortgage has not been returned by the appropriate recording office, such
Seller shall deliver or cause to be delivered such documents to the Trustee as
promptly as possible upon receipt thereof. If the public recording office in
which a Mortgage or interim assignment thereof is recorded retains the
original of such Mortgage or assignment, a copy of the original Mortgage or
assignment so retained, with evidence of recording thereon, certified to be
true and complete by such recording office, shall satisfy a Seller's
obligations in Section 2.01. If any document submitted for recording pursuant
to this Agreement is (x) lost prior to recording or rejected by the applicable
recording office, the applicable Seller shall immediately prepare or cause to
be prepared a substitute and submit it for recording, and shall deliver copies
and originals thereof in accordance with the foregoing or (y) lost after
recording, the applicable Seller shall deliver to the Trustee a copy of such
document certified by the applicable public recording office to be a true and
complete copy of the original recorded document. Each Seller shall promptly
forward or cause to be forwarded to the Trustee (x) from time to time
additional original documents evidencing an assumption or modification of a
Mortgage Loan and (y) any other documents required to be delivered by the
Depositor or the Master Servicer to the Trustee within the time periods
specified in this Section 2.01.
With respect to each Mortgage Loan other than a MERS
Mortgage Loan as to which the related Mortgaged Property and Mortgage File are
located in (a) the State of California or (b) any other jurisdiction under the
laws of which the recordation of the assignment specified in clause (iii)
above is not necessary to protect the Trustee's and the Certificateholders'
interest in the related Mortgage Loan, as evidenced by an Opinion of Counsel
delivered by CHL to the Trustee and a copy to the Rating Agencies, in lieu of
recording the assignment specified in clause (iii) above, the applicable
Seller may deliver an unrecorded assignment in blank, in form otherwise
suitable for recording to the Trustee; provided that if the related Mortgage
has not been returned from the applicable public recording office, such
assignment, or any copy thereof, of the Mortgage may exclude the information
to be provided by the recording office. As to any Mortgage Loan other than a
MERS Mortgage Loan, the procedures of the preceding sentence shall be
applicable only so long as the related Mortgage File is maintained in the
possession of the Trustee in the State or jurisdiction described in such
sentence. In the event that with respect to Mortgage Loans other than MERS
Mortgage Loans (I) any Seller, the Depositor, the Master Servicer or the NIM
Insurer gives written notice to the Trustee that recording is required to
protect the right, title and interest of the Trustee on behalf of the
Certificateholders in and to any Mortgage Loan, (II) a court recharacterizes
any sale of the Mortgage Loans as a financing, or (III) as a result of any
change in or amendment to the laws of the State or jurisdiction described in
the first sentence of this paragraph or any applicable political subdivision
thereof, or any change in official position regarding application or
interpretation of such laws, including a holding by a court of competent
jurisdiction, such recording is so required, the Trustee shall complete the
assignment in the manner specified in clause (iii) above and CHL shall submit
or cause to be submitted for recording as specified above or, should CHL fail
to perform such obligations, the Trustee shall cause the Master Servicer, at
the Master Servicer's expense, to cause each such previously unrecorded
assignment to be submitted for recording as specified above. In the event a
Mortgage File is released to the Master Servicer as a result of the Master
Servicer's having completed a Request for Document Release, the Trustee shall
complete the assignment of the related Mortgage in the manner specified in
clause (iii) above.
The Trustee or its agent shall maintain possession of the
Mortgage Files in the State of California and shall not remove the Mortgage
Files from the State of California. In the event that a Seller fails to record
an assignment of a Mortgage Loan as herein provided within 90 days of notice
of an event set forth in clause (I), (II) or (III) of the preceding paragraph,
the Master Servicer shall prepare and, if required hereunder, file such
assignments for recordation in the appropriate real property or other records
office. Each Seller hereby appoints the Master Servicer (and any successor
servicer hereunder) as its attorney-in-fact with full power and authority
acting in its stead for the purpose of such preparation, execution and filing.
In the case of Mortgage Loans that become the subject of a
Principal Prepayment between the Closing Date (in the case of Initial Mortgage
Loans) or related Subsequent Transfer Date (in the case of Subsequent Mortgage
Loans) and the Cut-off Date, CHL shall deposit or cause to be deposited in the
Certificate Account the amount required to be deposited therein with respect
to such payment pursuant to Section 3.05 hereof.
Notwithstanding anything to the contrary in this Agreement,
within thirty days after the Closing Date (in the case of Initial Mortgage
Loans) or within twenty days after the related Subsequent Transfer Date (in
the case of Subsequent Mortgage Loans), CHL (on behalf
of each Seller) shall either (i) deliver to the Trustee the Mortgage File as
required pursuant to this Section 2.01 for each Delay Delivery Mortgage Loan
or (ii) (A) repurchase the Delay Delivery Mortgage Loan or (B) substitute the
Delay Delivery Mortgage Loan for a Replacement Mortgage Loan, which repurchase
or substitution shall be accomplished in the manner and subject to the
conditions set forth in Section 2.03, provided that if CHL fails to deliver a
Mortgage File for any Delay Delivery Mortgage Loan within the period provided
in the prior sentence, the cure period provided for in Section 2.02 or in
Section 2.03 shall not apply to the initial delivery of the Mortgage File for
such Delay Delivery Mortgage Loan, but rather CHL shall have five (5) Business
Days to cure such failure to deliver. CHL shall promptly provide each Rating
Agency with written notice of any cure, repurchase or substitution made
pursuant to the proviso of the preceding sentence. On or before the thirtieth
(30th) day (or if such thirtieth day is not a Business Day, the succeeding
Business Day) after the Closing Date (in the case of Initial Mortgage Loans)
or within twenty days after the related Subsequent Transfer Date (in the case
of Subsequent Mortgage Loans), the Trustee shall, in accordance with the
provisions of Section 2.02, send a Delay Delivery Certification substantially
in the form annexed hereto as Exhibit G-3 (with any applicable exceptions
noted thereon) for all Delay Delivery Mortgage Loans delivered within thirty
(30) days after such date. The Trustee will promptly send a copy of such Delay
Delivery Certification to each Rating Agency.
Each Seller has entered into this Agreement in consideration
for the purchase of the Mortgage Loans sold by such Seller to the Depositor
and has agreed to take the actions specified herein. The Depositor,
concurrently with the execution and delivery of this Agreement, hereby sells,
transfers, assigns and otherwise conveys to the Trustee for the use and
benefit of the Certificateholders and the Certificate Insurer, without
recourse, all right title and interest in the portion of the Trust Fund not
otherwise conveyed to the Trust Fund pursuant to Sections 2.01(a) or (b).
Section 2.02 Acceptance by Trustee of the Mortgage Loans.
-------------------------------------------
(a) The Trustee acknowledges receipt, subject to the
limitations contained in and any exceptions noted in the Initial Certification
in the form annexed hereto as Exhibit G-1 and in the list of exceptions
attached thereto, of the documents referred to in clauses (i) and (iii) of
Section 2.01(g) above with respect to the Initial Mortgage Loans and all other
assets included in the Trust Fund and declares that it holds and will hold
such documents and the other documents delivered to it constituting the
Mortgage Files, and that it holds or will hold such other assets included in
the Trust Fund, in trust for the exclusive use and benefit of all present and
future Certificateholders.
The Trustee agrees to execute and deliver on the Closing
Date to the Depositor, the Master Servicer, CHL (on behalf of each Seller) and
the Certificate Insurer, an Initial Certification substantially in the form
annexed hereto as Exhibit G-1 to the effect that, as to each Initial Mortgage
Loan listed in the Mortgage Loan Schedule (other than any Initial Mortgage
Loan paid in full or any Initial Mortgage Loan specifically identified in such
certification as not covered by such certification), the documents described
in Section 2.01(g)(i) and, in the case of each Initial Mortgage Loan that is
not a MERS Mortgage Loan, the documents described in Section 2.01(g)(iii) with
respect to such Initial Mortgage Loans as are in the Trustee's possession and
based on its review and examination and only as to the foregoing documents,
such
documents appear regular on their face and relate to such Initial Mortgage
Loan. The Trustee agrees to execute and deliver within 30 days after the
Closing Date to the Depositor, the Master Servicer, CHL (on behalf of each
Seller) and the Certificate Insurer, an Interim Certification substantially in
the form annexed hereto as Exhibit G-2 to the effect that, as to each Initial
Mortgage Loan listed in the Mortgage Loan Schedule (other than any Initial
Mortgage Loan paid in full or any Initial Mortgage Loan specifically
identified in such certification as not covered by such certification) all
documents required to be delivered to the Trustee pursuant to the Agreement
with respect to such Initial Mortgage Loans are in its possession (except
those documents described in Section 2.01(g)(vi)) and based on its review and
examination and only as to the foregoing documents, (i) such documents appear
regular on their face and relate to such Initial Mortgage Loan, and (ii) the
information set forth in items (i), (iv), (v), (vi), (viii) and (ix) of the
definition of the "Mortgage Loan Schedule" accurately reflects information set
forth in the Mortgage File. On or before the thirtieth (30th) day after the
Closing Date (or if such thirtieth day is not a Business Day, the succeeding
Business Day), the Trustee shall deliver to the Depositor, the Master
Servicer, CHL (on behalf of each Seller) and the Certificate Insurer a Delay
Delivery Certification with respect to the Initial Mortgage Loans
substantially in the form annexed hereto as Exhibit G-3, with any applicable
exceptions noted thereon. The Trustee shall be under no duty or obligation to
inspect, review or examine such documents, instruments, certificates or other
papers to determine that the same are genuine, enforceable or appropriate for
the represented purpose or that they have actually been recorded in the real
estate records or that they are other than what they purport to be on their
face.
Not later than 180 days after the Closing Date, the Trustee
shall deliver to the Depositor, the Master Servicer, CHL (on behalf of each
Seller), the Certificate Insurer and any Certificateholder that so requests, a
Final Certification with respect to the Initial Mortgage Loans substantially
in the form annexed hereto as Exhibit H, with any applicable exceptions noted
thereon.
In connection with the Trustee's completion and delivery of
such Final Certification, the Trustee shall review each Mortgage File with
respect to the Initial Mortgage Loans to determine that such Mortgage File
contains the following documents:
(i) the original Mortgage Note, endorsed by manual
or facsimile signature in blank in the following form: "Pay
to the order of ________________ without recourse", with all
intervening endorsements that show a complete chain of
endorsement from the originator to the Person endorsing the
Mortgage Note (each such endorsement being sufficient to
transfer all right, title and interest of the party so
endorsing, as noteholder or assignee thereof, in and to that
Mortgage Note), or, if the original Mortgage Note has been
lost or destroyed and not replaced, an original lost note
affidavit, stating that the original Mortgage Note was lost
or destroyed, together with a copy of the related Mortgage
Note and all such intervening endorsements;
(ii) in the case of each Initial Mortgage Loan that
is not a MERS Mortgage Loan, the original recorded Mortgage
or a copy of such Mortgage, with recording information, and
in the case of each Initial Mortgage Loan that is a MERS
Mortgage Loan, the original Mortgage or a copy of such
Mortgage, with
recording information, noting the presence of the MIN of the
Initial Mortgage Loan and language indicating that the
Mortgage Loan is a MOM Loan if the Initial Mortgage Loan is
a MOM Loan, with evidence of recording indicated thereon, or
a copy of the Mortgage certified by the public recording
office in which Mortgage has been recorded;
(iii) in the case of each Initial Mortgage Loan
that is not a MERS Mortgage Loan, a duly executed assignment
of the Mortgage or a copy thereof with recording
information, in either case in the form permitted by Section
2.01;
(iv) the original recorded assignment or
assignments of the Mortgage or a copy of such assignments,
with recording information, together with all interim
recorded assignments of such Mortgage or a copy of such
assignments, with recording information (in each case noting
the presence of a MIN in the case of each MERS Mortgage
Loan);
(v) the original or copies of each assumption,
modification, written assurance or substitution agreement,
if any; and
(vi) the original or duplicate original lender's
title policy or a copy of lender's title policy or a
printout of the electronic equivalent and all riders
thereto.
If, in the course of such review, the Trustee finds any
document or documents constituting a part of such Mortgage File that do not
meet the requirements of clauses (i)-(iv) and (vi) above, the Trustee shall
include such exceptions in such Final Certification (and the Trustee shall
state in such Final Certification whether any Mortgage File does not then
include the original or duplicate original lender's title policy or a printout
of the electronic equivalent and all riders thereto). If the public recording
office in which a Mortgage or assignment thereof is recorded retains the
original of such Mortgage or assignment, a copy of the original Mortgage or
assignment so retained, with evidence of recording thereon, certified to be
true and complete by such recording office, shall be deemed to satisfy the
requirements of clause (ii), (iii) or (iv) above, as applicable. CHL shall
promptly correct or cure such defect referred to above within 90 days from the
date it was so notified of such defect and, if CHL does not correct or cure
such defect within such period, CHL shall either (A) if the time to cure such
defect expires prior to the end of the second anniversary of the Closing Date,
substitute for the related Initial Mortgage Loan a Replacement Mortgage Loan,
which substitution shall be accomplished in the manner and subject to the
conditions set forth in Section 2.03, or (B) purchase such Initial Mortgage
Loan from the Trust Fund within 90 days from the date CHL was notified of such
defect in writing at the Purchase Price of such Initial Mortgage Loan;
provided that any such substitution pursuant to (A) above or repurchase
pursuant to (B) above shall not be effected prior to the delivery to the
Trustee of the Opinion of Counsel required by Section 2.05 hereof and any
substitution pursuant to (A) above shall not be effected prior to the
additional delivery to the Trustee of a Request for File Release. No
substitution will be made in any calendar month after the Determination Date
for such month. The Purchase Price for any such Initial Mortgage Loan shall be
deposited by CHL in the Certificate Account and, upon receipt of such deposit
and Request for File Release with respect thereto, the Trustee shall release
the related Mortgage File to CHL and shall execute and deliver at CHL's
request such instruments of transfer or
assignment as CHL has prepared, in each case without recourse, as shall be
necessary to vest in CHL, or a designee, the Trustee's interest in any Initial
Mortgage Loan released pursuant hereto. If pursuant to the foregoing
provisions CHL repurchases an Initial Mortgage Loan that is a MERS Mortgage
Loan, the Master Servicer shall cause MERS to execute and deliver an
assignment of the Mortgage in recordable form to transfer the Mortgage from
MERS to CHL and shall cause such Mortgage to be removed from registration on
the MERS(R) System in accordance with MERS' rules and regulations.
The Trustee shall retain possession and custody of each
Mortgage File in accordance with and subject to the terms and conditions set
forth herein. Each Seller shall promptly deliver to the Trustee, upon the
execution or receipt thereof, the originals of such other documents or
instruments constituting the Mortgage File that come into the possession of
such Seller from time to time.
It is understood and agreed that the obligation of CHL to
substitute for or to purchase any Mortgage Loan that does not meet the
requirements of Section 2.02(a) above shall constitute the sole remedy
respecting such defect available to the Trustee, the Depositor and any
Certificateholder against any Seller.
It is understood and agreed that the obligation of CHL to
substitute for or to purchase, pursuant to Section 2.02(a), any Initial
Mortgage Loan whose Mortgage File contains any document or documents that does
not meet the requirements of clauses (i)-(iv) and (vi) above and which defect
is not corrected or cured by CHL within 90 days from the date it was notified
of such defect, shall constitute the sole remedy respecting such defect
available to the Trustee, the Depositor and any Certificateholder against any
Seller.
(b) The Trustee agrees to execute and deliver on the
Subsequent Transfer Date to the Depositor, the Master Servicer, CHL (on behalf
of each Seller) and the Certificate Insurer an Initial Certification
substantially in the form annexed hereto as Exhibit G-4 to the effect that, as
to each Subsequent Mortgage Loan listed in the Mortgage Loan Schedule (other
than any Subsequent Mortgage Loan paid in full or any Subsequent Mortgage Loan
specifically identified in such certification as not covered by such
certification), the documents described in Section 2.01(g)(i) and, in the case
of each Subsequent Mortgage Loan that is not a MERS Mortgage Loan, the
documents described in Section 2.01(g)(iii), with respect to such Subsequent
Mortgage Loan are in its possession, and based on its review and examination
and only as to the foregoing documents, such documents appear regular on their
face and relate to such Subsequent Mortgage Loan.
The Trustee agrees to execute and deliver within 30 days
after the Subsequent Transfer Date to the Depositor, the Master Servicer, CHL
(on behalf of each Seller) and the Certificate Insurer an Interim
Certification substantially in the form annexed hereto as Exhibit G-2 to the
effect that, as to each Subsequent Mortgage Loan listed in the Mortgage Loan
Schedule (other than any Subsequent Mortgage Loan paid in full or any
Subsequent Mortgage Loan specifically identified in such certification as not
covered by such certification), all documents required to be delivered to it
pursuant to this Agreement with respect to such Subsequent Mortgage Loan are
in its possession (except those described in Section 2.01(g)(vi)) and based on
its review and examination and only as to the foregoing documents, (i) such
documents appear
regular on their face and relate to such Subsequent Mortgage Loan, and (ii)
the information set forth in items (i), (iv), (v), (vi), (viii) and (ix) of
the definition of the "Mortgage Loan Schedule" accurately reflects information
set forth in the Mortgage File. On or before the thirtieth (30th) day after
the Subsequent Transfer Date (or if such thirtieth day is not a Business Day,
the succeeding Business Day), the Trustee shall deliver to the Depositor, the
Master Servicer, CHL (on behalf of each Seller) and the Certificate Insurer a
Delay Delivery Certification with respect to the Subsequent Mortgage Loans
substantially in the form annexed hereto as Exhibit G-3, with any applicable
exceptions noted thereon, together with a Subsequent Certification
substantially in the form annexed hereto as Exhibit G-4. The Trustee shall be
under no duty or obligation to inspect, review or examine such documents,
instruments, certificates or other papers to determine that the same are
genuine, enforceable or appropriate for the represented purpose or that they
have actually been recorded in the real estate records or that they are other
than what they purport to be on their face.
Not later than 180 days after the Subsequent Transfer Date,
the Trustee shall deliver to the Depositor, the Master Servicer, CHL (on
behalf of each Seller), the Certificate Insurer and to any Certificateholder
that so requests a Final Certification with respect to the Subsequent Mortgage
Loans substantially in the form annexed hereto as Exhibit H, with any
applicable exceptions noted thereon.
In connection with the Trustee's completion and delivery of
such Final Certification, the Trustee shall review each Mortgage File with
respect to the Subsequent Mortgage Loans to determine that such Mortgage File
contains the following documents:
(i) the original Mortgage Note, endorsed by manual
or facsimile signature in blank in the following form: "Pay to the
order of ________________ without recourse", with all intervening
endorsements that show a complete chain of endorsement from the
originator to the Person endorsing the Mortgage Note (each such
endorsement being sufficient to transfer all right, title and
interest of the party so endorsing, as noteholder or assignee
thereof, in and to that Mortgage Note), or, if the original Mortgage
Note has been lost or destroyed and not replaced, an original lost
note affidavit, stating that the original Mortgage Note was lost or
destroyed, together with a copy of the related Mortgage Note and all
such intervening endorsements;
(ii) in the case of each Subsequent Mortgage Loan
that is not a MERS Mortgage Loan, the original recorded Mortgage or a
copy of such Mortgage, with recording information, and in the case of
each Subsequent Mortgage Loan that is a MERS Mortgage Loan, the
original Mortgage or a copy of such Mortgage, with recording
information, noting the presence of the MIN of the Subsequent
Mortgage Loan and language indicating that the Subsequent Mortgage
Loan is a MOM Loan if the Subsequent Mortgage Loan is a MOM Loan,
with evidence of recording indicated thereon, or a copy of the
Mortgage certified by the public recording office in which Mortgage
has been recorded;
(iii) in the case of each Subsequent Mortgage Loan
that is not a MERS Mortgage Loan, a duly executed assignment of the
Mortgage or a copy thereof with recording information, in either case
in the form permitted by Section 2.01;
(iv) the original recorded assignment or
assignments of the Mortgage or a copy of such assignments, with
recording information, together with all interim recorded assignments
of such Mortgage or a copy of such assignments, with recording
information (in each case noting the presence of a MIN in the case of
each MERS Mortgage Loan);
(v) the original or copies of each assumption,
modification, written assurance or substitution agreement, if any;
and
(vi) the original or duplicate original lender's
title policy or a copy of lender's title policy or a printout of the
electronic equivalent and all riders thereto.
If, in the course of such review, the Trustee finds any
document or documents constituting a part of such Mortgage File that do not
meet the requirements of clauses (i)-(iv) and (vi) above, the Trustee shall
include such exceptions in such Final Certification (and the Trustee shall
state in such Final Certification whether any Mortgage File does not then
include the original or duplicate original lender's title policy or a printout
of the electronic equivalent and all riders thereto). If the public recording
office in which a Mortgage or assignment thereof is recorded retains the
original of such Mortgage or assignment, a copy of the original Mortgage or
assignment so retained, with evidence of recording thereon, certified to be
true and complete by such recording office, shall be deemed to satisfy the
requirements of clause (ii), (iii) or (iv) above, as applicable. CHL shall
promptly correct or cure such defect referred to above within 90 days from the
date it was so notified of such defect and, if CHL does not correct or cure
such defect within such period, CHL shall either (A) if the time to cure such
defect expires prior to the end of the second anniversary of the Closing Date,
substitute for the related Subsequent Mortgage Loan a Replacement Mortgage
Loan, which substitution shall be accomplished in the manner and subject to
the conditions set forth in Section 2.03, or (B) purchase such Subsequent
Mortgage Loan from the Trust Fund within 90 days from the date CHL was
notified of such defect in writing at the Purchase Price of such Subsequent
Mortgage Loan; provided that any such substitution pursuant to (A) above or
repurchase pursuant to (B) above shall not be effected prior to the delivery
to the Trustee of the Opinion of Counsel required by Section 2.05 hereof and
any substitution pursuant to (A) above shall not be effected prior to the
additional delivery to the Trustee of a Request for File Release. No
substitution will be made in any calendar month after the Determination Date
for such month. The Purchase Price for any such Subsequent Mortgage Loan shall
be deposited by CHL in the Certificate Account and, upon receipt of such
deposit and Request for File Release with respect thereto, the Trustee shall
release the related Mortgage File to CHL and shall execute and deliver at
CHL's request such instruments of transfer or assignment as CHL has prepared,
in each case without recourse, as shall be necessary to vest in CHL, or a
designee, the Trustee's interest in any Subsequent Mortgage Loan released
pursuant hereto. If pursuant to the foregoing provisions CHL repurchases a
Subsequent Mortgage Loan that is a MERS Mortgage Loan, the Master Servicer
shall cause MERS to execute and deliver an assignment of the Mortgage in
recordable form to transfer the Mortgage from MERS to CHL and shall cause such
Mortgage to be removed from registration on the MERS(R) System in accordance
with MERS' rules and regulations.
The Trustee shall retain possession and custody of each
Mortgage File in accordance with and subject to the terms and conditions set
forth herein. Each Seller shall
promptly deliver to the Trustee, upon the execution or receipt thereof, the
originals of such other documents or instruments constituting the Mortgage
File that come into the possession of such Seller from time to time.
It is understood and agreed that the obligation of the
Sellers to substitute for or to purchase, pursuant to Section 2.02(b), any
Subsequent Mortgage Loan whose Mortgage File contains any document or
documents that does not meet the requirements of clauses (i)-(iv) and (vi)
above and which defect is not corrected or cured by such Seller within 90 days
from the date it was notified of such defect, shall constitute the sole remedy
respecting such defect available to the Trustee, the Depositor and any
Certificateholder against the Sellers.
Section 2.03 Representations, Warranties and
Covenants of the Master Servicer and the
Sellers.
--------------------------------------------
(a) The Master Servicer hereby represents and warrants to
the Depositor, the Certificate Insurer and the Trustee as follows, as of the
date hereof with respect to the Initial Mortgage Loans, and the related
Subsequent Transfer Date with respect to the Subsequent Mortgage Loans:
(1) The Master Servicer is duly organized as a
Texas limited partnership and is validly existing and in good
standing under the laws of the State of Texas and is duly authorized
and qualified to transact any and all business contemplated by this
Agreement to be conducted by the Master Servicer in any state in
which a Mortgaged Property is located or is otherwise not required
under applicable law to effect such qualification and, in any event,
is in compliance with the doing business laws of any such state, to
the extent necessary to ensure its ability to enforce each Mortgage
Loan, to service the Mortgage Loans in accordance with the terms of
this Agreement and to perform any of its other obligations under this
Agreement in accordance with the terms hereof.
(2) The Master Servicer has the full partnership
power and authority to sell and service each Mortgage Loan, and to
execute, deliver and perform, and to enter into and consummate the
transactions contemplated by this Agreement and has duly authorized
by all necessary partnership action on the part of the Master
Servicer the execution, delivery and performance of this Agreement;
and this Agreement, assuming the due authorization, execution and
delivery hereof by the other parties hereto, constitutes a legal,
valid and binding obligation of the Master Servicer, enforceable
against the Master Servicer in accordance with its terms, except that
(a) the enforceability hereof may be limited by bankruptcy,
insolvency, moratorium, receivership and other similar laws relating
to creditors' rights generally and (b) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
(3) The execution and delivery of this Agreement by
the Master Servicer, the servicing of the Mortgage Loans by the
Master Servicer under this Agreement, the consummation of any other
of the transactions contemplated by this
Agreement, and the fulfillment of or compliance with the terms
hereof are in the ordinary course of business of the Master Servicer
and will not (A) result in a material breach of any term or
provision of the certificate of limited partnership, partnership
agreement or other organizational document of the Master Servicer or
(B) materially conflict with, result in a material breach, violation
or acceleration of, or result in a material default under, the terms
of any other material agreement or instrument to which the Master
Servicer is a party or by which it may be bound, or (C) constitute a
material violation of any statute, order or regulation applicable to
the Master Servicer of any court, regulatory body, administrative
agency or governmental body having jurisdiction over the Master
Servicer; and the Master Servicer is not in breach or violation of
any material indenture or other material agreement or instrument, or
in violation of any statute, order or regulation of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over it which breach or violation may materially impair
the Master Servicer's ability to perform or meet any of its
obligations under this Agreement.
(4) The Master Servicer is an approved servicer of
conventional mortgage loans for Xxxxxx Xxx and Xxxxxxx Mac and is a
mortgagee approved by the Secretary of Housing and Urban Development
pursuant to sections 203 and 211 of the National Housing Act.
(5) No litigation is pending or, to the best of the
Master Servicer's knowledge, threatened, 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 service the Mortgage Loans or to perform any of its other
obligations under this Agreement or any Subsequent Transfer Agreement
in accordance with the terms hereof or thereof.
(6) 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 of the transactions contemplated hereby, or if any such
consent, approval, authorization or order is required, the Master
Servicer has obtained the same.
(7) The Master Servicer is a member of MERS in good
standing, and will comply in all material respects with the rules and
procedures of MERS in connection with the servicing of the Mortgage
Loans for as long as such Mortgage Loans are registered with MERS.
(b) CHL hereby represents and warrants to the Depositor, the
Certificate Insurer and the Trustee as follows, as of the Initial Cut-off Date
in the case of the Initial Mortgage Loans and as of the related Subsequent
Cut-off Date in the case of the Subsequent Mortgage Loans (unless otherwise
indicated or the context otherwise requires, percentages with respect to the
Initial Mortgage Loans in the Trust Fund are measured by the Cut-off Date
Principal Balance of the Initial Mortgage Loans in the Trust Fund):
(1) CHL is duly organized as a New York corporation
and is validly existing and in good standing under the laws of the
State of New York and is duly
authorized and qualified to transact any and all business
contemplated by this Agreement and each Subsequent Transfer
Agreement to be conducted by CHL in any state in which a Mortgaged
Property is located or is otherwise not required under applicable
law to effect such qualification and, in any event, is in compliance
with the doing business laws of any such state, to the extent
necessary to ensure its ability to enforce each Mortgage Loan, to
sell the CHL Mortgage Loans in accordance with the terms of this
Agreement and each Subsequent Transfer Agreement and to perform any
of its other obligations under this Agreement and each Subsequent
Transfer Agreement in accordance with the terms hereof and thereof.
(2) CHL has the full corporate power and authority
to sell each CHL Mortgage Loan, and to execute, deliver and perform,
and to enter into and consummate the transactions contemplated by
this Agreement and each Subsequent Transfer Agreement and has duly
authorized by all necessary corporate action on the part of CHL the
execution, delivery and performance of this Agreement and each
Subsequent Transfer Agreement; and this Agreement and each Subsequent
Transfer Agreement, assuming the due authorization, execution and
delivery hereof by the other parties hereto, constitutes a legal,
valid and binding obligation of CHL, enforceable against CHL in
accordance with its terms, except that (a) the enforceability hereof
may be limited by bankruptcy, insolvency, moratorium, receivership
and other similar laws relating to creditors' rights generally and
(b) the remedy of specific performance and injunctive and other forms
of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
(3) The execution and delivery of this Agreement
and each Subsequent Transfer Agreement by CHL, the sale of the CHL
Mortgage Loans by CHL under this Agreement and each Subsequent
Transfer Agreement, the consummation of any other of the transactions
contemplated by this Agreement and each Subsequent Transfer
Agreement, and the fulfillment of or compliance with the terms hereof
and thereof are in the ordinary course of business of CHL and will
not (A) result in a material breach of any term or provision of the
charter or by-laws of CHL or (B) materially conflict with, result in
a material breach, violation or acceleration of, or result in a
material default under, the terms of any other material agreement or
instrument to which CHL is a party or by which it may be bound, or
(C) constitute a material violation of any statute, order or
regulation applicable to CHL of any court, regulatory body,
administrative agency or governmental body having jurisdiction over
CHL; and CHL is not in breach or violation of any material indenture
or other material agreement or instrument, or in violation of any
statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over
it which breach or violation may materially impair CHL's ability to
perform or meet any of its obligations under this Agreement and each
Subsequent Transfer Agreement.
(4) CHL is an approved seller of conventional
mortgage loans for Xxxxxx Mae and Xxxxxxx Mac and is a mortgagee
approved by the Secretary of Housing and Urban Development pursuant
to sections 203 and 211 of the National Housing Act.
(5) No litigation is pending or, to the best of
CHL's knowledge, threatened, against CHL that would materially and
adversely affect the execution, delivery or enforceability of this
Agreement or any Subsequent Transfer Agreement or the ability of CHL
to sell the CHL Mortgage Loans or to perform any of its other
obligations under this Agreement or any Subsequent Transfer Agreement
in accordance with the terms hereof or thereof.
(6) No consent, approval, authorization or order of
any court or governmental agency or body is required for the
execution, delivery and performance by CHL of, or compliance by CHL
with, this Agreement or any Subsequent Transfer Agreement or the
consummation of the transactions contemplated hereby, or if any such
consent, approval, authorization or order is required, CHL has
obtained the same.
(7) The information set forth on Exhibit F-1 hereto
with respect to each Initial Mortgage Loan is true and correct in all
material respects as of the Closing Date.
(8) CHL will treat the transfer of the CHL Mortgage
Loans to the Depositor as a sale of the CHL Mortgage Loans for all
tax, accounting and regulatory purposes.
(9) None of the Mortgage Loans is 30 days or more
delinquent.
(10) No Mortgage Loan had a Combined Loan-to-Value
Ratio at origination in excess of 100.00%.
(11) Each Mortgage Loan is secured by a valid and
enforceable second lien on the related Mortgaged Property subject
only to (1) the lien of non-delinquent current real property taxes
and assessments, (2) covenants, conditions and restrictions, rights
of way, easements and other matters of public record as of the date
of recording of such Mortgage, such exceptions appearing of record
being acceptable to mortgage lending institutions generally or
specifically reflected in the appraisal made in connection with the
origination of the related Mortgage Loan, (3) other matters to which
like properties are commonly subject that do not materially interfere
with the benefits of the security intended to be provided by such
Mortgage (4) any senior mortgage loan secured by such Mortgaged
Property and identified in the Mortgage File related to such Mortgage
Loan.
(12) Immediately prior to the assignment of each
CHL Mortgage Loan to the Depositor, CHL had good title to, and was
the sole owner of, such CHL Mortgage Loan free and clear of any
pledge, lien, encumbrance or security interest and had full right and
authority, subject to no interest or participation of, or agreement
with, any other party, to sell and assign the same pursuant to this
Agreement.
(13) There is no delinquent tax or assessment lien
against any Mortgaged Property.
(14) There is no valid offset, claim, defense or
counterclaim to any Mortgage Note or Mortgage, including the
obligation of the Mortgagor to pay the unpaid principal of or
interest on such Mortgage Note.
(15) There are no mechanics' liens or claims for
work, labor or material affecting any Mortgaged Property that are or
may be a lien prior to, or equal with, the lien of such Mortgage,
except those that are insured against by the title insurance policy
referred to in item (18) below.
(16) As of the Closing Date in the case of the
Initial Mortgage Loans and as of the related Subsequent Transfer Date
in the case of the Subsequent Mortgage Loans, to the best of CHL's
knowledge, each Mortgaged Property is free of material damage and is
in good repair.
(17) As of the Closing Date in the case of the
Initial Mortgage Loans and as of the related Subsequent Transfer Date
in the case of the Subsequent Mortgage Loans, neither CHL nor any
prior holder of any Mortgage has modified the Mortgage in any
material respect (except that a Mortgage Loan may have been modified
by a written instrument that has been recorded or submitted for
recordation, if necessary, to protect the interests of the
Certificateholders and the original or a copy of which has been
delivered to the Trustee); satisfied, cancelled or subordinated such
Mortgage in whole or in part; released the related Mortgaged Property
in whole or in part from the lien of such Mortgage; or executed any
instrument of release, cancellation, modification (except as
expressly permitted above) or satisfaction with respect thereto.
(18) A lender's policy of title insurance together
with a condominium endorsement and extended coverage endorsement, if
applicable, in an amount at least equal to the Cut-off Date Principal
Balance of each such Mortgage Loan or a commitment (binder) to issue
the same was effective on the date of the origination of each
Mortgage Loan, each such policy is valid and remains in full force
and effect, and each such policy was issued by a title insurer
qualified to do business in the jurisdiction where the Mortgaged
Property is located and acceptable to Xxxxxx Mae and Xxxxxxx Mac and
is in a form acceptable to Xxxxxx Mae and Xxxxxxx Mac, which policy
insures the Sellers and successor owners of indebtedness secured by
the insured Mortgage, as to the second priority lien, of the Mortgage
subject to the exceptions set forth in paragraph (11) above; to the
best of CHL's knowledge, no claims have been made under such mortgage
title insurance policy and no prior holder of the related Mortgage,
including any Seller, has done, by act or omission, anything that
would impair the coverage of such mortgage title insurance policy.
(19) No Initial Mortgage Loan was the subject of a
Principal Prepayment in full between the Initial Cut-off Date and the
Closing Date. No Subsequent Mortgage Loan was the subject of a
Principal Prepayment in full between the Subsequent Cut-off Date and
the Subsequent Transfer Date.
(20) To the best of CHL's knowledge, all of the
improvements that were included for the purpose of determining the
Appraised Value of the Mortgaged
Property lie wholly within the boundaries and building restriction
lines of such property, and no improvements on adjoining properties
encroach upon the Mortgaged Property.
(21) To the best of CHL's knowledge, no improvement
located on or being part of the Mortgaged Property is in violation of
any applicable zoning law or regulation. To the best of CHL's
knowledge, all inspections, licenses and certificates required to be
made or issued with respect to all occupied portions of the Mortgaged
Property and, with respect to the use and occupancy of the same,
including but not limited to certificates of occupancy and fire
underwriting certificates, have been made or obtained from the
appropriate authorities, unless the lack thereof would not have a
material adverse effect on the value of such Mortgaged Property, and
the Mortgaged Property is lawfully occupied under applicable law.
(22) The Mortgage Note and the related Mortgage are
genuine, and each is the legal, valid and binding obligation of the
maker thereof, enforceable in accordance with its terms and under
applicable law, except that (a) the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium, receivership and other
similar laws relating to creditors' rights generally and (b) the
remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought. To the best of CHL's knowledge, all parties to the Mortgage
Note and the Mortgage had legal capacity to execute the Mortgage Note
and the Mortgage and each Mortgage Note and Mortgage have been duly
and properly executed by such parties.
(23) The proceeds of the Mortgage Loan have been
fully disbursed, there is no requirement for future advances
thereunder, and any and all requirements as to completion of any
on-site or off-site improvements and as to disbursements of any
escrow funds therefor have been complied with. All costs, fees and
expenses incurred in making, or closing or recording the Mortgage
Loan were paid.
(24) The related Mortgage contains customary and
enforceable provisions that render the rights and remedies of the
holder thereof adequate for the realization against the Mortgaged
Property of the benefits of the security, including, (i) in the case
of a Mortgage designated as a deed of trust, by trustee's sale, and
(ii) otherwise by judicial foreclosure.
(25) With respect to each Mortgage constituting a
deed of trust, a trustee, duly qualified under applicable law to
serve as such, has been properly designated and currently so serves
and is named in such Mortgage, and no fees or expenses are or will
become payable by the Certificateholders to the trustee under the
deed of trust, except in connection with a trustee's sale after
default by the Mortgagor.
(26) [Reserved].
(27) There exist no deficiencies with respect to
escrow deposits and payments, if such are required, for which
customary arrangements for repayment thereof
have not been made, and no escrow deposits or payments of other
charges or payments due the Sellers have been capitalized under the
Mortgage or the related Mortgage Note.
(28) The origination, underwriting, servicing and
collection practices with respect to each Mortgage Loan have been in
all respects legal, proper, prudent and customary in the mortgage
lending and servicing business, as conducted by prudent lending
institutions which service mortgage loans of the same type in the
jurisdiction in which the Mortgaged Property is located.
(29) There is no pledged account or other security
other than real estate securing the Mortgagor's obligations.
(30) No Mortgage Loan has a shared appreciation
feature, or other contingent interest feature.
(31) Each Mortgage Loan contains a customary "due
on sale" clause.
(32) No less than approximately the percentage
specified in the Collateral Schedule of the Initial Mortgage Loans
are secured by single family detached dwellings. No more than
approximately the percentage specified in the Collateral Schedule of
the Initial Mortgage Loans are secured by two- to four-family
dwellings. No more than approximately the percentage specified in the
Collateral Schedule of the Initial Mortgage Loans are secured by
low-rise condominium units. No more than approximately the percentage
specified in the Collateral Schedule of the Initial Mortgage Loans
are secured by high-rise condominium units. No more than
approximately the percentage specified in the Collateral Schedule of
the Initial Mortgage Loans are secured by manufactured housing. No
more than approximately the percentage specified in the Collateral
Schedule of the Initial Mortgage Loans are secured by PUDs.
(33) Each Initial Mortgage Loan was originated on
or after the date specified in the Collateral Schedule.
(34) [Reserved];
(35) Approximately the percentage specified in the
Collateral Schedule of the Initial Mortgage Loans provide for a
Prepayment Charge.
(36) On the basis of representations made by the
Mortgagors in their loan applications, no more than approximately the
percentage specified in the Collateral Schedule of the Initial
Mortgage Loans, respectively, are secured by investor properties, and
no less than approximately the percentage specified in the Collateral
Schedule of the Initial Mortgage Loans respectively, are secured by
owner-occupied Mortgaged Properties that are primary residences.
(37) At the Cut-off Date, the improvements upon
each Mortgaged Property are covered by a valid and existing hazard
insurance policy with a generally acceptable carrier that provides
for fire and extended coverage and coverage for such other hazards as
are customary in the area where the Mortgaged Property is located in
an
amount that is at least equal to the lesser of (i) the maximum
insurable value of the improvements securing such Mortgage Loan or
(ii) the greater of (a) the outstanding principal balance of the
Mortgage Loan and (b) an amount such that the proceeds of such policy
shall be sufficient to prevent the Mortgagor and/or the mortgagee
from becoming a co-insurer. If the Mortgaged Property is a
condominium unit, it is included under the coverage afforded by a
blanket policy for the condominium unit. All such individual
insurance policies and all flood policies referred to in item (38)
below contain a standard mortgagee clause naming the applicable
Seller or the original mortgagee, and its successors in interest, as
mortgagee, and the applicable Seller has received no notice that any
premiums due and payable thereon have not been paid; the Mortgage
obligates the Mortgagor thereunder to maintain all such insurance,
including flood insurance, at the Mortgagor's cost and expense, and
upon the Mortgagor's failure to do so, authorizes the holder of the
Mortgage to obtain and maintain such insurance at the Mortgagor's
cost and expense and to seek reimbursement therefor from the
Mortgagor.
(38) If the Mortgaged Property is in an area
identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards, a flood insurance
policy in a form meeting the requirements of the current guidelines
of the Flood Insurance Administration is in effect with respect to
such Mortgaged Property with a generally acceptable carrier in an
amount representing coverage not less than the least of (A) the
original outstanding principal balance of the Mortgage Loan, (B) the
minimum amount required to compensate for damage or loss on a
replacement cost basis, or (C) the maximum amount of insurance that
is available under the Flood Disaster Protection Act of 1973, as
amended.
(39) To the best of CHL's knowledge, there is no
proceeding occurring, pending or threatened for the total or partial
condemnation of the Mortgaged Property.
(40) There is no material monetary default existing
under any Mortgage or the related Mortgage Note and, to the best of
CHL's knowledge, there is no material event that, with the passage of
time or with notice and the expiration of any grace or cure period,
would constitute a default, breach, violation or event of
acceleration under the Mortgage or the related Mortgage Note; and no
Seller has waived any default, breach, violation or event of
acceleration.
(41) Each Mortgaged Property is improved by a one-
to four-family residential dwelling, including condominium units and
dwelling units in PUDs. To the best of CHL's knowledge, no
improvement to a Mortgaged Property includes a cooperative or a
mobile home or constitutes other than real property under state law.
(42) Each Mortgage Loan is being serviced by the
Master Servicer.
(43) Any future advances made prior to the Cut-off
Date have been consolidated with the outstanding principal amount
secured by the Mortgage, and the secured principal amount, as
consolidated, bears a single interest rate and single repayment term
reflected on the Mortgage Loan Schedule. The consolidated principal
amount does not exceed the original principal amount of the Mortgage
Loan. The
Mortgage Note does not permit or obligate the Master Servicer to
make future advances to the Mortgagor at the option of the
Mortgagor.
(44) All taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or
ground rents that previously became due and owing have been paid, or
an escrow of funds has been established in an amount sufficient to
pay for every such item that remains unpaid and that has been
assessed, but is not yet due and payable. Except for (A) payments in
the nature of escrow payments, and (B) interest accruing from the
date of the Mortgage Note or date of disbursement of the Mortgage
proceeds, whichever is later, to the day that precedes by one month
the Due Date of the first installment of principal and interest,
including without limitation, taxes and insurance payments, the
Master Servicer has not advanced funds, or induced, solicited or
knowingly received any advance of funds by a party other than the
Mortgagor, directly or indirectly, for the payment of any amount
required by the Mortgage.
(45) The Mortgage Loans originated by CHL were
underwritten in all material respects in accordance with CHL's
underwriting guidelines for closed-end second lien mortgage loans or,
with respect to Mortgage Loans purchased by CHL were underwritten in
all material respects in accordance with customary and prudent
underwriting guidelines generally used by originators of closed-end
second lien mortgage loans.
(46) Prior to the approval of the Mortgage Loan
application, an appraisal of the related Mortgaged Property was
obtained from a qualified appraiser, duly appointed by the
originator, who had no interest, direct or indirect, in the Mortgaged
Property or in any loan made on the security thereof, and whose
compensation is not affected by the approval or disapproval of the
Mortgage Loan; such appraisal is in a form acceptable to Xxxxxx Xxx
and Xxxxxxx Mac.
(47) None of the Mortgage Loans is a graduated
payment mortgage loan or a growing equity mortgage loan, and no
Mortgage Loan is subject to a buydown or similar arrangement.
(48) The Mortgage Rates borne by the Initial
Mortgage Loans as of the Cut-off Date ranged between the approximate
per annum percentages specified on the Collateral Schedule and the
weighted average Mortgage Rate of the Initial Mortgage Loans as of
the Cut-off Date was approximately the per annum rate specified on
the Collateral Schedule.
(49) The Mortgage Loans were selected from among
the outstanding one- to four-family mortgage loans in the applicable
Seller's portfolio at the Closing Date as to which the
representations and warranties made as to the Mortgage Loans set
forth in this Section 2.03(b) and Sections 2.03(c), 2.03(d) and
2.03(e) can be made. No selection was made in a manner that would
adversely affect the interests of Certificateholders or the
Certificate Insurer.
(50) [Reserved].
(51) Each of the Initial Mortgage Loans in the
Mortgage Pool has a Due Date on or before the date specified in the
Collateral Schedule.
(52) The Mortgage Loans, individually and in the
aggregate, conform in all material respects to the descriptions
thereof in the Prospectus Supplement.
(53) There is no obligation on the part of any
Seller under the terms of the Mortgage or related Mortgage Note to
make payments in addition to those made by the Mortgagor.
(54) Any leasehold estate securing a Mortgage Loan
has a term of not less than five years in excess of the term of the
related Mortgage Loan.
(55) Each Mortgage Loan represents a "qualified
mortgage" within the meaning of Section 860(a)(3) of the Code (but
without regard to the rule in Treasury Regulation ss. 1.860G-2(f)(2)
that treats a defective obligation as a qualified mortgage, or any
substantially similar successor provision) and applicable Treasury
regulations promulgated thereunder.
(56) No Mortgage Loan was either a "consumer credit
contract" or a "purchase money loan" as such terms are defined in 16
C.F.R. ss. 433 nor is any Mortgage Loan a "mortgage" as defined in 15
U.S.C. ss. 1602(aa).
(57) Each Mortgage Loan, at the time it was
originated and as of the Closing Date or the related Subsequent
Transfer Date, as applicable, complied in all material respects with
applicable local, state and federal laws, including, but not limited
to, all predatory and abusive lending laws.
(58) None of the Mortgage Loans is a "high cost"
mortgage loan as defined by applicable federal, state and local
predatory and abusive lending laws.
(59) Each Prepayment Charge is enforceable and was
originated in compliance with all applicable federal, state and local
laws.
(60) None of the Mortgage Loans that are secured by
property located in the State of Illinois are in violation of the
provisions of the Illinois Interest Act; 815 Ill. Comp. Stat.
205/0.01 (2004).
(61) There is no Mortgage Loan in the Trust Fund
that was originated on or after March 7, 2003, which is a "high cost
home loan" as defined under the Georgia Fair Lending Act.
(62) No Mortgage Loan in the Trust Fund is a High
Cost Loan or Covered Loan, as applicable (as such terms are defined
in the then-current Standard & Poor's LEVELS(R) Glossary which is now
Version 5.7(d), Appendix E) and no Mortgage
Loan originated on or after October 1, 2002 through March 6, 2003 is
governed by the Georgia Fair Lending Act.
(63) Each Mortgage Loan is secured by a "single
family residence" within the meaning of Section 25(e)(10) of the
Internal Revenue Code of 1986 (as amended) (the "Code"). The fair
market value of the manufactured home securing each Mortgage Loan was
at least equal to 80% of the adjusted issue price of the contract at
either (i) the time the contract was originated (determined pursuant
to the REMIC Provisions) or (ii) the time the contract is transferred
to the purchaser. Each Mortgage Loan is a "qualified mortgage" under
Section 860G(a)(3) of the Code.
(64) No Mortgage Loan in the Trust Fund is a "high
cost home," "covered" (excluding home loans defined as "covered home
loans" in the New Jersey Home Ownership Security Act of 2002 that
were originated between November 26, 2003 and July 7, 2004), "high
risk home" or "predatory" loan under any applicable state, federal or
local law (or a similarly classified loan using different terminology
under a law imposing heightened regulatory scrutiny or additional
legal liability for residential mortgage loans having high interest
rates, points and/or fees).
(65) There is no Mortgage Loan in the Trust Fund
that was originated on or after October 1, 2002 and before March 7,
2003, which is secured by property located in the State of Georgia.
(66) The representations in Section 2.03(c)(1)-(6),
2.03(d)(1)-(6) and 2.03(e)(1)-(6) are true and correct.
(c) Park Granada hereby represents and warrants to the
Depositor, the Certificate Insurer and the Trustee as follows, as of the
Cut-off Date:
(1) Park Granada is duly organized as a Delaware
corporation and is validly existing and in good standing under the
laws of the State of Delaware and is duly authorized and qualified to
transact any and all business contemplated by this Agreement and each
Subsequent Transfer Agreement to be conducted by Park Granada in any
state in which a Mortgaged Property securing a Park Granada Mortgage
Loan is located or is otherwise not required under applicable law to
effect such qualification and, in any event, is in compliance with
the doing business laws of any such state, to the extent necessary to
ensure its ability to enforce each Park Granada Mortgage Loan, to
sell the Park Granada Mortgage Loans in accordance with the terms of
this Agreement and each Subsequent Transfer Agreement and to perform
any of its other obligations under this Agreement in accordance with
the terms hereof.
(2) Park Granada has the full company power and
authority to sell each Park Granada Mortgage Loan, and to execute,
deliver and perform, and to enter into and consummate the
transactions contemplated by this Agreement and each Subsequent
Transfer Agreement and has duly authorized by all necessary corporate
action on the part of Park Granada the execution, delivery and
performance of this Agreement and each Subsequent Transfer Agreement;
and this Agreement and each Subsequent Transfer
Agreement, assuming the due authorization, execution and delivery
hereof by the other parties hereto, constitutes a legal, valid and
binding obligation of Park Granada, enforceable against Park Granada
in accordance with its terms, except that (a) the enforceability
hereof may be limited by bankruptcy, insolvency, moratorium,
receivership and other similar laws relating to creditors' rights
generally and (b) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(3) The execution and delivery of this Agreement
and each Subsequent Transfer Agreement by Park Granada, the sale of
the Park Granada Mortgage Loans by Park Granada under this Agreement
and each Subsequent Transfer Agreement, the consummation of any other
of the transactions contemplated by this Agreement and each
Subsequent Transfer Agreement, and the fulfillment of or compliance
with the terms hereof are in the ordinary course of business of Park
Granada and will not (A) result in a material breach of any term or
provision of the certificate of incorporation or by-laws of Park
Granada or (B) materially conflict with, result in a material breach,
violation or acceleration of, or result in a material default under,
the terms of any other material agreement or instrument to which Park
Granada is a party or by which it may be bound, or (C) constitute a
material violation of any statute, order or regulation applicable to
Park Granada of any court, regulatory body, administrative agency or
governmental body having jurisdiction over Park Granada; and Park
Granada is not in breach or violation of any material indenture or
other material agreement or instrument, or in violation of any
statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over
it which breach or violation may materially impair Park Granada's
ability to perform or meet any of its obligations under this
Agreement.
(4) No litigation is pending or, to the best of
Park Granada's knowledge, threatened, against Park Granada that would
materially and adversely affect the execution, delivery or
enforceability of this Agreement or any Subsequent Transfer Agreement
or the ability of Park Granada to sell the Park Granada Mortgage
Loans or to perform any of its other obligations under this Agreement
or any Subsequent Transfer Agreement in accordance with the terms
hereof or thereof.
(5) No consent, approval, authorization or order of
any court or governmental agency or body is required for the
execution, delivery and performance by Park Granada of, or compliance
by Park Granada with, this Agreement or any Subsequent Transfer
Agreement or the consummation of the transactions contemplated
hereby, or if any such consent, approval, authorization or order is
required, Park Granada has obtained the same.
(6) Park Granada will treat the transfer of the
Park Granada Mortgage Loans to the Depositor as a sale of the Park
Granada Mortgage Loans for all tax, accounting and regulatory
purposes.
(7) Immediately prior to the assignment of each
Park Granada Mortgage Loan to the Depositor, Park Granada had good
title to, and was the sole owner of, such Park Granada Mortgage Loan
free and clear of any pledge, lien, encumbrance or security interest
and had full right and authority, subject to no interest or
participation of, or agreement with, any other party, to sell and
assign the same pursuant to this Agreement.
(d) Park Monaco hereby represents and warrants to the
Depositor, the Certificate Insurer and the Trustee as follows, as of the
Cut-off Date:
(1) Park Monaco is duly organized as a Delaware
corporation and is validly existing and in good standing under the
laws of the State of Delaware and is duly authorized and qualified to
transact any and all business contemplated by this Agreement and each
Subsequent Transfer Agreement to be conducted by Park Monaco in any
state in which a Mortgaged Property securing a Park Monaco Mortgage
Loan is located or is otherwise not required under applicable law to
effect such qualification and, in any event, is in compliance with
the doing business laws of any such state, to the extent necessary to
ensure its ability to enforce each Park Monaco Mortgage Loan, to sell
the Park Monaco Mortgage Loans in accordance with the terms of this
Agreement and each Subsequent Transfer Agreement and to perform any
of its other obligations under this Agreement in accordance with the
terms hereof.
(2) Park Monaco has the full company power and
authority to sell each Park Monaco Mortgage Loan, and to execute,
deliver and perform, and to enter into and consummate the
transactions contemplated by this Agreement and each Subsequent
Transfer Agreement and has duly authorized by all necessary corporate
action on the part of Park Monaco the execution, delivery and
performance of this Agreement and each Subsequent Transfer Agreement;
and this Agreement and each Subsequent Transfer Agreement, assuming
the due authorization, execution and delivery hereof by the other
parties hereto, constitutes a legal, valid and binding obligation of
Park Monaco, enforceable against Park Monaco in accordance with its
terms, except that (a) the enforceability hereof may be limited by
bankruptcy, insolvency, moratorium, receivership and other similar
laws relating to creditors' rights generally and (b) the remedy of
specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
(3) The execution and delivery of this Agreement
and each Subsequent Transfer Agreement by Park Monaco, the sale of
the Park Monaco Mortgage Loans by Park Monaco under this Agreement
and each Subsequent Transfer Agreement, the consummation of any other
of the transactions contemplated by this Agreement and each
Subsequent Transfer Agreement, and the fulfillment of or compliance
with the terms hereof are in the ordinary course of business of Park
Monaco and will not (A) result in a material breach of any term or
provision of the certificate of incorporation or by-laws of Park
Monaco or (B) materially conflict with, result in a material breach,
violation or acceleration of, or result in a material default under,
the terms of any other material agreement or instrument to which Park
Monaco is a party or by which it may be bound,
or (C) constitute a material violation of any statute, order or
regulation applicable to Park Monaco of any court, regulatory body,
administrative agency or governmental body having jurisdiction over
Park Monaco; and Park Monaco is not in breach or violation of any
material indenture or other material agreement or instrument, or in
violation of any statute, order or regulation of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over it which breach or violation may materially impair
Park Monaco's ability to perform or meet any of its obligations under
this Agreement.
(4) No litigation is pending or, to the best of
Park Monaco's knowledge, threatened, against Park Monaco that would
materially and adversely affect the execution, delivery or
enforceability of this Agreement or any Subsequent Transfer Agreement
or the ability of Park Monaco to sell the Park Monaco Mortgage Loans
or to perform any of its other obligations under this Agreement or
any Subsequent Transfer Agreement in accordance with the terms hereof
or thereof.
(5) No consent, approval, authorization or order of
any court or governmental agency or body is required for the
execution, delivery and performance by Park Monaco of, or compliance
by Park Monaco with, this Agreement or any Subsequent Transfer
Agreement or the consummation of the transactions contemplated
hereby, or if any such consent, approval, authorization or order is
required, Park Monaco has obtained the same.
(6) Park Monaco will treat the transfer of the Park
Monaco Mortgage Loans to the Depositor as a sale of the Park Monaco
Mortgage Loans for all tax, accounting and regulatory purposes.
(7) Immediately prior to the assignment of each
Park Monaco Mortgage Loan to the Depositor, Park Monaco had good
title to, and was the sole owner of, such Park Monaco Mortgage Loan
free and clear of any pledge, lien, encumbrance or security interest
and had full right and authority, subject to no interest or
participation of, or agreement with, any other party, to sell and
assign the same pursuant to this Agreement.
(e) Park Sienna hereby represents and warrants to the
Depositor, the Certificate Insurer and the Trustee as follows, as of the
Cut-off Date:
(1) Park Sienna is duly organized as a Delaware
limited liability company and is validly existing and in good
standing under the laws of the State of Delaware and is duly
authorized and qualified to transact any and all business
contemplated by this Agreement and each Subsequent Transfer Agreement
to be conducted by Park Sienna in any state in which a Mortgaged
Property securing a Park Sienna Mortgage Loan is located or is
otherwise not required under applicable law to effect such
qualification and, in any event, is in compliance with the doing
business laws of any such state, to the extent necessary to ensure
its ability to enforce each Park Sienna Mortgage Loan, to sell the
Park Sienna Mortgage Loans in accordance with the terms of
this Agreement and each Subsequent Transfer Agreement and to perform
any of its other obligations under this Agreement in accordance with
the terms hereof.
(2) Park Sienna has the full company power and
authority to sell each Park Sienna Mortgage Loan, and to execute,
deliver and perform, and to enter into and consummate the
transactions contemplated by this Agreement and each Subsequent
Transfer Agreement and has duly authorized by all necessary company
action on the part of Park Sienna the execution, delivery and
performance of this Agreement and each Subsequent Transfer Agreement;
and this Agreement and each Subsequent Transfer Agreement, assuming
the due authorization, execution and delivery hereof by the other
parties hereto, constitutes a legal, valid and binding obligation of
Park Sienna, enforceable against Park Sienna in accordance with its
terms, except that (a) the enforceability hereof may be limited by
bankruptcy, insolvency, moratorium, receivership and other similar
laws relating to creditors' rights generally and (b) the remedy of
specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
(3) The execution and delivery of this Agreement
and each Subsequent Transfer Agreement by Park Sienna, the sale of
the Park Sienna Mortgage Loans by Park Sienna under this Agreement
and each Subsequent Transfer Agreement, the consummation of any other
of the transactions contemplated by this Agreement and each
Subsequent Transfer Agreement and the fulfillment of or compliance
with the terms hereof are in the ordinary course of business of Park
Sienna and will not (A) result in a material breach of any term or
provision of the certificate of formation or limited liability
company agreement of Park Sienna or (B) materially conflict with,
result in a material breach, violation or acceleration of, or result
in a material default under, the terms of any other material
agreement or instrument to which Park Sienna is a party or by which
it may be bound, or (C) constitute a material violation of any
statute, order or regulation applicable to Park Sienna of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over Park Sienna; and Park Sienna is not in breach or
violation of any material indenture or other material agreement or
instrument, or in violation of any statute, order or regulation of
any court, regulatory body, administrative agency or governmental
body having jurisdiction over it which breach or violation may
materially impair Park Sienna's ability to perform or meet any of its
obligations under this Agreement.
(4) No litigation is pending or, to the best of
Park Sienna's knowledge, threatened, against Park Sienna that would
materially and adversely affect the execution, delivery or
enforceability of this Agreement or any Subsequent Transfer Agreement
or the ability of Park Sienna to sell the Park Sienna Mortgage Loans
or to perform any of its other obligations under this Agreement or
any Subsequent Transfer Agreement in accordance with the terms hereof
or thereof.
(5) No consent, approval, authorization or order of
any court or governmental agency or body is required for the
execution, delivery and performance by Park Sienna of, or compliance
by Park Sienna with, this Agreement or any Subsequent Transfer
Agreement or the consummation of the transactions contemplated
hereby, or if
any such consent, approval, authorization or order is required, Park
Sienna has obtained the same.
(6) Park Sienna will treat the transfer of the Park
Sienna Mortgage Loans to the Depositor as a sale of the Park Sienna
Mortgage Loans for all tax, accounting and regulatory purposes.
(7) Immediately prior to the assignment of each
Park Sienna Mortgage Loan to the Depositor, Park Sienna had good
title to, and was the sole owner of, such the Park Sienna Mortgage
Loan free and clear of any pledge, lien, encumbrance or security
interest and had full right and authority, subject to no interest or
participation of, or agreement with, any other party, to sell and
assign the same pursuant to this Agreement.
(f) Upon discovery by any of the parties hereto of a breach
of a representation or warranty set forth in Section 2.03(a) through (e) that
materially and adversely affects the interests of the Certificateholders or
the Certificate Insurer in any Mortgage Loan, the party discovering such
breach shall give prompt notice thereof to the other parties, the NIM Insurer
and the Certificate Insurer. Each of the Master Servicer and the Sellers
(each, a "Representing Party") hereby covenants with respect to the
representations and warranties set forth in Sections 2.03(a) through (e) that
within 90 days of the earlier of the discovery by such Representing Party or
receipt of written notice by such Representing Party from any party of a
breach of any representation or warranty set forth herein made that materially
and adversely affects the interests of the Certificateholders in any Mortgage
Loan or the Certificate Insurer, it shall cure such breach in all material
respects and, if such breach is not so cured, shall, (i) if such 90-day period
expires prior to the second anniversary of the Closing Date, remove such
Mortgage Loan (a "Deleted Mortgage Loan") from the Trust Fund and substitute
in its place a Replacement Mortgage Loan, in the manner and subject to the
conditions set forth in this Section; or (ii) repurchase the affected Mortgage
Loan or Mortgage Loans from the Trustee at the Purchase Price in the manner
set forth below; provided that (a) any such substitution pursuant to (i) above
or repurchase pursuant to (ii) above shall not be effected prior to the
delivery to the Trustee of the Opinion of Counsel required by Section 2.05
hereof, (b) any such substitution pursuant to (i) above shall not be effected
prior to the additional delivery to the Trustee of a Request for File Release
and (c) any such substitution pursuant to (i) above shall include a payment by
the applicable Representing Party of any amount as calculated under item (iii)
of the definition of "Purchase Price". Any Representing Party liable for a
breach under this Section 2.03 shall promptly reimburse the Master Servicer or
the Trustee for any expenses reasonably incurred by the Master Servicer or the
Trustee in respect of enforcing the remedies for such breach. To enable the
Master Servicer to amend the Mortgage Loan Schedule, any Representing Party
liable for a breach under this Section 2.03 shall, unless it cures such breach
in a timely fashion pursuant to this Section 2.03, promptly notify the Master
Servicer whether such Representing Party intends either to repurchase, or to
substitute for, the Mortgage Loan affected by such breach. With respect to the
representations and warranties described in this Section that are made to the
best of the Representing Party's knowledge, if it is discovered by any of the
Depositor, the Master Servicer, the Sellers, the Certificate Insurer or the
Trustee that the substance of such representation and warranty is inaccurate
and such inaccuracy materially and adversely affects the value of the related
Mortgage Loan, notwithstanding the Representing Party's lack of knowledge with
respect to the substance of such representation or warranty, such inaccuracy
shall be deemed a breach of the applicable representation or warranty.
With respect to any Replacement Mortgage Loan or Loans, the
applicable Seller delivering such Replacement Mortgage Loan shall deliver to
the Trustee for the benefit of the Certificateholders and the Certificate
Insurer the related Mortgage Note, Mortgage and assignment of the Mortgage,
and such other documents and agreements as are required by Section 2.01, with
the Mortgage Note endorsed and the Mortgage assigned as required by Section
2.01. No substitution will be made in any calendar month after the
Determination Date for such month. Scheduled Payments due with respect to
Replacement Mortgage Loans in the Due Period related to the Distribution Date
on which such proceeds are to be distributed shall not be part of the Trust
Fund and will be retained by the applicable Seller delivering such Replacement
Mortgage Loan on such Distribution Date. For the month of substitution,
distributions to Certificateholders will include the Scheduled Payment due on
any Deleted Mortgage Loan for the related Due Period and thereafter the
applicable Seller shall be entitled to retain all amounts received in respect
of such Deleted Mortgage Loan. The Master Servicer shall amend the Mortgage
Loan Schedule for the benefit of the Certificateholders to reflect the removal
of such Deleted Mortgage Loan and the substitution of the Replacement Mortgage
Loan or Loans and the Master Servicer shall deliver the amended Mortgage Loan
Schedule to the Trustee. Upon such substitution, the Replacement Mortgage Loan
or Loans shall be subject to the terms of this Agreement in all respects, and
the applicable Seller delivering such Replacement Mortgage Loan shall be
deemed to have made with respect to such Replacement Mortgage Loan or Loans,
as of the date of substitution, the representations and warranties set forth
in Section 2.03(b), (c), (d) or (e) with respect to such Mortgage Loan. Upon
any such substitution and the deposit to the Certificate Account of the amount
required to be deposited therein in connection with such substitution as
described in the following paragraph, the Trustee shall release to the
Representing Party the Mortgage File relating to such Deleted Mortgage Loan
and held for the benefit of the Certificateholders and shall execute and
deliver at the Master Servicer's direction such instruments of transfer or
assignment as have been prepared by the Master Servicer, in each case without
recourse, as shall be necessary to vest in the applicable Seller, or its
respective designee, title to the Trustee's interest in any Deleted Mortgage
Loan substituted for pursuant to this Section 2.03.
For any month in which any Seller substitutes one or more
Replacement Mortgage Loans for one or more Deleted Mortgage Loans, the Master
Servicer will determine the amount (if any) by which the aggregate principal
balance of all such Replacement Mortgage Loans as of the date of substitution
is less than the Stated Principal Balance (after application of the principal
portion of the Scheduled Payment due in the month of substitution) of all such
Deleted Mortgage Loans. An amount equal to the aggregate of the deficiencies
described in the preceding sentence (such amount, the "Substitution Adjustment
Amount") shall be forwarded by the applicable Seller to the Master Servicer
and deposited by the Master Servicer into the Certificate Account not later
than the Determination Date for the Distribution Date relating to the
Prepayment Period during which the related Mortgage Loan became required to be
purchased or replaced hereunder.
In the event that a Seller shall have repurchased a Mortgage
Loan, the Purchase Price therefor shall be deposited in the Certificate
Account pursuant to Section 3.05 on the Determination Date for the
Distribution Date in the month following the month during which such Seller
became obligated to repurchase or replace such Mortgage Loan and upon such
deposit of the Purchase Price, the delivery of the Opinion of Counsel required
by Section 2.05, if
any, and the receipt of a Request for File Release, the Trustee shall release
the related Mortgage File held for the benefit of the Certificateholders to
such Seller, and the Trustee shall execute and deliver at such Person's
direction the related instruments of transfer or assignment prepared by such
Seller, in each case without recourse, as shall be necessary to transfer title
from the Trustee for the benefit of the Certificateholders and transfer the
Trustee's interest to such Seller to any Mortgage Loan purchased pursuant to
this Section 2.03. It is understood and agreed that the obligation under this
Agreement of the Sellers to cure, repurchase or replace any Mortgage Loan as
to which a breach has occurred and is continuing shall constitute the sole
remedy against the Sellers respecting such breach available to
Certificateholders, the Depositor or the Trustee.
(g) The representations and warranties set forth in this
Section 2.03 shall survive delivery of the respective Mortgage Files to the
Trustee for the benefit of the Certificateholders and the Certificate Insurer
with respect to each Mortgage Loan.
Section 2.04 Representations and Warranties of the
Depositor.
The Depositor hereby represents and warrants to the Master
Servicer and the Trustee as follows, as of the date hereof and as of each
Subsequent Transfer Date:
(1) The Depositor is duly organized and is validly
existing as a corporation in good standing under the laws of the
State of Delaware and has full power and authority (corporate and
other) necessary to own or hold its properties and to conduct its
business as now conducted by it and to enter into and perform its
obligations under this Agreement and each Subsequent Transfer
Agreement.
(2) The Depositor has the full corporate power and
authority to execute, deliver and perform, and to enter into and
consummate the transactions contemplated by, this Agreement and each
Subsequent Transfer Agreement and has duly authorized, by all
necessary corporate action on its part, the execution, delivery and
performance of this Agreement and each Subsequent Transfer Agreement;
and this Agreement and each Subsequent Transfer Agreement, assuming
the due authorization, execution and delivery hereof by the other
parties hereto, constitutes a legal, valid and binding obligation of
the Depositor, enforceable against the Depositor in accordance with
its terms, subject, as to enforceability, to (i) bankruptcy,
insolvency, reorganization, moratorium and other similar laws
affecting creditors' rights generally and (ii) general principles of
equity, regardless of whether enforcement is sought in a proceeding
in equity or at law.
(3) The execution and delivery of this Agreement
and each Subsequent Transfer Agreement by the Depositor, the
consummation of the transactions contemplated by this Agreement, and
the fulfillment of or compliance with the terms hereof are in the
ordinary course of business of the Depositor and will not (A) result
in a material breach of any term or provision of the charter or
by-laws of the Depositor or (B) materially conflict with, result in a
material breach, violation or acceleration of, or result in a
material default under, the terms of any other material agreement or
instrument to which the Depositor is a party or by which it may be
bound or (C) constitute a material violation of any statute, order or
regulation applicable to the Depositor of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over the Depositor; and the Depositor is not in breach
or violation of any material indenture or other material agreement or
instrument, or in violation of any statute, order or regulation of
any court, regulatory body, administrative agency or governmental
body having jurisdiction over it which breach or violation may
materially impair the Depositor's ability to perform or meet any of
its obligations under this Agreement.
(4) No litigation is pending, or, to the best of
the Depositor's knowledge, threatened, against the Depositor that
would materially and adversely affect the execution, delivery or
enforceability of this Agreement or any Subsequent Transfer Agreement
or the ability of the Depositor to perform its obligations under this
Agreement or any Subsequent Transfer Agreement in accordance with the
terms hereof or thereof.
(5) No consent, approval, authorization or order of
any court or governmental agency or body is required for the
execution, delivery and performance by the Depositor of, or
compliance by the Depositor with, this Agreement or any Subsequent
Transfer Agreement or the consummation of the transactions
contemplated hereby, or if any such consent, approval, authorization
or order is required, the Depositor has obtained the same.
The Depositor hereby represents and warrants to the Trustee
with respect to each Mortgage Loan, as of the Closing Date or the related
Subsequent Transfer Date, as applicable, following the transfer of such
Mortgage Loan to it by the Sellers, the Depositor had good title to the
Initial Mortgage Loans or related Subsequent Mortgage Loans, as applicable,
and the related Mortgage Notes were subject to no offsets, claims, defenses or
counterclaims.
It is understood and agreed that the representations and
warranties set forth in the two immediately preceding paragraphs shall survive
delivery of the Mortgage Files to the Trustee. Upon discovery by the Depositor
or the Trustee, of a breach of any of the foregoing representations and
warranties set forth in the immediately preceding paragraph (referred to
herein as a "breach"), which breach materially and adversely affects the
interest of the Certificateholders, the party discovering such breach shall
give prompt written notice to the others and to each Rating Agency and the NIM
Insurer. The Depositor hereby covenants with respect to the representations
and warranties made by it in this Section 2.04 that within 90 days of the
earlier of the discovery by it or receipt of written notice by it from any
party of a breach of any representation or warranty set forth herein made that
materially and adversely affects the interests of the Certificateholders in
any Mortgage Loan, it shall cure such breach in all material respects and, if
such breach is not so cured, shall repurchase or replace the affected Mortgage
Loan or Loans in accordance with the procedure set forth in Section 2.03(f).
Section 2.05 Delivery of Opinion of Counsel in Connection
with Substitutions and Repurchases.
---------------------------------------------
(a) Notwithstanding any contrary provision of this
Agreement, with respect to any Mortgage Loan that is not in default or as to
which default is not imminent, no repurchase or substitution pursuant to
Sections 2.02, 2.03 or 2.04 shall be made unless the Representing Party making
such repurchase or substitution delivers to the Trustee an Opinion of Counsel
(which
such Representing Party shall use reasonable efforts to obtain),
addressed to the Trustee to the effect that such repurchase or substitution
would not (i) result in the imposition of the tax on "prohibited transactions"
of the Trust Fund or contributions after the Closing Date, as defined in
sections 860F(a)(2) and 860G(d) of the Code, respectively or (ii) cause the
any REMIC formed hereunder to fail to qualify as a REMIC at any time that any
Certificates are outstanding. Any Mortgage Loan as to which repurchase or
substitution was delayed pursuant to this paragraph shall be repurchased or
the substitution therefor shall occur (subject to compliance with Sections
2.02, 2.03 or 2.04) upon the earlier of (a) the occurrence of a default or
imminent default with respect to such loan and (b) receipt by the Trustee of
an Opinion of Counsel to the effect that such repurchase or substitution, as
applicable, will not result in the events described in clause (i) or clause
(ii) of the preceding sentence.
(b) Upon discovery by the Depositor, any Seller, the Master
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 promptly (and in any event within five
Business Days of discovery) give written notice thereof to the other parties
and the NIM Insurer. In connection therewith, the Trustee shall require CHL,
at CHL's option, to either (i) substitute, if the conditions in Section
2.03(f) with respect to substitutions are satisfied, a Replacement Mortgage
Loan for the affected Mortgage Loan, or (ii) repurchase the affected Mortgage
Loan within 90 days of such discovery in the same manner as it would a
Mortgage Loan for a breach of representation or warranty contained in Section
2.03. The Trustee shall reconvey to CHL the Mortgage Loan to be released
pursuant hereto in the same manner, and on the same terms and conditions, as
it would a Mortgage Loan repurchased for breach of a representation or
warranty contained in Section 2.03.
Section 2.06 Authentication and Delivery of Certificates.
--------------------------------------------
The Trustee acknowledges the transfer and assignment to it
of the Trust Fund and, concurrently with such transfer and assignment, has
executed, authenticated and delivered, to or upon the order of the Depositor,
the Certificates in authorized denominations evidencing the entire ownership
of the Trust Fund. The Trustee agrees to hold the Trust Fund and exercise the
rights referred to above for the benefit of all present and future Holders of
the Certificates and to perform the duties set forth in this Agreement.
Section 2.07 Covenants of the Master Servicer.
---------------------------------
The Master Servicer hereby covenants to the Depositor and
the Trustee as follows:
(a) the Master Servicer shall comply in the performance of
its obligations under this Agreement with all reasonable rules and
requirements of the insurer under each Required Insurance Policy;
(b) no written information, certificate of an officer,
statement furnished in writing or written report delivered to the Depositor,
any affiliate of the Depositor or the Trustee and prepared by the Master
Servicer pursuant to this Agreement will contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the information, certificate, statement or report not misleading; and
(c) the Master Servicer shall ensure that the Covered
Mortgage Loans are serviced in accordance with the requirements of the Credit
Insurance Policy.
Section 2.08 Sponsor Loss Coverage Obligation.
---------------------------------
CHL hereby agrees that, for the benefit of the
Certificateholders and the Certificate Insurer, on the Business Day
immediately preceding each Distribution Date it will remit to the Trustee for
deposit into the Distribution Account the amount of any Loss Coverage Payment
due for such Distribution Date as specified in the remittance report delivered
by the Master Servicer. The obligation of CHL to remit Loss Coverage Payments
will terminate when the Sponsor Loss Coverage Amount has been reduced to zero.
ARTICLE III.
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01 Master Servicer to Service Mortgage Loans.
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For and on behalf of the Certificateholders, the Master
Servicer shall service and administer the Mortgage Loans in accordance with
customary and usual standards of practice of prudent mortgage loan lenders in
the respective states in which the Mortgaged Properties are located, including
taking all required and appropriate actions under each Required Insurance
Policy and taking all required and appropriate actions under the Credit
Insurance Policy on behalf of the Trustee, other than the payment of the
Credit Insurance Premium and obtaining the approval of the Credit Insurer with
respect to the appointment of a successor servicer. In connection with such
servicing and administration, the Master Servicer shall have full power and
authority, acting alone and/or through subservicers as provided in Section
3.02 hereof, subject to the terms hereof (i) to execute and deliver, on behalf
of the Certificateholders and the Trustee, customary consents or waivers and
other instruments and documents, (ii) to consent to transfers of any Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages (but only
in the manner provided in this Agreement), (iii) to collect any Insurance
Proceeds, other Liquidation Proceeds and Subsequent Recoveries, and (iv)
subject to Section 3.12(b), to effectuate foreclosure or other conversion of
the ownership of the Mortgaged Property securing any Mortgage Loan; provided
that the Master Servicer shall take no action that is inconsistent with or
prejudices the interests of the Trustee or the Certificateholders in any
Mortgage Loan or the rights and interests of the Depositor and the Trustee
under this Agreement. The Master Servicer shall represent and protect the
interest of the Trustee in the same manner as it currently protects its own
interest in mortgage loans in its own portfolio in any claim, proceeding or
litigation regarding a Mortgage Loan and shall not make or permit any
modification, waiver or amendment of any term of any Mortgage Loan which would
(i) cause any REMIC formed hereunder to fail to qualify as a REMIC, (ii)
result in the imposition of any tax under section 860(a) or 860(d) of the Code
or (iii) cause any Covered Loan to not be covered by the Credit Insurance
Policy, but in any case the Master Servicer shall not act in any manner that
is a lesser standard than that provided in the first sentence of this Section
3.01. Without limiting the
generality of the foregoing, the Master Servicer, in its own name or in the
name of the Depositor and the Trustee, is hereby authorized and empowered by
the Depositor and the Trustee, when the Master Servicer believes it
appropriate in its reasonable judgment, to execute and deliver, on behalf of
the Trustee, the Depositor, the Certificateholders or any of them, any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge and all other comparable instruments, with respect to the Mortgage
Loans, and with respect to the Mortgaged Properties held for the benefit of
the Certificateholders. The Master Servicer shall prepare and deliver to the
Depositor and/or the Trustee such documents requiring execution and delivery
by any or all of them as are necessary or appropriate to enable the Master
Servicer to service and administer the Mortgage Loans. Upon receipt of such
documents, the Depositor and/or the Trustee shall execute such documents and
deliver them to the Master Servicer. The Master Servicer further is authorized
and empowered by the Trustee, on behalf of the Certificateholders and the
Trustee, in its own name or in the name of the Subservicer, when the Master
Servicer or the Subservicer, as the case may be, believes it appropriate in
its best judgment to register any Mortgage Loan on the MERS(R) System, or
cause the removal from the registration of any Mortgage Loan on the MERS(R)
System, to execute and deliver, on behalf of the Trustee and the
Certificateholders or any of them, any and all instruments of assignment and
other comparable instruments with respect to such assignment or re-recording
of a Mortgage in the name of MERS, solely as nominee for the Trustee and its
successors and assigns.
In accordance with the standards of the preceding paragraph,
the Master Servicer shall advance or cause to be advanced funds as necessary
for the purpose of effecting the payment of taxes and assessments on the
Mortgaged Properties, which advances shall be reimbursable in the first
instance from related collections from the Mortgagors pursuant to Section
3.06, and further as provided in Section 3.08. All costs incurred by the
Master Servicer, if any, in effecting the timely payments of taxes and
assessments on the Mortgaged Properties and related insurance premiums shall
not, for the purpose of calculating monthly distributions to the
Certificateholders, be added to the Stated Principal Balance under the related
Mortgage Loans, notwithstanding that the terms of such Mortgage Loans so
permit.
The Master Servicer shall deliver a list of Servicing Officers
to the Trustee by the Closing Date.
In addition, the Master Servicer shall administer the Credit
Insurance Policy on behalf of itself, the Sellers, the Depositor, and the
Trustee for the benefit of the Certificateholders and the Certificate Insurer,
when it is necessary to make claims and receive payments under the Credit
Insurance Policy. In connection with its activities as Master Servicer of the
Mortgage Loans, the Master Servicer agrees to present, on behalf of itself,
the Trustee and the Certificateholders, claims to the insurer under any
primary insurance policies and, in this regard, to take any reasonable action
necessary to permit recovery under any primary insurance policies respecting
defaulted Mortgage Loans. Any amounts collected by the Master Servicer under
any primary insurance policies shall be deposited in the Certificate Account.
The Master Servicer shall take whatever action is
appropriate to maximize the amounts payable under the Credit Insurance Policy
and to service the Covered Loans in the manner required by the Credit
Insurance Policy. The Master Servicer shall prepare and submit all claims
eligible for submission under the Credit Insurance Policy and shall, except as
otherwise
specified in this Agreement, perform all of the obligations of the insured
under the Credit Insurance Policy.
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, Scheduled Payments or Stated Principal Balances
that were made by the Master Servicer in a manner not consistent with the
terms of the related Mortgage Note and this Agreement, the Master Servicer,
upon discovery or receipt of notice thereof, immediately shall deliver to the
Trustee for deposit in the Distribution Account from its own funds the amount
of any such shortfall and shall indemnify and hold harmless the Trust Fund,
the Trustee, the Depositor and any successor master servicer in respect of any
such liability. Such indemnities shall survive the termination or discharge of
this Agreement. Notwithstanding the foregoing, this Section 3.01 shall not
limit the ability of the Master Servicer to seek recovery of any such amounts
from the related Mortgagor under the terms of the related Mortgage Note, as
permitted by law and shall not be an expense of the Trust.
Section 3.02 Subservicing; Enforcement of the
Obligations of Master Servicer.
----------------------------------
(a) The Master Servicer may arrange for the subservicing of
any Mortgage Loan by a subservicer (each, a "Subservicer") pursuant to a
subservicing agreement (each, a "Subservicing Agreement"); provided that (i)
such subservicing arrangement and the terms of the related subservicing
agreement must provide for the servicing of such Mortgage Loans in a manner
consistent with the servicing arrangements contemplated hereunder, (ii) that
such subservicing agreements would not result in a withdrawal or a downgrading
by any Rating Agency of the ratings on any Class of Certificates (without
regard to the Certificate Insurance Policy in the case of the Class A
Certificates), as evidenced by a letter to that effect delivered by each
Rating Agency to the Depositor and the NIM Insurer and (iii) the NIM Insurer
shall have consented to such subservicing agreements (which consent shall not
be unreasonably withheld) with Subservicers, for the servicing and
administration of the Mortgage Loans. The Master Servicer shall deliver to the
Trustee copies of all Sub-Servicing Agreements, and any amendments or
modifications thereof, promptly upon the Master Servicer's execution and
delivery of such instruments. The Master Servicer, with the written consent of
the NIM Insurer (which consent shall not be unreasonably withheld), shall be
entitled to terminate any Subservicing Agreement and the rights and
obligations of any Subservicer pursuant to any Subservicing Agreement in
accordance with the terms and conditions of such Subservicing Agreement.
Notwithstanding the provisions of any subservicing agreement, any of the
provisions of this Agreement relating to agreements or arrangements between
the Master Servicer or a subservicer or reference to actions taken through a
Master Servicer or otherwise, the Master 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 subservicing agreements or arrangements or by
virtue of indemnification from the subservicer and to the same extent and
under the same terms and conditions as if the Master Servicer alone were
servicing and administering the Mortgage Loans. Every subservicing agreement
entered into by the Master Servicer shall contain a provision giving the
successor Master Servicer the option to terminate such agreement without cost
in the event a successor Master Servicer is appointed. All actions of each
subservicer performed pursuant to the related
subservicing agreement shall be performed as an agent of the Master Servicer
with the same force and effect as if performed directly by the Master
Servicer.
(b) For purposes of this Agreement, the Master Servicer
shall be deemed to have received any collections, recoveries or payments with
respect to the Mortgage Loans that are received by a subservicer regardless of
whether such payments are remitted by the subservicer to the Master Servicer.
Section 3.03 Rights of the Depositor, the Sellers,
the Certificateholders, the NIM Insurer,
the Certificate Insurer and the Trustee in
Respect of the Master Servicer.
--------------------------------------------
None of the Trustee, the Sellers, the Certificateholders,
the NIM Insurer, the Certificate Insurer or the Depositor shall have any
responsibility or liability for any action or failure to act by the Master
Servicer, and none of them is obligated to supervise the performance of the
Master Servicer hereunder or otherwise. The Master Servicer shall afford (and
any Subservicing Agreement shall provide that each Subservicer shall afford)
the Depositor, the NIM Insurer, the Certificate Insurer and the Trustee, upon
reasonable notice, during normal business hours, access to all records
maintained by the Master Servicer (and any such Subservicer) in respect of the
Master Servicer's rights and obligations hereunder and access to officers of
the Master Servicer (and those of any such Subservicer) responsible for such
obligations. Upon request, the Master Servicer shall furnish to the Depositor,
the NIM Insurer, the Certificate Insurer and the Trustee its (and any such
Subservicer's) most recent financial statements and such other information
relating to the Master Servicer's capacity to perform its obligations under
this Agreement that it possesses. To the extent such information is not
otherwise available to the public, the Depositor, the NIM Insurer, the
Certificate Insurer and the Trustee shall not disseminate any information
obtained pursuant to the preceding two sentences without the Masters
Servicer's (or any such Subservicer's) written consent, except as required
pursuant to this Agreement or to the extent that it is necessary to do so (i)
in working with legal counsel, auditors, taxing authorities or other
governmental agencies, rating agencies or reinsurers or (ii) pursuant to any
law, rule, regulation, order, judgment, writ, injunction or decree of any
court or governmental authority having jurisdiction over the Depositor, the
Trustee, the NIM Insurer, the Certificate Insurer or the Trust Fund, and in
either case, the Depositor, the NIM Insurer, the Certificate Insurer or the
Trustee, as the case may be, shall use its reasonable best efforts to assure
the confidentiality of any such disseminated non-public information. The
Depositor may, but is not obligated to, enforce the obligations of the Master
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
under this Agreement or exercise the rights of the Master Servicer under this
Agreement; provided by virtue of such performance by the Depositor of its
designee. The Depositor shall not have any responsibility or liability for any
action or failure to act by the Master Servicer and is not obligated to
supervise the performance of the Master Servicer under this Agreement or
otherwise.
Section 3.04 Trustee to Act as Master Servicer.
----------------------------------
In the event that the Master Servicer shall for any reason
no longer be the Master Servicer hereunder (including by reason of an Event of
Default or termination by the Depositor),
the Trustee or its designee shall thereupon assume all of the rights and
obligations of the Master Servicer hereunder arising thereafter (except that
the Trustee shall not be (i) liable for losses of the Master Servicer pursuant
to Section 3.10 hereof or any acts or omissions of the predecessor Master
Servicer hereunder, (ii) obligated to make Advances if it is prohibited from
doing so by applicable law, (iii) obligated to effectuate repurchases or
substitutions of Mortgage Loans hereunder, including pursuant to Section 2.02
or 2.03 hereof, (iv) responsible for expenses of the Master Servicer pursuant
to Section 2.03 or (v) deemed to have made any representations and warranties
hereunder, including pursuant to Section 2.03 or the first paragraph of
Section 6.02 hereof). If the Master Servicer shall for any reason no longer be
the Master Servicer (including by reason of any Event of Default or
termination by the Depositor), the Trustee (or any other successor servicer)
may, at its option, succeed to any rights and obligations of the Master
Servicer under any subservicing agreement in accordance with the terms
thereof; provided that the Trustee (or any other successor servicer) shall not
incur any liability or have any obligations in its capacity as servicer under
a subservicing agreement arising prior to the date of such succession unless
it expressly elects to succeed to the rights and obligations of the Master
Servicer thereunder; and the Master Servicer shall not thereby be relieved of
any liability or obligations under the subservicing agreement arising prior to
the date of such succession.
The Master Servicer shall, upon request of the Trustee, but
at the expense of the Master Servicer, deliver to the assuming party all
documents and records relating to each subservicing agreement and the Mortgage
Loans then being serviced thereunder and an accounting of amounts collected
held by it and otherwise use its best efforts to effect the orderly and
efficient transfer of the subservicing agreement to the assuming party.
Section 3.05 Collection of Mortgage Loan Payments;
Certificate Account; Distribution Account;
Pre-Funding Account; Seller Shortfall
Interest Requirement; Premium Account.
------------------------------------------
(a) The Master Servicer shall make reasonable efforts in
accordance with customary and usual standards of practice of prudent mortgage
lenders in the respective states in which the Mortgaged Properties are located
to collect all payments called for under the terms and provisions of the
Mortgage Loans to the extent such procedures shall be consistent with this
Agreement and the terms and provisions of any related Required Insurance
Policy. Consistent with the foregoing, the Master Servicer may in its
discretion (i) waive any late payment charge or, subject to Section 3.20, any
Prepayment Charge or penalty interest in connection with the prepayment of a
Mortgage Loan and (ii) extend the due dates for payments due on a Mortgage
Note for a period not greater than 270 days. In the event of any such
arrangement, the Master Servicer shall make Advances on the related Mortgage
Loan during the scheduled period in accordance with the amortization schedule
of such Mortgage Loan without modification thereof by reason of such
arrangements. In addition, the NIM Insurer's prior written consent shall be
required for any waiver of Prepayment Charges or for the extension of the due
dates for the payments due on a Mortgage Note, if the aggregate number of
Mortgage Loans that have been granted such waivers or extensions exceeds 5% of
the aggregate number of the Mortgage Loans. The Master Servicer shall not be
required to institute or join in litigation with respect to collection of any
payment (whether under a Mortgage, Mortgage Note or otherwise or against any
public or governmental authority with respect to a taking or condemnation) if
it reasonably
believes that enforcing the provision of the Mortgage or other instrument
pursuant to which such payment is required is prohibited by applicable law.
(b) The Master Servicer shall establish and maintain a
Certificate Account into which the Master Servicer shall deposit or cause to
be deposited on a daily basis within two Business Days of receipt, except as
otherwise specifically provided herein, the following payments and collections
remitted by Subservicers or received by it in respect of Mortgage Loans
subsequent to the Cut-off Date (other than in respect of principal and
interest due on the Mortgage Loans on or before the Cut-off Date) and the
following amounts required to be deposited hereunder:
(1) all payments on account of principal, including
Principal Prepayments, on the Mortgage Loans;
(2) all payments on account of interest on the
Mortgage Loans (net of the related Servicing Fee and Prepayment
Interest Excess permitted under Section 3.15 hereof to the extent not
previously paid to or withheld by the Master Servicer);
(3) all Insurance Proceeds (including proceeds from
the Credit Insurance Policy);
(4) all Liquidation Proceeds and Subsequent
Recoveries, other than proceeds to be applied to the restoration or
repair of the Mortgaged Property or released to the Mortgagor in
accordance with the Master Servicer's normal servicing procedures;
(5) all Compensating Interest;
(6) any amount required to be deposited by the
Master Servicer pursuant to Section 3.05(e) in connection with any
losses on Permitted Investments;
(7) any amounts required to be deposited by the
Master Servicer pursuant to Section 3.10 hereof;
(8) the Purchase Price and any Substitution
Adjustment Amount;
(9) all Advances made by the Master Servicer
or the Trustee pursuant to Section 4.01 hereof;
(10) all Prepayment Charges and Master Servicer
Prepayment Charge Payment Amounts; and
(11) any other amounts required to be deposited
hereunder.
The foregoing requirements for remittance by the Master
Servicer into the Certificate Account shall be exclusive, it being understood
and agreed that, without limiting the generality of the foregoing, payments in
the nature of late payment charges or assumption fees, if collected, need not
be remitted by the Master Servicer. In the event that the Master Servicer
shall remit any amount not required to be remitted and not otherwise subject
to withdrawal
1
pursuant to Section 3.08 hereof, it may at any time withdraw or direct the
institution maintaining the Certificate Account, to withdraw such amount from
the Certificate Account, any provision herein to the contrary notwithstanding.
Such withdrawal or direction may be accomplished by delivering written notice
thereof to the institution maintaining the Certificate Account, that describes
the amounts deposited in error in the Certificate Account. The Master Servicer
shall maintain adequate records with respect to all withdrawals made pursuant
to this Section. All funds deposited in the Certificate Account shall be held
in trust for the Certificateholders until withdrawn in accordance with Section
3.08.
No later than 1:00 p.m. Pacific time on the Business Day
prior to the Master Servicer Advance Date in each of September 2006, October
2006 and November 0000, XXX shall remit to the Master Servicer, and the Master
Servicer shall deposit in the Certificate Account, the Seller Shortfall
Interest Requirement (if any) for such Master Servicer Advance Date.
(c) The Trustee shall establish and maintain, on behalf of
the Certificateholders and the Certificate Insurer, the Distribution Account.
The Trustee shall, promptly upon receipt, deposit in the Distribution Account
and retain therein the following:
(1) the aggregate amount remitted by the Master
Servicer pursuant to the second paragraph of Section 3.08(a);
(2) any Loss Coverage Payment made by CHL pursuant
to Section 2.08;
(3) any amount required to be deposited by the
Master Servicer pursuant to Section 3.05(e) in connection with any
losses on Permitted Investments; and
(4) any amount to be deposited by the Trustee in
the Distribution Account pursuant to Section 3.05(d).
The foregoing requirements for remittance by the Master
Servicer and deposit by the Trustee into the Distribution Account shall be
exclusive. In the event that the Master Servicer shall remit any amount not
required to be remitted and not otherwise subject to withdrawal pursuant to
Section 3.08 hereof, it may at any time direct the Trustee to withdraw such
amount from the Distribution Account, any provision herein to the contrary
notwithstanding. Such direction may be accomplished by delivering a written
notice to the Trustee that describes the amounts deposited in error in the
Distribution Account. All funds deposited in the Distribution Account shall be
held by the Trustee in trust for the Certificateholders until disbursed in
accordance with this Agreement or withdrawn in accordance with Section 3.08.
In no event shall the Trustee incur liability for withdrawals from the
Distribution Account at the direction of the Master Servicer.
(d) If the Pre-Funded Amount is greater than zero, the
Trustee shall establish and maintain, on behalf of the Certificateholders and
the Certificate Insurer, the Pre-Funding Account, and on the Closing Date, CHL
shall remit the Pre-Funded Amount to the Trustee for deposit in the
Pre-Funding Account.
On the Business Day before the Distribution Date following
the end of the Funding Period, the Trustee shall (i) withdraw the amount on
deposit in the Pre-Funding Account (net of investment income), (ii) promptly
deposit such amount in the Distribution Account, and (iii) distribute each
amount to the Certificates on the Distribution Date pursuant to Section 4.04.
(e) Each institution that maintains the Certificate Account,
the Distribution Account, the Premium Account or the Pre-Funding Account shall
invest the funds in each such account, as directed by the Master Servicer, in
Permitted Investments, which shall mature not later than (x) in the case of
the Certificate Account, the second Business Day next preceding the related
Distribution Account Deposit Date (except that if such Permitted Investment is
an obligation of the institution that maintains such Certificate Account, then
such Permitted Investment shall mature not later than the Business Day next
preceding such Distribution Account Deposit Date) and (y) in the case of the
Distribution Account, the Premium Account and the Pre-Funding Account, the
Business Day immediately preceding the first Distribution Date that follows
the date of such investment (except that if such Permitted Investment is an
obligation of the institution that maintains such Distribution Account, the
Premium Account or Pre-Funding Account, then such Permitted Investment shall
mature not later than such Distribution Date), in each case, shall not be sold
or disposed of prior to its maturity. All such Permitted Investments shall be
made in the name of the Trustee, for the benefit of the Certificateholders. In
the case of (i) the Certificate Account and the Distribution Account, all
income and gain net of any losses realized from any such investment shall be
for the benefit of the Master Servicer as servicing compensation and shall be
remitted to it monthly as provided herein, (ii) the Pre-Funding Account, all
income and gain net of any losses realized from any such investment shall be
for the benefit of the Depositor and shall be remitted to the Depositor as
provided herein and (iii) the Premium Account, all income and gain net of any
losses realized from any such investment shall be for the benefit of the
Certificateholders and shall be remitted to the Premium Account. The amount of
any losses incurred in the Certificate Account or the Distribution Account in
respect of any such investments shall be deposited by the Master Servicer in
the Certificate Account or paid to the Trustee for deposit into the
Distribution Account out of the Master Servicer's own funds immediately as
realized. The amount of any losses incurred in the Pre-Funding Account in
respect of any such investments shall be paid by the Master Servicer to the
Trustee for deposit into the Pre-Funding Account out of the Master Servicer's
own funds immediately as realized. The Trustee shall not be liable for the
amount of any loss incurred in respect of any investment or lack of investment
of funds held in the Certificate Account, the Distribution Account, the
Premium Account or the Pre-Funding Account and made in accordance with this
Section 3.05. The Master Servicer shall not be liable for the amount of any
loss incurred in respect of any investment or lack of investment of funds held
in the Premium Account and made in accordance with this Section 3.05.
(f) The Master Servicer shall give at least 30 days advance
notice to the Trustee, each Seller, the Certificate Insurer, each Rating
Agency and the Depositor of any proposed change of location of the Certificate
Account prior to any change thereof. The Trustee shall give at least 30 days
advance notice to the Master Servicer, each Seller, the Certificate Insurer,
each Rating Agency and the Depositor of any proposed change of the location of
the Distribution Account, the Pre-Funding Account, the Premium Account or the
Carryover Reserve Fund prior to any change thereof.
(g) Except as otherwise expressly provided in this
Agreement, if any default occurs under any Permitted Investment, the Trustee
may and, subject to Sections 8.01 and 8.02(a)(4), at the request of the
Holders of Certificates representing more than 50% of the Voting Rights or the
NIM Insurer, shall take any action appropriate to enforce payment or
performance, including the institution and prosecution of appropriate
proceedings.
(h) Upon its initial receipt of written instructions from
the Master Servicer pursuant to Section 3.08(b)(vi) directing the Trustee to
deposit an amount in the Premium Account, the Trustee shall establish and
maintain, on behalf of the Certificateholders and the Certificate Insurer, the
Premium Account.
Section 3.06 Collection of Taxes, Assessments and
Similar Items; Escrow Accounts.
---------------------------------------
To the extent required by the related Mortgage Note, the
Master Servicer shall establish and maintain one or more accounts (each, an
"Escrow Account") and deposit and retain therein all collections from the
Mortgagors (or advances by the Master Servicer) for the payment of taxes,
assessments, hazard insurance premiums or comparable items for the account of
the Mortgagors. Nothing herein shall require the Master Servicer to compel a
Mortgagor to establish an Escrow Account in violation of applicable law.
Withdrawals of amounts so collected from the Escrow Accounts
may be made only to effect timely payment of taxes, assessments, hazard
insurance premiums, condominium or PUD association dues, or comparable items,
to reimburse the Master Servicer out of related collections for any payments
made pursuant to Sections 3.01 hereof (with respect to taxes and assessments
and insurance premiums) and 3.10 hereof (with respect to hazard insurance), to
refund to any Mortgagors any sums as may be determined to be overages, to pay
interest, if required by law or the terms of the related Mortgage or Mortgage
Note, to Mortgagors on balances in the Escrow Account or to clear and
terminate the Escrow Account at the termination of this Agreement in
accordance with Section 9.01 hereof. The Escrow Accounts shall not be a part
of the Trust Fund.
Section 3.07 Access to Certain Documentation and
Information Regarding the Mortgage Loans.
----------------------------------------
The Master Servicer shall afford the Depositor, the NIM
Insurer, the Trustee and the Certificate Insurer reasonable access to all
records and documentation regarding the Mortgage Loans and all accounts,
insurance policies and other matters relating to this Agreement, such access
being afforded without charge, but only upon reasonable request and during
normal business hours at the offices of the Master Servicer designated by it.
Upon request, the Master Servicer shall furnish to the Trustee and the NIM
Insurer its most recent publicly available financial statements and any other
information relating to its capacity to perform its obligations under this
Agreement reasonably requested by the NIM Insurer.
Upon reasonable advance notice in writing if required by
federal regulation, the Master Servicer will provide to each Certificateholder
or Certificate Owner that is a savings and loan association, bank or insurance
company certain reports and reasonable access to information
and documentation regarding the Mortgage Loans sufficient to permit such
Certificateholder or Certificate Owner to comply with applicable regulations
of the OTS or other regulatory authorities with respect to investment in the
Certificates; provided that the Master Servicer shall be entitled to be
reimbursed by each such Certificateholder or Certificate Owner for actual
expenses incurred by the Master Servicer in providing such reports and access.
Section 3.08 Permitted Withdrawals from the
Certificate Account, Distribution Account,
Carryover Reserve Fund and the Principal
Reserve Fund.
------------------------------------------
(a) The Master Servicer may from time to time make
withdrawals from the Certificate Account for the following purposes:
(i) to pay to the Master Servicer (to the extent
not previously paid to or withheld by the Master Servicer),
as servicing compensation in accordance with Section 3.15,
that portion of any payment of interest that equals the
Servicing Fee for the period with respect to which such
interest payment was made, and, as additional servicing
compensation to the Master Servicer, those other amounts set
forth in Section 3.15;
(ii) to reimburse each of the Master Servicer and
the Trustee for Advances made by it with respect to the
Mortgage Loans, such right of reimbursement pursuant to this
subclause (ii) being limited to amounts received on
particular Mortgage Loan(s) (including, for this purpose,
Liquidation Proceeds, Insurance Proceeds and Subsequent
Recoveries (other than proceeds of the Credit Insurance
Policy)) that represent late recoveries of payments of
principal and/or interest on such particular Mortgage
Loan(s) in respect of which any such Advance was made;
(iii) [Reserved];
(iv) to reimburse each of the Master Servicer and
the Trustee for any Nonrecoverable Advance previously made;
(v) to reimburse the Master Servicer from Insurance
Proceeds (other than proceeds of the Credit Insurance
Policy) for Insured Expenses covered by the related
Insurance Policy;
(vi) to pay the Master Servicer any unpaid
Servicing Fees and to reimburse it for any unreimbursed
Servicing Advances, the Master Servicer's right to
reimbursement of Servicing Advances pursuant to this
subclause (vi) with respect to any Mortgage Loan being
limited to amounts received on particular Mortgage Loan(s)
(including, for this purpose, Liquidation Proceeds,
Insurance Proceeds and Subsequent Recoveries and purchase
and repurchase proceeds) that represent late recoveries of
the payments for which such advances were made pursuant to
Section 3.01 or Section 3.06;
(vii) to pay to the applicable Seller, the
Depositor or the Master Servicer, as applicable, with
respect to each Mortgage Loan or property acquired
in respect thereof that has been purchased pursuant to
Section 2.02, 2.03, 2.04 or 3.12, all amounts received
thereon and not taken into account in determining the
related Purchase Price of such repurchased Mortgage Loan;
(viii) to reimburse the applicable Seller, the
Master Servicer, the NIM Insurer or the Depositor for
expenses incurred by any of them in connection with the
Mortgage Loans or Certificates and reimbursable pursuant to
Section 6.03 hereof; provided that such amount shall only be
withdrawn following the withdrawal from the Certificate
Account for deposit into the Distribution Account pursuant
to the following paragraph;
(ix) to pay any lender-paid primary mortgage
insurance premiums (other than the Credit Insurance
Premium);
(x) to withdraw any amount deposited in the
Certificate Account and not required to be deposited
therein; and
(xi) to clear and terminate the Certificate Account
upon termination of this Agreement pursuant to Section 9.01
hereof.
In addition, no later than 1:00 p.m. Pacific time on the
Distribution Account Deposit Date, the Master Servicer shall withdraw from the
Certificate Account and remit to the Trustee the Interest Remittance Amount,
the Principal Remittance Amount, Prepayment Charges collected and the Master
Servicer Prepayment Charge Payment Amount, and the Trustee shall deposit such
amount in the Distribution Account.
The Trustee shall establish and maintain, on behalf of the
Certificateholders, a Principal Reserve Fund in the name of the Trustee. On
the Closing Date, CHL shall deposit into the Principal Reserve Fund $200.00.
Funds on deposit in the Principal Reserve Fund shall not be invested. The
Principal Reserve Fund shall be treated as an "outside reserve fund" under
applicable Treasury regulations and shall not be part of any REMIC created
under this Agreement.
On the Business Day before the first Distribution Date, the
Trustee shall transfer $100.00 from the Principal Reserve Fund to the
Distribution Account, and on the first Distribution Date, the Trustee shall
withdraw $100 and distribute such amount to the Class A-R Certificates in
reduction of the Certificate Principal Balance thereof.
On the Business Day before the Class P Principal
Distribution Date, the Trustee shall transfer from the Principal Reserve Fund
to the Distribution Account $100.00 and shall distribute such amount to the
Class P Certificates on the Class P Principal Distribution Date. Following the
distributions to be made in accordance with the preceding sentence, the
Trustee shall then terminate the Principal Reserve Fund.
The Master Servicer shall keep and maintain separate
accounting, on a Mortgage Loan by Mortgage Loan basis, for the purpose of
justifying any withdrawal from the Certificate Account pursuant to subclauses
(i), (ii), (iv), (v), (vi), (vii), (viii), (ix) and (x) above. Prior to making
any withdrawal from the Certificate Account pursuant to subclause (iv), the
Master
Servicer shall deliver to the Trustee and the Certificate Insurer an Officer's
Certificate of a Servicing Officer indicating the amount of any previous
Advance determined by the Master Servicer to be a Nonrecoverable Advance and
identifying the related Mortgage Loan(s), and their respective portions of
such Nonrecoverable Advance.
(b) The Trustee shall withdraw funds from the Distribution
Account for distribution to the Certificateholders and the Certificate Insurer
in the manner specified in this Agreement (and to withhold from the amounts so
withdrawn, the amount of any taxes that it is authorized to retain pursuant to
the penultimate paragraph of Section 8.11). On each Distribution Date, the
Trustee shall pay (or cause to be paid) the applicable Credit Insurance
Premium to the Credit Insurer from funds on deposit in the Distribution
Account. Payments to the Credit Insurer shall be made by the Trustee by wire
transfer of immediately available funds to the following account, unless the
Credit Insurer notifies the Trustee in writing: ABA#000000000,
DDA#198002383687, Bank Name: US Bank, Re: Policy No.V09, [include reporting
month here]. In addition, the Trustee may from time to time make withdrawals
from the Distribution Account for the following purposes:
(i) to pay the Trustee the Trustee Fee on each
Distribution Date;
(ii) to pay to the Master Servicer, as additional
servicing compensation, earnings on or investment income
with respect to funds in or credited to the Distribution
Account;
(iii) to withdraw pursuant to Section 3.05 any
amount deposited in the Distribution Account and not
required to be deposited therein;
(iv) to reimburse the Trustee for any unreimbursed
Advances made by it pursuant to Section 4.01(d) hereof, such
right of reimbursement pursuant to this subclause (iv) being
limited to (x) amounts received on the related Mortgage
Loan(s) in respect of which any such Advance was made and
(y) amounts not otherwise reimbursed to the Trustee pursuant
to Section 3.08(a)(ii) hereof;
(v) to reimburse the Trustee for any Nonrecoverable
Advance previously made by the Trustee pursuant to Section
4.01(d) hereof, such right of reimbursement pursuant to this
subclause (v) being limited to amounts not otherwise
reimbursed to the Trustee pursuant to Section 3.08(a)(iv)
hereof;
(vi) upon receipt with written instructions by the
Master Servicer, deposit all or a portion of the Credit
Insurance Premium into the Premium Account; and
(vii) to clear and terminate the Distribution
Account upon termination of the Agreement pursuant to
Section 9.01 hereof.
(c) The Trustee shall withdraw funds from the Carryover
Reserve Fund for distribution to the Certificateholders in the manner
specified in this Agreement (and to withhold from the amounts so withdrawn,
the amount of any taxes that it is authorized to retain pursuant to
the penultimate paragraph of Section 8.11). In addition, the Trustee may from
time to time make withdrawals from the Carryover Reserve Fund for the
following purposes:
(1) to withdraw any amount deposited in the
Carryover Reserve Fund and not required to be deposited therein; and
(2) to clear and terminate the Carryover Reserve
Fund upon termination of the Agreement pursuant to Section 9.01
hereof.
Section 3.09 [Reserved].
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Section 3.10 Maintenance of Hazard Insurance.
--------------------------------
The Master Servicer shall cause to be maintained, for each
Mortgage Loan, hazard insurance with extended coverage in an amount that is at
least equal to the lesser of (i) the maximum insurable value of the
improvements securing such Mortgage Loan and (ii) the greater of (a) the
outstanding principal balance of the Mortgage Loan and (b) an amount such that
the proceeds of such policy shall be sufficient to prevent the related
Mortgagor and/or mortgagee from becoming a co-insurer. Each such policy of
standard hazard insurance shall contain, or have an accompanying endorsement
that contains, a standard mortgagee clause. The Master Servicer shall also
cause flood insurance to be maintained on property acquired upon foreclosure
or deed in lieu of foreclosure of any Mortgage Loan, to the extent described
below. Pursuant to Section 3.05 hereof, any amounts collected by the Master
Servicer under any such policies (other than the amounts to be applied to the
restoration or repair of the related Mortgaged Property or property thus
acquired or amounts released to the Mortgagor in accordance with the Master
Servicer's normal servicing procedures) shall be deposited in the Certificate
Account. Any cost incurred by the Master Servicer in maintaining any such
insurance shall not, for the purpose of calculating monthly distributions to
the Certificateholders or remittances to the Trustee for their benefit, be
added to the principal balance of the Mortgage Loan, notwithstanding that the
terms of the Mortgage Loan so permit. Such costs shall be recoverable by the
Master Servicer out of late payments by the related Mortgagor or out of
Liquidation Proceeds or Subsequent Recoveries to the extent permitted by
Section 3.08 hereof. It is understood and agreed that no earthquake or other
additional insurance is to be required of any Mortgagor or maintained on
property acquired in respect of a Mortgage 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 is located at the
time of origination of the Mortgage Loan in a federally designated special
flood hazard area and such area is participating in the national flood
insurance program, the Master Servicer shall cause flood insurance to be
maintained with respect to such Mortgage Loan. Such flood insurance shall be
in an amount equal to the lesser of (i) the original principal balance of the
related Mortgage Loan, (ii) the replacement value of the improvements that are
part of such Mortgaged Property, or (iii) the maximum amount of such insurance
available for the related Mortgaged Property under the Flood Disaster
Protection Act of 1973, as amended. If the hazard policy contains a deductible
clause, the Master Servicer will be required to deposit from its own funds
into the Certificate Account the amounts that would have been deposited
therein but for the deductible clause.
Section 3.11 Enforcement of Due-On-Sale Clauses;
Assumption Agreements.
-------------------------------------
(a) Except as otherwise provided in this Section 3.11(a),
when any property subject to a Mortgage has been or is about to be conveyed by
the Mortgagor, the Master Servicer shall to the extent that it has knowledge
of such conveyance, enforce any due-on-sale clause contained in any Mortgage
Note or Mortgage, to the extent permitted under applicable law and
governmental regulations, but only to the extent that such enforcement will
not adversely affect or jeopardize coverage under any Required Insurance
Policy. Notwithstanding the foregoing, the Master Servicer is not required to
exercise such rights with respect to a Mortgage Loan if the Person to whom the
related Mortgaged Property has been conveyed or is proposed to be conveyed
satisfies the terms and conditions contained in the Mortgage Note and Mortgage
related thereto and the consent of the mortgagee under such Mortgage Note or
Mortgage is not otherwise so required under such Mortgage Note or Mortgage as
a condition to such transfer. In the event that the Master Servicer is
prohibited by law from enforcing any such due-on-sale clause, or if coverage
under any Required Insurance Policy would be adversely affected, or if
nonenforcement is otherwise permitted hereunder, the Master Servicer is
authorized, subject to Section 3.11(b), to take or enter into an assumption
and modification agreement from or with the person to whom such property has
been or is about to be conveyed, pursuant to which such person becomes liable
under the Mortgage Note and, unless prohibited by applicable state law, the
Mortgagor remains liable thereon, provided that the Mortgage Loan shall
continue to be covered (if so covered before the Master Servicer enters such
agreement) by the applicable Required Insurance Policies. The Master Servicer,
subject to Section 3.11(b), is also authorized with the prior approval of the
insurers under any Required Insurance Policies to enter into a substitution of
liability agreement with such Person, pursuant to which the original Mortgagor
is released from liability and such Person is substituted as Mortgagor and
becomes liable under the Mortgage Note. The Master Servicer shall notify the
Trustee that any such substitution, modification or assumption agreement has
been completed by forwarding to the Trustee the executed original of such
substitution 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.
(b) Subject to the Master Servicer's duty to enforce any
due-on-sale clause to the extent set forth in Section 3.11(a) hereof, in any
case in which a Mortgaged Property has been conveyed to a Person by a
Mortgagor, and such Person is to enter into an assumption agreement or
modification agreement or supplement to the Mortgage Note or Mortgage that
requires the signature of the Trustee, or if an instrument of release signed
by the Trustee is required releasing the Mortgagor from liability on the
Mortgage Loan, the Master Servicer shall prepare and deliver or cause to be
prepared and delivered to the Trustee for signature and shall direct, in
writing, the Trustee to execute the assumption agreement with the Person to
whom the Mortgaged Property is to be conveyed and such modification agreement
or supplement to the Mortgage Note or Mortgage or other instruments as are
reasonable or necessary to carry out the terms of the Mortgage Note or
Mortgage or otherwise to comply with any applicable laws regarding assumptions
or the transfer of the Mortgaged Property to such Person. In connection with
any such assumption, no material term of the Mortgage Note (including, but not
limited to, the Mortgage Rate, the amount of the Scheduled Payment and any
other term affecting the amount or timing of payment on the Mortgage Loan) may
be changed. In addition, the substitute Mortgagor and the Mortgaged Property
must be acceptable to the Master Servicer in accordance
with its underwriting standards as then in effect. The Master Servicer shall
notify the Trustee that any such substitution or assumption agreement has been
completed by forwarding to the Trustee the original of such substitution or
assumption agreement, which in the case of the original shall be added to the
related Mortgage File and shall, for all purposes, be considered a part of
such Mortgage File to the same extent as all other documents and instruments
constituting a part thereof. Any fee collected by the Master Servicer for
entering into an assumption or substitution of liability agreement will be
retained by the Master Servicer as additional servicing compensation.
Section 3.12 Realization Upon Defaulted Mortgage
Loans; Determination of Excess Proceeds
and Realized Losses; Repurchase of Certain
Mortgage Loans.
------------------------------------------
(a) The Master Servicer may agree to a modification of any
Mortgage Loan (the "Modified Mortgage Loan") if (i) CHL purchases the Modified
Mortgage Loan from the Trust Fund immediately following the modification as
described below and (ii) the Stated Principal Balance of such Mortgage Loan,
when taken together with the aggregate of the Stated Principal Balances of all
other Mortgage Loans that have been so modified since the Closing Date at the
time of those modifications, does not exceed an amount equal to 5% of the
aggregate Certificate Principal Balance of the related Certificates. Effective
immediately after the modification, and, in any event, on the same Business
Day on which the modification occurs, all interest of the Trustee in the
Modified Mortgage Loan shall automatically be deemed transferred and assigned
to CHL and all benefits and burdens of ownership thereof, including the right
to accrued interest thereon from the date of modification and the risk of
default thereon, shall pass to CHL. The Master Servicer shall promptly deliver
to the Trustee a certification of a Servicing Officer to the effect that all
requirements of this paragraph have been satisfied with respect to the
Modified Mortgage Loan. For federal income tax purposes, the Trustee shall
account for such purchase as a prepayment in full of the Modified Mortgage
Loan. CHL shall remit the Purchase Price to the Master Servicer for deposit
into the Certificate Account pursuant to Section 3.05 within one Business Day
after the purchase of the Modified Mortgage Loan. Upon receipt by the Trustee
of written notification of any such deposit signed by a Servicing Officer, the
Trustee shall release to CHL or its designee the related Mortgage File and
shall execute and deliver such instruments of transfer or assignment, in each
case without recourse, as shall be necessary to vest in CHL any Modified
Mortgage Loan previously transferred and assigned pursuant hereto. CHL
covenants and agrees to indemnify the Trust Fund against any liability for any
"prohibited transaction" taxes and any related interest, additions, and
penalties imposed on the Trust Fund established hereunder as a result of any
modification of a Mortgage Loan effected pursuant to this subsection (a), any
holding of a Modified Mortgage Loan by the Trust Fund or any purchase of a
Modified Mortgage Loan by CHL (but such obligation shall not prevent CHL or
any other appropriate Person from in good faith contesting any such tax in
appropriate proceedings and shall not prevent CHL from withholding payment of
such tax, if permitted by law, pending the outcome of such proceedings). CHL
shall have no right of reimbursement for any amount paid pursuant to the
foregoing indemnification, except to the extent that the amount of any tax,
interest, and penalties, together with interest thereon, is refunded to the
Trust Fund or CHL. If the Master Servicer agrees to a modification of any
Mortgage Loan pursuant to this Section 3.12(a), and if such Mortgage Loan
carries a Prepayment Charge provision, CHL shall deliver to the Trustee the
amount of the Prepayment Charge, if any, that would have been due had such
Mortgage Loan been prepaid at the time of such modification, for deposit into
the Certificate Account (not later than 1:00 p.m. Pacific time on the Master
Servicer Advance Date immediately succeeding the date of such modification)
for distribution in accordance with the terms of this Agreement.
(b) The Master Servicer shall use reasonable efforts to
foreclose upon or otherwise comparably convert the ownership of properties
securing such of the Mortgage Loans as come into and continue in default and
as to which no satisfactory arrangements can be made for collection of
delinquent payments. In connection with such foreclosure or other conversion,
the Master Servicer shall follow such practices and procedures as it shall
deem necessary or advisable and as shall be normal and usual in its general
mortgage servicing activities and the requirements of the insurer under any
Required Insurance Policy; provided that the Master Servicer shall not be
required to expend its own funds in connection with any foreclosure or towards
the restoration of any property unless it shall determine (i) that such
restoration and/or foreclosure will increase the proceeds of liquidation of
the Mortgage Loan after reimbursement to itself of such expenses and (ii) that
such expenses will be recoverable to it through Liquidation Proceeds
(respecting which it shall have priority for purposes of withdrawals from the
Certificate Account pursuant to Section 3.08 hereof). The Master Servicer
shall be responsible for all other costs and expenses incurred by it in any
such proceedings; provided that it shall be entitled to reimbursement thereof
from the proceeds of liquidation of the related Mortgaged Property and any
related Subsequent Recoveries, as contemplated in Section 3.08 hereof. If the
Master Servicer has knowledge that a Mortgaged Property that the Master
Servicer is contemplating acquiring in foreclosure or by deed-in-lieu of
foreclosure is located within a one-mile radius of any site with environmental
or hazardous waste risks known to the Master Servicer, the Master Servicer
will, prior to acquiring the Mortgaged Property, consider such risks and only
take action in accordance with its established environmental review
procedures.
With respect to any REO Property, the deed or certificate of
sale shall be taken in the name of the Trustee for the benefit of the
Certificateholders (or the Trustee's nominee on behalf of the
Certificateholders). The Trustee's name shall be placed on the title to such
REO Property solely as the Trustee hereunder and not in its individual
capacity. The Master Servicer shall ensure that the title to such REO Property
references this Agreement and the Trustee's capacity thereunder. Pursuant to
its efforts to sell such REO Property, the Master Servicer shall either itself
or through an agent selected by the Master Servicer protect and conserve such
REO Property in the same manner and to such extent as is customary in the
locality where such REO Property is located and may, incident to its
conservation and protection of the interests of the Certificateholders, rent
the same, or any part thereof, as the Master Servicer deems to be in the best
interest of the Master Servicer and the Certificateholders for the period
prior to the sale of such REO Property. The Master Servicer shall prepare for
and deliver to the Trustee a statement with respect to each REO Property that
has been rented showing the aggregate rental income received and all expenses
incurred in connection with the management and maintenance of such REO
Property at such times as is necessary to enable the Trustee to comply with
the reporting requirements of the REMIC Provisions. The net monthly rental
income, if any, from such REO Property shall be deposited in the Certificate
Account no later than the close of business on each Determination Date. The
Master Servicer shall perform the tax reporting and withholding related to
foreclosures, abandonments and cancellation of indebtedness income as
specified by
Sections 1445, 6050J and 6050P of the Code by preparing and filing such tax
and information returns, as may be required.
In the event that the Trust Fund acquires any Mortgaged
Property as aforesaid or otherwise in connection with a default or imminent
default on a Mortgage Loan, the Master Servicer shall dispose of such
Mortgaged Property as soon as practicable in a manner that maximizes the
Liquidation Proceeds, but in no event later than three years after its
acquisition by the Trust Fund or, at the expense of the Trust Fund, the Master
Servicer shall request, more than 60 days prior to the day on which such
three-year period would otherwise expire, an extension of the three-year grace
period. In the event the Trustee shall have been supplied with an Opinion of
Counsel (such opinion not to be an expense of the Trustee) to the effect that
the holding by the Trust Fund of such Mortgaged Property subsequent to such
three-year period will not result in the imposition of taxes on "prohibited
transactions" of the Trust Fund as defined in section 860F of the Code or
cause any REMIC formed hereunder to fail to qualify as a REMIC at any time
that any Certificates are outstanding, and the Trust Fund may continue to hold
such Mortgaged Property (subject to any conditions contained in such Opinion
of Counsel) after the expiration of such three-year period. Notwithstanding
any other provision of this Agreement, no Mortgaged Property acquired by the
Trust Fund shall be rented (or allowed to continue to be rented) or otherwise
used for the production of income by or on behalf of the Trust Fund in such a
manner or pursuant to any terms that would (i) cause such Mortgaged Property
to fail to qualify as "foreclosure property" within the meaning of section
860G(a)(8) of the Code or (ii) subject the Trust Fund to the imposition of any
federal, state or local income taxes on the income earned from such Mortgaged
Property under section 860G(c) of the Code or otherwise, unless the Master
Servicer has agreed to indemnify and hold harmless the Trust Fund with respect
to the imposition of any such taxes.
The decision of the Master Servicer to foreclose on a
defaulted Mortgage Loan shall be subject to a determination by the Master
Servicer that the proceeds of such foreclosure would exceed the costs and
expenses of bringing such a proceeding. The income earned from the management
of any Mortgaged Properties acquired through foreclosure or other judicial
proceeding, net of reimbursement to the Master Servicer for expenses incurred
(including any property or other taxes) in connection with such management and
net of unreimbursed Servicing Fees, Advances, Servicing Advances and any
management fee paid or to be paid with respect to the management of such
Mortgaged Property, shall be applied to the payment of principal of, and
interest on, the related defaulted Mortgage Loans (with interest accruing as
though such Mortgage Loans were still current) and all such income shall be
deemed, for all purposes in this Agreement, to be payments on account of
principal and interest on the related Mortgage Notes and shall be deposited
into the Certificate Account. To the extent the income received during a
Prepayment Period is in excess of the amount attributable to amortizing
principal and accrued interest at the related Mortgage Rate on the related
Mortgage Loan, such excess shall be considered to be a partial Principal
Prepayment for all purposes hereof.
The Liquidation Proceeds from any liquidation of a Mortgage
Loan and any Subsequent Recoveries, net of any payment to the Master Servicer
as provided above, shall be deposited in the Certificate Account as provided
in Section 3.05 for distribution on the related Distribution Date, except that
any Excess Proceeds shall be retained by the Master Servicer as additional
servicing compensation.
The proceeds of any Liquidated Mortgage Loan, as well as any
recovery resulting from a partial collection of Liquidation Proceeds or any
income from an REO Property, will be applied in the following order of
priority: first, to reimburse the Master Servicer for any related unreimbursed
Servicing Advances and Servicing Fees, pursuant to Section 3.08(a)(vi) or this
Section 3.12; second, to reimburse the Master Servicer for any unreimbursed
Advances, pursuant to Section 3.08(a)(ii) or this Section 3.12; third, to
accrued and unpaid interest (to the extent no Advance has been made for such
amount) on the Mortgage Loan or related REO Property, at the Net Mortgage Rate
to the Due Date occurring in the month in which such amounts are required to
be distributed; and fourth, as a recovery of principal of the Mortgage Loan.
(c) [Reserved].
(d) The Master Servicer, in its sole discretion, shall have
the right to elect (by written notice sent to the Trustee) to purchase for its
own account from the Trust Fund any Mortgage Loan that is 150 days or more
delinquent at a price equal to the Purchase Price; provided, however, that the
Master Servicer may only exercise this right on or before the last day of the
calendar month in which such Mortgage Loan became 150 days delinquent (such
month, the "Eligible Repurchase Month"); provided further, that any such
Mortgage Loan which becomes current but thereafter becomes delinquent may be
purchased by the Master Servicer pursuant to this Section in any ensuing
Eligible Repurchase Month. The Purchase Price for any Mortgage Loan purchased
hereunder shall be deposited in the Certificate Account. Any purchase of a
Mortgage Loan pursuant to this Section 3.12(d) shall be accomplished by
remittance to the Master Servicer for deposit in the Certificate Account of
the Purchase Price. The Trustee, upon receipt of certification from the Master
Servicer of such deposit and a Request for File Release from the Master
Servicer, shall release or cause to be released to the purchaser of such
Mortgage Loan the related Mortgage File and shall execute and deliver such
instruments of transfer or assignment prepared by the purchaser of such
Mortgage Loan, in each case without recourse, as shall be necessary to vest in
the purchaser of such Mortgage Loan any Mortgage Loan released pursuant hereto
and the purchaser of such Mortgage Loan shall succeed to all the Trustee's
right, title and interest in and to such Mortgage Loan and all security and
documents related thereto. Such assignment shall be an assignment outright and
not for security. The purchaser of such Mortgage Loan shall thereupon own such
Mortgage Loan, and all security and documents, free of any further obligation
to the Trustee or the Certificateholders with respect thereto.
Section 3.13 Trustee to Cooperate; Release of Mortgage
Files.
-----------------------------------------
Upon the payment in full of any Mortgage Loan, or the
receipt by the Master Servicer of a notification that payment in full will be
escrowed in a manner customary for such purposes, the Master Servicer will
promptly notify the Trustee by delivering a Request for File Release. Upon
receipt of such request, the Trustee shall promptly release the related
Mortgage File to the Master Servicer, and the Trustee shall at the Master
Servicer's direction execute and deliver to the Master Servicer the request
for reconveyance, deed of reconveyance or release or satisfaction of mortgage
or such instrument releasing the lien of the Mortgage in each case provided by
the Master Servicer, together with the Mortgage Note with written evidence of
cancellation thereon. The Master Servicer is authorized to cause the removal
from the registration on the MERS(R) System of such Mortgage and to execute
and deliver, on behalf of
the Trust Fund and the Certificateholders or any of them, any and all
instruments of satisfaction or cancellation or of partial or full release. No
expenses incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be chargeable to the Certificate Account, the Distribution
Account, the Carryover Reserve Fund or the related subservicing account. From
time to time and as shall be appropriate for the servicing or foreclosure of
any Mortgage Loan, including for such purpose, collection under any policy of
flood insurance any fidelity bond or errors or omissions policy, or for the
purposes of effecting a partial release of any Mortgaged Property from the
lien of the Mortgage or the making of any corrections to the Mortgage Note or
the Mortgage or any of the other documents included in the Mortgage File, the
Trustee shall, upon delivery to the Trustee of a Request for Document Release
or a Request for File Release, as applicable, release the documents specified
in such request or the Mortgage File, as the case may be, to the Master
Servicer. Subject to the further limitations set forth below, the Master
Servicer shall cause the Mortgage File or documents so released to be returned
to the Trustee when the need therefor by the Master Servicer no longer exists,
unless the Mortgage Loan is liquidated and the proceeds thereof are deposited
in the Certificate Account, in which case the Master Servicer shall deliver to
the Trustee a Request for File Release for any remaining documents in the
Mortgage File not in the possession of the Master Servicer.
If the Master Servicer at any time seeks to initiate a foreclosure
proceeding in respect of any Mortgaged Property as authorized by this
Agreement, the Master Servicer shall deliver or cause to be delivered to the
Trustee, for signature, as appropriate, any court pleadings, requests for
trustee's sale or other documents necessary to effectuate such foreclosure or
any legal action brought to obtain judgment against the Mortgagor on the
Mortgage Note or the Mortgage or to obtain a deficiency judgment or to enforce
any other remedies or rights provided by the Mortgage Note or the Mortgage or
otherwise available at law or in equity. Notwithstanding the foregoing, the
Master Servicer shall cause possession of any Mortgage File or of the
documents therein that shall have been released by the Trustee to be returned
to the Trustee within 21 calendar days after possession thereof shall have
been released by the Trustee unless (i) the Mortgage Loan has been liquidated
and the Liquidation Proceeds relating to the Mortgage Loan have been deposited
in the Certificate Account, and the Master Servicer shall have delivered to
the Trustee a Request for File Release or (ii) the Mortgage File or document
shall have been delivered to an attorney or to a public trustee or other
public official as required by law for purposes of initiating or pursuing
legal action or other proceedings for the foreclosure of the Mortgaged
Property and the Master Servicer shall have delivered to the Trustee an
Officer's Certificate of a Servicing Officer certifying as to the name and
address of the Person to which the Mortgage File or the documents therein were
delivered and the purpose or purposes of such delivery.
Section 3.14 Documents, Records and Funds in Possession
of Master Servicer to be Held for
the Trustee.
-------------------------------------------
Notwithstanding any other provisions of this Agreement, the
Master Servicer shall transmit to the Trustee as required by this Agreement
all documents and instruments in respect of a Mortgage Loan coming into the
possession of the Master Servicer from time to time and shall account fully to
the Trustee for any funds received by the Master Servicer or that otherwise
are collected by the Master Servicer as Liquidation Proceeds, Insurance
Proceeds or Subsequent Recoveries in respect of any Mortgage Loan. 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 Subsequent Recoveries including but
not limited to, any funds on deposit in the Certificate Account, shall be held
by the Master Servicer for and on behalf of the Trust Fund and shall be and
remain the sole and exclusive property of the Trust Fund, subject to the
applicable provisions of this Agreement. The Master Servicer also agrees that
it shall not create, incur or subject any Mortgage File or any funds that are
deposited in the Certificate Account, the Distribution Account, the Carryover
Reserve Fund or in any Escrow Account (as defined in Section 3.06), or any
funds that otherwise are or may become due or payable to the Trustee for the
benefit of the Certificateholders, to any claim, lien, security interest,
judgment, levy, writ of attachment or other encumbrance, or assert by legal
action or otherwise any claim or right of set off against any Mortgage File or
any funds collected on, or in connection with, a Mortgage Loan, except,
however, that the Master Servicer shall be entitled to set off against and
deduct from any such funds any amounts that are properly due and payable to
the Master Servicer under this Agreement.
Section 3.15 Servicing Compensation.
------------------------
As compensation for its activities hereunder, the Master
Servicer shall be entitled to retain or withdraw from the Certificate Account
out of each payment of interest on a Mortgage Loan included in the Trust Fund
an amount equal to interest at the applicable Servicing Fee Rate on the Stated
Principal Balance of the related Mortgage Loan for the period covered by such
interest payment.
Additional servicing compensation in the form of any Excess
Proceeds, assumption fees, late payment charges, Prepayment Interest Excess,
and all income and gain net of any losses realized from Permitted Investments
shall be retained by the Master Servicer to the extent not required to be
deposited in the Certificate Account pursuant to Section 3.05 or 3.12(b)
hereof. The Master Servicer shall be required to pay all expenses incurred by
it in connection with its servicing activities hereunder (including payment of
any premiums for hazard insurance, as required by Section 3.10 hereof and
maintenance of the other forms of insurance coverage required by Section 3.10
hereof) and shall not be entitled to reimbursement therefor except as
specifically provided in Sections 3.08 and 3.12 hereof.
Section 3.16 Access to Certain Documentation.
-------------------------------
The Master Servicer shall provide to the OTS and the FDIC
and to comparable regulatory authorities supervising Holders of the
Certificates and Certificate Owners and the examiners and supervisory agents
of the OTS, the FDIC and such other authorities, access to the documentation
regarding the Mortgage Loans required by applicable regulations of the OTS and
the FDIC. Such access shall be afforded without charge, but only upon
reasonable and prior written request and during normal business hours at the
offices of the Master Servicer designated by it. Nothing in this Section shall
limit the obligation of the Master Servicer to observe any applicable law
prohibiting disclosure of information regarding the Mortgagors and the failure
of the Master Servicer to provide access as provided in this Section as a
result of such obligation shall not constitute a breach of this Section.
Section 3.17 Annual Statement as to Compliance.
----------------------------------
(a) The Master Servicer shall deliver to the Depositor, the
Certificate Insurer and the Trustee on or before March 15 of each year,
commencing with its 2007 fiscal year, an Officer's Certificate stating, as to
the signer thereof, that (i) a review of the activities of the Master Servicer
during the preceding calendar year (or applicable portion thereof) and of the
performance of the Master Servicer under this Agreement, has been made under
such officer's supervision and (ii) to the best of such officer's knowledge,
based on such review, the Master Servicer has fulfilled all its obligations
under this Agreement, in all material respects throughout such year (or
applicable portion thereof), or, if there has been a failure to fulfill any
such obligation in any material respect, specifying each such failure known to
such officer and the nature and status thereof and (iii) to the best of such
officer's knowledge, each Subservicer has fulfilled all its obligations under
its Subservicing Agreement in all material respects throughout such year, or,
if there has been a failure to fulfill any such obligation in any material
respect specifying each such failure known to such officer and the nature and
status thereof.
(b) The Master Servicer shall cause each Subservicer to
deliver to the Depositor, the Certificate Insurer and the Trustee on or before
March 15 of each year, commencing with its 2007 fiscal year, an Officer's
Certificate stating, as to the signer thereof, that (i) a review of the
activities of such Subservicer during the preceding calendar year (or
applicable portion thereof) and of the performance of the Subservicer under
the applicable Subservicing Agreement or primary servicing agreement, has been
made under such officer's supervision and (ii) to the best of such officer's
knowledge, based on such review, such Subservicer has fulfilled all its
obligations under the applicable Subservicing Agreement or primary servicing
agreement, in all material respects throughout such year (or applicable
portion thereof), or, if there has been a failure to fulfill any such
obligation in any material respect, specifying each such failure known to such
officer and the nature and status thereof.
(c) The Trustee shall forward a copy of each such statement
to each Rating Agency. Copies of such statement shall be provided by the
Trustee to any Certificateholder or Certificate Owner upon request at the
Master Servicer's expense, provided such statement is delivered by the Master
Servicer to the Trustee.
Section 3.18 The Corridor Contract.
---------------------
CHL shall cause The Bank of New York to enter into the
Corridor Contract Administration Agreement and shall assign all of its right,
title and interest in and to the interest rate corridor transaction evidenced
by the Corridor Contract to, and shall cause all of its obligations in respect
of such transaction to be assumed by, the Corridor Contract Administrator, on
the terms and conditions set forth in the Corridor Contract Assignment
Agreement. The Trustee's rights to receive certain proceeds of the Corridor
Contract as provided in the Corridor Contract Administration Agreement will be
an asset of the Trust Fund but will not be an asset of any REMIC. The Trustee
shall deposit any amounts received from time to time with respect to the
Corridor Contract into the Carryover Reserve Fund. The Master Servicer shall
deposit any amounts received on behalf of the Trustee from time to time with
respect to the Corridor Contract into the Carryover Reserve Fund.
No later than two Business Days following each Distribution
Date, the Trustee shall provide the Corridor Contract Administrator with
information regarding the Certificate Principal Balance of the Class A-1
Certificates after all distributions on such Distribution Date.
The Trustee shall direct the Corridor Contract Administrator
to terminate the Corridor Contract upon the occurrence of certain events of
default or termination events to the extent specified thereunder. Upon any
such termination, the Corridor Contract Counterparty will be obligated to pay
the Corridor Contract Administrator an amount in respect of such termination,
and the portion of such amount that is distributable to the Trust Fund
pursuant to the Corridor Contract Administration Agreement and received by the
Trustee or the Master Servicer for the benefit of the Trust Fund, as the case
may be, in respect of such termination shall be deposited and held in the
Carryover Reserve Fund to pay Net Rate Carryover for the Class A-1
Certificates as provided in Section 4.04(d) on the Distribution Dates
following such termination to and including the Corridor Contract Termination
Date, but shall not be available for distribution to the Class C Certificates
pursuant to Section 4.07(c) until such Corridor Contract Termination Date. On
the Corridor Contract Termination Date, after all other distributions on such
date, if any such amount in respect of early termination of the Corridor
Contract remains in the Carryover Reserve Fund, such amounts shall be
distributed by the Trustee to the Class C Certificates.
Section 3.19 [Reserved].
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Section 3.20 Prepayment Charges.
-------------------
(a) Notwithstanding anything in this Agreement to the
contrary, in the event of a Principal Prepayment in full or in part of a
Mortgage Loan, the Master Servicer may not waive any Prepayment Charge or
portion thereof required by the terms of the related Mortgage Note unless (i)
such Mortgage Loan is in default or the Master Servicer believes that such a
default is imminent, and the Master Servicer determines that such waiver would
maximize recovery of Liquidation Proceeds for such Mortgage Loan, taking into
account the value of such Prepayment Charge, or (ii) (A) the enforceability
thereof is limited (1) by bankruptcy, insolvency, moratorium, receivership, or
other similar law relating to creditors' rights generally or (2) due to
acceleration in connection with a foreclosure or other involuntary payment, or
(B) the enforceability is otherwise limited or prohibited by applicable law.
In the event of a Principal Prepayment in full or in part with respect to any
Mortgage Loan, the Master Servicer shall deliver to the Trustee an Officer's
Certificate substantially in the form of Exhibit T no later than the third
Business Day following the immediately succeeding Determination Date with a
copy to the Class P Certificateholders. If the Master Servicer has waived or
does not collect all or a portion of a Prepayment Charge relating to a
Principal Prepayment in full or in part due to any action or omission of the
Master Servicer, other than as provided above, the Master Servicer shall
deliver to the Trustee, together with the Principal Prepayment in full or in
part, the amount of such Prepayment Charge (or such portion thereof as had
been waived) for deposit into the Certificate Account (not later than 1:00
p.m. Pacific time on the immediately succeeding Master Servicer Advance Date,
in the case of such Prepayment Charge) for distribution in accordance with the
terms of this Agreement.
(b) Upon discovery by the Master Servicer or a Responsible
Officer of the Trustee of a breach of the foregoing subsection (a), the party
discovering the breach shall give prompt written notice to the other parties.
(c) CHL represents and warrants to the Depositor and the
Trustee, as of the Closing Date and each Subsequent Transfer Date, that the
information in the Prepayment Charge Schedule (including the attached
prepayment charge summary) is complete and accurate in all material respects
at the dates as of which the information is furnished and each Prepayment
Charge is permissible and enforceable in accordance with its terms under
applicable state law, except as the enforceability thereof is limited due to
acceleration in connection with a foreclosure or other involuntary payment.
(d) Upon discovery by the Master Servicer or a Responsible
Officer of the Trustee of a breach of the foregoing clause (c) that materially
and adversely affects right of the Holders of the Class P Certificates to any
Prepayment Charge, the party discovering the breach shall give prompt written
notice to the other parties hereto. Within 60 days of the earlier of discovery
by the Master Servicer or receipt of notice by the Master Servicer of breach,
the Master Servicer shall cure the breach in all material respects or shall
pay into the Certificate Account the amount of the Prepayment Charge that
would otherwise be due from the Mortgagor, less any amount representing such
Prepayment Charge previously collected and paid by the Master Servicer into
the Certificate Account.
ARTICLE IV.
DISTRIBUTIONS AND ADVANCES BY THE MASTER SERVICER
Section 4.01 Advances; Remittance Reports.
----------------------------
(a) Within two Business Days after each Determination Date,
the Master Servicer shall deliver to the Trustee by facsimile or electronic
mail (or by such other means as the Master Servicer and the Trustee, as the
case may be, may agree from time to time) a Remittance Report with respect to
the related Distribution Date. The Trustee shall not be responsible to
recompute, recalculate or verify any information provided to it by the Master
Servicer.
(b) Subject to the conditions of this Article IV, the Master
Servicer, as required below, shall make an Advance and deposit such Advance in
the Certificate Account. Each such Advance shall be remitted to the
Certificate Account no later than 1:00 p.m. Pacific time on the Master
Servicer Advance Date in immediately available funds. The Trustee will provide
notice to the Master Servicer by facsimile by the close of business on any
Master Servicer Advance Date in the event that the amount remitted by the
Master Servicer to the Trustee on the Distribution Account Deposit Date is
less than the Advances required to be made by the Master Servicer for such
Distribution Date. The Master Servicer shall be obligated to make any such
Advance only to the extent that such advance would not be a Nonrecoverable
Advance. If the Master Servicer shall have determined that it has made a
Nonrecoverable Advance or that a proposed Advance or a lesser portion of such
Advance would constitute a Nonrecoverable Advance, the Master Servicer shall
deliver (i) to the Trustee for the benefit of the Certificateholders funds
constituting the remaining portion of such Advance, if applicable,
and (ii) to the Depositor, each Rating Agency and the Trustee an Officer's
Certificate setting forth the basis for such determination.
(c) In lieu of making all or a portion of such Advance from
its own funds, the Master Servicer may (i) cause to be made an appropriate
entry in its records relating to the Certificate Account that any Amount Held
for Future Distributions has been used by the Master Servicer in discharge of
its obligation to make any such Advance and (ii) transfer such funds from the
Certificate Account to the Distribution Account. Any funds so applied and
transferred shall be replaced by the Master Servicer by deposit in the
Certificate Account no later than the close of business on the Business Day
immediately preceding the Distribution Date on which such funds are required
to be distributed pursuant to this Agreement. The Master Servicer shall be
entitled to be reimbursed from the Certificate Account for all Advances of its
own funds made pursuant to this Section as provided in Section 3.08. The
obligation to make Advances with respect to any Mortgage Loan shall continue
until such Mortgage Loan is paid in full or becomes a Liquidated Mortgage Loan
or until the purchase or repurchase thereof (or substitution therefor) from
the Trustee pursuant to any applicable provision of this Agreement, except as
otherwise provided in this Section 4.01.
(d) If the Master Servicer determines that it will be unable
to comply with its obligation to make the Advances as and when described in
paragraphs (b) and (c) immediately above, it shall use its best efforts to
give written notice thereof to the Trustee (each such notice a "Trustee
Advance Notice"; and such notice may be given by facsimile), not later than
3:00 p.m., New York time, on the Business Day immediately preceding the
related Master Servicer Advance Date, specifying the amount that it will be
unable to deposit (each such amount an "Advance Deficiency") and certifying
that such Advance Deficiency constitutes an Advance hereunder and is not a
Nonrecoverable Advance. If the Trustee receives a Trustee Advance Notice on or
before 3:30 p.m., (New York time) on a Master Servicer Advance Date, the
Trustee shall, not later than 3:00 p.m., (New York time), on the related
Distribution Date, deposit in the Distribution Account an amount equal to the
Advance Deficiency identified in such Trustee Advance Notice unless it is
prohibited from so doing by applicable law. Notwithstanding the foregoing, the
Trustee shall not be required to make such deposit if the Trustee shall have
received written notification from the Master Servicer that the Master
Servicer has deposited or caused to be deposited in the Certificate Account an
amount equal to such Advance Deficiency. All Advances made by the Trustee
pursuant to this Section 4.01(d) shall accrue interest on behalf of the
Trustee at the Trustee Advance Rate from and including the date such Advances
are made to but excluding the date of repayment, with such interest being an
obligation of the Master Servicer and not the Trust Fund. The Master Servicer
shall reimburse the Trustee for the amount of any Advance made by the Trustee
pursuant to this Section 4.01(d) together with accrued interest, not later
than 6:00 p.m. (New York time) on the Business Day following the related
Distribution Date. In the event that the Master Servicer does not reimburse
the Trustee in accordance with the requirements of the preceding sentence, the
Trustee shall immediately (i) terminate all of the rights and obligations of
the Master Servicer under this Agreement in accordance with Section 7.01 and
(ii) subject to the limitations set forth in Section 3.04, assume all of the
rights and obligations of the Master Servicer hereunder.
(e) The Master Servicer shall, not later than the close of
business on the second Business Day immediately preceding each Distribution
Date, deliver to the Trustee a report
(in form and substance reasonably satisfactory to the Trustee) that indicates
(i) the Mortgage Loans with respect to which the Master Servicer has
determined that the related Scheduled Payments should be advanced and (ii) the
amount of the related Scheduled Payments. The Master Servicer shall deliver to
the Trustee on the related Master Servicer Advance Date an Officer's
Certificate of a Servicing Officer indicating the amount of any proposed
Advance determined by the Master Servicer to be a Nonrecoverable Advance.
Section 4.02 Reduction of Servicing Compensation in
Connection with Prepayment Interest
Shortfalls
------------------------------------------
In the event that any Mortgage Loan is the subject of a
Prepayment Interest Shortfall, the Master Servicer shall remit any related
Compensating Interest as part of the related Interest Remittance Amount as
provided in this Agreement. The Master Servicer shall not be entitled to any
recovery or reimbursement for Compensating Interest from the Depositor, the
Trustee, any Seller, the Trust Fund or the Certificateholders.
Section 4.03 [Reserved].
---------
Section 4.04 Distributions.
-------------
(a) On each Distribution Date, the Interest Funds for such
Distribution Date shall be distributed by the Trustee from the Distribution
Account in the following order of priority:
(i) to the Certificate Insurer, the Certificate
Insurance Policy Premium for such Distribution Date;
(ii) concurrently to each Class of Class A
Certificates, the Current Interest for each such Class and
such Distribution Date, pro rata, based on their respective
entitlements;
(iii) to the Certificate Insurer, the Certificate
Insurance Reimbursement Amount for such Distribution Date;
(iv) concurrently to each Class of Class A
Certificates, the Interest Carry Forward Amount for each
such Class and such Distribution Date, pro rata, based on
their respective entitlements; and
(v) any remainder as part of the Excess Cashflow.
(b) On each Distribution Date, the Principal Distribution
Amount for such Distribution Date shall be distributed by the Trustee from the
Distribution Account in the following order of priority (with the Principal
Distribution Amount exclusive of the portion thereof consisting of the Extra
Principal Distribution Amount being applied first and the Extra Principal
Distribution Amount being applied thereafter):
(i) to the Certificate Insurer, any Certificate
Insurance Policy Premium for such Distribution Date
remaining unpaid after application of Interest Funds on such
Distribution Date;
(ii) to the Class A Certificates, in an amount up
to the Class A Principal Distribution Amount, sequentially:
(a) the NAS Principal Distribution Amount
to the Class A-6 Certificates, until the
Certificate Principal Balance thereof is reduced to
zero, and
(b) sequentially, to the Class A-1, Class
A-2, Class A-3, Class A-4, Class A-5 and Class A-6
Certificates, in that order, in each case until the
Certificate Principal Balance thereof is reduced to
zero;
(iii) to the Certificate Insurer, any Certificate
Insurance Reimbursement Amount for such Distribution Date
remaining unpaid after application of Interest Funds on such
Distribution Date; and
(iv) any remainder as part of the Excess Cashflow.
(c) With respect to any Distribution Date, any Excess
Cashflow shall be distributed to the Classes of Certificates in the following
order of priority:
(1) to the Class or Classes of Class A Certificates
then entitled to receive distributions in respect of principal, in an
aggregate amount equal to the Extra Principal Distribution Amount,
payable as part of the Principal Distribution Amount pursuant to
Section 4.04(b) above;
(2) concurrently, to each Class of Class A
Certificates, pro rata based on the Unpaid Realized Loss Amounts for
such Classes, in each case in an amount equal to the Unpaid Realized
Loss Amount for such Class; provided, however that to the extent an
Applied Realized Loss Amount was covered under the Certificate
Insurance Policy, then any related amounts otherwise payable to the
Class A Certificates pursuant to this clause (2) shall instead be
paid to the Certificate Insurer
(3) to each Class of Class A Certificates (in the
case of the Class A-1 Certificates, after application of amounts
received by the Trust Fund in respect of the Corridor Contract to
cover Net Rate Carryover), pro rata based on the Certificate
Principal Balances thereof, to the extent needed to pay any Net Rate
Carryover for each such Class; provided that any Excess Cashflow
remaining after such allocation to pay Net Rate Carryover based on
the Certificate Principal Balances of those Certificates shall be
distributed to each Class of Class A Certificates with respect to
which there remains any unpaid Net Rate Carryover (after the
distribution based on Certificate Principal Balances), pro rata,
based on the amount of such unpaid Net Rate Carryover;
(4) to the Carryover Reserve Fund, in an amount
equal to the Required Carryover Reserve Fund Deposit (after giving
effect to other deposits and withdrawals therefrom on such
Distribution Date without regard to any amounts allocated to the
Trust Fund in respect of the Corridor Contract not required to cover
Net Rate Carryover on the Class A-1 Certificates on such Distribution
Date);
(5) to the Class C Certificateholders, the Class C
Distributable Amount for such Distribution Date; and
(6) to the Class A-R Certificates, any remaining
amount.
(d) On each Distribution Date on or prior to the Corridor
Contract Termination Date, amounts received by the Trustee in respect of the
Corridor Contract for such Distribution Date shall be withdrawn from the
Carryover Reserve Fund and distributed to the Class A-1 Certificates to the
extent needed to pay any Net Rate Carryover with respect to such Class. Any
amounts remaining in the Carryover Reserve Fund in respect of the Corridor
Contract shall be distributed to the Holders of the Class C Certificates as
provided in Section 4.07(c).
(e) To the extent that a Class of Interest-Bearing
Certificates receives interest in excess of the applicable Net Rate Cap, if
such interest is paid pursuant to Section 4.04(c), then it shall be deemed to
have been paid to the Carryover Reserve Fund and then paid by the Carryover
Reserve Fund to those Certificateholders. For purposes of the Code, amounts
deemed deposited in the Carryover Reserve Fund shall be deemed to have first
been distributed, in the case of any such amounts relating to the Corridor
Contract, to the Class C Certificates.
(f) On each Distribution Date, all Prepayment Charges
(including amounts deposited in connection with the full or partial waiver of
such Prepayment Charges pursuant to Section 3.20) shall be allocated to the
Class P Certificates. On the Class P Principal Distribution Date, the Trustee
shall make the $100.00 distribution from the Principal Reserve Fund to the
Class P Certificates as specified in Section 3.08(a). On the first
Distribution Date, the Trustee shall make the $100.00 distribution from the
Principal Reserve Fund to the Class A-R Certificates as specified in Section
3.08(a).
(g) On each Distribution Date, the Trustee shall allocate
any Applied Realized Loss Amount to reduce the Certificate Principal Balances
of the Class A Certificates, pro rata, based on their respective Certificate
Principal Balances, until the Certificate Principal Balances of such Classes
have been reduced to zero. On each Distribution Date, the Certificate Insurer
is obligated to pay to the Class A Certificates an amount equal to the Applied
Realized Loss Amount allocated to the Class A Certificates on such
Distribution Date; provided, however, if the Premium Account is funded
pursuant to Section 3.08(b)(vi), the Certificate Insurer shall only be
obligated to pay any Applied Realized Loss Amount to the extent that funds on
deposit in the Premium Account (after giving effect to all deposits to be made
to the Premium Account on such
Distribution Date) are insufficient to cover the Applied Realized Loss Amount
for such Distribution Date.
(h) On each Distribution Date, the Trustee shall allocate
the amount of the Subsequent Recoveries with respect to the Mortgage Loans, if
any, to increase the Certificate Principal Balances of the Class A
Certificates to which Applied Realized Loss Amounts have been previously
allocated, on a pro rata basis according to their respective Certificate
Principal Balances and in each case by not more than the amount of the Unpaid
Realized Loss Amount of such Class; provided, however, that to the extent an
Applied Realized Loss Amount was covered under the Certificate Insurance
Policy, then any related Subsequent Recovery otherwise payable to the Class A
Certificateholders will instead be paid to the Certificate Insurer.
Holders of Certificates to which any Subsequent Recoveries
have been allocated shall not be entitled to any payment in respect of Current
Interest on the amount of such increases for any Accrual Period preceding the
Distribution Date on which such increase occurs.
(i) On any Distribution Date on which there are any amounts
on deposit in the Premium Account (after taking into account any deposit to
the Premium Account on such Distribution Date pursuant to Section 3.08(b)(vi))
and (i) any amounts payable to the Class A Certificates pursuant to Sections
4.04(a)(ii) or 4.04(a)(iv) remain unpaid, (ii) Applied Realized Loss Amounts
are allocable to the Class A Certificates on such Distribution Date and/or
(iii) Unpaid Realized Loss Amounts are outstanding after making all
distributions on such Distribution Date but prior to any draw on the
Certificate Insurance Policy, the Trustee shall apply the amounts on deposit
in the Premium Account in the following amounts and order of priority:
(i) first, concurrently to each Class of Class A
Certificates, the unpaid Current Interest for each such
Class and such Distribution Date, pro rata, based on their
respective entitlements;
(ii) second, concurrently to each Class of Class A
Certificates, the unpaid Interest Carry Forward Amount for
each such Class and such Distribution Date, pro rata, based
on their respective entitlements;
(iii) third, concurrently, to each Class of Class A
Certificates, as a distribution of principal, in an amount
up to the Applied Realized Loss Amount allocable to such
Class pursuant to Section 4.04(g) on such Distribution Date,
pro rata, based on the amount of Applied Realized Loss
Amounts allocable to each such Class on such Distribution
Date; and
(iv) fourth, concurrently, to each Class of Class A
Certificates, pro rata based on the Unpaid Realized Loss
Amounts for such Classes, in each case in an amount up to
the Unpaid Realized Loss Amount for such Class; provided,
however that to the extent an Applied Realized Loss Amount
was covered under the Certificate Insurance Policy, then any
related amounts otherwise payable to the Class A
Certificates pursuant to this paragraph shall instead be
paid to the Certificate Insurer.
(j) Subject to Section 9.02 hereof respecting the final
distribution, on each Distribution Date the Trustee shall make distributions
to each Certificateholder of record on the preceding Record Date either by
wire transfer in immediately available funds to the account of such Holder at
a bank or other entity having appropriate facilities therefor, if (i) such
Holder has so notified the Trustee at least five Business Days prior to the
related Record Date and (ii) such Holder shall hold Regular Certificates with
an aggregate initial Certificate Principal Balance of not less than $1,000,000
or evidencing a Percentage Interest aggregating 10% or more with respect to
such Class or, if not, by check mailed by first class mail to such
Certificateholder at the address of such Holder appearing in the Certificate
Register. Notwithstanding the foregoing, but subject to Section 9.02 hereof
respecting the final distribution, distributions with respect to Certificates
registered in the name of a Depository shall be made to such Depository in
immediately available funds. Payments to the Certificate Insurer shall be made
by wire transfer of immediately available funds to the following account,
unless the Certificate Insurer notifies the Trustee in writing: Account Name:
Ambac Assurance Corporation, Citibank, NA, ABA #000000000, DDA#40609486, RE:
AB1023BE CWHEQ 2006-S4.
On or before 5:00 p.m. Pacific time on the fifth Business
Day following each Determination Date (but in no event later than 5:00 p.m.
Pacific time on the third Business Day before the related Distribution Date),
the Master Servicer shall deliver a report to the Trustee (in the form of a
computer readable magnetic tape or by such other means as the Master Servicer
and the Trustee may agree from time to time) containing such data and
information as agreed to by the Master Servicer and the Trustee such as to
permit the Trustee to prepare the Monthly Statement and make the required
distributions for the related Distribution Date (the "Remittance Report"). The
Trustee shall not be responsible to recompute, recalculate or verify
information provided to it by the Master Servicer and shall be permitted to
conclusively rely on any information provided to it by the Master Servicer.
Section 4.05 Monthly Statements to Certificateholders.
(a) Concurrently with each distribution on a Distribution
Date, the Trustee will forward by mail to each Rating Agency, the Certificate
Insurer and the NIM Insurer and make available to Certificateholders and the
Certificate Insurer on the Trustee's website
(xxxx://xxx.xxxxxxxxxxxxxxxxxxxx.xxx) a statement generally setting forth the
information contained in Exhibit W.
(b) The Trustee's responsibility for disbursing the above
information to the Certificateholders is limited to the availability,
timeliness and accuracy of the information derived from the Master Servicer.
(c) Within a reasonable period of time after the end of each
calendar year, the Trustee shall cause to be furnished to each Person who at
any time during the calendar year was a Certificateholder, a statement
containing the information regarding (i) the amount of distributions to that
Certificateholder allocable to principal, separately identifying (A) the
aggregate amount of any Principal Prepayments included therein and (B) the
aggregate of all scheduled payments of principal included therein, (ii) the
amount of distributions to that Certificateholder allocable to interest and
(iii) the related amount of the Servicing Fees paid to or retained by the
Master Servicer, in each case aggregated for such calendar year or applicable
portion thereof during which such Person was a Certificateholder. Such
obligation of the Trustee shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Trustee
pursuant to any requirements of the Code as from time to time in effect.
(d) Upon filing with the Internal Revenue Service, the
Trustee shall furnish to the Holders of the Class A-R Certificates the Form
1066 and each Form 1066Q and shall respond promptly to written requests made
not more frequently than quarterly by any Holder of Class A-R Certificates
with respect to the following matters:
(1) The original projected principal and interest
cash flows on the Closing Date on each related Class of regular and
residual interests created hereunder and on the Mortgage Loans, based
on the Prepayment Assumption;
(2) The projected remaining principal and interest
cash flows as of the end of any calendar quarter with respect to each
related Class of regular and residual interests created hereunder and
the Mortgage Loans, based on the Prepayment Assumption;
(3) The applicable Prepayment Assumption and any
interest rate assumptions used in determining the projected principal
and interest cash flows described above;
(4) The original issue discount (or, in the case of
the Mortgage Loans, market discount) or premium accrued or amortized
through the end of such calendar quarter with respect to each related
Class of regular or residual interests created hereunder and to the
Mortgage Loans, together with each constant yield to maturity used in
computing the same;
(5) The treatment of losses realized with respect
to the Mortgage Loans or the regular interests created hereunder,
including the timing and amount of any cancellation of indebtedness
income of the related REMIC with respect to such regular interests or
bad debt deductions claimed with respect to the Mortgage Loans;
(6) The amount and timing of any non-interest
expenses of the related REMIC; and
(7) Any taxes (including penalties and interest)
imposed on the related REMIC, including, without limitation, taxes on
"prohibited transactions," "contributions" or "net income from
foreclosure property" or state or local income or franchise taxes.
The information pursuant to clauses (1), (2), (3) and (4)
above shall be provided by the Depositor pursuant to Section 8.11.
Section 4.06 Certificate Insurance Policy; Rights of the
Certificate Insurer.
-------------------------------------------
(a) If, on the third Business Day before any Distribution
Date, the Trustee determines that a there will be a Deficiency Amount for such
Distribution Date, the Trustee shall
determine the amount of any such deficiency and shall give notice to the
Certificate Insurer by telephone or telecopy of the amount of such deficiency,
confirmed in writing by notice substantially in the form of Exhibit A to the
Certificate Insurance Policy, by 12:00 p.m., New York time on such third
Business Day. The Trustee's responsibility for delivering the notice to the
Certificate Insurer as provided in the preceding sentence is limited to the
availability, timeliness and accuracy of the information provided by the
Master Servicer.
(b) In the event the Trustee receives a certified copy of an
order of the appropriate court that any scheduled payment of principal or
interest on a Class A Certificate has been voided in whole or in part as a
preference payment under applicable bankruptcy law, the Trustee shall (i)
promptly notify the Certificate Insurer and (ii) comply with the provisions of
the Certificate Insurance Policy, to obtain payment by the Certificate Insurer
of such voided scheduled payment. In addition, the Trustee shall mail notice
to all Holders of the Class A Certificates so affected that, in the event that
any such Holder's scheduled payment is so recovered, such Holder will be
entitled to payment pursuant to the terms of the Certificate Insurance Policy,
a copy of which shall be made available to such Holders by the Trustee. The
Trustee shall furnish to the Certificate Insurer its records listing the
payments on the affected Class A Certificates, if any, that have been made by
the Trustee and subsequently recovered from the affected Holders, and the
dates on which such payments were made by the Trustee.
(c) At the time of the execution hereof, and for the
purposes hereof, the Trustee shall establish a special purpose trust account
in the name of the Trustee for the benefit of Holders of the Class A
Certificates (the "Class A Insurance Payments Account") over which the Trustee
shall have exclusive control and sole right of withdrawal. The Class A
Insurance Payments Account shall be an Eligible Account. The Trustee shall
deposit any amount paid under the Certificate Insurance Policy into the Class
A Insurance Payments Account and distribute such amount only for the purposes
of making the payments to Holders of the Class A Certificates, in respect of
the related Deficiency Amount for which the related claim was made under the
Certificate Insurance Policy. Such amounts shall be allocated by the Trustee
to Holders of Class A Certificates affected by such shortfalls in the same
manner as principal and interest payments are to be allocated with respect to
such Certificates pursuant to Section 4.04. It shall not be necessary for such
payments to be made by checks or wire transfers separated from the checks or
wire transfers used to make regular payments hereunder with funds withdrawn
from the Distribution Account. However, any payments made on the Class A
Certificates from funds in the Class A Insurance Payments Account shall be
noted as provided in subsection (e) below. Funds held in the Class A Insurance
Payments Account shall not be invested by the Trustee.
(d) Any funds received from the Certificate Insurer for
deposit into the Class A Insurance Payments Account pursuant to the
Certificate Policy in respect of a Distribution Date or otherwise as a result
of any claim under the Certificate Insurance Policy shall be applied by the
Trustee directly to the payment in full (i) of the related Deficiency Amount
on such Distribution Date or (ii) of other amounts payable under the
Certificate Insurance Policy. Funds received by the Trustee as a result of any
claim under the Certificate Insurance Policy shall be used solely for payment
to the Holders of the Class A Certificates and may not be applied for any
other purpose, including, without limitation, satisfaction of any costs,
expenses or liabilities of the Trustee, the Master Servicer or the Trust Fund.
Any funds remaining in the Class A
Insurance Payments Account on the first Business Day after each Distribution
Date shall be remitted promptly to the Certificate Insurer in accordance with
the instructions set forth in Section 4.04(j).
(e) The Trustee shall keep complete and accurate records in
respect of (i) all funds remitted to it by the Certificate Insurer and
deposited into the Class A Insurance Payments Account and (ii) the allocation
of such funds to (A) payments of interest on and principal in respect of any
Class A Certificates and (B) the amount of funds available to make
distributions on the Class A Certificates pursuant to Sections 4.04(a), (b),
(c), (g) and (i). The Certificate Insurer shall have the right to inspect such
records at reasonable times during normal business hours upon three Business
Days' prior notice to the Trustee.
(f) The Trustee acknowledges, and each Holder of a Class A
Certificate by its acceptance of the Class A Certificate agrees, that, without
the need for any further action on the part of the Certificate Insurer or the
Trustee, to the extent the Certificate Insurer makes payments, directly or
indirectly, on account of principal of or interest on any Class A
Certificates, the Certificate Insurer will be fully subrogated to the rights
of the Holders of such Class A Certificates to receive such principal and
interest from the Trust Fund. The Holders of the Class A Certificates, by
acceptance of the Class A Certificates, assign their rights as Holders of the
Class A Certificates to the extent of the Certificate Insurer's interest with
respect to amounts paid under the Certificate Insurance Policy. Anything
herein to the contrary notwithstanding, solely for purposes of determining the
Certificate Insurer's rights, as applicable, as subrogee for payments
distributable pursuant to Section 4.04, any payment with respect to
distributions to the Class A Certificates which is made with funds received
pursuant to the terms of the Certificate Insurance Policy shall not be
considered payment of the Class A Certificates from the Trust Fund and shall
not result in the distribution or the provision for the distribution in
reduction of the Certificate Principal Balance of the Class A Certificates
within the meaning of Article IV.
(g) Upon its becoming aware of the occurrence of an Event of
Default, the Trustee shall promptly notify the Certificate Insurer of such
Event of Default.
(h) The Trustee shall promptly notify the Certificate
Insurer of either of the following as to which it has actual knowledge: (A)
the commencement of any proceeding by or against the Depositor commenced under
the United States bankruptcy code or any other applicable bankruptcy,
insolvency, receivership, rehabilitation or similar law (an "Insolvency
Proceeding") and (B) the making of any claim in connection with any Insolvency
Proceeding seeking the avoidance as a preferential transfer (a "Preference
Claim") of any distribution made with respect to the Class A Certificates as
to which it has actual knowledge. Each Holder of a Class A Certificate, by its
purchase of Class A Certificates, and the Trustee hereby agrees that the
Certificate Insurer (so long as no Certificate Insurer Default exists) may at
any time during the continuation of any proceeding relating to a Preference
Claim direct all matters relating to such Preference Claim, including, without
limitation, (i) the direction of any appeal of any order relating to any
Preference Claim and (ii) the posting of any surety, supersedes or performance
bond pending any such appeal. In addition and without limitation of the
foregoing, the Certificate Insurer shall be subrogated to the rights of the
Trustee and each Holder of a Class A Certificate in the conduct of any
Preference Claim, including, without limitation, all rights of any
party to an adversary proceeding action with respect to any court order issued
in connection with any such Preference Claim.
(i) The Master Servicer shall designate a Certificate
Insurer Contact Person who shall be available to the Certificate Insurer to
provide reasonable access to information regarding the Mortgage Loans. The
initial Certificate Insurer Contact Person is to the attention of Secondary
Marketing.
(j) The Trustee shall surrender the Certificate Insurance
Policy to the Certificate Insurer for cancellation upon the reduction of the
Certificate Principal Balance of the Class A Certificates to zero.
(k) The Trustee shall send to the Certificate Insurer the
reports prepared pursuant to Section 3.17 and the statements prepared pursuant
to Section 4.05, as well as any other statements or communications sent to
Holders of the Class A Certificates, in each case at the same time such
reports, statements and communications are otherwise sent.
(l) For so long as there is no continuing default by the
Certificate Insurer under its obligations under the Certificate Insurance
Policy (a "Certificate Insurer Default"), each Holder of a Class A Certificate
agrees that the Certificate Insurer shall be treated by the Depositor, the
Master Servicer and the Trustee as if the Certificate Insurer were the Holder
of all of the Class A Certificates, for the purpose (and solely for the
purpose) of the giving of any consent, the making of any direction or the
exercise of any voting or other control rights otherwise given to the Holders
of the Class A Certificates hereunder.
(m) With respect to this Section 4.06, the terms "Receipt"
and "Received" shall mean actual delivery to the Certificate Insurer, if any,
prior to 12:00 p.m., New York time, on a Business Day; delivery either on a
day that is not a Business Day or after 12:00 p.m., New York time, shall be
deemed to be Receipt on the next succeeding Business Day. If any notice or
certificate given under the Certificate Insurance Policy by the Trustee is not
in proper form or is not properly completed, executed or delivered, it shall
be deemed not to have been Received. The Certificate Insurer shall promptly so
advise the Trustee and the Trustee may submit an amended notice.
(n) All notices, statements, reports, certificates or
opinions required by this Agreement to be sent to the Rating Agencies or the
Class A Certificateholders shall also be sent at such time to the Certificate
Insurer at the notice address set forth in Section 10.05.
(o) The Certificate Insurer shall be an express third party
beneficiary of this Agreement for the purpose of enforcing the provisions
hereof to the extent of the Certificate Insurer's rights explicitly specified
herein as if a party hereto.
(p) All references herein to the ratings assigned to the
Certificates and to the interests of any Certificateholders shall be without
regard to the Certificate Insurance Policy, in the case of the Class A
Certificates.
Section 4.07 Termination of the Credit Insurance Policy.
-------------------------------------------
If on any given date the rating of the Credit Insurer's
claims-paying ability is downgraded to or below "A+" from S&P or "A1" from
Xxxxx'x, the Master Servicer may direct the Trustee to terminate the Credit
Insurance Policy (either by not paying the renewal premium or by terminating
the Credit Insurance Policy in accordance with its terms) and the Trustee
shall act in accordance with such direction. In the event that the Master
Servicer directs the Trustee to terminate the Credit Insurance Policy or if
the Credit Insurance Policy is terminated for any other reason other than
exhaustion of its coverage, the Master Servicer shall use its best efforts to
obtain a comparable policy from an insurer that is acceptable to the
Certificate Insurer and the Rating Agencies and such credit insurance policy
must cover the Covered Loans outstanding as of such date, if available. If the
premium cost of a replacement policy exceeds the premium cost of the Credit
Insurance Policy, the Master Servicer, at the direction of the Certificate
Insurer, will either (i) obtain a replacement policy with reduced coverage so
that its premium cost will not exceed the premium cost of the Credit Insurance
Policy or (ii) from interest collections on the Mortgage Loans for each Due
Period, deposit into the Premium Account the amounts that would have been paid
as premium on the Credit Insurance Policy had it not been terminated, which
amounts will be available to make payments on the Class A Certificates. The
amount remaining in the Premium Account after the payment in full of the Class
A Certificates and amounts owing to the Certificate Insurer will be paid to
the Class C Certificates.
In addition, if during the period which the Depositor is
required to file Exchange Act Reports with respect to the Trust Fund, the
Credit Insurer shall fail to provide to the Depositor with any information
required to comply with the Depositor's reporting obligations under the
related Exchange Act Reports, within 5 days of the Depositor's request
therefor, then the Trustee shall act at the written direction of the Depositor
as to whether to terminate the Credit Insurance Policy (either by not paying
the renewal premium or by terminating the Credit Insurance Policy in
accordance with its terms); provided, however, that the Depositor shall not
direct the Trustee to terminate the Credit Insurance Policy until it has
procured one or more replacement credit insurance policies covering the
then-outstanding Covered Loans from an insurer under a policy or policies
acceptable to the Certificate Insurer and the Rating Agencies and such credit
insurance policy must cover the Covered Loans outstanding as of such date, if
available.
Section 4.08 Carryover Reserve Fund.
-----------------------
(a) On the Closing Date, the Trustee shall establish and
maintain in its name, in trust for the benefit of the Holders of the
Certificates, the Carryover Reserve Fund and shall deposit $1,000 therein. The
Carryover Reserve Fund shall be an Eligible Account, and funds on deposit
therein shall be held separate and apart from, and shall not be commingled
with, any other moneys, including without limitation, other moneys held by the
Trustee pursuant to this Agreement.
(b) On each Distribution Date, the Trustee shall deposit all
amounts received in respect of the Corridor Contract in the Carryover Reserve
Fund. The Trustee shall make withdrawals from the Carryover Reserve Fund to
make distributions in respect of Net Rate Carryover as to the extent required
by Section 4.04.
(c) Any amounts received in respect of the Corridor Contract
with respect to a Distribution Date and remaining after the distributions
required pursuant to Section 4.04(d) shall be distributed to the Class C
Certificates; provided, however, that if the Corridor Contract is subject to
early termination, early termination payments received in respect of the
Corridor Contract shall be deposited by the Trustee in the Carryover Reserve
Fund and withdrawn from the Carryover Reserve Fund to pay any Net Rate
Carryover for the applicable Classes of Certificates as provided in Section
4.04(d) on the Distribution Dates following such termination to and including
the Corridor Contract Termination Date, but such early termination payments
shall not be available for distribution to the Class C Certificates on future
Distribution Dates until the Corridor Contract Termination Date.
(d) (1)Funds in the Carryover Reserve Fund in respect of
amounts received under the Corridor Contract may be invested in Permitted
Investments at the written direction of the Majority Holder of the Class C
Certificates, which Permitted Investments shall mature not later than the
Business Day immediately preceding the first Distribution Date that follows
the date of such investment (except that if such Permitted Investment is an
obligation of the institution that maintains the Carryover Reserve Fund, then
such Permitted Investment shall mature not later than such Distribution Date)
and shall not be sold or disposed of prior to maturity. All such Permitted
Investments shall be made in the name of the Trustee, for the benefit of the
Certificateholders. In the absence of such written direction, all funds in the
Carryover Reserve Fund in respect of amounts received under the Corridor
Contract shall be invested by the Trustee in The Bank of New York cash
reserves. Any net investment earnings on such amounts shall be payable pro
rata to the Holders of the Class C Certificates in accordance with their
Percentage Interests. Any losses incurred in the Carryover Reserve Fund in
respect of any such investments shall be charged against amounts on deposit in
the Carryover Reserve Fund (or such investments) immediately as realized.
(2) The Trustee shall not be liable for the amount
of any loss incurred in respect of any investment or lack of
investment of funds held in the Carryover Reserve Fund and made in
accordance with this Section 4.07. The Carryover Reserve Fund shall
not constitute an asset of any REMIC created hereunder. The Class C
Certificates shall evidence ownership of the Carryover Reserve Fund
for federal tax purposes
ARTICLE V.
THE CERTIFICATES
Section 5.01 The Certificates.
-----------------
The Certificates shall be substantially in the forms
attached hereto as Exhibits A-1 through A-5, Exhibit B, Exhibit C, Exhibit D
and Exhibit E. The Certificates shall be issuable in registered form, in the
minimum dollar denominations, integral dollar multiples in excess thereof and
aggregate dollar denominations as set forth in the following table:
Original Certificate
Integral Multiples in Principal Balance/
Class Minimum Denomination Excess of Minimum Original Notional Amount
------------------------------- ---------------------------- ---------------------------- ----------------------------
A-1 $25,000 $1 $437,259,000
A-2 $25,000 $1 $98,131,000
A-3 $25,000 $1 $200,037,000
A-4 $25,000 $1 $85,036,000
A-5 $25,000 $1 $79,537,000
A-6 $25,000 $1 $100,000,000
A-R $99.95(1) N/A $100
C N/A N/A N/A
P (2) (2) $100
(1) The Tax Matters Person Certificate may be issued in a denomination of $0.05.
(2) The minimum denomination for the Class P Certificates is a 20% Percentage Interest. Any Percentage
Interest in excess of 20% is an authorized denomination.
The Certificates shall be executed by manual or facsimile
signature on behalf of the Trustee by an authorized officer. Certificates
bearing the manual or facsimile signatures of individuals who were, at the
time when such signatures were affixed, authorized to sign on behalf of the
Trustee shall bind the Trustee, notwithstanding that such individuals or any
of them have ceased to be so authorized prior to the authentication and
delivery of such Certificates or did not hold such offices at the date of such
authentication and delivery. No Certificate shall be entitled to any benefit
under this Agreement, or be valid for any purpose, unless there appears on
such Certificate a certificate of authentication substantially in the form set
forth as attached hereto executed by the Trustee by manual signature, and such
certificate of authentication upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the
date of their authentication. On the Closing Date, the Trustee shall
authenticate the Certificates to be issued at the written direction of the
Depositor, or any affiliate thereof.
The Depositor shall provide, or cause to be provided, to the
Trustee on a continuous basis, an adequate inventory of Certificates to
facilitate transfers.
Section 5.02 Certificate Register; Registration of
Transfer and Exchange of Certificates.
--------------------------------------
(a) The Trustee shall maintain a Certificate Register for
the Trust Fund in which, subject to the provisions of subsections (b) and (c)
below and to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and of Transfers and
exchanges of Certificates as herein provided. Upon surrender for registration
of Transfer of any Certificate, the Trustee shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more new
Certificates of the same Class and of like aggregate Percentage Interest.
At the option of a Certificateholder, Certificates may be
exchanged for other Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest upon surrender of the
Certificates to be exchanged at the office or agency of the Trustee. Whenever
any Certificates are so surrendered for exchange, the Trustee shall execute,
authenticate, and deliver the Certificates that the Certificateholder making
the exchange is entitled to receive. Every Certificate presented or
surrendered for registration of Transfer or exchange shall be accompanied by a
written instrument of Transfer in form satisfactory to the Trustee duly
executed by the Holder thereof or his attorney duly authorized in writing.
No service charge to the Certificateholders shall be made
for any registration of Transfer or exchange of Certificates, but payment of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any Transfer or exchange of Certificates may be required.
All Certificates surrendered for registration of Transfer or
exchange shall be canceled and subsequently destroyed by the Trustee in
accordance with the Trustee's customary procedures.
(b) No Transfer of a Private Certificate shall be made
unless such Transfer is made pursuant to an effective registration statement
under the Securities Act and any applicable state securities laws or is exempt
from the registration requirements under the Securities Act and such state
securities laws. In the event that a transfer is to be made in reliance upon
an exemption from the Securities Act and such state securities laws, in order
to assure compliance with the Securities Act and such state securities laws,
the Certificateholder desiring to effect such Transfer and such
Certificateholder's prospective transferee shall (except in connection with
any transfer of a Private Certificate to an affiliate of the Depositor (either
directly or through a nominee) in connection with the initial issuance of the
Certificates) each certify to the Trustee in writing the facts surrounding the
Transfer in substantially the forms set forth in Exhibit J-2 and, in the case
of a Class A-R Certificate, Exhibit J-1 (the "Transferor Certificate") and (i)
deliver a letter in substantially the form of either Exhibit K (in the case of
the Class P and Class C Certificates only) (the "Investment Letter") or
Exhibit L (in the case of any Private Certificate) (the "Rule 144A Letter") or
(ii) there shall be delivered to the Trustee at the expense of the
Certificateholder desiring to effect such transfer an Opinion of Counsel that
such Transfer may be made pursuant to an exemption from the Securities Act;
provided, however, that in the case of the delivery of an Investment Letter in
connection with the transfer of any Class C or Class P Certificate to a
transferee that is formed with the purpose of issuing notes backed by such
Class
C or Class P Certificate, as the case may be, clause (b) and (c) of the
form of Investment Letter shall not be applicable and shall be deleted by such
transferee. The Depositor shall provide to any Holder of a Private Certificate
and any prospective transferee designated by any such Holder, information
regarding the related Certificates and the Mortgage Loans and such other
information as shall be necessary to satisfy the condition to eligibility set
forth in Rule 144A(d)(4) for transfer of any such Certificate without
registration thereof under the Securities Act pursuant to the registration
exemption provided by Rule 144A. The Trustee and the Master Servicer shall
cooperate with the Depositor in providing the Rule 144A information referenced
in the preceding sentence, including providing to the Depositor such
information regarding the Certificates, the Mortgage Loans and other matters
regarding the Trust Fund as the Depositor shall reasonably request to meet its
obligation under the preceding sentence. Each Holder of a Private Certificate
desiring to effect such Transfer shall, and does hereby agree to, indemnify
the Trustee, the Depositor, the Trust Fund, each Seller, the Master Servicer
and the NIM Insurer against any liability that may result if the Transfer is
not so exempt or is not made in accordance with such federal and state laws.
No Transfer of an ERISA-Restricted Certificate (other than a
transfer of an ERISA-Restricted Certificate to an affiliate of the Depositor
(either directly or through a nominee) in connection with the initial issuance
of the Certificates) shall be made unless the Trustee shall have received
either (i) a representation from the transferee of such Certificate acceptable
to and in form and substance satisfactory to the Trustee (in the event such
Certificate is a Private Certificate, such requirement is satisfied only by
the Trustee's receipt of a representation letter from the transferee
substantially in the form of Exhibit K or Exhibit L, or in the event such
Certificate is a Residual Certificate, such requirement is satisfied only by
the Trustee's receipt of a representation letter from the transferee
substantially in the form of Exhibit I), to the effect that (x) such
transferee is not a Plan, or (y) in the case of an ERISA-Restricted
Certificate that has been the subject of an ERISA-Qualifying Underwriting, a
representation that the transferee is an insurance company which is purchasing
such Certificate with funds contained in an "insurance company general
account" (as such term is defined in section V(e) of Prohibited Transaction
Class Exemption 95-60 ("PTCE 95-60")) and that the purchase and holding of
such Certificate satisfy the requirements for exemptive relief under Sections
I and III of PTCE 95-60 or (ii) in the case of any ERISA-Restricted
Certificate presented for registration in the name of an employee benefit plan
or arrangement subject to ERISA, or a plan or arrangement subject to Section
4975 of the Code (or comparable provisions of any subsequent enactments), or a
trustee of any such plan or arrangement or any other person acting on behalf
of any such plan or arrangement, an Opinion of Counsel satisfactory to the
Trustee, addressed to the Trustee and the Master Servicer, to the effect that
the purchase or holding of such ERISA-Restricted Certificate will not result
in a non-exempt prohibited transaction under ERISA or the Code and will not
subject the Trustee or the Master Servicer to any obligation in addition to
those expressly undertaken in this Agreement, which Opinion of Counsel shall
not be an expense of the Trustee, the Master Servicer, or the Trust Fund. For
purposes of the preceding sentence, one of such representations, as
appropriate, shall be deemed to have been made to the Trustee by the
transferee's acceptance of an ERISA-Restricted Certificate (or the acceptance
by a Certificate Owner of the beneficial interest in any such Class of
ERISA-Restricted Certificates) unless the Trustee shall have received from the
transferee an Opinion of Counsel as described in clause (ii) or a
representation letter acceptable in form and substance to the Trustee.
Notwithstanding anything else to the contrary herein, any purported transfer
of an ERISA-Restricted Certificate to
or on behalf of an employee benefit plan subject to Section 406 of ERISA or a
plan subject to Section 4975 of the Code without the delivery to the Trustee
of an Opinion of Counsel satisfactory to the Trustee meeting the requirements
of clause (i) of the first sentence of this paragraph as described above shall
be void and of no effect. The Trustee shall be under no liability to any
Person for any registration of transfer of any ERISA-Restricted Certificate
that is in fact not permitted by this Section 5.02(b) or for making any
payments due on such Certificate to the Holder thereof or taking any other
action with respect to such Holder under the provisions of this Agreement so
long as the Trustee, with respect to the transfer of such Classes of
Certificates, required delivery of such certificates and other documentation
or evidence as are expressly required by the terms of this Agreement and
examined such certificates and other documentation or evidence to determine
compliance as to form with the express requirements hereof. The Trustee shall
be entitled, but not obligated, to recover from any Holder of any
ERISA-Restricted Certificate that was in fact an employee benefit plan or
arrangement subject to Section 406 of ERISA or a plan or arrangement subject
to Section 4975 of the Code or a Person acting on behalf of any such plan or
arrangement at the time it became a Holder or, at such subsequent time as it
became such a plan or arrangement or Person acting on behalf of such a plan or
arrangement, all payments made on such ERISA-Restricted Certificate at and
after either such time. Any such payments so recovered by the Trustee shall be
paid and delivered by the Trustee to the last preceding Holder of such
Certificate that is not such a plan or arrangement or Person acting on behalf
of a plan or arrangement.
(c) Each Person who has or who acquires any Ownership
Interest in a Class A-R Certificate shall be deemed by the acceptance or
acquisition of such Ownership Interest to have agreed to be bound by the
following provisions, and the rights of each Person acquiring any Ownership
Interest in a Class A-R Certificate are expressly subject to the following
provisions:
(1) Each Person holding or acquiring any Ownership
Interest in a Class A-R Certificate shall be a Permitted Transferee
and shall promptly notify the Trustee of any change or impending
change in its status as a Permitted Transferee.
(2) Except in connection with (i) the registration
of the Tax Matters Person Certificate in the name of the Trustee or
(ii) any registration in the name of, or transfer of a Class A-R
Certificate to, an affiliate of the Depositor (either directly or
through a nominee) in connection with the initial issuance of the
Certificates, no Ownership Interest in a Class A-R Certificate may be
registered or transferred, and the Trustee shall not register the
Transfer of any Class A-R Certificate, unless the Trustee shall have
been furnished with an affidavit (a "Transfer Affidavit") of the
initial owner or the proposed transferee in the form attached hereto
as Exhibit I.
(3) Each Person holding or acquiring any Ownership
Interest in a Class A-R Certificate shall agree (A) to obtain a
Transfer Affidavit from any other Person to whom such Person attempts
to Transfer its Ownership Interest in a Class A-R Certificate, (B) to
obtain a Transfer Affidavit from any Person for whom such Person is
acting as nominee, trustee or agent in connection with any Transfer
of a Class A-R Certificate and (C) not to Transfer its Ownership
Interest in a Class A-R Certificate, or to cause the Transfer of an
Ownership Interest in a Class A-R Certificate to any other
Person, if it has actual knowledge that such Person is not a
Permitted Transferee or that such Transfer Affidavit is false.
(4) Any attempted or purported Transfer of any
Ownership Interest in a Class A-R Certificate in violation of the
provisions of this Section 5.02(c) shall be absolutely null and void
and shall vest no rights in the purported Transferee. If any
purported transferee shall become a Holder of a Class A-R Certificate
in violation of the provisions of this Section 5.02(c), then the last
preceding Permitted Transferee shall be restored to all rights as
Holder thereof retroactive to the date of registration of Transfer of
such Class A-R Certificate. The Trustee shall be under no liability
to any Person for any registration of Transfer of a Class A-R
Certificate that is in fact not permitted by Section 5.02(b) and this
Section 5.02(c) or for making any payments due on such Certificate to
the Holder thereof or taking any other action with respect to such
Holder under the provisions of this Agreement so long as the Transfer
was registered after receipt of the related Transfer Affidavit and
Transferor Certificate. The Trustee shall be entitled but not
obligated to recover from any Holder of a Class A-R Certificate that
was in fact not a Permitted Transferee at the time it became a Holder
or, at such subsequent time as it became other than a Permitted
Transferee, all payments made on such Class A-R Certificate at and
after either such time. Any such payments so recovered by the Trustee
shall be paid and delivered by the Trustee to the last preceding
Permitted Transferee of such Certificate.
(5) The Master Servicer shall use its best efforts
to make available, upon receipt of written request from the Trustee,
all information necessary to compute any tax imposed under section
860E(e) of the Code as a result of a Transfer of an Ownership
Interest in a Class A-R Certificate to any Holder who is not a
Permitted Transferee.
The restrictions on Transfers of a Class A-R Certificate set
forth in this Section 5.02(c) shall cease to apply (and the applicable
portions of the legend on a Class A-R Certificate may be deleted) with respect
to Transfers occurring after delivery to the Trustee of an Opinion of Counsel,
which Opinion of Counsel shall not be an expense of the Trustee, any Seller or
the Master Servicer, to the effect that the elimination of such restrictions
will not cause any REMIC formed hereunder to fail to qualify as a REMIC at any
time that the Certificates are outstanding or result in the imposition of any
tax on the Trust Fund, a Certificateholder or another Person. Each Person
holding or acquiring any Ownership Interest in a Class A-R Certificate, by
acceptance of its Ownership Interest, shall be deemed to consent to any
amendment of this Agreement that, based on an Opinion of Counsel furnished to
the Trustee, is reasonably necessary (a) to ensure that the record ownership
of, or any beneficial interest in, a Class A-R Certificate is not transferred,
directly or indirectly, to a Person that is not a Permitted Transferee and (b)
to provide for a means to compel the Transfer of a Class A-R Certificate that
is held by a Person that is not a Permitted Transferee to a Holder that is a
Permitted Transferee.
(d) The preparation and delivery of all affidavits,
certifications and opinions referred to above in this Section 5.02 shall not
be an expense of the Trust Fund, the Trustee, the Depositor, any Seller or the
Master Servicer.
Section 5.03 Mutilated, Destroyed, Lost or Stolen
Certificates.
-------------------------------------
If (a) any mutilated Certificate is surrendered to the
Trustee, or the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Certificate and of the ownership thereof and
(b) there is delivered to the Master Servicer and the Trustee (and with
respect to the Class A Certificates, the Certificate Insurer) such security or
indemnity as may be required by them to save each of them harmless, then, in
the absence of notice to the Trustee that such Certificate has been acquired
by a bona fide purchaser, the Trustee shall execute, authenticate and deliver,
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like Class, tenor and Percentage Interest.
In connection with the issuance of any new Certificate under this Section
5.03, the Trustee may require the payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Trustee) connected
therewith. Any replacement Certificate issued pursuant to this Section 5.03
shall constitute complete and indefeasible evidence of ownership in the Trust
Fund, as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time. All Certificates surrendered to the
Trustee under the terms of this Section 5.03 shall be canceled and destroyed
by the Trustee in accordance with its standard procedures without liability on
its part.
Section 5.04 Persons Deemed Owners.
----------------------
The Master Servicer, the Trustee, the NIM Insurer, the
Certificate Insurer and any agent of the Master Servicer, the Trustee, the NIM
Insurer or the Certificate Insurer may treat the person in whose name any
Certificate is registered as the owner of such Certificate for the purpose of
receiving distributions as provided in this Agreement and for all other
purposes whatsoever, and none of the Master Servicer, the Trustee, the NIM
Insurer, the Certificate Insurer or any agent of the Master Servicer, the
Trustee, the NIM Insurer or the Certificate Insurer shall be affected by any
notice to the contrary.
Section 5.05 Access to List of Certificateholders'
Names and Addresses.
--------------------------------------
If three or more Certificateholders or Certificate Owners
(a) request such information in writing from the Trustee, (b) state that such
Certificateholders or Certificate Owners desire to communicate with other
Certificateholders or Certificate Owners with respect to their rights under
this Agreement or under the Certificates and (c) provide a copy of the
communication that such Certificateholders or Certificate Owners propose to
transmit or if the Depositor or Master Servicer shall request such information
in writing from the Trustee, then the Trustee shall, within ten Business Days
after the receipt of such request, provide the Depositor, the Master Servicer
or such Certificateholders or Certificate Owners at such recipients' expense
the most recent list of the Certificateholders of the Trust Fund held by the
Trustee, if any. The Depositor and every Certificateholder or Certificate
Owner, by receiving and holding a Certificate, agree that the Trustee shall
not be held accountable by reason of the disclosure of any such information as
to the list of the Certificateholders hereunder, regardless of the source from
which such information was derived.
Section 5.06 Book-Entry Certificates.
------------------------
The Book-Entry Certificates, upon original issuance, shall
be issued in the form of one typewritten Certificate (or more than one, if
required by the Depository) for each Class of such Certificates, to be
delivered to the Depository by or on behalf of the Depositor. Such
Certificates shall initially be registered on the Certificate Register in the
name of the Depository or its nominee, and no Certificate Owner of such
Certificates will receive a definitive certificate representing such
Certificate Owner's interest in such Certificates, except as provided in
Section 5.08. Unless and until definitive, fully registered Certificates
("Definitive Certificates") have been issued to the Certificate Owners of such
Certificates pursuant to Section 5.08:
(a) the provisions of this Section shall be in full force
and effect;
(b) the Depositor, the Sellers, the Master Servicer and the
Trustee may deal with the Depository and the Depository Participants for all
purposes (including the making of distributions) as the authorized
representative of the respective Certificate Owners of such Certificates;
(c) registration of the Book-Entry Certificates may not be
transferred by the Trustee except to another Depository;
(d) the rights of the respective Certificate Owners of such
Certificates shall be exercised only through the Depository and the Depository
Participants and shall be limited to those established by law and agreements
between the Owners of such Certificates and the Depository and/or the
Depository Participants. Pursuant to the Depository Agreement, unless and
until Definitive Certificates are issued pursuant to Section 5.08, the
Depository will make book-entry transfers among the Depository Participants
and receive and transmit distributions of principal and interest on the
related Certificates to such Depository Participants;
(e) the Depository may collect its usual and customary fees,
charges and expenses from its Depository Participants;
(f) the Trustee may rely and shall be fully protected in
relying upon information furnished by the Depository with respect to its
Depository Participants; and
(g) to the extent the provisions of this Section conflict
with any other provisions of this Agreement, the provisions of this Section
shall control.
For purposes of any provision of this Agreement requiring or
permitting actions with the consent of, or at the direction of,
Certificateholders evidencing a specified percentage of the aggregate unpaid
principal amount of any Class of Certificates, such direction or consent may
be given by Certificate Owners (acting through the Depository and the
Depository Participants) owning Book-Entry Certificates evidencing the
requisite percentage of principal amount of such Class of Certificates.
Section 5.07 Notices to Depository.
----------------------
Whenever any notice or other communication is required to be
given to Certificateholders of the Class with respect to which Book-Entry
Certificates have been issued, unless and until Definitive Certificates shall
have been issued to the related Certificate Owners, the Trustee shall give all
such notices and communications to the Depository.
Section 5.08 Definitive Certificates.
------------------------
If, after Book-Entry Certificates have been issued with
respect to any Certificates, (a) the Depositor advises the Trustee that the
Depository is no longer willing or able to discharge properly its
responsibilities under the Depository Agreement with respect to such
Certificates and the Trustee or the Depositor is unable to locate a qualified
successor or (b) after the occurrence and continuation of an Event of Default,
Certificate Owners of such Book-Entry Certificates having not less than 51% of
the Voting Rights evidenced by any Class of Book-Entry Certificates advise the
Trustee and the Depository in writing through the Depository Participants that
the continuation of a book-entry system with respect to Certificates of such
Class through the Depository (or its successor) is no longer in the best
interests of the Certificate Owners of such Class, then the Trustee shall
notify all Certificate Owners of such Certificates, through the Depository, of
the occurrence of any such event and of the availability of Definitive
Certificates to Certificate Owners of such Class requesting the same. The
Depositor shall provide the Trustee with an adequate inventory of Certificates
to facilitate the issuance and transfer of Definitive Certificates. Upon
surrender to the Trustee of any such Certificates by the Depository,
accompanied by registration instructions from the Depository for registration,
the Trustee shall authenticate and deliver such Definitive Certificates.
Neither the Depositor nor the Trustee shall be liable for any delay in
delivery of such instructions and each may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of such
Definitive Certificates, all references herein to obligations imposed upon or
to be performed by the Depository shall be deemed to be imposed upon and
performed by the Trustee, to the extent applicable with respect to such
Definitive Certificates and the Trustee shall recognize the Holders of such
Definitive Certificates as Certificateholders hereunder.
Section 5.09 Maintenance of Office or Agency.
--------------------------------
The Trustee will maintain or cause to be maintained at its
expense an office or offices or agency or agencies in New York City where
Certificates may be surrendered for registration of transfer or exchange. The
Trustee initially designates its offices at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Corporate Trust MBS Administration, as offices for such
purposes. The Trustee will give prompt written notice to the
Certificateholders and the Certificate Insurer of any change in such location
of any such office or agency.
ARTICLE VI.
THE DEPOSITOR, THE MASTER SERVICER AND THE SELLERS
Section 6.01 Respective Liabilities of the Depositor,
the Master Servicer and the Sellers.
------------------------------------------
The Depositor, the Master Servicer and each Seller shall
each be liable in accordance herewith only to the extent of the obligations
specifically and respectively imposed upon and undertaken by them herein.
Section 6.02 Merger or Consolidation of the Depositor,
the Master Servicer or the Sellers.
-----------------------------------------
The Depositor will keep in full effect its existence, rights
and franchises as a corporation under the laws of the United States or under
the laws of one of the states thereof and will each obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, or any of the Mortgage Loans and to perform
its duties under this Agreement. The Master Servicer will keep in effect its
existence, rights and franchises as a limited partnership under the laws of
the United States or under the laws of one of the states thereof and will
obtain and preserve its qualification or registration to do business as a
foreign partnership in each jurisdiction in which such qualification or
registration is or shall be necessary to protect the validity and
enforceability of this Agreement or any of the Mortgage Loans and to perform
its duties under this Agreement.
Any Person into which the Depositor, the Master Servicer or
any Seller may be merged or consolidated, or any Person resulting from any
merger or consolidation to which the Depositor, the Master Servicer or any
Seller shall be a party, or any person succeeding to the business of the
Depositor, the Master Servicer or any Seller, shall be the successor of the
Depositor, the Master Servicer or such Seller, 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 that the successor or surviving Person to the Master Servicer shall
be qualified to service mortgage loans on behalf of Xxxxxx Mae and Xxxxxxx
Mac.
As a condition to the effectiveness of any merger or
consolidation, at least 15 calendar days prior to the effective date of any
merger or consolidation of the Master Servicer, the Master Servicer shall
provide (x) written notice to the Depositor of any successor pursuant to this
Section and (y) in writing and in form and substance reasonably satisfactory
to the Depositor, all information reasonably requested by the Depositor in
order to comply with its reporting obligation under Item 6.02 of Form 8-K with
respect to a replacement Master Servicer.
Section 6.03 Limitation on Liability of the
Depositor, the Sellers, the Master
Servicer, the NIM Insurer and Others.
-------------------------------------
None of the Depositor, the Sellers, the NIM Insurer or the
Master Servicer or any of the directors, officers, employees or agents of the
Depositor, the Sellers, the NIM Insurer or the Master Servicer shall be under
any liability to the Trustee (except as provided in Section
8.05), 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 that this provision shall not
protect the Depositor, the Sellers, the Master Servicer or any such Person
against any breach of representations or warranties made by it herein or
protect the Depositor, the Sellers, the Master Servicer or any such Person
from any liability that would otherwise be imposed by reasons 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 Sellers, the NIM Insurer, the Master Servicer and any director,
officer, employee or agent of the Depositor, the Sellers, the NIM Insurer or
the Master Servicer may rely in good faith on any document of any kind prima
facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Depositor, the Sellers, the NIM Insurer, the Master
Servicer and any director, officer, employee or agent of the Depositor, the
Sellers, the NIM Insurer or the Master Servicer shall be indemnified by the
Trust Fund and held harmless against any loss, liability or expense incurred
in connection with any audit, controversy or judicial proceeding relating to a
governmental taxing authority or any legal action relating to this Agreement
or the Certificates, other than any loss, liability or expense related to any
specific Mortgage Loan or Mortgage Loans (except as any such loss, liability
or expense shall be otherwise reimbursable pursuant to this Agreement) and any
loss, liability or expense incurred by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties hereunder or by reason
of reckless disregard of obligations and duties hereunder. None of the
Depositor, the Sellers, the NIM Insurer or the Master Servicer shall be under
any obligation to appear in, prosecute or defend any legal action that is not
incidental to its respective duties hereunder and that in its opinion may
involve it in any expense or liability; provided that any of the Depositor,
the Sellers, the NIM Insurer or the Master Servicer may, in its discretion
undertake any such action that it may deem necessary or desirable in respect
of this Agreement and the rights and duties of the parties hereto and
interests of the Trustee and the Certificateholders hereunder. In such event,
the legal expenses and costs of such action and any liability resulting
therefrom shall be, expenses, costs and liabilities of the Trust Fund, and the
Depositor, the Sellers, the NIM Insurer and the Master Servicer shall be
entitled to be reimbursed therefor out of the Certificate Account as provided
by Section 3.08 hereof.
Section 6.04 Limitation on Resignation of Master Servicer.
--------------------------------------------
The Master Servicer shall not resign from the obligations
and duties hereby imposed on it except (i) upon determination that its duties
hereunder are no longer permissible under applicable law or (ii) upon
appointment of a successor servicer that is reasonably acceptable to the
Trustee and the NIM Insurer and the written confirmation from each Rating
Agency (which confirmation shall be furnished to the Depositor, the Trustee
and the NIM Insurer) that such resignation will not cause such Rating Agency
to reduce the then-current rating of the Certificates (such determination to
be made without regard to the Certificate Insurance Policy). Any such
determination pursuant to clause (i) of the preceding sentence permitting the
resignation of the Master Servicer shall be evidenced by an Opinion of Counsel
to such effect delivered to the Trustee. No resignation of the Master Servicer
shall become effective until the Trustee 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 and the Depositor shall have received the information described in
the following sentence. As a condition to the effectiveness of any such
resignation, at least 15 calendar days
prior to the effective date of such resignation, the Master Servicer shall
provide (x) written notice to the Depositor of any successor pursuant to this
Section and (y) in writing and in form and substance reasonably satisfactory
to the Depositor, all information reasonably requested by the Depositor in
order to comply with its reporting obligation under Item 6.02 of Form 8-K with
respect to the resignation of the Master Servicer.
Section 6.05 Errors and Omissions Insurance;
Fidelity Bonds.
-------------------------------
The Master Servicer shall, for so long as it acts as
servicer under this Agreement, obtain and maintain in force (a) a policy or
policies of insurance covering errors and omissions in the performance of its
obligations as servicer hereunder, and (b) a fidelity bond in respect of its
officers, employees and agents. Each such policy or policies and bond shall,
together, comply with the requirements from time to time of Xxxxxx Xxx and
Xxxxxxx Mac for persons performing servicing for mortgage loans purchased by
Xxxxxx Mae and Xxxxxxx Mac. In the event that any such policy or bond ceases
to be in effect, the Master Servicer shall use its reasonable best efforts to
obtain a comparable replacement policy or bond from an insurer or issuer,
meeting the requirements set forth above as of the date of such replacement.
The Master Servicer shall provide the Trustee, the
Certificate Insurer and the NIM Insurer (upon such party's reasonable request)
with copies of any such insurance policies and fidelity bond. The Master
Servicer shall be deemed to have complied with this provision if an Affiliate
of the Master 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 Master Servicer.
ARTICLE VII.
DEFAULT; TERMINATION OF MASTER SERVICER
Section 7.01 Events of Default.
-----------------
"Event of Default," wherever used herein, means any one of
the following events:
(1) any failure by the Master Servicer to deposit
in the Certificate Account or the Distribution Account or remit to
the Trustee any payment (excluding a payment required to be made
under Section 4.01 hereof) required to be made under the terms of
this Agreement, which failure shall continue unremedied for five
calendar days and, with respect to a payment required to be made
under Section 4.01(b) or (c) hereof, for one Business Day, after the
date on which written notice of such failure shall have been given to
the Master Servicer by the Trustee, the NIM Insurer, the Certificate
Insurer or the Depositor, or to the Trustee, the NIM Insurer, the
Certificate Insurer and the Master Servicer by the Holders of
Certificates evidencing not less than 25% of the Voting Rights; or
(2) any failure by the Master Servicer 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 (except with respect to a failure related to a Limited
Exchange Act Reporting Obligation) or any representation or warranty
shall prove to be untrue, which failure or breach shall continue
unremedied for a period of 60 days after
the date on which written notice of such failure shall have been
given to the Master Servicer by the Trustee, the NIM Insurer, the
Certificate Insurer or the Depositor, or to the Trustee by the
Holders of Certificates evidencing not less than 25% of the Voting
Rights; provided, that the sixty-day cure period shall not apply to
the initial delivery of the Mortgage File for Delay Delivery Mortgage
Loans or the failure to repurchase or substitute in lieu thereof; or
(3) a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises for the
appointment of a receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of its
affairs, shall have been entered against the Master Servicer and such
decree or order shall have remained in force undischarged or unstayed
for a period of 60 consecutive days; or
(4) the Master Servicer shall consent to the
appointment of a receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to the Master Servicer or all or
substantially all of the property of the Master Servicer; or
(5) the Master Servicer shall admit in writing its
inability to pay its debts generally as they become due, file a
petition to take advantage of, or commence a voluntary case under,
any applicable insolvency or reorganization statute, make an
assignment for the benefit of its creditors, or voluntarily suspend
payment of its obligations; or
(6) the Master Servicer shall fail to reimburse in
full the Trustee not later than 6:00 p.m. (New York time) on the
Business Day following the related Distribution Date for any Advance
made by the Trustee pursuant to Section 4.01(d) together with accrued
and unpaid interest.
If an Event of Default shall occur, then, and in each and
every such case, so long as such Event of Default shall not have been
remedied, the Trustee shall, but only at the direction of either the NIM
Insurer or the Holders of Certificates evidencing not less than 25% of the
Voting Rights (subject to the consent of the Certificate Insurer, which
consent shall not be unreasonably withheld), by notice in writing to the
Master Servicer (with a copy to each Rating Agency and the Depositor),
terminate all of the rights and obligations of the Master Servicer under this
Agreement and in and to the Mortgage Loans and the proceeds thereof, other
than its rights as a Certificateholder hereunder. In addition, if during the
period that the Depositor is required to file Exchange Act Reports with
respect to the Trust Fund, the Master Servicer shall fail to observe or
perform any of the obligations that constitute a Limited Exchange Act
Reporting Obligation or the obligations set forth in Section 3.17(a) or
Section 11.07(a)(1) and (2), and such failure continues for the lesser of 10
calendar days or such period in which the applicable Exchange Act Report can
be filed timely (without taking into account any extensions), so long as such
failure shall not have been remedied, the Trustee shall, but only at the
direction of the Depositor, terminate all of the rights and obligations of the
Master Servicer under this Agreement and in and to the Mortgage Loans and the
proceeds thereof, other than its rights as a Certificateholder hereunder. The
Depositor shall not be entitled to terminate the rights and
obligations of the Master Servicer if a failure of the Master Servicer to
identify a Subcontractor "participating in the servicing function" within the
meaning of Item 1122 of Regulation AB was attributable solely to the role or
functions of such Subcontractor with respect to mortgage loans other than the
Mortgage Loans.
On or after the receipt by the Master Servicer of such
written notice, all authority and power of the Master Servicer hereunder,
whether with respect to the Mortgage Loans or otherwise, shall pass to and be
vested in the Trustee. The Trustee shall thereupon make any Advance described
in Section 4.01 hereof subject to Section 3.04 hereof. The Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the Master
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise. Unless expressly provided in such written
notice, no such termination shall affect any obligation of the Master Servicer
to pay amounts owed pursuant to Article VIII. The Master Servicer agrees to
cooperate with the Trustee in effecting the termination of the Master
Servicer's responsibilities and rights hereunder, including, without
limitation, the transfer to the Trustee of all cash amounts which shall at the
time be credited to the Certificate Account, or thereafter be received with
respect to the Mortgage Loans. The Trustee shall promptly notify the Rating
Agencies and the Depositor of the occurrence of an Event of Default.
Notwithstanding any termination of the activities of a
Master Servicer hereunder, such Master Servicer shall be entitled to receive,
out of any late collection of a Scheduled Payment on a Mortgage Loan that was
due prior to the notice terminating such Master Servicer's rights and
obligations as Master Servicer hereunder and received after such notice, that
portion thereof to which such Master Servicer would have been entitled
pursuant to Sections 3.08(a)(i) through (viii), and any other amounts payable
to such Master Servicer hereunder the entitlement to which arose prior to the
termination of its activities hereunder.
If the Master Servicer is terminated, the Trustee shall
provide the Depositor in writing and in form and substance reasonably
satisfactory to the Depositor, all information reasonably requested by the
Depositor in order to comply with its reporting obligation under Item 6.02 of
Form 8-K with respect to a successor master servicer in the event the Trustee
should succeed to the duties of the Master Servicer as set forth herein.
Section 7.02 Trustee to Act; Appointment of Successor.
----------------------------------------
On and after the time the Master Servicer receives a notice
of termination pursuant to Section 7.01 hereof, the Trustee shall, to the
extent provided in Section 3.04, be the successor to the Master Servicer in
its capacity as servicer under this Agreement and the transactions set forth
or provided for herein and shall be subject to all the responsibilities,
duties and liabilities relating thereto placed on the Master Servicer by the
terms and provisions hereof and applicable law including the obligation to
make advances pursuant to Section 4.01. As compensation therefor, the Trustee
shall be entitled to all fees, costs and expenses relating to the Mortgage
Loans that the Master Servicer would have been entitled to if the Master
Servicer had continued to act hereunder. Notwithstanding the foregoing, if the
Trustee has become the
successor to the Master Servicer in accordance with Section 7.01 hereof, the
Trustee may, if it shall be unwilling to so act, or shall, if it is prohibited
by applicable law from making Advances pursuant to Section 4.01 hereof or if
it is otherwise unable to so act, (i) appoint any established mortgage loan
servicing institution acceptable to the NIM Insurer (as evidenced by the prior
written consent of the NIM Insurer), or (ii) if it is unable for 60 days to
appoint a successor servicer acceptable to the NIM Insurer, petition a court
of competent jurisdiction to appoint any established mortgage loan servicing
institution, the appointment of which does not adversely affect the
then-current rating of the Certificates (without regard to the Certificate
Insurance Policy, in the case of the Class A Certificates) and the NIM Insurer
guaranteed notes (without giving any effect to any policy or guaranty provided
by the NIM Insurer) by each Rating Agency as the successor to the Master
Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Master Servicer hereunder. Any
successor Master Servicer shall be an institution that is a Xxxxxx Mae and
Xxxxxxx Mac approved seller/servicer in good standing, that has a net worth of
at least $15,000,000 and that is willing to service the Mortgage Loans and
executes and delivers to the Depositor and the Trustee an agreement accepting
such delegation and assignment, that contains an assumption by such Person of
the rights, powers, duties, responsibilities, obligations and liabilities of
the Master Servicer (other than liabilities and indemnities of the Master
Servicer under Section 6.03 hereof incurred prior to termination of the Master
Servicer under Section 7.01), with like effect as if originally named as a
party to this Agreement; and provided further that each Rating Agency
acknowledges that its rating of the Certificates in effect immediately prior
to such assignment and delegation will not be qualified or reduced as a result
of such assignment and delegation (without regard to the Certificate Insurance
Policy, in the case of the Class A Certificates). No appointment of a
successor to the Master Servicer hereunder shall be effective until (i) the
Trustee shall have consented thereto, (ii) written notice of such proposed
appointment shall have been provided by the Trustee to each Certificateholder
and the Certificate Insurer and (iii) at least 15 calendar days prior to the
effective date of such appointment, (x) the Trustee shall provide written
notice to the Depositor of such successor pursuant to this Section 7.02 and
(y) such successor Master Servicer shall provide to the Depositor in writing
and in form and substance reasonably satisfactory to the Depositor, all
information reasonably requested by the Depositor in order to comply with its
reporting obligation under Item 6.02 of Form 8-K with respect to a replacement
master servicer. The Trustee shall not resign as servicer until a successor
servicer has been appointed and has accepted such appointment. Pending
appointment of a successor to the Master Servicer hereunder, the Trustee,
unless the Trustee is prohibited by law from so acting, shall, subject to
Section 3.04 hereof, act in such capacity as herein above provided. In
connection with such appointment and assumption, the Trustee may make such
arrangements for the compensation of such successor out of payments on
Mortgage Loans as it and such successor shall agree; provided that no such
compensation shall be in excess of that permitted the Master Servicer
hereunder. The Trustee and such successor shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession.
Neither the Trustee nor any other successor servicer shall be deemed to be in
default hereunder by reason of any failure to make, or any delay in making,
any distribution hereunder or any portion thereof or any failure to perform,
or any delay in performing, any duties or responsibilities hereunder, in
either case caused by the failure of the Master Servicer to deliver or
provide, or any delay in delivering or providing, any cash, information,
documents or records to it.
Any successor to the Master Servicer as servicer shall give
notice to the NIM Insurer and the Mortgagors of such change of servicer and
shall, during the term of its service as servicer maintain in force the policy
or policies that the Master Servicer is required to maintain pursuant to
Section 6.05.
In connection with the termination or resignation of the
Master Servicer hereunder, either (i) the successor Master Servicer, including
the Trustee if the Trustee is acting as successor Master Servicer, shall
represent and warrant that it is a member of MERS in good standing and shall
agree to comply in all material respects with the rules and procedures of MERS
in connection with the servicing of the Mortgage Loans that are registered
with MERS, or (ii) the predecessor Master Servicer shall cooperate with the
successor Master Servicer in causing MERS to execute and deliver an assignment
of Mortgage in recordable form to transfer the Mortgage from MERS to the
Trustee and to execute and deliver such other notices, documents and other
instruments as may be necessary or desirable to effect a transfer of such
Mortgage Loan or servicing of such Mortgage Loan on the MERS(R) System to the
successor Master Servicer. The predecessor Master Servicer shall file or cause
to be filed any such assignment in the appropriate recording office. The
successor Master Servicer shall cause such assignment to be delivered to the
Trustee promptly upon receipt of the original with evidence of recording
thereon or a copy certified by the public recording office in which such
assignment was recorded.
Section 7.03 Notification to Certificateholders.
-----------------------------------
(a) Upon any termination of or appointment of a successor to
the Master Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders, to the Certificate Insurer and to each Rating Agency.
(b) Within 60 days after the occurrence of any Event of
Default, the Trustee shall transmit by mail to all Certificateholders notice
of each such Event of Default hereunder known to the Trustee, unless such
Event of Default shall have been cured or waived.
ARTICLE VIII.
CONCERNING THE TRUSTEE
Section 8.01 Duties of Trustee.
------------------
The Trustee, prior to the occurrence of an Event of Default
and after the curing of all Events of Default that may have occurred, shall
undertake to perform such duties and only such duties as are specifically set
forth in this Agreement. In case an Event of Default has occurred and remains
uncured, the Trustee shall exercise such of the rights and powers vested in it
by this Agreement, and use the same degree of care and skill in their exercise
as a prudent person would exercise or use under the circumstances in the
conduct of such person's own affairs.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments
furnished to the Trustee that 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, to the extent
provided in
this Agreement. If any such instrument is found not to conform to the
requirements of this Agreement in a material manner, the Trustee shall take
action as it deems appropriate to have the instrument corrected.
No provision of this Agreement shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act or its own misconduct, its negligent failure to perform its
obligations in compliance with this Agreement, or any liability that would be
imposed by reason of its willful misfeasance or bad faith; provided that:
(1) prior to the occurrence of an Event of Default,
and after the curing of all such Events of Default that may have
occurred, the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Agreement, the
Trustee shall not be liable, individually or as Trustee, except for
the performance of such duties and obligations as are specifically
set forth in this Agreement, no implied covenants or obligations
shall be read into this Agreement against the Trustee and the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates
or opinions furnished to the Trustee and conforming to the
requirements of this Agreement that it reasonably believed in good
faith to be genuine and to have been duly executed by the proper
authorities respecting any matters arising hereunder;
(2) the Trustee shall not be liable, individually
or as Trustee, for an error of judgment made in good faith by a
Responsible Officer or Responsible Officers of the Trustee, unless
the Trustee was negligent or acted in bad faith or with willful
misfeasance;
(3) the Trustee shall not be liable, individually
or as Trustee, 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 each Class of Certificates evidencing not less than
25% of the Voting Rights of such Class relating to the time, method
and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred upon the
Trustee under this Agreement; and
(4) without in any way limiting the provisions of
this Section 8.01 or Section 8.02 hereof, the Trustee shall be
entitled to rely conclusively on the information delivered to it by
the Master Servicer in a Trustee Advance Notice in determining
whether or not it is required to make an Advance under Section
4.01(d), shall have no responsibility to ascertain or confirm any
information contained in any Trustee Advance Notice, and shall have
no obligation to make any Advance under Section 4.01(d) in the
absence of a Trustee Advance Notice or actual knowledge by a
Responsible Officer that (A) a required Advance was not made and (B)
such required Advance was not a Nonrecoverable Advance.
Section 8.02 Certain Matters Affecting the Trustee
-------------------------------------
(a) Except as otherwise provided in Section 8.01:
(1) the Trustee may request and rely upon and shall
be protected in acting or refraining from acting upon any resolution,
Officer's Certificate, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond or other paper or document believed
by it to be genuine and to have been signed or presented by the
proper party or parties;
(2) the Trustee may consult with counsel and any
Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by
it hereunder in good faith and in accordance with such Opinion of
Counsel;
(3) the Trustee shall not be liable, individually
or as Trustee, 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;
(4) prior to the occurrence of an Event of Default
hereunder and after the curing of all Events of Default that may have
occurred, the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent,
order, approval, bond or other paper or document, unless requested in
writing so to do by the NIM Insurer or the Holders of each Class of
Certificates evidencing not less than 25% of the Voting Rights of
such Class; provided, however, that if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is,
in the opinion of the Trustee not reasonably assured to the Trustee
by the NIM Insurer or such Certificateholders, the Trustee may
require reasonable indemnity against such expense, or liability from
the NIM Insurer or such Certificateholders as a condition to taking
any such action;
(5) the Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or
by or through agents, accountants or attorneys;
(6) the Trustee shall not be required to expend its
own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder if it shall have
reasonable grounds for believing that repayment of such funds or
adequate indemnity against such liability is not assured to it;
(7) the Trustee shall not be liable, individually
or as Trustee, for any loss on any investment of funds pursuant to
this Agreement (other than as issuer of the investment security);
(8) the Trustee shall not be deemed to have
knowledge of an Event of Default until a Responsible Officer of the
Trustee shall have received written notice thereof; and
(9) the Trustee shall be under no obligation to
exercise any of the trusts or powers vested in it by this Agreement
or to make any investigation of matters arising hereunder or to
institute, conduct or defend any litigation hereunder or in relation
hereto at the request, order or direction of the NIM Insurer or any
of the Certificateholders, pursuant to the provisions of this
Agreement, unless the NIM Insurer or such Certificateholders, as
applicable, shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities that may be
incurred therein or thereby.
(b) All rights of action under this Agreement or under any
of the Certificates, enforceable by the Trustee, may be enforced by the
Trustee 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 the Certificates, subject to the
provisions of this Agreement.
Section 8.03 Trustee Not Liable for Mortgage Loans.
--------------------------------------
The recitals contained herein shall be taken as the
statements of the Depositor or the Master Servicer, as the case may be, and
the Trustee assumes no responsibility for their correctness. The Trustee makes
no representations as to the validity or sufficiency of this Agreement or of
any Mortgage Loan or related document or of MERS or the MERS(R) System other
than with respect to the Trustee's execution and authentication of the
Certificates. The Trustee shall not be accountable for the use or application
by the Depositor or the Master Servicer of any funds paid to the Depositor or
the Master Servicer in respect of the Mortgage Loans or deposited in or
withdrawn from the Certificate Account by the Depositor or the Master
Servicer.
Section 8.04 Trustee May Own Certificates.
-----------------------------
The Trustee in its individual or any other capacity may
become the owner or pledgee of Certificates with the same rights as it would
have if it were not the Trustee.
Section 8.05 Master Servicer to Pay Trustee's Fees and
Expenses.
-----------------------------------------
The Master Servicer covenants and agrees to pay or reimburse
the Trustee, upon its request, for all reasonable expenses, disbursements and
advances incurred or made by the Trustee on behalf of the Trust Fund in
accordance with any of the provisions of this Agreement (including, without
limitation: (A) the reasonable compensation and the expenses and disbursements
of its counsel, but only for representation of the Trustee acting in their
capacities as trustees hereunder and (B) to the extent that the Trustee must
engage persons not regularly in its employ to perform acts or services on
behalf of the Trust Fund, which acts or services are not in the ordinary
course of the duties of a trustee, paying agent or certificate registrar, in
the absence of a breach or default by any party hereto, the reasonable
compensation, expenses and disbursements of such persons, except any such
expense, disbursement or advance as may arise from its negligence, bad faith
or willful misconduct). The Trustee and any director, officer, employee or
agent of the Trustee shall be indemnified by the Master Servicer and held
harmless against any loss, liability or expense (i) incurred in connection
with any legal action relating to
this Agreement or the Certificates, or in connection with the performance of
any of the Trustee's duties hereunder, other than any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence in
the performance of any of the Trustee's duties hereunder or by reason of
reckless disregard of the Trustee's obligations and duties hereunder or (ii)
resulting from any error in any tax or information return prepared by the
Master Servicer. Such indemnity shall survive the termination of this
Agreement or the resignation or removal of the Trustee hereunder.
Section 8.06 Eligibility Requirements for Trustee.
-------------------------------------
The Trustee hereunder shall, at all times, be a corporation
or association organized and doing business under the laws of a state or the
United States of America, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least $50,000,000,
subject to supervision or examination by federal or state authority and with a
credit rating that would not cause any of the Rating Agencies to reduce their
respective ratings of any Class of Certificates (without regard to the
Certificate Insurance Policy, in the case of the Class A Certificates) below
the ratings issued on the Closing Date (or having provided such security from
time to time as is sufficient to avoid such reduction). If such corporation or
association publishes reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining authority,
then for the purposes of this Section 8.06 the combined capital and surplus of
such corporation or association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 8.06, the Trustee shall resign immediately in the
manner and with the effect specified in Section 8.07 hereof. The corporation
or national banking association serving as Trustee may have normal banking and
trust relationships with the Depositor, the Sellers and the Master Servicer
and their respective affiliates; provided that such corporation cannot be an
affiliate of the Master Servicer other than the Trustee in its role as
successor to the Master Servicer.
Section 8.07 Resignation and Removal of Trustee.
-----------------------------------
The Trustee may at any time resign and be discharged from
the trusts hereby created by (1) giving written notice of resignation to the
Depositor and the Master Servicer and by mailing notice of resignation by
first class mail, postage prepaid, to the Certificateholders at their
addresses appearing on the Certificate Register, the Certificate Insurer and
each Rating Agency, not less than 60 days before the date specified in such
notice when, subject to Section 8.08, such resignation is to take effect, and
(2) acceptance of appointment by a successor trustee in accordance with
Section 8.08 and meeting the qualifications set forth in Section 8.06. If no
successor trustee shall have been so appointed and have accepted appointment
within 30 days after the giving of such notice or resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment
of a successor trustee.
As a condition to the effectiveness of any such resignation,
at least 15 calendar days prior to the effective date of such resignation, the
Trustee shall provide (x) written notice to the Depositor of any successor
pursuant to this Section and (y) in writing and in form and substance
reasonably satisfactory to the Depositor, all information reasonably requested
by the
Depositor in order to comply with its reporting obligation under Item 6.02 of
Form 8-K with respect to the resignation of the Trustee.
If at any time (i) the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.06 hereof and shall fail to resign
after written request thereto by the NIM Insurer or the Depositor, (ii) the
Trustee shall become incapable of acting, or shall be adjudged as bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, (iii)(A) a tax is imposed with respect to the Trust Fund by any
state in which the Trustee or the Trust Fund is located, (B) the imposition of
such tax would be avoided by the appointment of a different trustee and (C)
the Trustee fails to indemnify the Trust Fund against such tax, or (iv) during
the period which the Depositor is required to file Exchange Act Reports with
respect to the Trust Fund, the Trustee fails to comply with its obligations
under the last sentence of Section 7.01, the preceding paragraph, Section 8.09
or Article XI and such failure is not remedied within the lesser of 10
calendar days or such period in which the applicable Exchange Act Report can
be filed timely (without taking into account any extensions), then, in the
case of clauses (i) through (iii), the Depositor, the NIM Insurer or the
Master Servicer, or in the case of clause (iv), the Depositor, may remove the
Trustee and appoint a successor trustee, reasonably acceptable to the
Certificate Insurer and the NIM Insurer, by written instrument, in triplicate,
one copy of which instrument shall be delivered to the Trustee, one copy of
which shall be delivered to the Master Servicer and one copy of which shall be
delivered to the successor trustee.
The Holders evidencing at least 51% of the Voting Rights of
each Class of Certificates may at any time remove the Trustee and appoint a
successor trustee by written instrument or instruments, in triplicate, signed
by such Holders or their attorneys-in-fact duly authorized, one complete set
of which instruments shall be delivered by the successor Trustee to the Master
Servicer one complete set to the Trustee so removed, one complete set to the
successor so appointed and one complete set to the Depositor, together with a
written description of the basis for such removal. Notice of any removal of
the Trustee shall be given to each Rating Agency by the successor Trustee.
Any resignation or removal of the Trustee and appointment of
a successor trustee pursuant to any of the provisions of this Section 8.07
shall become effective upon acceptance of appointment by the successor trustee
as provided in Section 8.08 hereof.
Section 8.08 Successor Trustee.
------------------
Any successor trustee appointed as provided in Section 8.07
hereof shall execute, acknowledge and deliver to the Depositor, its
predecessor trustee and the Master Servicer an instrument accepting such
appointment hereunder and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with the
like effect as if originally named as trustee herein. In addition, if the
Corridor Contract is still outstanding, the Person appointed as successor
trustee shall execute, acknowledge and deliver to the predecessor trustee, CHL
and the
Master Servicer an instrument accepting the appointment as successor Corridor
Contract Administrator under the Corridor Contract Administration Agreement.
No successor trustee shall accept appointment as provided in
this Section 8.08 unless at the time of such acceptance such successor trustee
shall be eligible under the provisions of Section 8.06 hereof, is reasonably
acceptable to the Certificate Insurer and the NIM Insurer, its appointment
shall not adversely affect the then-current ratings of the Certificates
(without regard to the Certificate Insurance Policy, in the case of the Class
A Certificates) and has provided to the Depositor in writing and in form and
substance reasonably satisfactory to the Depositor, all information reasonably
requested by the Depositor in order to comply with its reporting obligation
under Item 6.02 of Form 8-K with respect to a replacement Trustee.
Upon acceptance of appointment by a successor trustee as
provided in this Section 8.08, the Depositor shall mail notice of the
succession of such trustee hereunder to the Certificate Insurer, the NIM
Insurer and all Holders of Certificates. If the Depositor fails to mail such
notice within ten days after acceptance of appointment by the successor
trustee, the successor trustee shall cause such notice to be mailed at the
expense of the Depositor.
Section 8.09 Merger or Consolidation of Trustee.
-----------------------------------
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to substantially all of the corporate
trust business of the Trustee, shall be the successor of the Trustee
hereunder, provided that such corporation shall be eligible under the
provisions of Section 8.06 hereof without the execution or filing of any paper
or further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding.
As a condition to the effectiveness of any merger or
consolidation, at least 15 calendar days prior to the effective date of any
merger or consolidation of the Trustee, the Trustee shall provide (x) written
notice to the Depositor of any successor pursuant to this Section and (y) in
writing and in form and substance reasonably satisfactory to the Depositor,
all information reasonably requested by the Depositor in order to comply with
its reporting obligation under Item 6.02 of Form 8-K with respect to a
replacement Trustee.
Section 8.10 Appointment of Co-Trustee or Separate Trustee.
---------------------------------------------
Notwithstanding any other provisions of this Agreement, at
any time, for the purpose of meeting any legal requirements of any
jurisdiction in which any part of the Trust Fund or property securing any
Mortgage Note may at the time be located, the Master Servicer and the Trustee
acting jointly shall have the power and shall execute and deliver all
instruments to appoint one or more Persons approved by the Trustee and
reasonably acceptable to the NIM Insurer to act as co-trustee or co-trustees
jointly with the Trustee, or separate trustee or separate trustees, of all or
any part of the Trust Fund, and to vest in such Person or Persons, in such
capacity and for the benefit of the Certificateholders, such title to the
Trust Fund or any part thereof, whichever is applicable, and, subject to the
other provisions of this Section 8.10, such powers, duties, obligations,
rights and trusts as the Master Servicer and the Trustee may consider
necessary or desirable. If the Master Servicer shall not have joined in such
appointment, or the NIM Insurer shall not have approved such appointment,
within 15 days after receipt by it of a request to do so, or in the case an
Event of Default shall have occurred and be continuing, the Trustee shall have
the power to make such appointment. No co-trustee or separate trustee
hereunder shall be required to meet the terms of eligibility as a successor
trustee under Section 8.06 and no notice to Certificateholders of the
appointment of any co-trustee or separate trustee shall be required under
Section 8.08.
Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(1) All rights, powers, duties and obligations
conferred or imposed upon the Trustee, except for the obligation of
the Trustee under this Agreement to advance funds on behalf of the
Master Servicer, shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee
is not authorized to act separately without the Trustee joining in
such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as successor to the Master Servicer
hereunder), the Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties
and obligations (including the holding of title to the Trust Fund or
any portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely
at the direction of the Trustee;
(2) No trustee hereunder shall be held personally
liable by reason of any act or omission of any other trustee
hereunder; and
(3) The Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement
and the conditions of this Article VIII. Each separate trustee and co-trustee
upon its acceptance of the trusts conferred, shall be vested with the estates
or property specified in its instrument of appointment, either jointly with
the Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Every such instrument shall be filed with the
Trustee and a copy thereof given to the Master Servicer and the Depositor.
Any separate trustee or co-trustee may, at any time,
constitute the Trustee its agent or attorney-in-fact, with full power and
authority, to the extent not prohibited by law, to do any lawful act under or
in respect of this Agreement on its behalf and in its name. If any separate
trustee or co-trustee shall die, become incapable of acting, resign or be
removed, all of its estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Trustee, to the extent permitted by law,
without the appointment of a new or successor trustee.
Section 8.11 Tax Matters.
------------
It is intended that the Trust Fund shall constitute, and
that the affairs of the Trust Fund shall be conducted so that each REMIC
created pursuant to the Preliminary Statement qualifies as, a "real estate
mortgage investment conduit" as defined in and in accordance with the REMIC
Provisions. In furtherance of such intention, the Trustee covenants and agrees
that it shall act as agent (and the Trustee is hereby appointed to act as
agent) on behalf of the Trust Fund and that in such capacity it shall: (a)
prepare and file, or cause to be prepared and filed, in a timely manner, a
U.S. Real Estate Mortgage Investment Conduit Income Tax Returns (Form 1066 or
any successor form adopted by the Internal Revenue Service) and prepare and
file or cause to be prepared and filed with the Internal Revenue Service and
applicable state or local tax authorities income tax or information returns
for each taxable year with respect to each REMIC created hereunder containing
such information and at the times and in the manner as may be required by the
Code or state or local tax laws, regulations, or rules, and furnish or cause
to be furnished to Certificateholders the schedules, statements or information
at such times and in such manner as may be required thereby; (b) within thirty
days of the Closing Date, furnish or cause to be furnished to the Internal
Revenue Service, on Forms 8811 or as otherwise may be required by the Code,
the name, title, address, and telephone number of the person that the Holders
of the Certificates may contact for tax information relating thereto, together
with such additional information as may be required by such Form, and update
such information at the time or times in the manner required by the Code for
the Trust Fund; (c) make or cause to be made elections, on behalf of each
REMIC created hereunder to be treated as a REMIC on the federal tax return of
each such REMIC for its first taxable year (and, if necessary, under
applicable state law); (d) prepare and forward, or cause to be prepared and
forwarded, to the Certificateholders and to the Internal Revenue Service and,
if necessary, state tax authorities, all information returns and reports as
and when required to be provided to them in accordance with the REMIC
Provisions, including without limitation, the calculation of any original
issue discount using the Prepayment Assumption; (e) provide information
necessary for the computation of tax imposed on the transfer of a Class A-R
Certificate to a Person that is not a Permitted Transferee, or an agent
(including a broker, nominee or other middleman) of a Non-Permitted
Transferee, or a pass-through entity in which a Non-Permitted Transferee is
the record holder of an interest (the reasonable cost of computing and
furnishing such information may be charged to the Person liable for such tax);
(f) to the extent that they are under its control conduct the affairs of the
Trust Fund at all times that any Certificates are outstanding so as to
maintain the status of each REMIC created hereunder as a REMIC under the REMIC
Provisions; (g) not knowingly or intentionally take any action or omit to take
any action that would cause the termination of the REMIC status of any REMIC
created hereunder; (h) pay, from the sources specified in the penultimate
paragraph of this Section 8.11, the amount of any federal, state and local
taxes, including prohibited transaction taxes as described below, imposed on
any REMIC created hereunder prior to the termination of the Trust Fund when
and as the same shall be due and payable (but such obligation shall not
prevent the Trustee or any other appropriate Person from contesting any such
tax in appropriate proceedings and shall not prevent the Trustee from
withholding payment of such tax, if permitted by law, pending the outcome of
such proceedings); (i) sign or cause to be signed federal, state or local
income tax or information returns; (j) maintain records relating to each REMIC
created hereunder, including but not limited to the income, expenses, assets
and liabilities of each such REMIC, and the fair market value and adjusted
basis of the Trust Fund property determined at such intervals as may be
required by the Code, as may be necessary to
prepare the foregoing returns, schedules, statements or information; and
(k) as and when necessary and appropriate, represent the Trust Fund in any
administrative or judicial proceedings relating to an examination or audit by
any governmental taxing authority, request an administrative adjustment as to
any taxable year of any REMIC created hereunder, enter into settlement
agreements with any governmental taxing agency, extend any statute of
limitations relating to any tax item of the Trust Fund, and otherwise act on
behalf of any REMIC created hereunder in relation to any tax matter involving
any such REMIC.
In order to enable the Trustee to perform its duties as set
forth herein, the Depositor shall provide, or cause to be provided, to the
Trustee within ten days after the Closing Date all information or data that
the Trustee requests in writing and determines to be relevant for tax purposes
to the valuations and offering prices of the Certificates, including, without
limitation, the price, yield, prepayment assumption and projected cash flows
of the Certificates and the Mortgage Loans (and, to the extent not part of the
aforementioned, the information referred to in paragraphs (1), (2), (3) and
(4) of Section 4.05(d)). Thereafter, the Depositor shall provide to the
Trustee promptly upon written request therefor, any such additional
information or data that the Trustee may, from time to time, request in order
to enable the Trustee to perform its duties as set forth herein. The Depositor
hereby indemnifies the Trustee for any losses, liabilities, damages, claims or
expenses of the Trustee arising from any errors or miscalculations of the
Trustee that result from any failure of the Depositor to provide, or to cause
to be provided, accurate information or data to the Trustee on a timely basis.
In the event that any tax is imposed on "prohibited
transactions" of the Trust Fund as defined in section 860F(a)(2) of the Code,
on the "net income from foreclosure property" of the Trust Fund as defined in
section 860G(c) of the Code, on any contribution to the Trust Fund after the
startup day pursuant to section 860G(d) of the Code, or any other tax is
imposed, including, without limitation, any federal, state or local tax or
minimum tax imposed upon the Trust Fund pursuant to sections 23153 and 24872
of the California Revenue and Taxation Code if not paid as otherwise provided
for herein, such tax shall be paid by (i) the Trustee, if any such other tax
arises out of or results from a breach by the Trustee of any of its
obligations under this Agreement, (ii) (x) the Master Servicer, in the case of
any such minimum tax, and (y) any party hereto (other than the Trustee) to the
extent any such other tax arises out of or results from a breach by such other
party of any of its obligations under this Agreement or (iii) in all other
cases, or in the event that any liable party here fails to honor its
obligations under the preceding clauses (i) or (ii), any such tax will be paid
first with amounts otherwise to be distributed to the Class A-R
Certificateholders, and second with amounts otherwise to be distributed to all
other Certificateholders in the same manner as if such tax were a Realized
Loss. Notwithstanding anything to the contrary contained herein, to the extent
that such tax is payable by the Class A-R Certificates, the Trustee is hereby
authorized to retain on any Distribution Date, from the Holders of the Class
A-R Certificates (and, if necessary, second, from the Holders of the other
Certificates in the priority specified in the preceding sentence), funds
otherwise distributable to such Holders in an amount sufficient to pay such
tax. The Trustee agrees to promptly notify in writing the party liable for any
such tax of the amount thereof and the due date for the payment thereof.
The Trustee shall treat the Carryover Reserve Fund as an
outside reserve fund within the meaning of Treasury Regulation 1.860G-2(h)
which is not an asset of any REMIC
created hereunder. The Carryover Reserve Fund shall be treated as owned by the
Class C Certificateholders. The rights of the Holders of each Class of
Certificates (other than the Class P and Class A-R Certificates) to receive
payments from, and the deemed obligations of such Holders to make payments to,
the Carryover Reserve Fund shall be treated as rights and obligations with
respect to notional principal contracts written by the Corridor Contract
Counterparty in respect of any Net Rate Carryover funded by the Corridor
Contract and in respect of any residual payments from such Corridor Contract
received by the Class C Certificates and (ii) the Holders of the Class C
Certificates in respect of any Net Rate Carryover distributed pursuant to
Sections 4.04(c)(4). Thus, the Certificates (other than the Class P and Class
A-R Certificates), shall be treated as representing ownership of Master REMIC
regular interests coupled with contractual rights and obligations within the
meaning of Treasury Regulation 1.860G-2(i). For purposes of determining the
issue price of the various Master REMIC regular interests, the Trustee shall
assume that the Corridor Contract has a value of $26,000.
Section 8.12 Access to Records of the Trustee.
---------------------------------
The Trustee shall afford the Sellers, the Depositor, the
Master Servicer, the NIM Insurer, the Certificate Insurer and each Certificate
Owner upon reasonable notice during normal business hours access to all
records maintained by the Trustee in respect of its duties under this
Agreement and access to officers of such entity responsible for performing its
duties. Upon request, the Trustee shall furnish the Depositor, the Master
Servicer, the NIM Insurer, the Certificate Insurer and any requesting
Certificate Owner with its most recent financial statements. The Trustee shall
cooperate fully with the Sellers, the Master Servicer, the Depositor, the NIM
Insurer, the Certificate Insurer and the Certificate Owner for review and
copying any books, documents, or records requested with respect to the
Trustee's duties under this Agreement. The Sellers, the Depositor, the Master
Servicer, the Certificate Insurer and the Certificate Owner shall not have any
responsibility or liability for any action for failure to act by the Trustee
and are not obligated to supervise the performance of the Trustee under this
Agreement or otherwise.
Section 8.13 Suits for Enforcement.
----------------------
If an Event of Default or other material default by the
Master Servicer or the Depositor under this Agreement occurs and is
continuing, at the direction of the Certificateholders holding not less than
51% of the Voting Rights, the Certificate Insurer or the NIM Insurer, the
Trustee shall proceed to protect and enforce its rights and the rights of the
Certificateholders, the Certificate Insurer or the NIM Insurer under this
Agreement by a suit, action, or proceeding in equity or at law or otherwise,
whether for the specific performance of any covenant or agreement contained in
this Agreement or in aid of the execution of any power granted in this
Agreement or for the enforcement of any other legal, equitable, or other
remedy, as the Trustee, being advised by counsel, and subject to the
foregoing, shall deem most effectual to protect and enforce any of the rights
of the Trustee, the NIM Insurer, the Certificate Insurer and the
Certificateholders.
Section 8.14 Monitoring of Significance Percentage.
--------------------------------------
With respect to each Distribution Date, the Trustee shall
calculate the "significance percentage" (as defined in Item 1115 of Regulation
AB) of each derivative instrument, if any, based on the aggregate Class
Principal Balance of the related Class(es) of Covered Certificates for such
derivative instrument and Distribution Date (after all distributions to be
made thereon on such Distribution Date) and based on the methodology provided
in writing by or on behalf of CHL no later than the fifth Business Day
preceding such Distribution Date. On each Distribution Date, the Trustee shall
provide to CHL a written report (which written report may include similar
information with respect to other derivative instruments relating to
securitization transactions sponsored by CHL) specifying the "significance
percentage" of each derivative instrument, if any, for that Distribution Date.
If the "significance percentage" of any derivative instrument exceeds 7.0%
with respect to any Distribution Date, the Trustee shall make a separate
notation thereof in the written report described in the preceding sentence.
Such written report may contain such assumptions and disclaimers as are deemed
necessary and appropriate by the Trustee.
ARTICLE IX.
TERMINATION
Section 9.01 Termination upon Liquidation or Repurchase
of all Mortgage Loans.
-------------------------------------------
[Subject to Section 9.03, the Trust Fund shall terminate and
the obligations and responsibilities of the Depositor, the Master Servicer,
the Sellers and the Trustee created hereby shall terminate upon the earlier of
(a) the purchase by the Master Servicer or NIM Insurer at the direction of the
Majority Holder of the Class C Certificates (the party exercising such
purchase option, the "Terminator") of all of the Mortgage Loans (and REO
Properties) remaining in the Trust Fund at the price equal to the sum of (i)
100% of the Stated Principal Balance of each Mortgage Loan in the Trust Fund
(other than in respect of an REO Property), (ii) accrued interest thereon at
the applicable Mortgage Rate (or, if such repurchase is effected by the Master
Servicer, at the applicable Net Mortgage Rate), (iii) the appraised value of
any REO Property in the Trust Fund (up to the Stated Principal Balance of the
related Mortgage Loan), such appraisal to be conducted by an appraiser
mutually agreed upon by the Terminator and the Trustee, (iv) any remaining
unpaid costs and damages incurred by the Trust Fund that arises out of an
actual violation of any predatory or abusive lending law or regulation and (v)
if the Terminator is the NIM Insurer, any unreimbursed Servicing Advances, and
the principal portion of any unreimbursed Advances, made on the Mortgage Loans
prior to the exercise of such repurchase and (b) the later of (i) the maturity
or other liquidation (or any Advance with respect thereto) of the last
Mortgage Loan remaining in the Trust Fund and the disposition of all REO
Property and (ii) the distribution to related Certificateholders of all
amounts required to be distributed to them pursuant to this Agreement, as
applicable. In no event shall the trusts created hereby continue beyond the
earlier of (i) the expiration of 21 years from the death of the last survivor
of the descendants of Xxxxxx X. Xxxxxxx, the late Ambassador of the United
States to the Court of St. James's, living on the date hereof and (ii) the
Latest Possible Maturity Date. If any such termination will result in a
Deficiency Amount on the Certificate Insurance Policy, the consent
of the Certificate Insurer will also be required prior to exercising the
option specified in clause (a) of this paragraph.]
The right to purchase all Mortgage Loans and REO Properties
by the Terminator pursuant to clause (a) of the immediately preceding
paragraph shall be conditioned upon (1) the Stated Principal Balance of the
Mortgage Loans, at the time of any such repurchase, aggregating ten percent
(10%) or less of the sum of the aggregate Cut-off Date Principal Balance of
the Initial Mortgage Loans and the Pre-Funded Amount and (2) unless the NIM
Insurer otherwise consents, the purchase price for such Mortgage Loans and REO
Properties shall result in a final distribution on any NIM Insurer guaranteed
notes that is sufficient (x) to pay such notes in full and (y) to pay any
amounts due and payable to the NIM Insurer pursuant to the indenture related
to such notes and (3) unless the Certificate Insurer otherwise consents, the
purchase price for such Mortgage Loans and REO Properties shall result in a
final distribution on the Class A Certificates and the Certificate Insurer
that is sufficient (x) to pay such Class A Certificates in full (without the
need of any Insured Payment) and (y) to pay any amounts due and payable to the
Certificate Insurer pursuant to the terms hereof and pursuant to the Insurance
and Indemnity Agreement.
The NIM Insurer's right to purchase all Mortgage Loans and
REO Properties shall be further conditioned upon the written consent of the
Master Servicer.
Section 9.02 Final Distribution on the Certificates.
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If on any Determination Date, (i) the Master Servicer
determines that there are no Outstanding Mortgage Loans and no other funds or
assets in the Trust Fund other than the funds in the Certificate Account, the
Master Servicer shall direct the Trustee to send a final distribution notice
promptly to each related Certificateholder and the Certificate Insurer or (ii)
the Trustee determines that a Class of Certificates shall be retired after a
final distribution on such Class, the Trustee shall notify the related
Certificateholders and the Certificate Insurer within five (5) Business Days
after such Determination Date that the final distribution in retirement of
such Class of Certificates is scheduled to be made on the immediately
following Distribution Date. Any final distribution made pursuant to the
immediately preceding sentence will be made only upon presentation and
surrender of the related Certificates at the Corporate Trust Office of the
Trustee. If the Terminator elects to terminate pursuant to clause (a) of
Section 9.01, at least 20 days prior to the date notice is to be mailed to the
affected Certificateholders, such electing party shall notify the Depositor,
the Certificate Insurer and the Trustee of the date such electing party
intends to terminate and of the applicable repurchase price of the related
Mortgage Loans and REO Properties.
Notice of any termination, specifying the Distribution Date
on which related Certificateholders may surrender their Certificates for
payment of the final distribution and cancellation, shall be given promptly by
the Trustee by letter to related Certificateholders mailed not earlier than
the 10th day and no later than the 15th day of the month immediately preceding
the month of such final distribution. Any such notice shall specify (a) the
Distribution Date upon which final distribution on related Certificates will
be made upon presentation and surrender of such Certificates at the office
therein designated, (b) the amount of such final distribution, (c) the
location of the office or agency at which such presentation and surrender must
be made, and (d)
that the Record Date otherwise applicable to such Distribution Date is not
applicable, distributions being made only upon presentation and surrender of
such Certificates at the office therein specified. The Terminator will give
such notice to each Rating Agency at the time such notice is given to the
affected Certificateholders.
In the event such notice is given, the Master Servicer shall
cause all funds in the Certificate Account to be remitted to the Trustee for
deposit in the Distribution Account on the Business Day prior to the
applicable Distribution Date in an amount equal to the final distribution in
respect of the Certificates. Upon such final deposit and the receipt by the
Trustee of a Request for File Release therefor, the Trustee shall promptly
release to the Master Servicer the Mortgage Files for the Mortgage Loans.
Upon presentation and surrender of the Certificates, the
Trustee shall cause to be distributed to Certificateholders of each affected
Class and the Certificate Insurer the amounts allocable to such Certificates
and the Certificate Insurer held in the Distribution Account (and, if
applicable, the Carryover Reserve Fund) in the order and priority set forth in
Section 4.04 hereof on the final Distribution Date and in proportion to their
respective Percentage Interests. Notwithstanding the reduction of the
Certificate Principal Balance of any Class of Certificates to zero, such Class
will be outstanding hereunder (solely for the purpose of receiving
distributions (if any) to which it may be entitled pursuant to the terms of
this Agreement and not for any other purpose) until the termination of the
respective obligations and responsibilities of the Depositor, each Seller, the
Master Servicer and the Trustee hereunder in accordance with Article IX.
In the event that any affected Certificateholders shall not
surrender related Certificates for cancellation within six months after the
date specified in the above mentioned written notice, the Trustee shall give a
second written notice to the remaining Certificateholders to surrender their
related Certificates for cancellation and receive the final distribution with
respect thereto. If within six months after the second notice all the
applicable Certificates shall not have been surrendered for cancellation, the
Trustee may take appropriate steps, or may appoint an agent to take
appropriate steps, to contact the remaining Certificateholders concerning
surrender of their Certificates, and the cost thereof shall be paid out of the
funds and other assets that remain a part of the Trust Fund. If within one
year after the second notice all related Certificates shall not have been
surrendered for cancellation, the Certificate Insurer, with respect to any
unpaid Certificate Insurance Reimbursement Amounts, and then the Class A-R
Certificates shall be entitled to all unclaimed funds and other assets that
remain subject hereto.
Section 9.03 Additional Termination Requirements.
------------------------------------
(a) In the event the Terminator exercises its purchase
option, the Trust Fund shall be terminated in accordance with the following
additional requirements, unless the Trustee has been supplied with an Opinion
of Counsel, at the expense of the Terminator, to the effect that the failure
of the Trust Fund to comply with the requirements of this Section 9.03 will
not (i) result in the imposition of taxes on "prohibited transactions" of a
REMIC, or (ii) cause any REMIC created hereunder to fail to qualify as a REMIC
at any time that any Certificates are outstanding:
(1) The Master Servicer shall establish a 90-day
liquidation period and notify the Trustee thereof, which shall in turn specify
the first day of such period in a statement attached to the Trust Fund's final
Tax Return pursuant to Treasury Regulation Section 1.860F-1. The Master
Servicer shall prepare a plan of complete liquidation and shall otherwise
satisfy all the requirements of a qualified liquidation under Section 860F of
the Code and any regulations thereunder, as evidenced by an Opinion of Counsel
delivered to the Trustee and the Depositor obtained at the expense of the
Terminator;
(2) During such 90-day liquidation period, and at
or prior to the time of making the final payment on the Certificates, the
Master Servicer as agent of the Trustee shall sell all of the assets of the
Trust Fund to the Terminator for cash; and
(3) At the time of the making of the final payment
on the Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited, to the Class A-R Certificateholders all cash on hand
(other than cash retained to meet claims) related to such Class of
Certificates, and the Trust Fund shall terminate at that time.
(b) By their acceptance of the Certificates, the Holders
thereof hereby authorize the Master Servicer to specify the 90-day liquidation
period for the Trust Fund, which authorization shall be binding upon all
successor Certificateholders. The Trustee shall attach a statement to the
final federal income tax return for each of any REMIC created hereunder
stating that pursuant to Treasury Regulation Section 1.860F-1, the first day
of the 90-day liquidation period for each the REMIC was the date on which the
Trustee sold the assets of the Trust Fund to the Terminator.
(c) The Trustee as agent for each REMIC created hereunder
hereby agrees to adopt and sign such a plan of complete liquidation upon the
written request of the Master Servicer, and the receipt of the Opinion of
Counsel referred to in Section 9.03(a)(1), and together with the Holders of
the Class A-R Certificates agree to take such other action in connection
therewith as may be reasonably requested by the Terminator.
ARTICLE X.
MISCELLANEOUS PROVISIONS
Section 10.01 Amendment.
---------
This Agreement may be amended from time to time by the
Depositor, the Master Servicer, the Sellers and the Trustee with the consent
of the Certificate Insurer (such consent not to be unreasonably withheld) and
the NIM Insurer, without the consent of any of the Certificateholders (i) to
cure any ambiguity, (ii) to correct or supplement any provisions herein, (iii)
to conform this Agreement to the Prospectus Supplement or the Prospectus, (iv)
to modify, alter, amend, add to or rescind any of the terms or provisions
contained in this Agreement to comply with any rules or regulations
promulgated by the Securities and Exchange Commission from time to time, or
(v) to make such other provisions with respect to matters or questions arising
under this Agreement, as shall not be inconsistent with any other provisions
herein if such action shall not, as evidenced by an Opinion of Counsel,
adversely affect in any material respect the interests of any
Certificateholder; provided that any such amendment shall be deemed not to
adversely affect in any material respect the interests of the
Certificateholders and no such Opinion of Counsel shall be required if the
Person requesting such amendment obtains a letter from each Rating Agency
stating that such amendment would not result in the downgrading or withdrawal
of the respective ratings then assigned to the Certificates (without regard to
the Certificate Insurance Policy, in the case of the Class A Certificates), it
being understood and agreed that any such 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. Any amendment described above made solely to conform this Agreement to
the Prospectus or the Prospectus Supplement shall be deemed not to adversely
affect in any material respect the interests of the Certificateholders.
Notwithstanding the foregoing, no amendment that significantly changes the
permitted activities of the trust created by this Agreement may be made
without the consent of Certificateholders representing not less than 51% of
the Voting Rights of each Class of Certificates affected by such amendment.
Each party to this Agreement hereby agrees that it will cooperate with each
other party in amending this Agreement pursuant to clause (iv) above.
The Trustee, the Depositor, the Master Servicer and the
Sellers with the consent of the NIM Insurer may also at any time and from time
to time amend this Agreement, without the consent of the Certificateholders,
to modify, eliminate or add to any of its provisions to such extent as shall
be necessary or appropriate to maintain the qualification of the Trust Fund as
a REMIC under the Code or to avoid or minimize the risk of the imposition of
any tax on the Trust Fund pursuant to the Code that would be a claim against
the Trust Fund at any time prior to the final redemption of the Certificates,
provided that the Trustee has been provided an Opinion of Counsel, which
opinion shall be an expense of the party requesting such opinion but in any
case shall not be an expense of the Trustee, to the effect that such action is
necessary or appropriate to maintain such qualification or to avoid or
minimize the risk of the imposition of such a tax.
This Agreement may also be amended from time to time by the
Depositor, the Master Servicer, the Sellers and the Trustee with the consent
of the NIM Insurer and the Holders of each Class of Certificates affected
thereby evidencing not less than 51% of the Voting Rights
of such Class, with the consent of the Certificate Insurer (such consent not
to be unreasonably withheld), for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement
or of modifying in any manner the rights of the Holders of Certificates;
provided that no such amendment shall (i) reduce in any manner the amount of,
or delay the timing of, payments required to be distributed on any Certificate
without the consent of the Holder of such Certificate, (ii) 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 66% or more of the
Voting Rights of such Class, or (iii) reduce the aforesaid percentages of
Certificates the Holders of which are required to consent to any such
amendment without the consent of the Holders of all such Certificates then
outstanding.
Notwithstanding any contrary provision of this Agreement,
the Certificate Insurer's consent shall be deemed given to any proposed
amendment to this Agreement if it shall not have objected to such proposed
amendment within two Business Days of receipt of notice of the proposed
amendment.
Notwithstanding any contrary provision of this Agreement,
the Trustee and the NIM Insurer shall not consent to any amendment to this
Agreement unless each shall have first received an Opinion of Counsel
satisfactory to the Trustee and the NIM Insurer, which opinion shall be an
expense of the party requesting such amendment but in any case shall not be an
expense of the Trustee or the NIM Insurer, to the effect that such amendment
will not cause the imposition of any tax on the Trust Fund or the
Certificateholders or cause any REMIC formed hereunder to fail to qualify as a
REMIC at any time that any Certificates are outstanding.
Promptly after the execution of any amendment to this
Agreement, the Trustee shall furnish written notification of the substance of
such amendment to the Certificate Insurer and, if the amendment required the
consent of Certificateholders, to each Certificateholder and each Rating
Agency.
It shall not be necessary for the consent of
Certificateholders under this Section to approve the particular form of any
proposed amendment, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable regulations as the Trustee may prescribe.
Nothing in this Agreement shall require the Trustee to enter
into an amendment without receiving an Opinion of Counsel, reasonably
satisfactory to the Trustee and the NIM Insurer that (i) such amendment is
permitted and is not prohibited by this Agreement and that all requirements
for amending this Agreement have been complied with; and (ii) either (A) the
amendment does not adversely affect in any material respect the interests of
any Certificateholder or (B) the conclusion set forth in the immediately
preceding clause (A) is not required to be reached pursuant to this Section
10.01.
Section 10.02 Recordation of Agreement; Counterparts.
--------------------------------------
This Agreement is subject to recordation in all appropriate
public offices for real property records in all the counties or other
comparable jurisdictions in which any or all of the properties subject to the
Mortgages are situated, and in any other appropriate public recording office
or elsewhere, such recordation to be effected by the Master Servicer at its
expense.
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 10.03 Governing Law.
--------------
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HERETO AND THE
CERTIFICATEHOLDERS SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 10.04 Intention of Parties.
---------------------
(a) It is the express intent of the parties hereto that the
conveyance of the Mortgage Notes, Mortgages, assignments of Mortgages, title
insurance policies and any modifications, extensions and/or assumption
agreements and private mortgage insurance policies relating to the Mortgage
Loans by the Depositor to the Trustee be, and be construed as, an absolute
sale thereof to the Trustee. It is, further, not the intention of the parties
that such conveyance be deemed a pledge thereof by the Depositor to the
Trustee. However, in the event that, notwithstanding the intent of the
parties, such assets are held to be the property of the Depositor, or if for
any other reason this Agreement or any Subsequent Transfer Agreement is held
or deemed to create a security interest in such assets, then (i) this
Agreement shall be deemed to be a security agreement (within the meaning of
the Uniform Commercial Code of the State of New York) with respect to all such
assets and security interests and (ii) the conveyance provided for in this
Agreement and any Subsequent Transfer Agreement shall be deemed to be an
assignment and a grant pursuant to the terms of this Agreement by the
Depositor to the Trustee, for the benefit of the Certificateholders and the
Certificate Insurer, of a security interest in all of the assets that
constitute the Trust Fund, whether now owned or hereafter acquired.
The Depositor for the benefit of the Certificateholders, the
Certificate Insurer and the NIM Insurer shall, to the extent consistent with
this Agreement, take such actions as may be necessary to ensure that, if this
Agreement were deemed to create a security interest in the assets of the Trust
Fund, such security interest would be deemed to be a perfected security
interest of first priority under applicable law and will be maintained as such
throughout the term of the Agreement. The Depositor shall arrange for filing
any Uniform Commercial Code continuation statements in connection with any
security interest granted or assigned to the Trustee for the benefit of the
Certificateholders.
(b) The Depositor hereby represents that:
(i) This Agreement creates a valid and continuing
security interest (as defined in the Uniform Commercial Code
as enacted in the State of New York (the "NY UCC")) in the
Mortgage Notes in favor of the Trustee, which security
interest is prior to all other liens, and is enforceable as
such as against creditors of and purchasers from the
Depositor.
(ii) The Mortgage Notes constitute "instruments"
within the meaning of the NY UCC.
(iii) Immediately prior to the assignment of each
Mortgage Loan to the Trustee, the Depositor owns and has
good and marketable title to such Mortgage Loan free and
clear of any lien, claim or encumbrance of any Person.
(iv) The Depositor has received all consents and
approvals required by the terms of the Mortgage Loans to the
sale of the Mortgage Loans hereunder to the Trustee.
(v) All original executed copies of each Mortgage
Note that are required to be delivered to the Trustee
pursuant to Section 2.01 have been delivered to the Trustee.
(vi) Other than the security interest granted to
the Trustee pursuant to this Agreement, the Depositor has
not pledged, assigned, sold, granted a security interest in,
or otherwise conveyed any of the Mortgage Loans. The
Depositor has not authorized the filing of and is not aware
of any financing statements against the Depositor that
include a description of collateral covering the Mortgage
Loans other than any financing statement relating to the
security interest granted to the Trustee hereunder or that
has been terminated. The Depositor is not aware of any
judgment or tax lien filings against the Depositor.
(c) The Master Servicer shall take such action as is
reasonably necessary to maintain the perfection and priority of the security
interest of the Trustee in the Mortgage Loans; provided, however, that the
obligation to deliver the Mortgage File to the Trustee pursuant to Section
2.01 shall be solely the Depositor's obligation and the Master Servicer shall
not be responsible for the safekeeping of the Mortgage Files by the Trustee.
(d) It is understood and agreed that the representations and
warranties set forth in subsection (b) above shall survive delivery of the
Mortgage Files to the Trustee. Upon discovery by the Depositor or the Trustee
of a breach of any of the foregoing representations and warranties set forth
in subsection (b) above, which breach materially and adversely affects the
interest of the Certificateholders or the Certificate Insurer, the party
discovering such breach shall give prompt written notice to the others, to the
Certificate Insurer and to each Rating Agency.
Section 10.05 Notices.
--------
(a) The Trustee shall use its best efforts to promptly
provide notice to each Rating Agency with respect to each of the following of
which it has actual knowledge:
(1) Any material change or amendment to this
Agreement;
(2) The occurrence of any Event of Default that has
not been cured;
(3) The resignation or termination of the Master
Servicer or the Trustee and the appointment of any successor;
(4) The repurchase or substitution of Mortgage
Loans pursuant to Sections 2.02, 2.03, 2.04 and 3.12; and
(5) The final payment to Certificateholders.
(b) In addition, the Trustee shall promptly furnish to each
Rating Agency copies of the following:
(1) Each report to Certificateholders described in
Section 4.05;
(2) Each annual statement as to compliance
described in Section 3.17; and
(3) Each annual independent public accountants'
servicing report described in Section 11.07.
(c) All directions, demands and notices hereunder shall be
in writing and shall be deemed to have been duly given when sent by facsimile
transmission, first class mail or delivered to (i) in the case of the
Depositor, CWHEQ, Inc., 0000 Xxxx Xxxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000,
facsimile number: (000) 000-0000, Attention: Xxxx Xxxxx, or such other
address as may be hereafter furnished to the Sellers, the Master Servicer and
the Trustee by the Depositor in writing; (ii) in the case of CHL, Countrywide
Home Loans, Inc., 0000 Xxxx Xxxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000, facsimile
number (000) 000-0000, Attention: Xxxx Xxxxx, or such other address as
may be hereafter furnished to the Depositor, the Master Servicer and the
Trustee by the Sellers in writing; (iii) in the case of Park Monaco, Park
Monaco Inc., 0000 Xxxx Xxxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000, facsimile number
(000) 000-0000, Attention: Xxxx Xxx, or such other address as may be hereafter
furnished to the Depositor, the Master Servicer and the Trustee by the Sellers
in writing; (iv) in the case of Park Granada, Park Granada LLC., 0000 Xxxx
Xxxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000, facsimile number (000) 000-0000,
Attention: Xxxx Xxx, or such other address as may be hereafter furnished to
the Depositor, the Master Servicer and the Trustee by the Sellers in writing;
(v) in the case of Park Sienna, Park Sienna LLC, 0000 Xxxx Xxxxxxx, Xxxxxxxxx,
Xxxxxxxxxx 00000, facsimile number (000) 000-0000, Attention: Xxxx Xxx, or
such other address as may be hereafter furnished to the Depositor, the Master
Servicer and the Trustee by the Sellers in writing; (vi) in the case of the
Master Servicer, Countrywide Home Loans Servicing LP, 0000 Xxxxxxxxx Xxxxx,
Xxxxx, Xxxxx 00000, facsimile number (000) 000-0000, Attention: Xxxx Xxxx or
such other address as may be
hereafter furnished to the Depositor, the Sellers and the Trustee by the
Master Servicer in writing; (vii) in the case of the Trustee, The Bank of New
York, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Corporate Trust
MBS Administration, CWHEQ, Series 2006-S5, or such other address as the
Trustee may hereafter furnish to the parties hereto; (viii) in the case of the
Rating Agencies, (x) Xxxxx'x Investors Service, Inc., Attention: ABS
Monitoring Department, 00 Xxxxxx Xxxxxx, Xxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, and (y) Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Attention: Mortgage Surveillance Group, 00 Xxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000; (ix) in the case of the Corridor
Contract Counterparty, JPMorgan Chase Bank, N.A., NA Derivatives Operations,
000 Xxxxxxx Xxxxxxxxx Xx., 000XX0, Xxxxxx, Xxxxxxxx 00000-0000; and (x) in the
case of the Certificate Insurer, Ambac Assurance Corporation, Xxx Xxxxx Xxxxxx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Consumer Asset Backed Securities
Group or such other address as may be hereafter furnished by the Certificate
Insurer. Notices to Certificateholders shall be deemed given when mailed,
first postage prepaid, to their respective addresses appearing in the
Certificate Register.
Section 10.06 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 10.07 Assignment.
-----------
Notwithstanding anything to the contrary contained herein,
except as provided pursuant to Section 6.02, this Agreement may not be
assigned by the Master Servicer without the prior written consent of the
Trustee and the Depositor.
Section 10.08 Limitation on Rights of Certificateholders.
-------------------------------------------
The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representative or heirs to claim an accounting or to
take any action or commence any proceeding in any court for a petition or
winding up of the Trust Fund, or otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
No Certificateholder shall have any right to vote (except as
provided herein) or in any manner otherwise control the operation and
management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth or contained in the terms of the Certificates
be construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be
under any liability to any third party by reason of any action taken by the
parties to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue or by
availing itself of any provisions of this Agreement to institute any suit,
action or proceeding in equity or at law upon
or under or with respect to this Agreement, unless such Holder previously
shall have given to the Trustee a written notice of an Event of Default and of
the continuance thereof, as hereinbefore provided, the Holders of Certificates
evidencing not less than 25% of the Voting Rights shall also have made written
request to the Trustee to institute such action, suit or proceeding in its own
name as Trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses, and
liabilities to be incurred therein or thereby, and the Trustee, for 60 days
after its receipt of such notice, request and offer of indemnity shall have
neglected or refused to institute any such action, suit or proceeding; it
being understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder and the Trustee, that no
one or more Holders of Certificates shall have any right in any manner
whatever by virtue or by availing itself or themselves of any provisions of
this Agreement to affect, disturb or prejudice the rights of the Holders of
any other of the Certificates, or to obtain or seek to obtain priority over or
preference to any other such Holder or to enforce any right under this
Agreement, except in the manner herein provided and for the common benefit of
all Certificateholders. For the protection and enforcement of the provisions
of this Section 10.08, each and every Certificateholder and the Trustee shall
be entitled to such relief as can be given either at law or in equity.
Section 10.09 Inspection and Audit Rights.
----------------------------
The Master Servicer agrees that, on reasonable prior notice,
it will permit any representative of the Depositor, any Seller, the NIM
Insurer or the Trustee during the Master Servicer's normal business hours, to
examine all the books of account, records, reports and other papers of the
Master Servicer relating to the Mortgage Loans, to make copies and extracts
therefrom, to cause such books to be audited by independent certified public
accountants selected by the Depositor, a Seller, the NIM Insurer or the
Trustee and to discuss its affairs, finances and accounts relating to the
Mortgage Loans with its officers, employees and independent public accountants
(and by this provision the Master Servicer hereby authorizes such accountants
to discuss with such representative such affairs, finances and accounts), all
at such reasonable times and as often as may be reasonably requested. Any
out-of-pocket expense incident to the exercise by the Depositor, any Seller,
the NIM Insurer or the Trustee of any right under this Section 10.09 shall be
borne by the party requesting such inspection; all other such expenses shall
be borne by the Master Servicer.
Section 10.10 Certificates Nonassessable and Fully Paid.
-----------------------------------------
It is the intention of the Depositor that Certificateholders
shall not be personally liable for obligations of the Trust Fund, that the
interests in the Trust Fund represented by the Certificates shall be
nonassessable for any reason whatsoever, and that the Certificates, upon due
authentication thereof by the Trustee pursuant to this Agreement, are and
shall be deemed fully paid.
Section 10.11 Rights of NIM Insurer.
----------------------
(a) The rights of the NIM Insurer under this Agreement shall
exist only so long as either:
(1) the notes certain payments on which are
guaranteed by the NIM Insurer remain outstanding or
(2) the NIM Insurer is owed amounts paid by it with
respect to that guaranty.
(b) The rights of the NIM Insurer under this Agreement are
exercisable by the NIM Insurer only so long as no default by the NIM Insurer
under its guaranty of certain payments under notes backed or secured by the
Class C or Class P Certificates has occurred and is continuing. If the NIM
Insurer is the subject of any insolvency proceeding, the rights of the NIM
Insurer under this Agreement will be exercisable by the NIM Insurer only so
long as:
(1) the obligations of the NIM Insurer under its
guaranty of notes backed or secured by the Class C or Class P
Certificates have not been disavowed and
(2) CHL and the Trustee have received reasonable
assurances that the NIM Insurer will be able to satisfy its
obligations under its guaranty of notes backed or secured by the
Class C or Class P Certificates.
(c) The NIM Insurer is a third party beneficiary of this
Agreement to the same extent as if it were a party to this Agreement and may
enforce any of those rights under this Agreement.
(d) A copy of any documents of any nature required by this
Agreement to be delivered by the Trustee, or to the Trustee or the Rating
Agencies, shall in each case at the same time also be delivered to the NIM
Insurer. Any notices required to be given by the Trustee, or to the Trustee or
the Rating Agencies, shall in each case at the same time also be given to the
NIM Insurer. If the Trustee receives a notice or document that is required
hereunder to be delivered to the NIM Insurer, and if such notice or document
does not indicate that a copy thereof has been previously sent to the NIM
Insurer, the Trustee shall send the NIM Insurer a copy of such notice or
document. If such document is an Opinion of Counsel, the NIM Insurer shall be
an addressee thereof or such Opinion of Counsel shall contain language
permitting the NIM Insurer to rely thereon as if the NIM Insurer were an
addressee thereof.
(e) Anything in this Agreement that is conditioned on not
resulting in the downgrading or withdrawal of the ratings then assigned to the
Certificates by the Rating Agencies shall also be conditioned on not resulting
in the downgrading or withdrawal of the ratings then assigned by the Rating
Agencies to the notes backed or secured by the Class C or Class P Certificates
(without giving effect to any policy or guaranty provided by the NIM Insurer).
ARTICLE XI.
EXCHANGE ACT REPORTING
Section 11.01 Filing Obligations.
-------------------
The Master Servicer, the Trustee and each Seller shall
reasonably cooperate with the Depositor in connection with the satisfaction of
the Depositor's reporting requirements under the Exchange Act with respect to
the Trust Fund. In addition to the information specified below, if so
requested by the Depositor for the purpose of satisfying its reporting
obligation under the Exchange Act, the Master Servicer, the Trustee and each
Seller shall (and the Master Servicer shall cause each Subservicer to) provide
the Depositor with (a) such information which is available to such Person
without unreasonable effort or expense and within such timeframe as may be
reasonably requested by the Depositor to comply with the Depositor's reporting
obligations under the Exchange Act and (b) to the extent such Person is a
party (and the Depositor is not a party) to any agreement or amendment
required to be filed, copies of such agreement or amendment in
XXXXX-compatible form.
Section 11.02 Form 10-D Filings.
------------------
(a) In accordance with the Exchange Act, the Trustee shall
prepare for filing and file within 15 days after each Distribution Date
(subject to permitted extensions under the Exchange Act) with the Commission
with respect to the Trust Fund, a Form 10-D with copies of the Monthly
Statement and, to the extent delivered to the Trustee, no later than 10 days
following the Distribution Date, such other information identified by the
Depositor or the Master Servicer, in writing, to be filed with the Commission
(such other information, the "Additional Designated Information"). If the
Depositor or Master Servicer directs that any Additional Designated
Information is to be filed with any Form 10-D, the Depositor or Master
Servicer, as the case may be, shall specify the Item on Form 10-D to which
such information is responsive and, with respect to any Exhibit to be filed on
Form 10-D, the Exhibit number. Any information to be filed on Form 10-D shall
be delivered to the Trustee in XXXXX-compatible form or as otherwise agreed
upon by the Trustee and the Depositor or the Master Servicer, as the case may
be, at the Depositor's expense, and any necessary conversion to
XXXXX-compatible format will be at the Depositor's expense. At the reasonable
request of, and in accordance with the reasonable directions of, the Depositor
or the Master Servicer, subject to the two preceding sentences, the Trustee
shall prepare for filing and file an amendment to any Form 10-D previously
filed with the Commission with respect to the Trust Fund. The Master Servicer
shall sign the Form 10-D filed on behalf of the Trust Fund.
(b) No later than each Distribution Date, each of the Master
Servicer and the Trustee shall notify (and the Master Servicer shall cause any
Subservicer to notify) the Depositor and the Master Servicer of any Form 10-D
Disclosure Item, together with a description of any such Form 10-D Disclosure
Item in form and substance reasonably acceptable to the Depositor. In addition
to such information as the Master Servicer and the Trustee are obligated to
provide pursuant to other provisions of this Agreement, if so requested by the
Depositor, each of the Master Servicer and the Trustee shall provide such
information which is available to the Master Servicer and the Trustee, as
applicable, without unreasonable effort or expense regarding the performance
or servicing of the Mortgage Loans (in the case of the Trustee, based on the
information provided by the Master Servicer) as is reasonably required to
facilitate preparation of distribution reports in accordance with Item 1121 of
Regulation AB. Such information shall be provided concurrently with the
Remittance Reports in the case of the Master Servicer and the Monthly
Statement in the case of the Trustee, commencing with the first such report
due not less than five Business Days following such request.
(c) The Trustee shall not have any responsibility to file
any items (other than those generated by it) that have not been received in a
format suitable (or readily convertible into a format suitable) for electronic
filing via the XXXXX system and shall not have any responsibility to convert
any such items to such format (other than those items generated by it or that
are readily convertible to such format). The Trustee shall have no liability
to the Certificateholders, the Trust Fund, the Master Servicer, the Depositor
or the NIM Insurer with respect to any failure to properly prepare or file any
of Form 10-D to the extent that such failure is not the result of any
negligence, bad faith or willful misconduct on its part.
Section 11.03 Form 8-K Filings.
-----------------
The Master Servicer shall prepare and file on behalf of the
Trust Fund any Form 8-K required by the Exchange Act. Each Form 8-K must be
signed by the Master Servicer. Each of the Master Servicer (and the Master
Servicer shall cause any Subservicer to promptly notify) and the Trustee shall
promptly notify the Depositor and the Master Servicer (if the notifying party
is not the Master Servicer), but in no event later than one (1) Business Day
after its occurrence, of any Reportable Event of which it has actual
knowledge. Each Person shall be deemed to have actual knowledge of any such
event to the extent that it relates to such Person or any action or failure to
act by such Person. Concurrently with any Subsequent Transfer, CHL shall
notify the Depositor and the Master Servicer, if any material pool
characteristic of the actual asset pool at the time of issuance of the
Certificates differs by 5% or more (other than as a result of the pool assets
converting into cash in accordance with their terms) from the description of
the asset pool in the Prospectus Supplement.
Section 11.04 Form 10-K Filings.
------------------
Prior to March 30th of each year, commencing in 2007 (or
such earlier date as may be required by the Exchange Act), the Depositor shall
prepare and file on behalf of the Trust Fund a Form 10-K, in form and
substance as required by the Exchange Act. A senior officer in charge of the
servicing function of the Master Servicer shall sign each Form 10-K filed on
behalf of the Trust Fund. Such Form 10-K shall include as exhibits each (i)
annual compliance statement described under Section 3.17, (ii) annual report
on assessments of compliance with servicing criteria described under Section
11.07 and (iii) accountant's report described under Section 11.07. Each Form
10-K shall also include any Xxxxxxxx-Xxxxx Certification required to be
included therewith, as described in Section 11.05.
If the Item 1119 Parties listed on Exhibit Z have changed
since the Closing Date, no later than March 1 of each year, the Master
Servicer shall provide each of the Master Servicer (and the Master Servicer
shall provide any Subservicer) and the Trustee with an updated Exhibit Z
setting forth the Item 1119 Parties. No later than March 15 of each year,
commencing in 2007, the Master Servicer and the Trustee shall notify (and the
Master Servicer shall cause any
Subservicer to notify) the Depositor and the Master Servicer of any Form 10-K
Disclosure Item, together with a description of any such Form 10-K Disclosure
Item in form and substance reasonably acceptable to the Depositor.
Additionally, each of the Master Servicer and the Trustee shall provide, and
shall cause each Reporting Subcontractor retained by the Master Servicer or
the Trustee, as applicable, and in the case of the Master Servicer shall cause
each Subservicer, to provide, the following information no later than March 15
of each year in which a Form 10-K is required to be filed on behalf of the
Trust Fund: (i) if such Person's report on assessment of compliance with
servicing criteria described under Section 11.07 or related registered public
accounting firm attestation report described under Section 11.07 identifies
any material instance of noncompliance, notification of such instance of
noncompliance and (ii) if any such Person's report on assessment of compliance
with servicing criteria or related registered public accounting firm
attestation report is not provided to be filed as an exhibit to such Form
10-K, information detailing the explanation why such report is not included.
Section 11.05 Xxxxxxxx-Xxxxx Certification.
-----------------------------
Each Form 10-K shall include a certification (the
"Xxxxxxxx-Xxxxx Certification") required by Rules 13a-14(d) and 15d-14(d)
under the Exchange Act (pursuant to Section 302 of the Xxxxxxxx-Xxxxx Act of
2002 and the rules and regulations of the Commission promulgated thereunder
(including any interpretations thereof by the Commission's staff)). No later
than March 15 of each year, beginning in 2007, the Master Servicer and the
Trustee shall (unless such person is the Certifying Person), and the Master
Servicer shall cause each Subservicer and each Reporting Subcontractor and the
Trustee shall cause each Reporting Subcontractor to, provide to the Person who
signs the Xxxxxxxx-Xxxxx Certification (the "Certifying Person") a
certification (each, a "Performance Certification"), in the form attached
hereto as Exhibit X-1 (in the case of a Subservicer or any Reporting
Subcontractor of the Master Servicer or a Subservicer) and Exhibit X-2 (in the
case of the Trustee or any Reporting Subcontractor of the Trustee), on which
the Certifying Person, the entity for which the Certifying Person acts as an
officer, and such entity's officers, directors and Affiliates (collectively
with the Certifying Person, "Certification Parties") can reasonably rely. The
senior officer in charge of the servicing function of the Master Servicer
shall serve as the Certifying Person on behalf of the Trust Fund. Neither the
Master Servicer nor the Depositor will request delivery of a certification
under this clause unless the Depositor is required under the Exchange Act to
file an annual report on Form 10-K with respect to the Trust Fund. In the
event that prior to the filing date of the Form 10-K in March of each year,
the Trustee or the Depositor has actual knowledge of information material to
the Xxxxxxxx-Xxxxx Certification, the Trustee or the Depositor, as the case
may be, shall promptly notify the Master Servicer and the Depositor. The
respective parties hereto agree to cooperate with all reasonable requests made
by any Certifying Person or Certification Party in connection with such
Person's attempt to conduct any due diligence that such Person reasonably
believes to be appropriate in order to allow it to deliver any Xxxxxxxx-Xxxxx
Certification or portion thereof with respect to the Trust Fund.
Section 11.06 Form 15 Filing.
---------------
Prior to January 30 of the first year in which the Depositor
is able to do so under applicable law, the Depositor shall file a Form 15
relating to the automatic suspension of reporting in respect of the Trust Fund
under the Exchange Act.
Section 11.07 Report on Assessment of Compliance and
Attestation.
---------------------------------------
(a) On or before March 15 of each calendar year, commencing
in 2007:
(1) Each of the Master Servicer and the Trustee
shall deliver to the Depositor and the Master Servicer a report (in
form and substance reasonably satisfactory to the Depositor)
regarding the Master Servicer's or the Trustee's, as applicable,
assessment of compliance with the Servicing Criteria during the
immediately preceding calendar year, as required under Rules 13a-18
and 15d-18 of the Exchange Act and Item 1122 of Regulation AB. Such
report shall be signed by an authorized officer of such Person and
shall address each of the Servicing Criteria specified on a
certification substantially in the form of Exhibit W hereto delivered
to the Depositor concurrently with the execution of this Agreement.
To the extent any of the Servicing Criteria are not applicable to
such Person, with respect to Asset Backed securities transactions
taken as a whole involving such Person and that are backed by the
same asset type backing the Certificates, such report shall include
such a statement to that effect. The Depositor and the Master
Servicer, and each of their respective officers and directors shall
be entitled to rely on upon each such servicing criteria assessment.
(2) Each of the Master Servicer and the Trustee
shall deliver to the Depositor and the Master Servicer a report of a
registered public accounting firm reasonably acceptable to the
Depositor that attests to, and reports on, the assessment of
compliance made by Master Servicer or the Trustee, as applicable, and
delivered pursuant to the preceding paragraphs. Such attestation
shall be in accordance with Rules 1-02(a)(3) and 2-02(g) of
Regulation S-X under the Securities Act and the Exchange Act,
including, without limitation that in the event that an overall
opinion cannot be expressed, such registered public accounting firm
shall state in such report why it was unable to express such an
opinion. Such report must be available for general use and not
contain restricted use language. To the extent any of the Servicing
Criteria are not applicable to such Person, with respect to Asset
Backed securities transactions taken as a whole involving such Person
and that are backed by the same asset type backing the Certificates,
such report shall include such a statement that that effect.
(3) The Master Servicer shall cause each
Subservicer and each Reporting Subcontractor to deliver to the
Depositor an assessment of compliance and accountant's attestation as
and when provided in paragraphs (a) and (b) of this Section 11.07.
(4) The Trustee shall cause each Reporting
Subcontractor to deliver to the Depositor and the Master Servicer an
assessment of compliance and accountant's attestation as and when
provided in paragraphs (a) and (b) of this Section.
(5) The Master Servicer and the Trustee shall
execute (and the Master Servicer shall cause each Subservicer to
execute, and the Master Servicer and the Trustee shall cause each
Reporting Subcontractor to execute) a reliance certificate to enable
the Certification Parties to rely upon each (i) annual compliance
statement provided pursuant to Section 3.17, (ii) annual report on
assessments of compliance with servicing criteria provided pursuant
to this Section 11.07 and (iii) accountant's report provided pursuant
to this Section 11.07 and shall include a certification that each
such annual compliance statement or report discloses any deficiencies
or defaults described to the registered public accountants of such
Person to enable such accountants to render the certificates provided
for in this Section 11.07.
(b) In the event the Master Servicer, any Subservicer, the
Trustee or Reporting Subcontractor is terminated or resigns during the term of
this Agreement, such Person shall provide documents and information required
by this Section 11.07 with respect to the period of time it was subject to
this Agreement or provided services with respect to the Trust Fund, the
Certificates or the Mortgage Loans.
(c) Each assessment of compliance provided by a Subservicer
pursuant to Section 11.07(a)(3) shall address each of the Servicing Criteria
specified on a certification substantially in the form of Exhibit W hereto
delivered to the Depositor concurrently with the execution of this Agreement
or, in the case of a Subservicer subsequently appointed as such, on or prior
to the date of such appointment. An assessment of compliance provided by a
Subcontractor pursuant to Section 11.07(a)(3) or (4) need not address any
elements of the Servicing Criteria other than those specified by the Master
Servicer or the Trustee, as applicable, pursuant to Section 11.07(a)(1).
Section 11.08 Use of Subservicers and Subcontractors.
---------------------------------------
(a) The Master Servicer shall cause any Subservicer used by
the Master Servicer (or by any Subservicer) for the benefit of the Depositor
to comply with the provisions of Section 3.17 and this Article XI to the same
extent as if such Subservicer were the Master Servicer (except with respect to
the Master Servicer's duties with respect to preparing and filing any Exchange
Act Reports or as the Certifying Person). The Master Servicer shall be
responsible for obtaining from each Subservicer and delivering to the
Depositor any servicer compliance statement required to be delivered by such
Subservicer under Section 3.17, any assessment of compliance and attestation
required to be delivered by such Subservicer under Section 11.07 and any
certification required to be delivered to the Certifying Person under Section
11.05 as and when required to be delivered. As a condition to the succession
to any Subservicer as subservicer under this Agreement by any Person (i) into
which such Subservicer may be merged or consolidated, or (ii) which may be
appointed as a successor to any Subservicer, the Master Servicer shall provide
to the Depositor, at least 15 calendar days prior to the effective date of
such succession or appointment, (x) written notice to the Depositor of such
succession or appointment and (y) in writing and in form and substance
reasonably satisfactory to the Depositor, all information reasonably requested
by the Depositor in order to comply with its reporting obligation under Item
6.02 of Form 8-K.
(b) It shall not be necessary for the Master Servicer, any
Subservicer or the Trustee to seek the consent of the Depositor or any other
party hereto to the utilization of any Subcontractor. The Master Servicer or
the Trustee, as applicable, shall promptly upon request provide to the
Depositor (or any designee of the Depositor, such as the Master Servicer or
administrator) a written description (in form and substance satisfactory to
the Depositor) of the role and function of each Subcontractor utilized by such
Person (or in the case of the Master Servicer, any Subservicer), specifying
(i) the identity of each such Subcontractor, (ii) which (if any) of such
Subcontractors are "participating in the servicing function" within the
meaning of Item 1122 of Regulation AB, and (iii) which elements of the
Servicing Criteria will be addressed in assessments of compliance provided by
each Subcontractor identified pursuant to clause (ii) of this paragraph.
As a condition to the utilization of any Subcontractor
determined to be a Reporting Subcontractor, the Master Servicer or the
Trustee, as applicable, shall cause any such Subcontractor used by such Person
(or in the case of the Master Servicer, any Subservicer) for the benefit of
the Depositor to comply with the provisions of Sections 11.07 and 11.09 of
this Agreement to the same extent as if such Subcontractor were the Master
Servicer (except with respect to the Master Servicer's duties with respect to
preparing and filing any Exchange Act Reports or as the Certifying Person) or
the Trustee, as applicable. The Master Servicer or the Trustee, as applicable,
shall be responsible for obtaining from each Subcontractor and delivering to
the Depositor and the Master Servicer, any assessment of compliance and
attestation required to be delivered by such Subcontractor under Section 11.05
and Section 11.07, in each case as and when required to be delivered.
Section 11.09 Amendments.
-----------
In the event the parties to this Agreement desire to further
clarify or amend any provision of this Article XI, this Agreement shall be
amended to reflect the new agreement between the parties covering matters in
this Article XI pursuant to Section 10.01, which amendment shall not require
any Opinion of Counsel or Rating Agency confirmations or the consent of any
Certificateholder, the Certificate Insurer or the NIM Insurer.
If, during the period that the Depositor is required to file
Exchange Act Reports with respect to the Trust Fund, the Master Servicer is no
longer an Affiliate of the Depositor, the Depositor shall assume the
obligations and responsibilities of the Master Servicer in this Article XI
with respect to the preparation and filing of the Exchange Act Reports and/or
acting as the Certifying Person, if the Depositor has received indemnity from
such successor Master Servicer satisfactory to the Depositor, and such Master
Servicer has agreed to provide a Xxxxxxxx-Xxxxx Certification to the Depositor
substantially in the form of Exhibit AA and the certifications referred to in
Section 11.07.
Section 11.10 Reconciliation of Accounts.
---------------------------
Any reconciliation of Account performed by any party hereto,
or any Subservicer or Subcontractor, shall be prepared no later than 45
calendar days after the bank statement cutoff date.
IN WITNESS WHEREOF, the parties hereto have caused their
names to be signed hereto by their respective officers thereunto duly
authorized as of the day and year first above written.
CWHEQ, INC.,
as Depositor
By: /s/ Xxxxxx Xxxxx
-----------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
COUNTRYWIDE HOME LOANS, INC.,
as a Seller
By: /s/ Xxxxxx Xxxxx
-----------------------------------
Name: Xxxxxx Xxxxx
Title: Executive Vice President
PARK GRANADA LLC,
as a Seller
By: /s/ Xxxxxx Xxxxx
-----------------------------------
Name: Xxxxxx Xxxxx
Title: Assistant Vice President
PARK MONACO INC.,
as a Seller
By: /s/ Xxxxxx Xxxxx
-----------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
PARK SIENNA LLC,
as a Seller
By: /s/ Xxxxxx Xxxxx
-----------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
COUNTRYWIDE HOME LOANS SERVICING LP,
as Master Servicer
By: COUNTRYWIDE GP, INC.
By: /s/ Xxxxxx Xxxxx
-----------------------------------
Name: Xxxxxx Xxxxx
Title: Senior Vice President
THE BANK OF NEW YORK,
as Trustee
By: /s/ Xxxxxx Xxxxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Vice President
THE BANK OF NEW YORK
(solely with respect to its obligations
under Section 4.01(d))
By: /s/ Xxxx Xxxxxxxx
-----------------------------------
Name: Xxxx Xxxxxxxx
Title: Vice President
Exhibits A-1
through A-6
[Exhibits A-1 through A-6 are
photocopies of such Certificates as delivered.]
[See appropriate documents delivered at closing.]
Exhibit B
Exhibit B is a photocopy
of the Class P Certificates
as delivered.
[See appropriate document delivered at closing.]
Exhibit C
Exhibit C is a photocopy
of the Class C Certificates
as delivered.
[See appropriate document delivered at closing.]
Exhibit D
Exhibit D is a photocopy
of the Class A-R Certificate
as delivered.
[See appropriate documents delivered at closing.]
Exhibit E
Exhibit E is a photocopy
of the Tax Matters Person Certificate
as delivered.
[See appropriate documents delivered at closing.]
Exhibit F-1 and F-2
[Exhibits F-1 and F-2 are schedules of Mortgage Loans]
[Delivered to Trustee at closing and on file with the Trustee.]
EXHIBIT G-1
FORM OF INITIAL CERTIFICATION OF TRUSTEE
[Date]
[Depositor]
[Sellers]
[Master Servicer]
[Certificate Insurer]
Re: CWHEQ Home Equity Loan Trust, Series 2006-S4
-------------------------------------------
Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing
Agreement dated as of August 1, 2006 (the "Pooling and Servicing Agreement")
among CWHEQ, Inc., as Depositor, Countrywide Home Loans, Inc., as a Seller,
Park Granada LLC, as a Seller, Park Monaco Inc., as a Seller, Park Sienna LLC,
as a Seller, Countrywide Home Loans Servicing LP, as Master Servicer, and the
undersigned, as Trustee, hereby certifies that, as to each Mortgage Loan
listed in the Mortgage Loan Schedule (other than any Mortgage Loan paid in
full or listed in the attached list of exceptions) the Trustee has received:
(i) the original Mortgage Note, endorsed by manual or
facsimile signature in blank in the following form: "Pay to the order of
______________, without recourse", or, if the original Mortgage Note has been
lost or destroyed and not replaced, an original lost note affidavit, stating
that the original Mortgage Note was lost or destroyed, together with a copy of
the related Mortgage Note; and
(ii) a duly executed assignment of the Mortgage or a copy of
such assignment, in either case in the form permitted by Section 2.01 of the
Pooling and Servicing Agreement.
Based on its review and examination and only as to the
foregoing documents, such documents appear regular on their face and related
to such Mortgage Loan.
The Trustee has made no independent examination of any
documents contained in each Mortgage File beyond the review specifically
required in the Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
or genuineness of any of the documents contained in each Mortgage File of any
of
the Mortgage Loans identified on the Mortgage Loan Schedule or (ii) the
collectibility, insurability, effectiveness or suitability of any such
Mortgage Loan.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the Pooling and Servicing Agreement.
The Bank of New York,
as Trustee
By:________________________________
Name:
Title:
EXHIBIT G-2
FORM OF INTERIM CERTIFICATION OF TRUSTEE
[Date]
[Depositor]
[Sellers]
[Master Servicer]
[Certificate Insurer]
Re: CWHEQ Home Equity Loan Trust, Series 2006-S4
--------------------------------------------
Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing
Agreement dated as of August 1, 2006 (the "Pooling and Servicing Agreement")
among CWHEQ, Inc., as Depositor, Countrywide Home Loans, Inc., as a Seller,
Park Granada LLC, as a Seller , Park Monaco Inc., as a Seller, Park Sienna
LLC, as a Seller, Countrywide Home Loans Servicing LP, as Master Servicer, and
the undersigned, as Trustee, hereby certifies that [, with respect to the
Subsequent Mortgage Loans delivered in connection with the Subsequent Transfer
Agreement, dated as of __________ (the "Subsequent Transfer Agreement") among
CWHEQ, Inc., as Depositor, Countrywide Home Loans, Inc., as a Seller, Park
Granada LLC, as a Seller, Park Monaco Inc., as a Seller, Park Sienna LLC, as a
Seller and The Bank of New York, as Trustee], except as listed in the
following paragraph, as to each [Initial Mortgage Loan][Subsequent Mortgage
Loan] listed in the [Mortgage Loan Schedule][Loan Number and Borrower
Identification Mortgage Loan Schedule] (other than any [Mortgage Loan][Loan
Number and Borrower Identification Mortgage Loan Schedule] paid in full or
listed on the attached list of exceptions) the Trustee has received:
(i) the original Mortgage Note, endorsed by manual or
facsimile signature in blank in the following form: "Pay to the order of
_______________ without recourse", with all intervening endorsements that show
a complete chain of endorsement from the originator to the Person endorsing
the Mortgage Note (each such endorsement being sufficient to transfer all
right, title and interest of the party so endorsing, as noteholder or assignee
thereof, in and to that Mortgage Note), or, if the original Mortgage Note has
been lost or destroyed and not replaced, an original lost note affidavit,
stating that the original Mortgage Note was lost or destroyed, together with a
copy of the related Mortgage Note and all such intervening endorsements;
(ii) the case of each [Initial Mortgage Loan][Subsequent
Mortgage Loan] that is not a MERS Mortgage Loan, the original recorded
Mortgage or a copy of such Mortgage, with recording information, and in the
case of each [Initial Mortgage Loan][Subsequent Mortgage Loan] that is a MERS
Mortgage Loan, the original Mortgage or a copy of such Mortgage, with
recording information, noting thereon the presence of the MIN of the [Initial
Mortgage Loan][Subsequent Mortgage Loan] and language indicating that the
[Initial Mortgage Loan][Subsequent Mortgage Loan] is a MOM Loan if the
[Initial Mortgage Loan][Subsequent Mortgage Loan] is a MOM Loan, with evidence
of recording indicated thereon, or a copy of the Mortgage certified by the
public recording office in which such Mortgage has been recorded;
(iii) the case of each [Initial Mortgage Loan][Subsequent
Mortgage Loan] that is not a MERS Mortgage Loan, a duly executed assignment of
the Mortgage to "Home Equity Loan Asset Backed Certificates, Series 2006-S4,
CWHEQ, Inc., by The Bank of New York, a New York banking corporation, as
trustee under the Pooling and Servicing Agreement dated as of August 1, 2006,
without recourse" or a copy of such assignment, with recording information,
or, in the case of each [Initial Mortgage Loan][Subsequent Mortgage Loan] with
respect to property located in the State of California that is not a MERS
Mortgage Loan, a duly executed assignment of the Mortgage in blank (each such
assignment, when duly and validly completed, to be in recordable form and
sufficient to effect the assignment of and transfer to the assignee thereof,
under the Mortgage to which such assignment relates);
(iv) the original recorded assignment or assignments of the
Mortgage or a copy of such assignments, with recording information, together
with all interim recorded assignments of such Mortgage or a copy of such
assignments, with recording information (in each case noting the presence of a
MIN in the case of each MERS Mortgage Loan);
(v) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any; and
(vi) the original or duplicate original lender's title
policy or a copy of lender's title policy or a printout of the electronic
equivalent and all riders thereto or, in the event such original title policy
has not been received from the insurer, any one of an original title binder,
an original preliminary title report or an original title commitment, or a
copy thereof certified by the title company, with the original policy of title
insurance to be delivered within one year of the Closing Date.
In the event that in connection with any [Initial Mortgage
Loan][Subsequent Mortgage Loan] that is not a MERS Mortgage Loan the
applicable Seller cannot deliver the original recorded Mortgage or all interim
recorded assignments of the Mortgage satisfying the requirements of clause
(ii), (iii) or (iv), as applicable, the Trustee has received, in lieu thereof,
a true and complete copy of such Mortgage and/or such assignment or
assignments of the Mortgage, as applicable, each certified by the applicable
Seller, the applicable title company, escrow agent or attorney, or the
originator of such [Initial Mortgage Loan][Subsequent Mortgage Loan], as the
case may be, to be a true and complete copy of the original Mortgage or
assignment of Mortgage submitted for recording.
Based on its review and examination and only as to the
foregoing documents, (i) such documents appear regular on their face and
related to such [Initial Mortgage Loan][Subsequent Mortgage Loan], and (ii)
the information set forth in items (i), (iv), (v), (vi), (viii) and (ix) of
the definition of the "Mortgage Loan Schedule" in Section 1.01 of the Pooling
and Servicing Agreement accurately reflects information set forth in the
Mortgage File.
The Trustee has made no independent examination of any
documents contained in each Mortgage File beyond the review specifically
required in the Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
or genuineness of any of the documents contained in each Mortgage File of any
of the [Initial Mortgage Loans][Subsequent Mortgage Loans] identified on the
[Mortgage Loan Schedule][Loan Number and Borrower Identification Mortgage Loan
Schedule] or (ii) the collectibility, insurability, effectiveness or
suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the Pooling and Servicing Agreement.
The Bank of New York,
as Trustee
By:________________________________
Name:
Title:
EXHIBIT G-3
FORM OF DELAY DELIVERY CERTIFICATION
[Date]
[Depositor]
[Sellers]
[Master Servicer]
[Certificate Insurer]
Re: CWHEQ Home Equity Loan Trust, Series 2006-S4
--------------------------------------------
Gentlemen:
Reference is made to the Initial Certification of Trustee
relating to the above-referenced series, with the schedule of exceptions
attached thereto, delivered by the undersigned, as Trustee, on the Closing
Date in accordance with Section 2.02 of the Pooling and Servicing Agreement
dated as of August 1, 2006 (the "Pooling and Servicing Agreement") among
CWHEQ, Inc., as Depositor, Countrywide Home Loans, Inc., as a Seller, Park
Granada LLC, as a Seller, Park Monaco Inc., as a Seller, Park Sienna LLC, as a
Seller, Countrywide Home Loans Servicing LP, as Master Servicer, and the
undersigned, as Trustee. The undersigned hereby certifies that [, with respect
to the Subsequent Mortgage Loans delivered in connection with the Subsequent
Transfer Agreement, dated as of __________ (the "Subsequent Transfer
Agreement") among CWHEQ, Inc., as Depositor, Countrywide Home Loans, Inc., as
a Seller, Park Granada LLC, as a Seller, Park Monaco Inc., as a Seller, Park
Sienna LLC, as a Seller and The Bank of New York, as Trustee,] as to each
Delay Delivery Mortgage Loan listed on the Schedule A attached hereto (other
than any [Initial Mortgage Loan][Subsequent Mortgage Loan] paid in full or
listed on Schedule B attached hereto) the Trustee has received:
(1) the original Mortgage Note, endorsed by manual or
facsimile signature in blank in the following form: "Pay to the order of
_______________ without recourse", with all intervening endorsements that show
a complete chain of endorsement from the originator to the Person endorsing
the Mortgage Note (each such endorsement being sufficient to transfer all
right, title and interest of the party so endorsing, as noteholder or assignee
thereof, in and to that Mortgage Note), or, if the original Mortgage Note has
been lost or destroyed and not replaced, an original lost note affidavit,
stating that the original Mortgage Note was lost or destroyed, together with a
copy of the related Mortgage Note and all such intervening endorsements;
(2) in the case of each [Initial Mortgage Loan][Subsequent
Mortgage Loan] that is not a MERS Mortgage Loan, a duly executed assignment of
the Mortgage to "Home Equity Loan Asset Backed Certificates, Series 2006-S4,
CWHEQ, Inc., by The Bank of New York, a New York banking corporation, as
trustee under the Pooling and Servicing Agreement
dated as of August 1, 2006, without recourse" or a copy of such assignment,
with recording information, or, in the case of each [Initial Mortgage
Loan][Subsequent Mortgage Loan] with respect to property located in the State
of California that is not a MERS Mortgage Loan, a duly executed assignment of
the Mortgage in blank (each such assignment, when duly and validly completed,
to be in recordable form and sufficient to effect the assignment of and
transfer to the assignee thereof, under the Mortgage to which such assignment
relates).
Based on its review and examination and only as to the
foregoing documents, such documents appear regular on their face and related
to such Mortgage Loan.
The Trustee has made no independent examination of any
documents contained in each Mortgage File beyond the review specifically
required in the Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
or genuineness of any of the documents contained in each Mortgage File of any
of the [Initial Mortgage Loans][Subsequent Mortgage Loans] identified on the
[Mortgage Loan Schedule][Loan Number and Borrower Identification Mortgage Loan
Schedule] or (ii) the collectibility, insurability, effectiveness or
suitability of any such [Initial Mortgage Loan][Subsequent Mortgage Loan].
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the Pooling and Servicing Agreement.
The Bank of New York,
as Trustee
By:________________________________
Name:
Title:
EXHIBIT G-4
FORM OF INITIAL CERTIFICATION OF TRUSTEE
(SUBSEQUENT MORTGAGE LOANS)
[Date]
[Depositor]
[Sellers]
[Master Servicer]
[Certificate Insurer]
Re: CWHEQ Home Equity Loan Trust, Series 2006-S4
--------------------------------------------
Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing
Agreement dated as of August 1, 2006 (the "Pooling and Servicing Agreement")
among CWHEQ, Inc., as Depositor, Countrywide Home Loans, Inc., as a Seller,
Park Granada LLC, as a Seller, Park Monaco Inc., as a Seller, Park Sienna LLC,
as a Seller, Countrywide Home Loans Servicing LP, as Master Servicer, and the
undersigned, as Trustee, the undersigned hereby certifies that, as to each
Subsequent Mortgage Loan listed in the Loan Number and Borrower Identification
Mortgage Loan Schedule (other than any Subsequent Mortgage Loan paid in full
or listed in the attached list of exceptions) the Trustee has received:
(1) the original Mortgage Note, endorsed by manual or
facsimile signature in blank in the following form: "Pay to the order of
_______________ without recourse", with all intervening endorsements that show
a complete chain of endorsement from the originator to the Person endorsing
the Mortgage Note (each such endorsement being sufficient to transfer all
right, title and interest of the party so endorsing, as noteholder or assignee
thereof, in and to that Mortgage Note), or, if the original Mortgage Note has
been lost or destroyed and not replaced, an original lost note affidavit,
stating that the original Mortgage Note was lost or destroyed, together with a
copy of the related Mortgage Note and all such intervening endorsements; and
(2) a duly executed assignment of the Mortgage or a copy of
such assignment with recording information, in either case in the form
permitted by Section 2.01 of the Pooling and Servicing Agreement.
Based on its review and examination and only as to the
foregoing documents, such documents appear regular on their face and related
to such Mortgage Loan.
The Trustee has made no independent examination of any
documents contained in each Mortgage File beyond the review specifically
required in the Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
or genuineness of any of the documents contained in each Mortgage File of any
of the Subsequent Mortgage Loans identified on the Loan Number and Borrower
Identification Mortgage Loan Schedule or (ii) the collectibility,
insurability, effectiveness or suitability of any such Subsequent Mortgage
Loan.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the Pooling and Servicing Agreement.
The Bank of New York,
as Trustee
By:________________________________
Name:
Title:
EXHIBIT H
FORM OF FINAL CERTIFICATION OF TRUSTEE
[Date]
[Depositor]
[Master Servicer]
[Sellers]
[Certificate Insurer]
Re: CWHEQ Home Equity Loan Trust, Series 2006-S4
--------------------------------------------
Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing
Agreement dated as of August 1, 2006 (the "Pooling and Servicing Agreement")
among CWHEQ, Inc., as Depositor, Countrywide Home Loans, Inc., as a Seller,
Park Granada LLC, as a Seller, Park Monaco Inc., as a Seller, Park Sienna LLC,
as a Seller, Countrywide Home Loans Servicing LP, as Master Servicer, and the
undersigned, as Trustee, the undersigned, as Trustee, hereby certifies that[,
with respect to the Subsequent Mortgage Loans delivered in connection with the
Subsequent Transfer Agreement, dated as of __________ (the "Subsequent
Transfer Agreement") among CWHEQ, Inc., as Depositor, Countrywide Home Loans,
Inc., as a Seller, Park Granada LLC, as a Seller, Park Monaco Inc., as a
Seller, Park Sienna LLC, as a Seller and The Bank of New York, as Trustee,] as
to each [Initial Mortgage Loan][Subsequent Mortgage Loan] listed in the
[Mortgage Loan Schedule][Loan Number and Borrower Identification Mortgage Loan
Schedule] (other than any [Initial Mortgage Loan][Subsequent Mortgage Loan]
paid in full or listed on the attached Document Exception Report) the Trustee
has received:
(i) the original Mortgage Note, endorsed by manual or
facsimile signature in blank in the following form: "Pay to the order of
_________________ without recourse", with all intervening endorsements that
show a complete chain of endorsement from the originator to the Person
endorsing the Mortgage Note (each such endorsement being sufficient to
transfer all right, title and interest of the party so endorsing, as
noteholder or assignee thereof, in and to that Mortgage Note), or, if the
original Mortgage Note has been lost or destroyed and not replaced, an
original lost note affidavit, stating that the original Mortgage Note was lost
or destroyed, together with a copy of the related Mortgage Note and all such
intervening endorsements;
(ii) in the case of each [Initial Mortgage Loan][Subsequent
Mortgage Loan] that is not a MERS Mortgage Loan, the original recorded
Mortgage or a copy of such Mortgage, with recording information, and in the
case of each [Initial Mortgage Loan][Subsequent Mortgage Loan] that is a MERS
Mortgage Loan, the original Mortgage or a copy of such Mortgage, with
recording information, noting the presence of the MIN of the [Initial Mortgage
Loan][Subsequent Mortgage Loan] and language indicating that the [Initial
Mortgage Loan][Subsequent Mortgage Loan] is a MOM Loan if the [Initial
Mortgage Loan][Subsequent Mortgage Loan] is a MOM Loan, with evidence of
recording indicated thereon, or a copy of the Mortgage certified by the public
recording office in which such Mortgage has been recorded];
(iii) in the case of each [Initial Mortgage Loan][Subsequent
Mortgage Loan] that is not a MERS Mortgage Loan, a duly executed assignment of
the Mortgage to "Home Equity Loan Asset Backed Certificates, Series 2006-S4,
CWHEQ, Inc., by The Bank of New York, a New York banking corporation, as
trustee under the Pooling and Servicing Agreement dated as of August 1, 2006,
without recourse" or a copy of such assignment, with recording information,
or, in the case of each [Initial Mortgage Loan][Subsequent Mortgage Loan] with
respect to property located in the State of California that is not a MERS
Mortgage Loan, a duly executed assignment of the Mortgage in blank (each such
assignment, when duly and validly completed, to be in recordable form and
sufficient to effect the assignment of and transfer to the assignee thereof,
under the Mortgage to which such assignment relates);
(iv) the original recorded assignment or assignments of the
Mortgage or a copy of such assignments, with recording information, together
with all interim recorded assignments of such Mortgage or a copy of such
assignments, with recording information (in each case noting the presence of a
MIN in the case of each MERS Mortgage Loan);
(v) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any; and
(vi) the original or duplicate original lender's title
policy or a copy of lender's title policy or a printout of the electronic
equivalent and all riders thereto or any one of an original title binder, an
original preliminary title report or an original title commitment, or a copy
thereof certified by the title company.
If the public recording office in which a Mortgage or
assignment thereof is recorded has retained the original of such Mortgage or
assignment, the Trustee has received, in lieu thereof, a copy of the original
Mortgage or assignment so retained, with evidence of recording thereon,
certified to be true and complete by such recording office.
Based on its review and examination and only as to the
foregoing documents, (i) such documents appear regular on their face and
related to such Mortgage Loan, and (ii) the information set forth in items
(i), (iv), (v), (vi), (viii) and (ix) of the definition of the "Mortgage Loan
Schedule" in Section 1.01 of the Pooling and Servicing Agreement accurately
reflects information set forth in the Mortgage File.
The Trustee has made no independent examination of any
documents contained in each Mortgage File beyond the review specifically
required in the Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
or genuineness of any of the documents contained in each Mortgage File of any
of the [Initial Mortgage Loans][Subsequent Mortgage Loans] identified on the
[Mortgage Loan Schedule][Loan Number and Borrower Identification Mortgage Loan
Schedule] or (ii) the
collectibility, insurability, effectiveness or suitability of any such
[Initial Mortgage Loan][Subsequent Mortgage Loan].
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the Pooling and Servicing Agreement.
The Bank of New York,
as Trustee
By:________________________________
Name:
Title:
EXHIBIT I
TRANSFER AFFIDAVIT FOR THE CLASS A-R CERTIFICATES
STATE OF )
) ss.:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as
follows:
1. The undersigned is an officer of _______________, the
proposed Transferee of an Ownership Interest in a Class A-R Certificate (the
"Certificate") issued pursuant to the Pooling and Servicing Agreement, dated
as of August 1, 2006 (the "Agreement"), by and among CWHEQ, Inc., as depositor
(the "Depositor"), Countrywide Home Loans, Inc., as a Seller, Park Granada
LLC, as a Seller, Park Monaco Inc., as a Seller, Park Sienna LLC, as a Seller,
Countrywide Home Loans Servicing LP, as Master Servicer, and The Bank of New
York, as Trustee. Capitalized terms used, but not defined herein or in Exhibit
1 hereto, shall have the meanings ascribed to such terms in the Agreement. The
Transferee has authorized the undersigned to make this affidavit on behalf of
the Transferee.
2. The Transferee is not an employee benefit plan that is
subject to Title I of ERISA or to section 4975 of the Internal Revenue Code of
1986, nor is it acting on behalf of or with plan assets of any such plan. The
Transferee is, as of the date hereof, and will be, as of the date of the
Transfer, a Permitted Transferee. The Transferee will endeavor to remain a
Permitted Transferee for so long as it retains its Ownership Interest in the
Certificate. The Transferee is acquiring its Ownership Interest in the
Certificate for its own account.
3. The Transferee has been advised of, and understands that
(i) a tax will be imposed on Transfers of the Certificate to Persons that are
not Permitted Transferees; (ii) such tax will be imposed on the transferor,
or, if such Transfer is through an agent (which includes a broker, nominee or
middleman) for a Person that is not a Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability
for the tax if the subsequent Transferee furnished to such Person an affidavit
that such subsequent Transferee is a Permitted Transferee and, at the time of
Transfer, such Person does not have actual knowledge that the affidavit is
false.
4. The Transferee has been advised of, and understands that
a tax will be imposed on a "pass-through entity" holding the Certificate if at
any time during the taxable year of the pass-through entity a Person that is
not a Permitted Transferee is the record holder of an interest in such entity.
The Transferee understands that such tax will not be imposed for any period
with respect to which the record holder furnishes to the pass-through entity
an affidavit that such record holder is a Permitted Transferee and the
pass-through entity does not have actual knowledge that such affidavit is
false. (For this purpose, a "pass-through entity" includes a regulated
investment company, a real estate investment trust or common trust fund, a
partnership, trust or estate, and certain cooperatives and, except as may be
provided in Treasury Regulations, persons holding interests in pass-through
entities as a nominee for another Person.)
5. The Transferee has reviewed the provisions of Section
5.02(c) of the Agreement (attached hereto as Exhibit 2 and incorporated herein
by reference) and understands the legal consequences of the acquisition of an
Ownership Interest in the Certificate including, without limitation, the
restrictions on subsequent Transfers and the provisions regarding voiding the
Transfer and mandatory sales. The Transferee expressly agrees to be bound by
and to abide by the provisions of Section 5.02(c) of the Agreement and the
restrictions noted on the face of the Certificate. The Transferee understands
and agrees that any breach of any of the representations included herein shall
render the Transfer to the Transferee contemplated hereby null and void.
6. The Transferee agrees to require a Transfer Affidavit
from any Person to whom the Transferee attempts to Transfer its Ownership
Interest in the Certificate, and in connection with any Transfer by a Person
for whom the Transferee is acting as nominee, trustee or agent, and the
Transferee will not Transfer its Ownership Interest or cause any Ownership
Interest to be Transferred to any Person that the Transferee knows is not a
Permitted Transferee. In connection with any such Transfer by the Transferee,
the Transferee agrees to deliver to the Trustee a certificate substantially in
the form set forth as Exhibit J-1 to the Agreement (a "Transferor
Certificate") to the effect that such Transferee has no actual knowledge that
the Person to which the Transfer is to be made is not a Permitted Transferee.
7. The Transferee does not have the intention to impede the
assessment or collection of any tax legally required to be paid with respect
to the Class A-R Certificates.
8. The Transferee's taxpayer identification number is _____.
9. The Transferee is a U.S. Person as defined in Code
section 7701(a)(30).
10. The Transferee is aware that the Class A-R Certificates
may be "noneconomic residual interests" within the meaning of proposed
Treasury regulations promulgated pursuant to the Code and that the transferor
of a noneconomic residual interest will remain liable for any taxes due with
respect to the income on such residual interest, unless no significant purpose
of the transfer was to impede the assessment or collection of tax. In
addition, as the holder of a noneconomic residual interest, the Transferee may
incur tax liabilities in excess of any cash flows generated by the interest
and the Transferee hereby represents that it intends to pay taxes associated
with holding the residual interest as they become due.
11. The Transferee has provided financial statements or
other financial information requested by the Transferor in connection with the
transfer of the Class A-R Certificates to permit the Transferor to assess the
financial capability of the Transferee to pay such taxes.
* * *
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by
its duly authorized officer and its corporate seal to be hereunto affixed,
duly attested, this ____ day of _____________, 20__.
[NAME OF TRANSFEREE]
By:________________________________
Name:
Title:
[Corporate Seal]
ATTEST:
-------------------------
[Assistant] Secretary
Personally appeared before me the above-named _____________,
known or proved to me to be the same person who executed the foregoing
instrument and to be the ____________ of the Transferee, and acknowledged that
he executed the same as his free act and deed and the free act and deed of the
Transferee.
Subscribed and sworn before me this ___ day of _______, 20__.
------------------------------------------
NOTARY PUBLIC
My Commission expires the ___ day of
, 20__.
Certain Definitions
"Ownership Interest": As to any Certificate, any ownership
interest in such Certificate, including any interest in such Certificate as
the Holder thereof and any other interest therein, whether direct or indirect,
legal or beneficial.
"Permitted Transferee": Any person other than (i) the United
States, any State or political subdivision thereof, or any agency or
instrumentality of any of the foregoing, (ii) a foreign government,
International Organization or any agency or instrumentality of either of the
foregoing, (iii) an organization (except certain farmers' cooperatives
described in section 521 of the Code) that is exempt from tax imposed by
Chapter 1 of the Code (including the tax imposed by section 511 of the Code on
unrelated business taxable income) on any excess inclusions (as defined in
section 860E(c)(1) of the Code) with respect to any Class A-R Certificate,
(iv) rural electric and telephone cooperatives described in section
1381(a)(2)(C) of the Code, (v) an "electing large partnership" as defined in
section 775 of the Code, (vi) a Person that is not a citizen or resident of
the United States, a corporation, partnership, or other entity (treated as a
corporation or a partnership for federal income tax purposes) created or
organized in or under the laws of the United States, any state thereof or the
District of Columbia, or an estate whose income from sources without the
United States is includible in gross income for United States federal income
tax purposes regardless of its connection with the conduct of a trade or
business within the United States, or a trust if a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more United States persons have authority to control all
substantial decisions of the trustor unless such Person has furnished the
transferor and the Trustee with a duly completed Internal Revenue Service Form
W-8ECI, and (vii) any other Person so designated by the Trustee based upon an
Opinion of Counsel that the Transfer of an Ownership Interest in a Class A-R
Certificate to such Person may cause any REMIC formed hereunder to fail to
qualify as a REMIC at any time that any Certificates are Outstanding. The
terms "United States," "State" and "International Organization" shall have the
meanings set forth in section 7701 of the Code or successor provisions. A
corporation will not be treated as an instrumentality of the United States or
of any State or political subdivision thereof for these purposes if all of its
activities are subject to tax and, with the exception of the Federal Home Loan
Mortgage Corporation, a majority of its board of directors is not selected by
such government unit.
"Person": Any individual, corporation, limited liability
company, partnership, joint venture, bank, joint stock company, trust
(including any beneficiary thereof), unincorporated organization or government
or any agency or political subdivision thereof.
"Transfer": Any direct or indirect transfer or sale of any
Ownership Interest in a Certificate, including the acquisition of a
Certificate by the Depositor.
"Transferee": Any Person who is acquiring by Transfer any
Ownership Interest in a Certificate.
Section 5.02(c) of the Agreement
(c) Each Person who has or who acquires any Ownership Interest
in a Class A-R Certificate shall be deemed by the acceptance or acquisition of
such Ownership Interest to have agreed to be bound by the following
provisions, and the rights of each Person acquiring any Ownership Interest in
a Class A-R Certificate are expressly subject to the following provisions:
(1) Each Person holding or acquiring any Ownership Interest
in a Class A-R Certificate shall be a Permitted Transferee and shall
promptly notify the Trustee of any change or impending change in its
status as a Permitted Transferee.
(2) Except in connection with (i) the registration of the
Tax Matters Person Certificate in the name of the Trustee or (ii) any
registration in the name of, or transfer of a Class A-R Certificate
to, an affiliate of the Depositor (either directly or through a
nominee) in connection with the initial issuance of the Certificates,
no Ownership Interest in a Class A-R Certificate may be registered on
the Closing Date or thereafter transferred, and the Trustee shall not
register the Transfer of any Class A-R Certificate, unless the
Trustee shall have been furnished with an affidavit (a "Transfer
Affidavit") of the initial owner or the proposed transferee in the
form attached hereto as Exhibit I.
(3) Each Person holding or acquiring any Ownership Interest
in a Class A-R Certificate shall agree (A) to obtain a Transfer
Affidavit from any other Person to whom such Person attempts to
Transfer its Ownership Interest in a Class A-R Certificate, (B) to
obtain a Transfer Affidavit from any Person for whom such Person is
acting as nominee, trustee or agent in connection with any Transfer
of a Class A-R Certificate and (C) not to Transfer its Ownership
Interest in a Class A-R Certificate, or to cause the Transfer of an
Ownership Interest in a Class A-R Certificate to any other Person, if
it has actual knowledge that such Person is not a Permitted
Transferee.
(4) Any attempted or purported Transfer of any Ownership
Interest in a Class A-R Certificate in violation of the provisions of
this Section 5.02(c) shall be absolutely null and void and shall vest
no rights in the purported Transferee. If any purported transferee
shall become a Holder of a Class A-R Certificate in violation of the
provisions of this Section 5.02(c), then the last preceding Permitted
Transferee shall be restored to all rights as Holder thereof
retroactive to the date of registration of Transfer of such Class A-R
Certificate. The Trustee shall be under no liability to any Person
for any registration of Transfer of a Class A-R Certificate that is
in fact not permitted by Section 5.02(b) and this Section 5.02(c) or
for making any payments due on such Certificate to the Holder thereof
or taking any other action with respect to such Holder under the
provisions of this Agreement so long as the Transfer was registered
after receipt of the related Transfer Affidavit and Transferor
Certificate. The Trustee shall be entitled but not obligated to
recover from any Holder of a Class A-R Certificate that was in fact
not a Permitted Transferee at the time it became a Holder or, at such
subsequent time as it became other than a Permitted Transferee, all
payments made on such Class A-R Certificate at and after either such
time. Any such payments so recovered by the Trustee shall be paid and
delivered by the Trustee to the last preceding Permitted Transferee
of such Certificate.
(5) The Master Servicer shall use its best efforts to make
available, upon receipt of written request from the Trustee, all
information necessary to compute any tax imposed under section
860E(e) of the Code as a result of a Transfer of an Ownership
Interest in a Class A-R Certificate to any Holder who is not a
Permitted Transferee.
The restrictions on Transfers of a Class A-R Certificate set
forth in this Section 5.02(c) shall cease to apply (and the applicable
portions of the legend on a Class A-R Certificate may be deleted) with respect
to Transfers occurring after delivery to the Trustee of an Opinion of Counsel,
which Opinion of Counsel shall not be an expense of the Trustee, the Sellers
or the Master Servicer to the effect that the elimination of such restrictions
will not cause any constituent REMIC of any REMIC formed hereunder to fail to
qualify as a REMIC at any time that the Certificates are outstanding or result
in the imposition of any tax on the Trust Fund, a Certificateholder or another
Person. Each Person holding or acquiring any ownership Interest in a Class A-R
Certificate hereby consents to any amendment of this Agreement that, based on
an Opinion of Counsel furnished to the Trustee, is reasonably necessary (a) to
ensure that the record ownership of, or any beneficial interest in, a Class
A-R Certificate is not transferred, directly or indirectly, to a Person that
is not a Permitted Transferee and (b) to provide for a means to compel the
Transfer of a Class A-R Certificate that is held by a Person that is not a
Permitted Transferee to a Holder that is a Permitted Transferee.
EXHIBIT J-1
FORM OF TRANSFEROR CERTIFICATE FOR CLASS A-R CERTIFICATES
Date:
CWHEQ, Inc.
as Depositor
0000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
The Bank of New York
as Trustee
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: CWHEQ Home Equity Loan Trust, Series 2006-S4
--------------------------------------------
Ladies and Gentlemen:
In connection with our disposition of the Class A-R
Certificates, we certify that we have no knowledge that the Transferee is not
a Permitted Transferee. All capitalized terms used herein but not defined
herein shall have the meanings assigned to them in the Pooling and Servicing
Agreement dated as of August 1, 2006, among CWHEQ, Inc., as Depositor,
Countrywide Home Loans, Inc., as a Seller, Park Granada LLC, as a Seller, Park
Monaco Inc., as a Seller, Park Sienna LLC, as a Seller, Countrywide Home Loans
Servicing LP, as Master Servicer, and The Bank of New York, as Trustee.
Very truly yours,
-------------------------------------
Name of Transferor
By: _________________________________
Name:
Title:
EXHIBIT J-2
FORM OF TRANSFEROR CERTIFICATE FOR
PRIVATE CERTIFICATES
Date:
CWHEQ, Inc.,
as Depositor
0000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
The Bank of New York,
as Trustee
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: CWHEQ Home Equity Loan Trust, Series 2006-S4, Class [ ]
--------------------------------------------------------
Ladies and Gentlemen:
In connection with our disposition of the above-captioned
Certificates we certify that (a) we understand that the Certificates have not
been registered under the Securities Act of 1933, as amended (the "Act"), and
are being disposed by us in a transaction that is exempt from the registration
requirements of the Act, (b) we have not offered or sold any Certificates to,
or solicited offers to buy any Certificates from, any person, or otherwise
approached or negotiated with any person with respect thereto, in a manner
that would be deemed, or taken any other action which would result in, a
violation of Section 5 of the Act. All capitalized terms used herein but not
defined herein shall have the meanings assigned to them in the Pooling and
Servicing Agreement dated as of August 1, 2006, among CWHEQ, Inc., as
Depositor, Countrywide Home Loans, Inc., as a Seller, Park Granada LLC, as a
Seller, Park Monaco Inc., as a Seller, Park Sienna LLC, as a Seller,
Countrywide Home Loans Servicing LP, as Master Servicer, and The Bank of New
York, as Trustee.
Very truly yours,
-----------------------------------
Name of Transferor
By: _______________________________
Name:
Title:
EXHIBIT K
FORM OF INVESTMENT LETTER (NON-RULE 144A)
Date:
CWHEQ, Inc.,
as Depositor
0000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
The Bank of New York,
as Trustee
000 Xxxxxxx Xx., 0X
Xxx Xxxx, Xxx Xxxx 00000
Re: CWHEQ Home Equity Loan Trust, Series 2006-S4, Class [ ]
--------------------------------------------------------
Ladies and Gentlemen:
In connection with our acquisition of the above-captioned
Certificates we certify that (a) we understand that the Certificates are not
being registered under the Securities Act of 1933, as amended (the "Act"), or
any state securities laws and are being transferred to us in a transaction
that is exempt from the registration requirements of the Act and any such
laws, (b) we are an "accredited investor," as defined in Regulation D under
the Act, and have such knowledge and experience in financial and business
matters that we are capable of evaluating the merits and risks of investments
in the Certificates, (c) we have had the opportunity to ask questions of and
receive answers from the Depositor concerning the purchase of the Certificates
and all matters relating thereto or any additional information deemed
necessary to our decision to purchase the Certificates, (d) either (i) we are
not an employee benefit plan that is subject to the Employee Retirement Income
Security Act of 1974, as amended, or a plan or arrangement that is subject to
Section 4975 of the Internal Revenue Code of 1986, as amended, nor are we
acting on behalf of any such plan or arrangement, or using the assets of any
such plan or arrangement to effect such acquisition or (ii) if the
Certificates have been the subject of an ERISA-Qualifying Underwriting, we are
an insurance company which is purchasing such Certificates with funds
contained in an "insurance company general account" (as such term is defined
in Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE
95-60")) and the purchase and holding of such Certificates are covered under
Sections I and III of PTCE 95-60, (e) we are acquiring the Certificates for
investment for our own account and not with a view to any distribution of such
Certificates (but without prejudice to our right at all times to sell or
otherwise dispose of the Certificates in accordance with clause (g) below),
(f) we have not offered or sold any Certificates to, or solicited offers to
buy any Certificates from, any person, or otherwise approached or negotiated
with any person with respect thereto, or taken any other action which would
result in a violation of Section 5 of the Act, and (g) we will not sell,
transfer or otherwise dispose of any Certificates unless (1) such sale,
transfer or other disposition is made pursuant to an effective registration
statement under the Act or is exempt from such registration requirements, and
if
requested, we will at our expense provide an opinion of counsel satisfactory
to the addressees of this Certificate that such sale, transfer or other
disposition may be made pursuant to an exemption from the Act, (2) the
purchaser or transferee of such Certificate has executed and delivered to you
a certificate to substantially the same effect as this certificate, and (3)
the purchaser or transferee has otherwise complied with any conditions for
transfer set forth in the Pooling and Servicing Agreement.
All capitalized terms used herein but not defined herein
shall have the meanings assigned to them in the Pooling and Servicing
Agreement dated as of August 1, 2006, among CWHEQ, Inc., as Depositor,
Countrywide Home Loans, Inc., as a Seller, Park Granada LLC, as a Seller, Park
Monaco Inc., as a Seller, Park Sienna LLC, as a Seller, Countrywide Home Loans
Servicing LP, as Master Servicer, and The Bank of New York, as Trustee.
Very truly yours,
----------------------------------
Name of Transferee
By: _______________________________
Authorized Officer
EXHIBIT L
FORM OF RULE 144A LETTER
Date:
CWHEQ, Inc.,
as Depositor
0000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
The Bank of New York,
as Trustee
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: CWHEQ Home Equity Loan Trust, Series 2006-S4, Class [ ]
--------------------------------------------------------
Ladies and Gentlemen:
In connection with our acquisition of the above-captioned
Certificates we certify that (a) we understand that the Certificates are not
being registered under the Securities Act of 1933, as amended (the "Act"), or
any state securities laws and are being transferred to us in a transaction
that is exempt from the registration requirements of the Act and any such
laws, (b) we have such knowledge and experience in financial and business
matters that we are capable of evaluating the merits and risks of investments
in the Certificates, (c) we have had the opportunity to ask questions of and
receive answers from the Depositor concerning the purchase of the Certificates
and all matters relating thereto or any additional information deemed
necessary to our decision to purchase the Certificates, (d) either (i) we are
not an employee benefit plan that is subject to the Employee Retirement Income
Security Act of 1974, as amended, or a plan or arrangement that is subject to
Section 4975 of the Internal Revenue Code of 1986, as amended, nor are we
acting on behalf of any such plan or arrangement, or using the assets of any
such plan or arrangement to effect such acquisition or (ii) if the
Certificates have been the subject of an ERISA-Qualifying Underwriting, we are
an insurance company which is purchasing such Certificates with funds
contained in an "insurance company general account" (as such term is defined
in Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE
95-60")) and the purchase and holding of such Certificates are covered under
Sections I and III of PTCE 95-60, (e) we have not, nor has anyone acting on
our behalf offered, transferred, pledged, sold or otherwise disposed of the
Certificates, any interest in the Certificates or any other similar security
to, or solicited any offer to buy or accept a transfer, pledge or other
disposition of the Certificates, any interest in the Certificates or any other
similar security from, or otherwise approached or negotiated with respect to
the Certificates, any interest in the Certificates or any other similar
security with, any person in any manner, or made any general solicitation by
means of general advertising or in any other manner, or taken any other
action, that would constitute a distribution of the Certificates under the
Securities Act or that would render the disposition of the Certificates a
violation of Section 5 of the Securities Act or require registration pursuant
thereto,
nor will act, nor has authorized or will authorize any person to act, in such
manner with respect to the Certificates, (f) we are a "qualified institutional
buyer" as that term is defined in Rule 144A under the Securities Act and have
completed either of the forms of certification to that effect attached hereto
as Annex 1 or Annex 2. We are aware that the sale to us is being made in
reliance on Rule 144A. We are acquiring the Certificates for our own account
or for resale pursuant to Rule 144A and further, understand that such
Certificates may be resold, pledged or transferred only (i) to a person
reasonably believed to be a qualified institutional buyer that purchases for
its own account or for the account of a qualified institutional buyer to whom
notice is given that the resale, pledge or transfer is being made in reliance
on Rule 144A, or (ii) pursuant to another exemption from registration under
the Securities Act.
All capitalized terms used herein but not defined herein
shall have the meanings assigned to them in the Pooling and Servicing
Agreement dated as of August 1, 2006, among CWHEQ, Inc., as Depositor,
Countrywide Home Loans, Inc., as a Seller, Park Granada LLC, as a Seller, Park
Monaco Inc., as a Seller, Park Sienna LLC, as a Seller, Countrywide Home Loans
Servicing LP, as Master Servicer, and The Bank of New York, as Trustee.
Very truly yours,
----------------------------------
Name of Transferee
By: _______________________________
Authorized Officer
ANNEX 1 TO EXHIBIT L
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:
As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive
officer of the Buyer.
In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule
144A under the Securities Act of 1933, as amended ("Rule 144A")
because (i) the Buyer owned and/or invested on a discretionary
basis either at least $100,000,000 in securities or, if Buyer is
a dealer, Buyer must own and/or invest on a discretionary basis
at least $10,000,000 in securities (except for the excluded
securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance
with Rule 144A and (ii) the Buyer satisfies the criteria in the
category marked below.
___ Corporation, etc. The Buyer is a corporation (other than a
bank, savings and loan association or similar
institution), Massachusetts or similar business trust,
partnership, or charitable organization described in
Section 501(c)(3) of the Internal Revenue Code of 1986, as
amended.
___ Bank. The Buyer (a) is a national bank or banking
institution organized under the laws of any State,
territory or the District of Columbia, the business of
which is substantially confined to banking and is
supervised by the State or territorial banking commission
or similar official or is a foreign bank or equivalent
institution, and (b) has an audited net worth of at least
$25,000,000 as demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
___ Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association, cooperative
bank, homestead association or similar institution, which
is supervised and examined by a State or Federal authority
having supervision over any such institutions or is a
foreign savings and loan association or equivalent
institution and (b) has an audited net worth of at least
$25,000,000 as demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
___ Broker-dealer. The Buyer is a dealer registered pursuant
to Section 15 of the Securities Exchange Act of 1934.
___ Insurance Company. The Buyer is an insurance company whose
primary and predominant business activity is the writing
of insurance or the reinsuring of
risks underwritten by insurance companies and which is
subject to supervision by the insurance commissioner or a
similar official or agency of a State, territory or the
District of Columbia.
___ State or Local Plan. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any
agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan within
the meaning of Title I of the Employee Retirement Income
Security Act of 1974.
___ Investment Advisor. The Buyer is an investment advisor
registered under the Investment Advisors Act of 1940.
___ Small Business Investment Company. Buyer is a small
business investment company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the
Small Business Investment Act of 1958.
___ Business Development Company. Buyer is a business
development company as defined in Section 202(a)(22)of the
Investment Advisors Act of 1940.
The term "securities" as used herein does not include (i) securities
of issuers that are affiliated with the Buyer, (ii) securities
that are part of an unsold allotment to or subscription by the
Buyer, if the Buyer is a dealer, (iii) securities issued or
guaranteed by the U.S. or any instrumentality thereof, (iv) bank
deposit notes and certificates of deposit, (v) loan
participations, (vi) repurchase agreements, (vii) securities
owned but subject to a repurchase agreement and (viii) currency,
interest rate and commodity swaps.
For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Buyer, the Buyer
used the cost of such securities to the Buyer and did not
include any of the securities referred to in the preceding
paragraph, except (i) where the Buyer reports its securities
holdings in its financial statements on the basis of their
market value, and (ii) no current information with respect to
the cost of those securities has been published. If clause (ii)
in the preceding sentence applies, the securities may be valued
at market. Further, in determining such aggregate amount, the
Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the
Buyer in its financial statements prepared in accordance with
generally accepted accounting principles and if the investments
of such subsidiaries are managed under the Buyer's direction.
However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise
and the Buyer is not itself a reporting company under the
Securities Exchange Act of 1934, as amended.
The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to
the Certificates are relying and will continue to rely on the
statements made herein because one or more sales to the Buyer
may be in reliance on Rule 144A.
Until the date of purchase of the Rule 144A Securities, the Buyer
will notify each of the parties to which this certification is
made of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of the
Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if
the Buyer is a bank or savings and loan is provided above, the
Buyer agrees that it will furnish to such parties updated annual
financial statements promptly after they become available.
-----------------------------------------
Print Name of Buyer
By: ______________________________________
Name:
Title:
Date: _____________________________________
ANNEX 2 TO EXHIBIT L
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Transferees That are Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President,
Chief Financial Officer or Senior Vice President of the Buyer or, if the Buyer
is a "qualified institutional buyer" as that term is defined in Rule 144A
under the Securities Act of 1933, as amended ("Rule 144A") because Buyer is
part of a Family of Investment Companies (as defined below), is such an
officer of the Adviser.
In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the
Buyer is an investment company registered under the Investment
Company Act of 1940, as amended and (ii) as marked below, the
Buyer alone, or the Buyer's Family of Investment Companies,
owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year. For purposes of determining the
amount of securities owned by the Buyer or the Buyer's Family of
Investment Companies, the cost of such securities was used,
except (i) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial
statements on the basis of their market value, and (ii) no
current information with respect to the cost of those securities
has been published. If clause (ii) in the preceding sentence
applies, the securities may be valued at market.
___ The Buyer owned $ in securities (other than the excluded
securities referred to below) as of the end of the Buyer's
most recent fiscal year (such amount being calculated in
accordance with Rule 144A).
___ The Buyer is part of a Family of Investment Companies which
owned in the aggregate $ in securities (other than the
excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being calculated
in accordance with Rule 144A).
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).
The term "securities" as used herein does not include (i) securities of
issuers that are affiliated with the Buyer or are part of the Buyer's
Family of Investment Companies, (ii) securities issued or guaranteed
by the U.S. or any instrumentality thereof, (iii) bank deposit notes
and certificates of deposit, (iv) loan participations, (v) repurchase
agreements, (vi) securities owned but subject to a repurchase
agreement and (vii) currency, interest rate and commodity swaps.
The Buyer is familiar with Rule 144A and under-stands that the parties
listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the
statements made herein because one or more sales to the Buyer will be
in reliance on Rule 144A. In addition, the Buyer will only purchase
for the Buyer's own account.
Until the date of purchase of the Certificates, the undersigned will
notify the parties listed in the Rule 144A Transferee Certificate to
which this certification relates of any changes in the information
and conclusions herein. Until such notice is given, the Buyer's
purchase of the Certificates will constitute a reaffirmation of this
certification by the undersigned as of the date of such purchase.
-----------------------------------------
Print Name of Buyer or Adviser
By: _____________________________________
Name:
Title:
IF AN ADVISER:
-----------------------------------------
Print Name of Buyer
Date: ___________________________________
EXHIBIT M
FORM OF REQUEST FOR DOCUMENT RELEASE
Loan Information
Name of Mortgagor: ____________________________________________
Master Servicer
Loan No.: ____________________________________________
Trustee
Name: ____________________________________________
Address: ____________________________________________
Trustee
Mortgage File No.: ____________________________________________
The undersigned Master Servicer hereby acknowledges that it
has received from _______________________________________, as Trustee for the
Holders of Home Equity Loan Asset Backed Certificates, Series 2006-S4, the
documents referred to below (the "Documents"). All capitalized terms not
otherwise defined in this Request for Document Release shall have the meanings
given them in the Pooling and Servicing Agreement dated as of August 1, 2006
(the "Pooling and Servicing Agreement") among CWHEQ, Inc., as Depositor,
Countrywide Home Loans, Inc., as a Seller, Park Granada LLC, as a Seller, Park
Monaco Inc., as a Seller, Park Sienna LLC, as a Seller, Countrywide Home Loans
Servicing LP, as Master Servicer, and The Bank of New York, as Trustee.
( ) Mortgage Note dated ___________, ____, in the original
principal sum of $________, made by __________________, payable to,
or endorsed to the order of, the Trustee.
( ) Mortgage recorded on _________________ as instrument
no. ________________ in the County Recorder's Office of the County
of ________________, State of _______________ in book/reel/docket
_______________ of official records at page/image _____________.
( ) Deed of Trust recorded on _________________ as instrument
no. ________________ in the County Recorder's Office of the County of
________________, State of _______________ in book/reel/docket
_______________ of official records at page/image _____________.
( ) Assignment of Mortgage or Deed of Trust to the Trustee, recorded on
_________________ as instrument no. __________ in the County
Recorder's Office of
the County of __________, State of _______________ in
book/reel/docket _______________ of official records at page/image
_____________.
( ) Other documents, including any amendments, assignments or other
assumptions of the Mortgage Note or Mortgage.
( ) ----------------------------------------------
( ) ----------------------------------------------
( ) ----------------------------------------------
( ) ----------------------------------------------
The undersigned Master Servicer hereby acknowledges and agrees as
follows:
(1) The Master Servicer shall hold and retain possession of
the Documents in trust for the benefit of the Trust Fund, solely for
the purposes provided in the Pooling and Servicing Agreement.
(2) The Master Servicer shall not cause or knowingly permit
the Documents to become subject to, or encumbered by, any claim,
liens, security interest, charges, writs of attachment or other
impositions nor shall the Master Servicer assert or seek to assert
any claims or rights of setoff to or against the Documents or any
proceeds thereof.
(3) The Master Servicer shall return each and every Document
previously requested from the Mortgage File to the Trustee when the
need therefor no longer exists, unless the Mortgage Loan relating to
the Documents has been liquidated and the proceeds thereof have been
remitted to the Certificate Account and except as expressly provided
in the Pooling and Servicing Agreement.
(4) The Documents and any proceeds thereof, including any
proceeds of proceeds, coming into the possession or control of the
Master Servicer shall at all times be earmarked for the account of
the Trust Fund, and the Master Servicer shall keep the Documents and
any proceeds separate and distinct from all other property in the
Master Servicer's possession, custody or control.
[Master Servicer]
By _____________________________________
Its ____________________________________
Date: _________________, ____
EXHIBIT N
FORM OF REQUEST FOR FILE RELEASE
OFFICER'S CERTIFICATE AND TRUST RECEIPT
HOME EQUITY LOAN ASSET BACKED CERTIFICATES,
Series 2006-S4
__________________________________________ HEREBY CERTIFIES THAT HE/SHE IS AN
OFFICER OF THE MASTER SERVICER, HOLDING THE OFFICE SET FORTH BENEATH HIS/HER
SIGNATURE, AND HEREBY FURTHER CERTIFIES AS FOLLOWS:
WITH RESPECT TO THE MORTGAGE LOANS, AS THE TERM IS DEFINED IN THE POOLING AND
SERVICING AGREEMENT DESCRIBED IN THE ATTACHED SCHEDULE:
[ALL PAYMENTS OF PRINCIPAL AND INTEREST HAVE BEEN MADE.] [THE PURCHASE PRICE
FOR SUCH MORTGAGE LOANS HAS BEEN PAID.] [THE MORTGAGE LOANS HAVE BEEN
LIQUIDATED AND THE RELATED [INSURANCE PROCEEDS] [LIQUIDATION PROCEEDS] HAVE
BEEN DEPOSITED PURSUANT TO SECTION 3.13 OF THE POOLING AND SERVICING
AGREEMENT.] [A REPLACEMENT MORTGAGE LOAN HAS BEEN DELIVERED TO THE TRUSTEE IN
THE MANNER AND OTHERWISE IN ACCORDANCE WITH THE CONDITIONS SET FORTH IN
SECTIONS 2.02 AND 2.03 OF THE POOLING AND SERVICING AGREEMENT.]
LOAN NUMBER:_______________ BORROWER'S NAME:_____________
COUNTY:____________________
[For Substitution or Repurchase Only: The Master Servicer certifies that [an]
[no] opinion is required by Section 2.05 [and is attached hereto].]
I HEREBY CERTIFY THAT ALL AMOUNTS RECEIVED IN CONNECTION WITH SUCH PAYMENTS,
THAT ARE REQUIRED TO BE DEPOSITED IN THE CERTIFICATE ACCOUNT PURSUANT TO
SECTION 3.05 OF THE POOLING AND SERVICING AGREEMENT, HAVE BEEN OR WILL BE
CREDITED.
____________ _____________________
DATED:____________
/ / VICE PRESIDENT
/ / ASSISTANT VICE PRESIDENT
Exhibit O
Exhibit O is a photocopy
of the Depository Agreement
as delivered.
[See appropriate documents delivered at closing.]
EXHIBIT P
FORM OF SUBSEQUENT TRANSFER AGREEMENT
SUBSEQUENT TRANSFER AGREEMENT, dated as of ____________,
200[_] (this "Subsequent Transfer Agreement"), among CWHEQ, INC., a Delaware
corporation, as depositor (the "Depositor"), COUNTRYWIDE HOME LOANS, INC., a
New York corporation, in its capacity as a seller under the Pooling and
Servicing Agreement referred to below ("CHL"), PARK GRANADA LLC, a Delaware
corporation, in its capacity as a seller under the Pooling and Servicing
Agreement ("Park Granada"), PARK MONACO INC., a Delaware corporation, in its
capacity as a seller under the Pooling and Servicing Agreement ("Park
Monaco"), PARK SIENNA LLC, a Delaware limited liability company, in its
capacity as a seller under the Pooling and Servicing Agreement ("Park Sienna"
and, together with CHL, Park Granada and Park Monaco, the "Sellers") and The
Bank of New York, a New York banking corporation, as trustee (the "Trustee");
WHEREAS, the Depositor, CHL, Park Granada, Park Monaco, Park
Sienna, the Trustee, Countrywide Home Loans Servicing LP, as Master Servicer,
and The Bank of New York, as Trustee, have entered in the Pooling and
Servicing Agreement, dated as of August 1, 2006 (the "Pooling and Servicing
Agreement"), relating to the CWHEQ, Inc. Home Equity Loan Asset Backed
Certificates, Series 2006-S4 (capitalized terms not otherwise defined herein
are used as defined in the Pooling and Servicing Agreement);
WHEREAS, Section 2.01(b) of the Pooling and Servicing
Agreement provides for the parties hereto to enter into this Subsequent
Transfer Agreement in accordance with the terms and conditions of the Pooling
and Servicing Agreement;
NOW, THEREFORE, in consideration of the premises and for
other good and valuable consideration the receipt and adequacy of which are
hereby acknowledged the parties hereto agree as follows:
(a) The "Subsequent Transfer Date" with respect to this
Subsequent Transfer Agreement shall be ________ __, 200[_].
(b) The "Subsequent Transfer Date Purchase Amount" with
respect to this Subsequent Transfer Agreement shall be $_______________.
(c) The Subsequent Mortgage Loans conveyed on the Subsequent
Transfer Date shall be subject to the terms and conditions of the Pooling and
Servicing Agreement.
(d) Annex I hereto sets forth a list of the Mortgage Loans
which are Delay Delivery Mortgage Loans.
(e) In case any provision of this Subsequent Transfer
Agreement shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions or obligations shall not in any
way be affected or impaired thereby.
(f) In the event of any conflict between the provisions of
this Subsequent Transfer Agreement and the Pooling and Servicing Agreement,
the provisions of the Pooling and Servicing Agreement shall prevail.
(g) This Subsequent Transfer Agreement shall be governed by,
and shall be construed and enforced in accordance with the laws of the State
of New York.
(h) The Subsequent Transfer Agreement may be executed in one
or more counterparts, each of which so executed and delivered shall be deemed
an original, but all such counterparts together shall constitute but one and
the same instrument.
IN WITNESS WHEREOF, the parties to this Subsequent Transfer
Agreement have caused their names to be signed hereto by their respective
officers thereunto duly authorized as of the day and year first above written.
CWHEQ, INC.,
as Depositor
By: __________________________________
Name:
Title:
COUNTRYWIDE HOME LOANS, INC.,
as a Seller
By: __________________________________
Name:
Title:
PARK GRANADA LLC,
as a Seller
By: __________________________________
Name:
Title:
PARK MONACO INC.,
as a Seller
By: __________________________________
Name:
Title:
PARK SIENNA LLC,
as a Seller
By: __________________________________
Name:
Title:
THE BANK OF NEW YORK,
not in its individual capacity,
but solely as Trustee
By:___________________________________
Name:
Title:
Annex I
Mortgage Loans for which All or a Portion of a Related Mortgage
File is not Delivered to the Trustee on or prior
to the Subsequent Transfer Date
EXHIBIT Q
FORM OF CORRIDOR CONTRACT
[See appropriate documents delivered at closing.]
EXHIBIT R
CERTIFICATE INSURANCE POLICY
[See document delivered at closing.]
EXHIBIT S-1
FORM OF CORRIDOR CONTRACT ASSIGNMENT AGREEMENT
[See documents delivered at closing.]
EXHIBIT S-2
FORM OF CORRIDOR CONTRACT ADMINISTRATION AGREEMENT
[See documents delivered at closing.]
EXHIBIT T
OFFICER'S CERTIFICATE WITH RESPECT TO PREPAYMENTS
HOME EQUITY LOAN ASSET BACKED CERTIFICATES,
Series 2006-S4
[Date]
Via Facsimile
The Bank of New York,
as Trustee
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sir or Madam:
Reference is made to the Pooling and Servicing Agreement,
dated as of August 1, 2006, (the "Pooling and Servicing Agreement") among
CWHEQ, Inc., as Depositor, Countrywide Home Loans, Inc., as a Seller, Park
Granada LLC, as a Seller, Park Monaco Inc., as a Seller, Park Sienna LLC, as a
Seller, Countrywide Home Loans Servicing LP, as Master Servicer, and The Bank
of New York, as Trustee. Capitalized terms used herein shall have the meanings
ascribed to such terms in the Pooling and Servicing Agreement.
__________________ hereby certifies that he/she is a
Servicing Officer, holding the office set forth beneath his/her name and
hereby further certifies as follows:
With respect to the Distribution Date in _________ 20[ ] and
each Mortgage Loan set forth in the attached schedule:
1. A Principal Prepayment in full or in part was received
during the related Prepayment Period;
2. Any Prepayment Charge due under the terms of the Mortgage
Note with respect to such Principal Prepayment was or was not, as indicated on
the attached schedule using "Yes" or "No", received from the Mortgagor and
deposited in the Certificate Account;
3. As to each Mortgage Loan set forth on the attached
schedule for which all or part of the Prepayment Charge required in connection
with the Principal Prepayment was waived by the Master Servicer, such waiver
was, as indicated on the attached schedule, based upon:
(i) the Master Servicer's determination that such
waiver would maximize recovery of Liquidation Proceeds for such
Mortgage Loan, taking into account the value of such Prepayment
Charge, or
(ii)(A) the enforceability thereof is limited (1)
by bankruptcy, insolvency, moratorium, receivership, or other similar
law relating to creditors' rights generally or (2) due to
acceleration in connection with a foreclosure or other involuntary
payment, or (B) the enforceability is otherwise limited or prohibited
by applicable law; and
4. We certify that all amounts due in connection with the
waiver of a Prepayment Charge inconsistent with clause 3 above which are
required to be deposited by the Master Servicer pursuant to Section 3.20 of
the Pooling and Servicing Agreement, have been or will be so deposited.
COUNTRYWIDE HOME LOANS, INC.,
as Master Servicer
By:___________________________________
Name:
Title:
SCHEDULE OF MORTGAGE LOANS FOR WHICH A PREPAYMENT WAS
RECEIVED DURING THE RELATED PREPAYMENT PERIOD
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Loan Number Clause 2: Yes/No Clause 3: (i) or (ii)
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EXHIBIT U
[RESERVED]
EXHIBIT V-1
[RESERVED]
EXHIBIT V-2
[RESERVED]
EXHIBIT V-3
[RESERVED]
EXHIBIT W
MONTHLY STATEMENT
[On file with Trustee]
EXHIBIT X-1
FORM OF PERFORMANCE CERTIFICATION
(Subservicer)
Re: The Pooling and Servicing Agreement dated as of August 1, 2006 (the
"Pooling and Servicing Agreement") among CWHEQ, Inc., as Depositor,
Countrywide Home Loans, Inc., as a Seller, Park Granada LLC, as a
Seller, Park Monaco Inc., as a Seller, Park Sienna LLC, as a Seller,
Countrywide Home Loans Servicing LP, as Master Servicer, and the
undersigned, as Trustee, and [Subservicing Agreement] dated as of [
] (the "Agreement")
I, ________________________________, the _______________________ of
[NAME OF COMPANY] (the "Company"), certify to the Depositor and the Master
Servicer, and their officers, with the knowledge and intent that they will
rely upon this certification, that:
(1) I have reviewed the servicer compliance statement of the
Company provided in accordance with Item 1123 of Regulation AB (the
"Compliance Statement"), the report on assessment of the Company's
compliance with the servicing criteria set forth in Item 1122(d) of
Regulation AB (the "Servicing Criteria"), provided in accordance with
Rules 13a-18 and 15d-18 under Securities Exchange Act of 1934, as
amended (the "Exchange Act") and Item 1122 of Regulation AB (the
"Servicing Assessment"), the registered public accounting firm's
attestation report provided in accordance with Rules 13a-18 and
15d-18 under the Exchange Act and Section 1122(b) of Regulation AB
(the "Attestation Report"), all servicing reports, officer's
certificates and other information relating to the servicing of the
Mortgage Loans by the Company during 200[ ] that were delivered by
the Company to the Depositor, the Master Servicer and the Trustee
pursuant to the Agreement (collectively, the "Company Servicing
Information");
(2) Based on my knowledge, the Company Servicing
Information, taken as a whole, does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make
the statements made, in the light of the circumstances under which
such statements were made, not misleading with respect to the period
of time covered by the Company Servicing Information;
(3) Based on my knowledge, all of the Company Servicing
Information required to be provided by the Company under the
Agreement has been provided to the [Depositor] [Master Servicer];
(4) I am responsible for reviewing the activities performed
by the Company as a servicer under the Agreement, and based on my
knowledge and the compliance review conducted in preparing the
Compliance Statement and except as disclosed in the Compliance
Statement, the Servicing Assessment or the Attestation Report, the
Company has fulfilled its obligations under the Agreement; and
(5) The Compliance Statement required to be delivered by the
Company pursuant to the Agreement, and the Servicing Assessment and
Attestation Report required to be provided by the Company and by any
Subservicer or Subcontractor pursuant to the Agreement, have been
provided to the Master Servicer. Any material instances of
noncompliance described in such reports have been disclosed to the
Master Servicer. Any material instance of noncompliance with the
Servicing Criteria has been disclosed in such reports.
Date: _______________________________
By: __________________________________
Name:
Title:
EXHIBIT X-2
FORM OF PERFORMANCE CERTIFICATION
(Trustee)
Re: The Pooling and Servicing Agreement dated as of August 1, 2006 (the
"Pooling and Servicing Agreement") among CWHEQ, Inc., as Depositor,
Countrywide Home Loans, Inc., as a Seller, Park Granada LLC, as a
Seller, Park Monaco Inc., as a Seller, Park Sienna LLC, as a Seller,
Countrywide Home Loans Servicing LP, as Master Servicer, and the
undersigned, as Trustee.
I, ________________________________, the _______________________ of
[NAME OF COMPANY] (the "Company"), certify to the Depositor and the Master
Servicer, and their officers, with the knowledge and intent that they will
rely upon this certification, that:
(1) I have reviewed the report on assessment of the
Company's compliance with the servicing criteria set forth in Item
1122(d) of Regulation AB (the "Servicing Criteria"), provided in
accordance with Rules 13a-18 and 15d-18 under Securities Exchange Act
of 1934, as amended (the "Exchange Act") and Item 1122 of Regulation
AB (the "Servicing Assessment"), the registered public accounting
firm's attestation report provided in accordance with Rules 13a-18
and 15d-18 under the Exchange Act and Section 1122(b) of Regulation
AB (the "Attestation Report"), [all reports on Form 10-D containing
statements to certificateholders filed in respect of the period
included in the year covered by the annual report of the Trust Fund]
(collectively, the "Distribution Date Statements");
(2) Assuming the accuracy and completeness of the
information delivered to the Company by the Master Servicer as
provided in the Pooling and Servicing Agreement and subject to
paragraph (4) below, the distribution information determined by the
Company and set forth in the Distribution Date Statements contained
in all Form 10-D's included in the year covered by the annual report
of such Trust on Form 10-K for the calendar year 200[ ], is complete
and does not contain any material misstatement of fact as of the last
day of the period covered by such annual report;
(3) Based solely on the information delivered to the Company
by the Master Servicer as provided in the Pooling and Servicing
Agreement, (i) the distribution information required under the
Pooling and Servicing Agreement to be contained in the Trust Fund's
Distribution Date Statements and (ii) the servicing information
required to be provided by the Master Servicer to the trustee for
inclusion in the Trust Fund's Distribution Date Statements, to the
extent received by the Trustee from the Master Servicer in accordance
with the Pooling and Servicing Agreement, is included in such
Distribution Date Statements;
(4) The Company is not certifying as to the accuracy,
completeness or correctness of the information which it received from
the Master Servicer and did not
independently verify or confirm the accuracy, completeness or
correctness of the information provided by the Master Servicer;
(5) I am responsible for reviewing the activities performed
by the Company as a person "performing a servicing function" under
the Pooling and Servicing Agreement, and based on my knowledge and
the compliance review conducted in preparing the Servicing Assessment
and except as disclosed in the Servicing Assessment or the
Attestation Report, the Company has fulfilled its obligations under
the Pooling and Servicing Agreement; and
(6) The Servicing Assessment and Attestation Report required
to be provided by the Company and by Subcontractor pursuant to the
Pooling and Servicing Agreement, have been provided to the Master
Servicer and the Depositor. Any material instances of noncompliance
described in such reports have been disclosed to the Master Servicer
and the Depositor. Any material instance of noncompliance with the
Servicing Criteria has been disclosed in such reports.
Date: ______________________________
By: ________________________________
Name:
Title:
EXHIBIT Y
FORM OF
SERVICING CRITERIA TO BE ADDRESSED IN
ASSESSMENT OF COMPLIANCE STATEMENT
The assessment of compliance to be delivered by [the Master
Servicer] [Trustee] [Name of Subservicer] shall address, at a minimum, the
criteria identified as below as "Applicable Servicing Criteria":
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Servicing Criteria Applicable Servicing
Criteria
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Reference Criteria
-------------------- --------------------------------------------------------------------- ----------------------
General Servicing Considerations
-------------------- ----------------------
1122(d)(1)(i) Policies and procedures are instituted to monitor any
performance or other triggers and events of default in
accordance with the transaction agreements.
-------------------- ----------------------
1122(d)(1)(ii) If any material servicing activities are outsourced to
third parties, policies and procedures are instituted to
monitor the third party's performance and compliance with
such servicing activities.
-------------------- ----------------------
1122(d)(1)(iii) Any requirements in the transaction agreements to
maintain a back-up servicer for the mortgage loans are
maintained.
-------------------- ----------------------
1122(d)(1)(iv) A fidelity bond and errors and omissions policy is in
effect on the party participating in the servicing
function throughout the reporting period in the amount of
coverage required by and otherwise in accordance with the
terms of the transaction agreements.
-------------------- ----------------------
Cash Collection and Administration
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1122(d)(2)(i) Payments on mortgage loans are deposited into the
appropriate custodial bank accounts and related bank
clearing accounts no more than two business days
following receipt, or such other number of days specified
in the transaction agreements.
-------------------- ----------------------
1122(d)(2)(ii) Disbursements made via wire transfer on behalf of an
obligor or to an investor are made only by authorized
personnel.
-------------------- ----------------------
1122(d)(2)(iii) Advances of funds or guarantees regarding collections,
cash flows or distributions, and any interest or other
fees charged for such advances, are made, reviewed and
approved as specified in the transaction agreements.
-------------------- ----------------------
The related accounts for the transaction, such as cash
reserve accounts or accounts established as a form of
overcollateralization, are separately maintained (e.g.,
with respect to commingling of cash) as set forth in the
transaction agreements.
1122(d)(2)(iv)
-------------------- ----------------------
1122(d)(2)(v) Each custodial account is maintained at a federally
insured depository institution as set forth in the
transaction agreements. For purposes of this criterion,
"federally insured depository institution" with respect
to a foreign financial institution means a foreign
financial institution that meets the requirements of Rule
13k-1(b)(1) of the Securities Exchange Act.
-------------------- ----------------------
1122(d)(2)(vi) Unissued checks are safeguarded so as to prevent
unauthorized access.
-------------------- ----------------------
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Servicing Criteria Applicable Servicing
Criteria
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Reference Criteria
-------------------- --------------------------------------------------------------------- ----------------------
1122(d)(2)(vii) Reconciliations are prepared on a monthly basis for all
Asset Backed securities related bank accounts, including
custodial accounts and related bank clearing accounts.
These reconciliations are (A) mathematically accurate;
(B) prepared within 30 calendar days after the bank
statement cutoff date, or such other number of days
specified in the transaction agreements; (C) reviewed and
approved by someone other than the person who prepared
the reconciliation; and (D) contain explanations for
reconciling items. These reconciling items are resolved
within 90 calendar days of their original identification,
or such other number of days specified in the transaction
agreements.
-------------------- ----------------------
Investor Remittances and Reporting
-------------------- ----------------------
1122(d)(3)(i) Reports to investors, including those to be filed with
the Commission, are maintained in accordance with the
transaction agreements and applicable Commission
requirements. Specifically, such reports (A) are prepared
in accordance with timeframes and other terms set forth
in the transaction agreements; (B) provide information
calculated in accordance with the terms specified in the
transaction agreements; (C) are filed with the Commission
as required by its rules and regulations; and (D) agree
with investors' or the trustee's records as to the total
unpaid principal balance and number of mortgage loans
serviced by the Servicer.
-------------------- ----------------------
1122(d)(3)(ii) Amounts due to investors are allocated and remitted in
accordance with timeframes, distribution priority and
other terms set forth in the transaction agreements.
-------------------- ----------------------
Disbursements made to an investor are posted within two
business days to the Servicer's investor records, or such
other number of days specified in the transaction
1122(d)(3)(iii) agreements.
-------------------- ----------------------
Amounts remitted to investors per the investor reports
agree with cancelled checks, or other form of payment, or
custodial bank statements.
1122(d)(3)(iv)
-------------------- ----------------------
Pool Asset Administration
-------------------- ----------------------
1122(d)(4)(i) Collateral or security on mortgage loans is maintained as
required by the transaction agreements or related
mortgage loan documents.
-------------------- ----------------------
Mortgage loan and related documents are safeguarded as required by
1122(d)(4)(ii) the transaction agreements
-------------------- ----------------------
1122(d)(4)(iii) Any additions, removals or substitutions to the asset
pool are made, reviewed and approved in accordance with
any conditions or requirements in the transaction
agreements.
-------------------- ----------------------
1122(d)(4)(iv) Payments on mortgage loans, including any payoffs, made
in accordance with the related mortgage loan documents
are posted to the Servicer's obligor records maintained
no more than two business days after receipt, or such
other number of days specified in the transaction
agreements, and allocated to principal, interest or other
items (e.g., escrow) in accordance with the related
mortgage loan documents.
-------------------- ----------------------
1122(d)(4)(v) The Servicer's records regarding the mortgage loans agree
with the Servicer's records with respect to an obligor's
unpaid principal balance.
-------------------- ----------------------
1122(d)(4)(vi) Changes with respect to the terms or status of an
obligor's mortgage loans (e.g., loan modifications or
re-agings) are made, reviewed and approved by authorized
personnel in accordance with the transaction agreements
and related pool asset documents.
-------------------- ----------------------
1122(d)(4)(vii) Loss mitigation or recovery actions (e.g., forbearance
plans, modifications and deeds in lieu of foreclosure,
foreclosures and repossessions, as applicable) are
initiated, conducted and concluded in accordance with the
timeframes or other requirements established by the
transaction agreements.
-------------------- ----------------------
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Servicing Criteria Applicable Servicing
Criteria
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Reference Criteria
-------------------- --------------------------------------------------------------------- ----------------------
1122(d)(4)(viii) Records documenting collection efforts are maintained
during the period a mortgage loan is delinquent in
accordance with the transaction agreements. Such records
are maintained on at least a monthly basis, or such other
period specified in the transaction agreements, and
describe the entity's activities in monitoring delinquent
mortgage loans including, for example, phone calls,
letters and payment rescheduling plans in cases where
delinquency is deemed temporary (e.g., illness or
unemployment).
-------------------- ----------------------
1122(d)(4)(ix) Adjustments to interest rates or rates of return for
mortgage loans with variable rates are computed based on
the related mortgage loan documents.
-------------------- ----------------------
1122(d)(4)(x) Regarding any funds held in trust for an obligor (such as
escrow accounts): (A) such funds are analyzed, in
accordance with the obligor's mortgage loan documents, on
at least an annual basis, or such other period specified
in the transaction agreements; (B) interest on such funds
is paid, or credited, to obligors in accordance with
applicable mortgage loan documents and state laws; and
(C) such funds are returned to the obligor within 30
calendar days of full repayment of the related mortgage
loans, or such other number of days specified in the
transaction agreements.
-------------------- ----------------------
1122(d)(4)(xi) Payments made on behalf of an obligor (such as tax or
insurance payments) are made on or before the related
penalty or expiration dates, as indicated on the
appropriate bills or notices for such payments, provided
that such support has been received by the servicer at
least 30 calendar days prior to these dates, or such
other number of days specified in the transaction
agreements.
-------------------- ----------------------
1122(d)(4)(xii) Any late payment penalties in connection with any payment
to be made on behalf of an obligor are paid from the
servicer's funds and not charged to the obligor, unless
the late payment was due to the obligor's error or
omission.
-------------------- ----------------------
Disbursements made on behalf of an obligor are posted
within two business days to the obligor's records
maintained by the servicer, or such other number of days
specified in the transaction
1122(d)(4)(xiii) agreements.
-------------------- ----------------------
1122(d)(4)(xiv) Delinquencies, charge-offs and uncollectible accounts are
recognized and recorded in accordance with the
transaction agreements.
-------------------- ----------------------
Any external enhancement or other support, identified in
Item 1114(a)(1) through (3) or Item 1115 of Regulation
AB, is maintained as set forth in the transaction
1122(d)(4)(xv) agreements.
-------------------- ----------------------
[NAME OF MASTER SERVICER] [NAME OF TRUSTEE]
[NAME OF SUBSERVICER]
Date: _________________________
By: ________________________________
Name:
Title:
EXHIBIT Z
[FORM OF] LIST OF ITEM 1119 PARTIES
ASSET BACKED CERTIFICATES,
Series 200_-__
[Date]
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Party Contact Information
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EXHIBIT AA
FORM OF
XXXXXXXX-XXXXX CERTIFICATION
(Replacement Master Servicer)
(On file with Trustee)
SCHEDULE I
PREPAYMENT CHARGE SCHEDULE AND PREPAYMENT CHARGE SUMMARY
[Delivered to Trustee at closing and on file with the Trustee.]
SCHEDULE II
COLLATERAL SCHEDULE
------------------------------------------ ----------------- ----------------
Characteristic Applicable Mortgage Loans
Section
------------------------------------------ ----------------- ----------------
Single-Family Detached Dwellings 2.03(b)(32) 68.50%
Two- to Four-Family Dwellings 2.03(b)(32) 2.19%
Low-Rise Condominium Units 2.03(b)(32) 8.11%
High-Rise Condominium Units 2.03(b)(32) 0.80%
Manufactured Housing 2.03(b)(32) 0.00%
PUDs 2.03(b)(32) 20.39%
Earliest Origination Date 2.03(b)(33) 04/09/2003
Prepayment Penalty 2.03(b)(35) 42.93%
Investor Properties 2.03(b)(36) 2.23%
Primary Residences 2.03(b)(36) 95.52%
Lowest Current Mortgage Rate 2.03(b)(48) 5.250%
Highest Current Mortgage Rate 2.03(b)(48) 14.375%
Weighted Average Current Mortgage Rate 2.03(b)(48) 8.621%
Date on or before which each Initial
Mortgage Loan has a Due Date 2.03(b)(51) 10/1/2006
S-II-1
