Exhibit 4.1
================================================================================
ASSET BACKED FUNDING CORPORATION,
Depositor
XXXXXX LOAN SERVICING LP,
Servicer
AND
JPMORGAN CHASE BANK
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of March 1, 2004
ABFC 2004-AHL1 Trust
ABFC ASSET-BACKED CERTIFICATES, SERIES 2004-AHL1
================================================================================
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms......................................................9
Section 1.02. Accounting........................................................55
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of Mortgage Loans......................................56
Section 2.02. Acceptance by Trustee.............................................58
Section 2.03. Repurchase or Substitution of Mortgage Loans by the Seller........59
Section 2.04. Execution of Yield Maintenance Agreement..........................63
Section 2.05. Representations, Warranties and Covenants of the Servicer.........63
Section 2.06. Representations and Warranties of the Depositor...................65
Section 2.07. Issuance of Certificates and the Uncertificated
Regular Interests..............................................66
ARTICLE III
ADMINISTRATION AND SERVICING OF THE TRUST FUND
Section 3.01. Servicer to Act as Servicer.......................................68
Section 3.02. Collection of Mortgage Loan Payments..............................70
Section 3.03. Realization Upon Defaulted Mortgage Loans.........................70
Section 3.04. Collection Account, Distribution Account and Reserve Account......72
Section 3.05. Permitted Withdrawals From the Collection Account.................75
Section 3.06. Establishment of Escrow Accounts; Deposits in Escrow Accounts.....76
Section 3.07. Permitted Withdrawals From Escrow Account.........................76
Section 3.08. Payment of Taxes, Insurance and Other Charges;
Collections Thereunder.........................................77
Section 3.09. Transfer of Accounts..............................................77
Section 3.10. Maintenance of Hazard Insurance...................................78
Section 3.11. Maintenance of Mortgage Impairment Insurance Policy...............78
Section 3.12. Fidelity Bond, Errors and Omissions Insurance.....................79
Section 3.13. Title, Management and Disposition of REO Property.................79
Section 3.14. Due-on-Sale Clauses; Assumption and Substitution Agreements.......81
Section 3.15. Notification of Adjustments.......................................82
Section 3.16. Optional Purchases of Mortgage Loans by Servicer..................83
Section 3.17. Trustee to Cooperate; Release of Files............................84
Section 3.18. Servicing Compensation............................................85
Section 3.19. Annual Statement as to Compliance.................................85
Section 3.20. Annual Independent Certified Public Accountants' Reports..........86
Section 3.21. Access to Certain Documentation and Information Regarding
the Mortgage Loans.............................................86
Section 3.22. Reports Filed with Securities and Exchange Commission;
Annual Certification of Securities and
Exchange Commission Filing.....................................86
Section 3.23. Obligations of the Servicer in Respect of
Compensating Interest..........................................89
i
Section 3.24. Obligations of the Servicer in Respect of Mortgage
Interest Rates and Monthly Payments............................89
Section 3.25. Investment of Funds in the Collection Account.....................89
Section 3.26. Liability of Servicer; Indemnification............................90
Section 3.27. Reports of Foreclosure and Abandonment of
Mortgaged Properties...........................................91
Section 3.28. Protection of Assets..............................................91
Section 3.29. Prepayment Charges................................................91
Section 3.30. [Reserved]........................................................92
Section 3.31. No Personal Solicitation..........................................92
ARTICLE IV
FLOW OF FUNDS
Section 4.01. Interest Distributions............................................93
Section 4.02. Distributions of Principal and Monthly Excess
Cashflow Amounts...............................................94
Section 4.03. Allocation of Losses..............................................98
Section 4.04. Method of Distribution............................................98
Section 4.05. Distributions on Book-Entry Certificates..........................98
Section 4.06. Statements........................................................98
Section 4.07. Remittance Reports; Advances.....................................101
Section 4.08. REMIC Distributions and Allocation of Losses.....................103
ARTICLE V
THE CERTIFICATES
Section 5.01. The Certificates.................................................105
Section 5.02. Registration of Transfer and Exchange of Certificates............106
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates................111
Section 5.04. Persons Deemed Owners............................................112
Section 5.05. Appointment of Paying Agent......................................112
ARTICLE VI
THE SERVICER AND THE DEPOSITOR
Section 6.01. Liability of the Servicer and the Depositor......................112
Section 6.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer or the Depositor.................113
Section 6.03. Limitation on Liability of the Servicer and Others...............113
Section 6.04. Servicer Not to Resign...........................................114
Section 6.05. Delegation of Duties.............................................114
Section 6.06. Advance Facility.................................................115
ARTICLE VII
DEFAULT
Section 7.01. Servicer Events of Termination...................................117
Section 7.02. Trustee to Act; Appointment of Successor.........................119
Section 7.03. Waiver of Defaults...............................................120
Section 7.04. Notification to Certificateholders...............................120
Section 7.05. Survivability of Servicer Liabilities............................121
ii
ARTICLE VIII
THE TRUSTEE
Section 8.01. Duties of Trustee................................................121
Section 8.02. Certain Matters Affecting the Trustee............................123
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans............124
Section 8.04. Trustee May Own Certificates.....................................125
Section 8.05. Trustee Fees and Expenses........................................125
Section 8.06. Eligibility Requirements for Trustee.............................125
Section 8.07. Resignation or Removal of Trustee................................126
Section 8.08. Successor Trustee................................................126
Section 8.09. Merger or Consolidation of Trustee...............................127
Section 8.10. Appointment of Co-Trustee or Separate Trustee....................127
Section 8.11. Limitation of Liability..........................................128
Section 8.12. Trustee May Enforce Claims Without Possession of Certificates....129
Section 8.13. Suits for Enforcement............................................129
Section 8.14. Waiver of Bond Requirement.......................................129
Section 8.15. Waiver of Inventory, Accounting and Appraisal Requirement........129
ARTICLE IX
REMIC AND GRANTOR TRUST ADMINISTRATION
Section 9.01. REMIC Administration.............................................130
Section 9.02. Prohibited Transactions and Activities...........................132
Section 9.03. Indemnification with Respect to Certain Taxes and
Loss of REMIC Status..........................................132
Section 9.04. REO Property.....................................................133
Section 9.05. Grantor Trust Administration.....................................133
ARTICLE X
TERMINATION
Section 10.01. Termination......................................................134
Section 10.02. Additional Termination Requirements..............................136
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment........................................................137
Section 11.02. Recordation of Agreement; Counterparts...........................138
Section 11.03. Limitation on Rights of Certificateholders.......................138
Section 11.04. Governing Law; Jurisdiction......................................139
Section 11.05. Notices..........................................................139
Section 11.06. Severability of Provisions.......................................140
Section 11.07. Article and Section References...................................140
Section 11.08. Notice to the Rating Agencies....................................140
Section 11.09. Further Assurances...............................................141
Section 11.10. Benefits of Agreement............................................141
Section 11.11. Acts of Certificateholders.......................................141
iii
EXHIBITS
Exhibit A-1 Form of Class A-1 Certificates
Exhibit A-2 Form of Class A-2 Certificates
Exhibit B [Reserved]
Exhibit C-1 Form of Residual Certificates
Exhibit C-2 Form of Class M-1 Certificates
Exhibit C-3 Form of Class M-2 Certificates
Exhibit C-4 Form of Class M-3 Certificates
Exhibit C-5 Form of Class M-4 Certificates
Exhibit C-6 Form of Class M-5 Certificates
Exhibit C-7 Form of Class M-6 Certificates
Exhibit C-8 Form of Class M-7 Certificates
Exhibit C-9 Form of Class CE Certificates
Exhibit C-10 Form of Class P Certificates
Exhibit D Mortgage Loan Schedule
Exhibit E Form of Request for Release
Exhibit F-1 Form of Custodian's Initial Certification
Exhibit F-2 Form of Custodian's Final Certification
Exhibit G Mortgage Loan Purchase Agreement
Exhibit H Form of Affidavit of Lost Note
Exhibit I Form of ERISA Representation
Exhibit J-1 Form of Investment Letter (Non-Rule 144A)
Exhibit J-2 Form of Investment Letter (Rule 144A)
Exhibit K Form of Residual Certificate Transfer Affidavit
Exhibit L Form of Transferor Certificate
Exhibit M Monthly Information Provided by Servicer
Exhibit N Form of Yield Maintenance Agreement
Exhibit O [Reserved]
Exhibit P [Reserved]
Exhibit Q Form of Xxxxxxxx-Xxxxx Certification
Exhibit R-1 Form of Certification of the Trustee to be Provided to Depositor
Exhibit R-2 Form of Certification of the Servicer to be Provided to Depositor
Exhibit S Form of Power of Attorney
Schedule I Prepayment Charge Schedule
iv
This Pooling and Servicing Agreement is dated as of March 1, 2004 (this
"Agreement"), among ASSET BACKED FUNDING CORPORATION, as depositor (the
"Depositor"), XXXXXX LOAN SERVICING LP, as servicer (the "Servicer"), and
JPMORGAN CHASE BANK, as trustee (the "Trustee").
PRELIMINARY STATEMENT
The Depositor intends to sell pass-through certificates (collectively, the
"Certificates"), to be issued hereunder in multiple Classes, which in the
aggregate will evidence the entire beneficial ownership interest in the Trust
Fund created hereunder. The Certificates will consist of thirteen Classes of
Certificates, designated as (i) the Class A-1 and Class A-2 Certificates, (ii)
the Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6 and Class
M-7 Certificates, (iii) the Class CE Certificates, (iv) the Class P
Certificates, (v) the Class R Certificate and (vi) the Class RX Certificates.
The descriptions of REMIC 1 and REMIC 2 that follow are part of the Preliminary
Statement.
REMIC 1
As provided herein, the Trustee will make an election to treat the
segregated pool of assets consisting of the Mortgage Loans and certain other
related assets subject to this Agreement (but exclusive of the Yield Maintenance
Agreement, the Reserve Fund, the Net WAC Rate Carryover Arrangement, the
Prepayment Charges, the Servicer Prepayment Charge Payment Amounts and the
Transferor Prepayment Charge Payment Amount) as a real estate investment conduit
(a "REMIC") for federal income tax purposes, and such segregated pool of assets
will be designated as "REMIC 1." The Class R-1 Interest will represent the sole
class of "residual interests" in REMIC 1 for purposes of the REMIC Provisions
under federal income tax law. The following table irrevocably sets forth the
designation, the Uncertificated REMIC 1 Pass-Through Rate, the initial
Uncertificated Principal Balance, and solely for purposes of satisfying Treasury
regulation Section 1.860G-1(a)(4)(iii), the "latest possible maturity date" for
each of the REMIC 1 Uncertificated Regular Interests. None of the REMIC 1
Uncertificated Regular Interests will be certificated.
--------------------------------------------------------------------------------------
Uncertificated REMIC Initial Latest Possible Maturity
Designation Pass-Through Rate Uncertificated Balance Date(1)
--------------------------------------------------------------------------------------
LT1AA Variable(2) $174,611,052.25 December 2033
--------------------------------------------------------------------------------------
LT1A1 Variable(2) $ 1,192,920.00 December 2033
--------------------------------------------------------------------------------------
LT1A2 Variable(2) $ 263,650.00 December 2033
--------------------------------------------------------------------------------------
LT1M1 Variable(2) $ 106,910.00 December 2033
--------------------------------------------------------------------------------------
LT1M2 Variable(2) $ 97,990.00 December 2033
--------------------------------------------------------------------------------------
LT1M3 Variable(2) $ 22,270.00 December 2033
--------------------------------------------------------------------------------------
LT1M4 Variable(2) $ 26,730.00 December 2033
--------------------------------------------------------------------------------------
LT1M5 Variable(2) $ 22,270.00 December 2033
--------------------------------------------------------------------------------------
LT1M6 Variable(2) $ 22,270.00 December 2033
--------------------------------------------------------------------------------------
LT1M7 Variable(2) $ 17,820.00 December 2033
--------------------------------------------------------------------------------------
LT1ZZ Variable(2) $ 1,790,660.86 December 2033
--------------------------------------------------------------------------------------
----------
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date immediately following the maturity date for
the Mortgage Loan with the latest maturity date has been designated as the
"latest possible maturity date" for each REMIC 1 Uncertificated Regular
Interest.
(2) Calculated in accordance with the definition of "Uncertificated REMIC 1
Pass-Through Rate" herein.
REMIC 2
As provided herein, the Trustee shall make an election to treat the
segregated pool of assets consisting of the REMIC 1 Uncertificated Regular
Interests as a REMIC for federal income tax purposes, and such segregated pool
of assets will be designated as "REMIC 2." The Class R-2 Interest represents the
sole class of "residual interests" in REMIC 2 for purposes of the REMIC
Provisions. The following table sets forth the Class designation, Pass-Through
Rate and Original Class Certificate Principal Balance or REMIC 2 Uncertificated
Principal Balance, as applicable, for each Class of Certificates and for the
REMIC 2 Uncertificated Regular Interests, each of which, other than the Class P
Certificates, represents one or more of the "regular interests" in REMIC 2
created hereunder:
--------------------------------------------------------------------------------------
Original Class Certificate
or Uncertificated Assumed Final
Class Designation Pass-Through Rate Principal Balance Maturity Date(1)
--------------------------------------------------------------------------------------
Class A-1 Variable(2) $119,292,000.00 December 2033
--------------------------------------------------------------------------------------
Class A-2 Variable(2) $ 26,365,000.00 December 2033
--------------------------------------------------------------------------------------
Class M-1 Variable(2) $ 10,691,000.00 December 2033
--------------------------------------------------------------------------------------
Class M-2 Variable(2) $ 9,799.000.00 December 2033
--------------------------------------------------------------------------------------
Class M-3 Interest Variable(2) $ 2,227,000.00 December 2033
--------------------------------------------------------------------------------------
Class M-4 Interest Variable(2) $ 2,673,000.00 December 2033
--------------------------------------------------------------------------------------
Class M-5 Interest Variable(2) $ 2,227,000.00 December 2033
--------------------------------------------------------------------------------------
Class M-6 Interest Variable(2) $ 2,227,000.00 December 2033
--------------------------------------------------------------------------------------
Class M-7 Interest Variable(2) $ 1,782,000.00 December 2033
--------------------------------------------------------------------------------------
Class P** N/A(3) N/A(3) December 2033
--------------------------------------------------------------------------------------
Class CE Interest Variable(4) $ 891,543.01 December 2033
--------------------------------------------------------------------------------------
----------
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date following the maturity date for the Mortgage
Loan with the latest maturity date has been designated as the "latest possible
maturity date" for each Class of Certificates and for the REMIC 2 Uncertificated
Regular Interests, each of which represents one or more of the "regular
interests" in REMIC 2.
(2) Calculated in accordance with the definition of "Pass-Through Rate"
herein.
(3) The Class P Certificates do not have a Certificate Principal Balance
and do not bear interest.
(4) The Class CE Interest will accrue interest at the Class CE Pass-Through
Rate on the Notional Amount of the Class CE Interests outstanding from time to
time which shall equal the aggregate of the Uncertified Principal Balances of
the REMIC 1 Uncertificated Regular Interests. The Class CE Interest will have an
initial principal balance equal to the Initial Overcollateralization Amount. The
Class CE Interest will not accrue interest on the REMIC 2 Uncertificated
Principal Balance.
**The Class P Certificates represent the right to receive payments in
respect of Prepayment Charges, Transferor Prepayment Charge Payment Amounts and
Servicer Prepayment Charge Payment Amounts. The Class P Certificates will not
represent an interest in any REMIC.
2
REMIC 3
As provided herein, the Trustee shall make an election to treat the
segregated pool of assets consisting of the Class M-3 Interest as a REMIC for
federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC 3." The Class R-3 Interest represents the sole class of
"residual interests" in REMIC 3 for purposes of the REMIC Provisions.
The following table sets forth the Class designation, Pass-Through Rate and
Original Class Certificate Principal Balance for the indicated Class of
Certificates that represents a "regular interest" in REMIC 3 created hereunder:
--------------------------------------------------------------------------------
Original Class
Certificate Principal Assumed Final
Class Designation Pass-Through Rate Balance Maturity Date(1)
--------------------------------------------------------------------------------
Class M-3 Variable(2) $2,227,000.00(3) December 2033
--------------------------------------------------------------------------------
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date following the maturity date for the Mortgage
Loan with the latest maturity date has been designated as the "latest possible
maturity date" for the Class M-3 Certificates, which represents the "regular
interest" in REMIC 3.
(2) The Class M-3 Certificates will receive 100% of the interest received
in respect of the Class M-3 Interest.
(3) The Class M-3 Certificates will receive 100% of the principal payments
received in respect of the Class M-3 Interest.
3
REMIC 4
As provided herein, the Trustee shall make an election to treat the
segregated pool of assets consisting of the Class M-4 Interest as a REMIC for
federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC 4." The Class R-4 Interest represents the sole class of
"residual interests" in REMIC 4 for purposes of the REMIC Provisions.
The following table sets forth the Class designation, Pass-Through Rate and
Original Class Certificate Principal Balance for the indicated Class of
Certificates that represents a "regular interest" in REMIC 4 created hereunder:
--------------------------------------------------------------------------------
Original Class
Certificate Principal Assumed Final
Class Designation Pass-Through Rate Balance Maturity Date(1)
--------------------------------------------------------------------------------
Class M-4 Variable(2) $2,673,000.00(3) December 2033
--------------------------------------------------------------------------------
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date following the maturity date for the Mortgage
Loan with the latest maturity date has been designated as the "latest possible
maturity date" for the Class M-4 Certificates, which represents the "regular
interest" in REMIC 4.
(2) The Class M-4 Certificates will receive 100% of the interest received
in respect of the Class M-4 Interest.
(3) The Class M-4 Certificates will receive 100% of the principal payments
received in respect of the Class M-4 Interest.
4
REMIC 5
As provided herein, the Trustee shall make an election to treat the
segregated pool of assets consisting of the Class M-5 Interest as a REMIC for
federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC 5." The Class R-5 Interest represents the sole class of
"residual interests" in REMIC 5 for purposes of the REMIC Provisions.
The following table sets forth the Class designation, Pass-Through Rate and
Original Class Certificate Principal Balance for the indicated Class of
Certificates that represents a "regular interest" in REMIC 5 created hereunder:
--------------------------------------------------------------------------------
Original Class
Certificate Principal Assumed Final
Class Designation Pass-Through Rate Balance Maturity Date(1)
--------------------------------------------------------------------------------
Class M-5 Variable(2) $2,227,000.00(3) December 2033
--------------------------------------------------------------------------------
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date following the maturity date for the Mortgage
Loan with the latest maturity date has been designated as the "latest possible
maturity date" for the Class M-3 Certificates, which represents the "regular
interest" in REMIC 5.
(2) The Class M-5 Certificates will receive 100% of the interest received
in respect of the Class M-5 Interest.
(3) The Class M-5 Certificates will receive 100% of the principal payments
received in respect of the Class M-5 Interest.
5
REMIC 6
As provided herein, the Trustee shall make an election to treat the
segregated pool of assets consisting of the Class M-6 Interest as a REMIC for
federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC 6." The Class R-6 Interest represents the sole class of
"residual interests" in REMIC 6 for purposes of the REMIC Provisions.
The following table sets forth the Class designation, Pass-Through Rate and
Original Class Certificate Principal Balance for the indicated Class of
Certificates that represents a "regular interest" in REMIC 6 created hereunder:
--------------------------------------------------------------------------------
Original Class
Certificate Principal Assumed Final
Class Designation Pass-Through Rate Balance Maturity Date(1)
--------------------------------------------------------------------------------
Class M-6 Variable(2) $2,227,000.00(3) December 2033
--------------------------------------------------------------------------------
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date following the maturity date for the Mortgage
Loan with the latest maturity date has been designated as the "latest possible
maturity date" for the Class M-6 Certificates, which represents the "regular
interest" in REMIC 6.
(2) The Class M-6 Certificates will receive 100% of the interest received
in respect of the Class M-6 Interest.
(3) The Class M-6 Certificates will receive 100% of the principal payments
received in respect of the Class M-6 Interest.
6
REMIC 7
As provided herein, the Trustee shall make an election to treat the
segregated pool of assets consisting of the Class M-7 Interest as a REMIC for
federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC 7." The Class R-7 Interest represents the sole class of
"residual interests" in REMIC 7 for purposes of the REMIC Provisions.
The following table sets forth the Class designation, Pass-Through Rate and
Original Class Certificate Principal Balance for the indicated Class of
Certificates that represents a "regular interest" in REMIC 7 created hereunder:
--------------------------------------------------------------------------------
Original Class
Certificate Principal Assumed Final
Class Designation Pass-Through Rate Balance Maturity Date(1)
--------------------------------------------------------------------------------
Class M-7 Variable(2) $1,782,000.00(3) December 2033
--------------------------------------------------------------------------------
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date following the maturity date for the Mortgage
Loan with the latest maturity date has been designated as the "latest possible
maturity date" for the Class M-7 Certificates, which represents the "regular
interest" in REMIC 7.
(2) The Class M-7 Certificates will receive 100% of the interest received
in respect of the Class M-7 Interest.
(3) The Class M-7 Certificates will receive 100% of the principal payments
received in respect of the Class M-7 Interest.
7
REMIC 8
As provided herein, the Trustee shall make an election to treat the
segregated pool of assets consisting of the Class CE Interest as a REMIC for
federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC 8." The Class R-8 Interest represents the sole class of
"residual interests" in REMIC 8 for purposes of the REMIC Provisions.
The following table sets forth the Class designation, Pass-Through Rate and
Original Class Certificate Principal Balance for the indicated Class of
Certificates that represents a "regular interest" in REMIC 8 created hereunder:
--------------------------------------------------------------------------------
Original Class
Certificate Principal Assumed Final
Class Designation Pass-Through Rate Balance Maturity Date(1)
--------------------------------------------------------------------------------
Class CE Variable(2) $891,543.01(3) December 2033
--------------------------------------------------------------------------------
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date following the maturity date for the Mortgage
Loan with the latest maturity date has been designated as the "latest possible
maturity date" for the Class CE Certificates, which represents the "regular
interest" in REMIC 8.
(2) The Class CE Certificates will receive 100% of the interest received in
respect of the Class CE Interest.
(3) The Class CE Certificates will receive 100% of the principal payments
received in respect of the Class CE Interest.
8
ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms.
Whenever used in this Agreement or in the Preliminary Statement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article. Interest on all Classes of REMIC Regular
Interests will be calculated on the basis of a 360-day year consisting of twelve
30-day months. Interest on the Class X-0, Xxxxx X-0, Class M-1, Class M-2, Class
M-3, Class M-4, Class M-5, Class M-6 and Class M-7 Certificates will be
calculated on the basis of the actual number of days in the related Interest
Accrual Period and a 360-day year.
"1933 Act": The Securities Act of 1933, as amended.
"60+ Day Delinquent Loan": Each Mortgage Loan (including each Mortgage Loan
in foreclosure and each Mortgage Loan for which the Mortgagor has filed for
bankruptcy after the Closing Date) with respect to which any portion of a
Monthly Payment is, as of the last day of the prior Collection Period, two
months or more past due and each Mortgage Loan relating to an REO Property.
"Account": Any of the Collection Account, the Distribution Account, the
Reserve Account or the Escrow Account.
"Accrued Certificate Interest": With respect to each Distribution Date and
Class of Class Certificates (other than the Class P and Residual Certificates),
an amount equal to the interest accrued at the applicable rate set forth or
described opposite such Class in the table in the Preliminary Statement during
the related Interest Accrual Period on the Certificate Principal Balance of such
Class of Certificates, reduced by such Class's Interest Percentage of Relief Act
Interest Shortfalls, for such Distribution Date. The Class P and Residual
Certificates will not be entitled to distributions in respect of interest.
"Adjustable-Rate Mortgage Loan": A Mortgage Loan which has a rate at which
interest accrues that adjusts based on the Index plus a related Gross Margin, as
set forth and subject to the limitations in the related Mortgage Note.
"Adjusted Net Maximum Mortgage Interest Rate": With respect to any
Adjustable-Rate Mortgage Loan for any Distribution Date, the applicable maximum
Mortgage Interest Rate for such Mortgage Loan, or with respect to any Fixed-Rate
Mortgage Loan for any Distribution Date, the fixed Mortgage Interest Rate for
such Mortgage Loan, in each case as of the first day of the related Collection
Period and minus the Expense Fee Rate.
"Adjusted Net Mortgage Interest Rate": With respect to any Mortgage Loan,
the Mortgage Interest Rate borne by such Mortgage Loan minus the Expense Fee
Rate.
"Adjustment Date": With respect to each Adjustable-Rate Mortgage Loan, each
adjustment date on which the Mortgage Interest Rate of an Adjustable-Rate
Mortgage Loan
9
changes pursuant to the related Mortgage Note. The first Adjustment Date
following the Cut-off Date as to each Adjustable-Rate Mortgage Loan is set forth
in the Mortgage Loan Schedule.
"Advance": As to any Mortgage Loan, any advance made by the Servicer in
respect of any Distribution Date pursuant to Section 4.07.
"Advance Facility": As defined in Section 6.06(a) hereof.
"Advance Facility Notice": As defined in Section 6.06(b) hereof.
"Advance Financing Person": As defined in Section 6.06(a) hereof.
"Advance Reimbursement Amounts": As defined in Section 6.06(b) hereof.
"Adverse REMIC Event": As defined in Section 9.01(f) hereof.
"Affiliate": With respect to any Person, any other Person controlling,
controlled by or under common control with such Person. For purposes of this
definition, "control" means the power to direct the management and policies of a
Person, directly or indirectly, whether through ownership of voting securities,
by contract or otherwise and "controlling" and "controlled" shall have meanings
correlative to the foregoing.
"Agreement": This Pooling and Servicing Agreement and all amendments and
supplements hereto.
"Applicable Regulations": As to any Mortgage Loan, all federal, state and
local laws, statutes, rules and regulations applicable thereto.
"Applied Realized Loss Amount": With respect to each Distribution Date, the
excess, if any, of (a) the aggregate of the Certificate Principal Balances of
the Certificates (after giving effect to all distributions on such Distribution
Date, including with respect to amounts representing Subsequent Recoveries) over
(b) the Pool Balance as of the end of the related Collection Period.
"Assignment": An assignment of Mortgage, notice of transfer or equivalent
instrument, in recordable form, which is sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale of the Mortgage.
"Assignment, Assumption and Recognition Agreement": The Assignment,
Assumption and Recognition Agreement, dated March 30, 2004, among the Depositor,
the Seller and the Transferor.
"Assumed Final Maturity Date": As to each Class of Certificates, the date
set forth as such in the Preliminary Statement.
"Available Funds": As to any Distribution Date, an amount equal to the
excess of (i) the sum of (a) the aggregate amount of the Monthly Payments due
and received during the related Collection Period and remitted to the Trustee by
the Servicer one Business Day prior to the
10
related Distribution Date, (b) Liquidation Proceeds, Insurance Proceeds,
Condemnation Proceeds, Principal Prepayments, Substitution Adjustment Amounts,
Reimbursement Amounts, Subsequent Recoveries, the Purchase Price for any
repurchased Mortgage Loan, the Termination Price with respect to the termination
of the Trust pursuant to Section 10.01 hereof and other unscheduled recoveries
of principal and interest (excluding Prepayment Charges, Transferor Prepayment
Charge Payment Amounts and Servicer Prepayment Charge Payment Amounts) in
respect of the Mortgage Loans during the related Prepayment Period, (c) the
aggregate of any amounts received in respect of an REO Property deposited in the
Collection Account for such Distribution Date, (d) any Compensating Interest for
such Distribution Date, and (e) the aggregate of any Advances made by the
Servicer for such Distribution Date over (ii) the sum of (a) amounts
reimbursable or payable to the Servicer pursuant to Sections 3.05 or 6.03, (b)
amounts reimbursable or payable to the Trustee pursuant to Section 8.05 (other
than Trustee Fees) and Section 9.01(c), (c) Stayed Funds, (d) the Servicing Fee
and (e) amounts deposited in the Collection Account or the Distribution Account,
as the case may be, in error.
"Balloon Mortgage Loan": A Mortgage Loan that provides for the payment of
the unamortized principal balance of such Mortgage Loan in a single payment at
the maturity of such Mortgage Loan that is substantially greater than the
preceding monthly payment.
"Balloon Payment": A payment of the unamortized principal balance of a
Mortgage Loan in a single payment at the maturity of such Mortgage Loan that is
substantially greater than the preceding Monthly Payment.
"Bankruptcy Code": Title 11 of the United States Code, as amended.
"Basic Principal Distribution Amount": With respect to any Distribution
Date, an amount equal to the excess of (i) the Principal Remittance Amount for
such Distribution Date over (ii) the Overcollateralization Release Amount, if
any, for such Distribution Date.
"Book-Entry Certificates": Any of the Certificates that shall be registered
in the name of the Depository or its nominee, the ownership of which is
reflected on the books of the Depository or on the books of a Person maintaining
an account with the Depository (directly, as a "Depository Participant," or
indirectly, as an indirect participant in accordance with the rules of the
Depository and as described in Section 5.02 hereof). On the Closing Date, the
Class X-0, Xxxxx X-0, Class M-1, Class M-2, Class M-3, Class M-4, Class M-5,
Class M-6 and Class M-7 Certificates shall be Book-Entry Certificates.
"Business Day": Any day other than a Saturday, a Sunday or a day on which
banking institutions in the State of Texas, the State of New York or in the city
in which the Corporate Trust Office of the Trustee is located are authorized or
obligated by law or executive order to be closed.
"Cap Amount": With respect to each Distribution Date and each of the Class
X-0, Xxxxx X-0, Class M-5, Class M-6 and Class M-7 Certificates, the product of
(i) the Yield Maintenance Agreement Payment for such Distribution Date and (ii)
a fraction, the numerator of which is the Certificate Principal Balance of such
Class immediately prior to such Distribution Date and the
11
denominator of which is the aggregate Certificate Principal Balance of the Class
M-3, Class M-4, Class M-5, Class M-6 and Class M-7 Certificates immediately
prior to such Distribution Date.
"Certificate": Any Regular Certificate, Class P Certificate or Residual
Certificate.
"Certificate Owner": With respect to each Book-Entry Certificate, any
beneficial owner thereof.
"Certificate Principal Balance": With respect to any Class of Certificates
(other than the Class P, Class CE and Residual Certificates) and any
Distribution Date, the sum of (a) the Original Class Certificate Principal
Balance and (b) Subsequent Recoveries allocated to such Class of Certificates,
reduced by the sum of (i) all amounts actually distributed in respect of
principal of such Class on all prior Distribution Dates and (ii) except with
respect to the Class A-1 and Class A-2 Certificates, Applied Realized Loss
Amounts allocated thereto. The Class P and Residual Certificates do not have a
Certificate Principal Balance. With respect to the Class CE Certificate and any
Distribution Date, the excess, if any, of the then aggregate Uncertificated
Principal Balances of the REMIC 1 Uncertificated Regular Interests over the
aggregate Certificate Principal Balance of the Class A Certificates and the
Mezzanine Certificates then outstanding. With respect to any Certificate (other
than a Class P or a Residual Certificate) of a Class and any Distribution Date,
the portion of the Certificate Principal Balance of such Class represented by
such Certificate is equal to the product of the Percentage Interest evidenced by
such Certificate and the Certificate Principal Balance of such Class.
"Certificate Register" and "Certificate Registrar": The register maintained
and registrar appointed pursuant to Section 5.02 hereof.
"Certificateholder" or "Holder": The Person in whose name a Certificate is
registered in the Certificate Register, except that a Disqualified Organization
or Non-U.S. Person shall not be a Holder of either of the Residual Certificates
for any purpose hereof.
"Class": Collectively, Certificates or REMIC Regular Interests which have
the same priority of payment and bear the same class designation and the form of
which is identical except for variation in the Percentage Interest evidenced
thereby.
"Class A Certificate": Any one of the Certificates with an "A" designated
on the face thereof substantially in the form annexed hereto as Exhibits A-1 and
A-2 executed by the Trustee on behalf of the Trust and authenticated and
delivered by the Certificate Registrar, representing the right to distributions
as set forth herein and therein.
"Class A Certificateholders": Collectively, the Holders of the Class A
Certificates.
"Class A Principal Distribution Amount": For any Distribution Date on or
after the Stepdown Date and as long as a Trigger Event is not in effect, the
excess of (x) the sum of the Certificate Principal Balances of the Class A
Certificates immediately prior to such Distribution Date over (y) the lesser of
(A) the product of (i) 63.50% and (ii) the Pool Balance as of the last day of
the related Collection Period and (B) the Pool Balance as of the last day of the
related Collection Period minus the product of (i) 0.50% and (ii) the Cut-off
Date Aggregate Principal Balance.
12
"Class A-1 Certificate": Any one of the Class A-1 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-1, executed by the Trustee, and authenticated and delivered by the
Certificate Registrar representing the right to distributions as set forth
herein and therein and evidencing a regular interest in REMIC 2 for purposes of
the REMIC Provisions.
"Class A-1 Certificate Margin": For each Distribution Date (i) on or prior
to the Optional Termination Date, 0.16% per annum, and (ii) following the
Optional Termination Date, 0.32% per annum.
"Class A-1 Formula Rate": For each Distribution Date, a rate per annum
equal to the lesser of (a) One-Month LIBOR as of the related LIBOR Determination
Date, plus the Class A-1 Certificate Margin and (b) the Maximum Cap Rate.
"Class A-1 Pass-Through Rate": For each Distribution Date, a rate per annum
equal to the lesser of (a) the Class A-1 Formula Rate and (b) the Net WAC Cap.
"Class A-2 Certificate": Any one of the Class A-2 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-2, executed by the Trustee, and authenticated and delivered by the
Certificate Registrar representing the right to distributions as set forth
herein and therein and evidencing a regular interest in REMIC 2 for purposes of
the REMIC Provisions.
"Class A-2 Certificate Margin": For each Distribution Date (i) on or prior
to the Optional Termination Date, 0.42% per annum, and (ii) following the
Optional Termination Date, 0.84% per annum.
"Class A-2 Formula Rate": For each Distribution Date, a rate per annum
equal to the lesser of (a) One-Month LIBOR as of the related LIBOR Determination
Date, plus the Class A-2 Certificate Margin and (b) the Maximum Cap Rate.
"Class A-2 Pass-Through Rate": For any Distribution Date, a rate per annum
equal to the lesser of (a) the Class A-2 Formula Rate and (b) the Net WAC Cap.
"Class CE Certificates": Any one of the Class CE Certificates as designated
on the face thereof substantially in the form annexed hereto as Exhibit C-9,
executed by the Trustee on behalf of the Trust and authenticated and delivered
by the Certificate Registrar, representing the right to distributions as set
forth herein and therein and evidencing a regular interest in REMIC 8.
"Class CE Distributable Amount": With respect to any Distribution Date, the
sum of (i) the interest accrued on such Class CE Certificate at the Pass-Through
Rate for the Class CE Certificates calculated on its Notional Amount less the
amount (without duplication) of Net WAC Rate Carryover Amounts paid pursuant to
Section 4.02(b)(xxiii), (ii) any remaining Overcollateralization Release Amounts
and (iii) the aggregate of amounts remaining in the Reserve Account after the
distributions pursuant to Section 3.04(g).
13
"Class CE Interest": An uncertificated interest in the Trust Fund held by
the Trustee on behalf of the holders of the Class CE Certificates, evidencing a
regular interest in REMIC 2 for purposes of the REMIC Provisions.
"Class M Certificate": Any one of the Certificates with an "M" designated
on the face thereof substantially in the form annexed hereto as Exhibit C-2,
Exhibit C-3, Exhibit C-4, Exhibit C-5, Exhibit C-6, Exhibit C-7 and Exhibit C-8,
executed by the Trustee on behalf of the Trust and authenticated and delivered
by the Certificate Registrar, representing the right to distributions as set
forth herein and therein.
"Class M Certificateholders": Collectively, the Holders of the Class M
Certificates.
"Class M-1 Applied Realized Loss Amount": As to the Class M-1 Certificates
and as of any Distribution Date, the lesser of (x) the Certificate Principal
Balance thereof (after taking into account the distribution of the Principal
Distribution Amount on such Distribution Date, but prior to the application of
the Class M-1 Applied Realized Loss Amount, if any, on such Distribution Date)
and (y) the excess of (i) the Applied Realized Loss Amount as of such
Distribution Date over (ii) the sum of the Class M-2 Applied Realized Loss
Amount, the Class M-3 Applied Realized Loss Amount, the Class M-4 Applied
Realized Loss Amount, the Class M-5 Applied Realized Loss Amount, the Class M-6
Applied Realized Loss Amount and the Class M-7 Applied Realized Loss Amount, in
each case as of such Distribution Date.
"Class M-1 Certificate": Any one of the Class M-1 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit C-2, executed by the Trustee, and authenticated and delivered by the
Certificate Registrar representing the right to distributions as set forth
herein and therein and evidencing a regular interest in REMIC 2 for purposes of
the REMIC Provisions.
"Class M-1 Certificate Margin": For each Distribution Date (i) on or prior
to the Optional Termination Date, 0.52% per annum, and (ii) following the
Optional Termination Date, 0.78% per annum.
"Class M-1 Formula Rate": For each Distribution Date, a per annum rate
equal to the lesser of (a) One-Month LIBOR as of the related LIBOR Determination
Date, plus the Class M-1 Certificate Margin and (b) the Maximum Cap Rate.
"Class M-1 Pass-Through Rate": For any Distribution Date, a per annum rate
equal to the lesser of (a) the Class M-1 Formula Rate and (b) the Net WAC Cap.
"Class M-1 Principal Distribution Amount": For any Distribution Date on or
after the Stepdown Date and as long as a Trigger Event is not in effect, the
excess of (x) the sum of (i) the Certificate Principal Balances of the Class A
Certificates (after taking into account the payment of the Class A Principal
Distribution Amount on such Distribution Date) and (ii) the Certificate
Principal Balance of the Class M-1 Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) 75.50% and (ii)
the Pool Balance as of the last day of the related Collection Period and (B) the
Pool Balance as of the last day of the related Collection Period minus the
product of 0.50% and the Cut-off Date Aggregate Principal Balance.
14
"Class M-1 Realized Loss Amortization Amount": As to the Class M-1
Certificates and as of any Distribution Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-1 Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum
of the amounts described in Section 4.02(b)(i) through (ii) hereof, in each case
for such Distribution Date.
"Class M-2 Applied Realized Loss Amount": As to the Class M-2 Certificates
and as of any Distribution Date, the lesser of (x) the Certificate Principal
Balance thereof (after taking into account the distribution of the Principal
Distribution Amount on such Distribution Date, but prior to the application of
the Class M-2 Applied Realized Loss Amount, if any, on such Distribution Date)
and (y) the excess of (i) the related Applied Realized Loss Amount as of such
Distribution Date over (ii) the sum of the Class M-3 Applied Realized Loss
Amount, the Class M-4 Applied Realized Loss Amount, the Class M-5 Applied
Realized Loss Amount, the Class M-6 Applied Realized Loss Amount and the Class
M-7 Applied Realized Loss Amount as of such Distribution Date.
"Class M-2 Certificate": Any one of the Class M-2 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit C-3, executed by the Trustee, and authenticated and delivered by the
Certificate Registrar representing the right to distributions as set forth
herein and therein and evidencing a regular interest in REMIC 2 for purposes of
the REMIC Provisions.
"Class M-2 Certificate Margin": For each Distribution Date (i) on or prior
to the Optional Termination Date, 1.15% per annum, and (ii) following the
Optional Termination Date, 1.725% per annum.
"Class M-2 Formula Rate": For each Distribution Date, a per annum rate
equal to the lesser of (a) One-Month LIBOR as of the related LIBOR Determination
Date, plus the Class M-2 Certificate Margin and (b) the Maximum Cap Rate.
"Class M-2 Pass-Through Rate": For any Distribution Date, a per annum rate
equal to the lesser of (a) the Class M-2 Formula Rate and (b) the Net WAC Cap.
"Class M-2 Principal Distribution Amount": For any Distribution Date on or
after the Stepdown Date and as long as a Trigger Event is not in effect, the
excess of (x) the sum of (i) the Certificate Principal Balances of the Class A
Certificates (after taking into account the payment of the Class A Principal
Distribution Amount on such Distribution Date), (ii) the Certificate Principal
Balance of the Class M-1 Certificates (after taking into account the payment of
the Class M-1 Principal Distribution Amount on such Distribution Date) and (iii)
the Certificate Principal Balance of the Class M-2 Certificates immediately
prior to such Distribution Date over (y) the lesser of (A) the product of (i)
86.50% and (ii) the Pool Balance as of the last day of the related Collection
Period and (B) the Pool Balance as of the last day of the related Collection
Period minus the product of 0.50% and the Cut-off Date Aggregate Principal
Balance.
"Class M-2 Realized Loss Amortization Amount": As to the Class M-2
Certificates and as of any Distribution Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-2 Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow
15
Amount over (ii) the sum of the amounts described in Section 4.02(b)(i) through
(v) hereof, in each case for such Distribution Date.
"Class M-3 Applied Realized Loss Amount": As to the Class M-3 Certificates
and as of any Distribution Date, the lesser of (x) the Certificate Principal
Balance thereof (after taking into account the distribution of the Principal
Distribution Amount on such Distribution Date, but prior to the application of
the Class M-3 Applied Realized Loss Amount, if any, on such Distribution Date)
and (y) the excess of (i) the related Applied Realized Loss Amount as of such
Distribution Date over (ii) the sum of the Class M-4 Applied Realized Loss
Amount, the Class M-5 Applied Realized Loss Amount, the Class M-6 Applied
Realized Loss Amount and the Class M-7 Applied Realized Loss Amount as of such
Distribution Date.
"Class M-3 Certificate": Any one of the Class M-3 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit C-4, executed by the Trustee, and authenticated and delivered by the
Certificate Registrar representing the right to distributions as set forth
herein and therein and evidencing a regular interest in REMIC 3 for purposes of
the REMIC Provisions.
"Class M-3 Certificate Margin": For each Distribution Date (i) on or prior
to the Optional Termination Date, 1.40% per annum, and (ii) following the
Optional Termination Date, 2.10% per annum.
"Class M-3 Formula Rate": For each Distribution Date, a per annum rate
equal to the lesser of (a) One-Month LIBOR as of the related LIBOR Determination
Date, plus the Class M-3 Certificate Margin and (b) the Maximum Cap Rate.
"Class M-3 Interest": An uncertificated interest in the Trust Fund held by
the Trustee on behalf of the holders of the Class M-3 Certificates, evidencing a
regular interest in REMIC 2 for purposes of the REMIC Provisions.
"Class M-3 Pass-Through Rate": For any Distribution Date, a per annum rate
equal to the lesser of (a) the Class M-3 Formula Rate and (b) the Net WAC Cap.
"Class M-3 Principal Distribution Amount": As of any Distribution Date on
or after the Stepdown Date and as long as a Trigger Event is not in effect, the
excess of (x) the sum of (i) the sum of the Certificate Principal Balances of
the Class A Certificates (after taking into account the payment of the Class A
Principal Distribution Amount on such Distribution Date), (ii) the Certificate
Principal Balance of the Class M-1 Certificates (after taking into account the
payment of the Class M-1 Principal Distribution Amount on such Distribution
Date), (iii) the Certificate Principal Balance of the Class M-2 Certificates
(after taking into account the payment of the Class M-2 Principal Distribution
Amount on such Distribution Date), and (iv) the Certificate Principal Balance of
the Class M-3 Certificates immediately prior to such Distribution Date over (y)
the lesser of (A) the product of (i) 89.00% and (ii) the Pool Balance as of the
last day of the related Collection Period and (B) the Pool Balance as of the
last day of the related Collection Period minus the product of 0.50% and the
Cut-off Date Aggregate Principal Balance.
"Class M-3 Realized Loss Amortization Amount": As to the Class M-3
Certificates and as of any Distribution Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-3
16
Certificates as of such Distribution Date and (y) the excess of (i) the Monthly
Excess Cashflow Amount over (ii) the sum of the amounts described in Section
4.02(b)(i) through (viii) hereof, in each case for such Distribution Date.
"Class M-4 Applied Realized Loss Amount": As to the Class M-4 Certificates
and as of any Distribution Date, the lesser of (x) the Certificate Principal
Balance thereof (after taking into account the distribution of the Principal
Distribution Amount on such Distribution Date, but prior to the application of
the Class M-4 Applied Realized Loss Amount, if any, on such Distribution Date)
and (y) the excess of (i) the related Applied Realized Loss Amount as of such
Distribution Date over (ii) the sum of the Class M-5 Applied Realized Loss
Amount, the Class M-6 Applied Realized Loss Amount and the Class M-7 Applied
Realized Loss Amount as of such Distribution Date.
"Class M-4 Certificate": Any one of the Class M-4 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit C-5, executed by the Trustee, and authenticated and delivered by the
Certificate Registrar representing the right to distributions as set forth
herein and therein and evidencing a regular interest in REMIC 4 for purposes of
the REMIC Provisions.
"Class M-4 Certificate Margin": For each Distribution Date (i) on or prior
to the Optional Termination Date, 1.65% per annum, and (ii) following the
Optional Termination Date, 2.475% per annum.
"Class M-4 Formula Rate": For each Distribution Date, a per annum rate
equal to the lesser of (a) One-Month LIBOR as of the related LIBOR Determination
Date, plus the Class M-4 Certificate Margin and (b) the Maximum Cap Rate.
"Class M-4 Interest": An uncertificated interest in the Trust Fund held by
the Trustee on behalf of the holders of the Class M-4 Certificates, evidencing a
regular interest in REMIC 2 for purposes of the REMIC Provisions.
"Class M-4 Pass-Through Rate": For any Distribution Date, a per annum rate
equal to the lesser of (a) the Class M-4 Formula Rate and (b) the Net WAC Cap.
"Class M-4 Principal Distribution Amount": As of any Distribution Date on
or after the Stepdown Date and as long as a Trigger Event is not in effect, the
excess of (x) the sum of (i) the sum of the Certificate Principal Balances of
the Class A Certificates (after taking into account the payment of the Class A
Principal Distribution Amount on such Distribution Date), (ii) the Certificate
Principal Balance of the Class M-1 Certificates (after taking into account the
payment of the Class M-1 Principal Distribution Amount on such Distribution
Date), (iii) the Certificate Principal Balance of the Class M-2 Certificates
(after taking into account the payment of the Class M-2 Principal Distribution
Amount on such Distribution Date), (iv) the Certificate Principal Balance of the
Class M-3 Certificates (after taking into account the payment of the Class M-3
Principal Distribution Amount on such Distribution Date) and (v) the Certificate
Principal Balance of the Class M-4 Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) 92.00% and (ii)
the Pool Balance as of the last day of the
17
related Collection Period and (B) the Pool Balance as of the last day of the
related Collection Period minus the product of 0.50% and the Cut-off Date
Aggregate Principal Balance.
"Class M-4 Realized Loss Amortization Amount": As to the Class M-4
Certificates and as of any Distribution Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-4 Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum
of the amounts described in Section 4.02(b)(i) through (xi) hereof, in each case
for such Distribution Date.
"Class M-5 Applied Realized Loss Amount": As to the Class M-5 Certificates
and as of any Distribution Date, the lesser of (x) the Certificate Principal
Balance thereof (after taking into account the distribution of the Principal
Distribution Amount on such Distribution Date, but prior to the application of
the Class M-5 Applied Realized Loss Amount, if any, on such Distribution Date)
and (y) the excess of (i) the related Applied Realized Loss Amount as of such
Distribution Date over (ii) the sum of the Class M-6 Applied Realized Loss
Amount and the Class M-7 Applied Realized Loss Amount as of such Distribution
Date.
"Class M-5 Certificate": Any one of the Class M-5 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit C-6, executed by the Trustee, and authenticated and delivered by the
Certificate Registrar representing the right to distributions as set forth
herein and therein and evidencing a regular interest in REMIC 5 for purposes of
the REMIC Provisions.
"Class M-5 Certificate Margin": For each Distribution Date (i) on or prior
to the Optional Termination Date, 1.80% per annum, and (ii) following the
Optional Termination Date, 2.70% per annum.
"Class M-5 Formula Rate": For each Distribution Date, a per annum rate
equal to the lesser of (a) One-Month LIBOR as of the related LIBOR Determination
Date, plus the Class M-5 Certificate Margin and (b) the Maximum Cap Rate.
"Class M-5 Interest": An uncertificated interest in the Trust Fund held by
the Trustee on behalf of the holders of the Class M-5 Certificates, evidencing a
regular interest in REMIC 2 for purposes of the REMIC Provisions.
"Class M-5 Pass-Through Rate": For any Distribution Date, a per annum rate
equal to the lesser of (a) the Class M-5 Formula Rate and (b) the Net WAC Cap.
"Class M-5 Principal Distribution Amount": As of any Distribution Date on
or after the Stepdown Date and as long as a Trigger Event is not in effect, the
excess of (x) the sum of (i) the sum of the Certificate Principal Balances of
the Class A Certificates (after taking into account the payment of the Class A
Principal Distribution Amount on such Distribution Date), (ii) the Certificate
Principal Balance of the Class M-1 Certificates (after taking into account the
payment of the Class M-1 Principal Distribution Amount on such Distribution
Date), (iii) the Certificate Principal Balance of the Class M-2 Certificates
(after taking into account the payment of the Class M-2 Principal Distribution
Amount on such Distribution Date), (iv) the Certificate Principal Balance of the
Class M-3 Certificates (after taking into account the payment of the Class M-3
Principal Distribution Amount on such Distribution Date), (v) the Certificate
Principal
18
Balance of the Class M-4 Certificates (after taking into account the payment of
the Class M-4 Principal Distribution Amount on such Distribution Date) and (vi)
the Certificate Principal Balance of the Class M-5 Certificates immediately
prior to such Distribution Date over (y) the lesser of (A) the product of (i)
94.50% and (ii) the Pool Balance as of the last day of the related Collection
Period and (B) the Pool Balance as of the last day of the related Collection
Period minus the product of 0.50% and the Cut-off Date Aggregate Principal
Balance.
"Class M-5 Realized Loss Amortization Amount": As to the Class M-5
Certificates and as of any Distribution Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-5 Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum
of the amounts described in Section 4.02(b)(i) through (xiv) hereof, in each
case for such Distribution Date.
"Class M-6 Applied Realized Loss Amount": As to the Class M-6 Certificates
and as of any Distribution Date, the lesser of (x) the Certificate Principal
Balance thereof (after taking into account the distribution of the Principal
Distribution Amount on such Distribution Date, but prior to the application of
the Class M-6 Applied Realized Loss Amount, if any, on such Distribution Date)
and (y) the excess of (i) the related Applied Realized Loss Amount as of such
Distribution Date over (ii) the Class M-7 Applied Realized Loss Amount as of
such Distribution Date.
"Class M-6 Certificate": Any one of the Class M-6 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit C-7, executed by the Trustee, and authenticated and delivered by the
Certificate Registrar representing the right to distributions as set forth
herein and therein and evidencing a regular interest in REMIC 6 for purposes of
the REMIC Provisions.
"Class M-6 Certificate Margin": For each Distribution Date (i) on or prior
to the Optional Termination Date, 3.00% per annum, and (ii) following the
Optional Termination Date, 4.50% per annum.
"Class M-6 Formula Rate": For each Distribution Date, a per annum rate
equal to the lesser of (a) One-Month LIBOR as of the related LIBOR Determination
Date, plus the Class M-6 Certificate Margin and (b) the Maximum Cap Rate.
"Class M-6 Interest": An uncertificated interest in the Trust Fund held by
the Trustee on behalf of the holders of the Class M-6 Certificates, evidencing a
regular interest in REMIC 2 for purposes of the REMIC Provisions.
"Class M-6 Pass-Through Rate": For any Distribution Date, a per annum rate
equal to the lesser of (a) the Class M-6 Formula Rate and (b) the Net WAC Cap.
"Class M-6 Principal Distribution Amount": As of any Distribution Date on
or after the Stepdown Date and as long as a Trigger Event is not in effect, the
excess of (x) the sum of (i) the sum of the Certificate Principal Balances of
the Class A Certificates (after taking into account the payment of the Class A
Principal Distribution Amount on such Distribution Date), (ii) the Certificate
Principal Balance of the Class M-1 Certificates (after taking into account the
payment of the Class M-1 Principal Distribution Amount on such Distribution
Date), (iii) the Certificate Principal Balance of the Class M-2 Certificates
(after taking into account the payment of the
19
Class M-2 Principal Distribution Amount on such Distribution Date), (iv) the
Certificate Principal Balance of the Class M-3 Certificates (after taking into
account the payment of the Class M-3 Principal Distribution Amount on such
Distribution Date), (v) the Certificate Principal Balance of the Class M-4
Certificates (after taking into account the payment of the Class M-4 Principal
Distribution Amount on such Distribution Date), (vi) the Certificate Principal
Balance of the Class M-5 Certificates immediately prior to such Distribution
Date (after taking into account the payment of the Class M-5 Principal
Distribution Amount on such Distribution Date) and (vii) the Certificate
Principal Balance of the Class M-6 Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) 97.00% and (ii)
the Pool Balance as of the last day of the related Collection Period and (B) the
Pool Balance as of the last day of the related Collection Period minus the
product of 0.50% and the Cut-off Date Aggregate Principal Balance.
"Class M-6 Realized Loss Amortization Amount": As to the Class M-6
Certificates and as of any Distribution Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-6 Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum
of the amounts described in Section 4.02(b)(i) through (xvii) hereof, in each
case for such Distribution Date.
"Class M-7 Applied Realized Loss Amount": As to the Class M-7 Certificates
and as of any Distribution Date, the lesser of (x) the Certificate Principal
Balance thereof (after taking into account the distribution of the Principal
Distribution Amount on such Distribution Date, but prior to the application of
the Class M-7 Applied Realized Loss Amount, if any, on such Distribution Date)
and (y) the related Applied Realized Loss Amount as of such Distribution Date.
"Class M-7 Certificate": Any one of the Class M-7 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit C-8, executed by the Trustee, and authenticated and delivered by the
Certificate Registrar representing the right to distributions as set forth
herein and therein and evidencing a regular interest in REMIC 7 for purposes of
the REMIC Provisions.
"Class M-7 Certificate Margin": For each Distribution Date (i) on or prior
to the Optional Termination Date, 3.50% per annum, and (ii) following the
Optional Termination Date, 5.25% per annum.
"Class M-7 Formula Rate": For each Distribution Date, a per annum rate
equal to the lesser of (a) One-Month LIBOR as of the related LIBOR Determination
Date, plus the Class M-7 Certificate Margin and (b) the Maximum Cap Rate.
"Class M-7 Interest": An uncertificated interest in the Trust Fund held by
the Trustee on behalf of the holders of the Class M-7 Certificates, evidencing a
regular interest in REMIC 2 for purposes of the REMIC Provisions.
"Class M-7 Pass-Through Rate": For any Distribution Date, a per annum rate
equal to the lesser of (a) the Class M-7 Formula Rate and (b) the Net WAC Cap.
"Class M-7 Principal Distribution Amount": As of any Distribution Date on
or after the Stepdown Date and as long as a Trigger Event is not in effect, the
excess of (x) the sum of (i) the
20
sum of the Certificate Principal Balances of the Class A Certificates (after
taking into account the payment of the Class A Principal Distribution Amount on
such Distribution Date), (ii) the Certificate Principal Balance of the Class M-1
Certificates (after taking into account the payment of the Class M-1 Principal
Distribution Amount on such Distribution Date), (iii) the Certificate Principal
Balance of the Class M-2 Certificates (after taking into account the payment of
the Class M-2 Principal Distribution Amount on such Distribution Date), (iv) the
Certificate Principal Balance of the Class M-3 Certificates (after taking into
account the payment of the Class M-3 Principal Distribution Amount on such
Distribution Date), (v) the Certificate Principal Balance of the Class M-4
Certificates (after taking into account the payment of the Class M-4 Principal
Distribution Amount on such Distribution Date), (vi) the Certificate Principal
Balance of the Class M-5 Certificates immediately prior to such Distribution
Date (after taking into account the payment of the Class M-5 Principal
Distribution Amount on such Distribution Date), (vii) the Certificate Principal
Balance of the Class M-6 Certificates immediately prior to such Distribution
Date (after taking into account the payment of the Class M-6 Principal
Distribution Amount on such Distribution Date), and (viii) the Certificate
Principal Balance of the Class M-7 Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) 99.00% and (ii)
the Pool Balance as of the last day of the related Collection Period and (B) the
Pool Balance as of the last day of the related Collection Period minus the
product of 0.50% and the Cut-off Date Aggregate Principal Balance.
"Class M-7 Realized Loss Amortization Amount": As to the Class M-7
Certificates and as of any Distribution Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-7 Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum
of the amounts described in Section 4.02(b)(i) through (xx) hereof, in each case
for such Distribution Date.
"Class P Certificate": Any one of the Certificates with a "P" designated on
the face thereof substantially in the form annexed hereto as Exhibit C-10,
executed by the Trustee on behalf of the Trust and authenticated and delivered
by the Certificate Registrar, representing the right to distributions as set
forth herein and therein.
"Class R Certificate": The Class R Certificate executed by the Trustee on
behalf of the Trust, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit C-1 and
evidencing the ownership of the Residual Interest in each of REMIC 1 and REMIC
2. The Class R Certificate represents the ownership of the Class R-1 Interest
and Class R-2 Interest.
"Class RX Certificate": The Class RX Certificate executed by the Trustee,
and authenticated and delivered by the Certificate Registrar, substantially in
the form annexed hereto as Exhibit C-1 and evidencing the ownership of the Class
R-3 Interest, the Class R-4 Interest, the Class R-5 Interest, the Class R-6
Interest, the Class R-7 Interest and the Class R-8 Interest.
"Class R-1 Interest": The uncertificated residual interest in REMIC 1.
"Class R-2 Interest": The uncertificated residual interest in REMIC 2.
"Class R-3 Interest": The uncertificated Residual Interest in REMIC 3.
21
"Class R-4 Interest": The uncertificated Residual Interest in REMIC 4.
"Class R-5 Interest": The uncertificated Residual Interest in REMIC 5.
"Class R-6 Interest": The uncertificated Residual Interest in REMIC 6.
"Class R-7 Interest": The uncertificated Residual Interest in REMIC 7.
"Class R-8 Interest": The uncertificated Residual Interest in REMIC 8.
"Closing Date": March 30, 2004.
"Code": The Internal Revenue Code of 1986, as it may be amended from time
to time.
"Collection Account": The account or accounts created and maintained by the
Servicer pursuant to Section 3.04, which shall be entitled "Collection Account,
Xxxxxx Loan Servicing LP, as Servicer for the Trust under the Pooling and
Servicing Agreement dated as of March 1, 2004 among Asset Backed Funding
Corporation, as Depositor, Xxxxxx Loan Servicing LP, as Servicer, and JPMorgan
Chase Bank, as Trustee, in trust for registered Holders of ABFC 2004-AHL1 Trust,
ABFC Asset-Backed Certificates, Series 2004-AHL1," and which must be an Eligible
Account.
"Collection Period": With respect to any Distribution Date, the period from
the second day of the calendar month preceding the month in which such
Distribution Date occurs through the first day of the month in which such
Distribution Date occurs.
"Compensating Interest": As defined in Section 3.23 hereof.
"Condemnation Proceeds": All awards or settlements in respect of a taking
of a Mortgaged Property by exercise of the power of eminent domain or
condemnation.
"Corporate Trust Office": The principal corporate trust office of the
Trustee at which at any particular time its corporate trust business in
connection with this Agreement shall be administered, which office at the date
of the execution of this instrument is located at 4 New York Plaza, 6th Floor,
New York, New York, 10004-2477, Attention: Institutional Trust Services/Global
Debt - ABFC 2004-AHL1 or at such other address as the Trustee may designate from
time to time by notice to the Certificateholders, the Depositor and the
Servicer.
"Corresponding Classes": With respect to REMIC 1 Regular Interest LT1A1,
REMIC 1 Regular Interest LT1A2, REMIC 1 Regular Interest LT1M1, REMIC 1 Regular
Interest LT1M2, REMIC 1 Regular Interest LT1M3, REMIC 1 Regular Interest LT1M4,
REMIC 1 Regular Interest LT1M5, REMIC 1 Regular Interest LT1M6, and REMIC 1
Regular Interest LT1M7, the Class A-1 Certificates, the Class A-2 Certificates,
the Class M-1 Certificates, the Class M-2 Certificates, the Class M-3 Interest,
the Class M-4 Interest, the Class M-5 Interest, the Class M-6 Interest and the
Class M-7 Interest. With respect to the Class M-3 Interest, the Class M-4
Interest, the Class M-5 Interest, the Class M-6 Interest, the Class M-7 Interest
and the Class CE Interest, the Class M-3 Certificates, the Class M-4
Certificates, the Class M-5 Certificates, the Class M-6 Certificates, the Class
M-7 Certificates and the Class CE Certificates.
22
"Credit Enhancement Percentage": For any Distribution Date, the percentage
obtained by dividing (x) the sum of (i) the aggregate Certificate Principal
Balances of the Mezzanine Certificates and (ii) the Overcollateralization
Amount, in each case after taking into account the distribution of the Principal
Distribution Amount on such Distribution Date by (y) the Pool Balance as of the
last day of the related Collection Period.
"Cumulative Loss Trigger Event": With respect to any Distribution Date on
or after the Distribution Date occurring in April 2007, a Cumulative Loss
Trigger Event shall exist if the aggregate Realized Losses incurred from and
after the Closing Date (reduced by the aggregate amount of Subsequent Recoveries
received from and after the Closing Date) divided by the Cut-off Date Aggregate
Principal Balance exceeds the applicable percentage with respect to such
Distribution Date (the "Cumulative Loss Trigger Percentage"). The Cumulative
Loss Trigger Percentage for certain Distribution Dates is set forth below. The
Cumulative Loss Trigger Percentage will increase each month and is calculated
using straight line interpolation methodology between the Cumulative Loss
Trigger Percentage for the particular Distribution Dates specified in the table
below.
-------------------------------------------------------------------
Distribution Date Occurring In Cumulative Loss Trigger Percentage
-------------------------------------------------------------------
April 2007 - March 2008 5.00%
-------------------------------------------------------------------
April 2008 - March 2009 7.50%
-------------------------------------------------------------------
April 2009 - March 2010 10.00%
-------------------------------------------------------------------
April 2010 and thereafter 11.50%
-------------------------------------------------------------------
""Custodian": Initially, JPMorgan Chase Bank; thereafter any other
Custodian acceptable to the Depository and selected by the Trustee.
Cut-off Date": March 1, 2004.
"Cut-off Date Aggregate Principal Balance": The aggregate of the Cut-off
Date Principal Balances of the Mortgage Loans.
"Cut-off Date Principal Balance": With respect to any Mortgage Loan, the
unpaid principal balance thereof as of the Cut-off Date after application of
funds received or advanced on or before such date (or as of the applicable date
of substitution with respect to an Eligible Substitute Mortgage Loan).
"Debt Service Reduction": With respect to any Mortgage Loan, a reduction in
the scheduled Monthly Payment for such Mortgage Loan by a court of competent
jurisdiction in a proceeding under the Bankruptcy Code, except such a reduction
resulting from a Deficient Valuation.
"Defective Mortgage Loan": A Mortgage Loan replaced or to be replaced by
one or more Eligible Substitute Mortgage Loans.
"Deficient Valuation": With respect to any Mortgage Loan, a valuation of
the related Mortgaged Property by a court of competent jurisdiction in an amount
less than the then outstanding principal balance of the Mortgage Loan, which
valuation results from a proceeding initiated under the Bankruptcy Code.
23
"Definitive Certificates": As defined in Section 5.02(c) hereof.
"Delinquent": Any Mortgage Loan with respect to which the Monthly Payment
due on a Due Date is not made by the close of business on the next scheduled Due
Date for such Mortgage Loan.
"Depositor": Asset Backed Funding Corporation, a Delaware corporation, or
any successor in interest.
"Depository": The initial depository shall be The Depository Trust Company,
whose nominee is Cede & Co., or any other organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act. The Depository shall
initially be the registered Holder of the Book-Entry Certificates. The
Depository shall at all times be a "clearing corporation" as defined in Section
8-102(3) of the Uniform Commercial Code of the State of New York.
"Depository Participant": A broker, dealer, bank or other financial
institution or other person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
"Determination Date": With respect to any Distribution Date, the 18th day
of the calendar month in which such Distribution Date occurs or, if such 18th
day is not a Business Day, the Business Day immediately preceding such 18th day.
"Directly Operate": With respect to any REO Property, the furnishing or
rendering of services to the tenants thereof, the management or operation of
such REO Property, the holding of such REO Property primarily for sale to
customers, the performance of any construction work thereon or any use of such
REO Property in a trade or business conducted by the Trust other than through an
Independent Contractor; provided, however, that the Trustee (or the Servicer
under this Agreement) shall not be considered to Directly Operate an REO
Property solely because the Trustee (or the Servicer under this Agreement)
establishes rental terms, chooses tenants, enters into or renews leases, deals
with taxes and insurance, or makes decisions as to repairs or capital
expenditures with respect to such REO Property.
"Disqualified Organization": A "disqualified organization" under Section
860E of the Code, which as of the Closing Date is any of: (i) the United States,
any state or political subdivision thereof, any possession of the United States,
any foreign government, any international organization, or any agency or
instrumentality of any of the foregoing, (ii) any organization (other than a
cooperative described in Section 521 of the Code) which is exempt from the tax
imposed by Chapter 1 of the Code unless such organization is subject to the tax
imposed by Section 511 of the Code, (iii) any organization described in Section
1381(a)(2)(C) of the Code, (iv) a foreign government, any international
organization, or any agency or instrumentality of the foregoing, (v) an
"electing large partnership," or (vi) any other Person so designated by the
Trustee based upon an Opinion of Counsel provided by nationally recognized
counsel to the Trustee that the holding of an ownership interest in the Class R
Certificate by such Person may cause any REMIC created hereunder or any Person
having an ownership interest in any Class of Certificates (other than such
Person) to incur liability for any federal tax imposed under the Code that would
not otherwise be imposed but for the transfer of an ownership interest
24
in the Class R Certificate to such Person. A corporation will not be treated as
an instrumentality of the United States or of any state or political subdivision
thereof if all of its activities are subject to tax, except for Xxxxxxx Mac, and
a majority of its board of directors is not selected by a governmental unit. The
term "United States," "state" and "international organization" shall have the
meanings set forth in Section 7701 of the Code.
"Distribution Account": The trust account or accounts created and
maintained by the Trustee pursuant to Section 3.04(b) which shall be entitled
"Distribution Account, JPMorgan Chase Bank, as Trustee, in trust for the
registered Holders of ABFC 2004-AHL1 Trust, ABFC Asset-Backed Certificates,
Series 2004-AHL1" and which must be an Eligible Account.
"Distribution Date": The 25th day of any calendar month, or if such 25th
day is not a Business Day, the Business Day immediately following such 25th day,
commencing in April 2004.
"Distribution Date Statement": As defined in Section 4.06(a) hereof.
"Due Date": With respect to each Mortgage Loan and any Distribution Date,
the day of the calendar month in which such Distribution Date occurs on which
the Monthly Payment for such Mortgage Loan was due, exclusive of any grace
period.
"Eligible Account": Any of (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the short-term unsecured debt obligations of such holding company) are
rated "A-1+" by S&P and "P-1" by Xxxxx'x (or comparable ratings if S&P and
Xxxxx'x are not the Rating Agencies) at the time any amounts are held on deposit
therein, (ii) an account or accounts the deposits in which are fully insured by
the FDIC, (iii) a trust account or accounts maintained with the trust department
of a federal or state chartered depository institution, national banking
association or trust company acting in its fiduciary capacity or (iv) an account
otherwise acceptable to each Rating Agency without reduction or withdrawal of
their then current ratings of the Certificates as evidenced by a letter from
each Rating Agency to the Trustee. Eligible Accounts may bear interest.
"Eligible Substitute Mortgage Loan": A mortgage loan substituted for a
Defective Mortgage Loan pursuant to the terms of this Agreement which must, on
the date of such substitution, (i) have an outstanding principal balance, after
application of all scheduled payments of principal and interest due during or
prior to the month of substitution, not in excess of, and not more than 5.00%
less than, the outstanding principal balance of the Defective Mortgage Loan as
of the Due Date in the calendar month during which the substitution occurs, (ii)
have a Mortgage Interest Rate, with respect to a Fixed-Rate Mortgage Loan, not
less than the Mortgage Interest Rate of the Defective Mortgage Loan and not more
than 1.00% in excess of the Mortgage Interest Rate of such Defective Mortgage
Loan, (iii) have the same Due Date as the Defective Mortgage Loan; (iv) if an
Adjustable-Rate Mortgage Loan, have a Maximum Mortgage Interest Rate not less
than the Maximum Mortgage Interest Rate for the Defective Mortgage Loan, (v) if
an Adjustable-Rate Mortgage Loan, have a Minimum Mortgage Interest Rate not less
than the Minimum Mortgage Interest Rate of the Defective Mortgage Loan, (vi) if
25
an Adjustable-Rate Mortgage Loan, have a Gross Margin equal to or greater than
the Gross Margin of the Defective Mortgage Loan, (vii) if an Adjustable-Rate
Mortgage Loan, have the same Index as the Defective Mortgage Loan, (viii) if an
Adjustable-Rate Mortgage Loan, have a next Adjustment Date not more than two
months later than the next Adjustment Date on the Defective Mortgage Loan, an
Eligible Substitute Mortgage Loan must have all Adjustment Dates occurring
during the same Interest Accrual Period during which Adjustment Dates occur with
respect to the Defective Mortgage Loan, (ix) have a remaining term to maturity
not greater than (and not more than one year less than) that of the Defective
Mortgage Loan, (x) be current as of the date of substitution, (xi) have a
Loan-to-Value Ratio as of the date of substitution equal to or lower than the
Loan-to-Value Ratio of the Defective Mortgage Loan as of such date, (xii) have a
risk grading determined by the Seller at least equal to the risk grading
assigned on the Defective Mortgage Loan, (xiii) have been underwritten or
reunderwritten in accordance with the same underwriting criteria and guidelines
as the Defective Mortgage Loan and (xiv) conform to each representation and
warranty set forth in Section 3.01 of the Mortgage Loan Purchase Agreement
applicable to the Defective Mortgage Loan. In the event that one or more
mortgage loans are substituted for one or more Defective Mortgage Loans, the
amounts described in clause (i) hereof shall be determined on the basis of
aggregate principal balances, the Mortgage Interest Rates described in clause
(ii) hereof shall be determined on the basis of weighted average Mortgage
Interest Rates, the risk gradings described in clause (xii) hereof shall be
satisfied as to each such mortgage loan, the terms described in clause (ix)
hereof shall be determined on the basis of weighted average remaining term to
maturity, the Loan-to-Value Ratios described in clause (xi) hereof shall be
satisfied as to each such mortgage loan and, except to the extent otherwise
provided in this sentence, the representations and warranties described in
clause (xiv) hereof must be satisfied as to each Eligible Substitute Mortgage
Loan or in the aggregate, as the case may be.
"ERISA": The Employee Retirement Income Security Act of 1974, as amended.
"ERISA-Restricted Certificates": Any of the Class M-7, Class P, Class CE
and the Residual Certificates; and any Class of Certificates that no longer
satisfies the applicable ratings requirement of Prohibited Transaction Exemption
2002-41, 67 Fed. Reg. 54487 (August 22, 2002).
"Escrow Account": The account or accounts created and maintained pursuant
to Section 3.06.
"Escrow Payments": The amounts constituting ground rents, taxes,
assessments, water rates, mortgage insurance premiums, fire and hazard insurance
premiums and other payments required to be escrowed by the Mortgagor with the
mortgagee pursuant to any Mortgage Loan.
"Estate in Real Property": A fee simple estate in a parcel of real
property.
"Exchange Act": The Securities Exchange Act of 1934, as amended.
"Expense Fee Rate": The sum of (i) the Trustee Fee Rate and (ii) the
Servicing Fee Rate.
"Extended Period": As defined in Section 9.04(b).
26
"Extra Principal Distribution Amount": As of any Distribution Date, the
lesser of (x) the Monthly Excess Cashflow Amount for such Distribution Date and
(y) the Overcollateralization Deficiency for such Distribution Date.
"FDIC": Federal Deposit Insurance Corporation or any successor thereto.
"Fidelity Bond": Shall have the meaning assigned thereto in Section 3.12.
"Final Recovery Determination": With respect to any defaulted Mortgage Loan
or any REO Property (other than a Mortgage Loan or REO Property (i) purchased by
the Seller pursuant to or as contemplated by Section 2.03, (ii) purchased by the
Servicer pursuant to Section 3.16 or (iii) purchased by the Majority Class CE
Certificateholders or the Servicer pursuant to Section 10.01), a determination
made by the Servicer that all Insurance Proceeds, Condemnation Proceeds,
Liquidation Proceeds and other payments or recoveries which the Servicer, in its
reasonable good faith judgment, expects to be finally recoverable in respect
thereof have been so recovered. The Servicer shall maintain records, prepared by
a Servicing Officer, of each Final Recovery Determination made thereby.
"Final Scheduled Distribution Date": With respect to each Class of
Certificates, the date specified as such in the related form of certificate
attached hereto as an exhibit.
"Fixed-Rate Mortgage Loan": A Mortgage Loan which has a constant annual
rate at which interest accrues in accordance with the provisions of the related
Mortgage Note.
"Foreclosure Price": The amount reasonably expected to be received from the
sale of the related Mortgaged Property net of any expenses associated with
foreclosure proceedings.
"Grantor Trust": That portion of the Trust Fund exclusive of any REMIC
created hereunder which holds (a) any Prepayment Charges received in respect of
the Mortgage Loans, any Servicer Prepayment Charge Payment Amounts or any
Transferor Prepayment Charge Payment Amounts and the right of the Class P
Certificateholders to receive such Prepayment Charges, Servicer Prepayment
Charge Payment Amounts or Transferor Prepayment Charge Payment Amounts, (b) the
right of the Offered Certificates and the Class M-3, Class M-4, Class M-5, Class
M-6 and Class M-7 Certificates to receive Net WAC Rate Carryover Amounts, (c)
the Yield Maintenance Agreement, the Reserve Account and the beneficial interest
of the Class CE Certificates with respect thereto, subject to the obligation to
pay Net WAC Rate Carryover Amounts and (d) the obligation of the Class CE
Certificates to pay such Net WAC Rate Carryover Amounts.
"Gross Margin": With respect to each Adjustable-Rate Mortgage Loan, the
fixed percentage set forth in the related Mortgage Note that is added to the
Index on each Adjustment Date in accordance with the terms of the related
Mortgage Note used to determine the Mortgage Interest Rate for such Mortgage
Loan.
"HUD": The United States Department of Housing and Urban Development, or
any successor thereto.
27
"Independent": When used with respect to any specified Person, any such
Person who (i) is in fact independent of the Depositor, the Servicer and their
respective Affiliates, (ii) does not have any direct financial interest in or
any material indirect financial interest in the Depositor or the Servicer or any
Affiliate thereof, and (iii) is not connected with the Depositor or the Servicer
or any Affiliate thereof as an officer, employee, promoter, underwriter,
trustee, partner, director or Person performing similar functions; provided,
however, that a Person shall not fail to be Independent of the Depositor or the
Servicer or any Affiliate thereof merely because such Person is the beneficial
owner of 1.00% or less of any class of securities issued by the Depositor or the
Servicer or any Affiliate thereof, as the case may be.
"Independent Contractor": Either (i) any Person (other than the Servicer)
that would be an "independent contractor" with respect to REMIC 1 within the
meaning of Section 856(d)(3) of the Code if REMIC 1 were a real estate
investment trust (except that the ownership tests set forth in that section
shall be considered to be met by any Person that owns, directly or indirectly,
35 percent or more of any Class of Certificates), so long as such REMIC does not
receive or derive any income from such Person and provided that the relationship
between such Person and such REMIC is at arm's length, all within the meaning of
Treasury Regulation Section 1.856-4(b)(5), or (ii) any other Person (including
the Servicer) if the Trustee has received an Opinion of Counsel, which Opinion
of Counsel shall be an expense of the Trust Fund, to the effect that the taking
of any action in respect of any REO Property by such Person, subject to any
conditions therein specified, that is otherwise herein contemplated to be taken
by an Independent Contractor will not cause such REO Property to cease to
qualify as "foreclosure property" within the meaning of Section 860G(a)(8) of
the Code (determined without regard to the exception applicable for purposes of
Section 860D(a) of the Code), or cause any income realized in respect of such
REO Property to fail to qualify as Rents from Real Property.
"Index": With respect to each Adjustable-Rate Mortgage Loan and with
respect to each related Adjustment Date, the index as specified in the related
Mortgage Note.
"Initial Certificate Principal Balance": With respect to any Certificate of
a Class other than a Class P or Residual Certificate, the amount designated
"Initial Certificate Principal Balance" on the face thereof.
"Initial Overcollateralization Amount": $891,543.01.
"Insurance Proceeds": Proceeds of any title policy, hazard policy or other
insurance policy covering a Mortgage Loan, to the extent such proceeds are not
to be applied to the restoration of the related Mortgaged Property or released
to the Mortgagor in accordance with the procedures that the Servicer would
follow in servicing mortgage loans held for its own account, subject to the
terms and conditions of the related Mortgage Note and Mortgage.
"Interest Accrual Period": With respect to any Distribution Date and (i)
the Class X-0, Xxxxx X-0, Class M-1, Class M-2, Class M-3, Class M-4, Class M-5,
Class M-6, Class M-7 and Class CE Certificates, the period from the preceding
Distribution Date to the day prior to the current Distribution Date (or, in the
case of the first Distribution Date, the period from the Closing Date to the day
prior to the first Distribution Date), and (ii) the REMIC Regular
28
Interests, the calendar month immediately preceding the month in which
such Distribution Date occurs.
"Interest Only Mortgage Loan": A Mortgage Loan which requires only payments
of interest (and not principal) for a period of time specified in the related
Mortgage Note.
"Interest Percentage": With respect to any Class of Certificates (other
than the Class P and Residual Certificates) and any Distribution Date, the ratio
(expressed as a decimal carried to six places) of the Accrued Certificate
Interest for such Class to the sum of the Accrued Certificate Interest for all
Classes of Certificates, in each case with respect to such Distribution Date,
without regard to Relief Act Interest Shortfalls.
"Interest Remittance Amount": As of any Distribution Date, the sum, without
duplication, of (i) that portion of the Available Funds for such Distribution
Date attributable to all interest collected or advanced with respect to the
related Collection Period on the Mortgage Loans, (ii) all Compensating Interest
paid by the Servicer with respect to such Distribution Date with respect to the
Mortgage Loans, and (iii) the portion of any payment in connection with any
Principal Prepayment, Substitution Adjustment Amount, Purchase Price,
Termination Price, Net Liquidation Proceeds or Insurance Proceeds, relating to
interest with respect to the Mortgage Loans received during the related
Prepayment Period and (iv) any Reimbursement Amount received during the related
Prepayment Period.
"Late Collections": With respect to any Mortgage Loan, all amounts received
subsequent to the Determination Date immediately following any related
Collection Period, whether as late payments of Monthly Payments or as Insurance
Proceeds, Condemnation Proceeds, Liquidation Proceeds or otherwise, which
represent late payments or collections of principal and/or interest due (without
regard to any acceleration of payments under the related Mortgage and Mortgage
Note) but delinquent on a contractual basis for such Collection Period and not
previously recovered.
"Lender": As defined in Section 6.06(b) hereof.
"LIBOR Business Day": Any day on which banks in London, England and the
City of New York are open and conducting transactions in foreign currency and
exchange.
"LIBOR Determination Date": With respect to the Offered Certificates and
the Class M-3, Class M-4, Class M-5, Class M-6 and Class M-7 Certificates, (i)
for the first Distribution Date, the second LIBOR Business Day preceding the
Closing Date and (ii) for each subsequent Distribution Date, the second LIBOR
Business Day prior to the immediately preceding Distribution Date.
"Liquidated Mortgage Loan": As to any Distribution Date, any Mortgage
Loan in respect of which the Servicer has determined, in accordance with the
servicing procedures specified herein, as of the end of the related Prepayment
Period, that all Liquidation Proceeds, Condemnation Proceeds and Insurance
Proceeds which it expects to recover with respect to the liquidation of the
Mortgage Loan or disposition of the related REO Property have been recovered.
29
"Liquidation Proceeds": The amount (other than amounts received in respect
of the rental of any REO Property prior to REO Disposition) received by the
Servicer in connection with (i) the taking of all or a part of a Mortgaged
Property by exercise of the power of eminent domain or condemnation or (ii) the
liquidation of a defaulted Mortgage Loan by means of a trustee's sale,
foreclosure sale or otherwise.
"Liquidation Report": The report with respect to a Liquidated Mortgage Loan
in such form as is agreed to by the Servicer and the Trustee listing (i) the
sale price of the related Mortgaged Property or amount of the REO Disposition,
(ii) the amount of any Realized Loss (or gain) with respect to such Liquidated
Mortgage Loan, (iii) the expenses relating to the liquidation of such Liquidated
Mortgage Loan and (iv) such other information as is agreed to by the Servicer
and the Trustee.
"Loan-to-Value Ratio": As of any date and Mortgage Loan, the fraction,
expressed as a percentage, the numerator of which is the Principal Balance of
the Mortgage Loan and the denominator of which is the Value of the related
Mortgaged Property.
"Losses": As defined in Section 9.03.
"Lost Note Affidavit": With respect to any Mortgage Loan as to which the
original Mortgage Note has been permanently lost or destroyed and has not been
replaced, an affidavit from the Seller certifying that the original Mortgage
Note has been lost, misplaced or destroyed (together with a copy of the related
Mortgage Note and indemnifying the Trust against any loss, cost or liability
resulting from the failure to deliver the original Mortgage Note) in the form of
Exhibit H hereto.
"Majority Certificateholders": The Holders of Certificates evidencing at
least 51% of the Voting Rights.
"Majority Class CE Certificateholders": The Holders of Class CE
Certificates representing at least 51% of the Notional Amount of such Class.
"Marker Rate": With respect to the Class CE Certificates and any
Distribution Date, a per annum rate equal to two (2) times the weighted average
of the Uncertificated REMIC Pass-Through Rates for REMIC 1 Regular Interest
LT1A1, REMIC 1 Regular Interest LT1A2, REMIC 1 Regular Interest LT1M1, REMIC 1
Regular Interest LT1M2, REMIC 1 Regular Interest LT1M3, REMIC 1 Regular Interest
LT1M4, REMIC 1 Regular Interest LT1M5, REMIC 1 Regular Interest LT1M6, REMIC 1
Regular Interest LT1M7 and REMIC 1 Regular Interest LT1ZZ, (i) with the rate on
each such REMIC 1 Uncertificated Regular Interest subject to a cap equal to the
Formula Rate of its Corresponding Class for the purposes of this calculation and
(ii) with the rate on REMIC 1 Regular Interest LT1ZZ subject to a cap of zero
for the purpose of this calculation; provided, however, that for this purpose,
calculations of the Uncertificated REMIC 1 Pass-Through Rate and the related
caps with respect to REMIC 1 Regular Interest LT1A1, REMIC 1 Regular Interest
LT1A2, REMIC 1 Regular Interest LT1M1, REMIC 1 Regular Interest LT1M2, REMIC 1
Regular Interest LT1M3, REMIC 1 Regular Interest LT1M4, REMIC 1 Regular Interest
LT1M5, REMIC Regular Interest LT1M6 and REMIC 1 Regular Interest
30
LT1M7 shall be multiplied by a fraction, the numerator of which is the actual
number of days in the Interest Accrual Period and the denominator of which is
30.
"Maximum Cap Rate": With respect to any Distribution Date for the Class A
and Mezzanine Certificates, a per annum rate equal to the average of the
Adjusted Net Maximum Mortgage Interest Rates of the Mortgage Loans weighted on
the basis of the Principal Balances of the Mortgage Loans as of the first day of
the related Collection Period, adjusted by multiplying such rate by a fraction,
the numerator of which is 30, and the denominator of which is equal to the
actual number of days in the related Interest Accrual Period.
"Maximum LT1ZZ Uncertificated Accrued Interest Deferral Amount": With
respect to any Distribution Date, the excess of (a) accrued interest at the
Uncertificated REMIC 1 Pass-Through Rate applicable to REMIC 1 Regular Interest
LT1ZZ for such Distribution Date on a balance equal to the Uncertificated
Principal Balance of REMIC 1 Regular Interest LT1ZZ minus the REMIC 1
Overcollateralized Amount, in each case for such Distribution Date, over (b)
Uncertificated Accrued Interest on REMIC Regular Interest LT1A1, REMIC 1 Regular
Interest LT1A2, REMIC 1 Regular Interest LT1M1, REMIC 1 Regular Interest LT1M2,
REMIC 1 Regular Interest LT1M3, REMIC 1 Regular Interest LT1M4, REMIC 1 Regular
Interest LT1M5, REMIC 1 Regular Interest LT1M6 and REMIC 1 Regular Interest
LT1M7, each subject to a cap equal to the Formula Rate of the related
Corresponding Class for the purpose of this calculation; provided, however, that
for this purpose, calculations of the Uncertificated REMIC 1 Pass-Through Rate
and the related caps with respect to REMIC 1 Regular Interest LT1A1, REMIC 1
Regular Interest LT1A2, REMIC 1 Regular Interest LT1M1, REMIC 1 Regular Interest
LT1M2, REMIC 1 Regular Interest LT1M3, REMIC 1 Regular Interest LT1M4, REMIC 1
Regular Interest LT1M5, REMIC 1 Regular Interest LT1M6 and REMIC 1 Regular
Interest LT1M7, shall be multiplied by a fraction, the numerator of which is the
actual number of days in the Interest Accrual Period and the denominator of
which is 30.
"Maximum Mortgage Interest Rate": With respect to each Adjustable-Rate
Mortgage Loan, the percentage set forth in the related Mortgage Note as the
maximum Mortgage Interest Rate thereunder.
"MERS": Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, or any successor to it.
"MERS Designated Mortgage Loan": Mortgage Loans for which (a) the
Responsible Party has designated or will designate MERS as, and has taken or
will take such action as is necessary to cause MERS to be, the mortgage of
record, as nominee for the Responsible Party, in accordance with MERS Procedure
Manual and (b) the Responsible Party has designated or will designate the Trust
as the Investor on the MERS(R) System.
"MERS Procedure Manual": The MERS Procedures Manual, as it may be amended,
supplemented or otherwise modified from time to time.
"MERS(R) System": MERS mortgage electronic registry system, as more
particularly described in the MERS Procedures Manual.
"Mezzanine Certificates": The Class M Certificates.
31
"Minimum Mortgage Interest Rate": With respect to each Adjustable-Rate
Mortgage Loan, the percentage set forth in the related Mortgage Note as the
minimum Mortgage Interest Rate thereunder.
"Monthly Excess Cashflow Amount": The sum of the Monthly Excess Interest
Amount, the Overcollateralization Release Amount and (without duplication) any
portion of the Principal Distribution Amount remaining after principal
distributions on the Class A Certificates and the Mezzanine Certificates.
"Monthly Excess Interest Amount": With respect to each Distribution Date,
the amount, if any, by which the Interest Remittance Amount for such
Distribution Date exceeds the aggregate amount distributed on such Distribution
Date pursuant to paragraphs (a) through (j) under Section 4.01.
"Monthly Payment": With respect to any Mortgage Loan, the scheduled monthly
payment of principal and interest on such Mortgage Loan which is payable by the
related Mortgagor from time to time under the related Mortgage Note, determined:
(a) after giving effect to (i) any Deficient Valuation and/or Debt Service
Reduction with respect to such Mortgage Loan and (ii) any reduction in the
amount of interest collectible from the related Mortgagor pursuant to the Relief
Act; (b) without giving effect to any extension granted or agreed to by the
Servicer pursuant to Section 3.01; and (c) on the assumption that all other
amounts, if any, due under such Mortgage Loan are paid when due.
"Moody's": Xxxxx'x Investors Service, Inc., and its successors, and if such
company shall for any reason no longer perform the functions of a securities
rating agency, "Moody's" shall be deemed to refer to any other "nationally
recognized statistical rating organization" as set forth on the most current
list of such organizations released by the Securities and Exchange Commission.
"Mortgage": The mortgage, deed of trust or other instrument creating a
first lien on, or first priority security interest in, a Mortgaged Property
securing a Mortgage Note.
"Mortgage File": The mortgage documents listed in Section 2.01 pertaining
to a particular Mortgage Loan and any additional documents required to be added
to the Mortgage File pursuant to this Agreement.
"Mortgage Interest Rate": With respect to each Mortgage Loan, the annual
rate at which interest accrues on such Mortgage Loan from time to time in
accordance with the provisions of the related Mortgage Note, which rate (i) in
the case of each Fixed-Rate Mortgage Loan shall remain constant at the rate set
forth in the applicable Mortgage Loan Schedule as the Mortgage Interest Rate in
effect immediately following the Cut-off Date and (ii) in the case of each
Adjustable-Rate Mortgage Loan (A) as of any date of determination until the
first Adjustment Date following the Cut-off Date shall be the rate set forth in
the applicable Mortgage Loan Schedule as the Mortgage Interest Rate in effect
immediately following the Cut-off Date and (B) as of any date of determination
thereafter shall be the rate as adjusted on the most recent Adjustment Date, to
equal the sum, rounded as provided in the Mortgage Note, of the Index,
determined as set forth in the related Mortgage Note, plus the related Gross
Margin subject to the
32
limitations set forth in the related Mortgage Note. With respect to each
Mortgage Loan that becomes an REO Property, as of any date of determination, the
annual rate determined in accordance with the immediately preceding sentence as
of the date such Mortgage Loan became an REO Property.
"Mortgage Loan": Each mortgage loan transferred and assigned to the Trustee
pursuant to Section 2.01 or Section 2.03(d) as from time to time held as a part
of the Trust Fund, the Mortgage Loans so held being identified in the Mortgage
Loan Schedule.
"Mortgage Loan Purchase Agreement": The agreement between the Seller and
the Depositor, dated as of March 30, 2004, regarding the transfer of the
Mortgage Loans by the Seller to or at the direction of the Depositor.
"Mortgage Loan Schedule": As of any date with respect to the Mortgage
Loans, the list of such Mortgage Loans included in the Trust Fund on such date,
separately identifying the Fixed-Rate Mortgage Loans and the Adjustable-Rate
Mortgage Loans, attached hereto as Exhibit D. The Mortgage Loan Schedule shall
set forth the following information with respect to each Mortgage Loan:
(1) the Mortgage Loan identifying number;
(2) the full street address, state and zip code of the Mortgaged Property;
(3) the type of Residential Dwelling constituting the Mortgaged Property;
(4) the occupancy status of the Mortgaged Property at origination;
(5) the original months to maturity;
(6) the date of origination;
(7) the first payment date;
(8) the stated maturity date;
(9) the stated remaining months to maturity;
(10) the original principal amount of the Mortgage Loan;
(11) the Principal Balance of each Mortgage Loan as of the Cut-off Date;
(12) the initial Mortgage Interest Rate;
(13) the Mortgage Interest Rate of the Mortgage Loan as of the Cut-off Date;
(14) the current principal and interest payment of the Mortgage Loan as of the
Cut-off Date;
(15) the contractual interest paid to date of the Mortgage Loan;
33
(16) the Loan-to-Value Ratio at origination and as of the Cut-off Date;
(17) a code indicating the delinquency status of the Mortgage Loan as of the
Cut-off Date;
(18) a code indicating whether the Mortgage Loan is an Adjustable Rate Mortgage
Loan or Fixed-Rate Mortgage Loan;
(19) with respect to each Adjustable-Rate Mortgage Loan, a code indicating the
Index that is associated with such Mortgage Loan;
(20) with respect to each Adjustable-Rate Mortgage Loan, the Gross Margin;
(21) with respect to each Adjustable-Rate Mortgage Loan, the Periodic Rate Cap;
(22) with respect to each Adjustable-Rate Mortgage Loan, the initial Periodic
Rate Cap;
(23) the Minimum Mortgage Interest Rate;
(24) the Maximum Mortgage Interest Rate;
(25) a code indicating whether the Mortgage Loan has a Prepayment Charge and the
type of Prepayment Charge and the term;
(26) with respect to each Adjustable-Rate Mortgage Loan, the first Adjustment
Date immediately following the Cut-off Date;
(27) with respect to each Adjustable-Rate Mortgage Loan, the rate adjustment
frequency;
(28) with respect to each Adjustable-Rate Mortgage Loan, the payment adjustment
frequency;
(29) the MERS identification number;
(30) a code indicating each credit score (i.e. FICO score) of the Mortgagor
obtained at the time of origination;
(31) the purpose of the Mortgage Loan;
(32) a code indicating the credit grade and specific loan/underwriting program
of each Mortgage Loan;
(33) the Value of the related Mortgaged Property;
(34) the date on which the first Monthly Payment was due;
(35) the documentation level (i.e. full, alternative, limited);
(36) the Mortgagor's debt to income ratio;
(37) a code indicating whether the Mortgage Loan is a Balloon Mortgage Loan;
34
(38) a code indicating whether the Mortgage Loan is an Interest Only Mortgage
Loan; and
(39) a code indicating whether the Mortgage Loan is secured by a ground lease.
The Mortgage Loan Schedule shall set forth the following information, as of
the Cut-off Date, with respect to the Mortgage Loans in the aggregate, for the
Fixed-Rate Mortgage Loans and for the Adjustable-Rate Mortgage Loans: (1) the
number of Mortgage Loans; (2) the current Principal Balance of the Mortgage
Loans; (3) the weighted average Mortgage Interest Rate of the Mortgage Loans;
and (4) the weighted average maturity of the Mortgage Loans. The Mortgage Loan
Schedule shall be amended from time to time in accordance with the provisions of
this Agreement. With respect to any Eligible Substitute Mortgage Loan, Cut-off
Date shall refer to the applicable date of substitution.
"Mortgage Note": The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgage Pool": The pool of Mortgage Loans, identified on Exhibit D from
time to time, and any REO Properties acquired in respect thereof.
"Mortgaged Property": The underlying property securing a Mortgage Loan,
including any REO Property, consisting of an Estate in Real Property improved by
a Residential Dwelling.
"Mortgagor": The obligor on a Mortgage Note.
"Net Liquidation Proceeds": With respect to any Liquidated Mortgage Loan or
any other disposition of related Mortgaged Property (including REO Property) the
related Liquidation Proceeds net of unreimbursed Advances, unreimbursed
Servicing Advances, Servicing Fees and any other accrued and unpaid servicing
fees received and retained in connection with the liquidation of such Mortgage
Loan or Mortgaged Property.
"Net WAC Cap": With respect to any Distribution Date, the Net WAC Rate.
"Net WAC Rate": As of any Distribution Date, a per annum rate (not less
than zero and subject to adjustment based upon the actual number of days in the
related Interest Accrual Period) equal to the weighted average of the Adjusted
Net Mortgage Interest Rates of the Mortgage Loans, calculated as of the first
day of the related Collection Period.
"Net WAC Rate Carryover Amount": For any Distribution Date, if on such
Distribution Date or any prior Distribution Date, the Accrued Certificate
Interest for any Class A or Mezzanine Certificates is based upon the Net WAC Cap
for such Distribution Date, the sum of (i) the excess of (a) the amount of
interest that would have accrued on such Class in respect of such Distribution
Date based on the related Formula Rate, over (b) the amount of interest actually
accrued on such Class in respect of such Distribution Date based on the related
Net WAC Rate, plus (ii) the unpaid portion of any Net WAC Rate Carryover Amount
from prior Distribution Dates (and interest accrued thereon at the then
applicable Formula Rate on such Certificate).
35
"Net WAC Rate Carryover Arrangement": The right of the Class A and
Mezzanine Certificates to receive payments of amounts otherwise payable to the
Class CE Certificates and the right of the Class CE Certificates to amounts
remaining after payment of the Net WAC Rate Carryover Amount and any amounts
remaining in the Reserve Fund, each as specified in Sections 4.02(b)(xxii),
4.02(b)(xxiii), and 3.04(g), respectively.
"New Lease": Any lease of REO Property entered into on behalf of the Trust,
including any lease renewed or extended on behalf of the Trust if the Trust has
the right to renegotiate the terms of such lease.
"Nonrecoverable Advance": Any Advance or Servicing Advance previously made
or proposed to be made in respect of a Mortgage Loan that, in the good faith
business judgment of the Servicer, will not or, in the case of a proposed
Advance or Servicing Advance, would not be ultimately recoverable from Late
Collections on such Mortgage Loan as provided herein.
"Non-U.S. Person": Any person other than a U.S. Person.
"Notional Amount": With respect to the Class CE Certificates, immediately
prior to any Distribution Date, a notional amount equal to the aggregate of the
Uncertificated Principal Balances of the REMIC 1 Uncertificated Regular
Interests.
"Offered Certificates": The Class A-1, Class A-2, Class M-1 and Class M-2
Certificates.
"Officers' Certificate": A certificate signed by the Chairman of the Board,
the Vice Chairman of the Board, the President or a vice president (however
denominated), or by the Treasurer, the Secretary, or one of the assistant
treasurers or assistant secretaries of the Servicer, the Seller or the
Depositor, as applicable.
"One-Month LIBOR": With respect to each Interest Accrual Period, the rate
determined by the Trustee on the related LIBOR Determination Date on the basis
of the offered rate for one-month United States dollar deposits, as such rate
appears on the Telerate Page 3750, as of 11:00 a.m. (London time) on such LIBOR
Determination Date. If no such quotations are available on an LIBOR
Determination Date, One-Month LIBOR for the related Interest Accrual Period will
be established by the Trustee as follows:
(i) If on such LIBOR Determination Date two or more Reference Banks
provide such offered quotations, One-Month LIBOR for the related Interest
Accrual Period shall be the arithmetic mean of such offered quotations
(rounded upwards if necessary to the nearest whole multiple of 0.001%);
(ii) If on such LIBOR Determination Date fewer than two Reference
Banks provide such offered quotations, One-Month LIBOR for the related
Interest Accrual Period shall be the arithmetic mean of the rates quoted by
one or more major banks in New York City, selected by the Trustee after
consultation with the Depositor, as of 11:00 A.M., New York City time, on
such date for loans in U.S. Dollars to leading European banks for a period
of one month in amounts approximately equal to the aggregate Certificate
Principal Balance of the Offered Certificates; and
36
(iii) If no such quotations can be obtained, One-Month LIBOR for the
related Interest Accrual Period shall be One-Month LIBOR for the prior
Distribution Date.
"Opinion of Counsel": A written opinion of counsel, who may, without
limitation, be a salaried counsel for the Depositor or the Servicer, except that
any opinion of counsel relating to (a) the qualification of any REMIC as a REMIC
or (b) compliance with the REMIC Provisions must be an opinion of Independent
counsel.
"Optional Termination Date": The first Distribution Date on which the
Majority Holders of the Class CE Certificates or, if such Holders do not
exercise such option, the Servicer or any affiliate of the Servicer, may opt to
terminate the Mortgage Pool pursuant to Section 10.01.
"Original Class Certificate Principal Balance": With respect to each Class
of Certificates (other than the Class P and Residual Certificates), the
Certificate Principal Balance thereof on the Closing Date, as set forth opposite
such Class in the Preliminary Statement. The Class P and Residual Certificates
do not have an Original Class Certificate Principal Balance.
"Overcollateralization Amount": As of any Distribution Date, the excess, if
any, of (x) the Pool Balance as of the last day of the related Collection Period
over (y) the aggregate Certificate Principal Balances of all Classes of Offered
Certificates and the Class M-3, Class M-4, Class M-5, Class M-6 and Class M-7
Certificates (in each case, after taking into account all distributions of
principal on such Distribution Date).
"Overcollateralization Deficiency": As of any Distribution Date, the
excess, if any, of (x) the Targeted Overcollateralization Amount for such
Distribution Date over (y) the Overcollateralization Amount for such
Distribution Date, calculated for this purpose after taking into account the
reduction on such Distribution Date of the Certificate Principal Balances of all
Classes of Class A and Class M Certificates resulting from the distribution of
the Basic Principal Distribution Amount on such Distribution Date, but prior to
taking into account any Applied Realized Loss Amounts on such Distribution Date.
"Overcollateralization Release Amount": With respect to any Distribution
Date on and after the Stepdown Date on which a Trigger Event is not in effect,
the excess, if any, of (i) the Overcollateralization Amount for such
Distribution Date (calculated for this purpose after taking into account the
reduction on such Distribution Date of the Certificate Principal Balances of all
Classes of Class A and Class M Certificates resulting from the distribution of
the Basic Principal Distribution Amount on such Distribution Date, but prior to
taking into account any Applied Realized Loss Amounts on such Distribution
Date), assuming that 100% of the Principal Remittance Amount is applied as a
principal payment on the Offered Certificates on such Distribution Date, over
(ii) the Targeted Overcollateralization Amount for such Distribution Date. With
respect to any Distribution Date on which a Trigger Event is in effect, the
Overcollateralization Release Amount will be zero.
"Ownership Interest": As to any Certificate, any ownership or security
interest in such Certificate, including any interest in such Certificate as the
Holder thereof and any other interest therein, whether direct or indirect, legal
or beneficial, as owner or as pledgee.
37
"Pass-Through Rate": Any of the Class A-1 Pass-Through Rate, the Class A-2
Pass-Through Rate, the Class M-1 Pass-Through Rate, the Class M-2 Pass-Through
Rate, the Class M-3 Pass-Through Rate, the Class M-4 Pass-Through Rate, the
Class M-5 Pass-Through Rate, the Class M-6 Pass-Through Rate and the Class M-7
Pass-Through Rate. With respect to the Class CE Certificates and any
Distribution Date, a per annum rate equal to the percentage equivalent of a
fraction, the numerator of which is the sum of the amounts calculated pursuant
to clauses (A) through (K) below, and the denominator of which is the aggregate
of the Uncertificated Principal Balances of REMIC 1 Regular Interest LT1AA,
REMIC 1 Regular Interest LT1A1, REMIC 1 Regular Interest LT1A2, REMIC 1 Regular
Interest LT1M1, REMIC 1 Regular Interest LT1M2, REMIC 1 Regular Interest LT1M3,
REMIC 1 Regular Interest LT1M4, REMIC 1 Regular Interest LT1M5, REMIC 1 Regular
Interest LT1M6, REMIC 1 Regular Interest LT1M7 and REMIC 1 Regular Interest
LT1ZZ. For purposes of calculating the Pass-Through Rate for the Class CE
Certificates, the numerator is equal to the sum of the following components:
(A) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT1AA minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC 1 Regular
Interest LT1AA;
(B) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT1A1 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC 1 Regular
Interest LT1A1;
(C) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT1A2 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC 1 Regular
Interest LT1A2;
(D) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT1M1 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC 1 Regular
Interest LT1M1;
(E) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT1M2 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC 1 Regular
Interest LT1M2;
(F) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT1M3 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC 1 Regular
Interest LT1M3;
(G) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT1M4 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC 1 Regular
Interest LT1M4;
(H) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT1M5 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC 1 Regular
Interest LT1M5;
38
(I) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT1M6 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC 1 Regular
Interest LT1M6;
(J) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT1M7 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC 1 Regular
Interest LT1M7; and
(K) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT1ZZ minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC 1 Regular
Interest LT1ZZ.
"Paying Agent": Any paying agent appointed pursuant to Section 5.05.
"Percentage Interest": With respect to any Certificate (other than a Class
P or Residual Certificate), a fraction, expressed as a percentage, the numerator
of which is the Initial Certificate Principal Balance, as the case may be,
represented by such Certificate and the denominator of which is the Original
Class Certificate Principal Balance of the related Class. With respect to a
Class P or Residual Certificate, the portion of the Class evidenced thereby,
expressed as a percentage, as stated on the face of such Certificate; provided,
however, that the sum of all such percentages for each such Class totals 100%.
"Periodic Rate Cap": With respect to each Adjustable-Rate Mortgage Loan and
any Adjustment Date therefor, the fixed percentage set forth in the related
Mortgage Note, which is the maximum amount by which the Mortgage Interest Rate
for such Mortgage Loan may increase or decrease (without regard to the Maximum
Mortgage Interest Rate or the Minimum Mortgage Interest Rate) on such Adjustment
Date from the Mortgage Interest Rate in effect immediately prior to such
Adjustment Date.
"Permitted Investments": Any one or more of the following obligations or
securities acquired at a purchase price of not greater than par, regardless of
whether issued or managed by the Depositor, the Servicer, the Trustee or any of
their respective Affiliates or for which an Affiliate of the Trustee serves as
an advisor:
(i) direct obligations of, or obligations fully guaranteed as to
timely payment of principal and interest by, the United States or any
agency or instrumentality thereof, provided such obligations are backed by
the full faith and credit of the United States;
(ii) (A) demand and time deposits in, certificates of deposit of,
bankers' acceptances issued by or federal funds sold by any depository
institution or trust company (including the Trustee or its agents acting in
their respective commercial capacities) incorporated under the laws of the
United States of America or any state thereof and subject to supervision
and examination by federal and/or state authorities, so long as, at the
time of such investment or contractual commitment providing for such
investment, such depository institution or trust company or its ultimate
parent has a short-term uninsured debt rating in one of the two highest
available rating categories of S&P and Xxxxx'x and provided that each such
investment has an original maturity of no more
39
than 365 days and (B) any other demand or time deposit or deposit which is
fully insured by the FDIC;
(iii) repurchase obligations with a term not to exceed 30 days with
respect to any security described in clause (i) above and entered into with
a depository institution or trust company (acting as principal) rated "A"
or higher by S&P and "A2" or higher by Xxxxx'x, provided, however, that
collateral transferred pursuant to such repurchase obligation must be of
the type described in clause (i) above and must (A) be valued daily at
current market prices plus accrued interest or (B) pursuant to such
valuation, be equal, at all times, to 105% of the cash transferred by the
Trustee in exchange for such collateral and (C) be delivered to the Trustee
or, if the Trustee is supplying the collateral, an agent for the Trustee,
in such a manner as to accomplish perfection of a security interest in the
collateral by possession of certificated securities;
(iv) securities bearing interest or sold at a discount that are issued
by any corporation incorporated under the laws of the United States of
America or any State thereof and that are rated by each Rating Agency in
its highest long-term unsecured rating categories at the time of such
investment or contractual commitment providing for such investment;
(v) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a
specified date not more than 30 days after the date of acquisition thereof)
that is rated by each Rating Agency in its highest short-term unsecured
debt rating available at the time of such investment;
(vi) units of money market funds registered under the Investment
Company Act of 1940 (including funds managed or advised by the Trustee or
affiliates thereof) having the highest rating category by the applicable
Rating Agency; and
(vii) if previously confirmed in writing to the Trustee, any other
demand, money market or time deposit, or any other obligation, security or
investment, as may be acceptable to the Rating Agencies in writing as a
permitted investment of funds backing securities having ratings equivalent
to its highest initial rating of the Class A Certificates;
provided, that no instrument described hereunder shall evidence either the right
to receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provide a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations.
"Permitted Transferee": Any transferee of a Residual Certificate other than
a Disqualified Organization, a Non-U.S. Person or a U.S. Person with respect to
whom income on the Residual Certificate is attributable to a foreign permanent
establishment or fixed base, within the meaning of an applicable income tax
treaty, of such Person or any other U.S. Person.
40
"Person": Any individual, corporation, partnership, joint venture,
association, joint stock company, trust, limited liability company,
unincorporated organization or government or any agency or political subdivision
thereof.
"Pool Balance": As of any date of determination, the aggregate Principal
Balance of the Mortgage Loans.
"Prepayment Charge": With respect to any Prepayment Period, any prepayment
premium, penalty or charge collected by the Servicer from a Mortgagor in
connection with any voluntary Principal Prepayment pursuant to the terms of the
related Mortgage Note as from time to time held as a part of the Trust Fund, as
identified in the Prepayment Charge Schedule (other than any Servicer Prepayment
Charge Payment Amount or Transferor Prepayment Charge Payment Amount).
"Prepayment Charge Schedule": As of any date, the list of Prepayment
Charges included in the Trust Fund on such date, attached hereto as Schedule I
as supplemented by each schedule of Eligible Substitute Mortgage Loans which by
their terms have related Prepayment Charges. The Prepayment Charge Schedule
shall set forth the following information with respect to each Prepayment
Charge:
(a) the Mortgage Loan identifying number;
(b) a code indicating the type of Prepayment Charge;
(c) the date on which the first Monthly Payment was due on the related
Mortgage Loan;
(d) the term or amount of the Prepayment Charge;
(e) the original Principal Balance of the related Mortgage Loan; and
(f) the Cut-off Date Principal Balance of the related Mortgage Loan.
The Prepayment Charge Schedule shall be amended from time to time by the
Depositor in accordance with the provisions of this Agreement.
"Prepayment Interest Shortfall": With respect to any Distribution Date, for
each Mortgage Loan that was during the related Prepayment Period the subject of
a Principal Prepayment in full that was applied by the Servicer to reduce the
outstanding principal balance of such loan on a date preceding the related Due
Date, an amount equal to interest at the applicable Mortgage Interest Rate (net
of the Servicing Fee Rate) on the amount of such Principal Prepayment for the
number of days commencing on the date on which the prepayment is applied and
ending on the last day of the related Prepayment Period.
"Prepayment Period": With respect to any Distribution Date, the calendar
month preceding the month in which such Distribution Date occurs (or, with
respect to the first Distribution Date, the period commencing on the Cut-off
Date and ending on the last day of the calendar month preceding such
Distribution Date).
41
"Principal Balance": As to any Mortgage Loan and any day, other than a
Liquidated Mortgage Loan, the related Cut-off Date Principal Balance, minus the
sum of (i) all collections and other amounts credited against the principal
balance of any such Mortgage Loan, (ii) the principal portion of Advances, (iii)
any Deficient Valuation and (iv) any principal reduction resulting from a
Servicer Modification. For purposes of this definition, a Liquidated Mortgage
Loan shall be deemed to have a Principal Balance equal to the Principal Balance
of the related Mortgage Loan as of the final recovery of related Liquidation
Proceeds and a Principal Balance of zero thereafter. As to any REO Property and
any day, the Principal Balance of the related Mortgage Loan immediately prior to
such Mortgage Loan becoming REO Property minus any REO Principal Amortization
received with respect thereto on or prior to such day.
"Principal Distribution Amount": As to any Distribution Date, the sum of
(i) the Basic Principal Distribution Amount for such Distribution Date and (ii)
the Extra Principal Distribution Amount for such Distribution Date.
"Principal Prepayment": Any payment of principal made by the Mortgagor on a
Mortgage Loan which is received in advance of its scheduled Due Date and which
is not accompanied by an amount of interest representing the full amount of
scheduled interest due on any Due Date in any month or months subsequent to the
month of prepayment.
"Principal Remittance Amount": With respect to any Distribution Date, the
sum (less amounts available for reimbursement of Advances and Servicing Advances
pursuant to Section 3.05 and expenses reimbursable pursuant to Section 6.03) of:
(i) each scheduled payment of principal on a Mortgage Loan due during the
related Collection Period and received by the Servicer on or prior to the
related Determination Date, and any Advances with respect thereto, (ii) all full
and partial Principal Prepayments received by the Servicer during the related
Prepayment Period, (iii) the Net Liquidation Proceeds, Insurance Proceeds and
Subsequent Recoveries allocable to principal actually collected by the Servicer
during the related Prepayment Period, (iv) with respect to Defective Mortgage
Loans repurchased with respect to such Prepayment Period, the portion of the
Purchase Price allocable to principal, (v) the principal portion of any
Substitution Adjustment Amounts received on or prior to the previous
Determination Date and not yet distributed and (vi) on the Distribution Date on
which the Trust is to be terminated in accordance with Section 10.01 hereof,
that portion of the Termination Price in respect of principal.
"Private Certificates": Any of the Class M-3, Class M-4, Class M-5, Class
M-6, Class M-7, Class CE, Class P and Class R Certificates.
"Property Insurance Proceeds": Proceeds of any title policy, hazard policy
or other insurance policy covering a Mortgage Loan, to the extent such proceeds
are received by the Servicer and are not to be applied to the restoration of the
related Mortgaged Property or released to the Mortgagor in accordance with the
Servicer's servicing procedures, subject to the terms and conditions of the
related Mortgage Note and Mortgage.
"Prospectus Supplement": That certain Prospectus Supplement dated March 26,
2004 relating to the public offering of the Offered Certificates.
42
"Purchase Price": With respect to any Mortgage Loan or REO Property to be
purchased pursuant to or as contemplated by Section 2.03 or 10.01, an amount
equal to the sum of (i) 100% of the Principal Balance thereof as of the date of
purchase (or such other price as provided in Section 10.01), (ii) in the case of
(x) a Mortgage Loan, accrued interest on such Principal Balance at the
applicable Mortgage Interest Rate in effect from time to time from the Due Date
as to which interest was last covered by a payment by the Mortgagor or an
Advance by the Servicer, which payment or Advance had as of the date of purchase
been distributed pursuant to Section 4.01, through the end of the calendar month
in which the purchase is to be effected, and (y) an REO Property, accrued
interest at the applicable Mortgage Interest Rate on its fair market value,
determined in good faith by the Servicer, (iii) any unreimbursed Servicing
Advances and Advances and any unpaid Servicing Fees allocable to such Mortgage
Loan or REO Property, (iv) any amounts previously withdrawn from the Collection
Account in respect of such Mortgage Loan or REO Property pursuant to Section
3.13, (v) in the case of a Mortgage Loan required to be purchased pursuant to
Section 2.03, expenses reasonably incurred or to be incurred by the Servicer or
the Trustee in respect of the breach or defect giving rise to the purchase
obligation, and (vi) any costs and damages incurred by the Trust in connection
with any violation by such Mortgage Loan of any predatory or abusive lending
law.
"Qualified Insurer": Any insurance company acceptable to Xxxxxx Xxx or
Xxxxxxx Mac.
"Rating Agency or Rating Agencies": Xxxxx'x and S&P, or their respective
successors. If such agencies or their successors are no longer in existence,
"Rating Agencies" shall be such nationally recognized statistical rating
organizations as set forth on the most current list of such organizations
released by the Securities and Exchange Commission and designated by the
Depositor, notice of which designation shall be given to the Trustee and the
Servicer.
"Realized Loss": (a) With respect to a Liquidated Mortgage Loan, the amount
by which the remaining unpaid principal balance of the Mortgage Loan exceeds the
amount of Net Liquidation Proceeds from such Mortgage Loan and the related
Mortgaged Property which are applied to reduce the principal balance of the
related Mortgage Loan; (b) with respect to any Mortgage Loan, a Deficient
Valuation with respect thereto; and (c) with respect to any Mortgage Loan, a
reduction in the Principal Balance thereof resulting from a Servicer
Modification. If the Servicer receives Subsequent Recoveries with respect to any
Mortgage Loan, the amount of the Realized Loss with respect to such Mortgage
Loan will be reduced to the extent such recoveries are applied to principal
distributions on any Distribution Date.
"Realized Loss Amortization Amount": Any of the Class M-1 Realized Loss
Amortization Amount, the Class M-2 Realized Loss Amortization Amount, the Class
M-3 Realized Loss Amortization Amount, the Class M-4 Realized Loss Amortization
Amount, the Class M-5 Realized Loss Amortization Amount, the Class M-6 Realized
Loss Amortization Amount and the Class M-7 Realized Loss Amortization Amount.
"Record Date": With respect to any Distribution Date and all of the
Certificates (other than the Class P Certificates, the Class CE Certificates and
the Residual Certificates), the Business Day immediately preceding such
Distribution Date; provided, however, that if any such Certificate becomes a
Definitive Certificate, the Record Date for such Certificate shall be the last
Business Day of the month immediately preceding the month in which the related
Distribution
43
Date occurs. With respect to the Class P Certificates, Class CE Certificates and
the Residual Certificates, the last Business Day of the month immediately
preceding the month in which the related Distribution Date occurs (or the
Closing Date, in the case of the first Distribution Date).
"Reference Banks": Those three (3) banks (i) with an established place of
business in London, England, (ii) not controlling, under the control of or under
common control with the Depositor or the Trustee and (iii) which have been
designated as such by the Trustee after consultation with the Servicer;
provided, however, that if fewer than two of such banks provide a One-Month
LIBOR rate, then any leading banks selected by the Trustee which are engaged in
transactions in United States dollar deposits in the international Eurocurrency
market.
"Regular Certificate": Any of the Offered Certificates and the Class M-3,
Class M-4, Class M-5, Class M-6, Class M-7 and Class CE Certificates.
"Related Documents": With respect to any Mortgage Loan, the related
Mortgage Notes, Mortgages and other related documents.
"Relief Act": The Servicemembers Civil Relief Act, or any similar state or
local laws.
"Relief Act Interest Shortfall": With respect to any Distribution Date, for
any Mortgage Loan with respect to which there has been a reduction in the amount
of interest collectible thereon for the most recently ended Collection Period as
a result of the application of the Relief Act, the amount by which (i) interest
collectible on such Mortgage Loan during such Collection Period is less than
(ii) one month's interest on the Principal Balance of such Mortgage Loan at the
Mortgage Interest Rate for such Mortgage Loan before giving effect to the
application of the Relief Act.
"Reimbursement Amount": All costs or damages incurred by the Trust as a
result of the violation of any applicable federal, state or local abusive or
predatory lending law caused by a breach of a representation or warranty of the
Transferor in the Transfer Agreement regarding compliance of any Mortgage Loan
with the same.
"REMIC": A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
"REMIC 1": The segregated pool of assets subject hereto consisting of the
Trust Fund (exclusive of the Yield Maintenance Agreement, the Reserve Fund, the
Net WAC Rate Carryover Arrangement, the Prepayment Charges, the Servicer
Prepayment Charge Payment Amounts and the Transferor Servicer Prepayment Charge
Payment Amounts) with respect to which a REMIC election is to be made.
"REMIC 1 Interest Loss Allocation Amount": With respect to any Distribution
Date, an amount equal to (a) the product of (i) the sum of the aggregate
Principal Balance of the Mortgage Loans and related REO Properties then
outstanding and (ii) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT1AA minus the Marker Rate, divided by (b) 12.
"REMIC 1 Overcollateralization Target Amount": 1.00% of the Targeted
Overcollateralization Amount.
44
"REMIC 1 Overcollateralized Amount": With respect to any date of
determination, (i) 1.00% of the aggregate Uncertificated Principal Balances of
the REMIC 1 Uncertificated Regular Interests minus (ii) the aggregate of the
Uncertificated Principal Balances of REMIC 1 Regular Interest LT1A1, REMIC 1
Regular Interest LT1A2, REMIC 1 Regular Interest LT1M1, REMIC 1 Regular Interest
LT1M2, REMIC 1 Regular Interest LT1M3, REMIC 1 Regular Interest LT1M4, REMIC 1
Regular Interest LT1M5, REMIC 1 Regular Interest LT1M6 and REMIC 1 Regular
Interest LT1M7, in each case as of such date of determination.
"REMIC 1 Principal Loss Allocation Amount": With respect to any
Distribution Date, an amount equal to (a) the product of (i) the aggregate
Principal Balance of the Mortgage Loans and related REO Properties then
outstanding and (ii) one (1) minus a fraction, the numerator of which is two
times the aggregate of the Uncertificated Principal Balances of REMIC 1 Regular
Interest LT1A1, REMIC 1 Regular Interest LT1A2, REMIC 1 Regular Interest LT1M1,
REMIC 1 Regular Interest LT1M2, REMIC 1 Regular Interest LT1M3, REMIC 1 Regular
Interest LT1M4, REMIC 1 Regular Interest LT1M5, REMIC 1 Regular Interest LT1M6
and REMIC 1 Regular Interest LT1M7 and the denominator of which is the aggregate
of the Uncertificated Principal Balances of REMIC 1 Regular Interest LT1A1,
REMIC 1 Regular Interest LT1A2, REMIC 1 Regular Interest LT1M1, REMIC 1 Regular
Interest LT1M2, REMIC 1 Regular Interest LT1M3, REMIC 1 Regular Interest LT1M4,
REMIC 1 Regular Interest LT1M5, REMIC 1 Regular Interest LT1M6, REMIC 1 Regular
Interest LT1M7 and REMIC 1 Regular Interest LT1ZZ.
"REMIC 1 Regular Interest LT1AA": One of the separate uncertificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
Regular Interest in REMIC 1. REMIC 1 Regular Interest LT1AA shall accrue
interest at the related Uncertificated REMIC 1 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
"REMIC 1 Regular Interest LT1A1": One of the separate uncertificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
Regular Interest in REMIC 1. REMIC 1 Regular Interest LT1A1 shall accrue
interest at the related Uncertificated REMIC 1 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
"REMIC 1 Regular Interest LT1A2": One of the separate uncertificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
Regular Interest in REMIC 1. REMIC 1 Regular Interest LT1A2 shall accrue
interest at the related Uncertificated REMIC 1 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance asset forth in the Preliminary Statement
hereto.
"REMIC 1 Regular Interest LT1M1": One of the separate uncertificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
Regular Interest in REMIC 1. REMIC 1 Regular Interest LT1M1 shall accrue
interest at the related Uncertificated REMIC 1 Pass- Through Rate in effect from
time to time, and shall be entitled to distributions of
45
principal, subject to the terms and conditions hereof, in an aggregate amount
equal to its initial Uncertificated Principal Balance as set forth in the
Preliminary Statement hereto.
"REMIC 1 Regular Interest LT1M2": One of the separate uncertificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
Regular Interest in REMIC 1. REMIC 1 Regular Interest LT1M2 shall accrue
interest at the related Uncertificated REMIC 1 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
"REMIC 1 Regular Interest LT1M3": One of the separate uncertificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
Regular Interest in REMIC 1. REMIC 1 Regular Interest LT1M3 shall accrue
interest at the related Uncertificated REMIC 1 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
"REMIC 1 Regular Interest LT1M4": One of the separate uncertificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
Regular Interest in REMIC 1. REMIC 1 Regular Interest LT1M4 shall accrue
interest at the related Uncertificated REMIC 1 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
"REMIC 1 Regular Interest LT1M5": One of the separate uncertificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
Regular Interest in REMIC 1. REMIC 1 Regular Interest LT1M5 shall accrue
interest at the related Uncertificated REMIC 1 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
"REMIC 1 Regular Interest LT1M6": One of the separate uncertificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
Regular Interest in REMIC 1. REMIC 1 Regular Interest LT1M6 shall accrue
interest at the related Uncertificated REMIC 1 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
"REMIC 1 Regular Interest LT1M7": One of the separate uncertificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
Regular Interest in REMIC 1. REMIC 1 Regular Interest LT1M7 shall accrue
interest at the related Uncertificated REMIC 1 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
"REMIC 1 Regular Interest LT1ZZ": One of the separate uncertificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
Regular Interest in
46
REMIC 1. REMIC 1 Regular Interest LT1ZZ shall accrue interest at the related
Uncertificated REMIC 1 Pass- Through Rate in effect from time to time, and shall
be entitled to distributions of principal, subject to the terms and conditions
hereof, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement hereto.
"REMIC 1 Uncertificated Regular Interests": REMIC 1 Regular Interest LT1AA,
REMIC 1 Regular Interest LT1A1, REMIC 1 Regular Interest LT1A2, REMIC 1 Regular
Interest LT1M1, REMIC 1 Regular Interest LT1M2, REMIC 1 Regular Interest LT1M3,
REMIC 1 Regular Interest LT1M4, REMIC 1 Regular Interest LT1M5, REMIC 1 Regular
Interest LT1M6, REMIC 1 Regular Interest LT1M7, and REMIC 1 Regular Interest
LT1ZZ.
"REMIC 2": The segregated pool of assets consisting of all of the REMIC 1
Uncertificated Regular Interests conveyed in trust to the Trustee, for the
benefit of the Holders of the Offered Certificates, the Class M-3 Interest, the
Class M-4 Interest, the Class M-5 Interest, the Class M-6 Interest, the Class
M-7 Interest, the Class CE Interest and the Class R Certificate (in respect of
the Class R-1 Interest and the R-2 Interest), and all amounts deposited therein,
with respect to which a separate REMIC election is to be made. REMIC 2 will not
include the Yield Maintenance Agreement, the Reserve Fund, the Net WAC Rate
Carryover Arrangement, the Prepayment Charges, the Servicer Prepayment Charge
Payment Amounts or the Transferor Servicer Prepayment Charge Payment Amounts.
"REMIC 2 Uncertificated Principal Balance": With respect to the Class X-0,
Xxxxx X-0, Class M-5, Class M-6 and Class M-7 Interests as of the Closing Date,
the REMIC 2 Uncertificated Principal Balance of each REMIC 2 Uncertificated
Regular Interest shall equal the amount set forth in the Preliminary Statement
hereto as its initial Uncertificated Principal Balance. On each Distribution
Date, the Uncertificated Principal Balance of each REMIC 2 Uncertificated
Regular Interest shall be reduced by all distributions of principal made on the
Corresponding Class of such REMIC 2 Uncertificated Regular Interest on such
Distribution Date pursuant to Section 4.04.01 and 4.02. With respect to the
Class CE Interest as of any date of determination, The REMIC 2 Uncertificated
Principal Balance of each REMIC 2 Uncertificated Regular Interest shall never be
less than zero, an amount equal to the excess of (A) the then aggregate
Uncertificated Principal Balances of the REMIC 1 Uncertificated Regular
Interests over (B) the then aggregate Certificate Principal Balances of the
Class A and Class M Certificates. The original REMIC 2 Uncertificated Principal
Balance of the Class CE Interest shall equal the Initial Overcollateralization
Amount.
"REMIC 2 Uncertificated Regular Interests": The Class M-3, Class M-4, Class
M-5, Class M-6 and Class M-7 Interests and Class CE Interest.
"REMIC 3": The segregated pool of assets consisting of all of the Class M-3
Interest conveyed in trust to the Trustee, for the benefit of the Holders of the
Class M-3 Certificates and the Class RX Certificate (in respect of the Class R-3
Interest), pursuant and all amounts deposited therein, with respect to which a
separate REMIC election is to be made. REMIC 3 will not include the Yield
Maintenance Agreement, the Reserve Fund, the Net WAC Rate Carryover Arrangement,
the Prepayment Charges, the Servicer Prepayment Charge Payment Amounts or the
Transferor Servicer Prepayment Charge Payment Amounts.
47
"REMIC 4": The segregated pool of assets consisting of all of the Class M-4
Interest conveyed in trust to the Trustee, for the benefit of the Holders of the
Class M-4 Certificates and the Class RX Certificate (in respect of the Class R-4
Interest), and all amounts deposited therein, with respect to which a separate
REMIC election is to be made. REMIC 4 will not include the Yield Maintenance
Agreement, the Reserve Fund, the Net WAC Rate Carryover Arrangement, the
Prepayment Charges, the Servicer Prepayment Charge Payment Amounts or the
Transferor Servicer Prepayment Charge Payment Amounts.
"REMIC 5": The segregated pool of assets consisting of all of the Class M-5
Interest conveyed in trust to the Trustee, for the benefit of the Holders of the
Class M-5 Certificates and the Class RX Certificate (in respect of the Class R-5
Interest), and all amounts deposited therein, with respect to which a separate
REMIC election is to be made. REMIC 5 will not include the Yield Maintenance
Agreement, the Reserve Fund, the Net WAC Rate Carryover Arrangement, the
Prepayment Charges, the Servicer Prepayment Charge Payment Amounts or the
Transferor Servicer Prepayment Charge Payment Amounts.
"REMIC 6": The segregated pool of assets consisting of all of the Class M-6
Interest conveyed in trust to the Trustee, for the benefit of the Holders of the
Class M-6 Certificates and the Class RX Certificate (in respect of the Class R-6
Interest), and all amounts deposited therein, with respect to which a separate
REMIC election is to be made. REMIC 6 will not include the Yield Maintenance
Agreement, the Reserve Fund, the Net WAC Rate Carryover Arrangement, the
Prepayment Charges, the Servicer Prepayment Charge Payment Amounts or the
Transferor Servicer Prepayment Charge Payment Amounts.
"REMIC 7": The segregated pool of assets consisting of all of the Class M-7
Interest conveyed in trust to the Trustee, for the benefit of the Holders of the
Class M-7 Certificates and the Class RX Certificate (in respect of the Class R-7
Interest, and all amounts deposited therein, with respect to which a separate
REMIC election is to be made. REMIC 7 will not include the Yield Maintenance
Agreement, the Reserve Fund, the Net WAC Rate Carryover Arrangement, the
Prepayment Charges, the Servicer Prepayment Charge Payment Amounts or the
Transferor Servicer Prepayment Charge Payment Amounts.
"REMIC 8": The segregated pool of assets consisting of all of the Class CE
Interest conveyed in trust to the Trustee, for the benefit of the Holders of the
Class CE Certificates and the Class RX Certificate (in respect of the Class R-8
Interest, and all amounts deposited therein, with respect to which a separate
REMIC election is to be made. REMIC 8 will not include the Yield Maintenance
Agreement, the Reserve Fund, the Net WAC Rate Carryover Arrangement, the
Prepayment Charges, the Servicer Prepayment Charge Payment Amounts or the
Transferor Servicer Prepayment Charge Payment Amounts.
"REMIC Provisions": Provisions of the federal income tax law relating to
real estate mortgage investment conduits which appear at Section 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations and rulings promulgated thereunder, as the foregoing may be in
effect from time to time.
"REMIC Regular Interests": The REMIC 1 Uncertificated Regular Interests and
the REMIC 2 Uncertificated Regular Interests.
48
"Remittance Report": A report prepared by the Servicer and delivered to the
Trustee pursuant to Section 4.07, containing the information attached hereto as
Exhibit M.
"Rents from Real Property": With respect to any REO Property, gross income
of the character described in Section 856(d) of the Code.
"REO Disposition": The sale or other disposition of an REO Property on
behalf of the Trust.
"REO Imputed Interest": As to any REO Property, for any Collection Period,
an amount equivalent to interest (at the Adjusted Net Mortgage Interest Rate
that would have been applicable to the related Mortgage Loan had it been
outstanding) for such Collection Period on the unpaid Principal Balance of the
Mortgage Loan as of the date of acquisition.
"REO Principal Amortization": With respect to any REO Property, for any
calendar month, the aggregate of all amounts received in respect of such REO
Property during such calendar month, whether in the form of rental income, sale
proceeds (including, without limitation, that portion of the Termination Price
paid in connection with a purchase of all of the Mortgage Loans and REO
Properties pursuant to Section 10.01 that is allocable to such REO Property) or
otherwise, net of any portion of such amounts (i) payable pursuant to Section
3.13 in respect of the proper operation, management and maintenance of such REO
Property or (ii) payable or reimbursable to the Servicer pursuant to Section
3.13 for unpaid Servicing Fees in respect of the related Mortgage Loan and
unreimbursed Servicing Advances and Advances in respect of such REO Property or
the related Mortgage Loan.
"REO Property": A Mortgaged Property acquired by the Servicer on behalf of
the Trust through foreclosure or deed-in-lieu of foreclosure, as described in
Section 3.13.
"Request for Release": A release signed by a Servicing Officer, in the form
of Exhibit E attached hereto.
"Reserve Account": The trust account created and maintained by the Trustee
pursuant to Section 3.04(g) which shall be entitled "Reserve Account, JPMorgan
Chase Bank, as Trustee, in trust for registered Holders of ABFC 2004-AHL1 Trust,
ABFC Asset-Backed Certificates, Series 2004-AHL1" and which must be an Eligible
Account. Amounts on deposit in the Reserve Account shall not be invested. The
Reserve Account shall not be an asset of any REMIC formed under this Agreement.
"Residential Dwelling": Any one of the following: (i) a detached one-family
dwelling, (ii) a detached two- to four-family dwelling, (iii) a one-family
dwelling unit in a Xxxxxx Xxx eligible condominium project, (iv) a manufactured
home, or (v) a detached one-family dwelling in a planned unit development, none
of which is a co-operative or mobile home.
"Residual Certificates": The Class R Certificates and the Class RX
Certificates.
"Residual Interest": The sole Class of "residual interests" in each of
REMIC 1, REMIC 2, REMIC 3, REMIC 4 REMIC 5, REMIC 6, REMIC 7 and REMIC 8 within
the meaning of Section 860G(a)(2) of the Code, represented by the Class R-1
Interest, the Class R-2 Interest, the
49
Class R-3 Interest, the Class R-4 Interest, the Class R-5 Interest, the Class
R-6 Interest, the Class R-7 Interest and the Class R-8 Interest, respectively.
"Responsible Officer": When used with respect to the Trustee, any officer
assigned to the Corporate Trust Division (or any successor thereto), including
any Vice President, Assistant Vice President, Trust Officer, any Assistant
Secretary, any trust officer or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and in each case having direct responsibility for the administration of
this Agreement.
"S&P": Standard & Poor's Ratings Services, a division of The XxXxxx-Xxxx
Companies, Inc., and its successors, and if such company shall for any reason no
longer perform the functions of a securities rating agency, "S&P" shall be
deemed to refer to any other "nationally recognized statistical rating
organization" as set forth on the most current list of such organizations
released by the Securities and Exchange Commission.
"Xxxxxxxx-Xxxxx Certification": As defined in Section 3.22(b) hereof.
"Seller": Bank of America, N.A., or its successor in interest, in its
capacity as seller under the Mortgage Loan Purchase Agreement.
"Servicer": Xxxxxx Loan Servicing LP, a Delaware limited partnership, or
any successor servicer appointed as herein provided, in its capacity as Servicer
hereunder.
"Servicer Event of Termination": One or more of the events described in
Section 7.01.
"Servicer Modification": A modification to the terms of a Mortgage Loan, in
accordance with the terms of Section 3.01, as to which the Mortgagor is in
default or as to which, in the judgment of the Servicer, default is reasonably
foreseeable.
"Servicer Prepayment Charge Payment Amount": The amount payable by the
Servicer in respect of any waived Prepayment Charges pursuant to Section
3.29(b), which amount shall be equal to the difference between the amount of
Prepayment Charge due by a Mortgagor before any waiver and the actual amount of
the Prepayment Charge that was paid by the Mortgagor. The Servicer Prepayment
Charge Payment Amounts shall not be an asset of any REMIC created hereunder.
"Servicer Remittance Date": With respect to any Distribution Date, one
Business Day prior to such Distribution Date.
"Servicer's Assignee": As defined in Section 6.06(b).
"Servicing Advances": All customary, reasonable and necessary "out of
pocket" costs and expenses incurred by the Servicer (including reasonable
attorneys' fees and disbursements) in the performance of its servicing
obligations, including, but not limited to, the cost of (i) the preservation,
restoration, inspection and protection of the Mortgaged Property, (ii) any
enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of the REO Property and (iv) compliance with the
obligations under Section 3.08.
50
"Servicing Fee": With respect to each Mortgage Loan (including each REO
Property) and for any calendar month, an amount equal to one month's interest
(or in the event of any payment of interest which accompanies a Principal
Prepayment in full made by the Mortgagor during such calendar month, interest
for the number of days covered by such payment of interest) at the Servicing Fee
Rate on the same principal amount on which interest on such Mortgage Loan
accrues for such calendar month.
"Servicing Fee Rate": With respect to each Mortgage Loan, 0.50% per annum.
"Servicing Officer": Any officer of the Servicer involved in, or
responsible for, the administration and servicing of Mortgage Loans, whose name
and specimen signature appear on a list of servicing officers furnished by the
Servicer to the Trustee and the Depositor on the Closing Date, as such list may
from time to time be amended.
"Servicing Rights Pledgee": One or more lenders, selected by the Servicer,
to which the Servicer will pledge and assign all of its right, title and
interest in, to and under this Agreement, including Wachovia Bank, National
Association, as the representative of certain lenders.
"Servicing Standard": The standards set forth in Section 3.01.
"SPV": As defined in Section 6.06(a) hereof.
"Startup Day": As defined in Section 9.01(b) hereof.
"Stayed Funds": Any payment required to be made under the terms of the
Certificates and this Agreement but which is not remitted by the Servicer
because the Servicer is the subject of a proceeding under the Bankruptcy Code
and the making of such remittance is prohibited by Section 362 of the Bankruptcy
Code.
"Stepdown Date": The earlier to occur of (i) the Distribution Date on which
the aggregate Certificate Principal Balance of the Class A Certificates is
reduced to zero and (ii) the later to occur of (x) the Distribution Date in
April 2007 and (y) the Distribution Date on which the Credit Enhancement
Percentage (after taking into account distributions of principal on such
Distribution Date) is greater than or equal to 36.50%.
"Subsequent Recoveries": As of any Distribution Date, unexpected amounts
received by the Servicer (net of any related expenses permitted to be reimbursed
pursuant to Section 3.05) specifically related to any Mortgage Loan that was the
subject of a liquidation or an REO Disposition prior to the related Collection
Period that resulted in a Realized Loss.
"Substitution Adjustment Amount": As defined in Section 2.03(d) hereof.
"Targeted Overcollateralization Amount": As of any Distribution Date, (x)
prior to the Stepdown Date, 0.50% of the Cut-off Date Aggregate Principal
Balance and (y) on and after the Stepdown Date, (i) if a Trigger Event has not
occurred, the greater of (A) 1.00% of the Pool Balance as of the last day of the
related Collection Period and (B) 0.50% of the Cut-off Date Aggregate Principal
Balance and (ii) if a Trigger Event has occurred, the Targeted
Overcollateralization Amount for the immediately preceding Distribution Date.
51
"Tax Matters Person": The tax matters person appointed pursuant to Section
9.01(e) hereof.
"Tax Returns": The federal income tax returns on Internal Revenue Service
Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax Return,
including Schedule Q thereto, Quarterly Notice to Residual Interest Holders of
the REMIC Taxable Income or Net Loss Allocation, or any successor forms, to be
filed on behalf of the Trust for each REMIC created pursuant to this Agreement
under the REMIC Provisions, together with any and all other information reports
or returns that may be required to be furnished to the Certificateholders or
filed with the Internal Revenue Service or any other governmental taxing
authority under any applicable provisions of federal, state or local tax laws.
"Telerate Page 3750": The display page currently so designated on the
Moneyline Telerate (or such other page as may replace the Telerate Page 3750
page on that service for the purpose of displaying London interbank offered
rates of major banks).
"Termination Price": As defined in Section 10.01(a) hereof.
"Transfer Agreement": Collectively, the Flow Sale and Interim Servicing
Agreement, dated as of December 1, 2003, the related Memorandum of Sale, dated
as of December 29, 2003, and the related Memorandum of Sale, dated as of January
2, 2004, each by and between the Seller and the Transferor.
"Transferor": Accredited Home Lenders, Inc.
"Transferor Prepayment Charge Payment Amount": The amount payable by the
Transferor in respect of certain Prepayment Charges that are not collected from
the Mortgagor pursuant to Section 4.21 of the Transfer Agreement. The Transferor
Prepayment Charge Payment Amounts shall not be an asset of any REMIC created
hereunder.
"Trigger Event": With respect to any Distribution Date on or after the
Stepdown Date, a Trigger Event shall exist if (i) the three-month rolling
average percentage of Pool Balance, as of the end of each of the preceding three
Collection Periods, represented by the aggregate Principal Balance of all 60+
Day Delinquent Loans, equals or exceeds 42.00% of the Credit Enhancement
Percentage or (ii) the aggregate amount of Realized Losses incurred since the
Cut-off Date through the last day of the related Collection Period (reduced by
the aggregate amount of Subsequent Recoveries received since the Cut-off Date
through the last day of the related Collection Period) divided by the Cut-off
Date Aggregate Principal Balance exceeds the applicable percentages with respect
to such Distribution Date (the "Trigger Loss Percentage"). The Trigger Loss
Percentage for certain Distribution Dates is set forth below. The Trigger Loss
Percentage will increase each month and is calculated using straight line
interpolation methodology between the Trigger Loss Percentages for the
particular Distribution Dates specified in the table below.
52
--------------------------------------------------------
Distribution Date Occurring In Trigger Loss Percentage
--------------------------------------------------------
April 2007 -- March 2008 2.75%
--------------------------------------------------------
April 2008 -- March 2009 4.25%
--------------------------------------------------------
April 2009 -- March 2010 5.25%
--------------------------------------------------------
April 2010 and thereafter 5.50%
--------------------------------------------------------
"Trust": ABFC 2004-AHL1 Trust, the trust created hereunder.
"Trust Fund": The segregated pool of assets subject hereto, constituting
the primary trust created hereby and to be administered hereunder, with respect
to a portion of which two REMIC elections are to be made, such entire Trust Fund
consisting of: (i) such Mortgage Loans as from time to time are subject to this
Agreement, together with the Mortgage Files relating thereto, and together with
all collections thereon and proceeds thereof, (ii) any REO Property, together
with all collections thereon and proceeds thereof, (iii) the Trustee's rights
with respect to the Mortgage Loans under all insurance policies required to be
maintained pursuant to this Agreement and any proceeds thereof, (iv) the
Depositor's rights under the Mortgage Loan Purchase Agreement (including any
security interest created thereby), (v) the Depositor's rights under the
Transfer Agreement which were assigned to the Depositor by the Seller, (vi) the
Trustee's rights under the Yield Maintenance Agreement and (vii) the Collection
Account, the Distribution Account and the Reserve Account and such assets that
are deposited therein from time to time and any investments thereof, together
with any and all income, proceeds and payments with respect thereto.
"Trustee": JPMorgan Chase Bank, a New York banking corporation, or any
successor Trustee appointed as herein provided.
"Trustee Fee": With respect to any Distribution Date, the product of (x)
one-twelfth of the Trustee Fee Rate and (y) the aggregate of the Principal
Balances of all Mortgage Loans as of the opening of business on the first day of
the related Collection Period.
"Trustee Fee Rate": With respect to any Distribution Date, 0.009% per
annum.
"Uncertificated Accrued Interest": With respect to each REMIC 1
Uncertificated Regular Interest on each Distribution Date, an amount equal to
one month's interest at the related Uncertificated Pass-Through Rate on the
Uncertificated Principal Balance of such REMIC 1 Uncertificated Regular
Interest. In each case, Uncertificated Accrued Interest will be reduced by any
Prepayment Interest Shortfalls and Relief Act Interest Shortfalls (allocated to
such REMIC 1 Uncertificated Regular Interests based on their respective
entitlements to interest irrespective of any Prepayment Interest Shortfalls and
Relief Act Interest Shortfalls for such Distribution Date).
"Uncertificated Principal Balance": The amount of any REMIC 1
Uncertificated Regular Interest outstanding as of any date of determination. As
of the Closing Date, the Uncertificated Principal Balance of each REMIC 1
Uncertificated Regular Interest shall equal the amount set forth in the
Preliminary Statement hereto as its initial uncertificated balance. On each
Distribution Date, the Uncertificated Principal Balance of each REMIC 1
Uncertificated Regular
53
Interest shall be reduced by all distributions of principal made on such REMIC 1
Uncertificated Regular Interest on such Distribution Date pursuant to Section
4.08 and, if and to the extent necessary and appropriate, shall be further
reduced on such Distribution Date by Prepayment Interest Shortfalls, Relief Act
Interest Shortfalls and Realized Losses as provided in Section 4.08(b) and (c).
The Uncertificated Principal Balance of REMIC 1 Regular Interest LT1ZZ shall be
increased by interest deferrals as provided in Section 4.08(a). The
Uncertificated Principal Balance of each REMIC 1 Uncertificated Regular Interest
shall never be less than zero.
"Uncertificated REMIC 1 Pass-Through Rate": With respect to REMIC 1 Regular
Interest LT1AA, REMIC 1 Regular Interest LT1A1, REMIC 1 Regular Interest LT1A2,
REMIC 1 Regular Interest LT1M1, REMIC 1 Regular Interest LT1M2, REMIC 1 Regular
Interest LT1M3, REMIC 1 Regular Interest LT1M4, REMIC 1 Regular Interest LT1M5,
REMIC 1 Regular Interest LT1M6, REMIC 1 Regular Interest LT1M7 and REMIC 1
Regular Interest LT1ZZ, the weighted average of the Adjusted Net Mortgage
Interest Rates of the Mortgage Loans.
"United States Person" or "U.S. Person": (i) A citizen or resident of the
United States, (ii) a corporation, partnership or other entity treated as a
corporation or partnership for United States federal income tax purposes
organized in or under the laws of the United States or any state thereof or the
District of Columbia (unless, in the case of a partnership, Treasury regulations
provide otherwise), (iii) an estate the income of which is includible in gross
income for United States tax purposes, regardless of its source, or (iv) a trust
if a court within the United States is able to exercise primary supervision over
the administration of the trust and one or more United States persons have
authority to control all substantial decisions of the trust. Notwithstanding the
preceding sentence, to the extent provided in Treasury regulations, certain
Trusts in existence on August 20, 1996, and treated as United States persons
prior to such date, that elect to continue to be treated as United States
persons will also be a U.S. Person; provided, that for purposes of the
definition of a "Permitted Transferee," a U.S. Person shall not include any
person whose income is attributable to a foreign permanent establishment or
fixed base, within the meaning of an applicable income tax treaty, of such
Person or any other Person.
"Unpaid Interest Shortfall Amount": For any Class of Certificates (i) for
the first Distribution Date, zero, and (ii) for any Class of Certificates (other
than the Class P, Class CE and the Residual Certificates) and any Distribution
Date after the first Distribution Date, the amount, if any, by which (a) the sum
of (1) of the Accrued Certificate Interest for such Class for the prior
Distribution Date and (2) the outstanding Unpaid Interest Shortfall Amount, if
any, for such Class for such preceding Distribution Date, exceeds (b) (1) the
aggregate amount distributed on such Class in respect of interest on such prior
Distribution Date plus (2) interest on such excess at the related Formula Rate
for the related Interest Accrual Period.
"Unpaid Realized Loss Amount": For any Class X-0, Xxxxx X-0, Class M-3,
Class M-4, Class M-5, Class M-6 and Class M-7 Certificates and as to any
Distribution Date, the excess of (x) the aggregate Applied Realized Loss Amounts
applied with respect to such Class for all prior Distribution Dates over (y) the
sum of (1) the aggregate Realized Loss Amortization Amounts with respect to such
Class for all prior Distribution Dates and (2) all increases in the Certificate
Principal Balance of such Class due to allocations of amounts representing
Subsequent Recoveries.
54
"Value": With respect to any Mortgaged Property, the value thereof as
determined by an independent appraisal made at the time of the origination of
the related Mortgage Loan or the sale price, if the appraisal is not available.
"Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. The Voting Rights allocated
among Holders of the Class A and Class M Certificates shall be 98%, and shall be
allocated among each such Class according to the fraction, expressed as a
percentage, the numerator of which is the aggregate Certificate Principal
Balance of all the Certificates of such Class then outstanding and the
denominator of which is the aggregate Certificate Principal Balance of all the
Offered Certificates then outstanding. The Voting Rights allocated to each such
Class of Certificates shall be allocated among all holders of each such Class in
proportion to the outstanding Certificate Principal Balance of such
Certificates; provided, however, that any Certificate registered in the name of
the Servicer, the Depositor or the Trustee or any of their respective affiliates
shall not be included in the calculation of Voting Rights; provided that only
such Certificates as are known by a Responsible Officer of the Trustee to be so
registered will be so excluded. One percent of all of the Voting Rights will be
allocated to the Holders of each of the Class CE and Class P Certificates. The
Class R Certificates shall have no Voting Rights.
"Written Order to Authenticate": A written order by which the Depositor
directs the Trustee to execute, authenticate and deliver the Certificates.
"Yield Maintenance Agreement": The interest rate cap agreement between the
Trustee, on behalf of the Trust and for the benefit of the Holders of the Class
M-3, Class M-4, Class M-5, Class M-6 and Class M-7 Certificates, and the Yield
Maintenance Agreement Provider substantially in the form attached hereto as
Exhibit N. The Yield Maintenance Agreement shall not be an asset of any REMIC
formed under this Agreement.
"Yield Maintenance Agreement Payment": Beginning on the first Distribution
Date and on each Distribution Date thereafter through the Distribution Date in
February 2007, the amount equal to the product of (a) the number of basis points
by which One-Month LIBOR (up to a maximum of 8.95%) exceeds the strike rate
related to such Distribution Date that is set forth on the schedule attached to
the confirmation to the Yield Maintenance Agreement and (b) the product of the
notional amount set forth on the schedule attached to the confirmation to the
Yield Maintenance Agreement for that Distribution Date, calculated on the basis
of the actual number of days in the related Interest Accrual Period and on a
360-day year.
"Yield Maintenance Agreement Provider": Swiss Re Financial Products
Corporation, and any successor thereto.
Section 1.02. Accounting.
Unless otherwise specified herein, for the purpose of any definition or
calculation, whenever amounts are required to be netted, subtracted or added or
any distributions are taken into account such definition or calculation and any
related definitions or calculations shall be determined without duplication of
such functions.
55
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of Mortgage Loans.
The Depositor, concurrently with the execution and delivery hereof, does
hereby transfer, assign, set over and otherwise convey to the Trustee, on behalf
of the Trust, without recourse for the benefit of the Certificateholders all the
right, title and interest of the Depositor, including any security interest
therein for the benefit of the Depositor, in and to (i) each Mortgage Loan
identified on the Mortgage Loan Schedules, including the related Cut-off Date
Principal Balance, all interest accruing thereon after the Cut-off Date and all
collections in respect of interest and principal due after the Cut-off Date;
(ii) property which secured each such Mortgage Loan and which has been acquired
by foreclosure or deed in lieu of foreclosure; (iii) its interest in any
insurance policies in respect of the Mortgage Loans; (iv) the rights of the
Depositor under the Mortgage Loan Purchase Agreement and the Assignment,
Assumption and Recognition Agreement; (v) all other assets included or to be
included in the Trust Fund; and (vi) all proceeds of any of the foregoing. Such
assignment includes all interest and principal due to the Depositor or the
Servicer after the Cut-off Date with respect to the Mortgage Loans.
In connection with such transfer and assignment, the Depositor has
delivered (or caused to be delivered) to, and deposited (or caused to be
deposited) with the Trustee, or its designated agent, the following documents or
instruments with respect to each Mortgage Loan (a "Mortgage File") so
transferred and assigned:
(a) the original Mortgage Note including any riders thereto, endorsed
either (A) in blank or (B) in the following form: "Pay to the order of JPMorgan
Chase Bank, as Trustee under the Pooling and Servicing Agreement, dated as of
March 1, 2004, among Asset Backed Funding Corporation, Xxxxxx Loan Servicing LP
and JPMorgan Chase Bank, ABFC Asset-Backed Certificates, Series 2004-AHL1,
without recourse," or with respect to any lost Mortgage Note, an original Lost
Note Affidavit, together with a copy of the related Mortgage Note;
(b) the original Mortgage with evidence of recording thereon including any
riders thereto, and the original recorded power of attorney, if the Mortgage was
executed pursuant to a power of attorney, with evidence of recording thereon or,
if such Mortgage or power of attorney has been submitted for recording but has
not been returned from the applicable public recording office, has been lost or
is not otherwise available, a copy of such Mortgage or power of attorney, as the
case may be, certified to be a true and complete copy of the original submitted
for recording;
(c) except with respect to each MERS Designated Mortgage Loan, an original
Assignment, in form and substance acceptable for recording. The Mortgage shall
be assigned either (A) in blank or (B) to "JPMorgan Chase Bank, as Trustee under
the Pooling and Servicing Agreement, dated as of March 1, 2004, among Asset
Backed Funding Corporation, Xxxxxx Loan Servicing LP, ABFC Asset-Backed
Certificates, Series 2004-AHL1, without recourse";
56
(d) the originals of all intervening Assignments (if any) evidencing a
complete chain of assignment from the applicable originator (or MERS with
respect to each MERS Designated Mortgage Loan) to the last endorsee with
evidence of recording thereon, or if any such intervening assignment has not
been returned from the applicable recording office or has been lost or if such
public recording office retains the original recorded Assignments, the Servicer
shall deliver or cause to be delivered to the Trustee, a photocopy of such
intervening assignment, together with (A) in the case of a delay caused by the
public recording office, an Officer's Certificate of the Servicer (or certified
by the title company, escrow agent, or closing attorney) stating that such
intervening Assignment has been dispatched to the appropriate public recording
office for recordation and that such original recorded intervening Assignment or
a copy of such intervening Assignment certified by the appropriate public
recording office to be a true and complete copy of the original recorded
intervening assignment of mortgage will be promptly delivered to the Trustee
upon receipt thereof by the Servicer; or (B) in the case of an intervening
assignment where a public recording office retains the original recorded
intervening assignment or in the case where an intervening assignment is lost
after recordation in a public recording office, a copy of such intervening
assignment certified by such public recording office to be a true and complete
copy of the original recorded intervening assignment;
(e) the original or a certified copy of lender's title insurance policy;
and
(f) the original or copies of each assumption, modification, written
assurance or substitution agreement, if any.
If any of the documents referred to in Section 2.01(b), (c) or (d) above
has as of the Closing Date been submitted for recording but either (x) has not
been returned from the applicable public recording office or (y) has been lost
or such public recording office has retained the original of such document, the
obligations of the Depositor to deliver such documents shall be deemed to be
satisfied upon (1) delivery to the Trustee no later than the Closing Date, of a
copy of each such document certified by the Seller in the case of (x) above or
the applicable public recording office in the case of (y) above to be a true and
complete copy of the original that was submitted for recording and (2) if such
copy is certified by the Seller, delivery to the Trustee, promptly upon receipt
thereof of either the original or a copy of such document certified by the
applicable public recording office to be a true and complete copy of the
original. If the original lender's title insurance policy was not delivered
pursuant to Section 2.01(e) above, the Seller shall deliver or cause to be
delivered to the Trustee, a written commitment or interim binder or preliminary
report of title issued by the title insurance or escrow company, with the
original to be delivered to the Trustee, promptly upon receipt thereof. The
Depositor shall deliver or cause to be delivered to the Trustee promptly upon
receipt thereof any other documents constituting a part of a Mortgage File
received with respect to any Mortgage Loan, including, but not limited to, any
original documents evidencing an assumption or modification of any Mortgage
Loan.
Subject to Section 2.03(d), upon discovery or receipt of notice of any
materially defective document in, or that a document is missing from, a Mortgage
File, the Seller shall have 120 days to cure such defect or 150 days following
the Closing Date, in the case of missing Mortgages or Assignments, or deliver
such missing document to the Trustee. If the Seller does not cure such
57
defect or deliver such missing document within such time period, the Seller
shall either repurchase or substitute for such Mortgage Loan in accordance with
Section 2.03.
The Depositor shall cause the Assignments which were delivered in blank
with respect to any Mortgage Loans that are not MERS Designated Mortgage Loans
to be completed. The Servicer shall have no liability for its failure to receive
and act on notices related to such Assignments. The Servicer shall cause, within
30 days after the Closing Date, the MERS System to indicate that all of the
Mortgage Loans have been assigned by the Seller or the Transferor, as the case
may be, to the Trustee in accordance with this Agreement. The Servicer shall not
be liable for failure to have any assignments of Mortgage Loans that are not
MERS Designated Mortgage Loans recorded in the name of MERS.
In the event that any Assignment is not recorded or is improperly recorded,
the Servicer shall have no liability for its failure to receive or act on
notices not received related to such Assignment to the extent the Servicer would
not have otherwise obtained the relevant information by acting in accordance
with the Servicing Standard.
The Depositor herewith delivers to the Trustee an executed copy of the
Mortgage Loan Purchase Agreement.
Section 2.02. Acceptance by Trustee.
The Trustee acknowledges the receipt of, subject to the provisions of
Section 2.01 and subject to the review described below and any exceptions noted
on the exception report described in the next paragraph below, the documents
referred to in Section 2.01 above and all other assets included in the
definition of "Trust Fund" and declares that it holds and will hold such
documents and the other documents delivered to it constituting a Mortgage File,
and that it holds or will hold all such assets and such other assets included in
the definition of "Trust Fund" in trust for the exclusive use and benefit of all
present and future Certificateholders.
The Trustee agrees, for the benefit of the Certificateholders, to review
each Mortgage File prior to the Closing Date (or, with respect to any document
delivered after the Startup Day, within 60 days of receipt and with respect to
any Eligible Substitute Mortgage Loan, within 60 days after the assignment
thereof) and to certify in substantially the form attached hereto as Exhibit F-1
that, as to each Mortgage Loan listed in the Mortgage Loan Schedules (other than
any Mortgage Loan paid in full or any Mortgage Loan specifically identified in
the exception report annexed thereto as not being covered by such
certification), (i) all documents required to be delivered to it pursuant to
Section 2.01(a)-(e) and (f) to the extent delivered of this Agreement are in its
possession, (ii) such documents have been reviewed by it and have not been
mutilated, damaged or torn and relate to such Mortgage Loan and (iii) based on
its examination and only as to the foregoing, the information set forth in the
Mortgage Loan Schedules to the extent of the items set forth in Schedule B of
Exhibit F-2 accurately reflects information set forth in the Mortgage File. It
is herein acknowledged that, in conducting such review, the Trustee is under no
duty or obligation to inspect, review or examine any such documents,
instruments, certificates or other papers to determine that they are genuine,
enforceable, or appropriate for the represented purpose or that they have
actually been recorded or that they are other than what they purport to be on
their face.
58
Prior to the first anniversary date of this Agreement the Trustee shall
deliver to the Depositor and the Servicer a final certification in the form
annexed hereto as Exhibit F-2 evidencing the completeness of the Mortgage Files,
with any applicable exceptions noted thereon.
If in the process of reviewing the Mortgage Files and making or preparing,
as the case may be, the certifications referred to above, the Trustee finds any
document or documents constituting a part of a Mortgage File to be missing or
defective in any material respect, at the conclusion of its review the Trustee
shall so notify the Seller, the Depositor and the Servicer. In addition, upon
the discovery by the Seller, the Depositor, the Trustee or the Servicer (or upon
receipt by the Trustee of written notification of such breach) of a breach of
any of the representations and warranties made by the Seller in the Mortgage
Loan Purchase Agreement in respect of any Mortgage Loan which materially
adversely affects such Mortgage Loan or the interests of the related
Certificateholders in such Mortgage Loan, the party discovering such breach
shall give prompt written notice to the other parties.
The Depositor and the Trustee intend that the assignment and transfer
herein contemplated constitute a sale of the Mortgage Loans and the Related
Documents, conveying good title thereto free and clear of any liens and
encumbrances, from the Depositor to the Trustee and that such property not be
part of the Depositor's estate or property of the Depositor in the event of any
insolvency by the Depositor. In the event that such conveyance is deemed to be,
or to be made as security for, a loan, the parties intend that the Depositor
shall be deemed to have granted and does hereby grant to the Trustee, on behalf
of the Trust, a first priority perfected security interest in all of the
Depositor's right, title and interest in and to the Mortgage Loans and the
Related Documents, and that this Agreement shall constitute a security agreement
under applicable law.
Section 2.03. Repurchase or Substitution of Mortgage Loans by the Seller.
(a) Upon discovery or receipt of written notice of any materially defective
document in, or that a document is missing from, a Mortgage File or that any
document in a Mortgage File is materially inconsistent with the related Mortgage
Loan Schedule or of the breach by the Transferor or the Seller of any
representation, warranty or covenant under the Transfer Agreement or the
Mortgage Loan Purchase Agreement in respect of any Mortgage Loan which
materially adversely affects the value of such Mortgage Loan, any related
Prepayment Charge or the interest therein of the Certificateholders, the Trustee
shall promptly notify the Seller, the Transferor and the Servicer of such
defect, missing document or breach and request that the Transferor or the
Seller, as applicable, deliver such missing document or cure such defect or
breach within 120 days following the Closing Date, in the case of missing
Mortgages or Assignments, or otherwise from the date the Transferor or the
Seller, as applicable, was notified of such missing document, defect or breach,
and if the Transferor or the Seller, as applicable, does not deliver such
missing document or cure such defect or breach in all material respects during
such period, the Trustee shall enforce the Transferor's or the Seller's
obligation, as the case may be, under the Transfer Agreement or the Mortgage
Loan Purchase Agreement, as applicable, and cause the Transferor or the Seller,
as applicable, to repurchase such Mortgage Loan from the Trust Fund at the
Purchase Price on or prior to the Determination Date following the expiration of
such 120 day period (subject to Section 2.03(d)); provided that, in connection
59
with any such breach that could not reasonably have been cured within such 120
day period, if the Transferor or the Seller, as applicable, shall have commenced
to cure such breach within such 120 day period, the Seller shall be permitted to
proceed thereafter diligently and expeditiously to cure the same within the
additional period provided under the Transfer Agreement or the Mortgage Loan
Purchase Agreement. The Purchase Price for the repurchased Mortgage Loan shall
be deposited in the Collection Account, and the Trustee, upon receipt of written
notice from the Servicer of such deposit, shall release to the Transferor or the
Seller, as applicable, the related Mortgage File and shall execute and deliver
such instruments of transfer or assignment, in each case without recourse, as
the Transferor or the Seller, as applicable, shall furnish to it and as shall be
necessary to vest in the Transferor or the Seller, as applicable, any Mortgage
Loan released pursuant hereto and the Trustee shall have no further
responsibility with regard to such Mortgage File. In furtherance of the
foregoing, if the related Transferor or the Seller, as applicable, is not a
member of MERS and repurchases a Mortgage Loan which is registered on the
MERS(R) System, the related Transferor or the Seller, as applicable, at its own
expense and without any right of reimbursement, shall cause MERS to execute and
deliver an assignment of the Mortgage in recordable form to transfer the
Mortgage from MERS to the related Transferor or the Seller, as applicable, and
shall cause such Mortgage to be removed from registration on the MERS(R) System
in accordance with MERS' rules and regulations. In lieu of repurchasing any such
Mortgage Loan as provided above, the Transferor or the Seller may cause such
Mortgage Loan to be removed from the Trust Fund (in which case it shall become a
Defective Mortgage Loan) and substitute one or more Eligible Substitute Mortgage
Loans in the manner and subject to the limitations set forth in Section 2.03(c);
provided, however, the Transferor or the Seller, as applicable, may not
substitute an Eligible Substitute Mortgage Loan for any Deleted Mortgage Loan
that violates any predatory or abusive lending law. It is understood and agreed
that the obligation of the Transferor or the Seller to cure or to repurchase (or
to substitute for) any Mortgage Loan as to which a document is missing, a
material defect in a constituent document exists or as to which such a breach
has occurred and is continuing shall constitute the sole remedy against the
Transferor or the Seller respecting such omission, defect or breach available to
the Trustee on behalf of the Certificateholders.
With respect to the representations and warranties set forth in the
Mortgage Loan Purchase Agreement that are made to the best of the Seller's
knowledge or as to which the Seller has no knowledge, if it is discovered by the
Depositor, the Servicer or the Trustee that the substance of such representation
and warranty is inaccurate and such inaccuracy materially and adversely affects
the value of the related Mortgage Loan, Prepayment Charge or the interest
therein of the Certificateholders then, notwithstanding the Seller's lack of
knowledge with respect to the substance of such representation and warranty
being inaccurate at the time the representation or warranty was made, such
inaccuracy shall be deemed a breach of the applicable representation or
warranty.
It is understood and agreed that the representations and warranties set
forth in the Mortgage Loan Purchase Agreement shall survive delivery of the
Mortgage Files to the Trustee and shall inure to the benefit of the
Certificateholders notwithstanding any restrictive or qualified endorsement or
assignment. It is understood and agreed that the obligations of the Seller set
forth in this Section 2.03(a) to cure, substitute for or repurchase a Mortgage
Loan pursuant to the Mortgage Loan Purchase Agreement constitute the sole
remedies available to the
60
Certificateholders and to the Trustee on their behalf respecting a breach of the
representations and warranties contained in the Mortgage Loan Purchase
Agreement.
The representations and warranties of the Transferor with respect to the
Mortgage Loans in the Transfer Agreement, which have been assigned to the
Trustee hereunder, were made as of the date specified in the Transfer Agreement.
To the extent that any fact, condition or event with respect to a Mortgage Loan
constitutes a breach of both (i) a representation or warranty of the Transferor
under the Transfer Agreement and (ii) a representation or warranty of the Seller
and the Mortgage Loan Purchase Agreement, the only right or remedy of the
Trustee or of any Certificateholder shall be the Trustee's right to enforce the
obligations of the applicable Transferor under any applicable representation or
warranty made by it. The Trustee acknowledges that the Seller shall have no
obligation or liability with respect to any breach of a representation or
warranty made by it with respect to the Mortgage Loans if the fact, condition or
event constituting such breach also constitutes a breach of a representation or
warranty made by the Transferor in the Transfer Agreement, without regard to
whether the Transferor fulfills its contractual obligations in respect of such
representation or warranty. The Trustee further acknowledges that the Depositor
shall have no obligation or liability with respect to any breach of any
representation or warranty with respect to the Mortgage Loans (except as set
forth in Section 2.06) under any circumstances.
(b) Within 90 days of the earlier of discovery by the Servicer or receipt
of notice by the Servicer of the breach of any representation, warranty or
covenant of the Servicer set forth in Section 2.05 which materially and
adversely affects the interests of the Certificateholders in any Mortgage Loan,
the Servicer shall cure such breach in all material respects.
(c) Any substitution of Eligible Substitute Mortgage Loans for Defective
Mortgage Loans made pursuant to Section 2.03(a) must be effected prior to the
last Business Day that is within two years after the Closing Date. As to any
Defective Mortgage Loan for which the Seller substitutes an Eligible Substitute
Mortgage Loan or Loans, such substitution shall be effected by the Seller
delivering to the Trustee for such Eligible Substitute Mortgage Loan or Loans,
the Mortgage Note, the Mortgage, the Assignment, and such other documents and
agreements, with all necessary endorsements thereon, as are required by Section
2.01, together with an Officers' Certificate providing that each such Eligible
Substitute Mortgage Loan satisfies the definition thereof and specifying the
Substitution Adjustment Amount (as described below), if any, in connection with
such substitution. The Trustee shall acknowledge receipt for such Eligible
Substitute Mortgage Loan or Loans and, within ten Business Days thereafter,
shall review such documents as specified in Section 2.02 and deliver to the
Servicer, with respect to such Eligible Substitute Mortgage Loan or Loans, a
certification substantially in the form attached hereto as Exhibit F-1, with any
applicable exceptions noted thereon. Within one year of the date of
substitution, the Trustee shall deliver to the Servicer a certification
substantially in the form of Exhibit F-2 hereto with respect to such Eligible
Substitute Mortgage Loan or Loans, with any applicable exceptions noted thereon.
Monthly Payments due with respect to Eligible Substitute Mortgage Loans in the
month of substitution are not part of the Trust Fund and will be retained by the
Seller. For the month of substitution, distributions to Certificateholders will
reflect the collections and recoveries in respect of such Defective Mortgage
Loan in the Collection Period or Prepayment Period, as applicable, preceding the
date of substitution and the Depositor or the Seller, as the case may be, shall
thereafter be entitled to retain all amounts
61
subsequently received in respect of such Defective Mortgage Loan. The Depositor
shall give or cause to be given written notice to the Certificateholders that
such substitution has taken place, shall amend the applicable Mortgage Loan
Schedule (and Prepayment Charge Schedule, if applicable) to reflect the removal
of such Defective Mortgage Loan from the terms of this Agreement and the
substitution of the Eligible Substitute Mortgage Loan or Loans and shall deliver
a copy of such amended Mortgage Loan Schedule to the Trustee. Upon such
substitution, such Eligible Substitute Mortgage Loan or Loans shall constitute
part of the Mortgage Pool and shall be subject in all respects to the terms of
this Agreement and, in the case of a substitution effected by the Seller, the
Mortgage Loan Purchase Agreement, including, in the case of a substitution
effected by the Seller, all applicable representations and warranties thereof
included in the Mortgage Loan Purchase Agreement, as of the date of
substitution.
For any month in which the Seller substitutes one or more Eligible
Substitute Mortgage Loans for one or more Defective Mortgage Loans, the Servicer
will determine the amount (the "Substitution Adjustment Amount"), if any, by
which the aggregate Purchase Price of all such Defective Mortgage Loans exceeds
the aggregate, as to each such Eligible Substitute Mortgage Loan, of the
principal balance thereof as of the date of substitution, together with one
month's interest on such principal balance at the applicable Adjusted Net
Mortgage Interest Rate. On the date of such substitution, the Seller will
deliver or cause to be delivered to the Servicer for deposit in the Collection
Account an amount equal to the Substitution Adjustment Amount, if any, and the
Trustee, upon receipt of the related Eligible Substitute Mortgage Loan or Loans
and notice by the Servicer of such deposit, shall release to the Seller the
related Mortgage File or Files and shall execute and deliver such instruments of
transfer or assignment, in each case without recourse, as the Seller shall
deliver to it and as shall be necessary to vest therein any Defective Mortgage
Loan released pursuant hereto.
In addition, the Seller shall obtain at its own expense and deliver to the
Trustee an Opinion of Counsel to the effect that such substitution will not
cause (a) any federal tax to be imposed on the Trust Fund, including without
limitation, any federal tax imposed on "prohibited transactions" under Section
860F(a)(l) of the Code or on "contributions after the startup date" under
Section 860G(d)(l) of the Code, or (b) any REMIC to fail to qualify as a REMIC
at any time that any Certificate is outstanding. If such Opinion of Counsel can
not be delivered, then such substitution may only be effected at such time as
the required Opinion of Counsel can be given.
(d) Notwithstanding anything to the contrary in this Section 2.03, upon
discovery by the Seller, the Servicer or the Trustee that any Mortgage Loan does
not constitute a "qualified mortgage" within the meaning of Section 860G(a)(3)
of the Code, the party discovering such fact shall within two Business Days give
written notice thereof to the other parties. In connection therewith, the Seller
shall repurchase or, subject to the limitations set forth in Section 2.03(c),
substitute one or more Eligible Substitute Mortgage Loans for the affected
Mortgage Loan within 90 days of the earlier of discovery or receipt of such
notice with respect to such affected Mortgage Loan. In addition, upon discovery
that a Mortgage Loan is defective in a manner that would cause it to be a
"defective obligation" within the meaning of Treasury regulations relating to
REMICs, the Seller shall cure the defect or make the required purchase or
substitution no later than 90 days after the discovery of the defect. Any such
repurchase or substitution shall be made in the same manner as set forth in
Section 2.03(a), if made by the Seller. The Trustee shall
62
reconvey to the Seller the Mortgage Loan to be released pursuant hereto in the
same manner, and on the same terms and conditions, as it would a Mortgage Loan
repurchased for breach of a representation or warranty.
Section 2.04. Execution of Yield Maintenance Agreement.
The Depositor hereby directs the Trustee to enter into and execute the
Yield Maintenance Agreement on the Closing Date on behalf of the Trust for the
benefit of the Holders of the Class M-3, Class M-4, Class M-5, Class M-6 and
Class M-7 Certificates. The Depositor, the Servicer and the Holders of the Class
M-3, Class M-4, Class M-5, Class M-6 and Class M-7 Certificates (by their
acceptance of such Certificates) acknowledge that JPMorgan Chase Bank is
entering into the Yield Maintenance Agreement solely in its capacity as Trustee
of the Trust Fund and not in its individual capacity.
Section 2.05. Representations, Warranties and Covenants of the Servicer.
The Servicer hereby represents, warrants and covenants to the Trustee, for
the benefit of each of the Trustee and the Certificateholders and to the
Depositor that as of the Closing Date or as of such date specifically provided
herein:
(i) The Servicer is a limited partnership duly formed, validly
existing and in good standing under the laws of the State of Delaware and
has all licenses necessary to carry on its business as now being conducted,
except for such licenses, certificates and permits the absence of which,
individually or in the aggregate, would not have a material adverse effect
on the ability of the Servicer to conduct its business as it is presently
conducted, and is licensed, qualified and in good standing in the states
where the Mortgaged Property is located if the laws of such state require
licensing or qualification in order to conduct business of the type
conducted by the Servicer or to ensure the enforceability or validity of
each Mortgage Loan; the Servicer has the power and authority to execute and
deliver this Agreement and to perform in accordance herewith; the
execution, delivery and performance of this Agreement (including all
instruments of transfer to be delivered pursuant to this Agreement) by the
Servicer and the consummation of the transactions contemplated hereby have
been duly and validly authorized; this Agreement evidences the valid,
binding and enforceable obligation of the Servicer, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally; and all requisite
corporate action has been taken by the Servicer to make this Agreement
valid and binding upon the Servicer in accordance with its terms;
(ii) The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Servicer and will
not result in the breach of any term or provision of the certificate of
formation or the partnership agreement of the Servicer or result in the
breach of any term or provision of, or conflict with or constitute a
default under or result in the acceleration of any obligation under, any
agreement, indenture or loan or credit agreement or other instrument to
which the Servicer or its property is subject, or result in the violation
of any law, rule, regulation, order, judgment or decree to which the
Servicer or its property is subject;
63
(iii) The Servicer is an approved seller/servicer of conventional
residential mortgage loans for Xxxxxx Xxx and has the facilities,
procedures, and experienced personnel necessary for the sound servicing of
mortgage loans of the same type as the Mortgage Loans. The Servicer is, and
shall remain for as long as it is servicing the Mortgage Loans hereunder,
in good standing to service mortgage loans for HUD, Xxxxxx Mae or Xxxxxxx
Mac, and no event has occurred, including but not limited to a change in
insurance coverage, which would make the Servicer unable to comply with
HUD, Xxxxxx Mae or Xxxxxxx Mac eligibility requirements or which would
require notification to any of HUD, Xxxxxx Mae or Xxxxxxx Mac;
(iv) This Agreement, and all documents and instruments contemplated
hereby which are executed and delivered by the Servicer, constitute and
will constitute valid, legal and binding obligations of the Servicer,
enforceable in accordance with their respective terms, except as the
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement
of creditors' rights generally (whether considered in a proceeding at law
or in equity);
(v) The Servicer does not believe, nor does it have any reason or
cause to believe, that it cannot perform each and every covenant contained
in this Agreement;
(vi) There is no action, suit, proceeding or investigation pending or,
to its knowledge, threatened against the Servicer that, either individually
or in the aggregate, may result in any material adverse change in the
business, operations, financial condition, properties or assets of the
Servicer, or in any material impairment of the right or ability of the
Servicer to carry on its business substantially as now conducted, or in any
material liability on the part of the Servicer, or that would draw into
question the validity or enforceability of this Agreement or of any action
taken or to be taken in connection with the obligations of the Servicer
contemplated herein, or that would be likely to impair materially the
ability of the Servicer to perform under the terms of this Agreement;
(vii) No consent, approval or order of any court or governmental
agency or body is required for the execution, delivery and performance by
the Servicer of or compliance by the Servicer with this Agreement or the
consummation of the transactions contemplated by this Agreement, except for
such consents, approvals, authorizations and orders, if any, that have been
obtained;
(viii) No information in this Agreement provided by the Servicer nor
any information, certificate of an officer, statement furnished in writing
or report delivered to the Trustee by the Servicer in connection with the
transactions contemplated hereby contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements contained therein, in light of
the circumstances under which they were made, not misleading; and
(ix) The Servicer is a member of MERS in good standing.
64
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.05 shall survive delivery of the Mortgage
Files to the Trustee and shall inure to the benefit of the Trustee, the
Depositor and the Certificateholders. Upon discovery by any of the Depositor,
the Servicer or the Trustee of a breach of any of the foregoing representations,
warranties and covenants which materially and adversely affects the value of any
Mortgage Loan, Prepayment Charge or the interests therein of the
Certificateholders, the party discovering such breach shall give prompt written
notice (but in no event later than two Business Days following such discovery)
to the other parties hereto.
Section 2.06. Representations and Warranties of the Depositor.
The Depositor represents and warrants to the Trust and the Trustee on
behalf of the Certificateholders and to the Servicer as follows:
(i) This agreement constitutes a legal, valid and binding obligation
of the Depositor, enforceable against the Depositor in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect affecting the enforcement of creditors' rights in
general and except as such enforceability may be limited by general
principles of equity (whether considered in a proceeding at law or in
equity);
(ii) Immediately prior to the sale and assignment by the Depositor to
the Trustee on behalf of the Trust of each Mortgage Loan, the Depositor had
good and marketable title to each Mortgage Loan (insofar as such title was
conveyed to it by the Seller) subject to no prior lien, claim,
participation interest, mortgage, security interest, pledge, charge or
other encumbrance or other interest of any nature;
(iii) As of the Closing Date, the Depositor has transferred all right,
title interest in the Mortgage Loans to the Trustee on behalf of the Trust;
(iv) The Depositor has not transferred the Mortgage Loans to the
Trustee on behalf of the Trust with any intent to hinder, delay or defraud
any of its creditors;
(v) The Depositor has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware,
with full corporate power and authority to own its assets and conduct its
business as presently being conducted;
(vi) The Depositor is not in violation of its certificate of
incorporation or by-laws or in default in the performance or observance of
any material obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Depositor is a party or by which it or its
properties may be bound, which default might result in any material adverse
changes in the financial condition, earnings, affairs or business of the
Depositor or which might materially and adversely affect the properties or
assets, taken as a whole, of the Depositor;
65
(vii) The execution, delivery and performance of this Agreement by the
Depositor, and the consummation of the transactions contemplated thereby,
do not and will not result in a material breach or violation of any of the
terms or provisions of, or, to the knowledge of the Depositor, constitute a
default under, any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which the Depositor is a party or by which
the Depositor is bound or to which any of the property or assets of the
Depositor is subject, nor will such actions result in any violation of the
provisions of the certificate of incorporation or by-laws of the Depositor
or, to the best of the Depositor's knowledge without independent
investigation, any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Depositor or any
of its properties or assets (except for such conflicts, breaches,
violations and defaults as would not have a material adverse effect on the
ability of the Depositor to perform its obligations under this Agreement);
(viii) To the best of the Depositor's knowledge without any
independent investigation, no consent, approval, authorization, order,
registration or qualification of or with any court or governmental agency
or body of the United States or any other jurisdiction is required for the
issuance of the Certificates, or the consummation by the Depositor of the
other transactions contemplated by this Agreement, except such consents,
approvals, authorizations, registrations or qualifications as (a) may be
required under State securities or Blue Sky laws, (b) have been previously
obtained or (c) the failure of which to obtain would not have a material
adverse effect on the performance by the Depositor of its obligations
under, or the validity or enforceability of, this Agreement; and
(ix) There are no actions, proceedings or investigations pending
before or, to the Depositor's knowledge, threatened by any court,
administrative agency or other tribunal to which the Depositor is a party
or of which any of its properties is the subject: (a) which if determined
adversely to the Depositor would have a material adverse effect on the
business, results of operations or financial condition of the Depositor;
(b) asserting the invalidity of this Agreement or the Certificates; (c)
seeking to prevent the issuance of the Certificates or the consummation by
the Depositor of any of the transactions contemplated by this Agreement, as
the case may be; (d) which might materially and adversely affect the
performance by the Depositor of its obligations under, or the validity or
enforceability of, this Agreement.
Section 2.07. Issuance of Certificates and the Uncertificated Regular
Interests.
(i) The Trustee acknowledges the assignment to it of the Mortgage
Loans and the delivery to it of the Mortgage Files, subject to the
provisions of Sections 2.01 and 2.02, and the Trustee acknowledges the
assignment to it of all other assets included in the Trust Fund, receipt of
which is hereby acknowledged. Concurrently with such assignment and
delivery and in exchange therefor, the Trustee shall, pursuant to a Written
Order to Authenticate delivered in accordance with Section 5.01, execute
and deliver to the Certificate Registrar the Certificates as provided for
in Section 5.01. The Trustee acknowledges the issuance of the REMIC 1
Uncertificated Regular Interests and declares
66
that it hold such regular interests in trust for the exclusive use and
benefit of the Offered Certificates and the REMIC 2 Uncertificated Regular
Interests as assets of REMIC 2.
(ii) The Trustee acknowledges the issuance of the Class M-3 Interest
and declares that it holds such regular interest for the exclusive use and
the benefit of the Holders of the Class M-3 Certificates and the Class RX
Certificates (in respect of the Class R-3 Interest). The interests
evidenced by the Class R-3 Interest, together with the Class M-3
Certificates, constitute the entire beneficial ownership interest in REMIC
3.
(iii) The Trustee acknowledges the issuance of the Class M-4 Interest
and declares that it holds such regular interest for the exclusive use and
the benefit of the Holders of the Class M-4 Certificates and the Class RX
Certificates (in respect of the Class R-4 Interest). The interests
evidenced by the Class R-4 Interest, together with the Class M-4
Certificates, constitute the entire beneficial ownership interest in REMIC
4.
(iv) The Trustee acknowledges the issuance of the Class M-5 Interest
and declares that it holds such regular interest for the exclusive use and
the benefit of the Holders of the Class M-5 Certificates and the Class RX
Certificates (in respect of the Class R-5 Interest). The interests
evidenced by the Class R-5 Interest, together with the Class M-5
Certificates, constitute the entire beneficial ownership interest in REMIC
5.
(v) The Trustee acknowledges the issuance of the Class M-6 Interest
and declares that it holds such regular interest for the exclusive use and
the benefit of the Holders of the Class M-6 Certificates and the Class RX
Certificates (in respect of the Class R-6 Interest). The interests
evidenced by the Class R-6 Interest, together with the Class M-6
Certificates, constitute the entire beneficial ownership interest in REMIC
6.
(vi) The Trustee acknowledges the issuance of the Class M-7 Interest
and declares that it holds such regular interest for the exclusive use and
the benefit of the Holders of the Class M-7 Certificates and the Class RX
Certificates (in respect of the Class R-7 Interest). The interests
evidenced by the Class R-7 Interest, together with the Class M-7
Certificates, constitute the entire beneficial ownership interest in REMIC
7.
(vii) The Trustee acknowledges the issuance of the Class CE Interest
and declares that it holds such regular interest for the exclusive use and
the benefit of the Holders of the Class CE Certificates and the Class RX
Certificates (in respect of the Class R-8 Interest). The interests
evidenced by the Class R-8 Interest, together with the Class CE
Certificates, constitute the entire beneficial ownership interest in REMIC
8.
(viii) The Trustee acknowledges the obligation of the Class CE
Certificates to pay Net WAC Rate Carryover Amounts, and declares that it
holds the same as assets of the Grantor Trust on behalf of the Holders of
the Class X-0, Xxxxx X-0, Class M-1, Class M-2, Class M-3, Class M-4, Class
M-5, Class M-6 and Class M-7 Certificates, respectively. In addition to the
assets described in the preceding sentence, the assets of the Grantor Trust
shall also include (i) any Prepayment Charges, Servicer Prepayment Charge
Payment Amounts, Transferor Prepayment Charge Payment Amounts and the
beneficial interest of the Class P Certificates with respect thereto and
(ii) the Yield
67
Maintenance Agreement, the Reserve Account and the beneficial interest of
the Class CE Certificates with respect thereto, subject to the obligation
to pay Net WAC Rate Carryover Amounts. The interests evidenced by the
Certificates constitute the entire beneficial ownership interest in the
Trust Fund.
ARTICLE III
ADMINISTRATION AND SERVICING OF THE TRUST FUND
Section 3.01. Servicer to Act as Servicer.
The Servicer, as independent contract servicer, shall service and
administer the Mortgage Loans on behalf of the Trust and in the best interests
of and for the benefit of the Certificateholders in accordance with this
Agreement and the normal and usual standards of practice of prudent mortgage
servicers servicing similar mortgage loans and, to the extent consistent with
such terms, in the same manner in which it services and administers similar
mortgage loans for its own portfolio, and shall have full power and authority,
acting alone, to do or cause to be done any and all things in connection with
such servicing and administration which the Servicer may deem necessary or
desirable and consistent with the terms of this Agreement (the "Servicing
Standard").
Consistent with the terms of this Agreement, the Servicer may waive, modify
or vary any term of any Mortgage Loan or consent to the postponement of strict
compliance with any such term or in any manner grant indulgence to any Mortgagor
if in the Servicer's reasonable and prudent determination such waiver,
modification, postponement or indulgence is not materially adverse to the
Certificateholders; provided, however, that the Servicer shall not make future
advances and, except as set forth in the following sentence or Section 3.03, the
Servicer shall not permit any modification with respect to any Mortgage Loan
that would (i) change the Mortgage Interest Rate, defer or forgive the payment
thereof of any principal or interest payments, reduce the outstanding principal
amount (except for actual payments of principal) or extend the final maturity
date with respect to such Mortgage Loan, (ii) affect adversely the status of any
REMIC constituting part of the Trust Fund as a REMIC or (iii) cause any such
REMIC to be subject to a tax on "prohibited transactions" or "contributions"
pursuant to the REMIC Provisions or any similar provisions of state or local
law.
Notwithstanding anything to the contrary contained in this Agreement, in
the event that any Mortgage Loan is in default or, if such default is reasonably
foreseeable, the Servicer, consistent with the standards set forth in this
Section 3.01, may also waive, modify or vary any term of such Mortgage Loan
(including modifications that would change the Mortgage Rate, forgive the
payment of principal or interest, extend the final maturity date of such
Mortgage Loan (including modifications that would change the Mortgage Rate,
forgive the payment of principal or interest, extend the final maturity date of
such Mortgage Loan or waive, in whole or in part, a Prepayment Charge)), accept
payment from the related Mortgagor of an amount less than the Stated Principal
Balance in final satisfaction of such Mortgage Loan, or consent to the
postponement of strict compliance with any such term or otherwise grant
indulgence to any Mortgagor (any and all such waivers, modifications, variances,
forgiveness of principal or interest, postponements, or indulgences collectively
referred to herein as "forbearance");
68
provided, however, that the final maturity date of any Mortgage Loan may not be
extended beyond the Assumed Final Distribution Date. The Servicer's analysis
supporting any forbearance and the conclusion that any forbearance meets the
standards of this Section 3.01 shall be reflected in writing in the Servicing
File. Notwithstanding the foregoing, the Servicer shall not permit any
modification with respect to any Mortgage Loan that would both (x) effect an
exchange or reissuance of such Mortgage Loan under Section 1.860G-2(b) of the
Treasury Regulations and (y) cause any REMIC constituting part of the Trust Fund
to fail to qualify as a REMIC under the Code or the imposition of any tax on
"prohibited transactions" or "contributions" after the Startup Day under the
REMIC Provisions or any similar provisions of state or local law. Without
limiting the generality of the foregoing, the Servicer shall continue, and is
hereby authorized and empowered to execute and deliver on behalf of itself, and
the Trustee, all instruments of satisfaction or cancellation, or of partial or
full release, discharge and all other comparable instruments, with respect to
the Mortgage Loans and with respect to the Mortgaged Property. The Servicer
shall make all required Servicing Advances and shall service and administer the
Mortgage Loans in accordance with Applicable Regulations, and shall provide to
the Mortgagor any reports required to be provided to them thereby. The Trustee
shall execute and deliver to the Servicer within at least fifteen (15) Business
Days of receipt, upon request, any powers of attorney furnished to it by the
Servicer empowering the Servicer to execute and deliver instruments of
satisfaction or cancellation, or of partial or full release or discharge, and to
foreclose upon or otherwise liquidate any Mortgaged Property, and to appeal,
prosecute or defend in any court action relating to the Mortgage Loans or the
Mortgaged Properties, in accordance with this Agreement, and the Trustee shall
execute and deliver such other documents as the Servicer may request, necessary
or appropriate to enable the Servicer to service and administer the Mortgage
Loans and carry out its duties hereunder, in each case in accordance with
Servicing Standard (and the Trustee shall have no liability for misuse of any
such powers of attorney by the Servicer). Notwithstanding anything contained
herein to the contrary, the Servicer shall not without the Trustee's written
consent: (i) initiate any action, suit or proceeding solely under the Trustee's
name without indicating the Servicer's representative capacity, or (ii) take any
action with the intent to cause, and which results in, the Trustee being
registered to do business in any state. If reasonably required by the Servicer,
the Trustee shall furnish the Servicer with a power of attorney substantially in
the form of Exhibit S hereto and such other documents necessary or appropriate
to enable the Servicer to carry out its servicing and administrative duties
hereunder.
In servicing and administering the Mortgage Loans, the Servicer shall
employ procedures including collection procedures and exercise the same care
that it customarily employs and exercises in servicing and administering
mortgage loans for its own account giving due consideration to accepted mortgage
servicing practices of prudent lending institutions and the Certificateholders'
reliance on the Servicer.
The Servicer shall give prompt notice to the Trustee of any action, of
which the Servicer has actual knowledge, to (i) assert a claim against the Trust
Fund or (ii) assert jurisdiction over the Trust Fund.
The Servicer further is authorized and empowered by the Trustee, on behalf
of the Certificateholders and the Trustee, in its own name when the Servicer
believes it is appropriate in its best judgment to register any Mortgage Loan on
the MERS(R) System, or cause the removal
69
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 Assignments 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. Any reasonable expenses incurred
in connection with the actions described in the preceding sentence or as a
result of MERS discontinuing or becoming unable to continue operations in
connection with the MERS(R) System, shall be subject to withdrawal by the
Servicer from the Collection Account.
As part of its servicing activities hereunder, the Servicer, for the
benefit of the Trustee and the Certificateholders, shall enforce the obligations
of the Transferor and the Seller under the Transfer Agreement or the Mortgage
Loan Purchase Agreements, as applicable, including, without limitation, any
obligation of either the Transferor or the Seller to purchase a Mortgage Loan on
account of missing or defective documentation or on account of a breach of a
representation, warranty or covenant.
For so long as any Mortgage Loan is registered on the MERS(R) System, the
Servicer shall maintain in good standing its membership in MERS and shall 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.
Section 3.02. Collection of Mortgage Loan Payments.
Continuously from the date hereof until the principal and interest on all
Mortgage Loans is paid in full or as long as the Mortgage Loan remains subject
to this Agreement, the Servicer will diligently collect all payments due under
each Mortgage Loan when the same shall become due and payable and shall, to the
extent such procedures shall be consistent with this Agreement and Applicable
Regulations, follow such collection procedures as it follows with respect to
mortgage loans comparable to the Mortgage Loans and held for its own account.
Further, the Servicer will take special care in ascertaining and estimating on
escrowed Mortgage Loans annual ground rents, taxes, assessments, water rates,
fire and hazard insurance premiums, mortgage insurance premiums, and all other
charges that, as provided in the Mortgage, will become due and payable to that
end that the installments payable by the Mortgagors will be sufficient to pay
such charges as and when they become due and payable.
Section 3.03. Realization Upon Defaulted Mortgage Loans.
In the event that any payment due under any Mortgage Loan is not paid when
the same becomes due and payable, or in the event the Mortgagor fails to perform
any other covenant or obligation under the Mortgage Loan and such failure
continues beyond any applicable grace period, the Servicer shall take such
action as it shall deem to be in the best interest of the Certificateholders.
With respect to any defaulted Mortgage Loan, the Servicer shall have the right
to review the status of the related forbearance plan and, subject to the second
paragraph of Section 3.01, may modify such forbearance plan; including extending
the Mortgage Loan repayment date for a period of one year or reducing the
Mortgage Interest Rate up to 50 basis points.
70
In connection with a foreclosure or other conversion, the Servicer shall
exercise such rights and powers vested in it hereunder and use the same degree
of care and skill in its exercise as prudent mortgage servicers would exercise
or use under the circumstances in the conduct of their own affairs and
consistent with Applicable Regulations and the Servicing Standard, including,
without limitation, advancing funds for the payment of taxes and insurance
premiums as provided in Section 3.08.
Notwithstanding the foregoing provisions of this Section 3.03, with respect
to any Mortgage Loan as to which the Servicer has received actual notice of, or
has actual knowledge of, the presence of any toxic or hazardous substance on the
related Mortgaged Property, the Servicer shall not either (i) obtain title to
such Mortgaged Property as a result of or in lieu of foreclosure or otherwise,
or (ii) otherwise acquire possession of, or take any other action with respect
to, such Mortgaged Property if, as a result of any such action, the Trust would
be considered to hold title to, to be a mortgagee-in-possession of, or to be an
owner or operator of such Mortgaged Property within the meaning of the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended from time to time, or any comparable law, unless the Servicer has also
previously determined, based on its reasonable judgment and a prudent report
prepared by a Person who regularly conducts environmental audits using customary
industry standards, that:
(A) such Mortgaged Property is in compliance with applicable
environmental laws or, if not, that it would be in the best economic
interest of the Certificateholders to take such actions as are
necessary to bring the Mortgaged Property into compliance therewith;
and
(B) there are no circumstances present at such Mortgaged Property
relating to the use, management or disposal of any hazardous
substances, hazardous materials, hazardous wastes, or petroleum-based
materials for which investigation, testing, monitoring, containment,
clean-up or remediation could be required under any federal, state or
local law or regulation, or that if any such materials are present for
which such action could be required, that it would be in the best
economic interest of the Certificateholders to take such actions with
respect to the affected Mortgaged Property.
The cost of the environmental audit report contemplated by this Section
3.03 shall be advanced by the Servicer, subject to the Servicer's right to be
reimbursed therefor from the Collection Account as provided in Section 3.05(iv).
If the Servicer determines, as described above, that it is in the best
economic interest of the Certificateholders to take such actions as are
necessary to bring any such Mortgaged Property into compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials, hazardous
wastes, or petroleum-based materials affecting any such Mortgaged Property, then
the Servicer shall take such action as it deems to be in the best economic
interest of the Certificateholders. The cost of any such compliance,
containment, clean-up or remediation shall be advanced by the Servicer, subject
to the Servicer's right to be reimbursed therefor from the Collection Account as
provided in Section 3.05(ii).
71
Section 3.04. Collection Account, Distribution Account and Reserve Account.
(a) The Servicer shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Collection Accounts.
Each Collection Account shall be an Eligible Account.
The Servicer shall deposit in the Collection Account on a daily basis
within two Business Days of receipt, and retain therein, the following payments
and collections received or made by it after the Cut-off Date with respect to
the Mortgage Loans:
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans
adjusted to the Mortgage Interest Rate less the Servicing Fee Rate;
(iii) all Liquidation Proceeds and Subsequent Recoveries;
(iv) all Insurance Proceeds, including amounts required to be
deposited pursuant to Section 3.10, other than proceeds to be held in the
Escrow Account and applied to the restoration or repair of the Mortgaged
Property or released to the Mortgagor in accordance with the Servicing
Standard, the Servicer's normal servicing procedures, the loan documents or
applicable law;
(v) all Condemnation Proceeds affecting any Mortgaged Property which
are not released to the Mortgagor in accordance with the Servicing
Standard, the Servicer's normal servicing procedures, the loan documents or
applicable law;
(vi) any amounts required to be deposited by the Servicer in
connection with any REO Property pursuant to Section 3.13; and
(vii) all Prepayment Charges collected by the Servicer in connection
with the voluntary Principal Prepayment in full of any Mortgage Loan, all
Servicer Prepayment Charge Payment Amounts required to be paid by the
Servicer pursuant to Section 3.29(b) in connection with any such Principal
Prepayment and all Transferor Prepayment Charge Payment Amounts paid by the
Transferor.
Any interest paid on funds deposited in the Collection Account, subject to
Section 3.25, shall accrue to the benefit of the Servicer and the Servicer shall
be entitled to retain and withdraw such interest from the Collection Account
pursuant to Section 3.05(v). The foregoing requirements for deposit from the
Collection Account shall be exclusive, it being understood and agreed that,
without limiting the generality of the foregoing, payments in the nature of late
payment charges, bad check fees, prepayment charges that are not Prepayment
Charges, Servicer Prepayment Charge Payment Amounts or Transferor Prepayment
Charge Payment Amounts, assumption fees and other similar fees need not be
deposited by the Servicer in the Collection Account. Amounts deposited in the
Collection Account in error may be withdrawn by the Servicer at any time.
72
(b) On behalf of the Trust Fund, the Trustee shall establish and maintain
one or more accounts (such account or accounts, the "Distribution Account"),
held in trust for the benefit of the Certificateholders. On behalf of the Trust
Fund, the Servicer shall deliver to the Trustee in immediately available funds
for deposit in the Distribution Account by 3:00 p.m., New York time, on the
Servicer Remittance Date, (i) that portion of the Available Funds (calculated
without regard to the references in the definition thereof to amounts that may
be deposited to the Distribution Account from a different source as provided
herein) then on deposit in the Collection Account and (ii) the amount of all
Prepayment Charges collected by the Servicer, all Transferor Prepayment Charge
Payment Amounts required to be paid by the Transferor and all Servicer
Prepayment Charge Payment Amounts paid by the Servicer in connection with the
voluntary Principal Prepayment in full of any of the Mortgage Loans then on
deposit in the Collection Account (other than any such Prepayment Charges
received and Servicer Prepayment Charge Payment Amounts and Transferor
Prepayment Charge Payment Amounts paid after the related Prepayment Period).
Amounts in the Distribution Account shall be deemed to be held on behalf of the
related REMICs and the Grantor Trust in accordance with the REMIC distributions
set forth in Section 4.08. The Trustee shall be entitled to withdraw from the
Distribution Account any amounts owing to it pursuant to Section 8.05 and
Section 9.01(c) prior to the distribution of any amounts on deposit to the
Certificateholders; provided, however, (x) in the case of amounts owing to it
other than the Trustee Fee, the Trustee shall provide the Depositor and the
Servicer with a written account of such amounts five Business Days prior to
withdrawing such funds and (y) the Trustee shall not be entitled to withdraw
such amounts from funds or deposit in the Distribution Account representing
Prepayment Charges, Servicer Prepayment Charge Payment Amounts and Transferor
Prepayment Charge Payment Amounts. In connection with any failure by the
Servicer to make any remittance required to be made by the Servicer to the
Distribution Account on the day and by the time such remittance is required to
be made under the terms of this Section 3.04(b) (without giving effect to any
grace or cure period), the Servicer shall pay to the Trustee for the account of
the Trustee interest at the prime rate of United States money center commercial
banks as published in The Wall Street Journal (Northeast Edition) on any amount
not timely remitted from and including the day such remittance was required to
be made to, but not including, the day on which such remittance was actually
made.
(c) Funds in the Collection Account may be invested in Permitted
Investments in accordance with the provisions set forth in Section 3.25. The
Servicer shall give notice to the Trustee of the location of the Collection
Account maintained by it when established and prior to any change thereof. The
Trustee shall give notice to the Servicer and the Depositor of the location of
the Distribution Account when established and prior to any change thereof.
(d) In the event the Servicer shall deliver to the Trustee for deposit in
the Distribution Account any amount not required to be deposited therein, it may
at any time request that the Trustee withdraw such amount from the Distribution
Account and remit to the Servicer any such amount, any provision herein to the
contrary notwithstanding. In addition, the Servicer shall deliver to the Trustee
from time to time for deposit, and the Trustee shall so deposit, in the
Distribution Account in respect of REMIC 1:
(i) any Advances, as required pursuant to Section 4.07;
73
(ii) any Stayed Funds, as soon as permitted by the federal bankruptcy
court having jurisdiction in such matters;
(iii) any amounts required to be deposited in the Distribution Account
by the Servicer pursuant to Sections 2.03, 3.04, 3.13, 3.15, 3.16, 3.23,
3.24, 4.07 or 10.01; and
(iv) any amounts required to be deposited by the Servicer pursuant to
Section 3.11 in connection with the deductible clause in any blanket hazard
insurance policy, such deposit being made from the Servicer's own funds,
without reimbursement therefor.
(e) Promptly upon receipt of any Stayed Funds, whether from the Servicer, a
trustee in bankruptcy, or federal bankruptcy court or other source, the Trustee
shall notify the Servicer of such receipt and deposit such funds in the
Distribution Account, subject to withdrawal thereof as permitted hereunder. In
addition, the Trustee shall deposit in the Distribution Account any amounts
required to be deposited pursuant to Section 3.25(b) in connection with losses
realized on Permitted Investments with respect to funds held in the Distribution
Account.
(f) Any Prepayment Charges, Transferor Prepayment Charge Payment Amounts
and Servicer Prepayment Charge Payment Amounts deposited pursuant to Section
3.04(a)(vii) shall not be assets of any REMIC created hereunder, but shall be
considered assets of the Grantor Trust held by the Trustee for the benefit of
the Class P Certificateholders.
(g) (i) The Trustee shall establish and maintain the Reserve Account, held
in trust for the benefit of the Class X-0, Xxxxx X-0, Class M-5, Class M-6 and
Class M-7 Certificateholders. The Trustee shall deposit in the Reserve Account
on the date received by it, any Yield Maintenance Agreement Payments received
from the Yield Maintenance Agreement Provider for the related Distribution Date.
On each Distribution Date, the Trustee shall withdraw from the Reserve Account
any Yield Maintenance Agreement Payment and apply it in the following order of
priority:
(A) to the Class X-0, Xxxxx X-0, Class M-5, Class M-6 and Class
M-7 Certificates, in that order, an amount equal to any unpaid
remaining Net WAC Rate Carryover Amounts with respect to such
Certificates (after distributions pursuant to Section 4.02(b) hereof),
in each case only up to the Cap Amount for the related Class;
(B) to the Class M-3, Class M-4, Class M-5, Class M-6 and Class
M-7 Certificates, in that order, an amount equal to any unpaid
remaining Net WAC Rate Carryover Amounts with respect to such
Certificates (after distributions pursuant to Section 4.02(b) hereof
and clause (A) above); and
(C) to the Class CE Certificates, any remaining amounts
attributable to Yield Maintenance Agreement Payments on deposit in the
Reserve Account.
(ii) The Trustee shall account for the Yield Maintenance Agreement and
the Reserve Account as assets of a grantor trust under subpart E, part I of
subchapter J of the Code and not assets of any REMIC created pursuant to
this Agreement. The beneficial owners of the Yield Maintenance Agreement
and the Reserve Account are the Class CE
74
Certificateholders. For all federal tax purposes, amounts transferred or
reimbursed by REMIC 2 in respect of payments made pursuant to the Yield
Maintenance Agreement to the Reserve Account shall be treated as
distributions by the Trustee to the Class CE Certificateholders.
(iii) Any Net WAC Rate Carryover Amounts paid by the Trustee to the
Class M-3, Class M-4, Class M-5, Class M-6 and Class M-7 Certificates
pursuant to this Section 3.04(g), shall be accounted for by the Trustee as
amounts paid first to the Class CE Certificates and then to such Class M
Certificates. In addition, the Trustee shall account for the Class X-0,
Xxxxx X-0, Class M-5, Class M-6 and Class M-7 Certificates' rights to
receive payments of Net WAC Rate Carryover Amounts as rights in limited
recourse interest rate cap contracts written by the Class CE Certificates
in favor of such Class M Certificates.
(iv) For federal tax return and information reporting, the right of
the Holders of the Class M-3, Class M-4, Class M-5, Class M-6 and Class M-7
Certificates to receive payments under the Yield Maintenance Agreement in
respect of any Yield Maintenance Agreement Payments shall be assigned a
value of zero.
Section 3.05. Permitted Withdrawals From the Collection Account.
The Servicer may, from time to time, withdraw from the Collection Account
for the following purposes:
(i) to remit to the Trustee for deposit in the Distribution Account
the amounts required to be so remitted pursuant to Section 3.04(b);
(ii) to reimburse itself for Advances and Servicing Advances; the
Servicer's right to reimburse itself pursuant to this subclause (ii) being
limited to amounts received on the related Mortgage Loan which represent
payments of (a) principal and/or interest respecting which any such Advance
was made (including portions of Condemnation Proceeds, Insurance Proceeds
or Liquidation Proceeds allocable to principal and/or interest on the
Mortgage Loan) or (b) Condemnation Proceeds, Insurance Proceeds or
Liquidation Proceeds respecting which any such Servicing Advance was made;
(iii) to reimburse itself for unreimbursed Servicing Advances, any
unpaid Servicing Fees and for unreimbursed Advances to the extent that such
amounts are deemed to be Nonrecoverable Advances, and to reimburse itself
for such amounts to the extent that such amounts are nonrecoverable from
the disposition of REO Property pursuant to Section 3.03 or Section 3.13
hereof;
(iv) to reimburse itself for any amounts paid or expenses incurred
pursuant to Section 3.03 (and not otherwise previously reimbursed);
(v) to pay to itself as servicing compensation (a) any interest earned
on funds in the Collection Account (all such interest to be withdrawn
monthly not later than each Servicer Remittance Date) and (b) the Servicing
Fee from that portion of any payment or
75
recovery as to interest to a particular Mortgage Loan to the extent not
retained pursuant to Section 3.04(ii);
(vi) to pay or reimburse itself for any amounts payable or paid
pursuant to Section 6.03 (and not otherwise previously reimbursed); and
(vii) to clear and terminate the Collection Account upon the
termination of this Agreement.
The foregoing requirements for withdrawal from the Collection Account shall
be exclusive. In the event the Servicer shall deposit in the Collection Account
any amount not required to be deposited therein, it may at any time withdraw
such amount from the Collection Account, any provision herein to the contrary
notwithstanding.
Section 3.06. Establishment of Escrow Accounts; Deposits in Escrow
Accounts.
The Servicer shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan which constitute Escrow Payments separate and
apart from any of its own funds and general assets and shall establish and
maintain one or more Escrow Accounts, in the form of time deposit or demand
accounts. A copy of such letter agreement shall be furnished to the Trustee upon
request. The Escrow Account shall be an Eligible Account.
The Servicer shall deposit in the Escrow Account or Accounts on a daily
basis within one Business Days of receipt, and retain therein, (i) all Escrow
Payments collected on account of the Mortgage Loans, for the purpose of
effecting timely payment of any such items as required under the terms of this
Agreement, and (ii) all Insurance Proceeds which are to be applied to the
restoration or repair of any Mortgaged Property. The Servicer shall make
withdrawals therefrom only to effect such payments as are required under this
Agreement, and for such other purposes as shall be set forth in, or in
accordance with, Section 3.07. The Servicer shall be entitled to retain any
interest paid on funds deposited in the Escrow Account by the depository
institution other than interest on escrowed funds required by law to be paid to
the Mortgagor and, to the extent required by the related Mortgage Loan or
Applicable Regulations, the Servicer shall pay interest on escrowed funds to the
Mortgagor notwithstanding that the Escrow Account is non-interest bearing or
that interest paid thereon is insufficient for such purposes.
Section 3.07. Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account may be made by the Servicer (i) to
effect timely payments of ground rents, taxes, assessments, water rates, fire,
flood and hazard insurance premiums and comparable items in a manner and at a
time that assures that the lien priority of the Mortgage is not jeopardized (or,
with respect to the payment of taxes, in a manner and at a time that avoids the
loss of the Mortgaged Property due to a tax sale or the foreclosure as a result
of a tax lien), (ii) to reimburse the Servicer for any Servicing Advance made by
the Servicer with respect to a related Mortgage Loan but only from amounts
received on the related Mortgage Loan which represent late payments or Late
Collections of Escrow Payments thereunder with respect to taxes and assessments
and with respect to hazard insurance, (iii) to refund to the Mortgagor any funds
as may be determined to be overages, (iv) for transfer to the Collection Account
in accordance with the terms of this Agreement, (v) for application to
restoration or
76
repair of the Mortgaged Property, (vi) to pay to the Servicer, or to the
Mortgagor to the extent required by the related Mortgage Loan or Applicable
Regulations, any interest paid on the funds deposited in the Escrow Account or
(vii) to clear and terminate the Escrow Account on the termination of this
Agreement. As part of its servicing duties, the Servicer shall pay to the
Mortgagor interest on funds in the Escrow Account, to the extent required by the
related Mortgage Loan or Applicable Regulations, and to the extent that interest
earned on funds in the Escrow Account is insufficient, shall pay such interest
from its own funds, without any reimbursement therefor.
In the event the Servicer shall deposit in the Escrow Account any amount
not required to be deposited therein, it may at any time withdraw such amount
from the Escrow Account, any provision herein to the contrary notwithstanding.
Section 3.08. Payment of Taxes, Insurance and Other Charges; Collections
Thereunder.
With respect to each Mortgage Loan that provides for Escrow Payments, the
Servicer shall maintain accurate records reflecting the status of ground rents,
taxes, assessments, water rates and other charges which are or may become a lien
upon the Mortgaged Property and the status of fire, flood and hazard insurance
coverage and shall obtain, from time to time, all bills for the payment of such
charges (including renewal premiums) and shall effect payment of taxes,
assessments, hazard insurance premiums, and comparable items in a manner and at
a time that assures that the lien priority of the Mortgage is not jeopardized
(or, with respect to the payment of taxes, in a manner and at a time that avoids
the loss of the Mortgaged Property due to a tax sale or the foreclosure as a
result of a tax lien). To the extent that a Mortgage does not provide for Escrow
Payments, the Servicer (i) shall determine whether any such payments are made by
the Mortgagor in a manner and at a time that is necessary to avoid the loss of
the Mortgaged Property due to a tax sale or the foreclosure as a result of a tax
lien and (ii) shall ensure that all insurance required to be maintained on the
Mortgaged Property pursuant to this Agreement is maintained. If any such payment
has not been made and the Servicer receives notice of a tax lien with respect to
the Mortgage Loan being imposed, the Servicer will, promptly and to the extent
required to avoid loss of the Mortgaged Property, advance or cause to be
advanced funds necessary to discharge such lien on the Mortgaged Property. The
Servicer assumes full responsibility for the payment of all such bills and shall
effect payments of all such bills irrespective of the Mortgagor's faithful
performance in the payment of same or the making of the Escrow Payments and
shall make Servicing Advances from its own funds to effect such payments.
Section 3.09. Transfer of Accounts.
The Servicer may transfer the Collection Account and the Escrow Account to
a different depository institution from time to time. Upon such transfer, the
Servicer shall deliver to the Trustee and the Depositor, a certification or
letter agreement, as the case may be, as required pursuant to Sections 3.04 and
3.06.
77
Section 3.10. Maintenance of Hazard Insurance.
The Servicer shall cause to be maintained for each Mortgage Loan fire and
hazard insurance with extended coverage as is customary in the area where the
Mortgaged Property is located in an amount which is at least equal to the lesser
of (i) the amount necessary to fully compensate for any damage or loss to the
improvements which are a part of such property on a replacement cost basis or
(ii) the Principal Balance of the Mortgage Loan, in each case in an amount not
less than such amount as is necessary to prevent the Mortgagor and/or the
Mortgagee from becoming a co-insurer. If the Mortgaged Property is in an area
identified in the Federal Register by the Flood Emergency Management Agency as
having special flood hazards and flood insurance has been made available, the
Servicer will cause to be maintained a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance Administration
with a Qualified Insurer, in an amount representing coverage not less than the
least of (i) the Principal Balance of the Mortgage Loan, (ii) the maximum
insurable value of the improvements securing such Mortgage Loan or (iii) the
maximum amount of insurance which is available under the National Flood
Insurance Act of 1968, as amended. The Servicer shall also maintain on the REO
Properties for the benefit of the Certificateholders, (x) fire and hazard
insurance with extended coverage in an amount which is at least equal to the
lesser of (i) 100% of the maximum insurable value of the improvements securing
the Mortgage Loan and (ii) the outstanding Principal Balance of the Mortgage
Loan at the time it became an REO Property, (y) public liability insurance and
(z) to the extent required and available under the National Flood Insurance Act
of 1968, as amended, flood insurance in an amount as provided above. Any amounts
collected by the Servicer under any such policies other than amounts to be
deposited in the Escrow Account and applied to the restoration or repair of the
Mortgaged Property or REO Property, or released to the Mortgagor in accordance
with the Servicer's normal servicing procedures, shall be deposited in the
Collection Account, subject to withdrawal pursuant to Section 3.05. It is
understood and agreed that no earthquake or other additional insurance is
required to be maintained by the Servicer or the Mortgagor or maintained on
property acquired in respect of the Mortgage Loan, other than pursuant to such
Applicable Regulations as shall at any time be in force and as shall require
such additional insurance. All such policies shall be endorsed with standard
mortgagee clauses with loss payable to the Servicer and shall provide for at
least thirty days prior written notice of any cancellation, reduction in the
amount of or material change in coverage to the Servicer. The Servicer shall not
interfere with the Mortgagor's freedom of choice in selecting either his
insurance carrier or agent, provided, however, that the Servicer shall not
accept any such insurance policies from insurance companies unless such
companies currently reflect a general policy rating of B:III or better in Best's
Key Rating Guide, are Qualified Insurers and are licensed to do business in the
state wherein the property subject to the policy is located.
Section 3.11. Maintenance of Mortgage Impairment Insurance Policy.
In the event that the Servicer shall obtain and maintain a blanket policy
issued by a Qualified Insurer acceptable under the Xxxxxx Xxx MBS Selling and
Servicing Guide or the Xxxxxxx Mac Servicer's Guide insuring against hazard
losses on all of the Mortgage Loans, then, to the extent such policy provides
coverage in an amount equal to the amount required pursuant to Section 3.10 and
otherwise complies with all other requirements of Section 3.10, it shall
conclusively be deemed to have satisfied its obligations as set forth in Section
3.10, it being
78
understood and agreed that such policy may contain a deductible clause, in which
case the Servicer shall, in the event that there shall not have been maintained
on the related Mortgaged Property or REO Property a policy complying with
Section 3.10, and there shall have been a loss which would have been covered by
such policy, deliver to the Trustee for deposit in the Distribution Account the
amount not otherwise payable under the blanket policy because of such deductible
clause, which amount shall not be reimbursable to the Servicer from the Trust
Fund. In connection with its activities as servicer of the Mortgage Loans, the
Servicer agrees to prepare and present, on behalf of the Trustee, claims under
any such blanket policy in a timely fashion in accordance with the terms of such
policy. Upon request of the Trustee, the Servicer shall cause to be delivered to
the Trustee a certified true copy of such policy and a statement from the
insurer thereunder that such policy shall in no event be terminated or
materially modified without thirty days prior written notice to the Trustee.
Section 3.12. Fidelity Bond, Errors and Omissions Insurance.
The Servicer shall maintain with a Qualified Insurer, at its own expense, a
blanket fidelity bond (the "Fidelity Bond") and an errors and omissions
insurance policy, with broad coverage with financially responsible companies on
all officers, employees or other persons acting in any capacity with regard to
the Mortgage Loans to handle funds, money, documents and papers relating to the
Mortgage Loans. The Fidelity Bond and errors and omissions insurance shall be in
the form of the Mortgage Banker's Blanket Bond and shall protect and insure the
Servicer against losses, including forgery, theft, embezzlement, fraud, errors
and omissions and negligent acts of such persons. Such Fidelity Bond shall also
protect and insure the Servicer against losses in connection with the failure to
maintain any insurance policies required pursuant to this Agreement and the
release or satisfaction of a Mortgage Loan without having obtained payment in
full of the indebtedness secured thereby. No provision of this Section 3.12
requiring the Fidelity Bond and errors and omissions insurance shall diminish or
relieve the Servicer from its duties and obligations as set forth in this
Agreement. The minimum coverage under any such bond and insurance policy shall
be at least equal to the corresponding amounts required by Xxxxxx Xxx in the
Xxxxxx Mae MBS Selling and Servicing Guide or by Xxxxxxx Mac in the Xxxxxxx Mac
Servicer's Guide. Upon request of the Trustee, the Servicer shall cause to be
delivered to the requesting party a certified true copy of the Fidelity Bond and
errors and omissions insurance policy and a statement from the surety and the
insurer that such Fidelity Bond and errors and omissions insurance policy shall
in no event be terminated or materially modified without thirty days' prior
written notice to the Trustee.
Section 3.13. Title, Management and Disposition of REO Property.
(a) In the event that title to a Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken (pursuant to a limited power of attorney to be provided by the
Trustee to the Servicer) in the name of the Trustee or its nominee, on behalf of
the Certificateholders, or in the event the Trustee is not authorized or
permitted to hold title to real property in the state where the REO Property is
located, or would be adversely affected under the "doing business" or tax laws
of such state by so holding title, the deed or certificate of sale shall be
taken in the name of such Person or Persons as shall be consistent with an
Opinion of Counsel obtained by the Servicer (the expense of which shall be
reimbursable as a Servicing Advance) from an attorney duly licensed to practice
law in the state
79
where the REO Property is located. Any Person or Persons holding such title
other than the Trustee shall acknowledge in writing that such title is being
held as nominee for the benefit of the Trustee.
(b) In the event that the Trust Fund acquires any REO Property as aforesaid
or otherwise in connection with a default or imminent default on a Mortgage
Loan, the Servicer shall dispose of such REO Property before the end of the
third taxable year beginning after the year of its acquisition by the Trust Fund
for purposes of Section 860G(a)(8) of the Code unless the Servicer has received
a grant of extension from the Internal Revenue Service, more than 60 days before
the day on which the above-mentioned grace period would otherwise expire, unless
the Servicer obtains an Opinion of Counsel, addressed to the Servicer and the
Trustee, to the effect such that the holding by the Trust Fund of such REO
Property subsequent to such period will not: (i) result in the imposition of any
tax on "prohibited transactions" as defined in Section 860F of the Code; (ii)
cause any REO property to fail to qualify as "foreclosure property" within the
meaning of Section 860G(a)(8) of the Code; or (iii) cause any REMIC constituting
any part of the Trust Fund to fail to qualify as a REMIC at any time that any
Certificates are outstanding, in which case the Trust Fund may continue to hold
such REO Property (subject to any conditions contained in such Opinion of
Counsel). The Servicer shall be entitled to be reimbursed from the Collection
Account for any costs incurred in obtaining such Opinion of Counsel, as provided
in Section 3.05.
Subject to compliance with applicable laws and regulations as shall at any
time be in force, and notwithstanding any other provisions of this Agreement, no
REO Property acquired by the Trust Fund shall be rented (or allowed to continue
to be rented) or otherwise used by or on behalf of the Trust Fund in such a
manner or pursuant to any terms that would: (i) cause such REO Property to fail
to qualify as "foreclosure property" within the meaning of Section 860G(a)(8) of
the Code; or (ii) subject any REMIC constituting part of the Trust Fund to the
imposition of any federal or state income taxes on the income earned from such
REO Property, including any taxes imposed by reason of Sections 860F or 860G(c)
of the Code, unless the Servicer has agreed to indemnify and hold harmless the
Trust Fund with respect to the imposition of any such taxes.
The Servicer shall manage, conserve, protect and operate each REO Property
for the Certificateholders and the Trust Fund solely for the purpose of its
prompt disposition and sale in a manner which does not cause such REO Property
to fail to qualify as "foreclosure property" within the meaning of Section
860G(a)(8) of the Code or result in the receipt by the related REMIC of any
"income from non-permitted assets" within the meaning of Section 860F(a)(2)(B)
of the Code, or any "net income from foreclosure property" which is subject to
taxation under the REMIC Provisions. The Servicer shall cause each REO Property
to be inspected promptly upon the acquisition of title thereto and shall cause
each REO Property to be inspected at least annually thereafter. The Servicer
shall make or cause to be made a written or electronic report of each such
inspection. Such reports shall be retained in the Mortgage File and copies
thereof shall be forwarded by the Servicer to the Trustee upon request. The
Servicer shall attempt to sell the same (and may temporarily rent the same) on
such terms and conditions as the Servicer deems to be in the best interest of
the Certificateholders and the Trust Fund.
80
With respect to each REO Property, the Servicer shall account separately
for each REO Property with respect to all funds collected and received in
connection with the operation of such REO Property.
The Servicer shall deposit or cause to be deposited, on a daily basis,
within one Business Day of receipt, in the Collection Account, all revenues
received with respect to each REO Property and shall withdraw therefrom funds
necessary for the proper operation, management and maintenance of the related
REO Property, including the cost of maintaining any hazard insurance pursuant to
Section 3.10 hereof and the fees of any managing agent acting on behalf of the
Servicer.
The Servicer shall furnish to the Trustee, on each Servicer Remittance
Date, an operating statement for each REO Property covering the operation of
each REO Property for the previous month. Such operating statement shall be
accompanied by such other information as the Trustee shall reasonably request.
The Servicer shall use its best efforts to dispose of the REO Property as
promptly as is practically consistent with protecting the Certificateholders'
interests.
Each REO Disposition shall be carried out by the Servicer at such price and
upon such terms and conditions as the Servicer deems to be in the best interest
of the Certificateholders. If as of the date title to any REO Property was
acquired by the Servicer there were outstanding unreimbursed Servicing Advances,
Servicing Fees and Advances with respect to the REO Property, the Servicer, upon
an REO Disposition of such REO Property, shall be entitled to reimbursement for
any related unreimbursed Servicing Advances, Servicing Fees and Advances from
proceeds received in connection with such REO Disposition. The proceeds from the
REO Disposition, net of any payment to the Servicer as provided above, shall be
deposited in the Collection Account for transfer to the Distribution Account on
the succeeding Servicer Remittance Date in accordance with Section 3.04(a)(vi).
Any REO Disposition shall be for cash only (unless changes in the REMIC
Provisions made subsequent to the Startup Day allow a sale for other
consideration and an Opinion of Counsel is obtained by the Servicer to the
effect that such sale shall not cause any REMIC constituting part of the Trust
Fund to fail to qualify as a REMIC).
Section 3.14. Due-on-Sale Clauses; Assumption and Substitution Agreements.
When a Mortgaged Property has been or is about to be conveyed by the
Mortgagor, the Servicer shall, except as set forth below, to the extent it has
knowledge of such conveyance or prospective conveyance, exercise its rights to
accelerate the maturity of the related Mortgage Loan under any "due-on-sale"
clause contained in the related Mortgage or Mortgage Note; provided, however,
that the Servicer shall not exercise any such right if the "due-on-sale" clause,
in the reasonable belief of the Servicer, is not enforceable under applicable
law. An Opinion of Counsel at the expense of the Servicer (which expense shall
constitute a Servicing Advance) delivered to the Trustee and the Depositor shall
conclusively establish the reasonableness of the Servicer's belief that any
"due-on-sale" clause is not enforceable under applicable law. In such event, the
Servicer shall make reasonable efforts to enter into an assumption and
modification
81
agreement with the Person to whom such property has been or is about to be
conveyed, pursuant to which such Person becomes liable under the Mortgage Note
and, unless prohibited by applicable law or the Mortgage, the Mortgagor remains
liable thereon. If the foregoing is not permitted under applicable law, the
Servicer is authorized to enter into a substitution of liability agreement with
such Person, pursuant to which the original Mortgagor is released from liability
and such Person is substituted as Mortgagor and becomes liable under the Note;
provided that no such substitution will be permitted unless such person
satisfies the underwriting criteria of the Servicer and such substitution is in
the best interests of the Certificateholders. In addition to the foregoing, the
Servicer shall not be required to enforce any "due-on-sale" clause if in the
reasonable judgment of the Servicer, entering into an assumption and
modification agreement with a Person to whom such property shall be conveyed and
releasing the original Mortgagor from liability would be in the best interests
of the Certificateholders. The Mortgage Loan, as assumed, shall conform in all
respects to the requirements, representations and warranties of this Agreement.
The Servicer shall not take or enter into any assumption and modification
agreement, unless (to the extent practicable under the circumstances) it shall
have received confirmation, in writing, of the continued effectiveness of any
applicable hazard insurance policy. The Servicer shall notify the Trustee that
any such assumption or substitution agreement has been completed by forwarding
to the Trustee the original copy of such assumption or substitution agreement
(indicating the Mortgage File to which it relates) which copy shall be added by
the Trustee to the related Mortgage File and which shall, for all purposes, be
considered a part of such Mortgage File to the same extent as all other
documents and instruments constituting a part thereof. The Servicer shall be
responsible for recording any such assumption or substitution agreements. In
connection with any such assumption or substitution agreement, the Monthly
Payment on the related Mortgage Loan shall not be changed but shall remain as in
effect immediately prior to the assumption or substitution, the stated maturity
or outstanding principal amount of such Mortgage Loan shall not be changed nor
shall any required monthly payments of principal or interest be deferred or
forgiven. Any fee collected by the Servicer for consenting to any such
conveyance or entering into an assumption or substitution agreement shall be
retained by or paid to the Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Mortgage Loan by operation of law or by the terms of the Mortgage Note or any
assumption which the Servicer may be restricted by law from preventing, for any
reason whatsoever. For purposes of this Section 3.14, the term "assumption" is
deemed to include a sale of the Mortgaged Property subject to the Mortgage that
is not accompanied by an assumption or substitution of liability agreement.
Section 3.15. Notification of Adjustments.
On each Adjustment Date, the Servicer shall make Mortgage Interest Rate
adjustments for each Adjustable-Rate Mortgage Rate Loan in compliance with the
requirements of the related Mortgage and Mortgage Note and Applicable
Regulations. The Servicer shall execute and deliver the notices required by each
Mortgage and Mortgage Note and Applicable Regulations regarding Mortgage
Interest Rate adjustments. Upon the discovery by the Servicer or the Trustee
that the Servicer has failed to adjust or has incorrectly adjusted a Mortgage
Interest Rate or a Monthly Payment pursuant to the terms of the related Mortgage
Note and Mortgage, the Servicer
82
shall deliver to the Trustee for deposit in the Distribution Account from its
own funds the amount of any interest loss caused thereby without reimbursement
therefor; provided, however, the Servicer shall be held harmless with respect to
any Mortgage Interest Rate adjustments made by any servicer prior to the
Servicer.
Section 3.16. Optional Purchases of Mortgage Loans by Servicer.
(a) The Servicer, or an Affiliate of the Servicer, shall have the right to
purchase any defaulted Mortgage Loan that is 90 days or more delinquent, which
the Servicer determines in good faith will otherwise become subject to
foreclosure proceedings (evidence of such determination to be delivered in
writing to the Trustee, in form and substance satisfactory to the Servicer and
the Trustee prior to purchase) or for which the Servicer has accepted a deed in
lieu of foreclosure, at a price equal to the Purchase Price. The Purchase Price
for any Mortgage Loan purchased hereunder shall be deposited in the Collection
Account, and the Trustee, upon receipt of written certification from the
Servicer of such deposit, shall release or cause to be released to the Servicer
the related Mortgage File and the Trustee shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, as the
Servicer shall furnish and as shall be necessary to vest in the Servicer title
to any Mortgage Loan released pursuant hereto.
(b) Notwithstanding the preceding paragraph, in the event that the Servicer
or an Affiliate thereof is the owner of more than 50% of a Class of Certificates
which is then in a first loss position and such party is deemed to be the
"Primary Beneficiary" as defined in FIN 40, the Servicer (or an Affiliate of the
Servicer) may, at its option, purchase a Mortgage Loan or REO Property which
becomes 120 or more days Delinquent or for which the Servicer has accepted a
deed in lieu of foreclosure, during the period commencing on the first day of
the calendar quarter succeeding the calendar quarter in which the Initial
Delinquency Date occurred with respect to such Mortgage Loan and ending on the
last Business Day of such calendar quarter. If the Servicer (or an Affiliate of
the Servicer) does not exercise its purchase right with respect to a Mortgage
Loan during the period specified in the preceding sentence, such Mortgage Loan
shall thereafter again become eligible for purchase pursuant to the preceding
sentence only after the Mortgage Loan ceases to be 120 days or more Delinquent
and thereafter becomes 120 days Delinquent again. The "Initial Delinquency Date"
of a Mortgage Loan shall mean the date on which the Mortgage Loan first became
120 days Delinquent. Prior to repurchase pursuant to this Section 3.16(b), the
Servicer shall be required to continue to make monthly advances pursuant to
Section 4.07. The Servicer shall not use any procedure in selecting Mortgage
Loans to be repurchased which is materially adverse to the interests of the
Certificateholders. The Servicer shall purchase such (i) Delinquent Mortgage
Loan at a price equal to the Principal Balance of the Mortgage Loan plus accrued
interest thereon at the Mortgage Interest Rate from the date to which interest
has last been paid to the Trust Fund to the date of purchase, plus any
unreimbursed Servicing Advances and Advances or (ii) REO Property at its fair
market value as determined in good faith by the Servicer. Any such repurchase of
a Mortgage Loan or REO Property pursuant to this Section 3.16(b) shall be
accomplished by delivery to the Trustee for deposit in the Distribution Account
of the amount of the purchase price. The Trustee shall immediately effectuate
the conveyance of such delinquent Mortgage Loan or REO Property to the Servicer
to the extent necessary, including the prompt delivery of all documentation to
the Servicer.
83
Section 3.17. Trustee to Cooperate; Release of Files.
(a) Upon the payment in full of any Mortgage Loan (including any
liquidation of such Mortgage Loan through foreclosure or otherwise, or the
receipt by the Servicer of a notification that payment in full will be escrowed
in a manner customary for such purposes), the Servicer shall deliver to the
Trustee, in written form (with two executed copies) or electronic form, of a
completed "Request for Release" in the form of Exhibit E. Upon receipt of such
Request for Release of Documents, the Trustee shall promptly release the related
Mortgage File within three (3) Business Days via overnight mail delivery (at the
expense of the Servicer), in trust, to (i) the Servicer, or (ii) such other
party identified in the related Request for Release. Upon any such payment in
full, or the receipt of such notification that such funds have been placed in
escrow, the Servicer shall direct the Trustee in writing to execute an
instrument of satisfaction (or assignment of Mortgage without recourse)
regarding the Mortgaged Property relating to such Mortgage, which instrument of
satisfaction or assignment shall be delivered to the Person or Persons entitled
thereto against receipt therefor of payment in full, it being understood and
agreed that no expense incurred in connection with such instrument of
satisfaction or assignment, as the case may be, shall be chargeable to the
Collection Account. In lieu of executing any such satisfaction or assignment, as
the case may be, the Servicer may prepare and submit to the Trustee a
satisfaction (or assignment without recourse, if requested by the Person or
Persons entitled thereto) in form for execution by the Trustee with all
requisite information completed by the Servicer; in such event, the Trustee
shall execute and acknowledge such satisfaction or assignment, as the case may
be, and deliver the same with the related Mortgage File, as aforesaid.
(b) From time to time and as appropriate in the servicing of any Mortgage
Loan, including, without limitation, foreclosure or other comparable conversion
of a Mortgage Loan or collection under any insurance policy relating to a
Mortgage Loan, the Trustee shall (except in the case of the payment or
liquidation pursuant to which the related Mortgage File is released to an escrow
agent or an employee, agent or attorney of the Trustee), upon written request of
the Servicer and delivery to the Trustee, in written form (with two executed
copies) or electronic form, of a "Request for Release" in the form of Exhibit E
signed by a Servicing Officer, release the related Mortgage File to the Servicer
within three (3) Business Days and shall execute such documents as shall be
necessary to the prosecution of any such proceedings, including, without
limitation, an assignment without recourse of the related Mortgage to the
Servicer. Such receipt shall obligate the Servicer to return the Mortgage File
to the Trustee when the need therefor by the Servicer no longer exists unless
the Mortgage Loan shall be liquidated, in which case, upon receipt of a Request
for Release evidencing such liquidation, the receipt shall be released by the
Trustee to the Servicer.
(c) Subject to Section 3.01, the Servicer shall have the right to accept
applications of Mortgagors for consent to (i) partial releases of Mortgages,
(ii) alterations, (iii) removal, demolition or division of properties subject to
Mortgages, (iv) modifications, and (v) second mortgage subordination agreements.
No application for approval shall be considered by the Servicer unless: (w) such
application would not both (A) effect an exchange or reissuance of such Mortgage
Loan under Section 1.860G-2(b) of the Treasury Regulations and (B) cause any
REMIC constituting part of the Trust Fund to fail to qualify as a REMIC under
the Code or the imposition of any tax on "prohibited transactions" or
"contributions" after the Startup Day under
84
the REMIC Provisions or any similar provisions of state or local law; (x) the
provisions of the related Mortgage Note and Mortgage have been complied with;
(y) the Loan-to-Value Ratio and debt-to-income ratio after any release does not
exceed the maximum Loan-to-Value Ratio and debt-to-income ratio established in
accordance with the underwriting standards of the Mortgage Loans; and (z) the
lien priority of the related Mortgage is not affected. Upon receipt by the
Trustee of a Servicing Officer's certificate setting forth the action proposed
to be taken in respect of a particular Mortgage Loan and certifying that the
criteria set forth in the immediately preceding sentence have been satisfied,
the Trustee shall execute and deliver to the Servicer the consent or partial
release so requested by the Servicer. A proposed form of consent or partial
release, as the case may be, shall accompany any Servicing Officer's certificate
delivered by the Servicer pursuant to this paragraph.
Section 3.18. Servicing Compensation.
As compensation for its activities hereunder, the Servicer shall be
entitled to retain the amount of the Servicing Fee with respect to each Mortgage
Loan (including REO Properties). The Servicer shall be entitled to retain
additional servicing compensation in the form of release fees; bad check
charges; assumption fees; modification or extension fees; late payment charges;
prepayment charges that are not Prepayment Charges, Servicer Prepayment Charge
Payment Amounts or Transferor Prepayment Charge Payment Amounts; customary
real-estate referral fees or any other service-related fees and similar items,
to the extent collected from Mortgagors.
The Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder (including payment of
premiums for any blanket policy insuring against hazard losses pursuant to
Section 3.11 and the fees and expenses of independent accountants and any agents
appointed by the Servicer), and shall not be entitled to reimbursement therefor
from the Trust Fund except as specifically provided in Section 3.05.
Section 3.19. Annual Statement as to Compliance.
(a) The Servicer, at its own expense, will deliver to the Trustee and the
Depositor, not later than March 15 of each calendar year commencing in 2005, a
Servicing Officer's certificate stating, as to each signer thereof, that (i) a
review of the activities of the Servicer during such preceding fiscal year and
of performance under this Agreement has been made under such officers'
supervision, and (ii) to the best of such officers' knowledge, based on such
review, the Servicer has fulfilled all its obligations under this Agreement for
such year, or, if there has been a default in the fulfillment of all such
obligations, specifying each such default known to such officers and the nature
and status thereof including the steps being taken by the Servicer to remedy
such default.
(b) Delivery of such reports, information and documents to the Trustee is
for informational purposes only and their receipt of such shall not constitute
constructive notice of any information contained therein or determinable, from
information contained therein, including the Servicer's compliance with any of
its covenants hereunder (as to which the Trustee is entitled to rely exclusively
on Officers' Certificates).
85
Section 3.20. Annual Independent Certified Public Accountants' Reports.
(a) On or before March 15 of each calendar year commencing in 2005, the
Servicer, at its expense, shall cause a nationally recognized firm of
independent certified public accountants to furnish to the Trustee, the
Depositor and each Rating Agency, a report stating that (i) it has obtained a
letter of representation regarding certain matters from the management of the
Servicer which includes an assertion that the Servicer has complied with certain
minimum residential mortgage loan servicing standards, identified in either the
Uniform Single Attestation Program for Mortgage Bankers established by the
Mortgage Bankers Association of America or the Audit Program for Mortgages
serviced by Xxxxxxx Mac, with respect to the servicing of residential mortgage
loans during the most recently completed fiscal year and (ii) on the basis of an
examination conducted by such firm in accordance with standards established by
the American Institute of Certified Public Accountants, such representation is
fairly stated in all material respects, subject to such exceptions and other
qualifications that may be appropriate. Copies of such statement shall be
provided by the Trustee to any Certificateholder upon request, at the Servicer's
expense, provided that such statement is delivered by the Servicer to the
Trustee.
(b) Delivery of such reports, information and documents to the Trustee is
for informational purposes only and their receipt of such shall not constitute
constructive notice of any information contained therein or determinable from
information contained therein, including the Servicer's compliance with any of
its covenants hereunder (as to which the Trustee is entitled to rely exclusively
on Officers' Certificates).
Section 3.21. Access to Certain Documentation and Information Regarding the
Mortgage Loans.
The Servicer shall provide to the Trustee, Certificateholders that are
federally insured savings and loan associations, the Office of Thrift
Supervision, the FDIC and the supervisory agents and examiners of each of the
foregoing (which, in the case of supervisory agents and examiners, may be
required by applicable state and federal regulations) access to the available
documentation regarding the Mortgage Loans, such access being afforded without
charge but only upon reasonable advance request and during normal business hours
at the offices of the Servicer designated by it.
Section 3.22. Reports Filed with Securities and Exchange Commission; Annual
Certification of Securities and Exchange Commission Filing.
(a) The Trustee and the Servicer shall reasonably cooperate with the
Depositor in connection with the Trust's satisfying the reporting requirements
under the Exchange Act. The Trustee shall prepare on behalf of the Trust any
Forms 8-K and 10-K customary for similar securities as required by the Exchange
Act and the Rules and Regulations of the Securities and Exchange Commission
thereunder, and the Trustee shall sign and file (via the Securities and Exchange
Commission's Electronic Data Gathering and Retrieval System) such Forms on
behalf of the Depositor. The Depositor hereby grants to the Trustee a limited
power of attorney to execute and file each such document on behalf of the
Depositor. Such power of attorney shall continue until either the earlier of (i)
receipt by the Trustee from the Depositor of written
86
termination of such power of attorney and (ii) the termination of the Trust.
Notwithstanding the foregoing, the Depositor shall sign any Form 10-K with
respect to which the Depositor signs a Xxxxxxxx-Xxxxx Certification.
(b) The Trustee shall file a Form 8-K within 15 days after each
Distribution Date, including a copy of the statement to the Certificateholders
for such Distribution Date as an exhibit thereto. Prior to March 30th of each
year (or such earlier date as may be required by the Exchange Act and the Rules
and Regulations of the Securities and Exchange Commission), the Trustee shall
file a Form 10-K, in substance as required by applicable law or applicable
Securities and Exchange Commission staff interpretations. Such Form 10-K shall
include as exhibits the Servicer's annual statement of compliance described
under Section 3.19 and the accountant's report described under Section 3.20, in
each case to the extent they have been timely delivered to the Trustee. If they
are not so timely delivered, the Trustee shall file an amended Form 10-K (to the
extent permissible) including such documents as exhibits reasonably promptly
after they are delivered to the Trustee. The Trustee shall have no liability
with respect to any failure to properly prepare or file such periodic reports
resulting from or relating to the Trustee's inability or failure to obtain any
information not resulting from its own negligence or willful misconduct. The
Form 10-K and any amended Form 10-K (to the extent permissible) shall also
include a certification of the Depositor in the form attached hereto as Exhibit
Q (the "Xxxxxxxx-Xxxxx Certification"), which shall be signed by the senior
officer of the Depositor in charge of its securitizations, and which the
Depositor shall deliver to the Trustee prior to March 15th of each year in which
a Form 10-K is to be filed with respect to the Trust. The Trustee, the Depositor
and the Servicer shall cooperate reasonably to enable the Securities and
Exchange Commission requirements with respect to the Trust to be met in the
event the Securities and Exchange Commission issues additional interpretative
guidance or promulgates rules or regulations, or in the event of any other
change of law, that would require the reporting arrangements, or the allocation
of responsibilities with respect thereto, described in this Section 3.22 to be
conducted in a different manner than as described herein.
(c) Not later than 15 calendar days before the date on which the
Depositor's annual report on Form 10-K is required to be filed in accordance
with the Exchange Act and the rules and regulations of the Securities and
Exchange Commission (or, if such day is not a Business Day, the immediately
preceding Business Day), the Trustee shall sign and deliver to the Depositor (or
to the Servicer, if the Servicer is signing the Xxxxxxxx-Xxxxx Certification) a
certification in the form attached hereto as Exhibit R-1 (the "Trustee's
Certification") for the benefit of the Depositor (or the Servicer) and its
officers, directors and Affiliates; provided, however, that the Trustee shall
not undertake an analysis of the accountant's report attached as an exhibit to
the Form 10-K. In addition, the Trustee shall indemnify and hold harmless the
Depositor and each Person, if any, who "controls" the Depositor within the
meaning of the Securities Act and its officers, directors and Affiliates from
and against any losses, damages, penalties, fines, forfeitures, reasonable and
necessary legal fees and related costs, judgments and other costs and expenses
arising out of or based upon a breach of the Trustee's obligations under this
Section 3.22(c) or the Trustee's negligence, bad faith or willful misconduct in
connection therewith or any inaccuracy in the Trustee's Certification. If the
indemnification provided for in this Section 3.22(c) is unavailable or
insufficient to hold harmless such Persons, then the Trustee shall contribute to
the amount paid or payable by such Persons as a result of the losses, claims,
damages or liabilities of such Persons in such proportion as is appropriate to
reflect the relative
87
fault of the Depositor or the Servicer on the one hand and the Trustee on the
other. The Trustee acknowledges that the Depositor is relying on the Trustee's
performance of its obligations under this Section 3.22(c) in order to perform
its obligations under Section 3.22(b) above.
(d) Not later than 15 calendar days before the date on which the
Depositor's annual report on Form 10-K is required to be filed in accordance
with the Exchange Act and the rules and regulations of the Securities and
Exchange Commission (or, if such day is not a Business Day, the immediately
preceding Business Day), the Servicer will deliver to the Depositor and to the
Trustee an Officer's Certificate for the prior calendar year in substantially
the form of Exhibit R-2 to this Agreement and shall deliver to the Depositor a
similar Officer's Certificate with respect to any additional Xxxxxxxx-Xxxxx
Certification that is required to be filed upon 30 days' written request. The
Servicer agrees to indemnify and hold harmless each of the Depositor and each
Person, if any, who "controls" the Depositor within the meaning of the
Securities Act and their respective officers, directors and Affiliates against
any and all losses, penalties, fines, forfeitures, reasonable legal fees and
related costs, judgments and any other costs and expenses that such Person may
sustain arising out of or based on the failure of the Servicer to deliver or
cause to be delivered when required any Officer's Certificate required pursuant
to this Section 3.22(d), or any untrue statement of a material fact or omission
of a material fact necessary to make any reports, certificates or other
information contained in any Officer's Certificate provided pursuant to this
Section 3.22(d) in light of the circumstances under which such statements were
made, not misleading, or the Servicer's negligence, bad faith or willful
misconduct of the Servicer in connection therewith. If an event occurs that
would otherwise result in an indemnification obligation under this Section
3.22(d), but the indemnification provided for in this Section 3.22(d) by the
Servicer is unavailable or insufficient to hold harmless such Persons, then the
Servicer shall contribute to the amount paid or payable by such Persons as a
result of the losses, claims, damages or liabilities of such Persons in such
proportion as is appropriate to reflect the relative fault of the Depositor or
Trustee on the one hand and the Servicer on the other. The Servicer acknowledges
that the Depositor and the Trustee are relying on the Servicer's performance of
its obligations under this Agreement in order to perform their respective
obligations under this Section 3.22.
(e) Upon any filing with the Securities and Exchange Commission, the
Trustee shall promptly deliver to the Depositor a copy of any such executed
report, statement or information.
(f) If the Securities and Exchange Commission issues additional
interpretative guidance or promulgates additional rules or regulations, or if
other changes in applicable law occur, which would require the reporting
arrangements, or the allocation of responsibilities with respect thereto,
described in this Section 3.22, to be conducted differently than as described,
the Depositor, the Servicer and the Trustee will reasonably cooperate to amend
the provisions of this Section 3.22 in order to comply with such amended
reporting requirements and such amendment of this Section 3.22. Any such
amendment shall be made in accordance with Section 11.01 without the consent of
the Certificateholders, and may result in a change in the reports filed by the
Trustee on behalf of the Trust under the Exchange Act. Notwithstanding the
foregoing, none of the Depositor, the Servicer or the Trustee shall be obligated
to enter into any amendment pursuant to this Section 3.22 that adversely affects
its obligations and immunities under this Agreement.
88
(g) Prior to January 30 of the first year in which the Trustee is able to
do so under applicable law, the Trustee shall file a Form 15D Suspension
Notification with respect to the Trust.
Section 3.23. Obligations of the Servicer in Respect of Compensating
Interest.
Not later than the close of business on each Servicer Remittance Date, the
Servicer shall deliver to the Trustee for deposit in the Distribution Account an
amount ("Compensating Interest") equal to the lesser of (A) the aggregate of the
Prepayment Interest Shortfalls on the Mortgage Loans for the related
Distribution Date resulting from Principal Prepayments in full on the Mortgage
Loans during the related Prepayment Period and (B) 50% of its Servicing Fee
received in the related Collection Period. The Servicer shall apply Compensating
Interest to offset any Prepayment Interest Shortfalls on the Mortgage Loans. The
Servicer shall not have the right to reimbursement for any amounts remitted to
the Trustee in respect of Compensating Interest. Such amounts so remitted shall
be included in the Available Funds and distributed therewith on the next
Distribution Date. The Servicer shall not be obligated to pay Compensating
Interest with respect to Relief Act Interest Shortfalls.
Section 3.24. Obligations of the Servicer in Respect of Mortgage Interest
Rates and Monthly Payments.
In the event that a shortfall in any collection on or liability with
respect to any Mortgage Loan results from or is attributable to adjustments to
Mortgage Interest Rates, Monthly Payments or Principal Balances that were made
by the Servicer in a manner not consistent with the terms of the related
Mortgage Note and this Agreement, the Servicer, upon discovery or receipt of
notice thereof, immediately shall deliver to the Trustee for deposit in the
Distribution Account from its own funds the amount of any such shortfall and
shall indemnify and hold harmless the Trust Fund, the Trustee, the Depositor and
any successor servicer in respect of any such liability. Such indemnities shall
survive the termination or discharge of this Agreement. Notwithstanding the
foregoing, this Section 3.24 shall not limit the ability of the Servicer to seek
recovery of any such amounts from the related Mortgagor under the terms of the
related Mortgage Note, as permitted by law.
Section 3.25. Investment of Funds in the Collection Account.
(a) The Servicer may direct any depository institution maintaining the
Collection Account to invest the funds in the Collection Account in one or more
Permitted Investments bearing interest or sold at a discount, and maturing,
unless payable on demand, (i) no later than the Business Day immediately
preceding the date on which such funds are required to be withdrawn from such
account pursuant to this Agreement, if a Person other than the Trustee is the
obligor thereon, and (ii) no later than the date on which such funds are
required to be withdrawn from such account pursuant to this Agreement, if the
Trustee is the obligor thereon or if such investment is managed or advised by
the Trustee of an Affiliate. All such Permitted Investments shall be held to
maturity, unless payable on demand. Any investment of funds in the Collection
Account shall be made in the name of the Trustee or the Servicer, as applicable
(in its capacity as such) or in the name of a nominee of the Trustee. The
Trustee shall be entitled to sole possession (except with respect to investment
direction of funds held in the Collection
89
Account) over each such investment and the income thereon, and any certificate
or other instrument evidencing any such investment shall be delivered directly
to the Trustee or its agent, together with any document of transfer necessary to
transfer title to such investment to the Trustee or its nominee. In the event
amounts on deposit in the Collection Account are at any time invested in a
Permitted Investment payable on demand, the Trustee shall at the direction of
the Servicer:
(x) consistent with any notice required to be given thereunder,
demand that payment thereon be made on the last day such
Permitted Investment may otherwise mature hereunder in an amount
equal to the lesser of (1) all amounts then payable thereunder
and (2) the amount required to be withdrawn on such date; and
(y) demand payment of all amounts due thereunder promptly upon
determination by a Responsible Officer of the Trustee that such
Permitted Investment would not constitute a Permitted Investment
in respect of funds thereafter on deposit in the Collection
Account.
(b) All income and gain realized from the investment of funds in the
Collection Account shall be for the benefit of the Servicer. The Servicer shall
deposit in the Collection Account or (to the extent funds in the Escrow Account
are invested if permitted by applicable law) the Escrow Account, as applicable,
the amount of any loss incurred in respect of any such Permitted Investment made
with funds in such account immediately upon realization of such loss. Funds in
the Distribution Account shall remain uninvested.
(c) Except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted Investment, or
if a default occurs in any other performance required under any Permitted
Investment, the Trustee may and, subject to Section 8.01 and Section 8.02(v),
upon the request of the Holders of Certificates representing more than 50% of
the Voting Rights allocated to any Class of Certificates, shall take such action
as may be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate proceedings.
Section 3.26. Liability of Servicer; Indemnification.
Subject to Section 6.03, the Servicer (except the Trustee if it is required
to succeed the Servicer hereunder) indemnifies and holds the Trustee, the
Depositor and the Trust Fund harmless against any and all claims, losses,
penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments, and any other costs, fees and expenses that the Trustee, the
Depositor and the Trust Fund may sustain in any way related to the failure of
the Servicer to perform its duties and service the Mortgage Loans in compliance
with the Servicing Standard. The Servicer shall immediately notify the Trustee
and the Depositor if a claim is made that may result in such claims, losses,
penalties, fines, forfeitures, legal fees or related costs, judgments, or any
other costs, fees and expenses, and the Servicer shall assume (with the consent
of the Trustee) the defense of any such claim and pay all expenses in connection
therewith, including reasonable counsel fees, and promptly pay, discharge and
satisfy any judgment or decree which may be entered against the Servicer, the
Trustee, the Depositor and/or the Trust Fund in respect of such
90
claim. The provisions of this Section 3.26 shall survive the termination of this
Agreement and the payment of the outstanding Certificates.
Section 3.27. Reports of Foreclosure and Abandonment of Mortgaged
Properties.
The Servicer shall file the reports of foreclosure and abandonment of any
Mortgaged Property required by Section 6050J of the Code with the Internal
Revenue Service on or before the due date for any such report. Not later than 90
days following the end of each calendar year, the Servicer will deliver an
Officer's Certificate to the Trustee certifying its compliance with this Section
3.27. The reports from the Servicer shall be in form and substance sufficient to
meet the reporting requirements imposed by such Section 6050J.
Section 3.28. Protection of Assets.
(a) Except for transactions and activities entered into in connection with
the securitization that is the subject of this Agreement, the Trust is not
authorized and has no power to:
(i) borrow money or issue debt;
(ii) merge with another entity, reorganize, liquidate or
sell assets; or
(iii) engage in any business or activities.
Notwithstanding any prior termination of this Agreement, each party hereto
agrees that, until after one year and one day following the payment in full of
the last of the Certificates issued hereunder, it shall not acquiesce, petition
or otherwise invoke or cause the Depositor or the Trust to invoke the process of
any court or government authority for the purpose of commencing or sustaining a
case against the Depositor or the Trust under any federal or state bankruptcy,
insolvency or similar law, or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Depositor or
the Trust or any substantial part of the property of either, or ordering the
winding up or liquidation of the affairs of the Depositor or the Trust.
Section 3.29. Prepayment Charges.
(a) To the extent consistent with the terms of this Agreement, the Servicer
may waive (or permit a subservicer to waive) a Prepayment Charge only under the
following circumstances: (i) such waiver relates to a default or a reasonably
foreseeable default and would, in the reasonable judgment of the Servicer,
maximize recovery of total proceeds taking into account the value of such
Prepayment Charge and the related Mortgage Loan or (ii) such waiver is required
under state or federal law or (iii) the Servicer has not been provided with
information sufficient to enable it to collect the Prepayment Charge. If a
Prepayment Charge is waived as permitted by meeting the standard described in
clause (iii) above, then the Servicer shall use commercially reasonable efforts
to enforce the obligation, if any, of the Transferor to pay the Transferor
Prepayment Charge Payment Amount related to such waived Prepayment Charge, for
deposit in the Collection Account. The Servicer shall not waive any Prepayment
Charge unless it is waived
91
in accordance with this Section 3.29(a). Notwithstanding anything to the
contrary in this Section 3.29, the Servicer shall not waive any Prepayment
Charge under (iii) above if it would (i) adversely affect the status of any
REMIC created hereunder or (ii) cause any such REMIC to be subject to a tax or
"prohibited transactions" or "prohibited contributions" under the REMIC
Provisions or any similar provision of state or local law.
(b) The Servicer shall pay the amount of any Prepayment Charge (to the
extent not collected and remitted to the Collection Account pursuant to Section
3.04(a)) to the Trustee, if a Servicer or any subservicer waives any Prepayment
Charge other than as permitted under Section 3.29(a); provided, however, that no
such payment shall be required in respect of a Prepayment Charge that was waived
by the Transferor, as predecessor servicer, prior to February 28, 2004. The
Servicer shall pay the amount of such Prepayment Charge (or portion thereof not
collected) by depositing such amount into the Collection Account at the time
that amount prepaid on the related Mortgage Loan is required to be deposited
into the Collection Account.
(c) In the event that a Prepayment Charge due with respect to any Mortgage
Loan is not timely received by the Servicer, the Servicer shall use commercially
reasonable efforts to determine whether the Transferor is obligated to pay a
related Transferor Prepayment Charge Payment Amount, and if the Servicer
determines that a Transferor Prepayment Charge Payment Amount is due, the
Servicer shall promptly notify the Transferor, and the Servicer shall enforce
the Transferor's obligations to pay in a timely manner any such Transferor
Prepayment Charge Payment Amounts and, to the extent that such amounts are
received by the Servicer, shall cause such amounts to be deposited into the
Collection Account within one Business Day of receipt.
Section 3.30. [Reserved].
Section 3.31. No Personal Solicitation.
From and after the Closing Date, the Servicer agrees that it will not take
any action or permit or cause any action to be taken by any of its agents and
Affiliates, or by any independent contractors or independent mortgage brokerage
companies on the Servicer's behalf, to personally, by telephone, mail or
electronic mail, solicit the Mortgagor under any Mortgage Loan for the purpose
of refinancing such Mortgage Loan; provided, that the Servicer may solicit any
Mortgagor for whom the Servicer has received a request for verification of
mortgage, a request for demand for payoff, a mortgagor initiated written or
verbal communication indicating a desire to prepay the related Mortgage Loan, or
the mortgagor initiates a title search; provided further, it is understood and
agreed that promotions undertaken by the Servicer or any of its Affiliates which
(i) concern optional insurance products or other additional products or (ii) are
directed to the general public at large, including, without limitation, mass
mailings based on commercially acquired mailing lists, newspaper, radio and
television advertisements shall not constitute solicitation under this Section,
nor is the Servicer prohibited from responding to unsolicited requests or
inquiries made by a Mortgagor or an agent of a Mortgagor. Furthermore, the
Servicer shall be permitted to include in its monthly statements to borrowers or
otherwise, statements regarding the availability of the Servicer's counseling
services with respect to refinancing mortgage loans.
92
ARTICLE IV
FLOW OF FUNDS
Section 4.01. Interest Distributions.
On each Distribution Date, the Trustee shall withdraw from the Distribution
Account the Interest Remittance Amount and apply it in the following order of
priority (based upon the Mortgage Loan information provided to it in the
Remittance Report, upon which the Trustee may conclusively rely), and the
calculations required to be made by the Trustee, to the extent available:
(a) to the Trustee, the Trustee Fee in respect of such Distribution Date;
(b) concurrently, to the Class A-1 and Class A-2 Certificates, pro rata,
the Accrued Certificate Interest thereon for such Distribution Date;
(c) concurrently, to the Class A-1 and Class A-2 Certificates, pro rata,
the Unpaid Interest Shortfall Amount, if any, for such Distribution Date;
(d) to the Class M-1 Certificates, the Accrued Certificate Interest thereon
for such Distribution Date;
(e) to the Class M-2 Certificates, the Accrued Certificate Interest thereon
for such Distribution Date;
(f) to the Class M-3 Certificates, the Accrued Certificate Interest thereon
for such Distribution Date;
(g) to the Class M-4 Certificates, the Accrued Certificate Interest thereon
for such Distribution Date;
(h) to the Class M-5 Certificates, the Accrued Certificate Interest thereon
for such Distribution Date;
(i) to the Class M-6 Certificates, the Accrued Certificate Interest thereon
for such Distribution Date;
(j) to the Class M-7 Certificates, the Accrued Certificate Interest thereon
for such Distribution Date; and
(k) the amount, if any, of the Interest Remittance Amount remaining after
application with respect to the priorities set forth above will be distributed
as part of the Monthly Excess Cashflow Amount as set forth in Section 4.02(b).
93
Section 4.02. Distributions of Principal and Monthly Excess Cashflow
Amounts.
(a) On each Distribution Date, the Trustee shall make the following
distributions in the following order of priority (based upon the Mortgage Loan
information provided to it in the Remittance Report and the calculations
required to be made by the Trustee), to the extent of the Principal Distribution
Amount:
(i) Before the Stepdown Date or with respect to which a Trigger Event
is in effect, sequentially, as follows:
first, to the Class A-1 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero;
second, to the Class A-2 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero;
third, to the Class M-1 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero;
fourth, to the Class M-2 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero;
fifth, to the Class M-3 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero;
sixth, to the Class M-4 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero;
seventh, to the Class M-5 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero;
eighth, to the Class M-6 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero;
ninth, to the Class M-7 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero; and
tenth, any remaining Principal Distribution Amount will be
distributed as part of the Monthly Excess Cashflow Amount as set forth
in Section 4.02(b).
(ii) On or after the Stepdown Date and as long as a Trigger Event is
not in effect:
first, to the Class A-1 Certificates, up to the Class A Principal
Distribution Amount, until the Certificate Principal Balance thereof
has been reduced to zero;
94
second, to the Class A-2 Certificates, the remaining Class A
Principal Distribution Amount, until the Certificate Principal Balance
thereof is reduced to zero;
third, to the Class M-1 Certificates, up to the Class M-1
Principal Distribution Amount, until the Certificate Principal Balance
thereof has been reduced to zero;
fourth, to the Class M-2 Certificates, up to the Class M-2
Principal Distribution Amount, until the Certificate Principal Balance
thereof has been reduced to zero;
fifth, to the Class M-3 Certificates, up to the Class M-3
Principal Distribution Amount, until the Certificate Principal Balance
thereof has been reduced to zero;
sixth, to the Class M-4 Certificates, up to the Class M-4
Principal Distribution Amount, until the Certificate Principal Balance
thereof has been reduced to zero;
seventh, to the Class M-5 Certificates, up to the Class M-5
Principal Distribution Amount, until the Certificate Principal Balance
thereof has been reduced to zero;
eighth, to the Class M-6 Certificates, up to the Class M-5
Principal Distribution Amount, until the Certificate Principal Balance
thereof has been reduced to zero;
ninth, to the Class M-7 Certificates, up to the Class M-5
Principal Distribution Amount, until the Certificate Principal Balance
thereof has been reduced to zero; and
tenth, any remaining Principal Distribution Amount will be
distributed as part of the Monthly Excess Cashflow Amount as set forth
in Section 4.02(b).
(b) On each Distribution Date, any Monthly Excess Cashflow Amount shall be
distributed, to the extent available, in the following order of priority on such
Distribution Date:
(i) to pay any remaining unpaid Accrued Certificate Interest for such
Distribution Date for the Class M-1 Certificates;
(ii) to pay the remaining Unpaid Interest Shortfall Amount, if any,
for the Class M-1 Certificates for such Distribution Date;
(iii) to pay the Class M-1 Realized Loss Amortization Amount for such
Distribution Date;
95
(iv) to pay any remaining unpaid Accrued Certificate Interest for such
Distribution Date for the Class M-2 Certificates;
(v) to pay the remaining Unpaid Interest Shortfall Amount, if any, for
the Class M-2 Certificates for such Distribution Date;
(vi) to pay the Class M-2 Realized Loss Amortization Amount for such
Distribution Date;
(vii) to pay any remaining unpaid Accrued Certificate Interest for
such Distribution Date for the Class M-3 Certificates;
(viii) to pay the remaining Unpaid Interest Shortfall Amount, if any,
for the Class M-3 Certificates for such Distribution Date;
(ix) to pay the Class M-3 Realized Loss Amortization Amount for such
Distribution Date;
(x) to pay any remaining unpaid Accrued Certificate Interest for such
Distribution Date for the Class M-4 Certificates;
(xi) to pay the remaining Unpaid Interest Shortfall Amount, if any,
for the Class M-4 Certificates for such Distribution Date;
(xii) to pay the Class M-4 Realized Loss Amortization Amount for such
Distribution Date;
(xiii) to pay any remaining unpaid Accrued Certificate Interest for
such Distribution Date for the Class M-5 Certificates;
(xiv) to pay the remaining Unpaid Interest Shortfall Amount, if any,
for the Class M-5 Certificates for such Distribution Date;
(xv) to pay the Class M-5 Realized Loss Amortization Amount for such
Distribution Date;
(xvi) to pay any remaining unpaid Accrued Certificate Interest for
such Distribution Date for the Class M-6 Certificates;
(xvii) to pay the remaining Unpaid Interest Shortfall Amount, if any,
for the Class M-6 Certificates for such Distribution Date;
(xviii) to pay the Class M-6 Realized Loss Amortization Amount for
such Distribution Date;
(xix) to pay any remaining unpaid Accrued Certificate Interest for
such Distribution Date for the Class M-7 Certificates;
96
(xx) to pay the remaining Unpaid Interest Shortfall Amount, if any,
for the Class M-7 Certificates for such Distribution Date;
(xxi) to pay the Class M-7 Realized Loss Amortization Amount for such
Distribution Date;
(xxii) first, to the Class A-1 and Class A-2 Certificates, pro rata,
and then sequentially, to the Class X-0, Xxxxx X-0, Class M-3, Class M-4,
Class M-5, Class M-6 and Class M-7 Certificates, in that order, any Net WAC
Rate Carryover Amount for each such Class, in each case until such amount
for such Class is paid in full; and
(xxiii) to the Class CE Certificates, the Class CE Distributable
Amount for such Distribution Date.
On each Distribution Date, there shall be distributed to the Holder of
related Residual Certificates, any remaining amount in the Distribution Account
on such date after the application pursuant to Sections 4.01, 4.02(a) and
4.02(b)(i)-(xxiii).
Following the foregoing distributions, an amount equal to an amount of
Subsequent Recoveries deposited into the Collection Account pursuant to Section
3.04 shall be applied to increase the Certificate Principal Balance of each
Class of Certificates with respect to which Realized Losses had previously been
allocated pursuant to Section 4.03, up to the extent of such previously
allocated Realized Losses, in accordance with the priority for such respective
Classes set forth in Section 4.01(d)-(j). Holders of such Certificates will not
be entitled to any distribution in respect of interest on the amount of such
increases for any Interest Accrual Period preceding the Distribution Date on
which such increase occurs. Any such increases shall be applied to the
Certificate Principal Balance of each Certificate of such Class in accordance
with its respective Percentage Interest.
(c) On each Distribution Date, the Trustee shall withdraw any amounts then
on deposit in the Distribution Account that represent Prepayment Charges
collected by the Servicer in connection with the Principal Prepayment in full of
any of the Mortgage Loans, any Transferor Prepayment Charge Payment Amount or
any Servicer Prepayment Charge Payment Amount and shall distribute such amounts
to the Holders of the Class P Certificates. Such amounts shall be treated as
having been distributed to the Holders of the Class P Certificates from the
Grantor Trust.
(d) Any amounts distributed to the Class A and Mezzanine Certificates in
respect of interest pursuant to Sections 4.02(b)(xxii) which constitute Net WAC
Rate Carryover Amounts (taking into account, in the case of the Class A-1 and
Class A-2 Certificates, the parenthetical in clause (ii) of the definition of
Net WAC Rate Carryover Amount) shall first be deemed distributed by REMIC 2 as a
distribution to the Class CE Certificates, and then distributed to the Class A
and Mezzanine Certificates from the Grantor Trust as payments on notional
principal contracts in the nature of cap contracts. Any remaining amount with
respect to the Net WAC Rate Carryover Arrangement or any remaining Yield
Maintenance Agreement Payment shall be treated as having been distributed to the
Holders of the Class CE Certificates from the Grantor Trust.
97
Section 4.03. Allocation of Losses.
Realized Losses shall be allocated first against the Overcollateralization
Amount until such amount has been reduced to zero. If, after giving effect to
the distribution of the Principal Distribution Amount on any Distribution Date
the aggregate Certificate Principal Balance of the Offered Certificates exceeds
the Pool Balance as of the end of the related Collection Period, such excess
will be allocated against the Class X-0, Xxxxx X-0, Class M-5, Class M-4, Class
M-3, Class M-2 and Class M-1 Certificates, in that order and until the
respective Certificate Principal Balances thereof are reduced to zero.
Section 4.04. Method of Distribution.
The Trustee shall make distributions in respect of a Distribution Date to
each Certificateholder of record on the related Record Date (other than as
provided in Section 10.01 respecting the final distribution), in the case of
Certificateholders of the Certificates, by wire transfer in immediately
available funds to the account of the Person entitled thereto if such Person
shall have so notified the Trustee in writing at least five Business Days prior
to the Record Date immediately prior to such Distribution Date and is the
registered owner of such Certificates, or by check mailed by first class mail to
the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register, provided that the Trustee may deduct a
reasonable wire transfer fee from any payment made by wire transfer.
Distributions among Certificateholders shall be made in proportion to the
Percentage Interests evidenced by the Certificates held by such
Certificateholders.
Section 4.05. Distributions on Book-Entry Certificates.
Each distribution with respect to a Book-Entry Certificate shall be paid to
the Depository, which shall credit the amount of such distribution to the
accounts of its Depository Participants in accordance with its normal
procedures. Each Depository Participant shall be responsible for disbursing such
distribution to the Certificate Owners that it represents and to each indirect
participating brokerage firm (a "brokerage firm" or "indirect participating
firm") for which it acts as agent. Each brokerage firm shall be responsible for
disbursing funds to the Certificate Owners that it represents. All such credits
and disbursements with respect to a Book-Entry Certificate are to be made by the
Depository and the Depository Participants in accordance with the provisions of
the Certificates. None of the Trustee, the Depositor or the Servicer shall have
any responsibility therefor except as otherwise provided by applicable law.
Section 4.06. Statements.
(a) On each Distribution Date, based on the Mortgage Loan information
contained in the Remittance Report, the Trustee shall prepare and post on its
website at xxx.xxxxxxxx.xxx/xxx, a statement (the "Distribution Date Statement")
as to the distributions made on such Distribution Date:
(i) the amount of the distribution made on such Distribution Date to
the Holders of each Class of Certificates allocable to principal or
reduction of Principal Balance, separately identified and the amount of the
distribution made on such Distribution Date to the Holders of the Class P
Certificates allocable to Prepayment
98
Charges, Servicer Prepayment Charge Payment Amounts and Transferor
Prepayment Charge Payment Amounts;
(ii) the amount of the distribution made on such Distribution Date to
the Holders of each Class of Certificates allocable to interest or Class CE
Distributable Amount, separately identified;
(iii) the Overcollateralization Amount, the Overcollateralization
Release Amount, the Overcollateralization Deficiency and the Targeted
Overcollateralization Amount as of such Distribution Date and the Monthly
Excess Interest Amount and Monthly Excess Cashflow Amount for such
Distribution Date;
(iv) the aggregate amount of servicing compensation received by the
Servicer during the related Collection Period;
(v) the aggregate amount of Advances for the related Collection
Period, cumulative unreimbursed Advances and Servicing Advances and
cumulative Nonrecoverable Advances;
(vi) the Pool Balance, at the close of business at the end of the
related Collection Period;
(vii) the number, weighted average remaining term to maturity and
weighted average Mortgage Interest Rate of the Mortgage Loans as of the
related Due Date;
(viii) the number and aggregate unpaid principal balance of Mortgage
Loans (a) 30 to 59 days past due on a contractual basis, (b) 60 to 89 days
past due on a contractual basis, (c) 90 or more days past due on a
contractual basis, (d) as to which foreclosure proceedings have been
commenced and (e) in bankruptcy as of the close of business on the last day
of the calendar month preceding such Distribution Date;
(ix) with respect to any Mortgage Loan that became an REO Property
during the preceding calendar month, the loan number of such Mortgage Loan,
the unpaid principal balance and the Principal Balance of such Mortgage
Loan as of the date it became an REO Property;
(x) the book value of any REO Property as of the close of business on
the last Business Day of the calendar month preceding the Distribution
Date, and, cumulatively, the total number and cumulative principal balance
of all REO Properties as of the close of business of the last day of the
preceding Collection Period;
(xi) the aggregate amount of Principal Prepayments made during the
related Prepayment Period;
(xii) the aggregate amount of Realized Losses incurred during the
related Collection Period, the cumulative amount of Realized Losses and the
aggregate amount of Subsequent Recoveries received during the related
Collection Period and the cumulative amount of Subsequent Recoveries;
99
(xiii) the Certificate Principal Balance, or Principal Balance, as
applicable, of each Class of Certificates, after giving effect to the
distributions, and allocations of Realized Losses or Applied Realized Loss
Amounts, as applicable, made on such Distribution Date, separately
identifying any reduction thereof due to allocations of Realized Losses or
Applied Realized Loss Amounts;
(xiv) the Accrued Certificate Interest in respect of each Class of
Certificates for such Distribution Date and any related Net WAC Rate
Carryover Amounts, and the respective portions thereof, if any, remaining
unpaid following the distributions made in respect of such Certificates on
such Distribution Date;
(xv) the aggregate amount of any Prepayment Interest Shortfalls for
such Distribution Date, to the extent not covered by payments by the
Servicer pursuant to Section 3.23;
(xvi) the amount of the Trustee Fee paid;
(xvii) the Net WAC Rate Carryover Amount for each Class distributed on
such Distribution Date, the amount of Net WAC Rate Carryover Amount
remaining after giving effect to distributions thereof on such Distribution
Date and the amount of all Net WAC Rate Carryover Amounts on the Class M-3,
Class M-4, Class M-5, Class M-6 and Class M-7 Certificates covered by
withdrawals from the Reserve Account on such Distribution Date;
(xviii) any Overcollateralization Deficiency after giving effect to
the distribution of principal on such Distribution Date;
(xix) (A) whether a Trigger Event has occurred and is continuing, (B)
the Credit Enhancement Percentage, (C) the three-month rolling average
percentage of the Pool Balance, as of the end of each of the preceding
three Collection Periods, represented by the aggregate Principal Balance of
all 60+ Day Delinquent Loans, (D) the percentage obtained by dividing such
percentage reported pursuant to (C) by the Credit Enhancement Percentage,
and (E) the cumulative Realized Losses, as a percentage of the original
Pool Balance;
(xx) the amount of Available Funds for such Distribution Date;
(xxi) the rate at which interest accrues for each Class of
Certificates for such Distribution Date;
(xxii) the information contained in the Liquidation Report for such
Distribution Date;
(xxiii) the aggregate Principal Balance of Mortgage Loans purchased by
the Servicer or Seller during the related Prepayment Period and indicating
the Section of this Agreement requiring or allowing the purchase of each
such Mortgage Loan;
100
(xxiv) the aggregate Principal Balance of the Mortgage Loans
repurchased by the Servicer during the related Prepayment Period in
connection with Section 3.16; and
(xxv) the Mortgage Loan identifying number of each Mortgage Loan with
a Prepayment Charge that was the subject of a Principal Prepayment in full
during the related Collection Period, the Prepayment Charge listed on, or
calculated pursuant to, each related Mortgage Note and the Prepayment
Charge collected and/or the Servicer Prepayment Charge Payment Amount paid
by the Servicer or Transferor Prepayment Charge Payment Amount paid by the
Transferor with respect to each such Mortgage Loan.
The Trustee may fully rely upon and shall have no liability with respect to
information with respect to the Mortgage Loans provided by the Servicer.
In the case of information furnished pursuant to subclauses (i), (ii) and
(xiii) above, the amounts shall be expressed in a separate section of the report
as a dollar amount for each Class for each $1,000 original dollar amount as of
the Cut-off Date.
(b) Within a reasonable period of time after the end of each calendar year,
the Trustee shall furnish to each Person who at any time during the calendar
year was a Certificateholder of a Regular Certificate, if requested in writing
by such Person, such information as is reasonably necessary to provide to such
Person a statement containing the information set forth in subclauses (i), (ii),
(xiv) and (xvii) above, aggregated for such calendar year or applicable portion
thereof during which such Person was a Certificateholder. Such obligation of the
Trustee shall be deemed to have been satisfied to the extent that substantially
comparable information shall be prepared and furnished by the Trustee to
Certificateholders pursuant to any requirements of the Code as are in force from
time to time.
(c) On each Distribution Date, the Trustee shall make available to the
Class R Certificateholder a copy of the reports made available to the Regular
Certificateholders in respect of such Distribution Date with such other
information as the Trustee deems necessary or appropriate. Such obligation of
the Trustee shall be deemed to have been satisfied to the extent that
substantially comparable information shall be prepared and furnished to Class R
Certificateholder by the Trustee pursuant to any requirements of the Code as
from time to time in force.
Section 4.07. Remittance Reports; Advances.
(a) On the second Business Day following each Determination Date, the
Servicer shall deliver to the Trustee by telecopy (or by such other means as the
Servicer and the Trustee may agree from time to time) a Remittance Report with
respect to the related Distribution Date. On the same date, the Servicer shall
electronically forward to the Trustee in such medium as may be agreed between
the Servicer and the Trustee the information set forth in such Remittance Report
with respect to the related Distribution Date and such information reasonably
available to the Servicer necessary in order for the Trustee to perform the
calculations necessary to make the distributions contemplated by Section 4.01,
4.02 and 4.03 and to prepare the Distribution Date
101
Statement. The Trustee shall not be responsible to recompute, recalculate or
verify any information provided to it by the Servicer.
(b) The amount of Advances to be made by the Servicer for any Distribution
Date shall equal, subject to Section 4.07(d), the sum of (i) the aggregate
amount of Monthly Payments (net of the related Servicing Fee), due during the
related Collection Period in respect of the Mortgage Loans, which Monthly
Payments were delinquent on a contractual basis as of the close of business on
the related Determination Date and (ii) with respect to each REO Property, which
REO Property was acquired during or prior to the related Collection Period and
as to which REO Property an REO Disposition did not occur during the related
Collection Period, an amount equal to the excess, if any, of the REO Imputed
Interest on such REO Property for such Collection Period, over the net income
from such REO Property transferred to the Distribution Account pursuant to
Section 3.13 for distribution on such Distribution Date. For purposes of the
preceding sentence, (i) the Monthly Payment on each Balloon Mortgage Loan with a
delinquent Balloon Payment is equal to the assumed monthly payment that would
have been due on the related Due Date based on the original principal
amortization schedule for the such Balloon Mortgage Loan and (ii) the Monthly
Payment on each Interest Only Mortgage Loan shall be, for the first 60 months of
the term of such Mortgage Loan, scheduled payments of interest thereon, and
thereafter, scheduled payments of principal and interest thereon.
On or before 3:00 p.m., New York time, on each Servicer Remittance Date,
the Servicer shall remit in immediately available funds to the Trustee for
deposit in the Distribution Account an amount equal to the aggregate amount of
Advances, if any, to be made in respect of the Mortgage Loans for the related
Distribution Date either (i) from its own funds or (ii) from the Collection
Account, to the extent of funds held therein for future distribution (in which
case it will cause to be made an appropriate entry in the records of the
Collection Account that amounts held for future distribution have been, as
permitted by this Section 4.07, used by the Servicer in discharge of any such
Advance) or (iii) in the form of any combination of (i) and (ii) aggregating the
total amount of Advances to be made by the Servicer with respect to the Mortgage
Loans. In addition, the Servicer shall have the right to reimburse itself for
any Advances previously made from amounts held from time to time in the
Collection Account that are not then required to be distributed pursuant to the
terms of this Agreement. Any amounts held for future distribution and so used
shall be appropriately reflected in the Servicer's records and replaced by the
Servicer by deposit in the Collection Account on or before any future Servicer
Remittance Date to the extent that the Available Funds for the related
Distribution Date (determined without regard to Advances to be made on the
Servicer Remittance Date) shall be less than the total amount that would be
distributed to the Classes of Certificateholders pursuant to Section 4.01 and
4.02 on such Distribution Date if such amounts held for future distributions had
not been so used to make Advances. The Trustee will provide notice to the
Servicer by telecopy by the close of business on any Servicer Remittance Date in
the event that the amount remitted by the Servicer to the Trustee on such date
is less than the Advances required to be made by the Servicer for the related
Distribution Date, as set forth in the related Remittance Report.
(c) The obligation of the Servicer to make such Advances is mandatory,
notwithstanding any other provision of this Agreement but subject to Section
4.07(d) below, and, with respect to any Mortgage Loan, shall continue until the
earlier of such time as the Trust
102
acquires title to the related Mortgaged Property or such Mortgage Loan is paid
in full by the Mortgagor or disposed of by the Trust, or until the recovery of
all Liquidation Proceeds thereon.
(d) Notwithstanding anything herein to the contrary, no Advance or
Servicing Advance shall be required to be made hereunder by the Servicer if such
Advance would, if made, constitute a Nonrecoverable Advance. The determination
by the Servicer that it has made a Nonrecoverable Advance or that any proposed
Advance, if made, would constitute a Nonrecoverable Advance, shall be evidenced
by an Officers' Certificate of the Servicer delivered to the Depositor and the
Trustee. The Trustee shall be entitled to conclusively rely upon any such
determination by the Servicer.
Section 4.08. REMIC Distributions and Allocation of Losses.
(a) On each Distribution Date, the Trustee shall cause, in the following
order of priority, the following amounts to be distributed by REMIC 1 to REMIC 2
on account of the REMIC 1 Uncertificated Regular Interests or withdrawn from the
Distribution Account and distributed to the Holders of the Class R Certificates
(in respect of the Class R-1 Interest), as the case may be:
(i) to Holders of REMIC 1 Regular Interest LT1AA, REMIC 1 Regular
Interest LT1A1, REMIC 1 Regular Interest LT1A2, REMIC 1 Regular Interest
LT1M1, REMIC 1 Regular Interest LT1M2, REMIC 1 Regular Interest LT1M3,
REMIC 1 Regular Interest LT1M4, REMIC 1 Regular Interest LT1M5, REMIC 1
Regular Interest LT1M6, REMIC 1 Regular Interest LT1M7, and REMIC 1 Regular
Interest LT1ZZ, pro rata, in an amount equal to (A) the Uncertificated
Accrued Interest for such Distribution Date, plus (B) any amounts in
respect thereof remaining unpaid from previous Distribution Dates. Amounts
payable as Uncertificated Accrued Interest in respect of REMIC 1 Regular
Interest LT1ZZ shall be reduced and deferred when the REMIC 1
Overcollateralized Amount is less than the REMIC 1 Overcollateralization
Target Amount, by the lesser of (x) the amount of such difference and (y)
the Maximum LT1ZZ Uncertificated Accrued Interest Deferral Amount and such
amount will be payable to the Holders of REMIC 1 Regular Interest LT1A1,
REMIC 1 Regular Interest LT1A2, REMIC 1 Regular Interest LT1M1, REMIC 1
Regular Interest LT1M2, REMIC 1 Regular Interest LT1M3, REMIC 1 Regular
Interest LT1M4, REMIC 1 Regular Interest LT1M5, REMIC 1 Regular Interest
LT1M6 and REMIC 1 Regular Interest LT1M7 in the same proportion as the
Overcollateralization Deficiency is allocated to the Corresponding
Certificates;
(ii) to the Holders of REMIC 1 Uncertificated Regular Interests, in an
amount equal to the remainder of the Available Funds for such Distribution
Date after the distributions made pursuant to clause (i) above, allocated
as follows:
(A) to the Holders of REMIC 1 Regular Interest LT1AA, 98.00% of
such remainder, until the Uncertificated Principal Balance of such
uncertificated REMIC 1 Uncertificated Regular Interest is reduced to
zero;
103
(B) to the Holders of REMIC 1 Regular Interest LT1A1, REMIC 1
Regular Interest LT1A2, REMIC 1 Regular Interest LT1M1, REMIC 1
Regular Interest LT1M2, REMIC 1 Regular Interest LT1M3, REMIC 1
Regular Interest LT1M4, REMIC 1 Regular Interest LT1M5, REMIC 1
Regular Interest LT1M6 and REMIC 1 Regular Interest LT1M7, 1.00% of
such remainder, in the same proportion as principal payments are
allocated to the Corresponding Certificates, until the Uncertificated
Principal Balances of such REMIC 1 Uncertificated Regular Interests
are reduced to zero; then
(C) to the Holders of REMIC 1 Regular Interest LT1ZZ, 1.00% of
such remainder, until the Uncertificated Principal Balance of such
REMIC 1 Uncertificated Regular Interest is reduced to zero; and
(D) any remaining amounts to the Holders of the Class R
Certificates (in respect of the Class R-1 Interest).
provided, however, that (i) 98.00% and (ii) 2.00% of any principal payments that
are attributable to an Overcollateralization Release Amount shall be allocated
to Holders of (i) REMIC 1 Regular Interest LT1AA and (ii) REMIC 1 Regular
Interest LT1ZZ, respectively;
(b) The aggregate amount of any Prepayment Interest Shortfalls and the
aggregate amount of any Relief Act Interest Shortfalls incurred in respect of
the Mortgage Loans for any Distribution Date shall be allocated first, to
Uncertificated Accrued Interest payable to REMIC 1 Regular Interest LT1AA and
REMIC 1 Regular Interest LT1ZZ up to an aggregate amount equal to the REMIC 1
Interest Loss Allocation Amount, 98% and 2%, respectively, and thereafter among
REMIC 1 Regular Interest LTA1, REMIC 1 Regular Interest LT1A2, REMIC 1 Regular
Interest LTAM1, REMIC 1 Regular Interest LT1M2, REMIC 1 Regular Interest LT1M3,
REMIC 1 Regular Interest LT1M4, REMIC 1 Regular Interest LT1M5, REMIC 1 Regular
Interest LT1M6, REMIC 1 Regular Interest LT1M7 and REMIC 1 Regular Interest
LT1ZZ pro rata based on, and to the extent of, one month's interest at the then
applicable respective Uncertificated REMIC 1 Pass-Through Rate on the respective
Uncertificated Principal Balance of each such REMIC 1 Regular Interest.
(c) Realized Losses on the Mortgage Loans shall be allocated by the Trustee
on each Distribution Date to the following REMIC 1 Uncertificated Regular
Interests in the specified percentages, as follows: first, to Uncertificated
Accrued Interest payable to REMIC 1 Regular Interest LT1AA and REMIC 1 Regular
Interest LT1ZZ up to an aggregate amount equal to the REMIC 1 Interest Loss
Allocation Amount, 98% and 2%, respectively; second, to the Uncertificated
Principal Balances of REMIC 1 Regular Interest LT1AA and REMIC 1 Regular
Interest LT1ZZ up to an aggregate amount equal to the REMIC 1 Principal Loss
Allocation Amount, 98% and 2%, respectively; third, to the Uncertificated
Principal Balances of REMIC 1 Regular Interest LT1AA, REMIC 1 Regular Interest
LT1M7 and REMIC 1 Regular Interest LT1ZZ, 98%, 1% and 1%, respectively, until
the Uncertificated Principal Balance of REMIC 1 Regular Interest LT1M7 has been
reduced to zero; fourth, to the Uncertificated Principal Balances of REMIC 1
Regular Interest LT1AA, REMIC 1 Regular Interest LT1M6 and REMIC 1 Regular
Interest LT1ZZ, 98%, 1% and 1%, respectively, until the Uncertificated Principal
Balance of REMIC 1 Regular Interest LT1M6 has been reduced to zero; fifth, to
the
104
Uncertificated Principal Balances of REMIC 1 Regular Interest LT1AA, REMIC 1
Regular Interest LT1M5 and REMIC 1 Regular Interest LT1ZZ, 98%, 1% and 1%,
respectively, until the Uncertificated Principal Balance of REMIC 1 Regular
Interest LT1M5 has been reduced to zero; sixth to the Uncertificated Principal
Balances of REMIC 1 Regular Interest LT1AA, REMIC 1 Regular Interest LT1M4 and
REMIC 1 Regular Interest LT1ZZ, 98%, 1% and 1%, respectively, until the
Uncertificated Principal Balance of REMIC 1 Regular Interest LT1M4 has been
reduced to zero; seventh to the Uncertificated Principal Balances of REMIC 1
Regular Interest LT1AA, REMIC 1 Regular Interest LT1M3 and REMIC 1 Regular
Interest LT1ZZ, 98%, 1% and 1%, respectively, until the Uncertificated Principal
Balance of REMIC 1 Regular Interest LT1M3 has been reduced to zero; eighth to
the Uncertificated Principal Balances of REMIC 1 Regular Interest LT1AA, REMIC 1
Regular Interest LT1M2 and REMIC 1 Regular Interest LT1ZZ, 98%, 1% and 1%,
respectively, until the Uncertificated Principal Balance of REMIC 1 Regular
Interest LT1M2 has been reduced to zero and ninth, to the Uncertificated
Principal Balances of REMIC 1 Regular Interest LT1AA, REMIC 1 Regular Interest
LT1M1 and REMIC 1 Regular Interest LT1ZZ, 98%, 1% and 1%, respectively, until
the Uncertificated Principal Balances of REMIC 1 Regular Interest LT1M1 has been
reduced to zero.
(d) All distributions in respect of the Class M-3 Certificates, the Class
M-4 Certificates, the Class M-5 Certificates, the Class M-6 Certificates, the
Class M-7 Certificates and the Class CE Certificates, shall be treated as having
been made first from REMIC 1 to the Corresponding Class of REMIC 2
Uncertificated Regular Interest and then to the Class M-3 Certificates, the
Class M-4 Certificates, the Class M-5 Certificates, the Class M-6 Certificates,
the Class M-7 Certificates and the Class CE Certificate, in each case by its
related REMIC.
ARTICLE V
THE CERTIFICATES
Section 5.01. The Certificates.
Each of the Class A-1, Class A-2, Class M-1, Class M-2, Class M-3, Class
M-4, Class M-5, Class M-6, Class M-7, Class P, Class CE, and Class R
Certificates shall be substantially in the forms annexed hereto as exhibits, and
shall, on original issue, be executed by the Trustee and authenticated and
delivered by the Certificate Registrar to or upon the receipt of a Written Order
to Authenticate from the Depositor concurrently with the sale and assignment to
the Trustee of the Trust Fund. Each Class of the Offered Certificates and the
Class M-3, Class M-4, Class M-5, Class M-6 and Class M-7 Certificates shall be
initially evidenced by one or more Certificates representing a Percentage
Interest with a minimum dollar denomination of $25,000 and integral multiples of
$1 in excess thereof. The Class P, Class CE and Class R Certificates are
issuable only in minimum Percentage Interests of 10%.
The Certificates shall be executed on behalf of the Trust by manual or
facsimile signature on behalf of the Trustee by a Responsible Officer.
Certificates bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures were affixed, authorized to sign on behalf of
the Trustee shall bind the Trust, notwithstanding that such individuals or any
of them have ceased to be so authorized prior to the authentication and delivery
of such Certificates or did not hold such offices at the date of such
Certificate. No Certificate shall be entitled to any
105
benefit under this Agreement or be valid for any purpose, unless such
Certificate shall have been manually authenticated by the Certificate Registrar
substantially in the form provided for herein, and such authentication upon any
Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication. Subject to Section
5.02(c), the Offered Certificates and the Class M-3, Class M-4, Class M-5, Class
M-6 and Class M-7 Certificates shall be Book-Entry Certificates. The Class P,
Class CE and Class R Certificates shall not be Book-Entry Certificates but shall
be issued in fully registered certificate form.
Section 5.02. Registration of Transfer and Exchange of Certificates.
(a) The Certificate Registrar shall cause to be kept at the Corporate Trust
Office of the Trustee a Certificate Register in which, subject to such
reasonable regulations as it may prescribe, the Certificate Registrar shall
provide for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. The Trustee shall initially serve as
Certificate Registrar for the purpose of registering Certificates and transfers
and exchanges of Certificates as herein provided. The Trustee as Certificate
Registrar shall be subject to the same standards of care, limitations on
liability and rights to indemnity as the Trustee, and the provisions of Sections
8.01, 8.02, 8.03, 8.04, 8.05, 8.14, 8.15 and 8.16 shall apply to the Certificate
Registrar to the same extent as they apply to the Trustee. Any Certificate
Registrar appointed in accordance with this Section 5.02(a) may at any time
resign by giving at least 30 days' advance written notice of resignation to the
Trustee, the Servicer and the Depositor, such resignation to become effective
upon appointment of a successor Certificate Registrar.
Upon surrender for registration of transfer of any Certificate at any
office or agency of the Certificate Registrar maintained for such purpose
pursuant to the foregoing paragraph and, in the case of the Residual
Certificates, upon satisfaction of the conditions set forth below, the Trustee,
on behalf of the Trust, shall execute and the Certificate Registrar shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of the same aggregate Percentage
Interest. In addition, (i) with respect to each Class R Certificate, the Holder
thereof may exchange, in the manner described above, such Class R Certificate
for two separate certificates, each representing such Holder's respective
Percentage Interest in the Class R-1 Interest and the Class R-2 Interest,
respectively, in each case that was evidenced by the Class R Certificate being
exchanged and (ii) with respect to each Class RX Certificate, the Holder thereof
may exchange, in the manner described above, such Class RX Certificate for six
separate certificates, each representing such Holder's respective Percentage
Interest in the Class R-3 Interest, the Class R-4 Interest, the Class R-5
Interest, the Class R-6 Interest, the Class R-7 Interest and the Class R-8
Interest, respectively, in each case that was evidenced by the Class RX
Certificate being exchanged.
At the option of the Certificateholders, Certificates may be exchanged for
other Certificates in authorized denominations and the same aggregate Percentage
Interests, upon surrender of the Certificates to be exchanged at any such office
or agency. Whenever any Certificates are so surrendered for exchange, the
Trustee shall execute on behalf of the Trust and the Certificate Registrar shall
authenticate and deliver the Certificates which the Certificateholder making the
exchange is entitled to receive. Every Certificate presented or surrendered for
registration of transfer or exchange shall (if so required by the Trustee or the
106
Certificate Registrar) be duly endorsed by, or be accompanied by a written
instrument of transfer satisfactory to the Trustee and the Certificate Registrar
duly executed by, the Holder thereof or his attorney duly authorized in writing.
(b) Upon original issuance, the Book-Entry Certificates shall be issued in
the form of one or more typewritten certificates, to be delivered to the
Depository, the initial Depository, by, or on behalf of, the Depositor; or to,
and deposited with the Custodian, on behalf of the Depository, if directed to do
so pursuant to instructions from the Depository. Except as provided in paragraph
(c) below, the Book-Entry Certificates shall at all times remain registered in
the name of the Depository or its nominee and at all times: (i) registration of
such Certificates may not be transferred by the Trustee except to another
Depository; (ii) the Depository shall maintain book-entry records with respect
to the Certificate Owners and with respect to ownership and transfers of such
Certificates; (iii) ownership and transfers of registration of such Certificates
on the books of the Depository shall be governed by applicable rules established
by the Depository; (iv) the Depository may collect its usual and customary fees,
charges and expenses from its Depository Participants; (v) the Trustee shall for
all purposes deal with the Depository as representative of the Certificate
Owners of the Certificates for purposes of exercising the rights of Holders
under this Agreement, and requests and directions for and votes of such
representative shall not be deemed to be inconsistent if they are made with
respect to different Certificate Owners; (vi) the Trustee may rely and shall be
fully protected in relying upon information furnished by the Depository with
respect to its Depository Participants and furnished by the Depository
Participants with respect to indirect participating firms and Persons shown on
the books of such indirect participating firms as direct or indirect Certificate
Owners; and (vii) the direct participants of the Depository shall have no rights
under this Agreement under or with respect to any of the Certificates held on
their behalf by the Depository, and the Depository may be treated by the Trustee
and its agents, employees, officers and directors as the absolute owner of the
Certificates for all purposes whatsoever.
All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository Participant
or brokerage firm representing such Certificate Owners. Each Depository
Participant shall only transfer Book-Entry Certificates of Certificate Owners
that it represents or of brokerage firms for which it acts as agent in
accordance with the Depository's normal procedures. The parties hereto are
hereby authorized to execute a Letter of Representations with the Depository or
take such other action as may be necessary or desirable to register a Book-Entry
Certificate to the Depository. In the event of any conflict between the terms of
any such Letter of Representation and this Agreement, the terms of this
Agreement shall control.
(c) If (x) the Depository or the Depositor advises the Trustee in writing
that the Depository is no longer willing or able to discharge properly its
responsibilities as Depository and (y) the Trustee or the Depositor is unable to
locate a qualified successor, the Certificate Owners of each Class of Book-Entry
Certificates representing Percentage Interests of such Classes aggregating not
less than 51% advises the Trustee and Depository through the Financial
Intermediaries and the Depository Participants in writing that the continuation
of a book-entry system through the Depository to the exclusion of definitive,
fully registered certificates (the "Definitive Certificates") to Certificate
Owners is no longer in the best interests of the Certificate Owners. Upon
surrender to the Certificate Registrar of the Book-Entry Certificates by the
107
Depository, accompanied by registration instructions from the Depository for
registration, the Trustee shall, at the Seller's expense, execute on behalf of
the Trust and the Certificate Registrar shall authenticate the Definitive
Certificates. None of the Depositor or the Trustee shall be liable for any delay
in delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Certificates, the Trustee, the Certificate Registrar, the Servicer, any Paying
Agent and the Depositor shall recognize the Holders of the Definitive
Certificates as Certificateholders hereunder.
(d) Except with respect to a transfer of the Private Certificates between
or among the Depositor, the Seller, their affiliates or both, no transfer, sale,
pledge or other disposition of any Private Certificate shall be made unless such
disposition is exempt from the registration requirements of the Securities Act
of 1933, as amended (the "1933 Act"), and any applicable state securities laws
or is made in accordance with the 1933 Act and laws. In the event of any such
transfer, and as a condition precedent to the transfer, (i) the transferor shall
deliver to the Certificate Registrar an executed transferor certificate (in
substantially the form attached hereto as Exhibit L) and (ii) the prospective
transferee shall deliver to the Certificate Registrar (A) an executed investment
letter in substantially the form attached hereto as Exhibit J-2 certifying that
such transferee is a "qualified institutional buyer" as defined in Rule 144A,
which investment letter shall not be an expense of the Certificate Registrar or
the Depositor or (B) an executed investment letter in substantially the form
attached hereto as Exhibit J-1 certifying as to certain facts and circumstances
relating to the transfer that establish that the transfer is exempt from 1933
Act registration and that the prospective transferee is an institutional
"accredited investor" (or in the case of the Residual Certificates only, an
"accredited investor"), which investment letter shall not be an expense of the
Certificate Registrar or the Depositor or (C) if the Private Certificate is in
physical form, an Opinion of Counsel satisfactory to the Depositor and the
Trustee that such transfer may be made without such registration or
qualification, which Opinion of Counsel shall not be an expense of the
Depositor, the Trustee or the Certificate Registrar, in their respective
capacities as such. In addition, in the case of the transfer of a Class R
Certificate, the Certificate Registrar and the Depositor shall require a written
Opinion of Counsel (which may be in-house counsel) acceptable to and in form and
substance reasonably satisfactory to the Certificate Registrar and the Depositor
that such transfer may be made pursuant to an exemption, describing the
applicable exemption and the basis therefor, from the 1933 Act or is being made
pursuant to the 1933 Act, which Opinion of Counsel shall not be an expense of
the Certificate Registrar, the Trustee, the Servicer or the Depositor. The
Holder of a Private Certificate desiring to effect such transfer shall, and does
hereby agree to, indemnify the Certificate Registrar and the Depositor against
any liability that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws.
For purposes of the Class M-3, Class M-4, Class M-5, Class M-6 and Class
M-7 Certificates, the representations in the transferor certificate (in
substantially the form attached hereto as Exhibit L), as discussed in (i) above,
shall be deemed to have been made by a transferor Certificate Owner to the
Certificate Registrar by the acceptance by such Certificate Owner of the
beneficial interest in any such Class of Class X-0, Xxxxx X-0, Class M-5, Class
M-6 or Class M-7 Certificates and the transfer by the Certificate Owner of such
beneficial interest, unless the Certificate Registrar shall have received from
the transferor an alternative representation acceptable in form and substance to
the Depositor. For the purposes of the Class X-0, Xxxxx X-0, Class M-5, Class
M-6 and Class M-7 Certificates, the representations set forth in the
108
investment letter (in substantially the form attached hereto as Exhibit J-1 or
J-2), as discussed in (ii) above, shall be deemed to have been made by a
transferee Certificate Owner to the Certificate Registrar by the acceptance by a
Certificate Owner of the beneficial interest in any such Class of Class X-0,
Xxxxx X-0, Class M-5, Class M-6 or Class M-7 Certificates, unless the
Certificate Registrar shall have received from the transferee an alternative
representation acceptable in form and substance to the Depositor.
No transfer of an ERISA-Restricted Certificate shall be made unless the
Certificate Registrar shall have received either (i) a representation from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Certificate Registrar and the Depositor, (such requirement
is satisfied only by the Certificate Registrar's receipt of a representation
letter from the transferee substantially in the form of Exhibit I hereto, as
appropriate), to the effect that such transferee is not an employee benefit plan
or arrangement subject to Section 406 of ERISA or a plan subject to Section 4975
of the Code, nor a person acting on behalf of any such plan or arrangement nor
using the assets of any such plan or arrangement to effect such transfer or (ii)
(except in the case of a Class R, Class P or Class CE Certificate) if the
purchaser is an insurance company, a representation that the purchaser is an
insurance company which is purchasing such Certificates with funds contained in
an "insurance company general account" (as such term is defined in Section V(e)
of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60") and that the
purchase and holding of such Certificates are covered under Sections I and III
of PTCE 95-60 or (iii) (except in the case of the Class R Certificate) in the
case of any such ERISA Restricted Certificate presented for registration in the
name of an employee benefit plan subject to ERISA or a plan or arrangement
subject to Section 4975 of the Code (or comparable provisions of any subsequent
enactments), or a trustee of any such plan or any other person acting on behalf
of any such plan or arrangement or using such plan's or arrangement's assets, an
Opinion of Counsel satisfactory to the Certificate Registrar, to the effect that
the purchase or holding of such ERISA Restricted Certificate will not result in
the assets of the Trust being deemed to be "plan assets" and subject to the
prohibited transaction provisions of ERISA and the Code and will not subject the
Depositor, the Servicer, the Trustee or the Certificate Registrar to any
obligation in addition to those expressly undertaken in this Agreement or to any
liability. For purposes of clause (i) of the preceding sentence, such
representation shall be deemed to have been made to the Certificate Registrar by
the acceptance by a Certificate Owner of the beneficial interest in any such
Class of ERISA-Restricted Certificates, unless the Certificate Registrar shall
have received from the transferee an alternative representation acceptable in
form and substance to the Depositor. Notwithstanding anything else to the
contrary herein, any purported transfer of an ERISA-Restricted Certificate to or
on behalf of an employee benefit plan subject to ERISA or to the Code without
the delivery to the Certificate Registrar of an Opinion of Counsel satisfactory
to the Certificate Registrar as described above shall be void and of no effect.
Any representations required to be made in subsection (i) and (ii) above in the
case of an ERISA-Restricted Certificate which is also a Book-Entry Certificate
shall be deemed to have been made by the acquisition of such Certificate.
Any beneficial owner of a Mezzanine Certificate that is not an
ERISA-Restricted Certificate shall be deemed to have represented by virtue of
its acquisition or holding of such Certificate that such Certificate is rated
"BBB-" (or its equivalent) or higher by Xxxxx'x or S&P.
109
Each Person who has or who acquires any Ownership Interest in the Residual
Certificate shall be deemed by the acceptance or acquisition of such Ownership
Interest to have agreed to be bound by the following provisions and to have
irrevocably appointed the Depositor or its designee as its attorney-in-fact to
negotiate the terms of any mandatory sale under clause (v) below and to execute
all instruments of transfer and to do all other things necessary in connection
with any such sale, and the rights of each Person acquiring any Ownership
Interest in the Residual Certificates are expressly subject to the following
provisions:
(i) Each Person holding or acquiring any Ownership Interest in the
Residual Certificates shall be a Permitted Transferee and shall promptly
notify the Certificate Registrar of any change or impending change in its
status as a Permitted Transferee.
(ii) No Person shall acquire an Ownership Interest in the Residual
Certificates unless such Ownership Interest is a pro rata undivided
interest.
(iii) In connection with any proposed transfer of any Ownership
Interest in the Residual Certificates, the Certificate Registrar shall as a
condition to registration of the transfer, require delivery to it, in form
and substance satisfactory to it, of each of the following:
(A) an affidavit in the form of Exhibit K hereto from the
proposed transferee to the effect that, among other things, such
transferee is a Permitted Transferee and that it is not acquiring its
Ownership Interest in the Residual Certificates that is the subject of
the proposed transfer as a nominee, trustee or agent for any Person
who is not a Permitted Transferee; and
(B) a covenant of the proposed transferee to the effect that the
proposed transferee agrees to be bound by and to abide by the transfer
restrictions applicable to the Residual Certificates.
(e) Any attempted or purported transfer of any Ownership Interest in the
Residual Certificates in violation of the provisions of this Section shall be
absolutely null and void and shall vest no rights in the purported transferee.
If any purported transferee shall, in violation of the provisions of this
Section, become the Holder of the Residual Certificates, then the prior Holder
of such Residual Certificates that is a Permitted Transferee shall, upon
discovery that the registration of transfer of such Residual Certificates was
not in fact permitted by this Section, be restored to all rights as Holder
thereof retroactive to the date of registration of transfer of such Residual
Certificates. The Certificate Registrar shall be under no liability to any
Person for any registration of transfer of the Residual Certificates that is in
fact not permitted by this Section or for making any distributions due on such
Residual Certificates to the Holder thereof or taking any other action with
respect to such Holder under the provisions of this Agreement so long as the
Certificate Registrar received the documents specified in clause (iii). The
Trustee shall be entitled to recover from any Holder of the Residual
Certificates that was in fact not a Permitted Transferee at the time such
distributions were made all distributions made on such Residual Certificates.
Any such distributions so recovered by the Trustee shall be distributed and
delivered by the Trustee to the prior Holder of such Residual Certificates that
is a Permitted Transferee.
110
(f) If any Person other than a Disqualified Organization acquires any
Ownership Interest in the Residual Certificates in violation of the restrictions
in this Section, then the Certificate Registrar shall have the right but not the
obligation, without notice to the Holder of the Residual Certificates or any
other Person having an Ownership Interest therein, to notify the Depositor to
arrange for the sale of the Residual Certificates. The proceeds of such sale,
net of commissions (which may include commissions payable to the Depositor or
its Affiliates in connection with such sale), expenses and taxes due, if any,
will be remitted by the Trustee to the previous Holder of the Residual
Certificates that is a Permitted Transferee, except that in the event that the
Trustee determines that the Holder of the Residual Certificates may be liable
for any amount due under this Section or any other provisions of this Agreement,
the Trustee may withhold a corresponding amount from such remittance as security
for such claim. The terms and conditions of any sale under this clause (v) shall
be determined in the sole discretion of the Trustee and it shall not be liable
to any Person having an Ownership Interest in the Residual Certificates as a
result of its exercise of such discretion.
(g) If any Person other than a Permitted Transferee acquires any Ownership
Interest in the Residual Certificates in violation of the restrictions in this
Section, then the Trustee will provide to the Internal Revenue Service, and to
the persons specified in Sections 860E(e)(3) and (6) of the Code, information
needed to compute the tax imposed under Section 860E(e)(5) of the Code on
transfers of residual interests to disqualified organizations. The Trustee shall
be entitled to reasonable compensation for providing such information from the
person to whom it is provided.
The foregoing provisions of this Section shall cease to apply to transfers
occurring on or after the date on which there shall have been delivered to the
Certificate Registrar, in form and substance satisfactory to the Certificate
Registrar, (i) written notification from each Rating Agency that the removal of
the restrictions on Transfer set forth in this Section will not cause such
Rating Agency to downgrade its rating of the Certificates and (ii) an Opinion of
Counsel to the effect that such removal will not cause any REMIC hereunder to
fail to qualify as a REMIC.
(h) No service charge shall be made for any registration of transfer or
exchange of Certificates of any Class, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
All Certificates surrendered for registration of transfer or exchange shall
be cancelled by the Certificate Registrar and disposed of pursuant to its
standard procedures.
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Certificate
Registrar or the Certificate Registrar receives evidence to its satisfaction of
the destruction, loss or theft of any Certificate and (ii) there is delivered to
the Trustee, the Depositor and the Certificate Registrar such security or
indemnity as may be required by them to save each of them harmless, then, in the
absence of notice to the Trustee or the Certificate Registrar that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute on behalf of the Trust, and the Certificate Registrar shall authenticate
and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost
or
111
stolen Certificate, a new Certificate of like tenor and Percentage Interest.
Upon the issuance of any new Certificate under this Section, the Trustee or the
Certificate Registrar may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Trustee and the
Certificate Registrar) in connection therewith. Any duplicate Certificate issued
pursuant to this Section, shall constitute complete and indefeasible evidence of
ownership in the Trust, as if originally issued, whether or not the lost, stolen
or destroyed Certificate shall be found at any time.
Section 5.04. Persons Deemed Owners.
The Servicer, the Depositor, the Trustee, the Certificate Registrar, any
Paying Agent and any agent of the Servicer, the Depositor, the Certificate
Registrar, any Paying Agent or the Trustee may treat the Person, including a
Depository, in whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions pursuant to Section 4.01
and 4.02 and for all other purposes whatsoever, and none of the Servicer, the
Trust, the Trustee nor any agent of any of them shall be affected by notice to
the contrary.
Section 5.05. Appointment of Paying Agent.
The Paying Agent shall make distributions to Certificateholders from the
Distribution Account pursuant to Section 4.01 and 4.02 and shall report the
amounts of such distributions to the Trustee. The duties of the Paying Agent may
include the obligation to distribute statements and provide information to
Certificateholders as required hereunder. The Paying Agent hereunder shall at
all times be an entity duly incorporated and validly existing under the laws of
the United States of America or any state thereof, authorized under such laws to
exercise corporate trust powers and subject to supervision or examination by
federal or state authorities. The Paying Agent shall initially be the Trustee.
The Trustee may appoint a successor to act as Paying Agent, which appointment
shall be reasonably satisfactory to the Depositor and the Rating Agencies. The
Trustee as Paying Agent shall be subject to the same standards of care,
limitations on liability and rights to indemnity as the Trustee, and the
provisions of Sections 8.01, 8.02, 8.03, 8.04, 8.05, 8.14, 8.15 and 8.16 shall
apply to the Paying Agent to the same extent as they apply to the Trustee. Any
Paying Agent appointed in accordance with this Section 5.05 may at any time
resign by giving at least 30 days' advance written notice of resignation to the
Trustee, the Servicer and the Depositor, such resignation to become effective
upon appointment of a successor Paying Agent.
ARTICLE VI
THE SERVICER AND THE DEPOSITOR
Section 6.01. Liability of the Servicer and the Depositor.
The Servicer shall be liable in accordance herewith only to the extent of
the obligations specifically imposed upon and undertaken by the Servicer herein.
The Depositor shall be liable in accordance herewith only to the extent of the
obligations specifically imposed upon and undertaken by the Depositor.
112
Section 6.02. Merger or Consolidation of, or Assumption of the Obligations
of, the Servicer or the Depositor.
Any entity into which the Servicer or the Depositor may be merged or
consolidated, or any entity resulting from any merger, conversion or
consolidation to which the Servicer or the Depositor shall be a party, or any
corporation succeeding to the business of the Servicer or the Depositor, shall
be the successor of the Servicer or the Depositor, as the case may be,
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the successor servicer shall satisfy
all the requirements of Section 7.02 with respect to the qualifications of a
successor servicer.
Section 6.03. Limitation on Liability of the Servicer and Others.
None of the Depositor, the Servicer, or any of the directors, officers,
employees or agents of the Depositor or the Servicer shall be under any
liability to the Trust Fund or the Certificateholders for any action taken, or
for refraining from the taking of any action, in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Depositor or the Servicer or any such Person against any
breach of warranties or representations made by such party herein, or against
any specific liability imposed on the Servicer for a breach of the Servicing
Standard and/or this Agreement, or against any liability which would otherwise
be imposed by reason of its respective willful misfeasance, bad faith, fraud or
negligence in the performance of its duties or by reasons of negligent disregard
of its respective obligations or duties hereunder.
The Depositor, the Servicer and any director, officer, employee or agent of
the Depositor or the Servicer, may rely in good faith on any document of any
kind which, prima facie, is properly executed and submitted by any appropriate
Person with respect to any matters arising hereunder. The Depositor, the
Servicer and any director, officer, employee or agent of the Depositor or the
Servicer shall be indemnified and held harmless by the Trust against any loss,
liability or expense incurred in connection with any legal action relating to
this Agreement or the Certificates, other than any loss, liability or expense
incurred in connection with any legal action incurred by reason of its
respective misfeasance, bad faith, fraud or negligence, a breach of a
representation or warranty made by such party hereunder or (in the case of the
Servicer) a breach of the Servicing Standard in the performance of its
respective duties or by reason of negligent disregard of its respective
obligations or duties hereunder. Neither the Depositor nor the Servicer shall be
under any obligation to appear in, prosecute or defend any legal action unless
such action is related to its respective duties under this Agreement and in its
opinion does not expose it to any expense or liability; provided, however, that
the Depositor or the Servicer may in their discretion undertake any action
related to their obligations hereunder which they may deem necessary or
desirable with respect to this Agreement and the rights and duties of the
parties hereto and the interests of the Certificateholders hereunder. The
Servicer's right to indemnity or reimbursement pursuant to this Section shall
survive any resignation or termination of the Servicer pursuant to Section 6.04
or 7.01 with respect to any losses, expenses, costs or liabilities arising prior
to such resignation or termination (or arising from events that occurred prior
to such resignation or termination).
113
Section 6.04. Servicer Not to Resign.
Subject to the provisions of Section 7.01 and Section 6.02, the Servicer
shall not resign from the obligations and duties hereby imposed on it except (i)
upon determination that the performance of its obligations or duties hereunder
is no longer permissible under applicable law or are in material conflict by
reason of applicable law with any other activities carried on by it or its
subsidiaries or Affiliates, the other activities of the Servicer so causing such
a conflict being of a type and nature carried on by the Servicer or its
subsidiaries or Affiliates at the date of this Agreement or (ii) upon
satisfaction of the following conditions: (a) the Servicer has proposed a
successor servicer to the Trustee in writing and such proposed successor
servicer is reasonably acceptable to the Trustee; and (b) each Rating Agency
shall have delivered a letter to the Trustee prior to the appointment of the
successor servicer stating that the proposed appointment of such successor
servicer as Servicer hereunder will not result in the reduction or withdrawal of
the then current rating of the Regular Certificates or the ratings that are in
effect; provided, however, that no such resignation by the Servicer shall become
effective until such successor servicer or, in the case of (i) above, the
Trustee, shall have assumed the Servicer's responsibilities and obligations
hereunder or the Trustee shall have designated a successor servicer in
accordance with Section 7.02. Any such resignation shall not relieve the
Servicer of responsibility for any of the obligations specified in Sections 7.01
and 7.02 as obligations that survive the resignation or termination of the
Servicer. Any such determination permitting the resignation of the Servicer
shall be evidenced by an Opinion of Counsel to such effect delivered to the
Trustee.
The Trustee and the Depositor hereby specifically (i) consent to the pledge
and assignment by the Servicer of all the Servicer's right, title and interest
in, to and under this Agreement to the Servicing Rights Pledgee, for the benefit
of certain lenders, and (ii) provided that no Servicer Event of Termination
exists, agree that upon delivery to the Trustee by the Servicing Rights Pledgee
of a letter signed by the Servicer whereunder the Servicer shall resign as
Servicer under this Agreement, the Trustee shall appoint the Servicing Rights
Pledgee or its designee as successor Servicer, provided that at the time of such
appointment, the Servicing Rights Pledgee or such designee meets the
requirements of a successor Servicer pursuant to Section 7.02(a) (including
being acceptable to the Rating Agencies) and agrees to be subject to the terms
of this Agreement. If, pursuant to any provision hereof, the duties of the
Servicer are transferred to a successor, the entire amount of the Servicing Fee
and other compensation payable to the Servicer pursuant hereto shall thereafter
be payable to such successor.
Section 6.05. Delegation of Duties.
In the ordinary course of business, the Servicer at any time may delegate
any of its duties hereunder to any Person, including any of its Affiliates, who
agrees to conduct such duties in accordance with standards comparable to those
set forth in Section 3.01. Such delegation shall not relieve the Servicer of its
liabilities and responsibilities with respect to such duties and shall not
constitute a resignation within the meaning of Section 6.04. The Servicer shall
provide the Trustee and the Rating Agencies with 60 days prior written notice
prior to the delegation of any of its duties to any Person other than any of the
Servicer's Affiliates or their respective successors and assigns.
114
Section 6.06. Advance Facility.
(a) The Servicer is hereby authorized to enter into a financing or other
facility (any such arrangement, an "Advance Facility"), the documentation for
which complies with Section 6.06(e) below, under which (1) the Servicer assigns
or pledges its rights under this Agreement to be reimbursed for any or all
Advances and/or Servicing Advances to (a) a Person, which may be a
special-purpose bankruptcy-remote entity (an "SPV"), (b) a Person, which may
simultaneously assign or pledge such rights to an SPV or (c) a lender (a
"Lender"), which, in the case of any Person or SPV of the type described in
either of the preceding clauses (a) or (b), may directly or through other
assignees and/or pledgees, assign or pledge such rights to a Person, which may
include a trustee acting on behalf of holders of debt instruments (any such
Person or any such Lender, an "Advance Financing Person"), and/or (2) an Advance
Financing Person agrees to fund all the Advances and/or Servicing Advances
required to be made by the Servicer pursuant to this Agreement. No consent of
the Trustee, Certificateholders or any other party shall be required before the
Servicer may enter into an Advance Facility nor shall the Trustee or the
Certificateholders be a third party beneficiary of any obligation of an Advance
Financing Person to the Servicer. Notwithstanding the existence of any Advance
Facility under which an Advance Financing Person agrees to fund Advances and/or
Servicing Advances, (A) the Servicer (i) shall remain obligated pursuant to this
Agreement to make Advances and/or Servicing Advances pursuant to and as required
by this Agreement and (ii) shall not be relieved of such obligations by virtue
of such Advance Facility and (B) neither the Advance Financing Person nor any
Servicer's Assignee (as hereinafter defined) shall have any right to proceed
against or otherwise contact any Mortgagor for the purpose of collecting any
payment that may be due with respect to any related Mortgage Loan or enforcing
any covenant of such Mortgagor under the related Mortgage Loan documents.
(b) If the Servicer enters into an Advance Facility, the Servicer and the
related Advance Financing Person shall deliver to the Trustee at the address set
forth in Section 11.05 hereof a written notice (an "Advance Facility Notice"),
stating (1) the identity of the Advance Financing Person and (2) the identity of
the Person (the "Servicer's Assignee") that will, subject to Section 6.06(c)
hereof, have the right to receive amounts available from the Collection Account
pursuant to Section 3.05 hereof to reimburse previously unreimbursed Advances
and/or Servicing Advances ("Advance Reimbursement Amounts"). Advance
Reimbursement Amounts (1) shall consist solely of amounts in respect of Advances
and/or Servicing Advances for which the Servicer would be permitted to reimburse
itself in accordance with Section 3.05 hereof, assuming the Servicer had made
the related Advance(s) and/or Servicing Advance(s) and (2) shall not consist of
amounts payable to a successor Servicer in accordance with Section 3.05 hereof
to the extent permitted under Section 6.06(e) below.
(c) Notwithstanding the existence of an Advance Facility, the Servicer, on
behalf of the Advance Financing Person and the Servicer's Assignee, shall be
entitled to receive reimbursements of Advances and/or Servicing Advances in
accordance with Section 3.05(ii) and Section 3.05(iii) hereof, which entitlement
may be terminated by the Advance Financing Person pursuant to a written notice
to the Trustee in the manner set forth in Section 11.05 hereof. Upon receipt of
such written notice, the Servicer shall no longer be entitled to receive
reimbursement for any Advance Reimbursement Amounts and the Servicer's Assignee
shall immediately have the right to receive from the Collection Account all
Advance Reimbursement Amounts.
115
Notwithstanding the foregoing, the Servicer and/or the Servicer's Assignee shall
only be entitled to reimbursement of Advance Reimbursement Amounts hereunder
from withdrawals from the Collection Account pursuant to Section 3.05(ii) and
Section 3.05(iii) of this Agreement and shall not otherwise be entitled to
receive amounts designated for distribution to Certificateholders. None of the
Trustee or the Certificateholders shall have any right to, or otherwise be
entitled to, receive any amounts which constitute Advance Reimbursement Amounts
designated for distribution to the Servicer or the Servicer's Assignee, as
applicable, pursuant to Section 3.05(ii) and Section 3.05(iii) hereof. An
Advance Facility may be terminated by the joint written direction of the
Servicer and the related Advance Financing Person. Written notice of such
termination shall be delivered to the Trustee in the manner set forth in Section
11.05 hereof. None of the Depositor or the Trustee shall, as a result of the
existence of any Advance Facility, have any additional duty or liability with
respect to the calculation or payment of any Advance Reimbursement Amount, nor,
as a result of the existence of any Advance Facility, shall the Depositor or the
Trustee have any additional responsibility to track or monitor the
administration of the Advance Facility or the payment of Advance Reimbursement
Amounts to the Servicer's Assignee. The Servicer shall indemnify the Depositor,
the Trustee, any successor Servicer and the Trust Fund for any claim, loss,
liability or damage resulting from any claim by the related Advance Financing
Person, except to the extent that such claim, loss, liability or damage resulted
from or arose out of negligence, recklessness or willful misconduct on the part
of the Depositor, the Trustee or any successor Servicer, as the case may be, or,
with respect to any claim for indemnity by any successor Servicer or the
Trustee, the failure by such Person to remit funds as required by this Agreement
or, with respect to any claim for indemnity by any successor Servicer or the
Trustee, the commission of an act or omission to act by the successor Servicer
or the Trustee, and the passage of any applicable cure or grace period, such
that an Event of Default under this Agreement occurs or such entity is subject
to termination for cause under this Agreement. The Servicer shall maintain and
provide to any successor Servicer and, upon request, the Trustee a detailed
accounting on a loan-by-loan basis as to amounts advanced by, pledged or
assigned to, and reimbursed to any Advance Financing Person. The successor
Servicer shall be entitled to rely on any such information provided by the
predecessor Servicer, and the successor Servicer shall not be liable for any
errors in such information.
(d) [Reserved].
(e) As between a predecessor Servicer and its Advance Financing Person, on
the one hand, and a successor Servicer and its Advance Financing Person, if any,
on the other hand, Advance Reimbursement Amounts on a loan-by-loan basis with
respect to each Mortgage Loan as to which an Advance and/or Servicing Advance
shall have been made and be outstanding shall be allocated on a "first-in, first
out" basis. In the event the Servicer's Assignee shall have received some or all
of an Advance Reimbursement Amount related to Advances and/or Servicing Advances
that were made by a Person other than such predecessor Servicer or its related
Advance Financing Person in error, then such Servicer's Assignee shall be
required to remit any portion of such Advance Reimbursement Amount to each
Person entitled to such portion of such Advance Reimbursement Amount. Without
limiting the generality of the foregoing, the Servicer shall remain entitled to
be reimbursed by the Advance Financing Person for all Advances and/or Servicing
Advances funded by the Servicer to the extent the related Advance Reimbursement
Amounts have not been assigned or pledged to such Advance Financing Person or
Servicer's Assignee.
116
(f) For purposes of any Officer's Certificate of the Servicer made pursuant
to Section 4.07(d), any Nonrecoverable Advance referred to therein may have been
made by such Servicer or any predecessor Servicer. In making its determination
that any Advance or Servicing Advance theretofore made has become a
Nonrecoverable Advance, the Servicer shall apply the same criteria in making
such determination regardless of whether such Advance or Servicing Advance shall
have been made by the Servicer or any predecessor Servicer.
(g) Any amendment to this Section 6.06 or to any other provision of this
Agreement that may be necessary or appropriate to effect the terms of an Advance
Facility as described generally in this Section 6.06, including amendments to
add provisions relating to a successor Servicer, may be entered into by the
Trustee, the Depositor and the Servicer without the consent of any
Certificateholder, provided such amendment complies with Section 11.01 hereof.
All reasonable costs and expenses (including attorneys' fees) of each party
hereto of any such amendment shall be borne solely by the Servicer. The parties
hereto hereby acknowledge and agree that: (a) the Advances and/or Servicing
Advances financed by and/or pledged to an Advance Financing Person under any
Advance Facility are obligations owed to the Servicer payable only from the cash
flows and proceeds received under this Agreement for reimbursement of Advances
and/or Servicing Advances only to the extent provided herein, and the Trustee
and the Trust are not, as a result of the existence of any Advance Facility,
obligated or liable to repay any Advances and/or Servicing Advances financed by
the Advance Financing Person; (b) the Servicer will be responsible for remitting
to the Advance Financing Person the applicable amounts collected by it as
reimbursement for Advances and/or Servicing Advances funded by the Advance
Financing Person, subject to the provisions of this Agreement; and (c) the
Trustee shall not have any responsibility to track or monitor the administration
of the financing arrangement between the Servicer and any Advance Financing
Person.
ARTICLE VII
DEFAULT
Section 7.01. Servicer Events of Termination.
(a) If any one of the following events ("Servicer Events of Termination")
shall occur and be continuing:
(i) (A) The failure by the Servicer to make any Advance; or (B) any
other failure by the Servicer to deposit in the Collection Account or
Distribution Account any deposit required to be made under the terms of
this Agreement, which failure continues unremedied for a period of one
Business Day after the date upon which written notice of such failure shall
have been given to the Servicer by the Trustee or by any Holder of a
Regular Certificate evidencing at least 25% of the Voting Rights; or
(ii) The failure by the Servicer to make any required Servicing
Advance which failure continues unremedied for a period of 30 days, or the
failure by the Servicer duly to observe or perform, in any material
respect, any other covenants, obligations or agreements of the Servicer as
set forth in this Agreement, which failure continues unremedied for a
period of 30 days, after the date (A) on which written notice of such
117
failure, requiring the same to be remedied, shall have been given to the
Servicer by the Trustee or by any Holder of a Regular Certificate
evidencing at least 25% of the Voting Rights or (B) actual knowledge of
such failure by a Servicing Officer of the Servicer; or
(iii) The entry against the Servicer of a decree or order by a court
or agency or supervisory authority having jurisdiction in the premises for
the appointment of a trustee, conservator, receiver or liquidator in any
insolvency, conservatorship, receivership, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the
winding up or liquidation of its affairs, and the continuance of any such
decree or order unstayed and in effect for a period of 60 days; or
(iv) The Servicer shall voluntarily go into liquidation, consent to
the appointment of a conservator or receiver or liquidator or similar
person in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the Servicer or of or
relating to all or substantially all of its property; or a decree or order
of a court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a conservator, receiver, liquidator or
similar person in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer
and such decree or order shall have remained in force undischarged,
unbonded or unstayed for a period of 60 days; or the Servicer shall admit
in writing its inability to pay its debts generally as they become due,
file a petition to take advantage of any applicable insolvency or
reorganization statute, make an assignment for the benefit of its creditors
or voluntarily suspend payment of its obligations; or
(v) On any Distribution Date on or after the Distribution Date
occurring in April 2007, a Cumulative Loss Trigger Event shall have
occurred.
(b) Then, and in each and every such case, so long as a Servicer Event of
Termination shall not have been remedied within the applicable grace period, (x)
with respect solely to clause (i)(A) above, if such Advance is not made by 2:00
P.M., New York time, on the Business Day immediately following the Servicer
Remittance Date, the Trustee shall terminate all of the rights and obligations
of the Servicer under this Agreement and the Trustee, or a successor servicer
appointed in accordance with Section 7.02, shall immediately make such Advance
and assume, pursuant to Section 7.02, the duties of a successor servicer and (y)
in the case of (i)(B), (ii), (iii), (iv) and (v) above, the Trustee shall, at
the direction of the Holders of each Class of Regular Certificates evidencing
Percentage Interests aggregating not less than 51%, by notice then given in
writing to the Servicer (and to the Trustee if given by Holders of
Certificates), terminate all of the rights and obligations of the Servicer as
servicer under this Agreement. Any such notice to the Servicer shall also be
given to each Rating Agency and the Depositor. On or after the receipt by the
Servicer (and by the Trustee if such notice is given by the Holders) of such
written notice, all authority and power of the Servicer under this Agreement,
whether with respect to the Certificates or the Mortgage Loans or otherwise,
shall pass to and be vested in the Trustee pursuant to and under this Section or
successor servicer appointed in connection with Section 7.02; and, without
limitation, the Trustee or successor servicer is hereby authorized and empowered
to execute and deliver, on behalf of the Servicer, as attorney-in-fact or
otherwise,
118
any and all documents and other instruments, and to do or accomplish all other
acts or things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of each Mortgage
Loan and Related Documents or otherwise. The Servicer agrees to cooperate with
the Trustee (or the applicable successor servicer) in effecting the termination
of the responsibilities and rights of the Servicer hereunder, including, without
limitation, the delivery to the Trustee (or the applicable successor servicer)
of all documents and records requested by it to enable it to assume the
Servicer's functions under this Agreement within ten Business Days subsequent to
such notice, the transfer within one Business Day subsequent to such notice to
the Trustee (or the applicable successor servicer) for the administration by it
of all cash amounts that shall at the time be held by the Servicer and to be
deposited by it in the Collection Account, the Distribution Account or any
Escrow Account or that have been deposited by the Servicer in such accounts or
thereafter received by the Servicer with respect to the Mortgage Loans or any
REO Property received by the Servicer. All reasonable out-of-pocket costs and
expenses (including attorneys' fees) incurred in connection with transferring
the servicing to the successor servicer and amending this Agreement to reflect
such succession as Servicer pursuant to this Section shall be paid by the
predecessor servicer (or if the predecessor servicer is the Trustee, the initial
servicer) upon presentation of reasonable documentation of such costs and
expenses.
Notwithstanding any termination of the activities of a Servicer hereunder,
the Servicer shall be entitled to receive payment of all accrued and unpaid
Servicing Fees and reimbursement for all outstanding Advances and Servicing
Advances properly made prior to the date of termination.
Section 7.02. Trustee to Act; Appointment of Successor.
(a) Within 90 days of the time the Servicer (and the Trustee, if notice is
sent by the Holders) receives a notice of termination pursuant to Section 7.01
or 6.04, the Trustee (or such other successor servicer as is approved in
accordance with this Agreement) shall be the successor in all respects to the
Servicer in its capacity as servicer under this Agreement and the transactions
set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Servicer
by the terms and provisions hereof arising on and after its succession. As
compensation therefor, the Trustee (or such other successor servicer) shall be
entitled to such compensation as the Servicer would have been entitled to
hereunder if no such notice of termination had been given. Notwithstanding the
above, (i) if the Trustee is unwilling to act as successor servicer or (ii) if
the Trustee is legally unable so to act, the Trustee shall appoint or petition a
court of competent jurisdiction to appoint, any established housing and home
finance institution, bank or other mortgage loan or home equity loan servicer
having a net worth of not less than $50,000,000 as the successor to the Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Servicer hereunder; provided, that the appointment of any
such successor servicer will not result in the qualification, reduction or
withdrawal of the ratings assigned to the Certificates or the ratings that are
in effect by the Rating Agencies as evidenced by a letter to such effect from
the Rating Agencies. Pending appointment of a successor to the Servicer
hereunder, unless the Trustee is prohibited by law from so acting, the Trustee
shall act in such capacity as hereinabove provided. In connection with such
appointment and assumption, the successor shall be entitled to receive
compensation out of payments on Mortgage Loans in an amount equal to the
compensation which the Servicer
119
would otherwise have received pursuant to Section 3.18 (or such other
compensation as the Trustee and such successor shall agree, not to exceed the
Servicing Fee). The successor servicer shall be entitled to withdraw from the
Collection Account all costs and expenses associated with the transfer of the
servicing to the successor servicer, including costs and expenses of the
Trustee. The appointment of a successor servicer shall not affect any liability
of the predecessor servicer which may have arisen under this Agreement prior to
its termination as Servicer to pay any deductible under an insurance policy
pursuant to Section 3.12 or to indemnify the parties indicated in Section 3.26
pursuant to the terms thereof, nor shall any successor servicer be liable for
any acts or omissions of the predecessor servicer or for any breach by such
servicer of any of its representations or warranties contained herein or in any
related document or agreement. The Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession.
In the event of a Servicer Event of Termination, notwithstanding anything
to the contrary above, the Trustee and the Depositor hereby agree that upon
delivery to the Trustee by the Servicing Rights Pledgee of a letter signed by
the Servicer within ten Business Days of when notification of such event shall
have been provided to the Trustee, whereunder the Servicer shall resign as
Servicer under this Agreement, the Servicing Rights Pledgee or its designee
shall be appointed as successor servicer (provided that at the time of such
appointment the Servicing Rights Pledgee or such designee meets the requirements
of a successor servicer set forth above) and the Servicing Rights Pledgee agrees
to be subject to the terms of this Agreement.
(b) Any successor, including the Trustee, to the Servicer as servicer shall
during the term of its service as servicer continue to service and administer
the Mortgage Loans for the benefit of Certificateholders, and maintain in force
a policy or policies of insurance covering errors and omissions in the
performance of its obligations as Servicer hereunder and a Fidelity Bond in
respect of its officers, employees and agents to the same extent as the Servicer
is so required pursuant to Section 3.12.
Section 7.03. Waiver of Defaults.
The Holders of Certificates entitled to at least 66 2/3% of the Voting
Rights allocated to the Classes of Certificates affected by a Servicer Event of
Termination may, on behalf of all Certificateholders, waive any events
permitting removal of the Servicer as servicer pursuant to this Article VII,
provided, however, that such Holders may not waive a default in making a
required distribution on a Certificate without the consent of the Holder of such
Certificate. Upon any waiver of a past default, such default shall cease to
exist and any Servicer Event of Termination arising therefrom shall be deemed to
have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other default or impair any right consequent thereto
except to the extent expressly so waived. Notice of any such waiver shall be
given by the Trustee to the Rating Agencies.
Section 7.04. Notification to Certificateholders.
(a) On any termination or appointment of a successor to the Servicer
pursuant to this Article VII or Section 6.04, the Trustee shall give prompt
written notice thereof to the
120
Certificateholders at their respective addresses appearing in the Certificate
Register and each Rating Agency.
(b) No later than 60 days after the occurrence of any event which
constitutes or which, with notice or a lapse of time or both, would constitute a
Servicer Event of Termination for five Business Days after a Responsible Officer
of the Trustee becomes aware of the occurrence of such an event, the Trustee
shall transmit by mail to all Certificateholders notice of such occurrence
unless such default or Servicer Event of Termination shall have been waived or
cured. Such notice shall be given to the Rating Agencies promptly after any such
occurrence.
Section 7.05. Survivability of Servicer Liabilities.
Notwithstanding anything herein to the contrary, upon termination of the
Servicer hereunder, any liabilities of the Servicer which accrued prior to such
termination shall survive such termination.
ARTICLE VIII
THE TRUSTEE
Section 8.01. Duties of Trustee.
The Trustee, prior to the occurrence of a Servicer Event of Termination of
which a Responsible Officer of the Trustee shall have actual knowledge and after
the curing of all Servicer Events of Termination which may have occurred,
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement. If a Servicer Event of Termination has occurred (which
has not been cured) of which a Responsible Officer has actual knowledge, the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement; provided, however, that that the
Trustee shall not be responsible for the accuracy or content of any resolution,
certificate, statement, opinion, report, document, order or other instrument
furnished by the Servicer, the Seller or the Depositor hereunder. If any such
instrument is found not to conform in any material respect to the requirements
of this Agreement, the Trustee shall notify the Certificateholders of such
instrument in the event that the Trustee, after so requesting, does not receive
a satisfactorily corrected instrument.
No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own misconduct; provided, however, that:
(i) prior to the occurrence of a Servicer Event of Termination of
which a Responsible Officer of the Trustee shall have actual knowledge, and
after the curing of
121
all such Servicer Events of Termination which 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 except for
the performance of such duties and obligations as are specifically set
forth in this Agreement, no implied covenants or obligations shall be read
into this Agreement against the Trustee and, in the absence of bad faith on
the part of the Trustee, the Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed therein,
upon any certificates or opinions furnished to the Trustee and conforming
to the requirements of this Agreement;
(ii) the Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer of the Trustee, unless
it shall be proved that the Trustee was negligent in ascertaining or
investigating the facts related thereto;
(iii) the Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Majority Certificateholders relating
to the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising or omitting to exercise any trust or
power conferred upon the Trustee under this Agreement; and
(iv) the Trustee shall not be charged with knowledge of any failure by
the Servicer to comply with the obligations of the Servicer referred to in
clauses (i) and (ii) of Section 7.01(a) or any Servicer Event of
Termination unless a Responsible Officer of the Trustee at the Corporate
Trust Office obtains actual knowledge of such failure or the Trustee
receives written notice of such failure from the Servicer or the Majority
Certificateholders. In the absence of such receipt of such notice, the
Trustee may conclusively assume that there is no Servicer Event of
Termination.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of the Servicer under this Agreement, except during such
time, if any, as the Trustee shall be the successor to, and be vested with the
rights, duties, powers and privileges of, the Servicer in accordance with the
terms of this Agreement.
The Trustee shall not have any duty (A) to see any recording, filing, or
depositing of this Agreement or any agreement referred to herein or any
financing statement or continuation statement evidencing a security interest, or
to see to the maintenance of any such recording or filing or depositing or to
any rerecording, refiling or redepositing of any thereof, (B) to see to any
insurance or (C) to see to the payment or discharge of any tax, assessment, or
other governmental charge or any lien or encumbrance of any kind owing with
respect to, assessed or levied against, any part of the Trust Fund other than
from funds available in the Distribution Account.
122
The Trustee shall have no duty hereunder with respect to any complaint,
claim, demand, notice or other document it may receive or which may be alleged
to have been delivered to or served upon it by any third party as a consequence
of the assignment of any Mortgage Loan hereunder; provided, however, that the
Trustee shall promptly remit to the Servicer upon receipt of any such complaint,
claim, demand, notice or other document (i) which is delivered to the Trustee at
its Corporate Trust Office; (ii) of which a Responsible Officer has actual
knowledge and (iii) which contains information sufficient to permit the Trustee
to make a determination that the real property to which such document relates to
is a Mortgaged Property.
Section 8.02. Certain Matters Affecting the Trustee.
Except as otherwise provided in Section 8.01:
(i) the Trustee may request and rely upon, and shall be protected in
acting or refraining from acting upon, any resolution, Officer's
Certificate, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal,
bond or other paper or document reasonably believed by it to be genuine and
to have been signed or presented by the proper party or parties;
(ii) the Trustee may consult with counsel and any advice or Opinion of
Counsel shall be full and complete authorization and protection in respect
of any action taken or suffered or omitted by it hereunder in good faith
and in accordance with such advice or Opinion of Counsel;
(iii) the Trustee shall not be under any obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation hereunder or in relation hereto, at the
request, order or direction of the Certificateholders pursuant to the
provisions of this Agreement, unless such Certificateholders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby; the
right of the Trustee to perform any discretionary act enumerated in this
Agreement shall not be construed as a duty, and the Trustee shall not be
answerable for other than its negligence or willful misconduct in the
performance of any such act;
(iv) the Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized
or within the discretion or rights or powers conferred upon it by this
Agreement;
(v) prior to the occurrence of a Servicer Event of Termination and
after the curing of all Servicer Events of Termination which may have
occurred, the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or documents, unless requested in writing to do so by
the Majority Certificateholders; provided, however, that if the payment
within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation
is, in the opinion of the Trustee, not reasonably assured to the Trustee by
the security afforded to it by the terms of this Agreement, the Trustee may
123
require reasonable indemnity against such cost, expense or liability as a
condition to such proceeding. The reasonable expense of every such
examination shall be paid by the Servicer or, if paid by the Trustee, shall
be reimbursed by the Servicer upon demand. Nothing in this clause (v) shall
derogate from the obligation of the Servicer to observe any applicable law
prohibiting disclosure of information regarding the Mortgagors;
(vi) the Trustee shall not be accountable, have any liability or make
any representation as to any acts or omissions hereunder of the Servicer
until such time as the Trustee may be required to act as Servicer pursuant
to Section 7.02;
(vii) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian and the Trustee shall not be responsible for any
misconduct or negligence on the part of any such agent, attorney or
custodian appointed by it with due care; and
(viii) the right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be answerable for other than its negligence or willful
misconduct in the performance of such act.
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than the
authentication of the Trustee on the Certificates) shall be taken as the
statements of the Depositor, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representations as to the validity
or sufficiency of this Agreement or of the Certificates (other than the
signature and authentication of the Trustee on the Certificates) or of any
Mortgage Loan or Related Document. The Trustee shall not be accountable for the
use or application by the Servicer, or for the use or application of any funds
paid to the Servicer in respect of the Mortgage Loans or deposited in or
withdrawn from the Collection Account by the Servicer. The Trustee shall not at
any time have any responsibility or liability for or with respect to the
legality, validity and enforceability of any Mortgage or any Mortgage Loan, or
the perfection and priority of any Mortgage or the maintenance of any such
perfection and priority, or for or with respect to the sufficiency of the Trust
or its ability to generate the payments to be distributed to Certificateholders
under this Agreement, including, without limitation: the existence, condition
and ownership of any Mortgaged Property; the existence and enforceability of any
hazard insurance thereon (other than if the Trustee shall assume the duties of
the Servicer pursuant to Section 7.02); the validity of the assignment of any
Mortgage Loan to the Trustee or of any intervening assignment; the completeness
of any Mortgage Loan; the performance or enforcement of any Mortgage Loan (other
than if the Trustee shall assume the duties of the Servicer pursuant to Section
7.02); the compliance by the Depositor or the Servicer with any warranty or
representation made under this Agreement or in any related document or the
accuracy of any such warranty or representation prior to the Trustee's receipt
of notice or other discovery of any non-compliance therewith or any breach
thereof; any investment of monies by or at the direction of the Servicer or any
loss resulting therefrom, it being understood that the Trustee shall remain
responsible for any Trust property that it may hold in its individual capacity;
the acts or omissions of any of the Servicer (other than if the Trustee shall
assume the duties of the Servicer pursuant to Section 7.02) or any Mortgagor;
any action of the Servicer
124
(other than if the Trustee shall assume the duties of the Servicer pursuant to
Section 7.02) taken in the name of the Trustee; the failure of the Servicer to
act or perform any duties required of it as agent of the Trustee hereunder; or
any action by the Trustee taken at the instruction of the Servicer (other than
if the Trustee shall assume the duties of the Servicer pursuant to Section
7.02); provided, however, that the foregoing shall not relieve the Trustee of
its obligation to perform its duties under this Agreement. The Trustee shall not
have any responsibility for filing any financing or continuation statement in
any public office at any time or to otherwise perfect or maintain the perfection
of any security interest or lien granted to it hereunder.
Section 8.04. Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Certificates with the same rights as it would have if it were not
Trustee and may transact any banking and trust business with the Servicer, the
Depositor or their respective Affiliates.
Section 8.05. Trustee Fees and Expenses.
The Trustee shall be entitled to the Trustee Fee (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 the Trustee in the exercise and
performance of any of the powers and duties hereunder. The Trustee shall
withdraw from the Distribution Account on each Distribution Date and pay to
itself the Trustee Fee. The Trust shall reimburse the Trustee for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any of the provisions of this Agreement (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all persons not regularly in its employ) except any such expense, disbursement
or advance as may arise from its negligence or bad faith or which is the
responsibility of Certificateholders or the Trustee hereunder. In addition, the
Trustee and its officers, directors, employees and agents shall be indemnified
by the Trust from, and held harmless against, any and all losses, liabilities,
damages, claims or expenses incurred in connection with any legal action
relating to this Agreement or the Certificates, other than any loss, liability
or expense incurred by reason of willful misfeasance, bad faith or negligence of
the Trustee in the performance of its duties hereunder or by reason of the
Trustee's reckless disregard of obligations and duties hereunder. This Section
shall survive termination of this Agreement or the resignation or removal of any
Trustee hereunder. Anything in this Agreement to the contrary notwithstanding,
in no event shall the Trustee be liable for special, indirect or consequential
loss or damage of any kind whatsoever (including, but not limited to, lost
profits) even if the Trustee has been advised of the likelihood of such loss or
damage and regardless of the form of action.
Section 8.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be an entity duly organized and
validly existing under the laws of the United States of America or any state
thereof, authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least $50,000,000 and a minimum long-term
debt rating of "BBB" by S&P and a long term debt rating of at least "A1" or
better by Xxxxx'x and subject to supervision or examination by federal or state
authority. If such entity publishes reports of condition at least annually,
pursuant to law or to the
125
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section 8.06, the combined capital and surplus of such entity
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. The principal office of the Trustee
(other than the initial Trustee) shall be in a state with respect to which an
Opinion of Counsel has been delivered to such Trustee at the time such Trustee
is appointed Trustee to the effect that the Trust will not be a taxable entity
under the laws of such state. In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 8.06, the Trustee
shall resign immediately in the manner and with the effect specified in Section
8.07.
Section 8.07. Resignation or Removal of Trustee.
The Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice thereof to the Depositor, the Servicer and each
Rating Agency. Upon receiving such notice of resignation, the Depositor shall
promptly appoint a successor Trustee by written instrument, in duplicate, one
copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor Trustee. If no successor Trustee shall have been so
appointed and having accepted appointment within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 8.06 and shall fail to resign after written request
therefor by the Depositor, or if at any time the Trustee shall be legally unable
to act, or shall be adjudged a bankrupt or insolvent, or a receiver of the
Trustee or of their property shall be appointed, or any public officer shall
take charge or control of the Trustee or of their property or affairs for the
purpose of rehabilitation, conservation or liquidation, then the Depositor may
remove the Trustee. If the Depositor or the Servicer removes the Trustee under
the authority of the immediately preceding sentence, the Depositor shall
promptly appoint a successor Trustee by written instrument, in duplicate, one
copy of which instrument shall be delivered to the Trustee so removed and one
copy to the successor Trustee.
The Majority Certificateholders may at any time remove the Trustee by
written instrument or instruments delivered to the Servicer, the Depositor and
the Trustee; the Depositor shall thereupon use its best efforts to appoint a
successor Trustee in accordance with this Section.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section 8.07 shall not become
effective until acceptance of appointment by the successor Trustee as provided
in Section 8.08.
Section 8.08. Successor Trustee.
Any successor Trustee appointed as provided in Section 8.07 shall execute,
acknowledge and deliver to the Depositor, the Rating Agencies, the Servicer and
to its predecessor Trustee an instrument accepting such appointment hereunder,
and thereupon the resignation or removal of the predecessor Trustee shall become
effective, and such successor Trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
126
obligations of its predecessor hereunder, with like effect as if originally
named as Trustee. The Depositor, the Servicer and the predecessor Trustee shall
execute and deliver such instruments and do such other things as may reasonably
be required for fully and certainly vesting and confirming in the successor
Trustee all such rights, powers, duties and obligations.
No successor Trustee shall accept appointment as provided in this Section
8.08 unless at the time of such acceptance such successor Trustee shall be
eligible under the provisions of Section 8.06 and the appointment of such
successor Trustee shall not result in a downgrading of the Regular Certificates
by either Rating Agency, as evidenced by a letter from each Rating Agency.
Upon acceptance of appointment by a successor Trustee as provided in this
Section 8.08, the successor Trustee shall mail notice of the appointment of a
successor Trustee hereunder to all Holders of Certificates at their addresses as
shown in the Certificate Register and to each Rating Agency.
Section 8.09. Merger or Consolidation of Trustee.
Any entity into which the Trustee may be merged or converted or with which
it may be consolidated, or any entity resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any entity succeeding to
the business of the Trustee, shall be the successor of the hereunder, provided
such entity shall be eligible under the provisions of Section 8.06 and 8.08,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding.
Section 8.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust or any Mortgaged Property may at the time be located, the
Depositor and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee to act as co-trustee or co-trustees, jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of the Trust, and to
vest in such Person or Persons, in such capacity and for the benefit of the
Certificateholders, such title to the Trust, or any part thereof, and, subject
to the other provisions of this Section 8.10, such powers, duties, obligations,
rights and trusts as the Servicer and the Trustee may consider necessary or
desirable. Any such co-trustee or separate trustee shall be subject to the
written approval of the Servicer. If the Servicer shall not have joined in such
appointment within 15 days after the receipt by it of a request so to do, or in
the case a Servicer Event of Termination shall have occurred and be continuing,
the Trustee alone shall have the power to make such appointment. No co-trustee
or separate trustee hereunder shall be required to meet the terms of eligibility
as a successor Trustee under Section 8.06, and no notice to Certificateholders
of the appointment of any co-trustee or separate trustee shall be required under
Section 8.08.
Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
127
(i) all rights, powers, duties and obligations conferred or imposed
upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly
(it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed (whether as Trustee hereunder or
as successor to the Servicer hereunder), the Trustee shall be incompetent
or unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of title to the Trust
or any portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at the
direction of the Trustee;
(ii) no trustee hereunder shall be held personally liable by reason of
any act or omission of any other trustee hereunder; and
(iii) the Servicer and the Trustee, acting jointly may at any time
accept the resignation of or remove any separate trustee or co-trustee
except that following the occurrence of a Servicer Event of Termination,
the Trustee acting alone may accept the resignation or remove any separate
trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then separate trustees and co-trustees, as
effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Depositor, the Rating Agencies and the Servicer.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.
Section 8.11. Limitation of Liability.
The Certificates are executed by the Trustee, not in its individual
capacity but solely as Trustee of the Trust, in the exercise of the powers and
authority conferred and vested in it by this Agreement. Each of the undertakings
and agreements made on the part of the Trustee in the Certificates is made and
intended not as a personal undertaking or agreement by the Trustee but is made
and intended for the purpose of binding only the Trust.
128
Section 8.12. Trustee May Enforce Claims Without Possession of
Certificates.
(a) All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and such proceeding instituted by the Trustee shall
be brought in its own name or in its capacity as Trustee for the benefit of all
Holders of such Certificates, subject to the provisions of this Agreement. Any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursement and advances of the Trustee, its agents and
counsel, be for the ratable benefit of the Certificateholders in respect of
which such judgment has been recovered.
(b) The Trustee shall afford the Depositor, the Servicer and each
Certificateholder upon reasonable notice during normal business hours, access to
all records maintained by the Trustee in respect of its duties hereunder and
access to officers of the Trustee responsible for performing such duties. The
Trustee shall cooperate fully with the Servicer, the Depositor and such
Certificateholder and shall make available to the Servicer, the Depositor and
such Certificateholder for review and copying at the expense of the party
requesting such copies, such books, documents or records as may be requested
with respect to the Trustee's duties hereunder. The Depositor, the Servicer and
the Certificateholders shall not have any responsibility or liability for any
action or failure to act by the Trustee and are not obligated to supervise the
performance of the Trustee under this Agreement or otherwise.
Section 8.13. Suits for Enforcement.
In case a Servicer Event of Termination or other default by the Servicer
hereunder shall occur and be continuing, the Trustee may proceed to protect and
enforce its rights and the rights of the Certificateholders under this Agreement
by a suit, action or proceeding in equity or at law or otherwise, whether for
the specific performance of any covenant or agreement contained in this
Agreement or in aid of the execution of any power granted in this Agreement or
for the enforcement of any other legal, equitable or other remedy, as the
Trustee, being advised by counsel, and subject to the foregoing, shall deem most
effectual to protect and enforce any of the rights of the Trustee and the
Certificateholders.
Section 8.14. Waiver of Bond Requirement.
The Trustee shall be relieved of, and each Certificateholder hereby waives,
any requirement of any jurisdiction in which the Trust, or any part thereof, may
be located that the Trustee post a bond or other surety with any court, agency
or body whatsoever.
Section 8.15. Waiver of Inventory, Accounting and Appraisal Requirement.
The Trustee shall be relieved of, and each Certificateholder hereby waives,
any requirement of any jurisdiction in which the Trust, or any part thereof, may
be located that the Trustee file any inventory, accounting or appraisal of the
Trust with any court, agency or body at any time or in any manner whatsoever.
129
ARTICLE IX
REMIC AND GRANTOR TRUST ADMINISTRATION
Section 9.01. REMIC Administration.
(a) The Trustee shall make or cause to be made REMIC elections for each of
REMIC 1, REMIC 2, REMIC 3, REMIC 4, REMIC 5, REMIC 6, REMIC 7 AND REMIC 8 as set
forth in the Preliminary Statement on Forms 1066 or other appropriate federal
tax or information return for the taxable year ending on the last day of the
calendar year in which the Certificates are issued. The regular interests and
residual interest in each REMIC shall be as designated in the Preliminary
Statement.
(b) The Closing Date is hereby designated as the "Startup Day" of each
REMIC within the meaning of section 860G(a)(9) of the Code.
(c) The Trustee shall pay any and all tax related expenses (not including
taxes) of each REMIC, including but not limited to any professional fees or
expenses related to audits or any administrative or judicial proceedings with
respect to such REMIC that involve the Internal Revenue Service or state tax
authorities, but only to the extent that (i) such expenses are ordinary or
routine expenses, including expenses of a routine audit but not expenses of
litigation (except as described in (ii)); or (ii) such expenses or liabilities
(including taxes and penalties) are attributable to the negligence or willful
misconduct of the Trustee in fulfilling its duties hereunder. The Trustee shall
be entitled to reimbursement of expenses to the extent provided in clause (i)
above from the Collection Account.
(d) The Trustee shall prepare or cause to be prepared, sign and file or
cause to be filed, each REMIC's federal and state tax and information returns as
such REMIC's direct representative. The expenses of preparing and filing such
returns shall be borne by the Trustee.
(e) The Holder of the Class R Certificate and Class RX Certificate shall be
the "tax matters person" as defined in the REMIC Provisions (the "Tax Matters
Person") with respect to the related REMICs, and the Trustee is irrevocably
designated as and shall act as attorney-in-fact and agent for such Tax Matters
Person for each such REMIC. The Trustee, as agent for the Tax Matters Person,
shall perform, on behalf of each REMIC, all reporting and other tax compliance
duties that are the responsibility of such REMIC under the Code, the REMIC
Provisions, or other compliance guidance issued by the Internal Revenue Service
or any state or local taxing authority. Among its other duties, if required by
the Code, the REMIC Provisions, or other such guidance, the Trustee, as agent
for the Tax Matters Person, shall provide (i) to the Treasury or other
governmental authority such information as is necessary for the application of
any tax relating to the transfer of the Residual Certificates to any
disqualified person or organization and (ii) to the Certificateholders such
information or reports as are required by the Code or REMIC Provisions.
(f) The Trustee, the Servicer, and the Holders of Certificates shall take
any action or cause any REMIC formed under this Agreement to take any action
necessary to create or
130
maintain the status of such REMIC as a REMIC under the REMIC Provisions and
shall assist each other as necessary to create or maintain such status. None of
the Trustee, the Servicer or the Holder of the Residual Certificate shall take
any action or cause any REMIC formed under this Agreement to take any action or
fail to take (or fail to cause to be taken) any action that, under the REMIC
Provisions, if taken or not taken, as the case may be, could (i) endanger the
status of such REMIC as a REMIC or (ii) result in the imposition of a tax upon
such REMIC (including but not limited to the tax on prohibited transactions as
defined in Code Section 860F(a)(2) and the tax on prohibited contributions set
forth on Section 860G(d) of the Code) (either such event, an "Adverse REMIC
Event") unless such action or failure to act is expressly permitted under the
terms of this Agreement, or the Trustee and the Servicer have received an
Opinion of Counsel (at the expense of the party seeking to take such action) to
the effect that the contemplated action will not endanger such status or result
in the imposition of such a tax. In addition, prior to taking any action with
respect to any REMIC formed under this Agreement or the assets therein, or
causing such REMIC to take any action, which is not expressly permitted under
the terms of this Agreement, any Holder of the Residual Certificate will consult
with the Trustee and the Servicer, or their respective designees, in writing,
with respect to whether such action could cause an Adverse REMIC Event to occur
with respect to such REMIC, and no such Person shall take any such action or
cause such REMIC to take any such action as to which the Trustee or the Servicer
has advised it in writing that an Adverse REMIC Event could occur.
(g) The Holder of the Residual Certificate shall pay when due any and all
taxes imposed on the related REMIC. REMIC formed under this Agreement by federal
or state governmental authorities, but only from amounts, if any, distributable
thereon. To the extent that such REMIC taxes are not paid by related Residual
Certificateholder, the Trustee shall pay any remaining REMIC taxes out of future
amounts otherwise distributable to the Holder of related Residual Certificate
or, if no such amounts are available, out of other amounts held in the
Distribution Account, and shall reduce amounts otherwise payable to Holders of
the REMIC 1 Uncertificated Regular Interests, the REMIC 2 Uncertificated Regular
Interests or the Certificates, as the case may be.
(h) The Trustee, shall, for federal income tax purposes, maintain or cause
to be maintained books and records with respect to each REMIC formed under this
Agreement on a calendar year and on an accrual basis.
(i) No additional contributions of assets shall be made to any REMIC,
except as expressly provided in this Agreement with respect to Eligible
Substitute Mortgage Loans.
(j) Neither the Trustee nor the Servicer shall enter into any arrangement
by which any REMIC will receive a fee or other compensation for services.
(k) The Trustee shall treat (i) the rights of the Class A and Mezzanine
Certificates to receive Net WAC Rate Carryover Amounts as a right in interest
rate cap contracts written by the Class CE Certificateholders in favor of the
Holders of the Class A and Mezzanine Certificates and (ii) the rights of the
Class CE Certificates under the Yield Maintenance Agreement in accordance with
the respective terms thereof and shall assign such rights for federal tax return
and information reporting a value of zero. The Trustee shall account for such as
property held separate and apart from the regular interests it holds in each of
the REMICs created hereunder.
131
The provisions of this paragraph are intended to satisfy the requirements of
Treasury Regulations Section 1.860G-2(i) for the treatment of property rights
coupled with regular interests to be separately respected and shall be
interpreted consistent with such regulation. On each Distribution Date, to the
extent the Class A and Mezzanine Certificates receive interest in excess of the
Class A1 REMIC Pass-Through Rate, Class A2 REMIC Pass-Through Rate, Class M-1
REMIC Pass-Through Rate, Class M-2 REMIC Pass-Through Rate, Class M-3 REMIC
Pass-Through Rate, Class M-4 REMIC Pass-Through Rate, Class M-5 REMIC
Pass-Through Rate, Class M-6 REMIC Pass-Through Rate and Class M-7 REMIC
Pass-Through Rate, as applicable, such interest will be treated as distributed
to the Class CE Certificates, together with any amount deposited in the Reserve
Account in respect of the Yield Maintenance Agreement, and then paid to the
respective Classes of Class A and Mezzanine Certificates pursuant to the related
interest rate cap agreement.
Section 9.02. Prohibited Transactions and Activities.
None of the Depositor, the Servicer or the Trustee shall sell, dispose of,
or substitute for any of the Mortgage Loans, except in a disposition pursuant to
(i) the foreclosure of a Mortgage Loan, (ii) the bankruptcy of the Trust Fund,
(iii) the termination of any REMIC pursuant to Article X of this Agreement, (iv)
a substitution pursuant to Article II of this Agreement, (v) a repurchase of
Mortgage Loans pursuant to Article II of this Agreement or (vi) an optional
purchase by the Servicer pursuant to Section 3.16 of this Agreement, nor acquire
any assets for any REMIC, nor sell or dispose of any investments in the
Distribution Account for gain, nor accept any contributions to any REMIC after
the Closing Date, unless it has received an Opinion of Counsel (at the expense
of the party causing such sale, disposition, or substitution) that such
disposition, acquisition, substitution, or acceptance will not (a) affect
adversely the status of such REMIC as a REMIC or of the interests therein other
than a Residual Certificate as the regular interests therein, (b) affect the
distribution of interest or principal on the Certificates, (c) result in the
encumbrance of the assets transferred or assigned to the Trust Fund (except
pursuant to the provisions of this Agreement) or (d) cause such REMIC to be
subject to a tax on prohibited transactions or prohibited contributions pursuant
to the REMIC Provisions.
Section 9.03. Indemnification with Respect to Certain Taxes and Loss of
REMIC Status.
In the event that any REMIC formed hereunder fails to qualify as a REMIC,
loses its status as a REMIC, or incurs federal, state or local taxes as a result
of a prohibited transaction or prohibited contribution under the REMIC
Provisions due to the negligent performance by the Servicer of its duties and
obligations set forth herein or is subject to any state or local taxes based on
the location of the Servicer, the Servicer shall indemnify the Holder of the
related Residual Certificate against any and all losses, claims, damages,
liabilities or expenses ("Losses") resulting from such negligence; provided,
however, that the Servicer shall not be liable for any such Losses attributable
to the action or inaction of the Trustee, the Depositor or the Holder of the
related Residual Certificate, as applicable, nor for any such Losses resulting
from misinformation provided by the Holder of the related Certificate on which
the Servicer has relied. The foregoing shall not be deemed to limit or restrict
the rights and remedies of the Holder of the related Certificate now or
hereafter existing at law or in equity. Notwithstanding the foregoing, however,
in no event shall the Servicer have any liability (1) for any action or omission
that is taken in accordance with and in compliance with the express terms of, or
which
132
is expressly permitted by the terms of, this Agreement, (2) for any Losses other
than arising out of a negligent performance by the Servicer of its duties and
obligations set forth herein, and (3) for any special or consequential damages
to Certificateholders (in addition to payment of principal and interest on the
Certificates).
Section 9.04. REO Property.
(a) Subject to compliance with applicable laws and regulations as shall at
any time be in force, and notwithstanding any other provision of this Agreement,
the Servicer, acting on behalf of the Trust hereunder, shall not rent, lease, or
otherwise earn income on behalf of any REMIC with respect to any REO Property
which might cause such REO Property to fail to qualify as "foreclosure" property
within the meaning of section 860G(a)(8) of the Code or result in the receipt by
any REMIC of any "income from non-permitted assets" within the meaning of
section 860F(a)(2) of the Code or any "net income from foreclosure property"
which is subject to tax under the REMIC Provisions unless the Servicer has
advised, or has caused the applicable Servicer to advise, the Trustee in writing
to the effect that, under the REMIC Provisions, such action would not adversely
affect the status of any REMIC as a REMIC and any income generated for such
REMIC by the REO Property would not result in the imposition of a tax upon such
REMIC.
(b) The Servicer shall make reasonable efforts to sell any REO Property for
its fair market value. In any event, however, the Servicer shall dispose of any
REO Property before the close of the third calendar year beginning after the
year of its acquisition by the Trust Fund unless the Servicer has received a
grant of extension from the Internal Revenue Service to the effect that, under
the REMIC Provisions and any relevant proposed legislation and under applicable
state law, any REMIC may hold REO Property for a longer period without adversely
affecting its REMIC status or causing the imposition of a Federal or state tax
upon any REMIC. If the Servicer has received such an extension, then the
Servicer shall continue to attempt to sell the REO Property for its fair market
value as determined in good faith by the Servicer for such longer period as such
extension permits (the "Extended Period"). If the Servicer has not received such
an extension and the Servicer is unable to sell the REO Property within 33
months after its acquisition by the Trust Fund or if the Servicer has received
such an extension, and the Servicer is unable to sell the REO Property within
the period ending three months before the close of the Extended Period, the
Servicer shall, before the end of the applicable period, (i) purchase such REO
Property at a price equal to the REO Property's fair market value as determined
in good faith by the Servicer or (ii) auction the REO Property to the highest
bidder (which may be the Servicer) in an auction reasonably designed to produce
a fair price prior to the expiration of the applicable period.
Section 9.05. Grantor Trust Administration.
The parties intend that the portions of the Trust Fund consisting of (i)
the right of the Class P Certificates to receive Prepayment Charges, Servicer
Prepayment Charge Payment Amounts and Transferor Prepayment Charge Payment
Amounts, (ii) the right of the Class A and Mezzanine Certificates to receive Net
WAC Rate Carryover Amounts, (iii) the Yield Maintenance Agreement, the related
Reserve Account and the right of the Class CE Certificates to receive Yield
Maintenance Agreement Payments subject to the obligation of the Class CE
133
Certificates to pay Net WAC Rate Carryover Amounts shall be treated as a
"grantor trust" under the Code, and the provisions hereof shall be interpreted
consistently with this intention. In furtherance of such intention, the Trustee
shall furnish or cause to be furnished (i) to the Holders of the Class A and
Mezzanine Certificates and (ii) to the Holder of the Class CE Certificates and
shall file or cause to be filed with the Internal Revenue Service together with
Form 1041 or such other form as may be applicable, their allocable shares of
income with respect to the property held by the Grantor Trust, at the time or
times and in the manner required by the Code.
ARTICLE X
TERMINATION
Section 10.01. Termination.
(a) The respective obligations and responsibilities of the Servicer, the
Depositor, the Trustee and the Certificate Registrar created hereby (other than
the obligation of the Trustee to make certain payments to Certificateholders
after the final Distribution Date and the obligation of the Servicer to send
certain notices as hereinafter set forth) shall terminate upon notice to the
Trustee upon the earliest of (i) the Distribution Date on which the Certificate
Principal Balance of each Class of Certificates has been reduced to zero, (ii)
the final payment or other liquidation of the last Mortgage Loan in the Trust,
and (iii) the optional purchase by the Majority Class CE Certificateholders or
Servicer of the Mortgage Loans as described below. Notwithstanding the
foregoing, in no event shall the trust created hereby continue beyond the
expiration of 21 years from the death of the last survivor of the descendants of
Xxxxxx X. Xxxxxxx, the late ambassador of the United States to the Court of St.
Xxxxx, living on the date hereof.
The Majority Class CE Certificateholders may, at their option, terminate
the Trust Fund and retire the Offered Certificates on the next succeeding
Distribution Date upon which the aggregate current Pool Balance is less than 10%
of the aggregate Pool Balance of the Mortgage Loans as of the Cut-off Date by
purchasing all of the outstanding (i) Mortgage Loans in the Trust Fund at a
price equal to the sum of the outstanding Principal Balance of the Mortgage
Loans and except to the extent previously advanced by the Servicer, accrued and
unpaid interest thereon at the weighted average of the Mortgage Interest Rates
through the end of the Collection Period preceding the final Distribution Date
plus unreimbursed Servicing Advances, Advances and any unpaid Servicing Fees
allocable to such Mortgage Loans and (ii) REO Properties in the Trust Fund at a
price equal to their fair market value as determined in good faith by the
Servicer (the "Termination Price"). If such option is not exercised by the
Majority Class CE Certificateholders on the first applicable Distribution Date,
the Servicer may exercise such option, but only upon providing at least 60 days
prior written notice to the Majority Class CE Certificateholders of the
Servicer's intention to terminate the Trust Fund and the applicable Distribution
Date for such termination. Upon receipt of such notice, the Majority Class CE
Certificateholders may exercise their option to terminate the Trust Fund on or
before the Distribution Date selected by the Servicer in accordance with the
procedures set forth in this Section 10.01; provided, however, that if the
Majority Class CE Certificateholders are subject to regulation by the OCC, the
FDIC, the Federal Reserve or the Office of Thrift Supervision, the Trust Fund
may not be terminated unless the aggregate fair market value of the Mortgage
Loans and REO Properties is greater than or equal to the Termination Price;
provided further, that the
134
Trust Fund may not be terminated by either the Majority Class CE
Certificateholders or the Servicer (or an Affiliate of the Servicer) until
payment of all outstanding Reimbursement Amounts with respect to the Trust Fund.
In connection with any such purchase pursuant to the preceding paragraph,
the Servicer or its Affiliate shall deliver to the Trustee for deposit in the
Distribution Account all amounts then on deposit in the Collection Account (less
amounts permitted to be withdrawn by the Servicer pursuant to Section 3.07),
which deposit shall be deemed to have occurred immediately following such
purchase.
Any such purchase shall be accomplished by delivery on the Servicer
Remittance Date before such Distribution Date of the Termination Price to the
Trustee for deposit into the Distribution Account as part of Available Funds.
(b) Notice of any termination, specifying the Distribution Date (which
shall be a date that would otherwise be a Distribution Date) upon which the
Certificateholders may surrender their Certificates to the Trustee for payment
of the final distribution and cancellation, shall be given promptly by the
Trustee upon the Trustee receiving notice of such date from the Majority Class
CE Certificateholders or the Servicer, as applicable, by letter to the
Certificateholders mailed not earlier than the 15th day of the month preceding
the month of such final distribution and not later than the 15th day of the
month of such final distribution specifying (1) the Distribution Date upon which
final distribution of the Certificates will be made upon presentation and
surrender of such Certificates at the office or agency of the Trustee therein
designated, (2) the amount of any such final distribution and (3) that the
Record Date otherwise applicable to such Distribution Date is not applicable,
distributions being made only upon presentation and surrender of the
Certificates at the office or agency of the Trustee therein specified.
(c) Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to the Holders of the Certificates on the Distribution
Date for such final distribution, in proportion to the Percentage Interests of
their respective Class and to the extent that funds are available for such
purpose, an amount equal to the amount required to be distributed to such
Holders in accordance with the provisions of Sections 4.01 and 4.02 for such
Distribution Date.
(d) In the event that all Certificateholders shall not surrender their
Certificates for final payment and cancellation on or before such final
Distribution Date, the Trustee shall promptly following such date cause all
funds in the Distribution Account not distributed in final distribution to
Certificateholders to be withdrawn therefrom and credited to the remaining
Certificateholders by depositing such funds in a separate escrow account for the
benefit of such Certificateholders, and the Servicer (if the Servicer or an
Affiliate of the Servicer, has exercised its right to purchase the Mortgage
Loans) or the Trustee (in any other case) shall give a second written notice to
the remaining Certificateholders, to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
nine months after the second notice all the Certificates shall not have been
surrendered for cancellation, the related Residual Certificateholder shall be
entitled to all unclaimed funds and other assets which remain subject hereto
(except with respect to the Class CE and Class P Certificates) and the Trustee
upon
135
transfer of such funds shall be discharged of any responsibility for such funds,
and all other Certificateholders shall look to the Residual Certificateholder
for payment.
Section 10.02. Additional Termination Requirements.
(a) In the event that the Majority Class CE Certificateholders or the
Servicer exercises the purchase option as provided in Section 10.01, the Trust
shall be terminated in accordance with the following additional requirements,
unless the Trustee shall have been furnished with an Opinion of Counsel to the
effect that the failure of the Trust to comply with the requirements of this
Section will not (i) result in the imposition of taxes on "prohibited
transactions" of the Trust as defined in Section 860F of the Code or (ii) cause
any REMIC constituting part of the Trust Fund to fail to qualify as a REMIC at
any time that any Certificates are outstanding:
(i) The Trustee shall designate a date within 90 days prior to the
final Distribution Date as the date of adoption of plans of complete
liquidation of each of REMIC 1, REMIC 2, REMIC 3, REMIC 4, REMIC 5, REMIC
6, REMIC 7 and REMIC 8, as applicable, and shall specify such date in the
final federal income tax return of each REMIC;
(ii) After the date of adoption of such plans of complete liquidation
and at or prior to the final Distribution Date, the Trustee shall sell all
of the assets of the Trust to the Majority Class CE Certificateholders or
the Servicer, as applicable, for cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited in the following order of priority (A) (i) to the
Holders of each of the Class A-1 and Class A-2 Certificates, pro rata and
(ii) sequentially, to the Class X-0, Xxxxx X-0, Class M-3, Class M-4, Class
M-5, Class M-6 and Class M-7 Certificates, the related Certificate
Principal Balance, as applicable, plus one month's interest thereon at the
applicable Pass-Through Rate, (B) to the Class CE Certificates, the amount
of any remaining Monthly Excess Cash Flow Amounts not previously
distributed thereon, (C) to the remaining REMIC 1 Uncertificated Regular
Interests and the REMIC 2 Uncertificated Regular Interests the amounts
allocable thereto pursuant to Section 4.08 and (D) to the related Residual
Certificateholder, all cash on hand in respect of the REMICs after such
payment (other than cash retained to meet claims) and the Trust shall
terminate at such time.
(b) By their acceptance of Certificates, the Holders thereof hereby agree
to appoint the Trustee as their attorney in fact to: (i) designate such date of
adoption of plans of complete liquidation and (ii) to take such other action in
connection therewith as may be reasonably required to carry out such plans of
complete liquidation all in accordance with the terms hereof.
136
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment.
This Agreement may be amended from time to time by the Depositor, the
Servicer and the Trustee; and without the consent of the Certificateholders, (i)
to cure any ambiguity or mistake, (ii) to correct, modify or supplement any
provision herein which may be inconsistent with any other provision herein or
the Prospectus Supplement, (iii) to make any other provisions with respect to
matters or questions arising under this Agreement, which shall not be
inconsistent with the provisions of this Agreement; or (iv) to comply with any
requirements imposed by the Code; provided, however, that any such action listed
in clause (iii) above shall not adversely affect in any respect the interests of
any Certificateholder, as evidenced by (i) notice in writing to the Depositor,
the Servicer and the Trustee from the Rating Agencies that such action will not
result in the reduction or withdrawal of the rating of any outstanding Class of
Certificates with respect to which it is a Rating Agency, or (ii) an Opinion of
Counsel delivered to the Servicer and the Trustee.
In addition, this Agreement may be amended from time to time by the
Depositor, the Servicer and the Trustee, with the consent of the Majority
Certificateholders for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Holders of Certificates; provided,
however, that no such amendment or waiver shall (x) reduce in any manner the
amount of, or delay the timing of, payments on the Certificates which are
required to be made on any Certificate without the consent of the Holder of such
Certificate, (y) adversely affect in any material respect the interests of the
Holders of any Class of Certificates in a manner other than as described in
clause (x) above, without the consent of the Holders of Certificates of such
Class evidencing at least a majority of the Percentage Interest in such Class,
or (z) reduce the percentage of Voting Rights required by clause (y) above
without the consent of the Holders of all Certificates of such Class then
outstanding. Upon approval of an amendment, a copy of such amendment shall be
sent to the Rating Agencies. Prior to the execution of any amendment to this
Agreement, the Trustee shall be entitled to receive and rely upon an Opinion of
Counsel (at the expense of the Person seeking such amendment) stating that the
execution of such amendment is authorized or permitted by this Agreement. The
Trustee may, but shall not be obligated to, enter into any such amendment which
affects the Trustee's own rights, duties or immunities under this Agreement.
Notwithstanding any provision of this Agreement to the contrary, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel, delivered by (and at the expense of)
the Person seeking such Amendment, to the effect that such amendment will not
result in the imposition of a tax on any REMIC constituting part of the Trust
Fund pursuant to the REMIC Provisions or cause any REMIC constituting part of
the Trust Fund to fail to qualify as a REMIC at any time that any Certificates
are outstanding and that the amendment is being made in accordance with the
terms hereof.
137
Promptly after the execution of any such amendment the Trustee shall
furnish, at the expense of the Person that requested the amendment if such
Person is the Servicer (but in no event at the expense of the Trustee),
otherwise at the expense of the Trust, a copy of such amendment and the Opinion
of Counsel referred to in the immediately preceding paragraph to the Servicer
and each Rating Agency.
It shall not be necessary for the consent of Certificateholders under this
Section 11.01 to approve the particular form of any proposed amendment; instead
it shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
regulations as the Trustee may prescribe.
Section 11.02. Recordation of Agreement; Counterparts.
To the extent permitted by applicable law, this Agreement is subject to
recordation in all appropriate public offices for real property records in all
of the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Servicer at the expense of the Trust, but only upon direction of
Certificateholders, accompanied by an Opinion of Counsel to the effect that such
recordation materially and beneficially affects the interests of the
Certificateholders.
For the purpose of facilitating the recordation of this Agreement as herein
provided and for other purposes, this Agreement may be executed simultaneously
in any number of counterparts, each of which counterparts shall be deemed to be
an original, and such counterparts shall together constitute but one and the
same instrument.
Section 11.03. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not (i) operate to
terminate this Agreement or the Trust, (ii) entitle such Certificateholder's
legal representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust, or (iii)
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
Except as expressly provided for herein, no Certificateholder shall have
any right to vote or in any manner otherwise control the operation and
management of the Trust, or the obligations of the parties hereto, nor shall
anything herein set forth or contained in the terms of the Certificates be
construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third person by reason of any action taken by the parties
to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue of any provision of
this Agreement to institute any suit, action or proceeding in equity or at law
upon or under or with respect to this Agreement, unless such Holder previously
shall have given to the Trustee a written notice of default and of the
continuance thereof, as herein provided, and unless also the Holders of
Certificates entitled to at least 25% of the Voting Rights shall have made
written request upon
138
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 is understood and intended,
and expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue of any provision of this
Agreement to affect, disturb or prejudice the rights of the Holders of any other
of such Certificates, or to obtain or seek to obtain priority over or preference
to any other such Holder, which priority or preference is not otherwise provided
for herein, or to enforce any right under this Agreement, except in the manner
herein provided and for the equal, ratable and common benefit of all
Certificateholders. For the protection and enforcement of the provisions of this
Section 11.03 each and every Certificateholder and the Trustee shall be entitled
to such relief as can be given either at law or in equity.
Section 11.04. Governing Law; Jurisdiction.
This Agreement shall be construed in accordance with the laws of the State
of New York, and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws. With respect to any claim
arising out of this Agreement, each party irrevocably submits to the exclusive
jurisdiction of the courts of the State of New York and the United States
District Court located in the Borough of Manhattan in The City of New York, and
each party irrevocably waives any objection which it may have at any time to the
laying of venue of any suit, action or proceeding arising out of or relating
hereto brought in any such courts, irrevocably waives any claim that any such
suit, action or proceeding brought in any such court has been brought in any
inconvenient forum and further irrevocably waives the right to object, with
respect to such claim, suit, action or proceeding brought in any such court,
that such court does not have jurisdiction over such party, provided that
service of process has been made by any lawful means.
Section 11.05. Notices.
All directions, demands and notices hereunder shall be in writing and shall
be deemed to have been duly given if personally delivered at or mailed by first
class mail, postage prepaid, or by express delivery service, to (a) in the case
of the Trustee, JPMorgan Chase Bank, 0 Xxx Xxxx Xxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000-0000, Attention: Institutional Trust Services/Global Debt: ABFC
2004-AHL1, or such other address as may hereafter be furnished to the Depositor
and the Servicer in writing by the Trustee, (b) in the case of the Depositor,
Asset Backed Funding Corporation, 000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxxxx,
Xxxxx Xxxxxxxx 00000, Attention: ABFC Asset-Backed Certificates, Series
2004-AHL1, or such other address as may be furnished to the Servicer and the
Trustee in writing by the Depositor, and (c) in the case of the Servicer, Xxxxxx
Loan Servicing LP, 0000 Xxxx Xxxxxxx Xxxxx, Xxxxxxx, Xxxxx 00000, Attention:
Xxxxxx XxXxxxx, or such other address as may be hereafter furnished to the
Depositor and the Trustee by the Servicer in writing. Any notice required or
permitted to be mailed to a Certificateholder shall be given by first class
mail, postage prepaid, at the address of such Holder as shown in the Certificate
Register. Notice of any Servicer Event of Termination shall be given by telecopy
and by certified mail. Any notice so mailed within the time prescribed in this
139
Agreement shall be conclusively presumed to have duly been given when mailed,
whether or not the Certificateholder receives such notice. A copy of any notice
required to be telecopied hereunder shall also be mailed to the appropriate
party in the manner set forth above.
Section 11.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall for any reason whatsoever be held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
Section 11.07. Article and Section References.
All article and section references used in this Agreement, unless otherwise
provided, are to articles and sections in this Agreement.
Section 11.08. Notice to the Rating Agencies.
Each of the Trustee and the Servicer shall be obligated to use its best
reasonable efforts promptly to provide notice to the Rating Agencies with
respect to each of the following of which a Responsible Officer of the Trustee
or the Servicer, as the case may be, has actual knowledge:
(i) any material change or amendment to this Agreement;
(ii) the occurrence of any Servicer Event of Termination that has not
been cured or waived;
(iii) the resignation or termination of the Servicer or the Trustee;
(iv) the final payment to Holders of the Certificates of any Class;
(v) any change in the location of any Account; and
(vi) if the Trustee is acting as successor servicer pursuant to
Section 7.02 hereof, any event that would result in the inability of the
Trustee to make Advances.
In addition, the Servicer shall promptly furnish to each Rating Agency
copies of the following:
(A) each annual statement as to compliance described in Section
3.19 hereof;
(B) each annual independent public accountants' servicing report
described in Section 3.20 hereof; and
(C) each notice delivered pursuant to Section 7.01(a) hereof
which relates to the fact that the Servicer has not made an Advance.
140
Any such notice pursuant to this Section 11.08 shall be in writing and
shall be deemed to have been duly given if personally delivered or mailed by
first class mail, postage prepaid, or by express delivery service to: Xxxxx'x
Investors Service, Inc., 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Attention: Managing Director, Residential Mortgage-Backed Securities; and
Standard & Poor's Ratings Services, a division of The XxXxxx-Xxxx Companies,
Inc., 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Mortgage
Surveillance Group.
Section 11.09. Further Assurances.
Notwithstanding any other provision of this Agreement, neither the Regular
Certificateholders nor the Trustee shall have any obligation to consent to any
amendment or modification of this Agreement unless they have been provided
reasonable security or indemnity against their out-of-pocket expenses (including
reasonable attorneys' fees) to be incurred in connection therewith.
Section 11.10. Benefits of Agreement.
Nothing in this Agreement or in the Certificates, expressed or implied,
shall give to any Person, other than the Certificateholders and the parties
hereto and their successors hereunder, any benefit or any legal or equitable
right, remedy or claim under this Agreement.
Section 11.11. Acts of Certificateholders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by the
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Certificateholders in person or by
agent duly appointed in writing; and such action shall become effective when
such instrument or instruments are delivered to the Trustee and the Servicer.
Such instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "act" of the Certificateholders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Agreement and conclusive in favor of the Trustee and the Trust,
if made in the manner provided in this Section 11.11.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by
the certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Whenever such execution is
by a signer acting in a capacity other than his or her individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority.
(c) Any request, demand, authorization, direction, notice, consent, waiver
or other action by any Certificateholder shall bind every future Holder of such
Certificate and the Holder of every Certificate issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof, in respect of
anything done, omitted or suffered to be done by the Trustee or the Trust in
reliance thereon, whether or not notation of such action is made upon such
Certificate.
141
[signatures follow on the next page]
142
IN WITNESS WHEREOF, the Depositor, the Servicer and the Trustee have caused
their names to be signed hereto by their respective officers thereunto duly
authorized, all as of the day and year first above written.
ASSET BACKED FUNDING CORPORATION,
as Depositor
By: /s/ Xxxx X. Xxxxxx
---------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
XXXXXX LOAN SERVICING LP,
as Servicer
By: /s/ Xxxxxx XxXxxxx
---------------------------
Name: Xxxxxx XxXxxxx
Title: Senior Vice President
JPMORGAN CHASE BANK,
as Trustee
By: /s/ Xxxxxxxx Xxxxxx
---------------------------
Name: Xxxxxxxx Xxxxxx
Title: Trust Officer
STATE OF NORTH CAROLINA )
) ss.:
COUNTY OF MECKLENBURG )
On the 1st day of March, 2004 before me, a notary public in and for said
State, personally appeared Xxxx X. Xxxxxx, known to me to be a Vice President of
Asset Backed Funding Corporation, a Delaware corporation that executed the
within instrument, and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
[Notary Seal] /s/ Xxxxx Xxxxxxxx
------------------------------------
Notary Public
My commission expires August 1, 0000
XXXXX XX XXXXX )
) ss.:
COUNTY OF XXXXXX )
On the 1st day of March, 2004 before me, a notary public in and for said
State, personally appeared Xxxxxx XxXxxxx, known to me to be a Senior Vice
President of XXXXXX LOAN SERVICING LP, a Delaware limited partnership, that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
[Notary Seal] /s/ X. Xxxxxx
------------------------------------
Notary Public - State of Texas
My commission expires: 04/28/06
STATE OF NY )
) ss.:
COUNTY OF NY )
On the 1st day of March, 2004 before me, a notary public in and for said
State, personally appeared Xxxxxxxx Xxxxxx, known to me to be a Trust Officer of
JPMorgan Chase Bank, a national banking association that executed the within
instrument, and also known to me to be the person who executed it on behalf of
said association, and acknowledged to me that such association executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
[Notary Seal] /s/ Xxxxxxxx X. Xxxxx
------------------------------------
Notary Public
My commission expires April 22, 2007
EXHIBIT A-1
FORM OF CLASS A-1 CERTIFICATES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS BENEFICIAL
OWNERSHIP OF A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") AND CERTAIN OTHER
PROPERTY.
ABFC ASSET-BACKED CERTIFICATES
SERIES 2004-AHL1, CLASS A-1
evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional fixed-rate and adjustable-rate
one- to four-family first lien mortgage loans formed and sold by
ASSET BACKED FUNDING CORPORATION
Series 2004-AHL1, Class A-1 Initial Certificate Principal Balance
of this Certificate: $[_]
Pass-Through Rate: LIBOR + 0.160% Servicer: Xxxxxx Loan Servicing LP
Date of Pooling and Servicing Agreement Trustee: JPMorgan Chase Bank
and Cut-off Date: March 1, 2004
First Distribution Date: April 26, 2004 Final Scheduled Distribution Date:
September 25, 2030
Closing Date: March 30, 2004 CUSIP: 04542B GE 6
Original Class Certificate Principal ISIN No. US04542BGE65
Balance of the Class A-1 Certificates:
$119,292,000
No.
----
A-1-1
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS THAN
THE AMOUNT SHOWN ABOVE.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ASSET BACKED
FUNDING CORPORATION, THE SERVICER, THE TRUSTEE OR ANY OF THEIR RESPECTIVE
AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY
OF THE UNITED STATES.
This certifies that _______________ is the registered owner of a
Percentage Interest (obtained by dividing the Initial Certificate Principal
Balance of this Certificate by the Original Class Certificate Principal Balance
of the Class A-1 Certificates) in that certain beneficial ownership interest
evidenced by all the Class A-1 Certificates in the Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Asset Backed Funding Corporation (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Servicer and the Trustee, a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, the capitalized
terms used herein have the meanings assigned in the Agreement. This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month in which the related Distribution Date occurs or, in the
case of the first Distribution Date, the Closing Date (the "Record Date"), from
funds in the Distribution Account in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to the Holders of Class A-1 Certificates on such Distribution Date
pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Certificate Registrar
in writing at least five Business Days prior to the Record Date immediately
prior to such Distribution Date and is the registered owner of such Class A-1
Certificates, or by check mailed by first class mail to the address of the
Person entitled thereto, as such name and address shall appear on the
Certificate Register, provided that the Certificate Registrar may deduct a
reasonable wire transfer fee from any payment made by wire transfer.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.
A-1-2
The Class A-1 Pass-Through Rate will be a per annum rate equal to the
lesser of (i) the lesser of (a) One-Month LIBOR as of the related LIBOR
Determination Date, plus the Class A-1 Certificate Margin and (b) the Maximum
Cap Rate, and (ii) the Net WAC Cap.
This Certificate is one of a duly authorized issue of Certificates
designated as ABFC Asset-Backed Certificates of the Series specified on the face
hereof (herein called the "Certificates") and representing a Percentage Interest
in the Class A-1 Certificates.
The Class A-1 Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer and the Trustee
with the consent of the Holders of Certificates entitled to the Voting Rights
identified in the Agreement. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Certificate Registrar may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
A-1-3
The Depositor, the Servicer, the Trustee and the Certificate Registrar
and any agent of the Depositor, the Servicer, the Trustee or the Certificate
Registrar may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and none of the Depositor, the Servicer, the
Trustee, the Certificate Registrar nor any such agent shall be affected by
notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Pool
Balance at the time of purchase being 10% or less of the aggregate Pool Balance
as of the Cut-Off Date.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
A-1-4
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
-------------------
JPMORGAN CHASE BANK,
as Trustee
By:
--------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-1 Certificates referred to in the
within-mentioned Agreement.
JPMORGAN CHASE BANK,
as Certificate Registrar
By:
--------------------------
Authorized Signatory
Date of authentication:
-------------------
A-1-5
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right -------------------
of survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) _____________________________________________
a Percentage Interest equal to ____% evidenced by the ABFC Asset-Backed
Certificates, Series 2004-AHL1, Class A-1 Certificate and hereby authorize(s)
the registration of transfer of such interest to assignee on the Certificate
Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
--------------------------------------------------------------------------------
Dated:
-------------------------------------
Signature by or on behalf of assignor
-------------------------------------
Signature Guaranteed
A-1-6
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of __________________________, account number _________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by _______________________________________________,
the assignee named above, or ____________________________________, as its agent.
X-0-0
XXXXXXX X-0
FORM OF CLASS A-2 CERTIFICATES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS BENEFICIAL
OWNERSHIP OF A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") AND CERTAIN OTHER
PROPERTY.
ABFC ASSET-BACKED CERTIFICATES
SERIES 2004-AHL1, CLASS A-2
evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional fixed-rate and adjustable-rate
one- to four-family first lien mortgage loans formed and sold by
ASSET BACKED FUNDING CORPORATION
Series 2004-AHL1, Class A-2 Initial Certificate Principal Balance
of this Certificate: $[_]
Pass-Through Rate: LIBOR + 0.420% Servicer: Xxxxxx Loan Servicing LP
Date of Pooling and Servicing Agreement Trustee: JPMorgan Chase Bank
and Cut-off Date: March 1, 2004
First Distribution Date: April 26, 2004 Final Scheduled Distribution Date:
November 25, 2033
Closing Date: March 30, 2004 CUSIP: 04542B GF 3
Original Class Certificate Principal ISIN No. US04542BGF31
Balance of the Class A-2 Certificates:
$26,365,000
No.
----
A-2-1
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS THAN
THE AMOUNT SHOWN ABOVE.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ASSET BACKED
FUNDING CORPORATION, THE SERVICER, THE TRUSTEE OR ANY OF THEIR RESPECTIVE
AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY
OF THE UNITED STATES.
This certifies that _______________ is the registered owner of a
Percentage Interest (obtained by dividing the Initial Certificate Principal
Balance of this Certificate by the Original Class Certificate Principal Balance
of the Class A-2 Certificates) in that certain beneficial ownership interest
evidenced by all the Class A-2 Certificates in the Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Asset Backed Funding Corporation (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Servicer and the Trustee, a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, the capitalized
terms used herein have the meanings assigned in the Agreement. This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Business Day immediately preceding the related
Distribution Date (the "Record Date"); provided, however, that if any such
Certificate becomes a Definitive Certificate, the Record Date for such
Certificate shall be the last Business Day of the month immediately preceding
the month in which the related Distribution Date occurs, from funds in the
Distribution Account in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to the Holders of Class A-2 Certificates on such Distribution Date pursuant to
the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Certificate Registrar
in writing at least five Business Days prior to the Record Date immediately
prior to such Distribution Date and is the registered owner of such Class A-2
Certificates, or by check mailed by first class mail to the address of the
Person entitled thereto, as such name and address shall appear on the
Certificate Register, provided that the Certificate Registrar may deduct a
reasonable wire transfer fee from any payment made by wire transfer.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.
A-2-2
The Class A-2 Pass-Through Rate will be a per annum rate equal to the
lesser of (i) the lesser of (a) One-Month LIBOR as of the related LIBOR
Determination Date, plus the Class A-2 Certificate Margin and (b) the Maximum
Cap Rate, and (ii) the Net WAC Cap.
This Certificate is one of a duly authorized issue of Certificates
designated as ABFC Asset-Backed Certificates of the Series specified on the face
hereof (herein called the "Certificates") and representing a Percentage Interest
in the Class A-2 Certificates.
The Class A-2 Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer and the Trustee
with the consent of the Holders of Certificates entitled to the Voting Rights
identified in the Agreement. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Certificate Registrar may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
A-2-3
The Depositor, the Servicer, the Trustee and the Certificate Registrar
and any agent of the Depositor, the Servicer, the Trustee or the Certificate
Registrar may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and none of the Depositor, the Servicer, the
Trustee, the Certificate Registrar nor any such agent shall be affected by
notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Pool
Balance at the time of purchase being 10% or less of the aggregate Pool Balance
as of the Cut-Off Date.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
A-2-4
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
-------------------
JPMORGAN CHASE BANK,
as Trustee
By:
--------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-2 Certificates referred to in the
within-mentioned Agreement.
JPMORGAN CHASE BANK,
as Certificate Registrar
By:
--------------------------
Authorized Signatory
Date of authentication:
-------------------
A-2-5
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right ------------------
of survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) _____________________________________________
a Percentage Interest equal to ____% evidenced by the ABFC Asset-Backed
Certificates, Series 2004-AHL1, Class A-2 Certificate and hereby authorize(s)
the registration of transfer of such interest to assignee on the Certificate
Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
--------------------------------------------------------------------------------
Dated:
-------------------------------------
Signature by or on behalf of assignor
-------------------------------------
Signature Guaranteed
A-2-6
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of __________________________, account number _________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by _______________________________________________,
the assignee named above, or ____________________________________, as its agent.
A-2-7
EXHIBIT B
[RESERVED]
B-1-1
EXHIBIT C-1
FORM OF CLASS [R/RX] CERTIFICATE
THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A NON-UNITED STATES PERSON.
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS THE "RESIDUAL
INTEREST" IN [TWO/SIX] SEPARATE "REAL ESTATE MORTGAGE INVESTMENT CONDUITS," AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE").
THIS CLASS [R/RX] CERTIFICATE IS SUBORDINATE TO THE OFFERED CERTIFICATES OF THIS
SERIES TO THE EXTENT DESCRIBED HEREIN AND IN THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
THIS CLASS [R/RX] CERTIFICATE WILL NOT BE ENTITLED TO PAYMENTS UNTIL SUCH TIME
AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CLASS [R/RX] CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES LAWS OF
ANY STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT
SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION THAT DOES
NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT, INCLUDING INDIVIDUAL RETIREMENT ACCOUNTS AND ANNUITIES,
XXXXX PLANS AND COLLECTIVE INVESTMENT FUNDS AND SEPARATE ACCOUNTS IN WHICH SUCH
PLANS, ACCOUNTS OR ARRANGEMENTS ARE INVESTED, THAT IS SUBJECT TO THE FIDUCIARY
RESPONSIBILITY PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA") OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986,
AS AMENDED (THE "CODE") (EACH, A "PLAN") OR ANY PERSON WHO IS DIRECTLY OR
INDIRECTLY PURCHASING THE CLASS [R/RX] CERTIFICATE ON BEHALF OF, AS A NAMED
FIDUCIARY OF, AS TRUSTEE OF, OR WITH ASSETS OF A PLAN.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CLASS [R/RX] CERTIFICATE MAY
BE MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES A FORM OF ERISA REPRESENTATION
AND A RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT AND (1) SUCH TRANSFEREE IS NOT (A)
THE UNITED STATES, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY
C-1-1
FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR
INSTRUMENTALITY OF ANY OF THE FOREGOING, (B) ANY ORGANIZATION (OTHER THAN A
COOPERATIVE DESCRIBED IN SECTION 521 OF THE CODE) WHICH IS EXEMPT FROM THE TAX
IMPOSED BY CHAPTER 1 OF THE CODE UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX
IMPOSED BY SECTION 511 OF THE CODE, (C) ANY ORGANIZATION DESCRIBED IN SECTION
1381(a)(2)(C) OF THE CODE (ANY SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES
(A), (B) OR (C) BEING HEREINAFTER REFERRED TO AS A "DISQUALIFIED ORGANIZATION"),
(D) AN AGENT OF A DISQUALIFIED ORGANIZATION OR (E) ANY OTHER ENTITY IDENTIFIED
AS A DISQUALIFIED ORGANIZATION UNDER THE CODE AND (2) NO PURPOSE OF SUCH
TRANSFER IS TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX, AND (3) SUCH
TRANSFEREE SATISFIES CERTAIN ADDITIONAL CONDITIONS RELATING TO THE FINANCIAL
CONDITION OF THE PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE
CERTIFICATE REGISTER OF ANY TRANSFER, SALE OR OTHER DISPOSITION OF THIS CLASS
[R/RX] CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR AN AGENT OF A DISQUALIFIED
ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR
EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER
FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF
DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF A CLASS [R/RX] CERTIFICATE BY
ACCEPTANCE OF THIS CERTIFICATE SHALL BE DEEMED TO HAVE CONSENTED TO THE
PROVISIONS OF THIS PARAGRAPH AND THE PROVISIONS OF SECTION 5.02(d) OF THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN. ANY PERSON THAT IS A
DISQUALIFIED ORGANIZATION IS PROHIBITED FROM ACQUIRING BENEFICIAL OWNERSHIP OF
THIS CLASS [R/RX] CERTIFICATE.
C-1-2
ABFC ASSET-BACKED CERTIFICATES
SERIES 2004-AHL1, CLASS [R/RX]
evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional fixed-rate and adjustable-rate
one- to four-family first lien mortgage loans formed and sold by
ASSET BACKED FUNDING CORPORATION
Series 2004-AHL1, Class [R/RX] Percentage Interest: [_]%
Date of Pooling and Servicing Agreement Servicer: Xxxxxx Loan Servicing LP
and Cut-off Date: March 1, 2004
First Distribution Date: April 26, 2004 Trustee: JPMorgan Chase Bank
Maturity Date: N/A Closing Date: March 30, 2004
No.
----
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ASSET BACKED
FUNDING CORPORATION, THE SERVICER, THE TRUSTEE OR ANY OF THEIR RESPECTIVE
AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY
OF THE UNITED STATES.
This certifies that _______________________ is the registered owner of
a Percentage Interest set forth above in that certain beneficial ownership
interest evidenced by the Class [R/RX] Certificates in the Trust Fund created
pursuant to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Asset Backed Funding Corporation (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Servicer and the Trustee, a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, the capitalized
terms used herein have the meanings assigned in the Agreement. This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month in which the related Distribution Date occurs (the "Record
Date"), from funds in the Distribution Account in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holder of the Class [R/RX] Certificate on such
Distribution Date pursuant to the Agreement.
C-1-3
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Certificate Registrar
in writing at least five Business Days prior to the Record Date immediately
prior to such Distribution Date and is the registered owner of the Class [R/RX]
Certificate, or by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register, provided that the Certificate Registrar may deduct a reasonable wire
transfer fee from any payment made by wire transfer. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as ABFC Asset-Backed Certificates of the Series specified on the face
hereof (herein called the "Certificates") and representing the Percentage
Interest specified on the face hereof.
The Class [R/RX] Certificate is limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer and the Trustee
with the consent of the Holders of Certificates entitled to the Voting Rights
identified in the Agreement. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Class [R/RX] Certificates are issuable in fully registered form
only without coupons in the Class and denomination representing the Percentage
Interest specified in the
C-1-4
Agreement. As provided in the Agreement and subject to certain limitations
therein set forth, Certificates are exchangeable for new Certificates of the
same Class in authorized denominations evidencing the same aggregate Percentage
Interest, as requested by the Holder surrendering the same.
No transfer of this Certificate shall be made unless that transfer is
made pursuant to an effective registration statement under the 1933 Act and
effective registration or qualification under applicable state securities laws,
or is made in a transaction that does not require such registration or
qualification. In the event that a transfer is to be made without registration
or qualification, the Trustee shall require, in order to assure compliance with
such laws, either (i) in the case of a transfer made in reliance on Rule 144A
under the 1933 Act, that the proposed transferee delivers to the Trustee a
completed investment letter in substantially the form attached to the Agreement
as Exhibit J-2, or (ii) in the case of any other transfer, that the
Certificateholder desiring to effect the transfer and such Certificateholder's
prospective transferee each execute a representation letter in substantially the
forms of Exhibit L and Exhibit J-1 attached to the Agreement, respectively,
certifying to the Depositor and the Trustee the facts surrounding the transfer
as described in Section 5.02 of the Agreement, or as provided in the Agreement
the Depositor and the Trustee shall require an Opinion of Counsel satisfactory
to them that such transfer may be made without such registration or
qualification, which Opinion of Counsel shall not be an expense of the
Depositor, the Trustee or the Certificate Registrar, in their respective
capacities as such. None of the Depositor, the Certificate Registrar nor the
Trustee is obligated to register or qualify the Class of Certificates specified
on the face hereof under the 1933 Act or any other securities law or to take any
action not otherwise required under the Agreement to permit the transfer of such
Certificates without registration or qualification. Any such Certificateholder
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee, the Depositor, the Certificate Registrar and the Servicer against any
liability that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws.
The Trustee shall, as a condition to registration of the transfer,
require delivery to it, in form and substance satisfactory to it, an affidavit
in the form of Exhibit K attached to the Agreement executed by the proposed
transferee to the effect that, among other things, such transferee is a
Permitted Transferee and that it is not acquiring its Ownership Interest in the
Class [R/RX] Certificate that is the subject of the proposed transfer as a
nominee, trustee or agent for any Person who is not a Permitted Transferee.
No transfer of a Certificate or any interest therein may be made to
employee benefit plans and certain other retirement plans and arrangements,
including individual retirement accounts and annuities, Xxxxx plans and
collective investment funds and separate accounts in which such plans, accounts
or arrangements are invested that are subject to the fiduciary responsibility
provisions of ERISA or Section 4975 of the Code or any person who is directly or
indirectly purchasing the Certificate or interest therein on behalf of, as named
fiduciary of, as trustee of, or with assets of a Plan.
The Holder of this Certificate, by its acceptance hereof, shall be
deemed for all purposes to have consented to the provisions of Section 5.02 of
the Agreement and to any amendment of the Agreement deemed necessary by counsel
of the Depositor to ensure that the
C-1-5
transfer of this Certificate to any Person other than a Permitted Transferee or
any other Person will not cause the Trust to cease to qualify as eight separate
REMICs or cause the imposition of a tax upon the Trust.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Certificate Registrar may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee and the Certificate Registrar
and any agent of the Depositor, the Servicer, the Trustee or the Certificate
Registrar may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and none of the Depositor, the Servicer, the
Trustee, the Certificate Registrar nor any such agent shall be affected by
notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Pool
Balance at the time of purchase being 10% or less of the aggregate Pool Balance
as of the Cut-Off Date.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
C-1-6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
-------------------
JPMORGAN CHASE BANK,
as Trustee
By:
-------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class [R/RX] Certificates referred to in the
within-mentioned Agreement.
JPMORGAN CHASE BANK,
as Certificate Registrar
By:
-------------------------------
Authorized Signatory
Date of authentication:
-------------------
C-1-7
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right -------------------
of survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) _____________________________________________
a Percentage Interest equal to ___% evidenced by the ABFC Asset-Backed
Certificates, Series 2004-AHL1, Class [R/RX] Certificate and hereby authorize(s)
the registration of transfer of such interest to assignee on the Certificate
Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
--------------------------------------------------------------------------------
Dated:
----------------------------------------
Signature by or on behalf of assignor
----------------------------------------
Signature Guaranteed
C-1-8
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _____________________________________________________________
________________________________________________________________________________
for the account of _____________________________, account number _______________
___________________, or, if mailed by check, to ________________________________
______________________________________________. Applicable statements should be
mailed to ______________________________________________________________. This
information is provided by _____________________________________________________
_______________________, the assignee named above, or __________________________
______________, as its agent.
C-1-9
EXHIBIT C-2
FORM OF CLASS M-1 CERTIFICATES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A-1 AND CLASS
A-2 CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS BENEFICIAL
OWNERSHIP OF A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") AND CERTAIN OTHER
PROPERTY.
THE CLASS M-1 CERTIFICATES ARE ONLY OFFERED FOR SALE, AND ARE ONLY TRANSFERABLE
TO PLAN INVESTORS IF AN EXEMPTION FROM THE PROHIBITED TRANSACTION RULES OF ERISA
AND THE CODE APPLIES. EACH PURCHASER OF A CLASS M-1 CERTIFICATE, OTHER THAN THE
INITIAL PURCHASER OF THE CLASS M-1 CERTIFICATE, BY VIRTUE OF ITS PURCHASE OF
SUCH CERTIFICATE, WILL BE DEEMED TO HAVE REPRESENTED EITHER THAT IT IS NOT A
PLAN INVESTOR OR THAT AN EXEMPTION FROM THE PROHIBITED TRANSACTION RULES OF
ERISA AND THE CODE APPLIES TO THE ACQUISITION, HOLDING, AND RESALE OF SUCH
CERTIFICATE AND TRANSACTIONS IN CONNECTION WITH THE SERVICING, MANAGEMENT AND
OPERATION OF THE TRUST.
C-2-1
ABFC ASSET-BACKED CERTIFICATES
SERIES 2004-AHL1, CLASS M-1
evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional fixed-rate and adjustable-rate
one- to four-family first lien mortgage loans formed and sold by
ASSET BACKED FUNDING CORPORATION
Series 2004-AHL1, Class M-1 Initial Certificate Principal Balance
of this Certificate: $[_]
Pass-Through Rate: LIBOR + 0.520% Servicer: Xxxxxx Loan Servicing LP
Date of Pooling and Servicing Agreement Trustee: JPMorgan Chase Bank
and Cut-off Date: March 1, 2004
First Distribution Date: April 26, 2004 Final Scheduled Distribution Date:
September 25, 2033
Closing Date: March 30, 2004 CUSIP: 04542B GG 1
Original Class Certificate Principal ISIN No. US04542BGG14
Balance of the Class M-1 Certificates
as of the Closing Date: $10,691,000
No.
--------
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS THAN
THE AMOUNT SHOWN ABOVE.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ASSET BACKED
FUNDING CORPORATION, THE SERVICER, THE TRUSTEE OR ANY OF THEIR RESPECTIVE
AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY
OF THE UNITED STATES.
This certifies that _________________ is the registered owner of a
Percentage Interest (obtained by dividing the Initial Certificate Principal
Balance of this Certificate by the Original Class Certificate Principal Balance
of the Class M-1 Certificates) in that certain beneficial ownership interest
evidenced by all the Class M-1 Certificates in the Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Asset Backed Funding Corporation (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Servicer and the Trustee, a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not
C-2-2
defined herein, the capitalized terms used herein have the meanings assigned in
the Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Business Day preceding the related Distribution
Date (the "Record Date"); provided, however, that if any such Certificate
becomes a Definitive Certificate, the Record Date for such Certificate shall be
the last Business Day of the month immediately preceding the month in which the
related Distribution Date occurs, from funds in the Distribution Account in an
amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to the Holders of Class
M-1 Certificates on such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Certificate Registrar
in writing at least five Business Days prior to the Record Date immediately
prior to such Distribution Date and is the registered owner of such Class M-1
Certificates, or by check mailed by first class mail to the address of the
Person entitled thereto, as such name and address shall appear on the
Certificate Register, provided that the Certificate Registrar may deduct a
reasonable wire transfer fee from any payment made by wire transfer.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.
The Class M-1 Pass-Through Rate will be a per annum rate equal to the
lesser of (i) the lesser of (a) One-Month LIBOR as of the related LIBOR
Determination Date, plus the Class M-1 Certificate Margin and (b) the Maximum
Cap Rate, and (ii) the Net WAC Cap.
This Certificate is one of a duly authorized issue of Certificates
designated as ABFC Asset-Backed Certificates of the Series specified on the face
hereof (herein called the "Certificates") and representing a Percentage Interest
in the Class M-1 Certificates.
The Class M-1 Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
This certificate is subordinated in right of payment to the Class A-1
and Class A-2 Certificates as described in the Agreement referred to herein.
C-2-3
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer and the Trustee
with the consent of the Holders of Certificates entitled to the Voting Rights
identified in the Agreement. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Certificate Registrar may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee and the Certificate Registrar
and any agent of the Depositor, the Servicer, the Trustee or the Certificate
Registrar may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and none of the Depositor, the Servicer, the
Trustee, the Certificate Registrar nor any such agent shall be affected by
notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as
C-2-4
provided in the Agreement. The exercise of such right will effect early
retirement of the Certificates; however, such right to purchase is subject to
the aggregate Pool Balance at the time of purchase being 10% or less of the
aggregate Pool Balance as of the Cut-Off Date.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
C-2-5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
-------------------
JPMORGAN CHASE BANK,
as Trustee
By:
-------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class M-1 Certificates referred to in the
within-mentioned Agreement.
JPMORGAN CHASE BANK,
as Certificate Registrar
By:
-------------------------------
Authorized Signatory
Date of authentication:
--------------------
C-2-6
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right -------------------
of survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto ___________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) _____________________________________________
a Percentage Interest equal to ____% evidenced by the ABFC Asset-Backed
Certificates, Series 2004-AHL1, Class M-1 Certificate and hereby authorize(s)
the registration of transfer of such interest to assignee on the Certificate
Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
--------------------------------------------------------------------------------
Dated:
---------------------------------------
Signature by or on behalf of assignor
---------------------------------------
Signature Guaranteed
C-2-7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of ___________________________, account number _________________
___________________, or, if mailed by check, to ________________________________
_______________________________________________. Applicable statements should be
mailed to ____________________________________________________________. This
information is provided by _____________________________________________________
_______________________, the assignee named above, or __________________________
______________, as its agent.
C-2-8
EXHIBIT C-3
FORM OF CLASS M-2 CERTIFICATES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A-1, CLASS A-2
AND CLASS M-1 CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS BENEFICIAL
OWNERSHIP OF A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") AND CERTAIN OTHER
PROPERTY.
THE CLASS M-2 CERTIFICATES ARE ONLY OFFERED FOR SALE, AND ARE ONLY TRANSFERABLE
TO PLAN INVESTORS IF AN EXEMPTION FROM THE PROHIBITED TRANSACTION RULES OF ERISA
AND THE CODE APPLIES. EACH PURCHASER OF A CLASS M-2 CERTIFICATE, OTHER THAN THE
INITIAL PURCHASER OF THE CLASS M-2 CERTIFICATE, BY VIRTUE OF ITS PURCHASE OF
SUCH CERTIFICATE, WILL BE DEEMED TO HAVE REPRESENTED EITHER THAT IT IS NOT A
PLAN INVESTOR OR THAT AN EXEMPTION FROM THE PROHIBITED TRANSACTION RULES OF
ERISA AND THE CODE APPLIES TO THE ACQUISITION, HOLDING, AND RESALE OF SUCH
CERTIFICATE AND TRANSACTIONS IN CONNECTION WITH THE SERVICING, MANAGEMENT AND
OPERATION OF THE TRUST.
C-3-1
ABFC ASSET-BACKED CERTIFICATES
SERIES 2004-AHL1, CLASS M-2
evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional fixed-rate and adjustable-rate
one- to four-family first lien mortgage loans formed and sold by
ASSET BACKED FUNDING CORPORATION
Series 2004-AHL1, Class M-2 Initial Certificate Principal Balance
of this Certificate: $[_]
Pass-Through Rate: LIBOR + 1.150% Servicer: Xxxxxx Loan Servicing LP
Date of Pooling and Servicing Agreement Trustee: JPMorgan Chase Bank
and Cut-off Date: March 1, 2004
First Distribution Date: April 26, 2004 Final Scheduled Distribution Date:
August 25, 2033
Closing Date: March 30, 2004 CUSIP: 04542B GH 9
Original Class Certificate Principal
Balance of the Class M-2 Certificates
as of the Closing Date: $9,799,000 ISIN No. US04542BGH96
No.
------
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS THAN
THE AMOUNT SHOWN ABOVE.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ASSET BACKED
FUNDING CORPORATION, THE SERVICER, THE TRUSTEE OR ANY OF THEIR RESPECTIVE
AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY
OF THE UNITED STATES.
This certifies that ___________ is the registered owner of a
Percentage Interest (obtained by dividing the Initial Certificate Principal
Balance of this Certificate by the Original Class Certificate Principal Balance
of the Class M-2 Certificates) in that certain beneficial ownership interest
evidenced by all the Class M-2 Certificates in the Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Asset Backed Funding Corporation (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Servicer and the Trustee, a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, the
C-3-2
capitalized terms used herein have the meanings assigned in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Business Day preceding the related Distribution
Date (the "Record Date"); provided, however, that if any such Certificate
becomes a Definitive Certificate, the Record Date for such Certificate shall be
the last Business Day of the month immediately preceding the month in which the
related Distribution Date occurs, from funds in the Distribution Account in an
amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to the Holders of Class
M-2 Certificates on such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Certificate Registrar
in writing at least five Business Days prior to the Record Date immediately
prior to such Distribution Date and is the registered owner of such Class M-2
Certificates, or by check mailed by first class mail to the address of the
Person entitled thereto, as such name and address shall appear on the
Certificate Register, provided that the Certificate Registrar may deduct a
reasonable wire transfer fee from any payment made by wire transfer.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.
The Class M-2 Pass-Through Rate will be a per annum rate equal to the
lesser of (i) the lesser of (a) One-Month LIBOR as of the related LIBOR
Determination Date, plus the Class M-2 Certificate Margin and (b) the Maximum
Cap Rate, and (ii) the Net WAC Cap.
This Certificate is one of a duly authorized issue of Certificates
designated as ABFC Asset-Backed Certificates of the Series specified on the face
hereof (herein called the "Certificates") and representing a Percentage Interest
in the Class M-2 Certificates.
The Class M-2 Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
This certificate is subordinated in right of payment to the Class A-1,
Class A-2 and Class M-1 Certificates as described in the Agreement referred to
herein.
C-3-3
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer and the Trustee
with the consent of the Holders of Certificates entitled to the Voting Rights
identified in the Agreement. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Certificate Registrar may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee and the Certificate Registrar
and any agent of the Depositor, the Servicer, the Trustee or the Certificate
Registrar may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and none of the Depositor, the Servicer, the
Trustee, the Certificate Registrar nor any such agent shall be affected by
notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as
C-3-4
provided in the Agreement. The exercise of such right will effect early
retirement of the Certificates; however, such right to purchase is subject to
the aggregate Pool Balance at the time of purchase being 10% or less of the
aggregate Pool Balance as of the Cut-Off Date.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
C-3-5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
-------------------
JPMORGAN CHASE BANK,
as Trustee
By:
-------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class M-2 Certificates referred to in the
within-mentioned Agreement.
JPMORGAN CHASE BANK,
as Certificate Registrar
By:
-------------------------------
Authorized Signatory
Date of authentication:
--------------------
C-3-6
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right -------------------
of survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto ___________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) _____________________________________________
a Percentage Interest equal to ____% evidenced by the ABFC Asset-Backed
Certificates, Series 2004-AHL1, Class M-2 Certificate and hereby authorize(s)
the registration of transfer of such interest to assignee on the Certificate
Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
--------------------------------------------------------------------------------
Dated:
---------------------------------------
Signature by or on behalf of assignor
---------------------------------------
Signature Guaranteed
C-3-7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of ____________________________, account number ________________
___________________, or, if mailed by check, to ________________________________
_______________________________________________. Applicable statements should be
mailed to ____________________________________________________________. This
information is provided by _____________________________________________________
_______________________, the assignee named above, or __________________________
______________, as its agent.
C-3-8
EXHIBIT C-4
FORM OF CLASS M-3 CERTIFICATES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS X-0, XXXXX
X-0, CLASS M-1 AND CLASS M-2 CERTIFICATES AS DESCRIBED IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS BENEFICIAL
OWNERSHIP OF A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") AND CERTAIN OTHER
PROPERTY.
THIS CLASS M-3 CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES LAWS OF
ANY STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT
SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION THAT DOES
NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
THE CLASS M-3 CERTIFICATES ARE ONLY OFFERED FOR SALE, AND ARE ONLY TRANSFERABLE
TO PLAN INVESTORS IF AN EXEMPTION FROM THE PROHIBITED TRANSACTION RULES OF ERISA
AND THE CODE APPLIES. EACH PURCHASER OF A CLASS M-3 CERTIFICATE, BY VIRTUE OF
ITS PURCHASE OF SUCH CERTIFICATE, WILL BE DEEMED TO HAVE REPRESENTED EITHER THAT
IT IS NOT A PLAN INVESTOR OR THAT AN EXEMPTION FROM THE PROHIBITED TRANSACTION
RULES OF ERISA AND THE CODE APPLIES TO THE ACQUISITION, HOLDING, AND RESALE OF
SUCH CERTIFICATE AND TRANSACTIONS IN CONNECTION WITH THE SERVICING, MANAGEMENT
AND OPERATION OF THE TRUST.
C-4-1
ABFC ASSET-BACKED CERTIFICATES
SERIES 2004-AHL1, CLASS M-3
evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional fixed-rate and adjustable-rate
one- to four-family first lien mortgage loans formed and sold by
ASSET BACKED FUNDING CORPORATION
Series 2004-AHL1, Class M-3 Initial Certificate Principal
Balance of this Certificate: $[_]
Pass-Through Rate: LIBOR + 1.400% Servicer: Xxxxxx Loan Servicing LP
Date of Pooling and Servicing Agreement Trustee: JPMorgan Chase Bank
and Cut-off Date: March 1, 2004
First Distribution Date: April 26, 2004 Final Scheduled Distribution Date:
June 25, 2033
Closing Date: March 30, 2004 CUSIP: 04542B GJ 5
Original Class Certificate Principal ISIN No. US04542BGJ52
Balance of the Class M-3 Certificates as
of the Closing Date: $2,227,000
No.
---
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS THAN
THE AMOUNT SHOWN ABOVE.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ASSET BACKED
FUNDING CORPORATION, THE SERVICER, THE TRUSTEE OR ANY OF THEIR RESPECTIVE
AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY
OF THE UNITED STATES.
This certifies that ___________ is the registered owner of a
Percentage Interest (obtained by dividing the Initial Certificate Principal
Balance of this Certificate by the Original Class Certificate Principal Balance
of the Class M-3 Certificates) in that certain beneficial ownership interest
evidenced by all the Class M-3 Certificates in the Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Asset Backed Funding Corporation (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Servicer and the Trustee, a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, the capitalized
terms used herein have the meanings assigned in the Agreement. This Certificate
is
C-4-2
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Business Day preceding the related Distribution
Date (the "Record Date"); provided, however, that if any such Certificate
becomes a Definitive Certificate, the Record Date for such Certificate shall be
the last Business Day of the month immediately preceding the month in which the
related Distribution Date occurs, from funds in the Distribution Account in an
amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to the Holders of Class
M-3 Certificates on such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Certificate Registrar
in writing at least five Business Days prior to the Record Date immediately
prior to such Distribution Date and is the registered owner of such Class M-3
Certificates, or by check mailed by first class mail to the address of the
Person entitled thereto, as such name and address shall appear on the
Certificate Register, provided that the Certificate Registrar may deduct a
reasonable wire transfer fee from any payment made by wire transfer.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.
The Class M-3 Pass-Through Rate will be a per annum rate equal to the
lesser of (i) the lesser of (a) One-Month LIBOR as of the related LIBOR
Determination Date, plus the Class M-3 Certificate Margin and (b) the Maximum
Cap Rate, and (ii) the Net WAC Cap.
This Certificate is one of a duly authorized issue of Certificates
designated as ABFC Asset-Backed Certificates of the Series specified on the face
hereof (herein called the "Certificates") and representing a Percentage Interest
in the Class M-3 Certificates.
The Class M-3 Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
This certificate is subordinated in right of payment to the Class X-0,
Xxxxx X-0, Class M-1 and Class M-2 Certificates as described in the Agreement
referred to herein.
C-4-3
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer and the Trustee
with the consent of the Holders of Certificates entitled to the Voting Rights
identified in the Agreement. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Certificate Registrar may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
No transfer of this Certificate shall be made unless that transfer is
made pursuant to an effective registration statement under the 1933 Act and
effective registration or qualification under applicable state securities laws,
or is made in a transaction that does not require such registration or
qualification. In the event that a transfer is to be made without registration
or qualification, the Trustee shall require, in order to assure compliance with
such laws, either (i) in the case of a transfer made in reliance on Rule 144A
under the 1933 Act, that the proposed transferee delivers to the Trustee a
completed investment letter in substantially the form attached to the Agreement
as Exhibit J-2, or (ii) in the case of any other transfer, that the
Certificateholder desiring to effect the transfer and such Certificateholder's
prospective transferee each execute a representation letter in substantially the
forms of Exhibit L and Exhibit J-1 attached to the Agreement, respectively,
certifying to the Depositor and the Trustee the facts surrounding the transfer
as described in Section 5.02 of the Agreement, or as provided in the Agreement
the Depositor and the Trustee shall require an Opinion of Counsel satisfactory
to them that such transfer may be made without such registration or
qualification, which Opinion of Counsel shall not be an expense of the
Depositor, the Trustee or the Certificate Registrar, in
C-4-4
their respective capacities as such. None of the Depositor, the Certificate
Registrar nor the Trustee is obligated to register or qualify the Class of
Certificates specified on the face hereof under the 1933 Act or any other
securities law or to take any action not otherwise required under the Agreement
to permit the transfer of such Certificates without registration or
qualification. Any such Certificateholder desiring to effect such transfer
shall, and does hereby agree to, indemnify the Trustee, the Depositor, the
Certificate Registrar and the Servicer against any liability that may result if
the transfer is not so exempt or is not made in accordance with such federal and
state laws.
The Depositor, the Servicer, the Trustee and the Certificate Registrar
and any agent of the Depositor, the Servicer, the Trustee or the Certificate
Registrar may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and none of the Depositor, the Servicer, the
Trustee, the Certificate Registrar nor any such agent shall be affected by
notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Pool
Balance at the time of purchase being 10% or less of the aggregate Pool Balance
as of the Cut-Off Date.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
C-4-5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
-------------------
JPMORGAN CHASE BANK,
as Trustee
By:
---------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class M-3 Certificates referred to in the
within-mentioned Agreement.
JPMORGAN CHASE BANK,
as Certificate Registrar
By:
---------------------------------
Authorized Signatory
Date of authentication:
----------------
C-4-6
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
(Cust)(Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right -------------------
of survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) _____________________________________________
a Percentage Interest equal to _______% evidenced by the ABFC Asset-Backed
Certificates, Series 2004-AHL1, Class M-3 Certificate and hereby authorize(s)
the registration of transfer of such interest to assignee on the Certificate
Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
--------------------------------------------------------------------------------
Dated:
---------------------------------------
Signature by or on behalf of assignor
---------------------------------------
Signature Guaranteed
C-4-7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of _______________________________, account number ____________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by _______________________________________________,
the assignee named above, or ____________________________________, as its agent.
C-4-8
EXHIBIT C-5
FORM OF CLASS M-4 CERTIFICATES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS X-0, XXXXX
X-0, CLASS M-1, CLASS M-2 AND CLASS M-3 CERTIFICATES AS DESCRIBED IN THE POOLING
AND SERVICING AGREEMENT REFERRED TO HEREIN.
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS BENEFICIAL
OWNERSHIP OF A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") AND CERTAIN OTHER
PROPERTY.
THIS CLASS M-4 CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES LAWS OF
ANY STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT
SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION THAT DOES
NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
THE CLASS M-4 CERTIFICATES ARE ONLY OFFERED FOR SALE, AND ARE ONLY TRANSFERABLE
TO PLAN INVESTORS IF AN EXEMPTION FROM THE PROHIBITED TRANSACTION RULES OF ERISA
AND THE CODE APPLIES. EACH PURCHASER OF A CLASS M-4 CERTIFICATE, BY VIRTUE OF
ITS PURCHASE OF SUCH CERTIFICATE, WILL BE DEEMED TO HAVE REPRESENTED EITHER THAT
IT IS NOT A PLAN INVESTOR OR THAT AN EXEMPTION FROM THE PROHIBITED TRANSACTION
RULES OF ERISA AND THE CODE APPLIES TO THE ACQUISITION, HOLDING, AND RESALE OF
SUCH CERTIFICATE AND TRANSACTIONS IN CONNECTION WITH THE SERVICING, MANAGEMENT
AND OPERATION OF THE TRUST.
C-5-1
ABFC ASSET-BACKED CERTIFICATES
SERIES 2004-AHL1, CLASS M-4
evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional fixed-rate and adjustable-rate
one- to four-family first lien mortgage loans formed and sold by
ASSET BACKED FUNDING CORPORATION
Series 2004-AHL1, Class M-4 Initial Certificate Principal Balance
of this Certificate: $[_]
Servicer: Xxxxxx Loan Servicing LP
Pass-Through Rate: LIBOR + 1.650%
Date of Pooling and Servicing Agreement Trustee: JPMorgan Chase Bank
and Cut-off Date: March 1, 2004
First Distribution Date: April 26, 2004 Final Scheduled Distribution Date:
May 25, 2033
Closing Date: March 30, 2004 CUSIP: 00000XXX 2
Original Class Certificate Principal ISIN No. US04542BGK26
Balance of the Class M-4 Certificates as
of the Closing Date: $2,673,000
No.
---
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS THAN
THE AMOUNT SHOWN ABOVE.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ASSET BACKED
FUNDING CORPORATION, THE SERVICER, THE TRUSTEE OR ANY OF THEIR RESPECTIVE
AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY
OF THE UNITED STATES.
This certifies that ____________ is the registered owner of a
Percentage Interest (obtained by dividing the Initial Certificate Principal
Balance of this Certificate by the Original Class Certificate Principal Balance
of the Class M-4 Certificates) in that certain beneficial ownership interest
evidenced by all the Class M-4 Certificates in the Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Asset Backed Funding Corporation (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Servicer and the Trustee, a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, the capitalized
terms used herein have the meanings assigned in the Agreement. This Certificate
is
C-5-2
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Business Day preceding the related Distribution
Date (the "Record Date"); provided, however, that if any such Certificate
becomes a Definitive Certificate, the Record Date for such Certificate shall be
the last Business Day of the month immediately preceding the month in which the
related Distribution Date occurs, from funds in the Distribution Account in an
amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to the Holders of Class
M-4 Certificates on such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Certificate Registrar
in writing at least five Business Days prior to the Record Date immediately
prior to such Distribution Date and is the registered owner of such Class M-4
Certificates, or by check mailed by first class mail to the address of the
Person entitled thereto, as such name and address shall appear on the
Certificate Register, provided that the Certificate Registrar may deduct a
reasonable wire transfer fee from any payment made by wire transfer.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.
The Class M-4 Pass-Through Rate will be a per annum rate equal to the
lesser of (i) the lesser of (a) One-Month LIBOR as of the related LIBOR
Determination Date, plus the Class M-4 Certificate Margin and (b) the Maximum
Cap Rate, and (ii) the Net WAC Cap.
This Certificate is one of a duly authorized issue of Certificates
designated as ABFC Asset-Backed Certificates of the Series specified on the face
hereof (herein called the "Certificates") and representing a Percentage Interest
in the Class M-4 Certificates.
The Class M-4 Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
This certificate is subordinated in right of payment to the Class X-0,
Xxxxx X-0, Class M-1, Class M-2 and Class M-3 Certificates as described in the
Agreement referred to herein.
C-5-3
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer and the Trustee
with the consent of the Holders of Certificates entitled to the Voting Rights
identified in the Agreement. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No transfer of this Certificate shall be made unless that transfer is
made pursuant to an effective registration statement under the 1933 Act and
effective registration or qualification under applicable state securities laws,
or is made in a transaction that does not require such registration or
qualification. In the event that a transfer is to be made without registration
or qualification, the Trustee shall require, in order to assure compliance with
such laws, either (i) in the case of a transfer made in reliance on Rule 144A
under the 1933 Act, that the proposed transferee delivers to the Trustee a
completed investment letter in substantially the form attached to the Agreement
as Exhibit J-2, or (ii) in the case of any other transfer, that the
Certificateholder desiring to effect the transfer and such Certificateholder's
prospective transferee each execute a representation letter in substantially the
forms of Exhibit L and Exhibit J-1 attached to the Agreement, respectively,
certifying to the Depositor and the Trustee the facts surrounding the transfer
as described in Section 5.02 of the Agreement, or as provided in the Agreement
the Depositor and the Trustee shall require an Opinion of Counsel satisfactory
to them that such transfer may be made without such registration or
qualification, which Opinion of Counsel shall not be an expense of the
Depositor, the Trustee or the Certificate Registrar, in their respective
capacities as such. None of the Depositor, the Certificate Registrar nor the
Trustee is obligated to register or qualify the Class of Certificates specified
on the face hereof under the 1933 Act or any other securities law or to take any
action not otherwise required under the Agreement to permit the transfer of such
Certificates without registration or qualification. Any such Certificateholder
desiring to effect such transfer shall, and does hereby agree to,
C-5-4
indemnify the Trustee, the Depositor, the Certificate Registrar and the Servicer
against any liability that may result if the transfer is not so exempt or is not
made in accordance with such federal and state laws.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Certificate Registrar may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee and the Certificate Registrar
and any agent of the Depositor, the Servicer, the Trustee or the Certificate
Registrar may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and none of the Depositor, the Servicer, the
Trustee, the Certificate Registrar nor any such agent shall be affected by
notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Pool
Balance at the time of purchase being 10% or less of the aggregate Pool Balance
as of the Cut-Off Date.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
C-5-5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
-------------------
JPMORGAN CHASE BANK,
as Trustee
By:
---------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class M-4 Certificates referred to in the
within-mentioned Agreement.
JPMORGAN CHASE BANK,
as Certificate Registrar
By:
---------------------------------
Authorized Signatory
Date of authentication:
----------------
C-5-6
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
(Cust)(Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right
of survivorship and not as -------------------
tenants in common (State)
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) _____________________________________________
a Percentage Interest equal to ____% evidenced by the ABFC Asset-Backed
Certificates, Series 2004-AHL1, Class M-4 Certificate and hereby authorize(s)
the registration of transfer of such interest to assignee on the Certificate
Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
--------------------------------------------------------------------------------
Dated:
--------------------------------------
Signature by or on behalf of assignor
--------------------------------------
Signature Guaranteed
C-5-7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of _______________________________, account number ____________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by _______________________________________________,
the assignee named above, or ____________________________________, as its agent.
C-5-8
EXHIBIT C-6
FORM OF CLASS M-5 CERTIFICATES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS X-0, XXXXX
X-0, CLASS M-1, CLASS M-2, CLASS M-3 AND CLASS M-4 CERTIFICATES AS DESCRIBED IN
THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS BENEFICIAL
OWNERSHIP OF A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") AND CERTAIN OTHER
PROPERTY.
THIS CLASS M-5 CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES LAWS OF
ANY STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT
SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION THAT DOES
NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
THE CLASS M-5 CERTIFICATES ARE ONLY OFFERED FOR SALE, AND ARE ONLY TRANSFERABLE
TO PLAN INVESTORS IF AN EXEMPTION FROM THE PROHIBITED TRANSACTION RULES OF ERISA
AND THE CODE APPLIES. EACH PURCHASER OF A CLASS M-5 CERTIFICATE, BY VIRTUE OF
ITS PURCHASE OF SUCH CERTIFICATE, WILL BE DEEMED TO HAVE REPRESENTED EITHER THAT
IT IS NOT A PLAN INVESTOR OR THAT AN EXEMPTION FROM THE PROHIBITED TRANSACTION
RULES OF ERISA AND THE CODE APPLIES TO THE ACQUISITION, HOLDING, AND RESALE OF
SUCH CERTIFICATE AND TRANSACTIONS IN CONNECTION WITH THE SERVICING, MANAGEMENT
AND OPERATION OF THE TRUST.
C-6-1
ABFC ASSET-BACKED CERTIFICATES
SERIES 2004-AHL1, CLASS M-5
evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional fixed-rate and adjustable-rate
one- to four-family first lien mortgage loans formed and sold by
ASSET BACKED FUNDING CORPORATION
Series 2004-AHL1, Class M-5 Initial Certificate Principal Balance
of this Certificate: $[_]
Pass-Through Rate: LIBOR + 1.800% Servicer: Xxxxxx Loan Servicing LP
Date of Pooling and Servicing Agreement Trustee: JPMorgan Chase Bank
and Cut-off Date: March 1, 2004
First Distribution Date: April 26, 2004 Final Scheduled Distribution Date:
February 25, 2033
Closing Date: March 30, 2004 CUSIP: 04542B GL 0
Original Class Certificate Principal ISIN No. US04542BGL09
Balance of the Class M-5 Certificates as
of the Closing Date: $2,227,000
No.
---
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS THAN
THE AMOUNT SHOWN ABOVE.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ASSET BACKED
FUNDING CORPORATION, THE SERVICER, THE TRUSTEE OR ANY OF THEIR RESPECTIVE
AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY
OF THE UNITED STATES.
This certifies that ___________ is the registered owner of a
Percentage Interest (obtained by dividing the Initial Certificate Principal
Balance of this Certificate by the Original Class Certificate Principal Balance
of the Class M-5 Certificates) in that certain beneficial ownership interest
evidenced by all the Class M-5 Certificates in the Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Asset Backed Funding Corporation (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Servicer and the Trustee, a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, the capitalized
terms used herein have the meanings assigned in the Agreement. This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which
C-6-2
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Business Day preceding the related Distribution
Date (the "Record Date"); provided, however, that if any such Certificate
becomes a Definitive Certificate, the Record Date for such Certificate shall be
the last Business Day of the month immediately preceding the month in which the
related Distribution Date occurs, from funds in the Distribution Account in an
amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to the Holders of Class
M-5 Certificates on such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Certificate Registrar
in writing at least five Business Days prior to the Record Date immediately
prior to such Distribution Date and is the registered owner of such Class M-5
Certificates, or by check mailed by first class mail to the address of the
Person entitled thereto, as such name and address shall appear on the
Certificate Register, provided that the Certificate Registrar may deduct a
reasonable wire transfer fee from any payment made by wire transfer.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.
The Class M-5 Pass-Through Rate will be a per annum rate equal to the
lesser of (i) the lesser of (a) One-Month LIBOR as of the related LIBOR
Determination Date, plus the Class M-5 Certificate Margin and (b) the Maximum
Cap Rate, and (ii) the Net WAC Cap.
This Certificate is one of a duly authorized issue of Certificates
designated as ABFC Asset-Backed Certificates of the Series specified on the face
hereof (herein called the "Certificates") and representing a Percentage Interest
in the Class M-5 Certificates.
The Class M-5 Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
This certificate is subordinated in right of payment to the Class X-0,
Xxxxx X-0, Class M-1, Class M-2, Class M-3 and Class M-4 Certificates as
described in the Agreement referred to herein.
C-6-3
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer and the Trustee
with the consent of the Holders of Certificates entitled to the Voting Rights
identified in the Agreement. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No transfer of this Certificate shall be made unless that transfer is
made pursuant to an effective registration statement under the 1933 Act and
effective registration or qualification under applicable state securities laws,
or is made in a transaction that does not require such registration or
qualification. In the event that a transfer is to be made without registration
or qualification, the Trustee shall require, in order to assure compliance with
such laws, either (i) in the case of a transfer made in reliance on Rule 144A
under the 1933 Act, that the proposed transferee delivers to the Trustee a
completed investment letter in substantially the form attached to the Agreement
as Exhibit J-2, or (ii) in the case of any other transfer, that the
Certificateholder desiring to effect the transfer and such Certificateholder's
prospective transferee each execute a representation letter in substantially the
forms of Exhibit L and Exhibit J-1 attached to the Agreement, respectively,
certifying to the Depositor and the Trustee the facts surrounding the transfer
as described in Section 5.02 of the Agreement, or as provided in the Agreement
the Depositor and the Trustee shall require an Opinion of Counsel satisfactory
to them that such transfer may be made without such registration or
qualification, which Opinion of Counsel shall not be an expense of the
Depositor, the Trustee or the Certificate Registrar, in their respective
capacities as such. None of the Depositor, the Certificate Registrar nor the
Trustee is obligated to register or qualify the Class of Certificates specified
on the face hereof under the 1933 Act or any other securities law or to take any
action not otherwise required under the Agreement to permit the transfer of such
Certificates without registration or qualification. Any such Certificateholder
desiring to effect such transfer shall, and does hereby agree to,
C-6-4
indemnify the Trustee, the Depositor, the Certificate Registrar and the Servicer
against any liability that may result if the transfer is not so exempt or is not
made in accordance with such federal and state laws.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Certificate Registrar may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee and the Certificate Registrar
and any agent of the Depositor, the Servicer, the Trustee or the Certificate
Registrar may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and none of the Depositor, the Servicer, the
Trustee, the Certificate Registrar nor any such agent shall be affected by
notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Pool
Balance at the time of purchase being 10% or less of the aggregate Pool Balance
as of the Cut-Off Date.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
C-6-5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
-------------------
JPMORGAN CHASE BANK,
as Trustee
By:
---------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class M-5 Certificates referred to in the
within-mentioned Agreement.
JPMORGAN CHASE BANK,
as Certificate Registrar
By:
---------------------------------
Authorized Signatory
Date of authentication:
----------------
C-6-6
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
(Cust)(Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right
of survivorship and not as -------------------
tenants in common (State)
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) _____________________________________________
a Percentage Interest equal to ____% evidenced by the ABFC Asset-Backed
Certificates, Series 2004-AHL1, Class M-5 Certificate and hereby authorize(s)
the registration of transfer of such interest to assignee on the Certificate
Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
--------------------------------------------------------------------------------
Dated:
--------------------------------------
Signature by or on behalf of assignor
--------------------------------------
Signature Guaranteed
C-6-7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of _______________________________, account number ____________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by _______________________________________________,
the assignee named above, or ____________________________________, as its agent.
C-6-8
EXHIBIT C-7
FORM OF CLASS M-6 CERTIFICATES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS X-0, XXXXX
X-0, CLASS M-1, CLASS M-2, CLASS M-3, CLASS M-4 AND CLASS M-5 CERTIFICATES AS
DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS BENEFICIAL
OWNERSHIP OF A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") AND CERTAIN OTHER
PROPERTY.
THIS CLASS M-6 CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES LAWS OF
ANY STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT
SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION THAT DOES
NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
THE CLASS M-6 CERTIFICATES ARE ONLY OFFERED FOR SALE, AND ARE ONLY TRANSFERABLE
TO PLAN INVESTORS IF AN EXEMPTION FROM THE PROHIBITED TRANSACTION RULES OF ERISA
AND THE CODE APPLIES. EACH PURCHASER OF A CLASS M-6 CERTIFICATE, BY VIRTUE OF
ITS PURCHASE OF SUCH CERTIFICATE, WILL BE DEEMED TO HAVE REPRESENTED EITHER THAT
IT IS NOT A PLAN INVESTOR OR THAT AN EXEMPTION FROM THE PROHIBITED TRANSACTION
RULES OF ERISA AND THE CODE APPLIES TO THE ACQUISITION, HOLDING, AND RESALE OF
SUCH CERTIFICATE AND TRANSACTIONS IN CONNECTION WITH THE SERVICING, MANAGEMENT
AND OPERATION OF THE TRUST.
C-7-1
ABFC ASSET-BACKED CERTIFICATES
SERIES 2004-AHL1, CLASS M-6
evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional fixed-rate and adjustable-rate
one- to four-family first lien mortgage loans formed and sold by
ASSET BACKED FUNDING CORPORATION
Series 2004-AHL1, Class M-6 Initial Certificate Principal
Balance of this Certificate: $[_]
Pass-Through Rate: LIBOR + 3.000% Servicer: Xxxxxx Loan Servicing LP
Date of Pooling and Servicing Agreement Trustee: JPMorgan Chase Bank
and Cut-off Date: March 1, 2004
First Distribution Date: April 26, 2003 Final Scheduled Distribution Date:
October 25, 2032
Closing Date: March 30, 2004 CUSIP: 04542B GM 8
Original Class Certificate Principal ISIN No. US04542BGM81
Balance of the Class M-6 Certificates as of
the Closing Date: $2,227,000
No.
----
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS THAN
THE AMOUNT SHOWN ABOVE.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ASSET BACKED
FUNDING CORPORATION, THE SERVICER, THE TRUSTEE OR ANY OF THEIR RESPECTIVE
AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY
OF THE UNITED STATES.
This certifies that ___________ is the registered owner of a
Percentage Interest (obtained by dividing the Initial Certificate Principal
Balance of this Certificate by the Original Class Certificate Principal Balance
of the Class M-6 Certificates) in that certain beneficial ownership interest
evidenced by all the Class M-6 Certificates in the Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Asset Backed Funding Corporation (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Servicer and the Trustee, a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, the capitalized
terms used herein have the meanings assigned in the Agreement. This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which
C-7-2
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Business Day preceding the related Distribution
Date (the "Record Date"); provided, however, that if any such Certificate
becomes a Definitive Certificate, the Record Date for such Certificate shall be
the last Business Day of the month immediately preceding the month in which the
related Distribution Date occurs, from funds in the Distribution Account in an
amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to the Holders of Class
M-6 Certificates on such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Certificate Registrar
in writing at least five Business Days prior to the Record Date immediately
prior to such Distribution Date and is the registered owner of such Class M-6
Certificates, or by check mailed by first class mail to the address of the
Person entitled thereto, as such name and address shall appear on the
Certificate Register, provided that the Certificate Registrar may deduct a
reasonable wire transfer fee from any payment made by wire transfer.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.
The Class M-6 Pass-Through Rate will be a per annum rate equal to the
lesser of (i) the lesser of (a) One-Month LIBOR as of the related LIBOR
Determination Date, plus the Class M-6 Certificate Margin and (b) the Maximum
Cap Rate, and (ii) the Net WAC Cap.
This Certificate is one of a duly authorized issue of Certificates
designated as ABFC Asset-Backed Certificates of the Series specified on the face
hereof (herein called the "Certificates") and representing a Percentage Interest
in the Class M-6 Certificates.
The Class M-6 Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
This certificate is subordinated in right of payment to the Class X-0,
Xxxxx X-0, Class M-1, Class M-2, Class M-3, Class M-4 and Class M-5 Certificates
as described in the Agreement referred to herein.
C-7-3
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer and the Trustee
with the consent of the Holders of Certificates entitled to the Voting Rights
identified in the Agreement. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No transfer of this Certificate shall be made unless that transfer is
made pursuant to an effective registration statement under the 1933 Act and
effective registration or qualification under applicable state securities laws,
or is made in a transaction that does not require such registration or
qualification. In the event that a transfer is to be made without registration
or qualification, the Trustee shall require, in order to assure compliance with
such laws, either (i) in the case of a transfer made in reliance on Rule 144A
under the 1933 Act, that the proposed transferee delivers to the Trustee a
completed investment letter in substantially the form attached to the Agreement
as Exhibit J-2, or (ii) in the case of any other transfer, that the
Certificateholder desiring to effect the transfer and such Certificateholder's
prospective transferee each execute a representation letter in substantially the
forms of Exhibit L and Exhibit J-1 attached to the Agreement, respectively,
certifying to the Depositor and the Trustee the facts surrounding the transfer
as described in Section 5.02 of the Agreement, or as provided in the Agreement
the Depositor and the Trustee shall require an Opinion of Counsel satisfactory
to them that such transfer may be made without such registration or
qualification, which Opinion of Counsel shall not be an expense of the
Depositor, the Trustee or the Certificate Registrar, in their respective
capacities as such. None of the Depositor, the Certificate Registrar nor the
Trustee is obligated to register or qualify the Class of Certificates specified
on the face hereof under the 1933 Act or any other securities law or to take any
action not otherwise required under the Agreement to permit the transfer of such
Certificates without registration or qualification. Any such Certificateholder
desiring to effect such transfer shall, and does hereby agree to,
C-7-4
indemnify the Trustee, the Depositor, the Certificate Registrar and the Servicer
against any liability that may result if the transfer is not so exempt or is not
made in accordance with such federal and state laws.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Certificate Registrar may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee and the Certificate Registrar
and any agent of the Depositor, the Servicer, the Trustee or the Certificate
Registrar may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and none of the Depositor, the Servicer, the
Trustee, the Certificate Registrar nor any such agent shall be affected by
notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Pool
Balance at the time of purchase being 10% or less of the aggregate Pool Balance
as of the Cut-Off Date.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
C-7-5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
-------------------
JPMORGAN CHASE BANK,
as Trustee
By:
------------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class M-6 Certificates referred to in the
within-mentioned Agreement.
JPMORGAN CHASE BANK,
as Certificate Registrar
By:
------------------------------------
Authorized Signatory
Date of authentication:
--------------
C-7-6
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right
of survivorship and not as -------------------
tenants in common (State)
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) _____________________________________________
a Percentage Interest equal to ____% evidenced by the ABFC Asset-Backed
Certificates, Series 2004-AHL1, Class M-6 Certificate and hereby authorize(s)
the registration of transfer of such interest to assignee on the Certificate
Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
--------------------------------------------------------------------------------
Dated:
---------------------------------------
Signature by or on behalf of assignor
---------------------------------------
Signature Guaranteed
C-7-7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of _______________________________, account number ____________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by _______________________________________________,
the assignee named above, or ____________________________________, as its agent.
C-7-8
EXHIBIT C-8
FORM OF CLASS M-7 CERTIFICATES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS X-0, XXXXX
X-0, CLASS M-1, CLASS M-2, CLASS M-3, CLASS M-4, CLASS M-5 AND CLASS M-6
CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS BENEFICIAL
OWNERSHIP OF A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") AND CERTAIN OTHER
PROPERTY.
THIS CLASS M-7 CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES LAWS OF
ANY STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT
SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION THAT DOES
NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED, SECTION 4975 OF THE CODE OR ANY MATERIALLY SIMILAR PROVISIONS
OF APPLICABLE FEDERAL, STATE OR LOCAL LAW WILL BE REGISTERED.
C-8-1
ABFC ASSET-BACKED CERTIFICATES
SERIES 2004-AHL1, CLASS M-7
evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional fixed-rate and adjustable-rate
one- to four-family first lien mortgage loans formed and sold by
ASSET BACKED FUNDING CORPORATION
Series 2004-AHL1, Class M-7 Initial Certificate Principal
Balance of this Certificate: $[_]
Pass-Through Rate: LIBOR + 3.500% Servicer: Xxxxxx Loan Servicing LP
Date of Pooling and Servicing Agreement and Trustee: JPMorgan Chase Bank
Cut-off Date: March 1, 2004
First Distribution Date: April 26, 2003 Final Scheduled Distribution Date:
September 25, 2031
Closing Date: March 30, 2004 CUSIP: 04542B GN 6
Original Class Certificate Principal ISIN No. US04542BGN64
Balance of the Class M-7 Certificates as of
the Closing Date: $1,782,000
No.
---
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS THAN
THE AMOUNT SHOWN ABOVE.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ASSET BACKED
FUNDING CORPORATION, THE SERVICER, THE TRUSTEE OR ANY OF THEIR RESPECTIVE
AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY
OF THE UNITED STATES.
This certifies that ___________ is the registered owner of a
Percentage Interest (obtained by dividing the Initial Certificate Principal
Balance of this Certificate by the Original Class Certificate Principal Balance
of the Class M-7 Certificates) in that certain beneficial ownership interest
evidenced by all the Class M-7 Certificates in the Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Asset Backed Funding Corporation (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Servicer and the Trustee, a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, the capitalized
terms used herein have the meanings assigned in the Agreement. This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which
C-8-2
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Business Day preceding the related Distribution
Date (the "Record Date"); provided, however, that if any such Certificate
becomes a Definitive Certificate, the Record Date for such Certificate shall be
the last Business Day of the month immediately preceding the month in which the
related Distribution Date occurs, from funds in the Distribution Account in an
amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to the Holders of Class
M-7 Certificates on such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Certificate Registrar
in writing at least five Business Days prior to the Record Date immediately
prior to such Distribution Date and is the registered owner of such Class M-7
Certificates, or by check mailed by first class mail to the address of the
Person entitled thereto, as such name and address shall appear on the
Certificate Register, provided that the Certificate Registrar may deduct a
reasonable wire transfer fee from any payment made by wire transfer.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.
The Class M-7 Pass-Through Rate will be a per annum rate equal to the
lesser of (i) the lesser of (a) One-Month LIBOR as of the related LIBOR
Determination Date, plus the Class M-7 Certificate Margin and (b) the Maximum
Cap Rate, and (ii) the Net WAC Cap.
This Certificate is one of a duly authorized issue of Certificates
designated as ABFC Asset-Backed Certificates of the Series specified on the face
hereof (herein called the "Certificates") and representing a Percentage Interest
in the Class M-7 Certificates.
The Class M-7 Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
This certificate is subordinated in right of payment to the Class X-0,
Xxxxx X-0, Class M-1, Class M-2, Class M-3, Class M-4, Class M-5 and Class M-6
Certificates as described in the Agreement referred to herein.
C-8-3
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer and the Trustee
with the consent of the Holders of Certificates entitled to the Voting Rights
identified in the Agreement. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No transfer of this Certificate shall be made unless that transfer is
made pursuant to an effective registration statement under the 1933 Act and
effective registration or qualification under applicable state securities laws,
or is made in a transaction that does not require such registration or
qualification. In the event that a transfer is to be made without registration
or qualification, the Trustee shall require, in order to assure compliance with
such laws, either (i) in the case of a transfer made in reliance on Rule 144A
under the 1933 Act, that the proposed transferee delivers to the Trustee a
completed investment letter in substantially the form attached to the Agreement
as Exhibit J-2, or (ii) in the case of any other transfer, that the
Certificateholder desiring to effect the transfer and such Certificateholder's
prospective transferee each execute a representation letter in substantially the
forms of Exhibit L and Exhibit J-1 attached to the Agreement, respectively,
certifying to the Depositor and the Trustee the facts surrounding the transfer
as described in Section 5.02 of the Agreement, or as provided in the Agreement
the Depositor and the Trustee shall require an Opinion of Counsel satisfactory
to them that such transfer may be made without such registration or
qualification, which Opinion of Counsel shall not be an expense of the
Depositor, the Trustee or the Certificate Registrar, in their respective
capacities as such. None of the Depositor, the Certificate Registrar nor the
Trustee is obligated to register or qualify the Class of Certificates specified
on the face hereof under the 1933 Act or any other securities law or to take any
action not otherwise required under the Agreement to permit the transfer of such
Certificates without registration or qualification. Any such Certificateholder
desiring to effect such transfer shall, and does hereby agree to,
C-8-4
indemnify the Trustee, the Depositor, the Certificate Registrar and the Servicer
against any liability that may result if the transfer is not so exempt or is not
made in accordance with such federal and state laws.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Certificate Registrar may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee and the Certificate Registrar
and any agent of the Depositor, the Servicer, the Trustee or the Certificate
Registrar may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and none of the Depositor, the Servicer, the
Trustee, the Certificate Registrar nor any such agent shall be affected by
notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Pool
Balance at the time of purchase being 10% or less of the aggregate Pool Balance
as of the Cut-Off Date.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
C-8-5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
-------------------
JPMORGAN CHASE BANK,
as Trustee
By:
------------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class M-7 Certificates referred to in the
within-mentioned Agreement.
JPMORGAN CHASE BANK,
as Certificate Registrar
By:
------------------------------------
Authorized Signatory
Date of authentication:
--------------------
C-8-6
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
(Cust)(Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right
of survivorship and not as -------------------
tenants in common (State)
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) _____________________________________________
a Percentage Interest equal to ____% evidenced by the ABFC Asset-Backed
Certificates, Series 2004-AHL1, Class M-7 Certificate and hereby authorize(s)
the registration of transfer of such interest to assignee on the Certificate
Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
--------------------------------------------------------------------------------
Dated:
----------------------------------------
Signature by or on behalf of assignor
----------------------------------------
Signature Guaranteed
C-8-7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of ______________________________, account number _____________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by _______________________________________________,
the assignee named above, or ________________________________________, as its
agent.
C-8-8
EXHIBIT C-9
FORM OF CLASS CE CERTIFICATES
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS BENEFICIAL
OWNERSHIP OF A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") AND CERTAIN OTHER
PROPERTY.
THIS CLASS CE CERTIFICATE IS SUBORDINATE TO THE CLASS A AND CLASS M CERTIFICATES
OF THIS SERIES TO THE EXTENT DESCRIBED HEREIN AND IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
THIS CLASS CE CERTIFICATE WILL NOT BE ENTITLED TO PAYMENTS UNTIL SUCH TIME AS
DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CLASS CE CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES LAWS OF
ANY STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT
SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION THAT DOES
NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED, SECTION 4975 OF THE CODE OR ANY MATERIALLY SIMILAR PROVISIONS
OF APPLICABLE FEDERAL, STATE OR LOCAL LAW WILL BE REGISTERED EXCEPT AS PROVIDED
IN THE POOLING AND SERVICING AGREEMENT.
C-9-1
ABFC ASSET-BACKED CERTIFICATES
SERIES 2004-AHL1, CLASS CE
evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional fixed-rate and adjustable-rate
one- to four-family first lien mortgage loans formed and sold by
ASSET BACKED FUNDING CORPORATION
Series 2004-AHL1, Class CE Servicer: Xxxxxx Loan Servicing LP
Date of Pooling and Servicing Agreement Trustee: JPMorgan Chase Bank
and Cut-off Date: March 1, 2004
First Distribution Date: April 26, 2004 Closing Date: March 30, 2004
No.
---
Percentage Interest: 100%
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ASSET BACKED
FUNDING CORPORATION, THE SERVICER, THE TRUSTEE OR ANY OF THEIR RESPECTIVE
AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY
OF THE UNITED STATES.
This certifies that _______________ is the registered owner of a
Percentage Interest set forth above in that certain beneficial ownership
interest evidenced by all the Class CE Certificates in the Trust Fund created
pursuant to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Asset Backed Funding Corporation (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Servicer and the Trustee, a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, the capitalized
terms used herein have the meanings assigned in the Agreement. This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month in which the related Distribution Date occurs (the "Record
Date"), from funds in the Distribution Account in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class CE Certificates on such Distribution
Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately
C-9-2
available funds to the account of the Person entitled thereto if such Person
shall have so notified the Certificate Registrar in writing at least five
Business Days prior to the Record Date immediately prior to such Distribution
Date and is the registered owner of Class CE Certificates, or by check mailed by
first class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register, provided that the Certificate
Registrar may deduct a reasonable wire transfer fee from any payment made by
wire transfer. Notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as ABFC Mortgage Loan Asset-Backed Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
the Percentage Interest specified on the face hereof.
The Class CE Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer and the Trustee
with the consent of the Holders of Certificates entitled to the Voting Rights
identified in the Agreement. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are
C-9-3
exchangeable for new Certificates of the same Class in authorized denominations
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No transfer of this Certificate shall be made unless that transfer is
made pursuant to an effective registration statement under the 1933 Act and
effective registration or qualification under applicable state securities laws,
or is made in a transaction that does not require such registration or
qualification. In the event that a transfer is to be made without registration
or qualification, the Certificate Registrar shall require, in order to assure
compliance with such laws, either (i) that the Certificateholder desiring to
effect the transfer and such Certificateholder's prospective transferee each
execute a representation letter in the form described by the Agreement
certifying to the Certificate Registrar the facts surrounding the transfer, or
(ii) unless such transfer is made in reliance upon Rule 144A under the 1933 Act,
that the Depositor and the Certificate Registrar receive an Opinion of Counsel
satisfactory to them that such transfer may be made without such registration or
qualification, which Opinion of Counsel shall not be an expense of the
Depositor, the Trustee or the Certificate Registrar, in their respective
capacities as such. None of the Depositor, the Certificate Registrar or the
Trustee is obligated to register or qualify the Class of Certificates specified
on the face hereof under the 1933 Act or any other securities law or to take any
action not otherwise required under the Agreement to permit the transfer of such
Certificates without registration or qualification. Any such Certificateholder
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee, the Depositor, the Certificate Registrar and any 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 a Certificate or any interest therein may be made to
employee benefit plans and certain other retirement plans and arrangements,
including individual retirement accounts and annuities, Xxxxx plans and
collective investment funds and separate accounts in which such plans, accounts
or arrangements are invested that are subject to the fiduciary responsibility
provisions of ERISA, Section 4975 of the Code or any materially similar
provisions of applicable federal, state or local law (collectively, "Plans") or
any person who is directly or indirectly purchasing the Certificate or interest
therein on behalf of, as named fiduciary of, as trustee of, or with assets of a
Plan except as provided in the Pooling and Servicing Agreement.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee and the Certificate Registrar
and any agent of the Depositor, the Servicer, the Trustee or the Certificate
Registrar may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and none of the Depositor, the Servicer, the
Trustee, the Certificate Registrar nor any such agent shall be affected by
notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the
C-9-4
Trustee and required to be paid to them pursuant to the Agreement following the
earlier of (i) the final payment or other liquidation (or any advance with
respect thereto) of the last Mortgage Loan remaining in the Trust Fund, and (ii)
the purchase by the party designated in the Agreement at a price determined as
provided in the Agreement from the Trust Fund of all Mortgage Loans and all
property acquired in respect of such Mortgage Loans. The Agreement permits, but
does not require, the party designated in the Agreement to purchase from the
Trust Fund all Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Pool Balance at the time of
purchase being 10% or less of the Pool Balance as of the Cut-off Date.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assume no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
C-9-5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
--------------
JPMORGAN CHASE BANK,
as Trustee
By:
------------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class CE Certificates referred to in the
within-mentioned Agreement.
JPMORGAN CHASE BANK,
as Certificate Registrar
By:
-------------------------------------
Authorized Signatory
Date of Authentication:
--------------
C-9-6
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right
of survivorship and not as -------------------
tenants in common (State)
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) _____________________________________________
a Percentage Interest equal to ____% evidenced by the ABFC Asset-Backed
Certificates, Series 2004-AHL1, Class CE Certificate and hereby authorize(s) the
registration of transfer of such interest to assignee on the Certificate
Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
--------------------------------------------------------------------------------
Dated:
----------------------------------------
Signature by or on behalf of assignor
----------------------------------------
Signature Guaranteed
C-9-7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of _________________________, account number __________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to ______________________________________
This information is provided by _______________________________________________,
the assignee named above, or ________________________________________, as its
agent.
C-9-8
EXHIBIT C-10
FORM OF CLASS P CERTIFICATE
THIS CLASS P CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES LAWS OF
ANY STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT
SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION THAT DOES
NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED, SECTION 4975 OF THE CODE OR ANY MATERIALLY SIMILAR PROVISIONS
OF APPLICABLE FEDERAL, STATE OR LOCAL LAW WILL BE REGISTERED EXCEPT AS PROVIDED
IN THE POOLING AND SERVICING AGREEMENT.
C-10-1
ABFC ASSET-BACKED CERTIFICATES
SERIES 2004-AHL1, CLASS P
evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional fixed-rate and adjustable-rate
one- to four-family first lien mortgage loans formed and sold by
ASSET BACKED FUNDING CORPORATION
Series 2004-AHL1, Class P Servicer: Xxxxxx Loan Servicing LP
Date of Pooling and Servicing Trustee: JPMorgan Chase Bank
Agreement and Cut-off Date: March 1, 2004
First Distribution Date: April 26, 2004 Closing Date: March 30, 2004
No.
----
Percentage Interest: 100%
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ASSET BACKED
FUNDING CORPORATION, THE SERVICER, THE TRUSTEE OR ANY OF THEIR RESPECTIVE
AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY
OF THE UNITED STATES.
This certifies that ______________ is the registered owner of a
Percentage Interest set forth above in that certain beneficial ownership
interest evidenced by all the Class P Certificates in the Trust Fund created
pursuant to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Asset Backed Funding Corporation (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Servicer and the Trustee, a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, the capitalized
terms used herein have the meanings assigned in the Agreement. This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month in which the related Distribution Date occurs (the "Record
Date"), from Prepayment Charges, Transferor Prepayment Charge Payment Amounts
and Servicer Prepayment Charge Payment Amounts in the Distribution Account in an
amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to the Holders of Class P
Certificates on such Distribution Date pursuant to the Agreement.
C-10-2
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Certificate Registrar
in writing at least five Business Days prior to the Record Date immediately
prior to such Distribution Date and is the registered owner of Class P
Certificates, or by check mailed by first class mail to the address of the
Person entitled thereto, as such name and address shall appear on the
Certificate Register, provided that the Certificate Registrar may deduct a
reasonable wire transfer fee from any payment made by wire transfer.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as ABFC Asset-Backed Certificates of the Series specified on the face
hereof (herein called the "Certificates") and representing the Percentage
Interest specified on the face hereof.
The Class P Certificates are limited in right of payment to Prepayment
Charges received on the Mortgage Loans, Transferor Prepayment Charge Payment
Amounts and Servicer Prepayment Charge Payment Amounts, all as more specifically
set forth herein and in the Agreement. As provided in the Agreement, withdrawals
from the Collection Account and the Distribution Account may be made from time
to time for purposes other than distributions to Certificateholders, such
purposes including reimbursement of advances made, or certain expenses incurred,
with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer and the Trustee
with the consent of the Holders of Certificates entitled to the Voting Rights
identified in the Agreement. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As
C-10-3
provided in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest, as
requested by the Holder surrendering the same.
No transfer of this Certificate shall be made unless that transfer is
made pursuant to an effective registration statement under the 1933 Act and
effective registration or qualification under applicable state securities laws,
or is made in a transaction that does not require such registration or
qualification. In the event that a transfer is to be made without registration
or qualification, the Certificate Registrar shall require, in order to assure
compliance with such laws, either (i) that the Certificateholder desiring to
effect the transfer and such Certificateholder's prospective transferee each
execute a representation letter in the form described by the Agreement
certifying to the Certificate Registrar the facts surrounding the transfer, or
(ii) unless such transfer is made in reliance upon Rule 144A under the 1933 Act,
that the Depositor and the Certificate Registrar receive an Opinion of Counsel
satisfactory to them that such transfer may be made without such registration or
qualification, which Opinion of Counsel shall not be an expense of the
Depositor, the Trustee or the Certificate Registrar, in their respective
capacities as such. None of the Depositor, the Certificate Registrar or the
Trustee is obligated to register or qualify the Class of Certificates specified
on the face hereof under the 1933 Act or any other securities law or to take any
action not otherwise required under the Agreement to permit the transfer of such
Certificates without registration or qualification. Any such Certificateholder
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee, the Depositor, the Certificate Registrar and any 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 a Certificate or any interest therein may be made to
employee benefit plans and certain other retirement plans and arrangements,
including individual retirement accounts and annuities, Xxxxx plans and
collective investment funds and separate accounts in which such plans, accounts
or arrangements are invested that are subject to the fiduciary responsibility
provisions of ERISA, Section 4975 of the Code or any materially similar
provisions of applicable federal, state or local law (collectively, "Plans") or
any person who is directly or indirectly purchasing the Certificate or interest
therein on behalf of, as named fiduciary of, as trustee of, or with assets of a
Plan.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Certificate Registrar may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee and the Certificate Registrar
and any agent of the Depositor, the Servicer, the Trustee or the Certificate
Registrar may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and none of the Depositor, the Servicer, the
Trustee, the Certificate Registrar or any such agent shall be affected by notice
to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the
C-10-4
Trustee and required to be paid to them pursuant to the Agreement following the
earlier of (i) the final payment or other liquidation (or any advance with
respect thereto) of the last Mortgage Loan remaining in the Trust Fund, and (ii)
the purchase by the party designated in the Agreement at a price determined as
provided in the Agreement from the Trust Fund of all Mortgage Loans and all
property acquired in respect of such Mortgage Loans. The Agreement permits, but
does not require, the party designated in the Agreement to purchase from the
Trust Fund all Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Pool Balance at the time of
purchase being 10% or less of the Pool Balance as of the Cut-off Date.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
C-10-5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
--------------
JPMORGAN CHASE BANK,
as Trustee
By:
-------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class P Certificates referred to in the
within-mentioned Agreement.
JPMORGAN CHASE BANK,
as Certificate Registrar
By:
-------------------------------
Authorized Signatory
Date of Authentication:
------------------
C-10-6
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform
Gifts to Minors
Act
JT TEN - as joint tenants with right
of survivorship and not as ------------------
tenants in common (State)
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) ___________________________________________ a
Percentage Interest equal to ____% evidenced by the ABFC Asset-Backed
Certificates, Series 2004-AHL1, Class P Certificate and hereby authorize(s) the
registration of transfer of such interest to assignee on the Certificate
Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
--------------------------------------------------------------------------------
Dated:
-----------------------------------
Signature by or on behalf of
assignor
-----------------------------------
Signature Guaranteed
C-10-7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________________________
for the account of _______________________________, account number ____________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________
This information is provided by _______________________________________________,
the assignee named above, or ____________________________________, as its agent.
C-10-8
EXHIBIT D
MORTGAGE LOAN SCHEDULE
[On File with Underwriters' Counsel]
D-1
EXHIBIT E
FORM OF REQUEST FOR RELEASE
To: JPMorgan Chase Bank
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxx 00000
Attn: Institutional Trust Services
Re: Pooling and Servicing Agreement, dated as of March 1, 2004, among
Asset Backed Funding Corporation, as depositor, Xxxxxx Loan Servicing
LP, as servicer and JPMorgan Chase Bank, as trustee.
All capitalized terms used herein shall have the meaning ascribed to them
in the Pooling and Servicing Agreement (the "Agreement") referenced above.
In connection with the administration of the Mortgage Loans held by you as
the Trustee pursuant to the Agreement, we request the release, and acknowledge
receipt, of the Mortgage File for the Mortgage Loan described below, for the
reason indicated.
Mortgagor's Name Address & Zip Code:
Mortgage Loan Number:
Reason for Requesting Documents (check one)
[_] 1. Mortgage Loan Paid in Full.
[_] 2. Foreclosure
[_] 3. Substitution
[_] 4. Other Liquidation (Repurchases, etc.)
[_] 5. Nonliquidation Reason: [_]
E-1
XXXXXX LOAN SERVICING LP,
as Servicer
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Date:
-----------------------------
Acknowledgment of Documents returned to the Trustee:
JPMORGAN CHASE BANK,
as Trustee
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Date:
-----------------------------
E-1
EXHIBIT F-1
FORM OF INITIAL CERTIFICATION
, 20
---------- --
Asset Backed Funding Corporation
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Xxxxxx Loan Servicing LP
0000 Xxxx Xxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Re: ABFC Asset-Backed Certificates, Series 2004-AHL1
Ladies and Gentlemen:
The undersigned, as Trustee, hereby certifies that, as except as noted on
the schedule of exceptions attached hereto as Schedule A, as to each Mortgage
Loan listed on the Mortgage Loan Schedule (other than any Mortgage Loan paid in
full or any Mortgage Loan listed on the attachment hereto) it has reviewed the
Mortgage Files and has determined that (i) all documents required to be
delivered to it pursuant to Section 2.01(a), (b), (c), (d) and (e) of the
Pooling and Servicing Agreement, dated as of March 1, 2004, among Asset Backed
Funding Corporation, as depositor, Xxxxxx Loan Servicing LP, as servicer and the
undersigned, as trustee (the "Agreement") are in its possession, and if
indicated as applicable in a separate writing delivered to the Trustee, that all
documents delivered to it pursuant to Section 2.01(f) of the Agreement are in
its possession; (ii) such documents have been reviewed by it and appear regular
on their face and related to such Mortgage Loan, (iii) each Mortgage Note has
been endorsed as provided in Section 2.01(a) of the Agreement and each Mortgage
has been assigned in accordance with Section 2.01(c) and (d) of the Agreement
and (iv) based on its examination of the documents in the Mortgage File and only
as to such documents, the Mortgage Loan information attached hereto as Schedule
B set forth for each Mortgage Loan on the related Mortgage Loan Schedule with
respect to such Mortgage Loan accurately reflects information set forth in the
related Mortgage File. The Trustee makes no representations as to (i) the
validity, legality, enforceability, sufficiency, due authorization or
genuineness of any of the documents contained in each Mortgage File or of any of
the Mortgage Loans or (ii) the collectability, insurability, effectiveness or
suitability of any such Mortgage Loan.
This Initial Certification is not divisible or negotiable.
The Trustee will accept and act on instructions with respect to the
Mortgage Loans subject hereto upon surrender of this Initial Certification at
its office at 0000 Xxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxx, Xxxxx 00000, Attention:
Institutional Trust Services.
F-1-1
Capitalized terms used herein shall have the meaning ascribed to them
in the Agreement.
JPMORGAN CHASE BANK,
as Trustee
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
F-1-2
Schedule A - to Initial Certification
EXCEPTIONS
F-1-3
Schedule B - to Initial Certification
MORTGAGE LOAN INFORMATION
1. Loan Identification Number
2. Mortgagor's Name
3. State and Zip Code of Mortgaged Property
4. Initial Mortgage Interest Rate
5. Original Principal Balance
6. Scheduled Maturity Date
7. Initial Monthly Payment
8. Initial Payment Date
9. Gross Margin (for Adjustable Rate Mortgage Loans)
10. Initial Adjustment Date (for Adjustable Rate Mortgage Loans)
11. Maximum Mortgage Interest Rate (for Adjustable Rate Mortgage Loans)
12. Minimum Mortgage Interest Rate (for Adjustable Rate Mortgage Loans)
13. Periodic Interest Rate (for Adjustable Rate Mortgage Loans)
F-1-4
EXHIBIT F-2
FORM OF FINAL CERTIFICATION
, 20
---------- --
Asset Backed Funding Corporation
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Xxxxxx Loan Servicing LP
0000 Xxxx Xxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Re: ABFC Asset-Backed Certificates, Series 2004-AHL1
Ladies and Gentlemen:
The undersigned, as Trustee, hereby certifies that, as except as noted on
the schedule of exceptions attached hereto as Schedule A, as to each Mortgage
Loan listed on the Mortgage Loan Schedule (other than any Mortgage Loan paid in
full or any Mortgage Loan listed on the attachment hereto) it has reviewed the
Mortgage Files and has determined that (i) all documents required to be
delivered to it pursuant to Section 2.01(a), (b), (c), (d) and (e) of the
Pooling and Servicing Agreement, dated as of March 1, 2004, among Asset Backed
Funding Corporation, as depositor, Xxxxxx Loan Servicing LP, as servicer and the
undersigned, as trustee (the "Agreement") are in its possession, and if
indicated as applicable in a separate writing delivered to the Trustee, that all
documents delivered to it pursuant to Section 2.01(f) of the Agreement are in
its possession; (ii) such documents have been reviewed by it and appear regular
on their face and related to such Mortgage Loan, (iii) each Mortgage Note has
been endorsed as provided in Section 2.01(a) of the Agreement and each Mortgage
has been assigned in accordance with Section 2.01(c) and (d) of the Agreement
and (iv) based on its examination of the documents in the Mortgage File and only
as to such documents, the Mortgage Loan information attached hereto as Schedule
B set forth for each Mortgage Loan on the related Mortgage Loan Schedule with
respect to such Mortgage Loan accurately reflects information set forth in the
related Mortgage File. The Trustee makes no representations as to (i) the
validity, legality, enforceability, sufficiency, due authorization or
genuineness of any of the documents contained in each Mortgage File or of any of
the Mortgage Loans or (ii) the collectability, insurability, effectiveness or
suitability of any such Mortgage Loan.
This Final Certification is not divisible or negotiable.
The Trustee will accept and act on instructions with respect to the
Mortgage Loans subject hereto upon surrender of this Final Certification at its
office at 0000 Xxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxx, Xxxxx 00000, Attention:
Institutional Trust Services.
F-2-1
Capitalized terms used herein shall have the meaning ascribed to them
in the Agreement.
JPMORGAN CHASE BANK,
as Trustee
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
F-2-2
Schedule A - to Final Certification
EXCEPTIONS
F-2-3
Schedule B - to Final Certification
MORTGAGE LOAN INFORMATION
1. Loan Identification Number
2. Mortgagor's Name
3. State and Zip Code of Mortgaged Property
4. Initial Mortgage Interest Rate
5. Original Principal Balance
6. Scheduled Maturity Date
7. Initial Monthly Payment
8. Initial Payment Date
9. Gross Margin (for Adjustable Rate Mortgage Loans)
10. Initial Adjustment Date (for Adjustable Rate Mortgage Loans)
11. Maximum Mortgage Interest Rate (for Adjustable Rate Mortgage Loans)
12. Minimum Mortgage Interest Rate (for Adjustable Rate Mortgage Loans)
13. Periodic Interest Rate (for Adjustable Rate Mortgage Loans)
F-2-4
EXHIBIT G
MORTGAGE LOAN PURCHASE AGREEMENT
[On File with Underwriters' Counsel]
G-1
EXHIBIT H
FORM OF AFFIDAVIT OF LOST NOTE
I, ________________ being duly sworn, do hereby state under oath that:
1. I, as _______________ [title] of Bank of America, N.A., (the "Seller"), am
authorized to make this Affidavit on behalf of the Seller.
2. The Seller is the current payee under the following described mortgage note
(the Note"):
Loan No: ((LoanNumber))
Borrower(s): ((BorrowersNames))
Original Amount: $((LoanAmt))
Rate of Interest: ((InterestRate))%
Address of Mortgaged Property: ((Address)), ((City)), ((State)) ((Zip))
3. The Note was not located after a thorough and diligent search.
4. Attached hereto is a true and correct copy of the Note, endorsed in blank
by Lender.
5. The Seller hereby agrees to indemnify and hold harmless, its successors,
and assigns, against any loss, from the unavailability of the original
Note, provided that in no event shall the Seller be liable for special or
consequential damages with respect to the foregoing, including but not
limited to, any claim for lost profits.
EXECUTED THIS ___ day of ______, on
behalf of the Seller by:
-----------------------------------
[Name]
On ____ day of _____________, before me appeared [_______] to me personally
known, who being, duly sworn did say that [he/she] is the [Vice President] of
[Asset Backed Funding Corporation], and that said Affidavit of Lost Note was
signed and sealed on behalf of such corporation and said [_______] acknowledged
this instrument to be the free act of deed of said corporation.
-----------------------------------------------
Notary Public in and for the State of [_______]
My Commission expires:
------------------
H-1
EXHIBIT I
FORM OF ERISA REPRESENTATION
[DATE]
Asset Backed Funding Corporation
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
JPMorgan Chase Bank
0 Xxx Xxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Institutional Trust Services/Global Debt
Re: ABFC Mortgage Loan Asset-Backed Certificates, Series 2004-AHL1
Ladies and Gentlemen:
The undersigned is a _______________ of _________________________ (the
"Transferee"), a ____________________ organized and existing under the laws of
the ____________________, on behalf of which he makes this affidavit.
The Transferee hereby acknowledges that under the terms of the Pooling and
Servicing Agreement (the "Agreement") dated as of March 1, 2004, among Asset
Backed Funding Corporation, as depositor (the "Depositor"), Xxxxxx Loan
Servicing LP, as servicer, and JPMorgan Chase Bank, as trustee (the "Trustee"),
no transfer of the ERISA-Restricted Certificates shall be permitted to be made
to any person unless the Depositor and the Certificate Registrar (as defined in
the Agreement) have received a certificate from such transferee in the form
hereof.
The Transferee either (x) (i) is not an employee benefit plan subject to Section
406 or Section 407 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or Section 4975 of the Internal Revenue Code of 1986, as
amended (the "Code"), the Trustee of any such plan or a person acting on behalf
of any such plan nor a person using the assets of any such plan or (ii) (except
in the case of the Class P, Class CE, Class R or Class RX Certificates) (1) is
an insurance company which is purchasing such Certificates with funds contained
in an "insurance company general account" (as such term is defined in Section
V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60"), (2) there
is no plan with respect to which the amount of such general account's reserves
and liabilities for the contract(s) held by or on behalf of such plan and all
other plans maintained by the same employer (or affiliate thereof as defined in
Section V(a)(1) of PTCE 95-60) or by the same employee organization exceeds 10%
of the total of all reserves and liabilities of such general account (as such
amounts are determined under Section I(a) of PTCE 95-60) at the date of
acquisition and (3) all plans that have an interest in such general account are
plans to which PTCE 95-60 applies or (y) (except in the case of a Class R or a
Class RX Certificate) shall deliver to the Certificate Registrar and the
Depositor an opinion of counsel (a "Benefit Plan Opinion") satisfactory to the
Certificate Registrar, and upon
I-1
which the Certificate Registrar and the Depositor shall be entitled to rely, to
the effect that the purchase or holding of such Certificate by the Transferee
will not result in the assets of the Trust Fund being deemed to be plan assets,
will not be subject to the prohibited transaction provisions of ERISA or the
Code, and will not subject the Trustee or the Depositor to any obligation in
addition to those undertaken by such entities in the Agreement, which opinion of
counsel shall not be an expense of the Trustee or the Depositor.
Capitalized terms used but not defined herein shall have the meanings
ascribed to such terms in the Agreement.
[SIGNATURE PAGE FOLLOWS]
I-2
IN WITNESS WHEREOF, the Transferee has executed this certificate.
-----------------------------------
[Transferee]
By:
-------------------------------
Name:
Title:
I-3
EXHIBIT J-1
FORM OF INVESTMENT LETTER (NON-RULE 144A)
[DATE]
Asset Backed Funding Corporation
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
JPMorgan Chase Bank
0 Xxx Xxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Institutional Trust Services/Global Debt
Re: ABFC Asset-Backed Certificates, Series 2004-AHL1
Ladies and Gentlemen:
In connection with our acquisition of the ABFC Asset-Backed
Certificates, Series 2004-AHL1 (the "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 "institutional
accredited investor," meaning an "accredited investor," as defined in
subparagraphs (1), (2), (3) or (7) of the definition of "accredited investor"
set forth in Rule 501(a) 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)
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), (e) we agree that the Certificates must be
held indefinitely by us and we acknowledge that we are able to bear the economic
risk of investment in the Certificates, (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, (g) we will not sell, transfer or otherwise dispose of any Certificates
unless (1) such sale, transfer or other disposition is made pursuant to an
effective registration statement under the Act or is exempt from such
registration requirements, and if requested, we will at our expense provide an
opinion of counsel satisfactory to the addressees of this Certificate that such
sale, transfer or other disposition may be made pursuant to an exemption from
the Act, (2) the purchaser or transferee of such Certificate has executed and
delivered to you a certificate to substantially the same effect as this
certificate, and (3) the purchaser or transferee has otherwise complied with any
conditions for transfer set forth
J-1-1
in the Pooling and Servicing Agreement and (h) we acknowledge that the
Certificates will bear a legend setting forth the applicable restrictions on
transfer.
Very truly yours,
[NAME OF TRANSFEREE]
By:
----------------------
Name:
--------------------
Title:
-------------------
X-0-0
XXXXXXX X-0
FORM OF INVESTMENT LETTER (RULE 144A)
[DATE]
Asset Backed Funding Corporation
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
JPMorgan Chase Bank
0 Xxx Xxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Institutional Trust Services/Global Debt
Re: ABFC Asset-Backed Certificates, Series 2004-AHL1
Ladies and Gentlemen:
In connection with our acquisition of the ABFC Asset-Backed
Certificates, Series 2004-AHL1 (the "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 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, (c)
we have not, nor has anyone acting on our behalf offered, transferred, pledged,
sold or otherwise disposed of the Certificates, any interest in the Certificates
or any other similar security to, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Certificates, any interest in the
Certificates or any other similar security from, or otherwise approached or
negotiated with respect to the Certificates, any interest in the Certificates or
any other similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or taken
any other action, that would constitute a distribution of the Certificates under
the Securities Act or that would render the disposition of the Certificates a
violation of Section 5 of the Securities Act or require registration pursuant
thereto, nor will act, nor has authorized or will authorize any person to act,
in such manner with respect to the Certificates, (d) 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, and who executes a certification in the form of this letter and a
J-2-1
certification in the form of either Annex 1 or Annex 2 attached hereto, or (ii)
pursuant to another exemption from registration under the Securities Act.
Very truly yours,
[NAME OF TRANSFEREE]
By:
----------------------
Name:
--------------------
Title:
-------------------
X-0-0
XXXXX 0 XX XXXXXXX X-0
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees 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:
i. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
ii. In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A ("Rule
144A") under the Securities Act of 1933, as amended (the "1933 Act") because (i)
the Buyer owned and/or invested on a discretionary basis $_____(1) in securities
(except for the excluded securities referred to below) as of the end of the
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 as
defined in Section 3(a)(2) of the 1933 Act 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 as of a date not more than 16 months preceding
the date of this certification in the case of a U.S. bank, and not
more than 18 months preceding the date of this certification in the
case of a foreign bank or equivalent institution, a copy of which
financial statements are 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 referenced in Section 3(a)(5)(A) of the 1933
Act, which is supervised and examined by a State or Federal authority
having supervisory authority 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, as of a date not more than 16
months preceding the date of this certification in the case of a U.S.
bank, and
----------
1 Buyer must own and/or invest on a discretionary basis at least $100,000,000 in
securities unless Buyer is a dealer, and, in that case, Buyer must own and/or
invest on a discretionary basis at least $10,000,000 in securities.
J-2-3
not more than 18 months preceding the date of this certification in
the case of a foreign bank or equivalent institution, a copy of which
financial statements are attached hereto.
___ Broker-dealer. The Buyer is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934, as amended.
___ Insurance Company. The Buyer is an insurance company, as defined
in Section 2(13) of the 1933 Act, whose primary and predominant
business activity is the writing of insurance or the reinsuring of
risks underwritten by insurance companies and which is subject to
supervision by the insurance commissioner or a similar official or
agency of a State, territory or the District of Columbia.
___ State or Local Plan. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any agency or
instrumentality of the State or its political subdivisions, for the
benefit of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security Act of
1974.
___ Investment Advisor. The Buyer is an investment advisor registered
under the Investment Advisors Act of 1940.
___ Small Business Investment Company. Buyer is a small business
investment company licensed by the U.S. Small Business Administration
under Section 301(c) or (d) of the Small Business Investment Act of
1958.
___ Business Development Company. Buyer is a business development
company as defined in Section 202(a)(22) of the Investment Advisors
Act of 1940.
___ Other. (Please supply a brief description of the entity and a
cross-reference to the paragraph and subparagraph under subsection
(a)( 1) of Rule 144A pursuant to which it qualifies. Note that
registered investment companies should complete Annex 2 rather than
this Annex 1.)
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
iii. 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) bank deposit notes and certificates of deposit, (iv) loan
participations, (v) repurchase agreements, (vi) securities owned but subject to
a repurchase agreement and (vii) currency, interest rate and commodity swaps.
For purposes of determining the aggregate amount of securities owned and/or
invested on a discretionary basis by the Buyer, the Buyer did not include any of
the securities referred to in this paragraph.
iv. 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,
J-2-4
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.
v. 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.
vi. Will the Buyer be purchasing the Certificates
------ -------
only for the Buyer's own account? YES NO
If the answer to the foregoing question is "NO," the Buyer agrees
that, in connection with any purchase of securities sold to the Buyer for the
account of a third party (including any separate account) in reliance on Rule
144A, the Buyer will only purchase for the account of a third party that at the
time is a "qualified institutional buyer" within the meaning of Rule 144A. In
addition, the Buyer agrees that the Buyer will not purchase securities for a
third party unless the Buyer has obtained a current representation letter from
such third party or taken other appropriate steps contemplated by Rule 144A to
conclude that such third party independently meets the definition of "qualified
institutional buyer" set forth in Rule 144A.
vii. 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.
[SIGNATURE ON FOLLOWING PAGE]
J-2-5
--------------------------
Print Name of Buyer
By:
----------------------
Name:
Title:
Date:
--------------------
X-0-0
XXXXX 0 XX XXXXXXX X-0
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees That are Registered Investment Companies]
The undersigned (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 ("Rule
144A") under the Securities Act of 1933, as amended (the "1933 Act") because
Buyer is part of a Family of Investment Companies (as defined below), is such an
officer of the Adviser.
2. 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 (the "1940 Act") 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 in paragraph 4 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 in paragraph 4 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 in paragraph 4 below) as of the end of the
Buyer's most recent fiscal year (such amount being calculated in
accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein means two
or more Registered Investment Companies, except for a unit investment trust
whose assets consist solely of shares of one or more Registered Investment
Companies (provided that each series of a "series company," as defined in Rule
18f-2 under the 1940 Act, shall be deemed to be a separate investment company)
that have the same investment adviser (or, in the case of unit investment
trusts, the same depositor) or investment advisers (or depositors) 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).
J-2-7
4. 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) bank deposit notes and certificates
of deposit, (iii) loan participations, (iv) repurchase agreements, (v)
securities owned but subject to a repurchase agreement and (vi) 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, or owned by the Buyer's Family of Investment Companies, the securities
referred to in this paragraph were excluded.
5. The Buyer is familiar with Rule 144A and understands that the parties to
which this certification is being made are relying and will continue to rely on
the statements made herein because one or more sales to the Buyer will be in
reliance on Rule I 44A.
Will the Buyer be purchasing the Certificates only for the
---- ----
Yes No Buyer's own account?
6. If the answer to the foregoing question is "NO," the Buyer agrees that,
in connection with any purchase of securities sold to the Buyer for the account
of a third party (including any separate account) in reliance on Rule 144A, the
Buyer will only purchase for the account of a third party that at the time is a
"qualified institutional buyer" within the meaning of Rule 144A. In addition,
the Buyer agrees that the Buyer will not purchase securities for a third party
unless the buyer has obtained a current representation letter from such third
party or taken other appropriate steps contemplated by Rule 144A to conclude
that such third party independently meets the definition of "qualified
institutional buyer" set forth in Rule 144A.
7. The undersigned will notify the parties to which this certification is
made of any changes in the information and conclusions herein. Until such
notice, 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:
------------------------
J-2-8
EXHIBIT K
FORM OF RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT
ABFC ASSET-BACKED CERTIFICATES, SERIES 2004-AHL1
STATE OF )
)
COUNTY OF ) ss.:
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 the Class [R/RX] Certificates (the
"Certificates") issued pursuant to the Pooling and Servicing Agreement, (the
"Agreement"), relating to the above-referenced Certificates, among Asset Backed
Funding Corporation, as depositor, Xxxxxx Loan Servicing LP, as servicer, and
JPMorgan Chase Bank, as trustee (the "Trustee"). Capitalized terms used, but not
defined herein 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, as of the date hereof, and will be, as of the
date of the Transfer, a Permitted Transferee. The Transferee is acquiring its
Ownership Interest in the Certificates either (i) for its own account or (ii) as
nominee, trustee or agent for another Person and has attached hereto an
affidavit from such Person in substantially the same form as this affidavit. The
Transferee has no knowledge that any such affidavit is false.
3. The Transferee has been advised of, and understands that (i) a tax
will be imposed on Transfers of the Certificates 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 Certificates 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.)
K-1
5. The Transferee has reviewed the provisions of Section 5.02(d) of
the Agreement and understands the legal consequences of the acquisition of an
Ownership Interest in the Certificates 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(d) of the Agreement and the
restrictions noted on the face of the Certificates. 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
Certificates, 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 in this Exhibit K 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
Certificates.
8. The Transferee's taxpayer identification number is_____________ .
9. The Transferee is a U.S. Person as defined in the Agreement.
10. The Transferee is not an employee benefit plan that is subject to
ERISA or a plan that is subject to Section 4975 of the Code, nor are we acting
on behalf of such a plan.
11. The Transferee is aware that the Certificates may be a
"noneconomic residual interest" 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.
12. The Transferee has filed all required federal and state income tax
returns and has paid all federal and state income tax due and intends to file
and pay all such returns and taxes in the future.
13. The Transferee historically has paid its debts as they come due
and fully intends to be financially able to pay its debts, including any and all
tax liabilities, as they become due.
14. The Transferee understands that, as the holder of an Ownership
Interest in a Certificate, it may incur tax liabilities in excess of any cash
flows generated by such Ownership Interest and intends to pay all taxes
associated with holding such Ownership Interest as such taxes become due.
K-2
15. The Transferee agrees that it will not cause income from the
Certificate to be attributable to a foreign permanent establishment or fixed
base (within the meaning of an applicable income tax treaty) of the Transferee
or of another U.S. taxpayer.
K-3
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____.
K-4
EXHIBIT L
FORM OF TRANSFEROR CERTIFICATE
[DATE]
Asset Backed Funding Corporation
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
JPMorgan Chase Bank
0 Xxx Xxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Institutional Trust Services/Global Debt
Re: ABFC Asset-Backed Certificates, Series 2004-AHL1
Ladies and Gentlemen:
In connection with our disposition of the ABFC Asset-Backed Certificates, Series
2004-AHL1 Class P and Class CE (the "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 and (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.
Very truly yours,
[_____________________]
By:
--------------------------
Name:
------------------------
Title:
-----------------------
L-1
EXHIBIT M
MONTHLY INFORMATION PROVIDED BY SERVICER
1. With respect to the Mortgage Pool, the number and Principal Balances of all
Mortgage Loans which were the subject of Principal Prepayments during the
related Collection Period.
2. With respect to the Mortgage Pool, the amount of all curtailments which
were received during the related Collection Period.
3. With respect to the Mortgage Pool, the aggregate amount of principal
portion of all Monthly Payments received during the related Collection
Period.
4. With respect to the Mortgage Pool, the amount of interest received on the
Mortgage Loans during the related Collection Period.
5. With respect to the Mortgage Pool, the aggregate amount of the Advances
made and recovered with respect to such Distribution Date.
6. With respect to the Mortgage Pool, the delinquency and foreclosure
information and the amount of Mortgage Loan Losses during the related
Collection Period.
7. With respect to the Mortgage Pool, the weighted average maturity, the
weighted average Mortgage Interest Rate and the weighted average Net
Mortgage Interest Rate as of the last day of the Collection Period
preceding the related Accrual Period.
8. The Servicing Fees paid and Servicing Fees accrued during the related
Collection Period.
9. The amount of all payments or reimbursements to the Servicer paid or to be
paid since the prior Distribution Date (or in the case of the first
Distribution Date, since the Closing Date).
10. The Pool Balance as of the beginning and as of the end of the preceding
Collection Period.
11. With respect to the Mortgage Pool, the number of Mortgage Loans outstanding
at the beginning and at the end of the related Collection Period.
12. The aggregate interest accrued on the Mortgage Loans at their respective
Mortgage Interest Rates for the related Collection Period.
13. The amount deposited in the Collection Account which may not be withdrawn
therefrom pursuant to an Order of a United States Bankruptcy Court of
competent jurisdiction imposing a stay pursuant to Section 362 of U.S.
Bankruptcy Code.
14. The aggregate Realized Losses since the Cut-off Date as of the end of the
related Collection Period.
M-1
EXHIBIT N
FORM OF YIELD MAINTENANCE agreement
[On File with Underwriters' Counsel]
N-1
EXHIBIT O
[RESERVED]
O-1
EXHIBIT P
[RESERVED]
P-1
EXHIBIT Q
FORM OF XXXXXXXX-XXXXX CERTIFICATION TO BE
PROVIDED WITH FORM 10-K
ABFC 2004-AHL1 Asset-Backed Certificates
Series 2004-AHL1
I, [identify the certifying individual], certify, in connection with that
certain Pooling and Servicing Agreement (the "Pooling and Servicing Agreement"),
dated as of March 1, 2004, among Asset Backed Funding Corporation, as depositor
(the "Depositor"), Xxxxxx Loan Servicing LP, as servicer (the "Servicer"), and
JPMorgan Chase Bank, as trustee (the "Trustee"), that I am the senior officer of
the Depositor in charge of its securitizations, and that:
1. I have reviewed this annual report on Form 10-K, and all reports on Form
8-K containing distribution or servicing reports filed in respect of periods
included in the year covered by this annual report, of Asset Backed Funding
Corporation (the "Depositor") relating to the above-referenced trust;
2. Based on my knowledge, the information in these reports, taken as a
whole, does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading as of the
last day of the period covered by this annual report;
3. Based on my knowledge, the distribution or servicing information
required to be provided to the Trustee by the Servicer under the Pooling and
Servicing Agreement referred to above is included in these reports;
4. Based on my knowledge and upon the annual compliance statements included
in the report and required to be delivered to the Trustee in accordance with the
terms of the Pooling and Servicing Agreement, and except as disclosed in the
report, the Servicer has fulfilled its obligations under the Pooling and
Servicing Agreement; and
5. The reports disclose all significant deficiencies relating to the
Servicer's compliance with the minimum servicing standards based upon the report
provided by an independent public accountant, after conducting a review in
compliance with the Uniform Single Attestation Program for Mortgage Bankers or
similar standard as set forth in the Pooling and Servicing Agreement, that is
included in these reports.
In giving the certifications above, I have reasonably relied on the
information provided to me by the following unaffiliated parties: Xxxxxx Loan
Servicing LP, as Servicer, and JPMorgan Chase Bank, as Trustee.
Q-1
Capitalized terms used but not defined herein have the meanings ascribed to
them in the Pooling and Servicing Agreement.
Date:
-------------------------
By:
--------------------------
Name:
------------------------
Title:
-----------------------
Q-2
EXHIBIT R-1
FORM OF CERTIFICATION OF THE TRUSTEE
TO BE PROVIDED TO DEPOSITOR
ABFC 2004-AHL1 Trust (the "Trust")
Asset-Backed Certificates, Series 2004-AHL1
JPMorgan Chase Bank, as Trustee of the Trust (the "Trustee"), hereby
certifies to Asset Backed Funding Corporation (the "Depositor") and each Person,
if any, who "controls" the Depositor within the meaning of the Securities Act of
1933, as amended, and its officers, directors and affiliates, and with the
knowledge and intent that they will rely upon this certification, in connection
with that certain Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of March 1, 2004, among the Depositor, Xxxxxx Loan
Servicing LP, as servicer (the "Servicer"), and the Trustee, that:
1. The Trustee has reviewed the annual report on Form 10-K for the fiscal
year [___], and all reports on Form 8-K containing distribution reports filed in
respect of periods included in the year covered by that annual report, relating
to the above-referenced Trust;
2. Subject to paragraph (4), the distribution information in the
distribution reports contained in all monthly Form 8-K's included in the year
covered by the annual report on Form 10-K for the calendar year [____], taken as
a whole, does not contain any untrue statement of a material fact or omit to
state a material fact required by the Pooling and Servicing Agreement to be
included therein and necessary to make the statements made, in light of the
circumstances under which statements were made, not misleading as of the last
day of the period covered by that annual report;
3. The distribution information required to be provided by the Trustee
under the Pooling and Servicing Agreement is included in these reports; and
4. In compiling the distribution information and making the foregoing
certifications, the Trustee has relied upon information furnished to it by the
Servicer under the Pooling and Servicing Agreement. The Trustee shall have no
responsibility or liability for any inaccuracy in such reports resulting from
information so provided by the Servicer.
Capitalized terms used but not otherwise defined herein shall have the
meanings ascribed to them in the Pooling and Servicing Agreement.
Date:
------------------------
JPMorgan Chase Bank,
as Trustee
By:
--------------------------
Name:
------------------------
Title:
-----------------------
X-0-0
XXXXXXX X-0
FORM OF CERTIFICATION OF THE SERVICER
TO BE PROVIDED TO DEPOSITOR
ABFC 2004-AHL1 Asset-Backed Certificates
Series 2004-AHL1
I, Xxxxx X. Xxxxxx, Xx., President and Chief Executive Officer of Xxxxxx
Loan Servicing LP, as Servicer for the Trust (the "Servicer"), hereby certify to
Asset Backed Funding Corporation (the "Depositor"), JPMorgan Chase Bank (the
"Trustee"), and their respective officers, directors and affiliates, and with
the knowledge and intent that they will rely on this certification, pursuant to
Section 3.22(d) of that certain Pooling and Servicing Agreement (the "Pooling
and Servicing Agreement"), dated as of March 1, 2004, among the Depositor, the
Servicer and the Trustee, that:
1. Based on my knowledge, the servicing information submitted by the
Servicer to the Trustee, which is used in connection with the preparation of
reports on Form 8-K and the annual report on Form 10-K filed with the Securities
and Exchange Commission with respect to the ABFC 2004-AHL1 Trust (the "Trust"),
taken as a whole, does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements required by the
Pooling and Servicing Agreement made, in light of the circumstances under which
such statements were made, not misleading as of the date of this certification;
2. The servicing information required to be provided to the Trustee by the
Servicer under the Pooling and Servicing Agreement has been provided to the
Trustee;
3. I am responsible for reviewing the activities performed by the Servicer
under the Pooling and Servicing Agreement and based upon my knowledge and the
annual compliance review required by the Pooling and Servicing Agreement, and
except as disclosed in the annual compliance statement required to be delivered
to the Trustee in accordance with the terms of the Pooling and Servicing
Agreement (which has been so delivered to the Trustee), the Servicer has
fulfilled its obligations under the Pooling and Servicing Agreement; and
4. All significant deficiencies relating to the Servicer's compliance with
the minimum servicing standards for purposes of the report provided by an
independent public accountant, after conducting a review in compliance with the
Uniform Single Attestation Program for Mortgage Bankers or similar procedure, as
set forth in the Pooling and Servicing Agreement, have been disclosed to such
accountant and are included in such report.
Date:
-------------------------------
-------------------------------------
Xxxxx X. Xxxxxx, Xx.
President and Chief Executive Officer
R-2-1
EXHIBIT S
FORM OF POWER OF ATTORNEY
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO
XXXXXX LOAN SERVICING LP
0000 Xxxx Xxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Attn:
---------------------------------
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that JPMorgan Chase Bank, having its
principal place of business at 0 Xxx Xxxx Xxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, as Trustee (the "Trustee") pursuant to that Pooling and Servicing
Agreement among Asset Backed Funding Corporation (the "Depositor"), Xxxxxx Loan
Servicing LP (the "Servicer"), and the Trustee, dated as of March 1, 2004 (the
"Pooling and Servicing Agreement"), hereby constitutes and appoints the
Servicer, by and through the Servicer's officers, the Trustee's true and lawful
Attorney-in-Fact, in the Trustee's name, place and stead and for the Trustee's
benefit, in connection with all mortgage loans serviced by the Servicer pursuant
to the Pooling and Servicing Agreement for the purpose of performing all acts
and executing all documents in the name of the Trustee as may be customarily and
reasonably necessary and appropriate to effectuate the following enumerated
transactions in respect of any of the mortgages or deeds of trust (the
"Mortgages" and the "Deeds of Trust", respectively) and promissory notes secured
thereby (the "Mortgage Notes") for which the undersigned is acting as Trustee
for various certificateholders (whether the undersigned is named therein as
mortgagee or beneficiary or has become mortgagee by virtue of endorsement of the
Mortgage Note secured by any such Mortgage or Deed of Trust) and for which the
Servicer is acting as servicer, all subject to the terms of the Pooling and
Servicing Agreement.
This appointment shall apply to the following enumerated transactions
only:
1. The modification or re-recording of a Mortgage or Deed of Trust, where said
modification or re-recordings is for the purpose of correcting the Mortgage
or Deed of Trust to conform same to the original intent of the parties
thereto or to correct title errors discovered after such title insurance
was issued and said modification or re-recording, in either instance, does
not adversely affect the lien of the Mortgage or Deed of Trust as insured.
2. The subordination of the lien of a Mortgage or Deed of Trust to an easement
in favor of a public utility company of a government agency or unit with
powers of eminent domain; this section shall include, without limitation,
the execution of partial
S-1
satisfactions/releases, partial reconveyances or the execution or requests
to trustees to accomplish same.
3. The conveyance of the properties to the mortgage insurer, or the closing of
the title to the property to be acquired as real estate owned, or
conveyance of title to real estate owned.
4. The completion of loan assumption agreements.
5. The full satisfaction/release of a Mortgage or Deed of Trust or full
conveyance upon payment and discharge of all sums secured thereby,
including, without limitation, cancellation of the related Mortgage Note.
6. The assignment of any Mortgage or Deed of Trust and the related Mortgage
Note, in connection with the repurchase of the mortgage loan secured and
evidenced thereby.
7. The full assignment of a Mortgage or Deed of Trust upon payment and
discharge of all sums secured thereby in conjunction with the refinancing
thereof, including, without limitation, the assignment of the related
Mortgage Note.
8. With respect to a Mortgage or Deed of Trust, the foreclosure, the taking of
a deed in lieu of foreclosure, or the completion of judicial or
non-judicial foreclosure or termination, cancellation or rescission of any
such foreclosure, including, without limitation, any and all of the
following acts:
a. the substitution of trustee(s) serving under a Deed of Trust, in
accordance with state law and the Deed of Trust;
b. the preparation and issuance of statements of breach or
non-performance;
c. the preparation and filing of notices of default and/or notices of
sale;
d. the cancellation/rescission of notices of default and/or notices of
sale;
e. the taking of a deed in lieu of foreclosure; and
f. the preparation and execution of such other documents and performance
of such other actions as may be necessary under the terms of the
Mortgage, Deed of Trust or state law to expeditiously complete said
transactions in paragraphs 8.a. through 8.e., above.
The undersigned gives said Attorney-in-Fact full power and authority
to execute such instruments and to do and perform all and every act and thing
necessary and proper to carry into effect the power or powers granted by or
under this Limited Power of Attorney as fully as the undersigned might or could
do, and hereby does ratify and confirm to all that said Attorney-in-Fact shall
lawfully do or cause to be done by authority hereof.
Third parties without actual notice may rely upon the exercise of the
power granted under this Limited Power of attorney; and may be satisfied that
this Limited Power of
S-2
Attorney shall continue in full force and effect and has not been revoked unless
an instrument of revocation has been made in writing by the undersigned.
S-3
IN WITNESS WHEREOF, JPMorgan Chase Bank, as Trustee pursuant to that
Pooling and Servicing Agreement among the Depositor, the Servicer, and the
Trustee, dated as of March 1, 2004 (ABFC Asset-Backed Certificates, Series
2004-AHL1), has caused its corporate seal to be hereto affixed and these
presents to be signed and acknowledged in its name and behalf by
________________ its duly elected and authorized Vice President this _____ day
of ____________________, 200__.
-------------------------------------
as Trustee for ABFC Asset-Backed
Certificates, Series 2004-AHL1
By
----------------------------------
STATE OF
----------------------------------
COUNTY OF
---------------------------------
On ________________ _____, 200__, before me, the undersigned, a Notary
Public in and for said state, personally appeared ________________, Vice
President of ____________________ as Trustee for ______________________ Mortgage
Loan Asset Backed Certificates, Series 200__-___, personally known to me to be
the person whose name is subscribed to the within instrument and acknowledged to
me that he/she executed that same in his/her authorized capacity, and that by
his/her signature on the instrument the entity upon behalf of which the person
acted and executed the instrument.
WITNESS my hand and official seal.
(SEAL)
-----------------------------------
Notary Public
My Commission Expires
-------------
S-4
SCHEDULE I
XXXXXX LOAN SERVICING LP PREPAYMENT CHARGE SCHEDULE
[On File with Underwriters' Counsel]
Schedule I-1
