EXHIBIT 99.1
EXECUTION COPY
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CWABS, INC.,
Depositor
COUNTRYWIDE HOME LOANS, INC.,
Seller
COUNTRYWIDE LFT LLC,
Seller
COUNTRYWIDE HOME LOANS SERVICING LP,
Master Servicer
THE BANK OF NEW YORK,
Trustee
and
BNY WESTERN TRUST COMPANY,
Co-Trustee
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POOLING AND SERVICING AGREEMENT
Dated as of February 1, 2004
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ASSET-BACKED CERTIFICATES, SERIES 2004-1
Table of Contents
Page
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ARTICLE I. DEFINITIONS............................................................................................7
Section 1.01 Defined Terms...................................................................................7
Section 1.02 Certain Interpretive Provisions................................................................45
ARTICLE II. CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES.........................................46
Section 2.01 Conveyance of Mortgage Loans...................................................................46
Section 2.02 Acceptance by Trustee of the Mortgage Loans....................................................50
Section 2.03 Representations, Warranties and Covenants of the Master Servicer and the Sellers...............53
Section 2.04 Representations and Warranties of the Depositor................................................70
Section 2.05 Delivery of Opinion of Counsel in Connection with Substitutions and Repurchases................71
Section 2.06 Authentication and Delivery of Certificates....................................................72
Section 2.07 Covenants of the Master Servicer...............................................................72
ARTICLE III. ADMINISTRATION AND SERVICING OF MORTGAGE LOANS......................................................73
Section 3.01 Master Servicer to Service Mortgage Loans......................................................73
Section 3.02 Subservicing; Enforcement of the Obligations of Master Servicer................................74
Section 3.03 Rights of the Depositor, the Sellers, the Certificateholders and the Trustee in
Respect of the Master Servicer.................................................................75
Section 3.04 Trustee to Act as Master Servicer..............................................................76
Section 3.05 Collection of Mortgage Loan Payments; Certificate Account; Distribution Account;
Seller Shortfall Interest Requirement..........................................................76
Section 3.06 Collection of Taxes, Assessments and Similar Items; Escrow Accounts............................79
Section 3.07 Access to Certain Documentation and Information Regarding the Mortgage Loans...................80
Section 3.08 Permitted Withdrawals from the Certificate Account, Distribution Account, Carryover
Reserve Fund and the Principal Reserve Fund....................................................80
Section 3.09 [Reserved].....................................................................................83
Section 3.10 Maintenance of Hazard Insurance................................................................83
Section 3.11 Enforcement of Due-On-Sale Clauses; Assumption Agreements......................................84
Section 3.12 Realization Upon Defaulted Mortgage Loans; Determination of Excess Proceeds and
Realized Losses; Repurchase of Certain Mortgage Loans..........................................85
Section 3.13 Co-Trustee to Cooperate; Release of Mortgage Files.............................................89
Section 3.14 Documents, Records and Funds in Possession of Master Servicer to be Held for the
Trustee........................................................................................90
Section 3.15 Servicing Compensation.........................................................................90
Section 3.16 Access to Certain Documentation................................................................91
Section 3.17 Annual Statement as to Compliance..............................................................91
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Section 3.18 Annual Independent Public Accountants' Servicing Statement; Financial Statements...............91
Section 3.19 The Corridor Contracts.........................................................................92
Section 3.20 Prepayment Charges.............................................................................92
ARTICLE IV. DISTRIBUTIONS AND ADVANCES BY THE MASTER SERVICER....................................................93
Section 4.01 Advances; Remittance Reports...................................................................93
Section 4.02 Reduction of Servicing Compensation in Connection with Prepayment Interest Shortfalls..........95
Section 4.03 [Reserved].....................................................................................95
Section 4.04 Distributions..................................................................................95
Section 4.05 Monthly Statements to Certificateholders......................................................104
Section 4.06 [Reserved]....................................................................................107
Section 4.07 [Reserved]....................................................................................107
Section 4.08 Carryover Reserve Fund........................................................................107
ARTICLE V. THE CERTIFICATES.....................................................................................108
Section 5.01 The Certificates..............................................................................108
Section 5.02 Certificate Register; Registration of Transfer and Exchange of Certificates...................109
Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates.............................................113
Section 5.04 Persons Deemed Owners.........................................................................113
Section 5.05 Access to List of Certificateholders' Names and Addresses.....................................113
Section 5.06 Book-Entry Certificates.......................................................................114
Section 5.07 Notices to Depository.........................................................................115
Section 5.08 Definitive Certificates.......................................................................115
Section 5.09 Maintenance of Office or Agency...............................................................115
ARTICLE VI. THE DEPOSITOR, THE MASTER SERVICER AND THE SELLERS..................................................116
Section 6.01 Respective Liabilities of the Depositor, the Master Servicer and the Sellers..................116
Section 6.02 Merger or Consolidation of the Depositor, the Master Servicer or the Sellers..................116
Section 6.03 Limitation on Liability of the Depositor, the Sellers, the Master Servicer and Others.........116
Section 6.04 Limitation on Resignation of Master Servicer..................................................117
Section 6.05 Errors and Omissions Insurance; Fidelity Bonds................................................117
ARTICLE VII. DEFAULT; TERMINATION OF MASTER SERVICER............................................................118
Section 7.01 Events of Default.............................................................................118
Section 7.02 Trustee to Act; Appointment of Successor......................................................120
Section 7.03 Notification to Certificateholders............................................................121
ARTICLE VIII. CONCERNING THE TRUSTEE AND THE CO-TRUSTEE.........................................................121
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Section 8.01 Duties of Trustee.............................................................................121
Section 8.02 Certain Matters Affecting the Trustee.........................................................123
Section 8.03 Trustee Not Liable for Mortgage Loans.........................................................124
Section 8.04 Trustee May Own Certificates..................................................................124
Section 8.05 Master Servicer to Pay Trustee's Fees and Expenses............................................124
Section 8.06 Eligibility Requirements for Trustee..........................................................125
Section 8.07 Resignation and Removal of Trustee............................................................125
Section 8.08 Successor Trustee.............................................................................125
Section 8.09 Merger or Consolidation of Trustee............................................................126
Section 8.10 Appointment of Co-Trustee or Separate Trustee.................................................127
Section 8.11 Tax Matters...................................................................................128
Section 8.12 Co-Trustee....................................................................................130
Section 8.13 Access to Records of the Trustee..............................................................133
Section 8.14 Suits for Enforcement.........................................................................133
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........................................................134
Section 9.03 Additional Termination Requirements...........................................................136
ARTICLE X. MISCELLANEOUS PROVISIONS.............................................................................137
Section 10.01 Amendment.....................................................................................137
Section 10.02 Recordation of Agreement; Counterparts........................................................138
Section 10.03 Governing Law.................................................................................138
Section 10.04 Intention of Parties..........................................................................139
Section 10.05 Notices.......................................................................................139
Section 10.06 Severability of Provisions....................................................................140
Section 10.07 Assignment....................................................................................141
Section 10.08 Limitation on Rights of Certificateholders....................................................141
Section 10.09 Certificates Nonassessable and Fully Paid.....................................................142
Section 10.10 [Reserved]....................................................................................142
Exhibits
EXHIBIT A Forms of Certificates
EXHIBIT A-1 Form of Class 1-A Certificate
EXHIBIT A-2 Form of Class 2-A Certificate
EXHIBIT A-3 Form of Class 3-A Certificate
EXHIBIT A-4 Form of Class M-1 Certificate
EXHIBIT A-5 Form of Class M-2 Certificate
EXHIBIT A-6 Form of Class M-3 Certificate
EXHIBIT A-7 Form of Class M-4 Certificate
EXHIBIT A-8 Form of Class M-5 Certificate
EXHIBIT A-9 Form of Class M-6 Certificate
EXHIBIT A-10 Form of Class M-7 Certificate
EXHIBIT A-11 Form of Class M-8 Certificate
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EXHIBIT A-12 Form of Class M-9 Certificate
EXHIBIT A-13 Form of Class B Certificate
EXHIBIT B Form of Class P Certificates
EXHIBIT C Form of Class C Certificates
EXHIBIT D Form of Class A-R Certificate
EXHIBIT E Form of Tax Matters Person Certificate (Class A-R)
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
EXHIBIT G-2 Form of Interim Certification of Trustee
EXHIBIT G-3 Forms of Delay Delivery Certification
EXHIBIT H Form of Final Certification of Trustee
EXHIBIT I-1 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 Trustee Notice with respect to REMIC Provisions
EXHIBIT N Request for Release (for Mortgage Loans Paid in Full, Repurchased or Replaced)
EXHIBIT O Copy of Depository Agreement
EXHIBIT P [Reserved]
EXHIBIT Q Form of Corridor Contracts
EXHIBIT Q-1 Form of Class 1-A Corridor Contract
EXHIBIT Q-2 Form of Class 2-A Corridor Contract
EXHIBIT Q-3 Form of Class 3-A Corridor Contract
EXHIBIT Q-4 Form of Subordinate Corridor Contract
EXHIBIT R [Reserved]
EXHIBIT S Form of Corridor Contract Novation Agreement
EXHIBIT T Officer's Certificate with respect to Prepayments
EXHIBIT U [Reserved]
SCHEDULE I Prepayment Charge Schedule and Prepayment Charge Summary
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POOLING AND SERVICING AGREEMENT, dated as of February 1, 2004, by
and among CWABS, INC., a Delaware corporation, as depositor (the "Depositor"),
COUNTRYWIDE HOME LOANS, INC., a New York corporation, as seller ("CHL" or a
"Seller"), COUNTRYWIDE LFT LLC (the "Liquidity Trust" or a "Seller", and
together with CHL, the "Sellers"), COUNTRYWIDE HOME LOANS SERVICING LP, a
Texas limited partnership, as master servicer (the "Master Servicer"), THE
BANK OF NEW YORK, a New York banking corporation, as trustee (the "Trustee"),
and BNY WESTERN TRUST COMPANY, a California banking corporation, as co-trustee
(the "Co-Trustee").
PRELIMINARY STATEMENT
The Depositor is the owner of the Trust Fund that is hereby conveyed to
the Trustee in return for the Certificates. For federal income tax purposes,
the Trust Fund (excluding the Corridor Contracts and the Carryover Reserve
Fund), will consist of three real estate mortgage investment conduits (each a
"REMIC" or, in the alternative, "REMIC 1," "REMIC 2" and the "Master REMIC,"
respectively). Each Certificate, other than the Class A-R Certificate, will
represent ownership of one or more regular interests in the Master REMIC for
purposes of the REMIC Provisions. The Class A-R Certificate represents
ownership of the sole class of residual interest in each of REMIC 1, REMIC 2
and the Master REMIC. The Master REMIC will hold as assets the several classes
of uncertificated REMIC 2 Interests (other than the Class R2-A-R Interest),
REMIC 2 will hold as assets the several classes of uncertificated REMIC 1
Interests (other than the Class R1-A-R Interest) and REMIC 1 will hold as
assets all property of the Trust Fund (excluding the Corridor Contracts and
the Carryover Reserve Fund). For federal income tax purposes, each REMIC 1
Interest (other than the Class R1-A-R Interest) is hereby designated as a
regular interest in REMIC 1 and each REMIC 2 Interest (other than the Class
R2-A-R Interest) is hereby designated as a regular interest in REMIC 2. The
latest possible maturity date of all REMIC regular interests created in this
Agreement shall be the Latest Possible Maturity Date.
The REMIC 1 Interests will have the initial balances, pass-through rates
and corresponding loan groups as set forth in the following table:
Pass-Through Corresponding
The REMIC 1 Interests Initial Balance Rate Loan Group
-------------------------------------------- --------------- ----------------- -------------
R1-1-A (0.9% of SCB Gr. 1).................. (1) (2) 1
R1-1-B (0.1% of SCB Gr. 1).................. (1) (2) 1
R1-1-C (0.9% of ASCB Gr.1).................. (1) (2) 1
R1-1-D (0.1% of ASCB Gr.1).................. (1) (2) 1
R1-1-E (Excess of Gr. 1).................... (1) (2) 1
R1-2-A (0.9% of SCB Gr. 2).................. (1) (2) 2
R1-2-B (0.1% of SCB Gr. 2).................. (1) (2) 2
R1-2-C (0.9% of ASCB Gr.2).................. (1) (2) 2
R1-2-D (0.1% of ASCB Gr.2).................. (1) (2) 2
R1-2-E (Excess of Gr. 2).................... (1) (2) 2
R1-3-A (0.9% of SCB Gr. 3).................. (1) (2) 3
R1-3-B (0.1% of SCB Gr. 3).................. (1) (2) 3
R1-3-C (0.9% of ASCB Gr.3).................. (1) (2) 3
R1-3-D (0.1% of ASCB Gr. 3)................. (1) (2) 3
R1-3-E (Excess of Gr. 3).................... (1) (2) 3
R1-A-R...................................... (3) (3) N/A
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(1) Each Class A Interest will have a principal balance initially equal to
0.9% of the Subordinate Component Balance ("SCB") of its Corresponding Loan
Group and each Class B Interest will have a principal balance initially equal
to 0.1% of the Subordinate Component Balance of its Corresponding Loan Group.
Each Class C Interest will have a principal balance initially equal to 0.9% of
the Adjusted Subordinate Component Balance ("ASCB") of its Corresponding Loan
Group and each Class D Interest will have a principal balance initially equal
to 0.1% of the Adjusted Subordinate Component Balance of its Corresponding
Loan Group. The initial principal balance of each Class E Interest will equal
the excess of its corresponding Loan Group over the initial aggregate
principal balances of the Class A, Class B, Class C and Class D Interests
corresponding to such Loan Group.
(2) A Rate equal to the weighted average of the Adjusted Net Mortgage Rates of
the Mortgage Loans of the Corresponding Loan Group.
(3) The Class R1-A-R Interest is the sole class of residual interest in REMIC
1. It has no principal balance and pays no principal or interest.
On each Distribution Date, the Available Funds shall be distributed with
respect to the the REMIC 1 Interests in the following manner:
(1) Interest. Interest is to be distributed with respect to each REMIC 1
Interest at the rate, or according to the formulas, described above;
(2) Principal if no Cross-Over Situation Exists. If no Cross-Over
Situation exists with respect to any Class of Interests, then Principal
Amounts arising with respect to each Loan Group
2
will be allocated: first to cause the Loan Group's corresponding Class A,
Class B, Class C and Class D Interests to equal, respectively, 0.9% of the
SCB, 0.1% of the SCB, 0.9% of the ASCB and 0.1% of the ASCB and then to the
Loan Group's corresponding Class E Interest;
(3) Principal if a Cross-Over Situation Exists. If a Cross-Over Situation
exists with respect to the Class A and Class B Interests then:
(a) if the Calculation Rate in respect of the outstanding Class A
and Class B Interests is less than the Subordinate Passthrough Rate, Principal
Relocation Payments will be made proportionately to the outstanding Class A
Interests prior to any other Principal Distributions from each such Loan
Group; and
(b) if the Calculation Rate in respect of the outstanding Class A
and Class B Interests is greater than the Subordinate Passthrough Rate,
Principal Relocation Payments will be made proportionately to the outstanding
Class B Interests prior to any other Principal Distributions from each such
Loan Group.
In each case, Principal Relocation Payments will be made so as to cause the
Calculation Rate in respect of the outstanding Class A and Class B Interests
to equal the Subordinate Pass-Through Rate. With respect to each Loan Group,
if (and to the extent that) the sum of (a) the principal payments comprising
the Principal Remittance Amount received during the Due Period and (b) the
Realized Losses, are insufficient to make the necessary reductions of
principal on the Class A and Class B Interests, then interest will be added to
the Loan Group's other Interests that are not receiving Principal Relocation
Payments, in proportion to their principal balances.
(c) The outstanding aggregate Class A and Class B Interests for all
Loan Groups will not be reduced below 1 percent of the excess of (i) the
aggregate outstanding Principal Balances of all Loan Groups as of the end of
any Due Period over (ii) the Senior Certificates for all Loan Groups as of the
related Distribution Date (after taking into account distributions of
principal on such Distribution Date).
If (and to the extent that) the limitation in paragraph (c) prevents the
distribution of principal to the Class A and Class B Interests of a Loan
Group, and if the Loan Group's Class E Interest has already been reduced to
zero, then the excess principal from that Loan Group will be paid to the Class
E Interests of the other Loan Groups, the aggregate Class A and Class B
Interests of which are less than one percent of the Subordinated Portion. If
the Loan Group of the Class E Interest that receives such payment has a
weighted average Adjusted Net Mortgage Rate below the weighted average
Adjusted Net Mortgage Rate of the Loan Group making the payment, then the
payment will be treated by the REMIC 1 as a Realized Loss. Conversely, if the
Loan Group of the Class E Interest that receives such payment has a weighted
average Adjusted Net Mortgage Rate above the weighted average Adjusted Net
Mortgage Rate of the Loan Group making the payment, then the payment will be
treated by the REMIC 1 as a reimbursement for prior Realized Losses.
If a Cross-Over Situation exists with respect to the Class C and Class D
Interests then:
(d) if the Calculation Rate in respect of the outstanding Class C
and Class D Interests is less than the Adjusted Subordinate Passthrough Rate,
Principal Relocation Payments
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will be made proportionately to the outstanding Class C Interests prior to any
other Principal Distributions from each such Loan Group; and
(e) if the Calculation Rate in respect of the outstanding Class C
and Class D Interests is greater than the Adjusted Subordinate Passthrough
Rate, Principal Relocation Payments will be made proportionately to the
outstanding Class D Interests prior to any other Principal Distributions from
each such Loan Group.
In each case, Principal Relocation Payments will be made so as to cause the
Calculation Rate in respect of the outstanding Class C and Class D Interests
to equal the Adjusted Subordinate Pass-Through Rate. With respect to each Loan
Group, if (and to the extent that) the sum of (a) the principal payments
comprising the Principal Remittance Amount received during the Due Period and
(b) the Realized Losses, are insufficient to make the necessary reductions of
principal on the Class C and Class D Interests, then interest will be added to
the Loan Group's other Interests that are not receiving Principal Relocation
Payments, in proportion to their principal balances.
(f) The outstanding aggregate Class C and Class D Interests for all
Loan Groups will not be reduced below 1 percent of the excess of (i) the
aggregate outstanding Principal Balances of all Loan Groups as of the end of
any Due Period over (ii) the Senior Certificates for all Loan Groups as of the
related Distribution Date (after taking into account distributions of
principal on such Distribution Date).
If (and to the extent that) the limitation in paragraph (f) prevents the
distribution of principal to the Class C and Class D Interests of a Loan
Group, and if the Loan Group's Class E Interest has already been reduced to
zero, then the excess principal from that Loan Group will be paid to the Class
E Interests of the other Loan Groups, the aggregate Class C and Class D
Interests of which are less than one percent of the Subordinated Portion. If
the Loan Group of the Class E Interest that receives such payment has a
weighted average Adjusted Net Mortgage Rate below the weighted average
Adjusted Net Mortgage Rate of the Loan Group making the payment, then the
payment will be treated by the REMIC 1 as a Realized Loss. Conversely, if the
Loan Group of the Class C Interest that receives such payment has a weighted
average Adjusted Net Mortgage Rate above the weighted average Adjusted Net
Mortgage Rate of the Loan Group making the payment, then the payment will be
treated by the REMIC 1 as a reimbursement for prior Realized Losses.
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REMIC 2:
The REMIC 2 Interests will have the initial balances, pass-through rates
and corresponding class certificates as set forth in the following table:
Corresponding
Pass-Through Class
The REMIC 1 Interests Initial Balance Rate Certificate
--------------------------------------------- --------------- ------------ -------------
R2-1-A...................................... (1) (2) Class 1-A
R2-2-A...................................... (1) (2) Class 2-A
R2-3-A...................................... (1) (2) Class 3-A
R2-M-1...................................... (1) (2) Class M-1
R2-M-2...................................... (1) (2) Class M-2
R2-M-3...................................... (1) (2) Class M-3
R2-M-4...................................... (1) (2) Class M-4
R2-M-5...................................... (1) (2) Class M-5
R2-M-6...................................... (1) (2) Class M-6
R2-M-7...................................... (1) (2) Class M-7
R2-M-8...................................... (1) (2) Class M-8
R2-M-9...................................... (1) (2) Class M-9
R2-$100..................................... $100 (3) Class A-R
R2-B........................................ (1) (2) Class B
R2-Accrual.................................. (1) (4) N/A
R2-P........................................ $100 (3) Class P
R2-A-R...................................... (5) (5) N/A
R2-D-2...................................... (6) (6) N/A
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(1) The Class R2-1-A Interest, Class R2-2-A Interest, Class R2-3-A Interest,
Class R2-M1 Interest, Class R2-M-2 Interest, Class R2-M-3 Interest, Class
R2-M-4 Interest, Class R2-M-5 Interest, Class R2-M-6 Interest, Class
R2-M-7 Interest, Class R2-M-8 Interest, Class R2-M-9 Interest Class R2-B
Interest (each such class hereafter referred to as an "Accretion Directed
Class") each has a principal balance that is initially equal to 50% of
its corresponding Certificate Class issued by the Master REMIC. Principal
payments, both scheduled and prepaid, Realized Losses, and interest
accruing on the Class R2-Accrual Interest will be allocated to each of
the foregoing classes to maintain each Class' size relative to its
Corresponding Certificate Class (that is, 50%) with any excess payments
of principal and Realized Losses being allocated to the Class R2-Accrual
Interest in such manner as to cause the principal balance of the Class
R2-Accrual Interest to have a principal balance equal to (a) 50% of the
Loan Group 1, Loan Group 2, and Loan Group 3 principal balances plus (b)
50% of the Overcollateralized Amount for such Distribution Date.
(2) The interest rate with respect to any Distribution Date (and the related
Accrual Period) for this REMIC 2 Interest is a per annum rate equal to
the Class 1-A Net Rate Cap, with respect to the Class 1-A Certificates,
the Class 2-A Net Rate Cap, with respect to the Class 2-A Certificates,
the Class 3-A Net Rate Cap, with respect to the Class 3-A Certificates or
the Adjusted Subordinate Net Rate Cap, with respect to the Subordinate
Certificates.
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(3) The R2-$100 Interest and the Class R2-P Interest do not pay any interest.
All Prepayment Charges will be allocated to the Class R2-P Interest.
(4) The interest rate with respect to any Distribution Date (and the related
Accrual Period) for the Class R2-Accrual Interest is a per annum rate
(hereafter referred to as the "Pool WAC Rate") equal to the weighted
average of the Adjusted Net Mortgage Rates of each of the Mortgage Loans.
(5) The Class R2-A-R Interest is the sole class of residual interest in REMIC
2. It has no principal balance and pays no principal or interest.
(6) The Class R2-D-2 Interest is reserved to help establish up to three "C"
PO classes (if any). It pays no principal or interest
Master REMIC:
The Master REMIC Certificates will have the original certificate
principal initial balances and pass-through rates as set forth in the
following table:
Original Certificate
Class Principal Balance Pass-Through Rate
------------------------------------------------ -------------------- -----------------
Class 1-A....................................... $1,516,690,000 (1)
Class 2-A....................................... $534,625,000 (1)
Class 3-A....................................... $588,910,000 (1)
Class M-1....................................... $104,325,000 (1)
Class M-2....................................... $88,275,500 (1)
Class M-3....................................... $56,175,500 (1)
Class M-4....................................... $48,150,500 (1)
Class M-5....................................... $48,150,500 (1)
Class M-6....................................... $48,150,500 (1)
Class M-7....................................... $40,125,000 (1)
Class M-8....................................... $40,125,000 (1)
Class M-9....................................... $40,125,000 (1)
Class B......................................... $32,100,000 5.50%(6)
Class C......................................... (2) (3)
Class P......................................... $100 (4)
Class A-R....................................... $100 (5)
(1) The Certificates will accrue interest at the related Pass-Through Rates
identified in this Agreement. Any entitlement of any class of
Certificates to Net Rate Carryover will be treated as paid by the Master
REMIC to the Class C Certificates and then paid to such Class of
Certificates pursuant to a limited recourse cap contract as described in
Section 8.11 herein.
(2) The Class C Certificates have no Certificate Principal Balance.
(3) For each Interest Accrual Period the Class C Certificates are entitled to
a specified portion of the interest on the Group 1, Group 2 and Group 3
Mortgage Loans equal to the excess of the Pool WAC Rate over the product
of two and the weighted average of the REMIC 2 Regular Interests with the
REMIC 2 Accretion Directed Interests subject to a cap equal to the
Pass-Through Rate of the corresponding Certificate Class (except that,
for this purpose, the Subordinate Certificates will be treated as subject
to a cap equal to
6
the Adjusted Subordinate Net Rate Cap) and the R2-Accrual Class subject
to a cap of 0.00%. The Pass-Through Rate of the Class C Certificates
shall be a rate sufficient to entitle it to all interest accrued on the
Mortgage Loans less the interest accrued on the other interests issued by
the Upper Tier REMIC.
(4) For each Distribution Date the Class P Certificates are entitled to all
Prepayment Charges distributed with respect to the Class R2-P Interests.
(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.
(6) Subject to the Subordinate Net Rate Cap.
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. To the extent
that the structure is believed to diverge from such intention the Trustee will
resolve ambiguities to accomplish such result and will to the extent necessary
rectify any drafting errors or seek clarification to the structure without
Certificateholder approval (but with guidance of Counsel) to accomplish such
intention.
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:
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 the Class B and
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 the Class B and 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 1-A, Class 2-A, Class 3-A
and the Adjustable Rate Subordinate Certificates.
Adjustable Rate Mortgage Loans: The Mortgage Loans identified in the
Mortgage Loan Schedule as having a Mortgage Rate which is adjustable in
accordance with the terms of the related Mortgage Note (for the avoidance of
doubt, excluding any Credit Comeback Loans).
Adjusted Maximum Mortgage Rate: With respect to each Adjustable Rate
Mortgage Loan, the Maximum Mortgage Rate for such Mortgage Loan less the
related Expense Fee Rate.
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Adjusted Net Mortgage Rate: As to each Mortgage Loan, the Mortgage
Rate less the related Expense Fee Rate.
Adjusted Subordinate Component Balance: For any Distribution Date
and for each Loan Group, (i) the principal balance of such Loan Group as of
the first day of the related Due Period less (ii) the product of (a) the
Overcollateralized Amount and (b)(I) the principal balance of such Loan Group,
divided by (II) the sum of the principal balance of the Mortgage Loans, in
each case, as of the first day of the related Due Period, less (iii) the
principal balance of the Class 1-A Certificates in the case of Loan Group 1,
the Class 2-A Certificates in the case of Loan Group 2 and the Class 3-A
Certificates in the case of Loan Group 3.
Adjusted Subordinate Net Rate Cap: For each Distribution Date, the
weighted average of the Class 1-A Net Rate Cap, Class 2-A Net Rate Cap and
Class 3-A Net Rate Cap, weighted on the basis of the respective Adjusted
Subordinate Component Balance of their corresponding Loan Groups. For federal
income tax purposes, the Adjusted Subordinate Net Rate Cap will be the
Calculation Rate in respect of the Class C and Class D Interests in REMIC 1.
Adjustment Date: As to each Adjustable Rate Mortgage Loan, each date
on which the related Mortgage Rate is subject to adjustment, as provided in
the related Mortgage Note.
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 and interest on 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; provided,
however, with respect to each REO Property that has not been liquidated, 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.
Agreement: This Pooling and Servicing Agreement and any and all
amendments or supplements hereto made in accordance with the terms herein.
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 and (ii) Principal Prepayments and
Liquidation Proceeds received in respect of such Mortgage Loans after the last
day of the related Prepayment Period or Due Period, respectively.
Applied Realized Loss Amount: With respect to any Distribution Date,
the sum of the Realized Losses with respect to the Mortgage Loans which are to
be applied in reduction of the Certificate Principal Balances of the
Subordinate Certificates pursuant to this Agreement, which shall equal the
amount, if any, by which, the aggregate Certificate Principal Balance of all
8
Certificates (after all distributions of principal on such Distribution Date)
exceeds the Stated Principal Balance of the Mortgage Loans for such
Distribution Date.
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 banking institutions in the States of New York or California
are authorized or obligated by law or executive order to be closed.
Calculation Rate: With respect to any Distribution Date, in the case
of the Class A and Class B Interests, the product of (i) 10 and (ii) the
weighted average rate of the outstanding Class A and Class B Interests,
treating each Class A Interest as capped at zero or reduced by a fixed
percentage of 100% of the interest accruing on such Class, and in the case of
the Class C and Class D Interests, the product of (i) 10 and (ii) the weighted
average rate of the outstanding Class C and Class D Interests, treating each
Class C Interest as capped at zero or reduced by a fixed percentage of 100% of
the interest accruing on such Class.
Carryover Reserve Fund: The separate Eligible Account created and
initially maintained by the Trustee pursuant to Section 4.08 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 CWABS, Inc., Asset-Backed
Certificates, Series 2004-1". 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-13, 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 designated "Countrywide
Home Loans Servicing LP in trust for registered holders of CWABS, Inc.,
Asset-Backed Certificates, Series 2004-1". Funds in the Certificate Account
shall be held in trust for the Certificateholders for the uses and purposes
set forth in this Agreement.
9
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 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, and (ii) with respect to any Subordinate Certificates, any Applied
Realized Loss Amounts allocated to such Certificate on previous Distribution
Dates pursuant to Section 4.04. 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.
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.
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 1-A Certificate: Any Certificate designated as a "Class 1-A
Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to distributions as set forth herein.
10
Class 1-A Corridor Contract: The transaction evidenced by the
related Confirmation (as assigned to the Trustee pursuant to the Corridor
Contract Novation Agreement), a form of which is attached hereto as Exhibit
Q-1.
Class 1-A Net Rate Cap: For any Distribution Date, the weighted
average Adjusted Net Mortgage Rate of the Mortgage Loans in Loan Group 1 on
such Distribution Date, adjusted to an effective rate reflecting the
calculation of interest on the basis of the actual number of days elapsed
during the related interest accrual period and a 360-day year.
Class 1-A Principal Distribution Amount: For any Distribution Date,
the product of (x) the Senior Principal Distribution Target Amount and (y) a
fraction, the numerator of which is the Class 1-A Principal Distribution
Target Amount and the denominator of which is the sum of the Class 1-A, Class
2-A and Class 3-A Principal Distribution Target Amounts.
Class 1-A Principal Distribution Target Amount: With respect to any
Distribution Date the excess of (i) the Certificate Principal Balance of the
Class 1-A Certificates immediately prior to such Distribution Date over (ii)
the lesser of (x) 64.50% of the aggregate Stated Principal Balance of the
Mortgage Loans in Loan Group 1 for such Distribution Date and (y) the
aggregate Stated Principal Balance of the Mortgage Loans in Loan Group 1 for
such Distribution Date minus 0.50% of the aggregate Stated Principal Balance
of the Mortgage Loans in Loan Group 1 as of the Cut-Off Date.
Class 2-A Certificate: Any Certificate designated as a "Class 2-A
Certificate" on the face thereof, in the form of Exhibit A-2 hereto,
representing the right to distributions as set forth herein.
Class 2-A Corridor Contract: The transaction evidenced by the
related Confirmation (as assigned to the Trustee pursuant to the Corridor
Contract Novation Agreement), a form of which is attached hereto as Exhibit
Q-2.
Class 2-A Net Rate Cap: For any Distribution Date, the weighted
average Adjusted Net Mortgage Rate of the Mortgage Loans in Loan Group 2 on
such Distribution Date, adjusted to an effective rate reflecting the
calculation of interest on the basis of the actual number of days elapsed
during the related interest accrual period and a 360-day year.
Class 2-A Principal Distribution Amount: For any Distribution Date,
the product of (x) the Senior Principal Distribution Target Amount and (y) a
fraction, the numerator of which is the Class 2-A Principal Distribution
Target Amount and the denominator of which is the sum of the Class 1-A, Class
2-A and Class 3-A Principal Distribution Target Amounts.
Class 2-A Principal Distribution Target Amount: With respect to any
Distribution Date the excess of (i) the Certificate Principal Balance of the
Class 2-A Certificates immediately prior to such Distribution Date over (ii)
the lesser of (x) 64.50% of the aggregate Stated Principal Balance of the
Mortgage Loans in Loan Group 2 for such Distribution Date and (y) the
aggregate Stated Principal Balance of the Mortgage Loans in Loan Group 2 for
such Distribution Date minus 0.50% of the aggregate Stated Principal Balance
of the Mortgage Loans in Loan Group 2 as of the Cut-Off Date.
11
Class 3-A Certificate: Any Certificate designated as a "Class 3-A
Certificate" on the face thereof, in the form of Exhibit A-3 hereto,
representing the right to distributions as set forth herein.
Class 3-A Corridor Contract: The transaction evidenced by the
related Confirmation (as assigned to the Trustee pursuant to the Corridor
Contract Novation Agreement), a form of which is attached hereto as Exhibit
Q-3.
Class 3-A Net Rate Cap: With respect to any Distribution Date, the
weighted average Adjusted Net Mortgage Rate of the Mortgage Loans in Loan
Group 3 on such Distribution Date, adjusted to an effective rate reflecting
the calculation of interest on the basis of the actual number of days elapsed
during the related interest accrual period and a 360-day year.
Class 3-A Principal Distribution Amount: With respect to any
Distribution Date, the product of (x) the Senior Principal Distribution Target
Amount and (y) a fraction, the numerator of which is the Class 3-A Principal
Distribution Target Amount and the denominator of which is the sum of Class
1-A, Class 2-A and Class 3-A Principal Distribution Target Amounts.
Class 3-A Principal Distribution Target Amount: With respect to any
Distribution Date the excess of (i) the aggregate Certificate Principal
Balance of the Class 3-A Certificates immediately prior to such Distribution
Date over (ii) the lesser of (x) 64.50% of the aggregate Stated Principal
Balance of the Mortgage Loans in Loan Group 3 for such Distribution Date and
(y) the aggregate Stated Principal Balance of the Mortgage Loans in Loan Group
3 for such Distribution Date minus 0.50% of the aggregate Stated Principal
Balance of the Mortgage Loans in Loan Group 3 as of the Cut-Off 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,
representing the right to distributions as set forth herein.
Class A Certificates: The Class 1-A, Class 2-A and Class 3-A
Certificates.
Class A Principal Distribution Amount: With respect to any
Distribution Date, the sum of the Class 1-A Principal Distribution Amount,
Class 2-A Principal Distribution Amount and the Class 3-A Principal
Distribution Amount.
Class B Certificate: Any Certificate designated as a "Class B
Certificate" on the face thereof, in the form of Exhibit A-13 hereto,
representing the right to distributions as set forth herein.
Class B Principal Distribution Amount: With respect to any
Distribution Date the excess of (i) the sum of (a) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account
distributions of the Class A Principal Distribution Amount for such
Distribution Date), (b) the Certificate Principal Balance of the Class M-1
Certificates (after taking into account distribution of the Class M-1
Principal Distribution Amount on such Distribution Date), (c) the Certificate
Principal Balance of the Class M-2 Certificates (after
12
taking into account distribution of the Class M-2 Principal Distribution
Amount on such Distribution Date), (d) the Certificate Principal Balance of
the Class M-3 Certificates (after taking into account distribution of the
Class M-3 Principal Distribution Amount on such Distribution Date), (e) the
Certificate Principal Balance of the Class M-4 Certificates (after taking into
account distribution of the Class M-4 Principal Distribution Amount on such
Distribution Date), (f) the Certificate Principal Balance of the Class M-5
Certificates (after taking into account distribution of the Class M-5
Principal Distribution Amount on such Distribution Date), (g) the Certificate
Principal Balance of the Class M-6 Certificates (after taking into account
distribution of the Class M-6 Principal Distribution Amount on such
Distribution Date) and (h) the Certificate Principal Balance of the Class M-7
Certificates (after taking into account distribution of the Class M-7
Principal Distribution Amount on such Distribution Date, (i) the Certificate
Principal Balance of the Class M-8 Certificates (after taking into account
distribution of the Class M-8 Principal Distribution Amount on such
Distribution Date, (j) the Certificate Principal Balance of the Class M-9
Certificates (after taking into account distribution of the Class M-9
Principal Distribution Amount on such Distribution Date and (k) the
Certificate Principal Balance of the Class B Certificates immediately prior to
such Distribution Date over (ii) the lesser of (x) 98.50% of the aggregate
Stated Principal Balance of the Mortgage Loans for such Distribution Date and
(y) the aggregate Stated Principal Balance of the Mortgage Loans for such
Distribution Date minus the OC Floor; provided, however, that if the Class B
Certificates are the only Class of Subordinate Certificates outstanding on
such Distribution Date, the Class B Certificates will be entitled to receive
the entire remaining Principal Distribution Amount for all three Loan Groups
until the Certificate Principal Balance thereof is reduced to zero.
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 M-1 Certificate: Any Certificate designated as a "Class M-1
Certificate" on the face thereof, in the form of Exhibit A-4 hereto,
representing the right to distributions as set forth herein.
Class M-1 Principal Distribution Amount: With respect to any
Distribution Date the excess of (i) the sum of (a) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account
distributions of the Class A Principal Distribution Amount for such
Distribution Date), and (b) the Certificate Principal Balance of the Class M-1
Certificates immediately prior to such Distribution Date, over (ii) the lesser
of (x) 71.00% of the aggregate Stated Principal Balance of the Mortgage Loans
for such Distribution Date and (y) the aggregate Stated Principal Balance of
the Mortgage Loans for such Distribution Date minus the OC Floor; provided,
however, that if the Class M-1 Certificates are the only Class of Subordinate
Certificates outstanding on such Distribution Date, the Class M-1 Certificates
will be entitled to receive the entire remaining Principal Distribution Amount
for all three Loan Groups until the Certificate Principal Balance thereof is
reduced to zero.
13
Class M-2 Certificate: Any Certificate designated as a "Class M-2
Certificate" on the face thereof, in the form of Exhibit A-5 hereto,
representing the right to distributions as set forth herein.
Class M-2 Principal Distribution Amount: With respect to any
Distribution Date the excess of (i) the sum of (a) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account
distributions of the Class A Principal Distribution Amount for such
Distribution Date), (b) the Certificate Principal Balance of the Class M-1
Certificates (after taking into account distribution of the Class M-1
Principal Distribution Amount for such Distribution Date) and (c) the
Certificate Principal Balance of the Class M-2 Certificates immediately prior
to such Distribution Date over (ii) the lesser of (x) 76.50% of the aggregate
Stated Principal Balance of the Mortgage Loans for such Distribution Date and
(y) the aggregate Stated Principal Balance of the Mortgage Loans for such
Distribution Date minus the OC Floor; provided, however, that if the Class M-2
Certificates are the only Class of Subordinate Certificates outstanding on
such Distribution Date, the Class M-2 Certificates will be entitled to receive
the entire remaining Principal Distribution Amount for all three Loan Groups
until the Certificate Principal Balance thereof is reduced to zero.
Class M-3 Certificate: Any Certificate designated as a "Class M-3
Certificate" on the face thereof, in the form of Exhibit A-6 hereto,
representing the right to distributions as set forth herein.
Class M-3 Principal Distribution Amount: With respect to any
Distribution Date the excess of (i) the sum of (a) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account
distributions of the Class A Principal Distribution Amount for such
Distribution Date), (b) the Certificate Principal Balance of the Class M-1
Certificates (after taking into account distribution of the Class M-1
Principal Distribution Amount for such Distribution Date), (c) the Certificate
Principal Balance of the Class M-2 Certificates (after taking into account
distributions of the Class M-2 Principal Distribution Amount for such
Distribution Date) (d) the Certificate Principal Balance of the Class M-3
Certificates immediately prior to such Distribution Date over (ii) the lesser
of (x) 80.00% of the aggregate Stated Principal Balance of the Mortgage Loans
for such Distribution Date and (y) the aggregate Stated Principal Balance of
the Mortgage Loans for such Distribution Date minus the OC Floor; provided,
however, that if the Class M-3 Certificates are the only Class of Subordinate
Certificates outstanding on such Distribution Date, the Class M-3 Certificates
will be entitled to receive the entire remaining Principal Distribution Amount
for all three Loan Groups until the Certificate Principal Balance thereof is
reduced to zero.
Class M-4 Certificate: Any Certificate designated as a "Class M-4
Certificate" on the face thereof, in the form of Exhibit A-7 hereto,
representing the right to distributions as set forth herein.
Class M-4 Principal Distribution Amount: With respect to any
Distribution Date the excess of (i) the sum of (a) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account
distributions of the Class A Principal Distribution Amount for such
Distribution Date), (b) the Certificate Principal Balance of the Class M-1
Certificates (after taking into account distribution of the Class M-1
Principal Distribution Amount for such
14
Distribution Date), (c) the Certificate Principal Balance of the Class M-2
Certificates (after taking into account distributions of the Class M-2
Principal Distribution Amount for such Distribution Date), (d) the Certificate
Principal Balance of the Class M-3 Certificates (after taking into account
distributions of the Class M-3 Principal Distribution Amount for such
Distribution Date), and (e) the Certificate Principal Balance of the Class M-4
Certificates immediately prior to such Distribution Date over (ii) the lesser
of (x) 83.00% of the aggregate Stated Principal Balance of the Mortgage Loans
for such Distribution Date and (y) the aggregate Stated Principal Balance of
the Mortgage Loans for such Distribution Date minus the OC Floor; provided,
however, that if the Class M-4 Certificates are the only Class of Subordinate
Certificates outstanding on such Distribution Date, the Class M-4 Certificates
will be entitled to receive the entire remaining Principal Distribution Amount
for all three Loan Groups until the Certificate Principal Balance thereof is
reduced to zero.
Class M-5 Certificate: Any Certificate designated as a "Class M-5
Certificate" on the face thereof, in the form of Exhibit A-8 hereto,
representing the right to distributions as set forth herein.
Class M-5 Principal Distribution Amount: With respect to any
Distribution Date the excess of (i) the sum of (a) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account
distributions of the Class A Principal Distribution Amount for such
Distribution Date), (b) the Certificate Principal Balance of the Class M-1
Certificates (after taking into account distribution of the Class M-1
Principal Distribution Amount for such Distribution Date), (c) the Certificate
Principal Balance of the Class M-2 Certificates (after taking into account
distributions of the Class M-2 Principal Distribution Amount for such
Distribution Date), (d) the Certificate Principal Balance of the Class M-3
Certificates (after taking into account distributions of the Class M-3
Principal Distribution Amount for such Distribution Date), (e) the Certificate
Principal Balance of the Class M-4 Certificates (after taking into account
distributions of the Class M-4 Principal Distribution Amount for such
Distribution Date), and (f) the Certificate Principal Balance of the Class M-5
Certificates immediately prior to such Distribution Date over (ii) the lesser
of (x) 86.00% of the aggregate Stated Principal Balance of the Mortgage Loans
for such Distribution Date and (y) the aggregate Stated Principal Balance of
the Mortgage Loans for such Distribution Date minus the OC Floor; provided,
however, that if the Class M-5 Certificates are the only Class of Subordinate
Certificates outstanding on such Distribution Date, the Class M-5 Certificates
will be entitled to receive the entire remaining Principal Distribution Amount
for all three Loan Groups until the Certificate Principal Balance thereof is
reduced to zero.
Class M-6 Certificate: Any Certificate designated as a "Class M-6
Certificate" on the face thereof, in the form of Exhibit A-9 hereto,
representing the right to distributions as set forth herein.
Class M-6 Principal Distribution Amount: With respect to any
Distribution Date the excess of (i) the sum of (a) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account
distributions of the Class A Principal Distribution Amount for such
Distribution Date), (b) the Certificate Principal Balance of the Class M-1
Certificates (after taking into account distribution of the Class M-1
Principal Distribution Amount for such Distribution Date), (c) the Certificate
Principal Balance of the Class M-2 Certificates (after
15
taking into account distributions of the Class M-2 Principal Distribution
Amount for such Distribution Date), (d) the Certificate Principal Balance of
the Class M-3 Certificates (after taking into account distributions of the
Class M-3 Principal Distribution Amount for such Distribution Date), (e) the
Certificate Principal Balance of the Class M-4 Certificates (after taking into
account distributions of the Class M-4 Principal Distribution Amount for such
Distribution Date), (f) the Certificate Principal Balance of the Class M-5
Certificates (after taking into account distributions of the Class M-5
Principal Distribution Amount for such Distribution Date), and (g) the
Certificate Principal Balance of the Class M-6 Certificates immediately prior
to such Distribution Date over (ii) the lesser of (x) 89.00% of the aggregate
Stated Principal Balance of the Mortgage Loans for such Distribution Date and
(y) the aggregate Stated Principal Balance of the Mortgage Loans for such
Distribution Date minus the OC Floor; provided, however, that if the Class M-6
Certificates are the only Class of Subordinate Certificates outstanding on
such Distribution Date, the Class M-6 Certificates will be entitled to receive
the entire remaining Principal Distribution Amount for all three Loan Groups
until the Certificate Principal Balance thereof is reduced to zero.
Class M-7 Certificate: Any Certificate designated as a "Class M-7
Certificate" on the face thereof, in the form of Exhibit A-10 hereto,
representing the right to distributions as set forth herein.
Class M-7 Principal Distribution Amount: With respect to any
Distribution Date the excess of (i) the sum of (a) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account
distributions of the Class A Principal Distribution Amount for such
Distribution Date), (b) the Certificate Principal Balance of the Class M-1
Certificates (after taking into account distribution of the Class M-1
Principal Distribution Amount for such Distribution Date), (c) the Certificate
Principal Balance of the Class M-2 Certificates (after taking into account
distributions of the Class M-2 Principal Distribution Amount for such
Distribution Date), (d) the Certificate Principal Balance of the Class M-3
Certificates (after taking into account distributions of the Class M-3
Principal Distribution Amount for such Distribution Date), (e) the Certificate
Principal Balance of the Class M-4 Certificates (after taking into account
distributions of the Class M-4 Principal Distribution Amount for such
Distribution Date), (f) the Certificate Principal Balance of the Class M-5
Certificates (after taking into account distributions of the Class M-5
Principal Distribution Amount for such Distribution Date), (g) the Certificate
Principal Balance of the Class M-6 Certificates (after taking into account
distributions of the Class M-6 Principal Distribution Amount for such
Distribution Date), and (h) the Certificate Principal Balance of the Class M-7
Certificates immediately prior to such Distribution Date over (ii) the lesser
of (x) 91.50% of the aggregate Stated Principal Balance of the Mortgage Loans
for such Distribution Date and (y) the aggregate Stated Principal Balance of
the Mortgage Loans for such Distribution Date minus the OC Floor; provided,
however, that if the Class M-7 Certificates are the only Class of Subordinate
Certificates outstanding on such Distribution Date, the Class M-7 Certificates
will be entitled to receive the entire remaining Principal Distribution Amount
for all three Loan Groups until the Certificate Principal Balance thereof is
reduced to zero.
Class M-8 Certificate: Any Certificate designated as a "Class M-8
Certificate" on the face thereof, in the form of Exhibit A-11 hereto,
representing the right to distributions as set forth herein.
16
Class M-8 Principal Distribution Amount: With respect to any
Distribution Date the excess of (i) the sum of (a) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account
distributions of the Class A Principal Distribution Amount for such
Distribution Date), (b) the Certificate Principal Balance of the Class M-1
Certificates (after taking into account distribution of the Class M-1
Principal Distribution Amount for such Distribution Date), (c) the Certificate
Principal Balance of the Class M-2 Certificates (after taking into account
distributions of the Class M-2 Principal Distribution Amount for such
Distribution Date), (d) the Certificate Principal Balance of the Class M-3
Certificates (after taking into account distributions of the Class M-3
Principal Distribution Amount for such Distribution Date), (e) the Certificate
Principal Balance of the Class M-4 Certificates (after taking into account
distributions of the Class M-4 Principal Distribution Amount for such
Distribution Date), (f) the Certificate Principal Balance of the Class M-5
Certificates (after taking into account distributions of the Class M-5
Principal Distribution Amount for such Distribution Date), (g) the Certificate
Principal Balance of the Class M-6 Certificates (after taking into account
distributions of the Class M-6 Principal Distribution Amount for such
Distribution Date), (h) the Certificate Principal Balance of the Class M-7
Certificates (after taking into account distributions of the Class M-7
Principal Distribution Amount for such Distribution Date), and (i) the
Certificate Principal Balance of the Class M-8 Certificates immediately prior
to such Distribution Date over (ii) the lesser of (x) 94.00% of the aggregate
Stated Principal Balance of the Mortgage Loans for such Distribution Date and
(y) the aggregate Stated Principal Balance of the Mortgage Loans for such
Distribution Date minus the OC Floor; provided, however, that if the Class M-8
Certificates are the only Class of Subordinate Certificates outstanding on
such Distribution Date, the Class M-8 Certificates will be entitled to receive
the entire remaining Principal Distribution Amount for all three Loan Groups
until the Certificate Principal Balance thereof is reduced to zero.
Class M-9 Certificate: Any Certificate designated as a "Class M-9
Certificate" on the face thereof, in the form of Exhibit A-12 hereto,
representing the right to distributions as set forth herein.
Class M-9 Principal Distribution Amount: With respect to any
Distribution Date the excess of (i) the sum of (a) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account
distributions of the Class A Principal Distribution Amount for such
Distribution Date), (b) the Certificate Principal Balance of the Class M-1
Certificates (after taking into account distribution of the Class M-1
Principal Distribution Amount for such Distribution Date), (c) the Certificate
Principal Balance of the Class M-2 Certificates (after taking into account
distributions of the Class M-2 Principal Distribution Amount for such
Distribution Date), (d) the Certificate Principal Balance of the Class M-3
Certificates (after taking into account distributions of the Class M-3
Principal Distribution Amount for such Distribution Date), (e) the Certificate
Principal Balance of the Class M-4 Certificates (after taking into account
distributions of the Class M-4 Principal Distribution Amount for such
Distribution Date), (f) the Certificate Principal Balance of the Class M-5
Certificates (after taking into account distributions of the Class M-5
Principal Distribution Amount for such Distribution Date), (g) the Certificate
Principal Balance of the Class M-6 Certificates (after taking into account
distributions of the Class M-6 Principal Distribution Amount for such
Distribution Date), (h) the Certificate Principal Balance of the Class M-7
Certificates (after taking into account distributions of the Class M-7
Principal Distribution Amount for such
17
Distribution Date), (i) the Certificate Principal Balance of the Class M-8
Certificates (after taking into account distributions of the Class M-8
Principal Distribution Amount for such Distribution Date), and (j) the
Certificate Principal Balance of the Class M-9 Certificates immediately prior
to such Distribution Date over (ii) the lesser of (x) 96.50% of the aggregate
Stated Principal Balance of the Mortgage Loans for such Distribution Date and
(y) the aggregate Stated Principal Balance of the Mortgage Loans for such
Distribution Date minus the OC Floor; provided, however, that if the Class M-9
Certificates are the only Class of Subordinate Certificates outstanding on
such Distribution Date, the Class M-9 Certificates will be entitled to receive
the entire remaining Principal Distribution Amount for all three Loan Groups
until the Certificate Principal Balance thereof is reduced to zero.
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: February 26, 2004.
Code: The Internal Revenue Code of 1986, including any successor or
amendatory provisions.
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 Mortgage Loans for the related Due Period and (y) the
aggregate Prepayment Interest Shortfalls for such Mortgage Loans for such
Distribution Date.
Confirmation: Any of the Confirmations dated either January 28 or
29, 2004 evidencing a transaction between the Corridor Contract Counterparty
and CHL relating to the Corridor Contracts.
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: The Class 1-A Corridor Contract, The Class 2-A
Corridor Contract, the Class 3-A Corridor Contract or the Subordinate Corridor
Contract, as applicable.
Corridor Contract Novation Agreement: The novation agreement dated
as of the Closing Date among CHL, the Trustee and the Corridor Contract
Counterparty, the form of which is attached hereto as Exhibit S.
Corridor Contract Counterparty: Royal Bank of Canada, and its
successors.
18
Corridor Contract Termination Date: With respect to each Corridor
Contract, the Distribution Date in December 2010.
Co-Trustee: BNY Western Trust Company, a California banking
corporation, not in its individual capacity, but solely in its capacity as
co-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.
Credit Comeback Excess Amount: With respect to the Credit Comeback
Loans and any Master Servicer Advance Date, the portion of the sum of the
following (without duplication) attributable to the excess, if any, of the
actual mortgage rate on each Credit Comeback Loan and the Mortgage Rate on
such Credit Comeback Loan: (i) all scheduled interest collected during the
related Due Period with respect to the Credit Comeback Loans, (ii) all
Advances relating to interest with respect to the Credit Comeback Loans, (iii)
all Compensating Interest with respect to the Credit Comeback Loans and (iv)
Liquidation Proceeds with respect to the Credit Comeback Loans collected
during the related Due Period (to the extent such Liquidation Proceeds relate
to interest), less all Nonrecoverable Advances relating to interest reimbursed
during the related Due Period.
Credit Comeback Loan: Any Mortgage Loan for which the related
Mortgage Rate is subject to reduction for good payment history of Scheduled
Payments by the related Mortgagor.
Cross-Over Situation: For any Distribution Date and for each Loan
Group (after taking into account principal distributions on such Distribution
Date) with respect to the Class A and Class B Interests, the Class A and Class
B Interests corresponding to any Loan Group are in the aggregate less than 1%
of the Subordinate Component Balance of the Loan Group to which they
correspond.
Cumulative Loss Trigger Event: With respect to a Distribution Date
on or after the Stepdown Date the aggregate amount of Realized Losses on the
Mortgage Loans from (and including) the Cut-off Date for each Mortgage Loan to
(and including) the last day of the related Due Period exceeds the applicable
percentage, for such Distribution Date, of the aggregate Cut-off Date
Principal Balance of the Mortgage Loans, as set forth below:
Distribution Date Percentage
----------------- ----------
March 2007-- February 2008....................... 3.00% with respect to March 2007, plus
an additional 1/12th of 1.50% for each
month thereafter
March 2008-- February 2009....................... 4.50% with respect to March 2008, plus
an additional 1/12th of 1.00% for each
month thereafter
March 2009-- February 2010....................... 5.50% with respect to March 2009, plus
an additional 1/12th of 0.25% for each
month thereafter
19
Distribution Date Percentage
----------------- ----------
March 2010 and thereafter........................ 5.75%
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 of such Class immediately prior to such
Distribution Date, plus any amount previously distributed with respect to
interest for such Class that is recovered as a voidable preference by a
trustee in bankruptcy.
Cut-off Date: In the case of any Mortgage Loan, the later of (x)
February 1, 2004 and (y) the date of origination of such Mortgage Loan.
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.
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: The 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 Co-Trustee
on or prior to the Closing Date. The Depositor shall deliver (or cause
delivery of) the Mortgage Files to the Co-Trustee: (A) with respect to at
least 50% of the Mortgage Loans, not later than the Closing Date, (B) with
respect to at least an additional 40% of the Mortgage Loans, not later than 20
days after the Closing Date, and (C) with respect to the remaining 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 Loan, until delivery to of such Mortgage File to
the Co-Trustee as provided in Section 2.01, Countrywide Home Loans, Inc. shall
hold such files as agent and in trust for the Co-Trustee.
20
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by
a Replacement Mortgage Loan.
Delinquency Trigger Event: With respect to a Distribution Date on or
after the Stepdown Date exists if (x) the product of: (1) 2.27 times (2) the
Rolling Sixty-Day Delinquency Rate for Outstanding Mortgage Loans equals or
exceeds (y) the Required Percentage for such Distribution Date.
Delinquent: A Mortgage Loan is "delinquent" if any payment due
thereon is not made pursuant to the terms of such Mortgage Loan by the close
of business on the day such payment is scheduled to be due. A Mortgage Loan is
"30 days delinquent" if such payment has not been received by the close of
business on the corresponding day of the month immediately succeeding the
month in which such payment was due, or, if there is no such corresponding day
(e.g., as when a 30-day month follows a 31-day month in which a payment was
due on the 31st day of such month), then on the last day of such immediately
succeeding month. Similarly for "60 days delinquent," "90 days delinquent" and
so on.
Denomination: With respect to each Certificate, the amount set forth
on the face thereof as the "Initial Certificate Balance of this Certificate"
or, if not the foregoing, the Percentage Interest appearing on the face
thereof, as applicable.
Depositor: CWABS, 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, the Trustee 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 15th
day of the month of such Distribution Date or, if such 15th day is not a
Business Day, the immediately preceding Business Day.
Distribution Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3.05(c) 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 CWABS, Inc., Asset-Backed
Certificates, Series 2004-1". Funds in the Distribution Account shall be held
in trust for the Certificateholders for the uses and purposes set forth in
this Agreement.
21
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 March
2004.
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 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 Due Date in the month
in which such Distribution Date occurs.
Eligible Account: Any of (i) an account or accounts maintained with
a federal or state chartered depository institution or trust company, the
long-term unsecured debt obligations and short-term unsecured debt obligations
of which (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 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 B
Certificates, Class P Certificates, Class C Certificates and Certificates of
any Class that ceases to satisfy the applicable rating requirement under the
Underwriter's Exemption.
Escrow Account: As defined in Section 3.06.
22
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 as set forth in Section 4.04(a)(iii)(k), which is the
amount remaining after the distribution of interest to Certificateholders for
such Distribution Date and (ii) the amount remaining as set forth in Section
4.04(b)(1)(B)(xi) or 4.04(b)(2)(L), as applicable, which is the amount
remaining after the distribution of principal to Certificateholders for such
Distribution Date.
Excess Proceeds: With respect to any Liquidated Loan, any
Liquidation Proceeds that are in excess of the sum of (i) the unpaid principal
balance of such Liquidated Loan as of the date of such liquidation 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 such Liquidation Proceeds
are required to be distributed on the Stated Principal Balance of such
Liquidated Loan outstanding during each Due Period as to which such interest
was not paid or advanced.
Expense Fee Rate: With respect to any Mortgage Loan, the sum of (i)
the Servicing Fee Rate and (ii) the Trustee Fee Rate.
Extra Principal Distribution Amount: With respect to any
Distribution Date and any Loan Group, is the product of (a) the lesser of (1)
the Overcollateralization Deficiency Amount and (2) the Excess Cashflow
available for payment thereof and (b) a fraction, the numerator of which is
the Principal Remittance Amount for such Loan Group and the denominator of
which is the sum of the Principal Remittance Amounts for all three Loan
Groups.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
Fitch: Fitch Ratings.
Fixed Rate Mortgage Loans: The group of Mortgage Loans identified in
the Mortgage Loan Schedule as having a Mortgage Rate which is fixed for the
life of the related Mortgage and any Credit Comeback Loans, including in each
case any Mortgage Loans delivered in replacement thereof.
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.
Gross Margin: The percentage set forth in the related Mortgage Note
for the Adjustable Rate Mortgage Loans to be added to the Index for use in
determining the Mortgage Rate on each Adjustment Date, and which is set forth
in the Mortgage Loan Schedule for the Adjustable Rate Mortgage Loans.
Group 1 Mortgage Loans: The group of Mortgage Loans identified in
the related Mortgage Loan Schedule as "Group 1 Mortgage Loans", including in
each case any Mortgage Loans delivered in replacement thereof.
23
Group 2 Mortgage Loans: The group of Mortgage Loans identified in
the related Mortgage Loan Schedule as "Group 2 Mortgage Loans", including in
each case any Mortgage Loans delivered in replacement thereof.
Group 3 Mortgage Loans: The group of Mortgage Loans identified in
the related Mortgage Loan Schedule as "Group 3 Mortgage Loans", including in
each case any Mortgage Loans delivered in replacement thereof.
Index: As to any Adjustable Rate Mortgage Loan on any Adjustment
Date related thereto, the index for the adjustment of the Mortgage Rate set
forth as such in the related Mortgage Note, such index in general being the
average of the London interbank offered rates for six-month U.S. dollar
deposits in the London market, as set forth in The Wall Street Journal, as
most recently announced as of a date 45 days prior to such Adjustment Date or,
if the Index ceases to be published in The Wall Street Journal or becomes
unavailable for any reason, then the Index shall be a new index selected by
the Master Servicer, based on comparable information.
Initial Adjustment Date: As to any Adjustable Rate Mortgage Loan,
the first Adjustment Date following the origination of such Mortgage Loan.
Initial Certificate Account Deposit: An amount equal to the
aggregate of all amounts in respect of (i) principal of the Mortgage Loans due
on or after the 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 Mortgage Loans due on and after the 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 Mortgage Rate: As to each Adjustable Mortgage Loan, the
Mortgage Rate in effect prior to the Initial Adjustment Date.
Insurance Policy: With respect to any Mortgage Loan included in the
Trust Fund, any insurance policy, including all riders and endorsements
thereto in effect with respect to such Mortgage Loan, including any
replacement policy or policies for any Insurance Policy.
Insurance Proceeds: Proceeds paid in respect of the Mortgage Loans
pursuant to any Insurance Policy or any other insurance policy covering a
Mortgage Loan, to the extent such proceeds are payable to the mortgagee under
the Mortgage, the 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.
Insured Expenses: Expenses covered by an Insurance Policy or any
other insurance policy with respect to the Mortgage Loans.
24
Interest Bearing Certificates: The Class B Certificates and the
Adjustable Rate 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 first Accrual
Period for the Adjustable Rate Certificates, February 24, 2004. With respect
to any Accrual Period for the Adjustable Rate Certificates thereafter, the
second LIBOR Business Day preceding the commencement of such Accrual Period.
Interest Funds: With respect to any Distribution Date and Loan
Group, the Interest Remittance Amount for such Loan Group and Distribution
Date, less the portion of the Trustee Fee for such Distribution Date allocable
to such Loan Group.
Interest Remittance Amount: With respect to the Mortgage Loans in
each Loan Group and any Master Servicer Advance Date, (x) the sum, without
duplication, of (i) all scheduled interest collected during the related Due
Period (for the avoidance of doubt, other than Credit Comeback Excess Amounts)
with respect to the related Mortgage Loans less the related Servicing Fee,
(ii) all interest on prepayments, other than Prepayment Interest Excess, (iii)
all related Advances relating to interest with respect to such Mortgage Loans,
(iv) all related Compensating Interest with respect to such Mortgage Loans,
(v) Liquidation Proceeds with respect to such Mortgage Loans collected during
the related Due Period (to the extent such Liquidation Proceeds relate to
interest) and (vi) the related Seller Shortfall Interest Requirement, less (y)
all reimbursements to the Master Servicer during the related Due Period for
Advances of interest previously made allocable to such Loan Group.
Investment Letter: As defined in Section 5.02(b).
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.
Liquidated Loan: With respect to any Distribution Date, a defaulted
Mortgage Loan that has been liquidated through deed-in-lieu of foreclosure,
foreclosure sale, trustee's sale or other realization as provided by
applicable law governing the real property subject to the related Mortgage and
any security agreements and as to which the Master Servicer has certified (in
accordance with Section 3.12) 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
25
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, less the sum of related
unreimbursed Advances, Servicing Fees and Servicing Advances.
Liquidity Trust: Countrywide LFT LLC a Delaware limited liability
company, and its successors and assigns.
Liquidity Trust Mortgage Loans: The Mortgage Loans identified as
such on the Mortgage Loan Schedule for which the Liquidity Trust is the
applicable Seller.
Loan Group: Any of the Loan Group 1 Mortgage Loans, Loan Group 2
Mortgage Loans or Loan Group 3 Mortgage Loans.
Loan Group 1: The Group 1 Mortgage Loans.
Loan Group 2: The Group 2 Mortgage Loans.
Loan Group 3: The Group 3 Mortgage Loans.
Loan-to-Value Ratio: The fraction, expressed as a percentage, the
numerator of which is the original principal balance of the related Mortgage
Loan and the denominator of which is the Appraised Value of the related
Mortgaged Property.
Majority Holder: The Holders of Certificates evidencing at least 51%
of the Voting Rights allocated to such Class of Certificates.
Margin: With respect to any Distribution Date and Class of
Adjustable Rate Certificates, the per annum rate indicated in the following
table:
---------------------- ---------------------- ----------------------
Class Margin (1) Margin (2)
---------------------- ---------------------- ----------------------
Class 1-A 0.270% 0.540%
---------------------- ---------------------- ----------------------
Class 2-A 0.240% 0.480%
---------------------- ---------------------- ----------------------
Class 3-A 0.280% 0.560%
---------------------- ---------------------- ----------------------
Class M-1 0.500% 0.750%
---------------------- ---------------------- ----------------------
Class M-2 0.550% 0.825%
---------------------- ---------------------- ----------------------
Class M-3 0.650% 0.975%
---------------------- ---------------------- ----------------------
Class M-4 0.950% 1.425%
---------------------- ---------------------- ----------------------
Class M-5 1.050% 1.575%
---------------------- ---------------------- ----------------------
Class M-6 1.200% 1.800%
---------------------- ---------------------- ----------------------
Class M-7 1.600% 2.400%
---------------------- ---------------------- ----------------------
Class M-8 1.900% 2.850%
---------------------- ---------------------- ----------------------
Class M-9 3.000% 4.500%
---------------------- ---------------------- ----------------------
---------------------- ---------------------- ----------------------
(1) For any Distribution Date occurring on or prior to the Optional
Termination Date.
(2) For any Distribution Date occurring after the Optional Termination Date.
Master Servicer: Countrywide Home Loans Servicing LP, a Texas
limited partnership, and its successors and assigns, in its capacity as master
servicer hereunder.
26
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).
Maximum Mortgage Rate: With respect to each Adjustable Rate Mortgage
Loan, the maximum rate of interest set forth as such in the related Mortgage
Note.
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.
Minimum Mortgage Rate: With respect to each Adjustable Rate Mortgage
Loan, the minimum rate of interest set forth as such in the related Mortgage
Note.
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 Payment: With respect to any Mortgage Loan, the scheduled
monthly payment of principal and interest on such Mortgage Loan which is
payable by the related Mortgagor from time to time under the related Mortgage
Note, determined: (a) after giving effect to (i) any Deficient Valuation
and/or Debt Service Reduction with respect to such Mortgage Loan and (ii) any
reduction in the amount of interest collectible from the related Mortgagor
pursuant to the Relief Act; (b) without giving effect to any extension granted
or agreed to by the 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.
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
first lien on or first priority ownership interest in an estate in fee simple
in real property securing a Mortgage Note.
27
Mortgage File: The mortgage documents listed in Section 2.01 hereof
pertaining to a particular Mortgage Loan and any additional documents
delivered to the Co-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 Deleted
Mortgage Loans and the addition of Replacement Mortgage Loans pursuant to the
provisions of this Agreement transferred to the Trustee as part of the Trust
Fund and from time to time subject to this Agreement, attached hereto as
Exhibit F-1, setting forth in the following information with respect to each
Mortgage Loan:
(i) the loan number;
(ii) the Loan Group;
(iii) the Appraised Value;
(iv) the Initial 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 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
condominium unit or (c) a two- to four-unit residential
property;
(xiii) a code indicating whether such Mortgage Loan is a
Credit Comeback Loan;
(xiv) the rate for the Mortgage Insurance Premium, if
applicable;
(xv) [Reserved];
(xvi) the purpose of the Mortgage Loan; and
(xvii) with respect to each Adjustable Rate Mortgage Loan:
28
(a) the frequency of each Adjustment Date;
(b) the next Adjustment Date;
(c) the Maximum Mortgage Rate
(d) the Minimum Mortgage Rate;
(e) the Mortgage Rate as of the Cut-off Date;
(f) the related Periodic Rate Cap;
(g) a code indicating whether the Mortgage Loan is a CHL
Mortgage Loan or a Liquidity Trust Mortgage Loan;
(h) the Gross Margin; and
(i) premium rate for any lender-paid mortgage insurance,
if applicable.
Such schedule shall also set forth the total of the amounts described under
(vii) above for all of the Mortgage Loans and for each Loan Group.
Mortgage Loans: Such of the Group 1 Mortgage Loans, Group 2 Mortgage
Loans and Group 3 Mortgage Loans transferred and assigned to the Trustee
pursuant to the provisions hereof 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
from time to time; provided, however, the Mortgage Rate for each Credit
Comeback Loan shall be treated for all purposes of payments on the
Certificates, including the calculation of the Pass-Through Rates and the Net
Rate Cap, as reduced by 0.375% on the Due Date following the end of each of
the first four annual periods after the origination date, irrespective of
whether the Mortgagor qualifies for the reduction by having a good payment
history.
Mortgaged Property: The underlying property securing a Mortgage
Loan.
29
Mortgagor: The obligors on a Mortgage Note.
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: (i) With respect to the Class 1-A Certificates, the
Class 1-A Net Rate Cap, (ii) with respect to the Class 2-A Certificates, the
Class 2-A Net Rate Cap, (iii) with respect to the Class 3-A Certificates, the
Class 3-A Net Rate Cap, and (iv) with respect to the Subordinate Certificates,
the Subordinate Net Rate Cap.
Net Rate Carryover: For any Class of Interest Bearing 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 not been determined based on the
applicable 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 the Seller
certain payments under notes backed principally by the Class C and Class P
Certificates.
Non-Book-Entry Certificate: Any Certificate other than a Book-Entry
Certificate.
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.
OC Floor: For any Distribution Date, an amount equal to 0.50% of the
aggregate Cut-off Date Principal Balance of the Mortgage Loans.
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
30
Secretaries of Countrywide GP, Inc., its general partner or (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.
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 that appears on Telerate Screen Page 3750 as of 11:00
a.m. (London time) on such Interest Determination Date; provided that the
parties hereto acknowledge that One-Month LIBOR calculated for the first
Accrual Period for the Adjustable Rate Certificates shall equal 1.11875% per
annum. If such rate does not appear on such page (or such other page as may
replace that page on that service, or if such service is no longer offered,
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 the last
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 aggregate Stated Principal Balance of the Mortgage Loans as of
the Cut-off Date.
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
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(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 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 distributions in respect of the Principal Remittance
Amount for each Loan Group on such Distribution Date).
Overcollateralization Target Amount: With respect to (a) each
Distribution Date prior to the Stepdown Date, an amount equal to 0.75% of the
aggregate Cut-off Date Principal Balance of the Mortgage Loans and (b) for any
Distribution Date on or after the Stepdown Date, 1.50% of the aggregate Stated
Principal Balance of the Mortgage Loans for the current Distribution Date,
subject to a minimum amount equal to the OC Floor; provided that if a Trigger
Event is in effect on any Distribution Date, the Overcollateralization Target
Amount will be the Overcollateralization Target Amount as in effect for the
prior Distribution Date.
Overcollateralized Amount: With respect to any Distribution Date the
amount, if any, by which (x) the aggregate Stated Principal Balance of the
Mortgage Loans for such Distribution Date exceeds (y) the aggregate
Certificate Principal Balance of the Senior and Subordinate Certificates as of
such Distribution Date (after giving effect to distributions in respect of the
Principal Remittance Amounts on such Distribution Date).
Ownership Interest: As to any Certificate, any ownership interest in
such Certificate including any interest in such Certificate as the Holder
thereof and any other interest therein, whether direct or indirect, legal or
beneficial.
Pass-Through Rate: With respect to any Distribution Date and each
Class of Adjustable Rate Certificates the lesser of (x) One-Month LIBOR for
the related Accrual Period plus the Margin for such Class and Distribution
Date and (y) the applicable Net Rate Cap for such Class and Distribution Date.
With respect to any Distribution Date and the Class B Certificates, the lesser
of (x) 5.50% and (y) the applicable Net Rate Cap for such Distribution Date.
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.
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Periodic Rate Cap: As to substantially all Adjustable Rate Mortgage
Loans and the related Mortgage Notes, the provision therein that limits
permissible increases and decreases in the Mortgage Rate on any Adjustment
Date to not more than two percentage points.
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 will not
result in the downgrading or withdrawal of the ratings then assigned
to the Certificates by such Rating Agency;
(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 will not result in the downgrading or
withdrawal of the ratings then assigned to the Certificates by such
Rating Agency;
(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 will not
result in the downgrading or withdrawal of the rating then assigned
to the Certificates by such Rating Agency;
(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 Moody's, such rating shall be the highest
commercial paper rating of S&P for any such securities) and (y), or
such lower
33
rating as each Rating Agency has confirmed in writing will not
result in the downgrading or withdrawal of the rating then assigned
to the Certificates by such Rating Agency;
(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 will not result in the
downgrading or withdrawal of the ratings then assigned to the
Certificates by such Rating Agency;
(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 will not result in the
downgrading or withdrawal of the ratings then assigned to the
Certificates by such Rating Agency; 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, as evidenced by a signed writing
delivered by each Rating Agency;
provided, that no such instrument shall be a Permitted Investment if such
instrument (i) evidences the right to receive interest only payments with
respect to the obligations underlying such instrument, (ii) is purchased at a
premium or (iii) is purchased at a deep discount; provided further that no
such instrument shall be a Permitted Investment (A) if such instrument
evidences principal and interest payments derived from obligations underlying
such instrument and the interest payments with respect to such instrument
provide a yield to maturity of greater than 120% of the yield to maturity at
par of such underlying obligations, or (B) if it may be redeemed at a price
below the purchase price (the foregoing clause (B) not to apply to investments
in units of money market funds pursuant to clause (vi) 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
34
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.
Pool Stated Principal Balance: The aggregate of the Stated Principal
Balances of the Mortgage Loans which were Outstanding Mortgage Loans.
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 to any Mortgage Loan,
the period of time during which a Prepayment Charge may be imposed.
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Prepayment Charge Schedule: As of the Cut-off Date with respect to
each 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 Mortgage Loan. 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 second day through the fifteenth day of the month of such
Distribution Date, 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, a Principal Prepayment in full, or that became a Liquidated Loan
during the portion of the related Prepayment Period occurring in the month
prior to the month of such Distribution Date (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), 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 from February 1, 2004)
and ending on the close of business on the fifteenth day of the month in which
such Distribution Date occurs.
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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 and a Loan Group, the sum of (i) the Principal Remittance Amount for such
Loan Group for such Distribution Date and (ii) the Extra Principal
Distribution Amount for such Loan Group 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 and 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 Reduction: For any Distribution Date and for each Loan
Group, the sum of the Principal Remittance Amount and any Realized Losses from
the Mortgage Loans in the related Loan Group. Principal Reductions shall
consist proportionately of principal allocations comprising the Principal
Remittance Amount and Realized Losses, and the REMIC 1 Interest allocated a
principal payment shall receive such payment on such Distribution Date and
shall have its principal balance reduced by an allocation of Realized Losses.
Principal Relocation Payment: A payment from any Loan Group to a
REMIC 1 Regular Interest other than a Regular Interest corresponding to that
Loan Group as provided in the Preliminary Statement. Principal Relocation
Payments shall be made of principal allocations comprising the Principal
Remittance Amount from a Loan Group and shall include a proportionate
allocation of Realized Losses from the Mortgage Loans of such Loan Group.
Principal Remittance Amount: With respect to the Mortgage Loans in
each Loan Group and 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 on or before 1:00 p.m. Pacific time
on the related Master Servicer Advance Date, (ii) 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 is less than the aggregate unpaid principal
balance of any Deleted Mortgage Loans delivered by the Sellers in connection
with a substitution of a Mortgage Loan and (v) all Liquidation Proceeds
collected during the related Due Period (to the extent such Liquidation
Proceeds related to principal); less (b) all Non-Recoverable 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
37
the Certificateholders and designated "The Bank of New York in trust for
registered holders of CWABS, Inc., Asset-Backed Certificates, Series 2004-1".
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 B, Class C and Class P Certificates.
Prospectus Supplement: The Prospectus Supplement dated January 27,
2004, 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: Xxxxx'x, Fitch 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,
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 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 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 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
38
Deficient Valuation and the principal balance of the Mortgage Loan as reduced
by the Deficient Valuation plus any reduction in the interest component of the
Scheduled Payments. With respect to each Mortgage Loan that has become the
subject of a Debt Service Reduction and any Distribution Date, the amount, if
any, by which the related Scheduled Payment was reduced.
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 Class B, 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.
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.
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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 CHL for a
Deleted Mortgage Loan which must, on the date of such substitution, as
confirmed in a Request for Release, substantially in the form of Exhibit N,
(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) with respect to any Fixed Rate Mortgage Loan, have a Mortgage Rate
not less than or no more than 1% per annum higher than the Mortgage Rate of
the Deleted Mortgage Loan and, with respect to any Adjustable Rate Mortgage
Loan: (a) have a Maximum Mortgage Rate no more than 1% per annum higher or
lower than the Maximum Mortgage Rate of the Deleted Mortgage Loan; (c) have
the same Index and Periodic Rate Cap as that of the Deleted Mortgage Loan; and
(d) not permit conversion of the related Mortgage Rate to a fixed Mortgage
Rate; (iii) have the same or higher credit quality characteristics than that
of the Deleted Mortgage Loan; (iv) be accruing interest at a rate not more
than 1% per annum higher or lower than that of the Deleted Mortgage Loan; (v)
have a Loan-to-Value Ratio no higher than that of the Deleted Mortgage Loan;
(vi) not permit conversion of the Mortgage Rate from a fixed rate to a
variable rate or visa versa; (viii) provide for a prepayment charge on terms
substantially similar to those of the Prepayment Charge, if any, of the
Deleted Mortgage Loan; (ix) have the same lien priority as the Deleted
Mortgage Loan; (x) constitute the same occupancy type as the Deleted Mortgage
Loan; (xi) comply with each representation and warranty set forth in Section
2.03 and (xii) [Reserved].
Representing Party: As defined in Section 2.03(d).
Request for Release: The Request for Release submitted by the Master
Servicer to the Trustee, substantially in the form of Exhibits M and N, as
appropriate.
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.
Required Percentage: With respect to a Distribution Date on and
after the Stepdown Date, the fraction (expressed as a percentage) (1) the
numerator of which is the excess of (a) the aggregate Stated Principal Balance
of the Mortgage Loans for the preceding Distribution Date over (b) (i) before
the Certificate Principal Balances of the Class 1-A, Class 2-A and Class 3-A
Certificates have been reduced to zero, the sum of the Certificate Principal
Balances of the Class 1-A, Class 2-A and Class 3-A Certificates, or (ii) after
the Certificate Principal Balances of the Class 1-A, Class 2-A and Class 3-A
Certificates have been reduced to zero, the Certificate Principal Balance of
the most senior Class of Subordinate Certificates outstanding as of the
preceding Master Servicer Advance Date and (2) the denominator of which is the
aggregate Stated Principal Balance of the Mortgage Loans for the preceding
Distribution Date.
Required Secondary Carryover Reserve Fund Deposit: With respect to
any Distribution Date, an amount equal to the excess of (i) $10,000 over (ii)
the amount of funds on deposit in the Carryover Reserve Fund.
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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.
Rolling Sixty-Day Delinquency Rate: With respect to any Distribution
Date and any Loan Group, the average of the Sixty-Day Delinquency Rates for
such Loan Group and such Distribution Date and the two immediately preceding
Distribution Dates.
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.
Scheduled Payment: The scheduled monthly payment on a Mortgage Loan
due on any Due Date allocable to principal and/or interest on such Mortgage
Loan.
Securities Act: The Securities Act of 1933, as amended.
Sellers: CHL, in its capacity as seller of the CHL Mortgage Loans to
the Depositor, and the Liquidity Trust, in its capacity as seller of the
Liquidity Trust Mortgage Loans to the Depositor.
Seller Shortfall Interest Requirement: With respect to the Master
Servicer Advance Date in March 2004, the product of: (1) the excess of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-Off
Date, over the aggregate Stated Principal Balance of the Mortgage Loans as of
the Cut-Off Date that have a scheduled payment of interest due in the related
Due Period, and (2) a fraction, the numerator of which is the weighted average
Net Mortgage Rate of the Mortgage Loans (weighted on the basis of the Stated
Principal Balances thereof for such Distribution Date) and the denominator of
which is 12.
Senior Certificates: The Class 1-A, Class 2-A, Class 3-A and Class
A-R Certificates.
Senior Principal Distribution Allocation Amount: For any
Distribution Date and, (a) the Class 1-A Certificates, the Class 1-A Principal
Distribution Amount, (b) the Class 2-A Certificates, the Class 2-A Principal
Distribution Amount, and (c) the Class 3-A Certificates, the Class 3-A
Principal Distribution Amount.
Senior Principal Distribution Target Amount: For any Distribution
Date, the excess of (i) the aggregate Certificate Principal Balance of the
Class 1-A, Class 2-A and Class 3-A Certificates immediately prior to such
Distribution Date, over (ii) the lesser of (A) 64.50% of the aggregate Stated
Principal Balance of the Mortgage Loans for such Distribution Date and (B)
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the aggregate Stated Principal Balance of the Mortgage Loans for such
Distribution Date minus the OC Floor.
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 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
and any Loan Group, a fraction, expressed as a percentage, the numerator of
which is the aggregate Stated Principal Balance for such Distribution Date of
all Mortgage Loans in such Loan Group 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 in such Loan Group.
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, and (c) all Liquidation Proceeds
collected with respect to such Mortgage Loan during each Due Period ending
prior to such Distribution Date, to the extent
42
applied by the Master Servicer as recoveries of principal in accordance with
Section 3.12. The Stated Principal Balance of any Mortgage Loan that becomes a
Liquidated Loan will be zero on each date following the Due Period in which
such Mortgage Loan becomes a Liquidated 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, and references herein to the Stated Principal Balance of a Loan Group at
any time shall mean the aggregate Stated Principal Balance of all Mortgage
Loans in such Loan Group at such time.
Stepdown Date: The earlier to occur of (i) the Distribution Date on
which the aggregate Certificate Principal Balance of the Class 1-A, Class 2-A
and Class 3-A Certificates is reduced to zero, and (ii) the later to occur of
(x) the Distribution Date in March 2007 and (y) the first Distribution Date on
which the aggregate Certificate Principal Balance of the Class 1-A, Class 2-A
and Class 3-A Certificates (after calculating anticipated distributions on
such Distribution Date) is less than or equal to 64.50% of the aggregate
Stated Principal Balance of the Mortgage Loans for such Distribution Date.
Subordinate Certificates: The Class M-1, Class M-2, Class M-3, Class
M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class M-9 and Class B
Certificates.
Subordinate Component Balance: For any Distribution Date and for
each Loan Group, the excess of the principal balance of such Loan Group as of
the first day of the related Due Period (after giving effect to Principal
Prepayments received in the related Prepayment Period) over the Class 1-A
Certificates in the case of Loan Group 1, the Class 2-A Certificates in the
case of Loan Group 2 and the Class 3-A Certificates in the case of Loan Group
3.
Subordinate Corridor Contract: The transaction evidenced by the
related Confirmation (as assigned to the Trustee pursuant to the Corridor
Contract Novation Agreement), a form of which is attached hereto as Exhibit
Q-4.
Subordinate Net Rate Cap: For any Distribution Date and each Class
of Subordinate Certificates, the weighted average of (a) the weighted average
Adjusted Net Mortgage Rate of the Mortgage Loans in Loan Group 1 (weighted by
an amount equal to the positive difference (if any) of the aggregate Stated
Principal Balance of the Mortgage Loans in Loan Group 1 over the outstanding
Certificate Principal Balance of the Class 1-A Certificates), (b) the weighted
average Adjusted Net Mortgage Rate of the Mortgage Loans in Loan Group 2
(weighted by an amount equal to the positive difference (if any) of the
aggregate Stated Principal Balance of the Mortgage Loans in Loan Group 2 over
the outstanding Certificate Principal Balance of the Class 2-A Certificates)
and (c) the weighted average Adjusted Net Mortgage Rate of the Mortgage Loans
in Loan Group 3 (weighted by an amount equal to the positive difference (if
any) of the aggregate Stated Principal Balance of the Mortgage Loans in Loan
Group 3 over the outstanding Certificate Principal Balance of the Class 3-A
Certificates), and in the case of all Adjustable Rate Certificates, adjusted
to an effective rate reflecting the calculation of interest on the basis of
the actual number of days elapsed during the related interest accrual period
and a 360-day year.
Subservicer: As defined in Section 3.02(a).
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Subservicing Agreement: As defined in Section 3.02(a).
Substitution Adjustment Amount: The meaning ascribed to such term
pursuant to Section 2.03(d).
Substitution Amount: With respect to any Mortgage Loan substituted
pursuant to Section 2.03(d), 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 temporary
Treasury regulation ss. 301.6231(a)(7)-1T. Initially, this person shall be the
Trustee.
Tax Matters Person Certificate: With respect to the Master REMIC,
REMIC 1 and REMIC 2, the Class A-R Certificate with a Denomination of $0.05.
Terminator: As defined in Section 9.01.
Three-Year Hybrid Mortgage Loan: A Mortgage Loan having a Mortgage
Rate that is fixed for 36 months after origination thereof before such
Mortgage Rate becomes subject to adjustment.
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).
Trigger Event: With respect to a Distribution Date on or after the
Stepdown Date, consists of either a Delinquency Trigger Event with respect to
that Distribution Date or a Cumulative Loss Trigger Event with respect to that
Distribution Date.
Trust Fund: The corpus of the trust created hereunder consisting of
(i) the Mortgage Loans (excluding any entitlement to Credit Comeback Excess
Amounts) and all interest and principal received on or with respect thereto on
and 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 and all amounts deposited therein pursuant to the
applicable provisions of this Agreement; (iii) each Corridor Contract, (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; 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
44
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 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 Pool Stated Principal
Balance.
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.
Two-Year Hybrid Mortgage Loan: A Mortgage Loan having a Mortgage
Rate that is fixed for 24 months after origination thereof before such
Mortgage Rate becomes subject to adjustment.
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.
Unpaid Realized Loss Amount: For any Class of Subordinate
Certificates, the portion of the aggregate Applied Realized Loss Amount
previously allocated to that Class remaining unpaid from prior Distribution
Dates.
Voting Rights: The portion of the voting rights of all the
Certificates that is 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.
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) terms defined in Articles 8 and 9 of the UCC and
not otherwise defined in this Agreement are used as defined in those Articles;
(c) the words "hereof," "herein" and "hereunder" and words of similar import
refer to this Agreement (or the certificate, agreement or other document in
which
45
they are used) as a whole and not to any particular provision of this
Agreement (or such certificate, agreement or document); (d) 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; (e) the term "including" means "including without limitation"; (f)
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; (g) references
to any agreement refer to that agreement as amended from time to time; and (h)
references to any Person include that Person's permitted successors and
assigns.
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 Mortgage Loans, including all
interest and principal received and receivable by such Seller on or with
respect to applicable Mortgage Loans after the Cut-off Date (to the extent not
applied in computing the Cut-off Date Principal Balance thereof) or deposited
into the Certificate Account by such Seller as a Certificate Account Deposit
as provided in this Agreement, other than principal due on the applicable
Mortgage Loans on or prior to the Cut-off Date and interest accruing prior to
the Cut-off Date. CHL confirms that, concurrently with the transfer and
assignment, it has deposited into the Certificate Account the Certificate
Account Deposit.
Immediately upon the conveyance of the 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,
without recourse, all right title and interest in the Mortgage Loans.
CHL further agrees 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 Trustee on behalf of the Trust Fund, on the terms and
conditions set forth in the Corridor Contract Novation Agreement.
(b) [Reserved]
(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 Sections 2.01(a).
(d) [Reserved]
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(e) [Reserved]
(f) [Reserved]
(g) In connection with the transfer and assignment of each Mortgage
Loan, the Depositor has delivered to, and deposited with, the Co-Trustee (or,
in the case of the Delay Delivery Mortgage Loans, will deliver to, and deposit
with, the Co-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 the applicable
Seller or the originator of such Mortgage Loan, without recourse, 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 applicable Seller,
or, if the original Mortgage Note has been lost or destroyed and not
replaced, an original lost note affidavit from the applicable
Seller, stating that the original Mortgage Note was lost or
destroyed, together with a copy of the related Mortgage Note;
(ii) in the case of each Mortgage Loan that is not a MERS
Mortgage Loan, the original recorded Mortgage, and in the case of
each MERS Mortgage Loan, the original Mortgage, noting the presence
of the MIN of the Mortgage Loan and language indicating that the
Mortgage Loan is a MOM Loan if the Mortgage Loan is a MOM Loan, with
evidence of recording indicated thereon, or 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
"Asset-Backed Certificates, Series 2004-1, CWABS, Inc., by The Bank
of New York, a New York banking corporation, as trustee under the
Pooling and Servicing Agreement dated as of February 1, 2004,
without recourse" (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 together with all interim recorded assignments of such
Mortgage (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 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
47
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 Co-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 Co-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 Co-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 Co-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 Co-Trustee (x) from time to
time
48
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 Co-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 Co-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 Co-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) either Seller,
the Depositor or the Master Servicer 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 the 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 Co-Trustee shall complete the
assignment in the manner specified in clause (iii) of the second paragraph of
this Section 2.01(g) 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 Release in the form of Exhibit M, the Trustee shall complete the
assignment of the related Mortgage in the manner specified in clause (iii) of
the second paragraph of this Section 2.01(g).
So long as the Co-Trustee or its agent maintains an office in the
State of California, the Co-Trustee or its agent shall maintain possession of
and not remove or attempt to remove from the State of California any of the
Mortgage Files as to which the related Mortgaged Property is located in such
State. 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 above 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 and the Cut-off Date, CHL shall deposit or
cause to be deposited in the
49
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, CHL (on behalf of each Seller) shall
either (i) deliver to the Co-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, 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.
Section 2.02 Acceptance by Trustee of the Mortgage Loans.
(a) The Co-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 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 and CHL (on behalf of each Seller) an Initial
Certification substantially in the form annexed hereto as Exhibit G-1 to the
effect that, as to each Mortgage Loan listed in the Mortgage Loan Schedule
(other than any Mortgage Loan paid in full or any Mortgage Loan specifically
identified in such certification as not covered by such certification), the
documents described in Section 2.01(g)(i) and, in the case of each Mortgage
Loan that is not a MERS Mortgage Loan, the documents described in Section
2.01(g)(iii) with respect to such Mortgage Loans as are in the Co-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 Mortgage Loan. The Trustee agrees to execute and deliver within 30 days
after the Closing Date to the Depositor, the Master Servicer and CHL (on
behalf of each Seller) an Interim Certification substantially in the form
annexed hereto as Exhibit G-2 to the effect that, as to each Mortgage Loan
listed in the Mortgage Loan Schedule (other than any Mortgage Loan paid in
full or any Mortgage Loan specifically identified in such certification as not
covered by such certification)
50
all documents required to be delivered to the Co-Trustee pursuant to the
Agreement with respect to such 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 Mortgage Loan, and (ii) the
information set forth in items (i), (iv), (v), (vi), (viii), (xi) and (xiv) 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 and CHL (on behalf of each Seller) a Delay Delivery
Certification with respect to the Mortgage Loans substantially in the form
annexed hereto as Exhibit G-3, with any applicable exceptions noted thereon.
The Co-Trustee or the Trustee, as applicable, 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 and CHL (on behalf of each
Seller), and to any Certificateholder that so requests, a Final Certification
with respect to the 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 Co-Trustee, at the Trustee's direction, shall review
each Mortgage File with respect to the Mortgage Loans to determine that such
Mortgage File contains the following documents:
(i) the original Mortgage Note, endorsed by the applicable
Seller or the originator of such Mortgage Loan, without recourse, 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 such Seller, or, if the
original Mortgage Note has been lost or destroyed and not replaced,
an original lost note affidavit from such Seller, stating that the
original Mortgage Note was lost or destroyed, together with a copy
of the related Mortgage Note;
(ii) in the case of each Mortgage Loan that is not a MERS
Mortgage Loan, the original recorded Mortgage, and in the case of
each Mortgage Loan that is a MERS Mortgage Loan, the original
Mortgage, noting the presence of the MIN of the Mortgage Loan and
language indicating that the Mortgage Loan is a MOM Loan if the
Mortgage Loan is a MOM Loan, with evidence of recording indicated
thereon, or a copy of the Mortgage certified by the public recording
office in which 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 in the
form permitted by Section 2.01;
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(iv) the original recorded assignment or assignments of the
Mortgage together with all interim recorded assignments of such
Mortgage (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 printout of the electronic equivalent and all riders thereto.
If, in the course of such review, the Co-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 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 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 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 Co-Trustee of a
Request for Release substantially in the form of Exhibit N. No substitution
will be made in any calendar month after the Determination Date for such
month. The Purchase Price for any such Mortgage Loan shall be deposited by CHL
in the Certificate Account and, upon receipt of such deposit and certification
with respect thereto in the form of Exhibit N hereto, the Co-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 Mortgage Loan released pursuant
hereto. If pursuant to the foregoing provisions CHL repurchases a 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 Co-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 Co-Trustee, upon the
execution or receipt thereof, the originals of such
52
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 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 Co-Trustee, the Depositor
and any Certificateholder against the Sellers.
It is understood and agreed that the obligation of a Seller to
substitute for or to purchase, pursuant to Section 2.02(a), any 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 Co-Trustee, the Depositor and any
Certificateholder against the Sellers.
The Trust Fund will not acquire or hold any Mortgage Loan that would
violate the representations made by CHL in Section 2.03(b)(70), (72)(vii) or
(72)(viii).
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 and the Trustee as follows, as of the date hereof with respect to
the 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
corporate 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
53
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 in accordance with the terms hereof.
(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 and the
Trustee as follows, as of the Cut-off Date (unless otherwise indicated or the
context otherwise requires, percentages with respect to the Mortgage Loans in
the Trust Fund or in a Loan Group or Loan
54
Group are measured by the Cut-off Date Principal Balance of the Mortgage Loans
in the Trust Fund or of the Mortgage Loans in the related Loan Group or Loan
Group, as applicable):
(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 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 to perform any of its other obligations under this
Agreement in accordance with the terms hereof.
(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 has
duly authorized by all necessary corporate action on the part of CHL 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 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 by CHL, the
sale of the CHL Mortgage Loans by CHL 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 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.
(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.
55
(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 the
ability of CHL to sell the CHL Mortgage Loans or to perform any of its
other obligations under this Agreement in accordance with the terms
hereof.
(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
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 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 are delinquent in payment of
principal and interest.
(10) No Mortgage Loan that is secured by a first lien on the
related Mortgaged Property had a Loan-to-Value Ratio at origination in
excess of 100.00%.
(11) Each Group 1 Mortgage Loan, Group 2 Mortgage Loan and
Group 3 Mortgage Loan is secured by a valid and enforceable first 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, and (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.
(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.
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(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, 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, 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 first 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 either Seller, has done, by act or omission,
anything that would impair the coverage of such mortgage title insurance
policy.
(19) No Mortgage Loan was the subject of a Principal Prepayment
in full between the Closing Date and the Cut-off 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
57
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 Loans 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) Each Mortgage Note and each Mortgage is acceptable in form
to Xxxxxx Mae and Xxxxxxx Mac.
(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.
58
(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 77.51% of the Mortgage Loans in
Loan Group 1 are secured by single family detached dwellings. No more
than approximately 4.54% of the Mortgage Loans in Loan Group 1 are
secured by two- to four-family dwellings. No more than approximately
5.88% of the Mortgage Loans in Loan Group 1 are secured by condominium
units. No more than approximately 0.90% of the Mortgage Loans in Loan
Group 1 are secured by manufactured housing. No more than approximately
10.99% of the Mortgage Loans in Loan Group 1 are secured by PUDs. No less
than approximately 80.91% of the Mortgage Loans in Loan Group 2 are
secured by single family detached dwellings. No more than approximately
1.83% of the Mortgage Loans in Loan Group 2 are secured by two- to
four-family dwellings. No more than approximately 3.63% of the Mortgage
Loans in Loan Group 2 are secured by condominium units. No more than
approximately 0.10% of the Mortgage Loans in Loan Group 2 are secured by
high-rise condominium units. None of the Mortgage Loans in Loan Group 2
are secured by manufactured housing. No more than approximately 13.53% of
the Mortgage Loans in Loan Group 2 are secured by PUDs. No less than
approximately 82.12% of the Mortgage Loans in Loan Group 3 are secured by
single family detached dwellings. No more than approximately 1.88% of the
Mortgage Loans in Loan Group 3 are secured by two- to four-family
dwellings. No more than approximately 3.90% of the Mortgage Loans in Loan
Group 3 are secured by condominium units. No more than approximately
0.15% of the Mortgage Loans in Loan Group 2 are secured by high-rise
condominium units. No more than approximately 0.08% of the Mortgage Loans
in Loan Group 3 are secured by manufactured housing. No more than
approximately 11.88% of the Mortgage Loans in Loan Group 3 are secured by
PUDs.
(33) Each Mortgage Loan in Loan Group 1 was originated on or
after March 22, 2002, each Mortgage Loan in Loan Group 2 was originated
on or after August 20, 1997 and each Mortgage Loan in Loan Group 3 was
originated on or after July 2, 1997.
(34) Each Mortgage Loan that is an Adjustable Rate Mortgage
Loan, other than a Two-Year Hybrid Mortgage Loan or a Three-Year Hybrid
Mortgage Loan, had an initial Adjustment Date no later than June 1, 2004;
each Two-Year Hybrid Mortgage Loan had an initial Adjustment Date no
later than December 2, 2005; and each Three-Year Hybrid Mortgage Loan had
an initial Adjustment Date no later than January 1, 2007.
59
(35) Approximately 70.46% of the Mortgage Loans in Loan Group
1, approximately 80.86% of the Mortgage Loans in Loan Group 2 and
approximately 80.49% of the Mortgage Loans in Loan Group 3 provide for a
prepayment penalty.
(36) On the basis of representations made by the Mortgagors in
their loan applications, no more than approximately 1.69%, 1.53% and
1.54% of the Mortgage Loans in Loan Group 1, Loan Group 2 and Loan Group
3, respectively, are secured by investor properties, and no less than
approximately 97.86%, 98.03% and 98.18% of the Mortgage Loans in Loan
Group 1, Loan Group 2 and Loan Group 3 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
60
Mortgage or the related Mortgage Note; and neither 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 credit blemished quality 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 credit blemished quality 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.
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(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 Mortgage Loans in Loan
Group 1 as of the Cut-off Date ranged from 2.125% per annum to 12.750%
per annum and the weighted average Mortgage Rate as of the Cut-off Date
was 7.264% per annum. The Mortgage Rates borne by the Mortgage Loans in
Loan Group 2 as of the Cut-off Date ranged from 4.375% per annum to
13.625% per annum and the weighted average Mortgage Rate as of the
Cut-off Date was 7.207% per annum. The Mortgage Rates borne by the
Mortgage Loans in Loan Group 3 as of the Cut-off Date ranged from 4.500%
per annum to 13.750% per annum and the weighted average Mortgage Rate as
of the Cut-off Date was 7.118% per annum.
(49) [Reserved].
(50) The Mortgage Loans were selected from among the
outstanding one- to four-family mortgage loans in the Master Servicer'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) can be made. No selection was made in a manner that would
adversely affect the interests of Certificateholders.
(51) The Gross Margins on the Adjustable Rate Mortgage Loans in
Loan Group 1 range from approximately 3.000% to 12.000%, and the weighted
average Gross Margin was approximately 6.517%. The Gross Margins on the
Adjustable Rate Mortgage Loans in Loan Group 2 range from approximately
1.200% to 13.125%, and the weighted average Gross Margin was
approximately 6.907%. The Gross Margins on the Adjustable Rate Mortgage
Loans in Loan Group 3 range from approximately 3.250% to 15.250%, and the
weighted average Gross Margin was approximately 6.758%.
(52) Each of the Mortgage Loans in the Mortgage Pool has a Due
Date on or before March 1, 2004.
(53) The Mortgage Loans, individually and in the aggregate,
conform in all material respects to the descriptions thereof in the
Prospectus Supplement.
(54) There is no obligation on the part of either Seller under
the terms of the Mortgage or related Mortgage Note to make payments in
addition to those made by the Mortgagor.
(55) 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.
(56) 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.
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(57) 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).
(58) To the extent required under applicable law, each
originator and subsequent mortgagee or servicer of the Mortgage Loan
complied with all licensing requirements and was authorized to transact
and do business in the jurisdiction in which the related Mortgaged
Property is located at all times when it held or serviced the Mortgage
Loan. Any and all requirements of any federal, state or local laws or
regulations, including, without limitation, usury, truth-in-lending, real
estate settlement procedures, consumer credit protection, anti-predatory
lending, fair credit reporting, unfair collection practice, equal credit
opportunity, fair housing and disclosure laws and regulations, applicable
to the solicitation, origination, collection and servicing of such
Mortgage Loan have been complied with in all material respects; and any
obligations of the holder of the Mortgage Note, Mortgage and other loan
documents have been complied with in all material respects; servicing of
each Mortgage Loan has been in accordance with prudent mortgage servicing
standards, any applicable laws, rules and regulations and in accordance
with the terms of the Mortgage Notes, Mortgage and other loan documents,
whether such origination and servicing was done by Seller, its
affiliates, or any third party which originated the Mortgage Loan on
behalf of, or sold the Mortgage Loan to, any of them, or any servicing
agent of any of the foregoing;
(59) The methodology used in underwriting the extension of
credit for the each Mortgage Loan employs objective mathematical
principles which relate the borrower's income, assets and liabilities to
the proposed payment and such underwriting methodology does not rely on
the extent of the borrower's equity in the collateral as the principal
determining factor in approving such credit extension. Such underwriting
methodology confirmed that at the time of origination
(application/approval) the borrower had a reasonable ability to make
timely payments on the Mortgage Loan;
(60) No borrower was required to purchase any credit life,
disability, accident or health insurance product as a condition of
obtaining the extension of credit. No borrower obtained a prepaid
single-premium credit life, disability, accident or health insurance
policy in connection with the origination of the Mortgage Loan;
(61) If the Mortgage Loan provides that the interest rate on
the principal balance of the related Mortgage Loan may be adjusted, all
of the terms of the related Mortgage pertaining to interest rate
adjustments, payment adjustments and adjustments of the outstanding
principal balance have been made in accordance with the terms of the
related Mortgage Note and applicable law and are enforceable and such
adjustments will not affect the priority of the Mortgage lien;
(62) The Mortgaged Property complies with all applicable laws,
rules and regulations relating to environmental matters, including but
not limited to those relating to radon, asbestos and lead paint and
neither Seller nor, to the CHL's, the Mortgagor, has received any notice
of any violation or potential violation of such law;
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(63) There is no action, suit or proceeding pending, or to the
best of Seller's knowledge, threatened or likely to be asserted with
respect to the Mortgage Loan against or affecting Seller before or by any
court, administrative agency, arbitrator or governmental body;
(64) No action, inaction, or event has occurred and no state of
fact exists or has existed that has resulted or will result in the
exclusion from, denial of, or defense to coverage under any applicable
hazard insurance policy, irrespective of the cause of such failure of
coverage. In connection with the placement of any such insurance, no
commission, fee, or other compensation has been or will be received by
Seller or any designee of Seller or any corporation in which Seller or
any officer, director, or employee had a financial interest at the time
of placement of such insurance;
(65) Each Mortgage Loan has a fully assignable life of loan tax
service contract which may be assigned without the payment of any fee;
(66) No Mortgagor has notified CHL, and CHL has no knowledge,
of any relief requested or allowed to a Mortgagor under the Relief Act;
(67) Each Mortgage Loan was originated by a savings and loan
association, savings bank, commercial bank, credit union, insurance
company, or mortgage banking company which is supervised and examined by
a federal or state authority, or by a mortgagee approved by the Secretary
of Housing and Urban Development pursuant to Sections 2.03 and 2.11 of
the National Housing Act;
(68) Each Mortgage Loan was (A) originated no earlier than six
months prior to the time the Seller purchased such Mortgage Loan pursuant
to a mortgage loan purchase agreement or other similar agreement and (B)
underwritten or reunderwritten by the Seller in accordance with the
Seller's underwriting guidelines in effect at the time the loan was
underwritten or reunderwritten, as applicable;
(69) Each Mortgage Loan, at the time it was originated and as
of the Closing Date, complied in all material respects with applicable
local, state and federal laws, including, but not limited to, all
predatory and abusive lending laws;
(70) None of the Mortgage Loans are "high cost" loans as
defined by applicable federal, state and local predatory and abusive
lending laws;
(71) Each Prepayment Charge is enforceable and was originated
in compliance with all applicable federal, state and local laws; and
(72) Representations and Warraties relating to the Group 1
Mortgage Loans:
(i) Each Group 1 Mortgage Loan is in compliance with the
anti-predatory lending eligibility for purchase requirements of
Xxxxxx Mae's Selling Guide.
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(ii) No Group 1 Mortgage Loan is subject to the requirements of
the Home Ownership and Equity Protection Act of 1994.
(iii) No Group 1 Mortgage Loan is a "High-Cost Home Loan" as
defined in the Georgia Fair Lending Act, as amended (the "Georgia
Act"). No Group 1 Mortgage Loan subject to the Georgia Act and
secured by owner occupied real property or an owner occupied
manufactured home located in the State of Georgia was originated (or
modified) on or after October 1, 2002 through and including March 6,
2003.
(iv) No Group 1 Mortgage Loan is a "High-Cost Home Loan" as
defined in New York Banking Law 6-1.
(v) No Group 1 Mortgage Loan is a "High-Cost Home Loan" as
defined in the Arkansas Home Loan Protection Act effective July 16,
2003 (Act 1340 of 2003).
(vi) No Group 1 Mortgage Loan is a "High-Cost Home Loan" as
defined in the Kentucky high-cost home loan statute effective June
24, 2003 (Ky. Rev. Stat. Section 360.100).
(vii) No Group 1 Mortgage Loan is a "High-Cost Home Loan" as
defined in the New Jersey Home Ownership Act effective November 27,
2003 (N.J.S.A. 46:10B-22 et seq.).
(viii) No Group 1 Mortgage Loan is a "High-Cost Home Loan" as
defined in the New Mexico Home Loan Protection Act effective January
1, 2004 (N.M. Stat. Xxx. xx.xx. 58-21A-1 et seq.).
(ix) No Group 1 Mortgage Loan is a "High-Risk Home Loan" as
defined in the Illinois High-Risk Home Loan Act effective January 1,
2004 (815 Ill. Comp. Stat. 137/1 et seq.).
(x) No borrower was encouraged or required to select a Group 1
Mortgage Loan product offered by the Mortgage Loan's originator
which is a higher cost product designed for less creditworthy
borrowers, unless at the time of such Mortgage Loan's origination,
such borrower did not qualify taking into account credit history and
debt-to-income ratios for a lower-cost credit product then offered
by such Mortgage Loan's originator or any affiliate of such Mortgage
Loan's originator. If, at the time of loan application, the borrower
may have qualified for a for a lower-cost credit product then
offered by any mortgage lending affiliate of such Mortgage Loan's
originator, such Mortgage Loan's originator referred the borrower's
application to such affiliate for underwriting consideration.
(xi) With respect to any Group 1 Mortgage Loan that contains a
provision permitting imposition of a premium upon a prepayment prior
to maturity: (i) prior to the loan's origination, the borrower
agreed to such premium
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in exchange for a monetary benefit, including but not limited to a
rate or fee reduction, (ii) prior to the loan's origination, the
borrower was offered the option of obtaining a mortgage loan that
did not require payment of such a premium, (iii) the prepayment
premium is disclosed to the borrower in the loan documents pursuant
to applicable state and federal law, and (iv) notwithstanding any
state or federal law to the contrary, the Servicer shall not impose
such prepayment premium in any instance when the mortgage debt is
accelerated as the result of the borrower's default in making the
loan payments.
(xii) No proceeds from any Group 1 Mortgage Loan were used to
purchase single premium credit insurance policies as part of the
origination of, or as a condition to closing, such Mortgage Loan.
(xiii) All points and fees related to each Group 1 Mortgage
Loan were disclosed in writing to the borrower in accordance with
applicable state and federal law and regulation. Except in the case
of a Group 1 Mortgage Loan in an original principal amount of less
than $60,000 which would have resulted in an unprofitable
origination, no borrower in respect of a Group 1 Mortgage Loan was
charged "points and fees" (whether or not financed) in an amount
greater than 5% of the principal amount of such loan, such 5%
limitation is calculated in accordance with Xxxxxx Mae's
anti-predatory lending requirements as set forth in the Xxxxxx Mae
Selling Guide.
(xiv) All fees and charges (including finance charges) and
whether or not financed, assessed, collected or to be collected in
connection with the origination and servicing of each Group 1
Mortgage Loan has been disclosed in writing to the borrower in
accordance with applicable state and federal law and regulation; and
(xv) The Servicer will transmit full-file credit reporting data
for each Group 1 Mortgage Loan pursuant to Xxxxxx Xxx Guide
Announcement 95-19 and that for each Group 1 Mortgage Loan, Servicer
agrees it shall report one of the following statuses each month as
follows: new origination, current, delinquent (30-, 60-, 90-days,
etc.), foreclosed, or charged-off.
(c) The Liquidity Trust hereby represents and warrants to the
Depositor and the Trustee as follows, as of the Cut-off Date:
(1) The Liquidity Trust 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 to be
conducted by the Liquidity Trust in any state in which a Mortgaged
Property securing a Liquidity Trust 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
Liquidity
66
Trust Mortgage Loan, to sell the Liquidity Trust 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 Liquidity Trust has the full company power and
authority to sell each Liquidity Trust 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
company action on the part of the Liquidity Trust 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 Liquidity Trust,
enforceable against the Liquidity Trust 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
Liquidity Trust, the sale of the Liquidity Trust Mortgage Loans by the
Liquidity Trust 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 Liquidity Trust 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 the Liquidity Trust 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 Liquidity Trust 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 Liquidity Trust of
any court, regulatory body, administrative agency or governmental body
having jurisdiction over the Liquidity Trust; and the Liquidity Trust 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 Liquidity Trust's ability to perform or meet
any of its obligations under this Agreement.
(4) No litigation is pending or, to the best of the Liquidity
Trust's knowledge, threatened, against the Liquidity Trust that would
materially and adversely affect the execution, delivery or enforceability
of this Agreement or the ability of the Liquidity Trust to sell the
Liquidity Trust Mortgage Loans or to perform any of its other obligations
under this Agreement in accordance with the terms hereof.
(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 Liquidity Trust of, or compliance by the Liquidity
Trust with, this Agreement or the consummation of the transactions
contemplated hereby, or if any such consent, approval, authorization or
order is required, the Liquidity Trust has obtained the same.
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(6) The Liquidity Trust will treat the transfer of the
Liquidity Trust Mortgage Loans to the Depositor as a sale of the
Liquidity Trust Mortgage Loans for all tax, accounting and regulatory
purposes.
(7) Immediately prior to the assignment of each Liquidity Trust
Mortgage Loan to the Depositor, the Liquidity Trust had good title to,
and was the sole owner of, such the Liquidity Trust 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) Upon discovery by any of the parties hereto of a breach of a
representation or warranty set forth in Section 2.03(a) or (b) that materially
and adversely affects the interests of the Certificateholders in any Mortgage
Loan, the party discovering such breach shall give prompt notice thereof to
the other parties and the NIM 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) and (b) 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, 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 Release substantially in the form of Exhibit
M, 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 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.
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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 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 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)
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
Co-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 either 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 Release in the form of Exhibit N hereto,
the Co-Trustee
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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.
(e) The representations and warranties set forth in this Section
2.03 shall survive delivery of the respective Mortgage Files to the Co-Trustee
for the benefit of the Certificateholders 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:
(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.
(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 has duly authorized, by
all necessary corporate action on its part, the execution, delivery and
performance of this Agreement; and this Agreement, assuming the due
authorization, execution and delivery hereof by the other parties hereto,
constitutes a legal, valid and binding obligation of the Depositor,
enforceable against the 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 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,
70
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 the ability of the Depositor to perform its
obligations under this Agreement in accordance with the terms hereof.
(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 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, as applicable, and
following the transfer of the Mortgage Loans to it by the Sellers, the
Depositor had good title to the Mortgage Loans, and the related Mortgage Notes
were subject to no offsets, claims, defenses or counterclaims.
It is understood and agreed that the representations and warranties
set forth in the two immediately preceding paragraphs shall survive delivery
of the Mortgage Files to the Co-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 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(d).
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, 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
71
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, either 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 5 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(d) 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 to the
best of its ability, to the end that the interests of the Holders of the
Certificates may be adequately and effectively protected.
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; and
(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.
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ARTICLE III.
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01 Master Servicer to Service Mortgage Loans.
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. 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 and other Liquidation
Proceeds, 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 or (ii) result in the imposition of any tax under section
860(a) or 860(d) of the Code, 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.
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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 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.
In the event that a shortfall in any collection on or liability with
respect to any Mortgage Loan results from or is attributable to adjustments to
Mortgage Rates, Monthly Payments or 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, 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
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delivery of such instruments. The Master Servicer 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 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 and the Trustee
in Respect of the Master Servicer.
None of the Trustee, the Seller, the Certificateholders, the NIM
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 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 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 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 or the
Trust Fund, and in either case, the Depositor, the NIM Insurer or the Trustee,
as the case may be, shall use its best efforts to assure the confidentiality
of any such disseminated non-public
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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),
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), 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; Seller Shortfall
Interest Requirement.
(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
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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 payments due on a Mortgage Note, if the aggregate number of
outstanding Mortgage Loans that have been granted such waivers or extensions
exceeds 5% of the aggregate number of 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 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 permitted under Section 3.15 to the
extent not previously paid to or withheld by the Master Servicer);
(3) all Insurance Proceeds;
(4) all Liquidation Proceeds, 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;
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(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 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.
(c) The Trustee shall establish and maintain, on behalf of the
Certificateholders, 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); and
(2) any amount required to be deposited by the Master Servicer
pursuant to Section 3.05(e) in connection with any losses on Permitted
Investments.
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) [Reserved].
(e) Each institution that maintains the Certificate Account or the
Distribution 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
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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 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, 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 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. 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 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 or the
Distribution 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, 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, each Rating Agency and the Depositor of any proposed
change of the location of the Distribution 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
Section 8.01 and 8.02(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.
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
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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 and
the Trustee 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) 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;
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(iii) to pay to the applicable Seller any Credit Comeback
Excess Amount;
(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
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 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 or 3.12, all amounts received thereon
and not taken into account in determining the related Stated
Principal Balance 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;
(x) to withdraw pursuant to Section 3.05 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
and Principal Remittance Amount for each Loan Group, 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
$34,027.06. 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
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applicable Treasury regulations and shall not be part of any REMIC created
under this Agreement. Amounts on deposit in the Principal Reserve Fund shall
not be invested.
On the Business Day before the March 2004 Distribution Date, the
Trustee shall transfer $34,027.06 from the Principal Reserve Fund to the
Distribution Account the funds on deposit in the Principal Reserve Fund and
shall distribute such amount to the Certificates on the Distribution Date
pursuant to Section 4.04(b).
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) and (vi) above. Prior to making any withdrawal from the Certificate
Account pursuant to subclause (iii), the Master Servicer shall deliver to the
Trustee 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 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 last paragraph of
Section 8.11). 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 (v) 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 (vi) being
limited to amounts not otherwise reimbursed to the Trustee pursuant
to Section 3.08(a)(iv) hereof; and
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(vi) 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 last 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 pursuant to Section 3.05 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]
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 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
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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.
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 Co-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,
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the Mortgage Rate, the amount of the Scheduled Payment, the Maximum Mortgage
Rate, the Minimum Mortgage Rate, the Gross Margin, the Periodic Rate Cap, the
Adjustment Date 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) the modification is in lieu of a
refinancing and (ii) the Mortgage Rate on the Modified Mortgage Loan is
approximately a prevailing market rate for newly-originated mortgage loans
having similar terms and (iii) the Master Servicer purchases the Modified
Mortgage Loan from the Trust Fund as described below. 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 the Master
Servicer 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 the Master Servicer. 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. The Master Servicer shall deposit the Purchase Price
for any Modified Mortgage Loan in 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 the Master Servicer 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 the Master Servicer any Modified Mortgage Loan previously
transferred and assigned pursuant hereto. The Master Servicer 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 (b), any holding of a
Modified Mortgage Loan by the Trust Fund or any purchase of a Modified
Mortgage Loan by the Master Servicer (but such obligation shall not prevent
the Master Servicer or any other appropriate Person from in good faith
contesting any such tax in appropriate proceedings and shall not prevent the
Master Servicer from withholding payment of such tax, if permitted by law,
pending the outcome of such proceedings). The Master Servicer shall have no
right of reimbursement for any amount paid pursuant to the foregoing
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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 the Master Servicer.
(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, 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.
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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,
net of any payment to the Master Servicer as provided above, shall be
deposited in the Certificate Account on the next succeeding Determination Date
following receipt thereof 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 Loan, as well as any recovery
resulting from a partial collection of Liquidation Proceeds or any income from
an REO Property, will be applied
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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 Release from the Master Servicer in
the form of Exhibit N hereto, 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.
(e) Notwithstanding the other provisions of this Section 3.12, if
any Mortgage Loan that is more than 59 days Delinquent as of the Closing Date
(hereafter a "Foreclosure Restricted Mortgage Loan") comes into and continues
in default, the Master Servicer will nevertheless not complete foreclosure
upon, accept a deed in-lieu of foreclosure of, or otherwise comparably convert
the ownership of any property securing such Foreclosure Restricted Mortgage
Loan (hereafter, "Foreclosure Restricted Property") if the value of such
Foreclosure Restricted Property (measured in all cases as the outstanding
principal balance of the Foreclosure Restricted Mortgage Loan plus accrued
interest), when added to the value of all other Foreclosure Restricted
Property then held as part of the Trust Fund, would exceed 3/4 of one percent
(.75%) of the aggregate Stated Principal Balance of all Mortgage Loans then
held as part of the Trust Fund. Moreover, if, as of the next Distribution
Date, the value of all Foreclosure Restricted Property held as part of the
Trust Fund will exceed one percent (1.00%) of the aggregate Stated Principal
Balance of all Mortgage Loans held as part of the Trust Fund, then prior to
such Distribution Date, the Master Servicer will sell as much Foreclosure
Restricted
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Property as necessary so that as of such Distribution Date, the value of all
Foreclosure Restricted Property held as part of the Trust Fund will be less
one percent (1.00%) of the aggregate Stated Principal Balance of all Mortgage
Loans held as part of the Trust Fund. For purposes of this Section 3.12, any
Mortgage Loan transferred to the Trust Fund after the Closing Date that is
more than 59 days Delinquent as of the day of such transfer will also be a
Foreclosure Restricted Mortgage Loan.
Section 3.13 Co-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 Co-Trustee by delivering a Request for Release substantially in the form
of Exhibit N. Upon receipt of such request, the Co-Trustee shall promptly
release the related Mortgage File to the Master Servicer, and the Co-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 Co-Trustee shall, upon
delivery to the Co-Trustee of a Request for Release in the form of Exhibit N
signed by a Servicing Officer, release the Mortgage File 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 Co-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 Co-Trustee shall
deliver the Request for Release to 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 Co-Trustee to be
returned to the Co-Trustee within 21 calendar days after possession thereof
shall have been released by the Co-Trustee unless (i) the Mortgage Loan has
been liquidated and the Liquidation Proceeds relating
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to the Mortgage Loan have been deposited in the Certificate Account, and the
Master Servicer shall have delivered to the Co-Trustee a Request for Release
in the form of Exhibit N 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 Co-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 or Insurance
Proceeds 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, 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,
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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.
The Master Servicer shall deliver to the Depositor and the Trustee
on or before the 80th day after the end of the Master Servicer's fiscal year,
commencing with its 2004 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 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
throughout such year, or, if there has been a default in the fulfillment of
any such obligation, specifying each such default known to such officer and
the nature and status thereof and (iii) to the best of such officer's
knowledge, each Subservicer has fulfilled all its obligations under its
Subservicing Agreement throughout such year, or, if there has been a default
in the fulfillment of any such obligation specifying each such default known
to such officer and the nature and status thereof. 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 Annual Independent Public Accountants' Servicing
Statement; Financial Statements.
On or before the later of (i) the 80th day after the end of the
Master Servicer's fiscal year, commencing with its 2004 fiscal year or (ii)
within 30 days of the issuance of the annual audited financial statements
beginning with the audit for the period ending in 2004, the Master Servicer at
its expense shall cause a nationally recognized firm of independent public
accountants (who may also render other services to the Master Servicer, CHL or
any affiliate thereof) that is a member of the American Institute of Certified
Public Accountants to furnish a report to the Trustee, the Depositor and CHL
in compliance with the Uniform Single Attestation Program for Mortgage
Bankers. Copies of such report shall be provided by the Trustee to any
Certificateholder or Certificate Owner upon request at the Master Servicer's
expense, provided
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such report is delivered by the Master Servicer to the Trustee. Upon written
request, the Master Servicer shall provide to the Certificateholders or
Certificate Owners its publicly available annual financial statements (or the
Master Servicer's parent company's publicly available annual financial
statements, as applicable), if any, promptly after they become available.
Section 3.19 The Corridor Contracts.
CHL shall assign all of its right, title and interest in and to the
interest rate corridor transactions evidenced by the Corridor Contracts to,
and shall cause all of its obligations in respect of such transactions to be
assumed by, the Trustee on behalf of the Trust Fund, on the terms and
conditions set forth in the Corridor Contract Novation Agreement. The Corridor
Contracts will be assets of the Trust Fund but will not be an asset of any
REMIC. The Master Servicer, on behalf of the Trustee, shall deposit any
amounts received from time to time with respect to any Corridor Contract into
the Carryover Reserve Fund.
The Master Servicer, on behalf of the Trustee, shall prepare and
deliver any notices required to be delivered under a Corridor Contract.
The Master Servicer, on behalf of the Trustee, shall act as
calculation agent and/or shall terminate a Corridor Contract, in each case
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 Trustee or the Master Servicer for
the benefit of the Trust Fund an amount in respect of such termination. Any
amounts 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 applicable Classes of Certificates as provided in Section 4.04(b) on the
Distribution Dates following such termination to and including the applicable
Corridor Contract Termination Date, but shall not be available for
distribution to the Class C Certificates pursuant to Section 4.08(c) or to CHL
pursuant to Section 4.08(c) until such applicable Corridor Contract
Termination Date. On the Corridor Contract Termination Date, after all other
distributions on such date, if any such amounts in respect of early
termination of any of the Corridor Contracts remain in the Carryover Reserve
Fund, such amounts shall be distributed by the Trustee to the Class C
Certificates.
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) 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
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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, 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. 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 telecopy 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 telecopy by the close of business on any
Master
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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 the related Mortgaged Property or
related REO Property has been liquidated 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 telecopy), 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 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
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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,
either Seller, the Trust Fund or the Certificateholders.
Section 4.03 [Reserved]
Section 4.04 Distributions.
(a) Distributions of Interest Funds. On each Distribution Date, the
Interest Funds for such Distribution Date with respect to each Loan Group
shall be allocated by the Trustee from the Distribution Account in the
following order of priority:
(i) concurrently:
(1) from Interest Funds for Loan Group 1, to the Class 1-A
Certificates, the Current Interest and Interest Carry Forward
Amount for each such Class and such Distribution Date,
(2) from Interest Funds for Loan Group 2 to the Class 2-A
Certificates, the Current Interest and Interest Carry Forward
Amount for such Class and such Distribution Date, and
(3) from Interest Funds for Loan Group 3, to the Class 3-A
Certificates, the Current Interest and Interest Carry Forward
Amount for such Class and such Distribution Date,
(ii) from the remaining Interest Funds for all Loan Groups to
each Class of Senior Certificates, any remaining Current Interest
and Interest
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Carryforward Amount not paid pursuant to clauses (a)(i)(1),
(a)(i)(2) and (a)(i)(3) of this Section 4.04, pro rata, based on the
Certificate Principal Balances thereof, to the extent needed to pay
any Current Interest and Interest Carryforward Amount for each such
Class; provided that Interest Funds remaining after such allocation
to pay any Current Interest and Interest Carryforward Amount based
on the Certificate Principal Balances of the Certificates will be
distributed to each Class of Senior Certificates with respect to
which there remains any unpaid Current Interest and Interest
Carryforward Amount (after the distribution based on Certificate
Principal Balances), pro rata, based on the amount of such remaining
unpaid Current Interest and Interest Carryforward Amount,
(iii) from the remaining Interest Funds for all three Loan
Groups in the following order of priority:
(a) to the Class M-1 Certificates, the Current Interest
for such Class and such Distribution Date
(b) to the Class M-2 Certificates, the Current Interest
for such Class and such Distribution Date,
(c) to the Class M-3 Certificates, the Current Interest
for such Class and such Distribution Date,
(d) to the Class M-4 Certificates, the Current Interest
for such Class and such Distribution Date,
(e) to the Class M-5 Certificates, the Current Interest
for such Class and such Distribution Date,
(f) to the Class M-6 Certificates, the Current Interest
for such Class and such Distribution Date,
(g) to the Class M-7 Certificates, the Current Interest
for such Class and such Distribution Date,
(h) to the Class M-8 Certificates, the Current Interest
for such Class and such Distribution Date,
(i) to the Class M-9 Certificates, the Current Interest
for such Class and such Distribution Date,
(j) to the Class B Certificates, the Current Interest for
such Class and such Distribution Date, and
(k) any remainder, as part of the Excess Cashflow.
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(b) On each Distribution Date, the Principal Distribution Amounts
for such Distribution Date with respect to the Loan Groups shall be allocated
by the Trustee from the Distribution Account in the following order of
priority:
(1) with respect to any Distribution Date prior to the Stepdown
Date or on which a Trigger Event is in effect:
(A) concurrently:
(i) from the Principal Distribution Amount for Loan Group 1,
sequentially:
(a) to the Class A-R Certificates until the Certificate
Principal Balance thereof is reduced to zero,
(b) to the Class 1-A Certificates until the Certificate
Principal Balance thereof is reduced to zero, and
(c) from any remaining Principal Distribution Amount for
Loan Group 1, pro rata based on the Certificate Principal
Balances thereof, concurrently to (I) the Class 2-A
Certificates (after the distribution of the Principal
Distribution Amount from Loan Group 2 as provided in clause
(1)(A)(ii)(a) below) until the Certificate Principal Balance
thereof is reduced to zero, and (II) the Class 3-A Certificates
(after the distribution of the Principal Distribution Amount
from Loan Group 3 as provided in clause (1)(A)(iii)(a) below),
until the Certificate Principal Balance thereof is reduced to
zero,
(ii) from the Principal Distribution Amount for Loan Group 2,
sequentially:
(a) to the Class 2-A Certificates until the Certificate
Principal Balance thereof is reduced to zero, and
(b) from any remaining Principal Distribution Amount for
Loan Group 2, pro rata based on the Certificate Principal
Balances thereof, concurrently to (I) the Class 1-A
Certificates (after the distribution of the Principal
Distribution Amount from Loan Group 1 as provided in clause
(1)(A)(i)(b) above) until the Certificate Principal Balance
thereof is reduced to zero, and (II) the Class 3-A Certificates
(after the distribution of the Principal Distribution Amount
from Loan Group 3 as provided in clause (1)(A)(iii)(a) below),
until the Certificate Principal Balance thereof is reduced to
zero,
(iii) from the Principal Distribution Amount for Loan Group 3,
sequentially:
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(a) to the Class 3-A Certificates until the Certificate
Principal Balance thereof is reduced to zero, and
(b) from any remaining Principal Distribution Amount for
Loan Group 3, pro rata based on the Certificate Principal
Balances thereof, concurrently to (I) the Class 1-A
Certificates (after the distribution of the Principal
Distribution Amount from Loan Group 1 as provided in clause
(1)(A)(i)(b) above) until the Certificate Principal Balance
thereof is reduced to zero, and (II) the Class 2-A Certificates
(after the distribution of the Principal Distribution Amount
from Loan Group 2 as provided in clause (1)(A)(ii)(a) above),
until the Certificate Principal Balance thereof is reduced to
zero,
(B) the remaining Principal Distribution Amount for all three
Loan Groups in the following order of priority:
(i) to the Class M-1 Certificates, until the Certificate
Principal Balance thereof is reduced to zero,
(ii) to the Class M-2 Certificates, until the Certificate
Principal Balance thereof is reduced to zero,
(iii) to the Class M-3 Certificates, until the Certificate
Principal Balance thereof is reduced to zero,
(iv) to the Class M-4 Certificates, until the Certificate
Principal Balance thereof is reduced to zero,
(v) to the Class M-5 Certificates, until the Certificate
Principal Balance thereof is reduced to zero,
(vi) to the Class M-6 Certificates, until the Certificate
Principal Balance thereof is reduced to zero,
(vii) to the Class M-7 Certificates, until the Certificate
Principal Balance thereof is reduced to zero,
(viii) to the Class M-8 Certificates, until the Certificate
Principal Balance thereof is reduced to zero,
(ix) to the Class M-9 Certificates, until the Certificate
Principal Balance thereof is reduced to zero,
(x) to the Class B Certificates, until the Certificate
Principal Balance thereof is reduced to zero, and
(xi) any remainder as part of the Excess Cashflow.
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(2) For each Distribution Date on or after the Stepdown Date
and so long as a Trigger Event is not in effect, from the Principal
Distribution Amounts for Loan Group 1, Loan Group 2 and Loan Group 3,
sequentially:
(A) in an amount up to the Senior Principal Distribution Target
Amount, pro rata based on the related Senior Principal Distribution
Allocation Amount for each such Class of Certificates, concurrently,
to (I) the Class 1-A Certificates in an amount up to the Class 1-A
Principal Distribution Amount until the Certificate Principal
Balance thereof is reduced to zero, (II) the Class 2-A Certificates
in an amount up to the Class 2-A Principal Distribution Amount until
the Certificate Principal Balance thereof is reduced to zero and
(III) the Class 3-A Certificates in an amount up to the Class 3-A
Principal Distribution Amount until the Certificate Principal
Balance thereof is reduced to zero; provided, however, that any
remaining unpaid Senior Principal Distribution Target Amount will be
distributed pro rata to each Class of remaining Senior Certificates
based on their remaining respective Certificate Principal Balances
after distributions from (I), (II) and (III) above,
(B) to the Class M-1 Certificates, the Class M-1 Principal
Distribution Amount until the Certificate Principal Balance thereof
is reduced to zero,
(C) to the Class M-2 Certificates, the Class M-2 Principal
Distribution Amount until the Certificate Principal Balance thereof
is reduced to zero,
(D) to the Class M-3 Certificates, the Class M-3 Principal
Distribution Amount until the Certificate Principal Balance thereof
is reduced to zero,
(E) to the Class M-4 Certificates, the Class M-4 Principal
Distribution Amount until the Certificate Principal Balance thereof
is reduced to zero,
(F) to the Class M-5 Certificates, the Class M-5 Principal
Distribution Amount until the Certificate Principal Balance thereof
is reduced to zero,
(G) to the Class M-6 Certificates, the Class M-6 Principal
Distribution Amount until the Certificate Principal Balance thereof
is reduced to zero,
(H) to the Class M-7 Certificates, the Class M-7 Principal
Distribution Amount until the Certificate Principal Balance thereof
is reduced to zero,
(I) to the Class M-8 Certificates, the Class M-8 Principal
Distribution Amount until the Certificate Principal Balance thereof
is reduced to zero,
(J) to the Class M-9 Certificates, the Class M-9 Principal
Distribution Amount until the Certificate Principal Balance thereof
is reduced to zero,
(K) to the Class B Certificates, the Class B Principal
Distribution Amount, until the Certificate Principal Balance thereof
is reduced to zero, and
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(L) any remainder as part of the Excess Cashflow.
(c) With respect to any Distribution Date, any Excess Cashflow will
be paid to the Classes of Certificates in the following order of priority, in
each case to the extent of remaining Excess Cashflow:
(1) to the Certificateholders of the Class 1-A, Class 2-A,
Class 3-A, Class X-0, Xxxxx X-0, Class M-3, Class M-4, Class M-5, Class
M-6, Class M-7, Class M-8, Class M-9 and Class B Certificates then
entitled to receive distributions in respect of principal, in an
aggregate amount equal to the Extra Principal Distribution Amounts for
the Loan Groups, payable to such holders as part of the Principal
Distribution Amount pursuant to Section 4.04(b) above;
(2) to the Class M-1 Certificateholders, in an amount equal to
the Interest Carry Forward Amount for such Class and Distribution Date;
(3) to the Class M-1 Certificateholders, in an amount equal to
the Unpaid Realized Loss Amount for such Class and Distribution Date;
(4) to the Class M-2 Certificateholders, in an amount equal to
the Interest Carry Forward Amount for such Class and Distribution Date;
(5) to the Class M-2 Certificateholders, in an amount equal to
the Unpaid Realized Loss Amount for such Class and Distribution Date;
(6) to the Class M-3 Certificateholders, in an amount equal to
the Interest Carry Forward Amount for such Class and Distribution Date;
(7) to the Class M-3 Certificateholders, in an amount equal to
the Unpaid Realized Loss Amount for such Class and Distribution Date;
(8) to the Class M-4 Certificateholders, in an amount equal to
the Interest Carry Forward Amount for such Class and Distribution Date;
(9) to the Class M-4 Certificateholders, in an amount equal to
the Unpaid Realized Loss Amount for such Class and Distribution Date;
(10) to the Class M-5 Certificateholders, in an amount equal to
the Interest Carry Forward Amount for such Class and Distribution Date;
(11) to the Class M-5 Certificateholders, in an amount equal to
the Unpaid Realized Loss Amount for such Class and Distribution Date;
(12) to the Class M-6 Certificateholders, in an amount equal to
the Interest Carry Forward Amount for such Class and Distribution Date;
(13) to the Class M-6 Certificateholders, in an amount equal to
the Unpaid Realized Loss Amount for such Class and Distribution Date;
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(14) to the Class M-7 Certificateholders, in an amount equal to
the Interest Carry Forward Amount for such Class and Distribution Date;
(15) to the Class M-7 Certificateholders, in an amount equal to
the Unpaid Realized Loss Amount for such Class and Distribution Date;
(16) to the Class M-8 Certificateholders, in an amount equal to
the Interest Carry Forward Amount for such Class and Distribution Date;
(17) to the Class M-8 Certificateholders, in an amount equal to
the Unpaid Realized Loss Amount for such Class and Distribution Date;
(18) to the Class M-9 Certificateholders, in an amount equal to
the Interest Carry Forward Amount for such Class and Distribution Date;
(19) to the Class M-9 Certificateholders, in an amount equal to
the Unpaid Realized Loss Amount for such Class and Distribution Date;
(20) to the Class B Certificateholders, in an amount equal to
the Interest Carry Forward Amount for such Class and Distribution Date;
(21) to the Class B Certificateholders, in an amount equal to
the Unpaid Realized Loss Amount for such Class and Distribution Date;
(22) to the Carryover Reserve Fund and from the Carryover
Reserve Fund, concurrently to each Class of Senior Certificates (other
than the Class A-R Certificates) and Subordinate Certificates (after
application of amounts received under any applicable Corridor Contract to
cover Net Rate Carryover), pro rata based on the Certificate Principal
Balances thereof, to the extent needed to pay any unpaid Net Rate
Carryover for each such Class; and then any Excess Cashflow remaining
after such allocation to pay Net Rate Carryover based on the Certificate
Principal Balances of the Certificates will be distributed to each Class
of Senior and Subordinate Certificates with respect to which there
remains any unpaid Net Rate Carryover, pro rata, based on the amount of
such unpaid Net Rate Carryover;
(23) to the to the Carryover Reserve Fund, in an amount equal
to the Required Secondary Carryover Reserve Fund Deposit (after giving
effect to other deposits and withdrawals therefrom on such Distribution
Date without regard to any excess Corridor Contract proceeds);
(24) to the Class C Certificateholders, the Class C
Distributable Amount for such Distribution Date; and
(25) to the Class A-R Certificates
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(d) On each Distribution Date on or prior to each Corridor Contract
Termination Date, amounts received by the Trustee in respect of each Corridor
Contract for such Distribution Date will be withdrawn from the Carryover
Reserve Fund and distributed:
(1) in the case of any such amounts received on the Class 1-A
Corridor Contract, to the Class 1-A Certificates to the extent needed to
pay any Net Rate Carryover with respect to such Class;
(2) in the case of any such amounts received on the Class 2-A
Corridor Contract, to the Class 2-A Certificates to the extent needed to
pay any Net Rate Carryover with respect to such Class;
(3) in the case of any such amounts received on the Class 3-A
Corridor Contract, to the Class 3-A Certificates to the extent needed to
pay any Net Rate Carryover with respect to such Class;
(4) in the case of any such amounts received on the Subordinate
Corridor Contract, concurrently to each Class of Subordinate
Certificates, pro rata, based on the Certificate Principal Balances
thereof, to the extent needed to pay any Net Rate Carryover for each such
Class; and then, any amounts remaining after such allocation to pay Net
Rate Carryover based on the Certificate Principal Balances of the
Subordinate Certificates will be distributed to each Class of Subordinate
Certificates to the extent needed to pay any remaining unpaid Net Rate
Carryover, pro rata, based on the amount of such remaining unpaid Net
Rate Carryover; and
(5) any remaining amounts to the holders of the Class C
Certificates, unless a Corridor Contract is subject to early termination,
in which case any early termination payments received on such Corridor
Contract shall be deposited by the Trustee in the Carryover Reserve Fund
to cover any Net Rate Carryover on the Certificates entitled thereto on
future Distribution Dates until the applicable Corridor Contract
Termination Date.
(e) To the extent that a Class of Interest Bearing Certificates
receives interest in excess of the Net Rate Cap, such interest 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 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 and paid to
the Class P Certificates. On the Class P Principal Distribution Date, the
Trustee shall make the $100.00 distribution to the Class P Certificates as
specified in Section 3.08.
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(g) On each Distribution Date, the Trustee shall allocate the
Applied Realized Loss Amount to reduce the Certificate Principal Balances of
the Subordinate Certificates in the following order of priority:
(1) to the Class B Certificates until the Certificate Principal
Balance thereof is reduced to zero;
(2) to the Class M-9 Certificates until the Certificate
Principal Balance thereof is reduced to zero;
(3) to the Class M-8 Certificates until the Certificate
Principal Balance thereof is reduced to zero;
(4) to the Class M-7 Certificates until the Certificate
Principal Balance thereof is reduced to zero;
(5) to the Class M-6 Certificates until the Certificate
Principal Balance thereof is reduced to zero;
(6) to the Class M-5 Certificates until the Certificate
Principal Balance thereof is reduced to zero;
(7) to the Class M-4 Certificates until the Certificate
Principal Balance thereof is reduced to zero;
(8) to the Class M-3 Certificates until the Certificate
Principal Balance thereof is reduced to zero;
(9) to the Class M-2 Certificates until the Certificate
Principal Balance thereof is reduced to zero; and
(10) to the Class M-1 Certificates until the Certificate
Principal Balance thereof is reduced to zero.
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 5 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.
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On or before 5:00 p.m. Pacific time on the second Business Day
following each Determination 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 (including, without limitation, the actual mortgage rate for
each Credit Comeback Loan) such as to permit the Trustee to prepare the
Monthly Statement to Certificateholders 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) Not later than each Distribution Date, the Trustee shall prepare
and cause to be forwarded by first class mail to each Holder of a Class of
Certificates of the Trust Fund, the Master Servicer, each Seller and the
Depositor a statement setting forth for the Certificates:
(1) the amount of the related distribution to Holders of each
Class allocable to principal, separately identifying (A) the aggregate
amount of any Principal Prepayments included therein and (B) the
aggregate of all scheduled payments of principal included therein;
(2) the amount of such distribution to Holders of each Class
allocable to interest;
(3) any Interest Carry Forward Amount for each Class;
(4) the Certificate Principal Balance of each Class after
giving effect (i) to all distributions allocable to principal on such
Distribution Date and (ii) the allocation of any Applied Realized Loss
Amounts for such Distribution Date;
(5) the aggregate of the Stated Principal Balance of the
Mortgage Loans for the Mortgage Pool and each Loan Group;
(6) the related amount of the Servicing Fees paid to or
retained by the Master Servicer for the related Due Period;
(7) the Pass-Through Rate for each Class of Certificates with
respect to the current Accrual Period;
(8) the Net Rate Carryover paid on any Class of Certificates on
such Distribution Date and any Net Rate Carryover remaining on any Class
of Certificates on such Distribution Date;
(9) the amount of Advances for each Loan Group included in the
distribution on such Distribution Date;
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(10) the number and aggregate principal amounts of Mortgage
Loans in each Loan Group: (A) Delinquent (exclusive of Mortgage Loans in
foreclosure) (1) 30 to 59 days, (2) 60 to 89 days and (3) 90 or more
days, and (B) in foreclosure and Delinquent (1) 30 to 59 days, (2) 60 to
89 days and (3) 90 or more days, in each case as of the close of business
on the last day of the calendar month preceding such Distribution Date;
(11) with respect to any Mortgage Loan that became an REO
Property during the preceding calendar month in each Loan Group, the loan
number and Stated Principal Balance of such Mortgage Loan and the date of
acquisition thereof;
(12) the total number and Stated Principal Balance of any
Mortgage Loans converted to REO Properties, in each Loan Group as of the
close of business on the Determination Date preceding such Distribution
Date;
(13) the aggregate Stated Principal Balance of all Liquidated
Loans;
(14) with respect to any Liquidated Loan in each Loan Group,
the loan number and Stated Principal Balance relating thereto;
(15) whether a Trigger Event is in effect;
(16) the amount of the distribution made to the Holders of the
Class P Certificates;
(17) the aggregate amount of Mortgage Loans in which respect of
which the Master Servicer has submitted claims under the Mortgage
Insurance Policies and the aggregate amount of such claims;
(18) the amount of Realized Losses applied to the Subordinate
Certificates for such Distribution Date;
(19) the amount, if any, received under each Corridor Contract
for such Distribution Date;
(20) all payments made by the Master Servicer in respect of
Compensating Interest for such Distribution Date; and
(21) the information set forth in the Prepayment Charge
Schedule.
(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.
The Trustee will send a copy of each statement provided pursuant to this
Section 4.05 to each Rating Agency and the NIM Insurer. The Trustee may make
the above information available to Certificateholders via the Trustee's
website at xxxx://xxx.xxxxxxxxxxxx.xxx.
(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
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a Certificateholder, a statement containing the information set forth in
clauses (a)(1), (a)(2) and (a)(6) of this Section 4.05 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.
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Section 4.06 [Reserved]
Section 4.07 [Reserved]
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 $10,000 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 pursuant to the Corridor Contracts 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 on the Class 1-A Corridor Contract, the
Class 2-A Corridor Contract, the Class 3-A Corridor Contract and the
Subordinate Corridor Contract with respect to a Distribution Date and
remaining after the distributions required pursuant to Section 4.04(d)(1)
through (4) and (ii) shall be distributed to the Class C Certificates;
provided, however, that if the Class 1-A Corridor Contract, the Class 2-A
Corridor Contract, the Class 3-A Corridor Contract and the Subordinate
Corridor Contract is subject to early termination, early termination payments
received on such 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)(1) through (4) on the Distribution Dates following such
termination to and including the applicable 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 applicable Corridor Contract Termination Date.
(d) Funds in the Carryover Reserve Fund in respect of amounts
received of under the Class 1-A Corridor Contract, the Class 2-A Corridor
Contract, the Class 3-A Corridor Contract and the A Subordinate Corridor
Contract may be invested in Permitted Investments at the direction of the
Majority Holder of the Class C Certificates (voting as a single Class), which
Permitted Investments shall mature not late 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 of under the Class 1-A Corridor Contract, the
Class 2-A Corridor Contract, the Class 3-A Corridor Contract and the
Subordinate 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
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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.
(e) 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 4.08. The
Carryover Reserve Fund will 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-13. 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:
Integral Multiples
Class Minimum in Excess of Original Certificate
Denomination Minimum Principal Balance
---------------- --------------------- -------------------- ---------------------------
1-A $20,000 $1,000 $1,516,690,000
2-A $20,000 $1,000 $534,625,000
3-A $20,000 $1,000 $588,910,000
M-1 $20,000 $1,000 $104,325,000
M-2 $20,000 $1,000 $88,275,500
M-3 $20,000 $1,000 $56,175,500
M-4 $20,000 $1,000 $48,150,500
M-5 $20,000 $1,000 $48,150,500
M-6 $20,000 $1,000 $48,150,500
M-7 $20,000 $1,000 $40,125,000
M-8 $20,000 $1,000 $40,125,000
M-9 $20,000 $1,000 $40,125,000
B $100,000 $1,000 $32,100,000
A-R $99.95(1) N/A $100
C N/A N/A N/A
P N/A N/A $100
(1) The Tax Matters Person Certificate related to the Class A-R Certificates
may be issued in a denomination of $0.05.
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
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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 each certify to the Trustee
in
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writing the facts surrounding the Transfer in substantially the forms set
forth in Exhibit J (the "Transferor Certificate") and (i) deliver a letter in
substantially the form of either Exhibit K (the "Investment Letter") or
Exhibit L (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, the
Co-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
Co-Trustee, the Depositor, each Seller and the Master Servicer against any
liability that may result if the Transfer is not so exempt or is not made in
accordance with such federal and state laws.
No Transfer of an ERISA-Restricted Certificate shall be made unless
the Trustee shall have received either (i) a representation from the
transferee of such Certificate acceptable to and in form and substance
satisfactory to the Trustee (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-1), to the effect that (x) such transferee is not 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 or using the assets of any such plan or arrangement, 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 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
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of the Trustee or the Master Servicer. 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 Master Servicer and the Depositor. Notwithstanding anything
else to the contrary herein, any purported transfer of an ERISA-Restricted
Certificate to or on behalf of an employee benefit plan subject to 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) 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-1.
(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
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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, either 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 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.
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(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, either 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 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 and any agent of the Master
Servicer or the Trustee may treat the person in whose name any Certificate is
registered as the owner of such Certificate for the purpose of receiving
distributions as provided in this Agreement and for all other purposes
whatsoever, and none of the Master Servicer, the Trustee or the NIM Insurer or
any agent of the Master Servicer, the Trustee or the NIM 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.
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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.
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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, (b) the Depositor, at its
sole option, advises the Trustee that it elects to terminate the book-entry
system with respect to such Certificates through the Depository or (c) after
the occurrence and continuation of an Event of Default, Certificate Owners of
such Book-Entry Certificates having not less than 51% of the Voting Rights
evidenced by any Class of Book-Entry Certificates advise the Trustee and the
Depository in writing through the Depository Participants that the
continuation of a book-entry system with respect to Certificates of such Class
through the Depository (or its successor) is no longer in the best interests
of the Certificate Owners of such Class, then the Trustee shall notify all
Certificate Owners of such Certificates, through the Depository, of the
occurrence of any such event and of the availability of Definitive
Certificates to 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 of any change in such location of any such office or
agency.
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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 either
Seller may be merged or consolidated, or any Person resulting from any merger
or consolidation to which the Depositor, the Master Servicer or either Seller
shall be a party, or any person succeeding to the business of the Depositor,
the Master Servicer or either 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.
Section 6.03 Limitation on Liability of the Depositor, the Sellers,
the Master Servicer, the NIM Insurer and Others.
None of the Depositor, the Seller, the NIM Insurer or the Master
Servicer or any of the directors, officers, employees or agents of the
Depositor, the Seller, 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
Seller, the Master Servicer or any such Person against any breach of
representations or warranties made by it herein or protect the Depositor, the
Seller, 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
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duties or by reason of reckless disregard of obligations and duties hereunder.
The Depositor, the Seller, the NIM Insurer, the Master Servicer and any
director, officer, employee or agent of the Depositor, the Seller, 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 Seller, the NIM Insurer, the
Master Servicer and any director, officer, employee or agent of the Depositor,
the Seller, 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 Seller, 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 Seller, 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 Seller, 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. 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.
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
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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 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 or the Depositor, or to the Trustee, the NIM Insurer and
the Master Servicer by the Holders of Certificates evidencing not less
than 25% of the Voting Rights evidenced by the Certificates; 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 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 or the Depositor, or to the
Trustee by the Holders of Certificates evidencing not less than 25% of
the Voting Rights evidenced by the Certificates; provided that the
sixty-day cure period shall not apply to the initial delivery of the
Mortgage File for Delay Delivery Mortgage Loans nor 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
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(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
evidenced by the Certificates, by notice in writing to the Master Servicer
(with a copy to each Rating Agency), 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. 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 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.
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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 reasonably acceptable to the
NIM Insurer (as evidenced by the prior written consent of the NIM Insurer), or
(ii) 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 and the NIM
Insurer guaranteed notes 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 Xxx 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. No appointment of a successor to the Master
Servicer hereunder shall be effective until the Trustee shall have consented
thereto, and written notice of such proposed appointment shall have been
provided by the Trustee to each Certificateholder. 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.
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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
Co-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 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 AND THE CO-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 (or the Co-Trustee, to the extent provided in this
Agreement) that are specifically required to be furnished pursuant to any
provision of this Agreement shall examine them to determine whether they
conform to the
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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 grossly negligent action, its own gross
negligent failure to act or its own misconduct, its grossly 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
grossly 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 required Advance was not made.
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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 such Certificateholders, the Trustee may require
reasonable indemnity against such expense, or liability from 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
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(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 its
capacity as Trustee 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
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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 and (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 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 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.
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
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purpose of rehabilitation, conservation or liquidation, or (iii)(A) a tax is
imposed with respect to the Trust Fund by any state in which the Trustee or
the Trust Fund is located, (B) the imposition of such tax would be avoided by
the appointment of a different trustee and (C) the Trustee fails to indemnify
the Trust Fund against such tax, then the Depositor, the NIM Insurer or the
Master Servicer may remove the Trustee and appoint a successor trustee,
reasonably acceptable to 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 and one complete set to
the successor so appointed. 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.
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 NIM Insurer and its appointment shall not adversely affect
the then current ratings of the Certificates.
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 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
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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.
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 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
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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
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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 last 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 10 days after the Closing Date all information or data that the Trustee
requests in writing and determines to be relevant for tax purposes to the
valuations and offering prices of the Certificates, including, without
limitation, the price, yield, prepayment assumption and projected cash flows
of the Certificates and the Mortgage Loans (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
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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 that occurred ratably within each Loan Group.
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 all 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) that is
owned by the holders of the Class C Certificates, and that is not an asset of
any REMIC created hereunder. The Trustee shall treat the rights of the holders
of each Class of certificates (other than the Class P and Class A-R
Certificates) to receive payments from the Carryover Reserve Fund as rights in
an interest rate corridor contract written by: (i) 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 monies distributed pursuant to Section
4.04(c)(22) and (23) and Section 4.04(d)(5) herein, in favor of the other
Certificateholders. Thus, each Certificate (other than the Class P and Class
A-R Certificates) shall be treated as representing ownership of not only an
Master REMIC regular interest, but also ownership of an interest in an
interest rate corridor contract. For purposes of determining the issue price
of the Master REMIC regular interests, the Trustee shall assume that the
interest rate corridor contracts in respect of the Class 1-A, Class 2-A, Class
3-A and Subordinate Certificates have values of $2,020,000, $678,000, $499,000
and $1,481,000, respectively.
Section 8.12 Co-Trustee.
(a) The Co-Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments
furnished to the Co-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
required by this Agreement. If any such instrument is found not to conform to
the requirements of this Agreement in a material manner, the Co-Trustee shall
take action as it deems appropriate to have the instrument corrected.
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(b) No provision of this Agreement shall be construed to relieve the
Co-Trustee from liability for its own grossly negligent action, its own gross
negligent failure to act or its own misconduct, its grossly 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) the duties and obligations of the Co-Trustee shall be
determined solely by the express provisions of this Agreement with the
exception of Section 8.10, the Co-Trustee shall not be liable,
individually or as Co-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 Co-Trustee and the Co-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 Co-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; and
(2) the Co-Trustee shall not be liable, individually or as
Co-Trustee, for an error of judgment made in good faith by a Responsible
Officer or Responsible Officers of the Trustee, unless the Co-Trustee was
grossly negligent or acted in bad faith or with willful misfeasance.
(c) Except as otherwise provided in paragraph (b) above:
(1) the Co-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 Co-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 Co-Trustee shall not be liable, individually or as
Co-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) the Co-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;
(5) the Co-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; and
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(6) the Co-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.
(d) The recitals contained herein shall be taken as the statements
of the Depositor or the Master Servicer, as the case may be, and the
Co-Trustee assumes no responsibility for their correctness. The Co-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 Co-Trustee's execution and authentication of
the Certificates. The Co-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.
(e) The Co-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 Co-Trustee.
(f) The Master Servicer covenants and agrees (i) to pay to the
Co-Trustee from time to time, and the Co-Trustee shall be entitled to, such
compensation as shall be agreed in writing by the Master Servicer and the
Co-Trustee (which shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust) for all services rendered
by it in the execution of the trusts hereby created and in the exercise and
performance of any of the powers and duties hereunder of the Co-Trustee and
(ii) to pay or reimburse the Co-Trustee, upon its request, for all reasonable
expenses, disbursements and advances incurred or made by the Co-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 Co-Trustee acting in its capacity as Co-Trustee hereunder and (B) to the
extent that the Co-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 Co-Trustee and any
director, officer, employee or agent of the Co-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
Co-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 Co-Trustee's duties hereunder or by reason of
reckless disregard of the Co-Trustee's obligations and duties hereunder and
(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 Co-Trustee hereunder.
(g) The Co-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
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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 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 8.12
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 Co-Trustee shall
cease to be eligible in accordance with the provisions of this Section 8.12,
the Co-Trustee shall resign immediately in the manner and with the effect
specified in paragraph (h) below. The corporation or national banking
association serving as Co-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.
The Co-Trustee may at any time resign and be discharged from the
trusts hereby created by giving 30 days prior written notice of resignation to
the Trustee, the Depositor and the Master Servicer. Upon such resignation the
Trustee (x) may appoint a successor Co-Trustee meeting the requirements in
paragraph (g) above and acceptable to the Master Servicer (in its sole
discretion), so long as such Co-Trustee executes and delivers to the other
parties hereto an instrument agreeing to be bound by the provisions of this
Agreement or (y) may if permitted by the Master Servicer (in its sole
discretion) assume the rights and duties of the resigning Co-Trustee so long
as the Trustee executes and delivers an instrument to that effect.
Section 8.13 Access to Records of the Trustee.
The Trustee and any Co-Trustee shall afford the Sellers, the
Depositor, the Master Servicer, the NIM Insurer and each Certificate Owner
upon reasonable notice during normal business hours access to all records
maintained by the Trustee or Co-Trustee in respect of its duties under this
Agreement and access to officers of the Trustee responsible for performing its
duties. Upon request, the Trustee or Co-Trustee shall furnish the Depositor,
the Master Servicer, the NIM 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 and the
Certificate Owner for review and copying any books, documents, or records
requested with respect to the Trustee's and Co-Trustee's respective duties
under this Agreement. The Sellers, the Depositor, the Master Servicer and the
Certificate Owner shall not have any responsibility or liability for any
action for failure to act by the Trustee or Co-Trustee and are not obligated
to supervise the performance of the Trustee under this Agreement or otherwise.
Section 8.14 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 or the NIM Insurer, the Trustee shall proceed to protect and
enforce its rights and the rights of the Certificateholders or the NIM Insurer
under this Agreement by a suit, action, or proceeding in equity or at law or
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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 and the Certificateholders.
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 (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 and (iv) 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. Xxxxx, living on the date
hereof and (ii) the Latest Possible Maturity Date.
The right to purchase all Mortgage Loans and REO Properties by the
Terminator pursuant to clause (a) above shall be conditioned upon the Stated
Principal Balance of the Mortgage Loans, at the time of any such repurchase,
aggregating ten percent (10%) or less of the Stated Principal Balance of the
Mortgage Loans as of the Cut-off Date. 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.
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 related to such
Loan Group, the Master Servicer shall direct the Trustee to send a final
distribution notice promptly to each related Certificateholder or (ii) the
Trustee determines that a Class of Certificates shall be retired after a final
distribution on such Class, the Trustee shall notify the related
Certificateholders within five (5) Business Days after
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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 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 Release therefor, the Co-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 the
amounts allocable to such Certificates 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.
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 Class A-R Certificates shall be entitled to
all unclaimed funds and other assets that remain subject hereto.
135
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 have 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.
136
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 the Co-Trustee and the Trustee with the
consent of the NIM Insurer, without the consent of any of the
Certificateholders to cure any ambiguity, to correct or supplement any
provisions herein, or to make such other provisions with respect to matters or
questions arising under this Agreement, as shall not be inconsistent with any
other provisions herein if such action shall not, as evidenced by an Opinion
of Counsel, adversely affect in any material respect the interests of any
Certificateholder; provided that any such amendment shall be deemed not to
adversely affect in any material respect the interests of the
Certificateholders and no such Opinion of Counsel shall be required if the
Person requesting such amendment obtains a letter from each Rating Agency
stating that such amendment would not result in the downgrading or withdrawal
of the respective ratings then assigned to the Certificates, 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 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.
The Trustee, the Co-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 have 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, the Co-Trustee 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 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
137
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, 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
requiring the consent of Certificateholders, the Trustee shall furnish written
notification of the substance of such amendment to each Certificateholder and
each Rating Agency.
It shall not be necessary for the consent of Certificateholders
under this Section to approve the particular form of any proposed amendment,
but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject
to such reasonable regulations as the Trustee may prescribe.
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
138
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.
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 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 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, 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 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.
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.
139
In addition, the Trustee shall promptly furnish to each Rating
Agency copies of the following:
(6) Each report to Certificateholders described in Section
4.05;
(7) Each annual statement as to compliance described in Section
3.17; and
(8) Each annual independent public accountants' servicing
report described in Section 3.18.
(b) 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, CWABS, Inc., 0000 Xxxx Xxxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000,
facsimile number: (000) 000-0000, Attention: Xxxxx X. Xxxxxxx, 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: Xxxxx X. Xxxxxxx, 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 the Liquidity Trust,
Countrywide LFT 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; (iv) 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; (v) in the case of the Trustee, The Bank of New
York, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Corporate Trust
MBS Administration, CWABS, Series 2004-1, or such other address as the Trustee
may hereafter furnish to the Depositor or the Master Servicer; ; (vi) in the
case of the Co-Trustee, BNY Western Trust Company, a subsidiary of The Bank of
New York Company, Inc., 000 X. Xxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxxxxx,
Xxxxxxxxxx, 00000, Attention: MBS Support Services, or such other address as
the Co-Trustee may be hereafter furnished to the Depositor, the Master
Servicer and the Trustee; and (vii) 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 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000. 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.
140
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 evidenced by the Certificates shall also have made
written request to the Trustee to institute such action, suit or proceeding in
its own name as Trustee hereunder and shall have offered to the Trustee such
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.Inspection and Audit Rights.
The Master Servicer agrees that, on reasonable prior notice, it will
permit any representative of the Depositor, either 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
141
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, either
Seller, the NIM Insurer or the Trustee of any right under this Section 10.08
shall be borne by the party requesting such inspection; all other such
expenses shall be borne by the Master Servicer.
Section 10.09 Certificates Nonassessable and Fully Paid.
It is the intention of the Depositor that Certificateholders shall
not be personally liable for obligations of the Trust Fund, that the interests
in the Trust Fund represented by the Certificates shall be nonassessable for
any reason whatsoever, and that the Certificates, upon due authentication
thereof by the Trustee pursuant to this Agreement, are and shall be deemed
fully paid.
Section 10.10 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 principally by the
Class C and 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 principally by the Class C and Class P Certificates have not
been disavowed and
(2) the Seller and the Trustee have received reasonable
assurances that the NIM Insurer will be able to satisfy its obligations
under its guaranty of notes backed principally 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
142
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.
(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 principally by the Class C and Class P
Certificate].
143
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.
CWABS, INC.,
as Depositor
By: /s/ Xxxxx Xxxxxxx
------------------------------------------
Name: Xxxxx Xxxxxxx
Title: Vice President
COUNTRYWIDE HOME LOANS, INC.,
as Seller
By: /s/ Xxxxx Xxxxxxx
------------------------------------------
Name: Xxxxx Xxxxxxx
Title: Executive Vice President
COUNTRYWIDE LFT LLC,
as Seller
By: /s/ Xxxxx Xxxxxxx
------------------------------------------
Name: Xxxxx Xxxxxxx
Title: Vice President
COUNTRYWIDE HOME LOANS SERVICING LP,
as Master Servicer
By: COUNTRYWIDE GP, INC.
By: /s/ Xxxxx Xxxxxxx
------------------------------------------
Name: Xxxxx Xxxxxxx
Title: Senior Vice President
THE BANK OF NEW YORK,
as Trustee
By: /s/ Xxxxx Xxxxxxx
------------------------------------------
Name: Xxxxx Xxxxxxx
Title: Vice President
BNY WESTERN TRUST COMPANY,
as Co-Trustee
By: /s/ Xxxxxxxxx Xxxxxx
------------------------------------------
Name: Xxxxxxxxx Xxxxxx
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
STATE OF CALIFORNIA )
) ss.:
COUNTY OF LOS ANGELES )
On this 26th day of February, 2004, before me, a notary public in and
for said State, appeared Xxxxx Xxxxxxx, personally known to me on the basis of
satisfactory evidence to be the Executive Vice President of Countrywide Home
Loans, Inc., one of the corporations that executed the within instrument, and
also known to me to be the person who executed it on behalf of such
corporation and acknowledged to me that such corporation executed the within
instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Xxxxxx X. Xxxxxx
---------------------------------------------
Notary Public
[Notarial Seal]
STATE OF CALIFORNIA )
) ss.:
COUNTY OF LOS ANGELES )
On this 26th day of February, 2004, before me, a notary public in and
for said State, appeared Xxxxx Xxxxxxx, personally known to me on the basis of
satisfactory evidence to be the Senior Vice President of Countrywide GP, Inc.,
the parent company of Countrywide Home Loans Servicing LP, one of the
organizations that executed the within instrument, and also known to me to be
the person who executed it on behalf of such limited partnership and
acknowledged to me that such limited partnership executed the within
instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Xxxxxx X. Xxxxxx
---------------------------------------------
Notary Public
[Notarial Seal]
STATE OF CALIFORNIA )
) ss.:
COUNTY OF LOS ANGELES )
On this 26th day of February, 2004, before me, a notary public in and
for said State, appeared Xxxxx Xxxxxxx, personally known to me on the basis of
satisfactory evidence to be the Vice President of CWABS, Inc., one of the
corporations that executed the within instrument, and also known to me to be
the person who executed it on behalf of such corporation and acknowledged to
me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Xxxxxx X. Xxxxxx
---------------------------------------------
Notary Public
[Notarial Seal]
STATE OF CALIFORNIA )
) ss.:
COUNTY OF LOS ANGELES )
On this 26th day of February, 2004, before me, a notary public in and
for said State, appeared Xxxxx Xxxxxxx, personally known to me on the basis
of satisfactory evidence to be the Vice President of Countrywide LFT LLC,
one of the corporations that executed the within instrument, and also known to
me to be the person who executed it on behalf of such corporation and
acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Xxxxxx X. Xxxxxx
---------------------------------------------
Notary Public
[Notarial Seal]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 26th day of February, 2004 before me, a notary public in
and for said State, appeared Xxxxx Xxxxxxx, personally known to me on
the basis of satisfactory evidence to be a Vice President of The Bank
of New York, a New York banking corporation that executed the within
instrument, and also known to me to be the person who executed it on
behalf of such corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF,9 I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Xxxxx Xxxxxxx
---------------------------------------------
Notary Public
[Notarial Seal]
STATE OF CALIFORNIA )
) ss.:
COUNTY OF LOS ANGELES )
On this 26th day of February, 2004 before me, a notary public in
and for said State, appeared Xxxxxxxxx Xxxxxx, personally known to me on
the basis of satisfactory evidence to be a Vice President of BNY
Western Trust Company, one of the corporations that executed the within
instrument, and also known to me to be the person who executed it on
behalf of such corporation and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Xxxxxxxx X. Xxxxxx
---------------------------------------------
Notary Public
[Notarial Seal]
Exhibit A-1
through A-14
[Exhibits A-1 through A-13 are
photocopies of such Certificates as delivered.]
[See appropriate documents delivered at closing.]
A-1
Exhibit B
Exhibit B is a photocopy
of the Class P Certificates
as delivered.
[See appropriate documents delivered at closing.]
B-1
Exhibit C
Exhibit C is a photocopy
of the Class C Certificates
as delivered.
[See appropriate documents delivered at closing.]
C-1
Exhibit D
Exhibit D is a photocopy
of the Class A-R Certificate
as delivered.
[See appropriate documents delivered at closing.]
D-1
Exhibit E
Exhibit E is a photocopy
of the Tax Matters Person Certificate (Class A-R)
as delivered.
[See appropriate documents delivered at closing.]
E-1
Exhibit F-1 and F-2
[Exhibit F-1 and F-2 are schedules of Mortgage Loans]
[Delivered to Trustee at closing and on file with the Trustee.]
F-1
EXHIBIT G-1
FORM OF INITIAL CERTIFICATION OF TRUSTEE
[Date]
[Depositor]
[Seller]
[Master Servicer]
Re: CWABS Asset-Backed Certificates, Series 2004-1
----------------------------------------------
Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing
Agreement dated as of February 1, 2004 (the "Pooling and Servicing Agreement")
among CWABS, Inc., as Depositor, Countrywide Home Loans, Inc., as Seller,
Countrywide LFT LLC, as Seller, Countrywide Home Loans Servicing LP, as Master
Servicer, the undersigned, as Trustee, BNY Western Trust Company, as
Co-Trustee, 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 Co-Trustee
has received:
(i) the original Mortgage Note, endorsed by the applicable Seller or
the originator of such Mortgage Loan, without recourse 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 from
the applicable Seller, 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 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.
G-1-1
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:
G-1-2
EXHIBIT G-2
FORM OF INTERIM CERTIFICATION OF TRUSTEE
[Date]
[Depositor]
[Seller]
[Master Servicer]
Re: CWABS Asset-Backed Certificates, Series 2004-1
-------------------------------------------------------------
Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing
Agreement dated as of February 1, 2004 (the "Pooling and Servicing Agreement")
among CWABS, Inc., as Depositor, Countrywide Home Loans, Inc., as Seller,
Countrywide LFT LLC, as Seller, Countrywide Home Loans Servicing LP, as Master
Servicer, the undersigned, as Trustee, BNY Western Trust Company, as
Co-Trustee, the undersigned, as Trustee, hereby certifies that, except as
listed in the following paragraph, as to each Mortgage Loan listed in the
Mortgage Loan Schedule (other than any Mortgage Loan paid in full or listed on
the attached list of exceptions) the Co-Trustee has received:
(i) original Mortgage Note, endorsed by the applicable Seller or the
originator of such Mortgage Loan, without recourse 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 applicable Seller, or, if the original Mortgage Note has been lost or
destroyed and not replaced, an original lost note affidavit from the applicable
Seller, stating that the original Mortgage Note was lost or destroyed, together
with a copy of the related Mortgage Note;
(ii)the case of each Mortgage Loan that is not a MERS Mortgage Loan,
the original recorded Mortgage, [and in the case of each Mortgage Loan that is
a MERS Mortgage Loan, the original Mortgage, noting thereon 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) the case of each Mortgage Loan that is not a MERS Mortgage
Loan, a duly executed assignment of the Mortgage to "Asset-Backed Certificates,
Series 2004-1, CWABS, Inc., by The Bank of New York, a New York banking
corporation, as trustee under the Pooling and Servicing Agreement dated as of
February 1, 2004, without recourse", or, in the case of each 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
G-2-1
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)original recorded assignment or assignments of the Mortgage
together with all interim recorded assignments of such Mortgage [(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, with evidence of recording thereon
if recordation thereof is permissible under applicable law; and
(vi)the original or duplicate original 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 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 Co-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 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
Mortgage Loan, and (ii) the information set forth in items (i), (iv), (v),
(vi), (viii), (xi) and (xiv) 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 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:
G-2-2
EXHIBIT G-3
FORM OF DELAY DELIVERY CERTIFICATION
[Date]
[Depositor]
[Seller]
[Seller]
[Master Servicer]
Re: CWABS Asset-Backed Certificates, Series 2004-1
----------------------------------------------
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
February 1, 2004 (the "Pooling and Servicing Agreement") among CWABS, Inc., as
Depositor, Countrywide Home Loans, Inc., as Seller, Countrywide LFT LLC, as
Seller, Countrywide Home Loans Servicing LP, as Master Servicer, the
undersigned, as Trustee, BNY Western Trust Company, as Co-Trustee] The
undersigned hereby certifies that as to each Delay Delivery Mortgage Loan
listed on the Schedule A attached hereto (other than any Mortgage Loan paid in
full or listed on Schedule B attached hereto) it has received:
(1) the original Mortgage Note, endorsed by the applicable Seller or
the originator of such Mortgage Loan, without recourse 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 applicable Seller, or, if the original Mortgage Note has been lost or
destroyed and not replaced, an original lost note affidavit from the applicable
Seller, stating that the original Mortgage Note was lost or destroyed, together
with a copy of the related Mortgage Note;
(2) in the case of each Mortgage Loan that is not a MERS Mortgage
Loan, a duly executed assignment of the Mortgage to "Asset-Backed Certificates,
Series 2004-1, CWABS, Inc., by The Bank of New York, a New York banking
corporation, as trustee under the Pooling and Servicing Agreement dated as of
February 1, 2004, without recourse", or, in the case of each 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).
G-3-1
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:
G-3-2
EXHIBIT H
FORM OF FINAL CERTIFICATION OF TRUSTEE
[Date]
[Depositor]
[Master Servicer]
[Seller]
Re: CWABS Asset-Backed Certificates, Series 2004-1
---------------------------------------------
Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing
Agreement dated as of February 1, 2004 (the "Pooling and Servicing Agreement")
among CWABS, Inc., as Depositor, Countrywide Home Loans, Inc., as Seller,
Countrywide Home Loans Servicing LP, Countrywide LFT LLC, as Seller, as Master
Servicer, the undersigned, as Trustee, BNY Western Trust Company, as
Co-Trustee, 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 on the attached Document Exception Report) it has
received:
(i) the original Mortgage Note, endorsed by the applicable Seller or
the originator of such Mortgage Loan, without recourse 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 applicable Seller, or, if the original Mortgage Note has been lost or
destroyed and not replaced, an original lost note affidavit from the applicable
Seller, stating that the original Mortgage Note was lost or destroyed, together
with a copy of the related Mortgage Note;
(ii)in the case of each Mortgage Loan that is not a MERS Mortgage
Loan, the original recorded Mortgage, [and in the case of each Mortgage Loan
that is a MERS Mortgage Loan, the original Mortgage, noting thereon 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 "Asset-Backed Certificates,
Series 2004-1, CWABS, Inc., by The Bank of New York, a New York banking
corporation, as trustee under the Pooling and Servicing Agreement dated as of
February 1, 2004, without recourse", or, in the case of each 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
H-1
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
together with all interim recorded assignments of such Mortgage [(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, with evidence of recording thereon
if recordation thereof is permissible under applicable law; and
(vi) the original or duplicate original 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), (xiii) and (xiv) 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 Mortgage Loans
identified on the Mortgage Loan Schedule or (ii) the collectibility,
insurability, effectiveness or suitability of any such Mortgage Loan.
H-2
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:
H-3
EXHIBIT I-1
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 February 1, 2004 (the "Agreement"), by and among CWABS, Inc., as depositor
(the "Depositor"), Countrywide Home Loans, Inc., as Seller, Countrywide LFT
LLC, as Seller, Countrywide Home Loans Servicing LP, as Master Servicer, BNY
Western Trust Company, as Co-Trustee, 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.)
I-1-1
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.
* * *
I-1-2
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__.
I-1-3
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.
I-1-4
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:
(i) 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.
(ii) 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-1 or Exhibit I-2,
respectively.
(iii) 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.
(iv) 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.
(v) 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
I-1-5
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.
I-1-6
EXHIBIT J-1
FORM OF TRANSFEROR CERTIFICATE FOR CLASS A-R CERTIFICATES
Date:
CWABS, 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: CWABS, Inc. Asset Backed
Certificates, Series 2004-1
---------------------------
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 February 1, 2004, among CWABS, Inc., as Depositor, Countrywide Home Loans,
Inc., as Seller, Countrywide LFT LLC, as Seller, Countrywide Home Loans
Servicing LP, as Master Servicer, BNY Western Trust Company, as Co-Trustee, and
The Bank of New York, as Trustee.
Very truly yours,
-------------------------------------
Name of Transferor
By: _________________________________
Name:
Title:
X-0-0
XXXXXXX X-0
FORM OF TRANSFEROR CERTIFICATE FOR
PRIVATE CERTIFICATES
Date:
CWABS, 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: CWABS, Inc. Asset-Backed Certificates,
Series 2004-1, 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 February 1, 2004, among CWABS, Inc., as Depositor,
Countrywide Home Loans, Inc., as Seller, Countrywide LFT LLC, as Seller,
Countrywide Home Loans Servicing LP, as Master Servicer, BNY Western Trust
Company, as Co-Trustee, and The Bank of New York, as Trustee.
Very truly yours,
----------------------------------
Name of Transferor
By: _______________________________
Name:
Title:
J-2-1
EXHIBIT K
FORM OF INVESTMENT LETTER (NON-RULE 144A)
Date:
CWABS, 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: CWABS, Inc. Asset-Backed Certificates,
Series 2004-1, 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)][(b)] 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
K-1
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 February 1, 2004, among CWABS, Inc., as Depositor, Countrywide Home Loans,
Inc., as Seller, Countrywide LFT LLC, as Seller, Countrywide Home Loans
Servicing LP, as Master Servicer, BNY Western Trust Company, as Co-Trustee, and
The Bank of New York, as Trustee.
Very truly yours,
----------------------------------
Name of Transferee
By:
-------------------------------
Authorized Officer
K-2
EXHIBIT L
FORM OF RULE 144A LETTER
Date:
CWABS, 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: CWABS, Inc. Asset-Backed Certificates,
Series 2004-1, 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
L-1
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 February 1, 2004, among CWABS, Inc., as Depositor, Countrywide Home Loans,
Inc., as Seller, Countrywide LFT LLC, as Seller, Countrywide Home Loans
Servicing LP, as Master Servicer, BNY Western Trust Company, as Co-Trustee, and
The Bank of New York, as Trustee.
Very truly yours,
----------------------------------
Name of Transferee
By:
------------------------------
Authorized Officer
L-2
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 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
L-3
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.
L-4
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:
-------------------------------------
L-5
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
L-6
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:
------------------------------------
L-7
EXHIBIT M
[Reserved]
M-1
EXHIBIT N
REQUEST FOR RELEASE
[Mortgage Loans Paid in Full, Repurchased or Replaced]
OFFICER'S CERTIFICATE AND TRUST RECEIPT
ASSET-BACKED CERTIFICATES,
Series 2004-1
__________________________________________ 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]
[MORTGAGE LOAN REPURCHASE 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
N-1
Exhibit O
Exhibit O is a photocopy
of the Depository Agreement
as delivered.
[See appropriate documents delivered at closing.]
O-1
EXHIBIT P
[Reserved]
P-1
EXHIBIT Q
FORM OF CORRIDOR CONTRACTS
[See appropriate documents delivered at closing.]
Q-1
EXHIBIT R-1
[Reserved]
X-0
XXXXXXX X-0
[Reserved]
R-2
EXHIBIT S
FORM OF CORRIDOR CONTRACT NOVATION AGREEMENT
ASSIGNMENT AGREEMENT
[see document delivered at closing]
S-1
EXHIBIT T
OFFICER'S CERTIFICATE WITH RESPECT TO PREPAYMENTS
ASSET-BACKED CERTIFICATES,
Series 2004-1
[Date]
Via Facsimile
The Bank of New York,
as Trustee
000 Xxxxxxx Xx., 0X
Xxx Xxxx, Xxx Xxxx 00000
Dear Sir or Madam:
Reference is made to the Pooling and Servicing Agreement, dated as of
February 1, 2004, (the "Pooling and Servicing Agreement") among CWABS, Inc., as
Depositor, Countrywide Home Loans, Inc., as Seller, Countrywide LFT LLC, as
Seller, Countrywide Home Loans Servicing LP, as Master Servicer, BNY Western
Trust Company, as Co-Trustee, 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
T-1
(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 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
T-2
SCHEDULE OF MORTGAGE LOANS FOR WHICH A PREPAYMENT WAS RECEIVED
DURING THE RELATED PREPAYMENT PERIOD
--------------------- ---------------------------- ---------------------------
Loan Number Clause 2: Yes/No Clause 3: (i) or (ii)
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T-3
SCHEDULE I
PREPAYMENT CHARGE SCHEDULE AND PREPAYMENT CHARGE SUMMARY
[Delivered to Trustee at closing and on file with the Trustee.]
S-I-1
