EXHIBIT 4.1
==============================================================================
CWABS, INC.,
Depositor
COUNTRYWIDE HOME LOANS, INC.,
Seller
PARK MONACO INC.,
Seller
PARK SIENNA LLC,
Seller
COUNTRYWIDE HOME LOANS SERVICING LP,
Master Servicer
THE BANK OF NEW YORK,
Trustee
and
THE BANK OF NEW YORK TRUST COMPANY, N.A.,
Co-Trustee
--------------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of November 1, 2006
--------------------------------------
ASSET-BACKED CERTIFICATES, SERIES 2006-21
Table of Contents
-----------------
Page
----
ARTICLE I.
DEFINITIONS
Section 1.01 Defined Terms..................................................................................10
Section 1.02 Certain Interpretive Provisions................................................................55
ARTICLE II.
CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES
Section 2.01 Conveyance of Mortgage Loans...................................................................55
Section 2.02 Acceptance by Trustee of the Mortgage Loans....................................................63
Section 2.03 Representations, Warranties and Covenants of the Master Servicer and the Sellers...............68
Section 2.04 Representations and Warranties of the Depositor................................................88
Section 2.05 Delivery of Opinion of Counsel in Connection with Substitutions and Repurchases................90
Section 2.06 Authentication and Delivery of Certificates....................................................91
Section 2.07 Covenants of the Master Servicer...............................................................91
ARTICLE III.
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01 Master Servicer to Service Mortgage Loans......................................................91
Section 3.02 Subservicing; Enforcement of the Obligations of Master Servicer................................93
Section 3.03 Rights of the Depositor, the Sellers, the Certificateholders, the NIM Insurer and the
Trustee in Respect of the Master Servicer......................................................94
Section 3.04 Trustee to Act as Master Servicer..............................................................95
Section 3.05 Collection of Mortgage Loan Payments; Certificate Account; Distribution Account;
Pre-Funding Account; Seller Shortfall Interest Requirement.....................................95
Section 3.06 Collection of Taxes, Assessments and Similar Items; Escrow Accounts............................99
Section 3.07 Access to Certain Documentation and Information Regarding the Mortgage Loans...................99
Section 3.08 Permitted Withdrawals from the Certificate Account, Distribution Account, Carryover
Reserve Fund and the Principal Reserve Fund...................................................100
Section 3.09 [Reserved]....................................................................................103
Section 3.10 Maintenance of Hazard Insurance...............................................................103
Section 3.11 Enforcement of Due-On-Sale Clauses; Assumption Agreements.....................................103
Section 3.12 Realization Upon Defaulted Mortgage Loans; Determination of Excess Proceeds and
Realized Losses; Repurchase of Certain Mortgage Loans.........................................105
Section 3.13 Co-Trustee to Cooperate; Release of Mortgage Files............................................108
Section 3.14 Documents, Records and Funds in Possession of Master Servicer to be Held for the
Trustee.......................................................................................109
Section 3.15 Servicing Compensation........................................................................110
i
Section 3.16 Access to Certain Documentation...............................................................110
Section 3.17 Annual Statement as to Compliance.............................................................110
Section 3.18 [Reserved]....................................................................................111
Section 3.19 [Reserved]....................................................................................111
Section 3.20 Prepayment Charges............................................................................111
Section 3.21 Swap Contract.................................................................................112
ARTICLE IV.
DISTRIBUTIONS AND ADVANCES BY THE MASTER SERVICER
Section 4.01 Advances; Remittance Reports..................................................................114
Section 4.02 Reduction of Servicing Compensation in Connection with Prepayment Interest Shortfalls.........116
Section 4.03 [Reserved]....................................................................................116
Section 4.04 Distributions.................................................................................116
Section 4.05 Monthly Statements to Certificateholders......................................................123
Section 4.06 Termination of the Mortgage Insurance Policy Issued by Mortgage Guaranty Insurance
Corporation...................................................................................125
Section 4.07 Carryover Reserve Fund........................................................................125
Section 4.08 Credit Comeback Excess Account................................................................126
Section 4.09 Swap Trust and Swap Account...................................................................127
Section 4.10 Final Maturity Reserve Trust and Final Maturity Reserve Fund..................................127
ARTICLE V.
THE CERTIFICATES
Section 5.01 The Certificates..............................................................................129
Section 5.02 Certificate Register; Registration of Transfer and Exchange of Certificates...................130
Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates.............................................135
Section 5.04 Persons Deemed Owners.........................................................................135
Section 5.05 Access to List of Certificateholders' Names and Addresses.....................................135
Section 5.06 Book-Entry Certificates.......................................................................136
Section 5.07 Notices to Depository.........................................................................137
Section 5.08 Definitive Certificates.......................................................................137
Section 5.09 Maintenance of Office or Agency...............................................................137
ARTICLE VI.
THE DEPOSITOR, THE MASTER SERVICER AND THE SELLERS
Section 6.01 Respective Liabilities of the Depositor, the Master Servicer and the Sellers..................138
Section 6.02 Merger or Consolidation of the Depositor, the Master Servicer or the Sellers..................138
Section 6.03 Limitation on Liability of the Depositor, the Sellers, the Master Servicer, the NIM
Insurer and Others............................................................................138
Section 6.04 Limitation on Resignation of Master Servicer..................................................139
ii
Section 6.05 Errors and Omissions Insurance; Fidelity Bonds................................................140
ARTICLE VII.
DEFAULT; TERMINATION OF MASTER SERVICER
Section 7.01 Events of Default.............................................................................140
Section 7.02 Trustee to Act; Appointment of Successor......................................................142
Section 7.03 Notification to Certificateholders............................................................144
ARTICLE VIII.
CONCERNING THE TRUSTEE AND THE CO-TRUSTEE
Section 8.01 Duties of Trustee.............................................................................144
Section 8.02 Certain Matters Affecting the Trustee.........................................................146
Section 8.03 Trustee Not Liable for Mortgage Loans.........................................................147
Section 8.04 Trustee May Own Certificates..................................................................147
Section 8.05 Master Servicer to Pay Trustee's Fees and Expenses............................................147
Section 8.06 Eligibility Requirements for Trustee..........................................................148
Section 8.07 Resignation and Removal of Trustee............................................................148
Section 8.08 Successor Trustee.............................................................................150
Section 8.09 Merger or Consolidation of Trustee............................................................150
Section 8.10 Appointment of Co-Trustee or Separate Trustee.................................................150
Section 8.11 Tax Matters...................................................................................152
Section 8.12 Co-Trustee....................................................................................155
Section 8.13 Access to Records of the Trustee..............................................................158
Section 8.14 Suits for Enforcement.........................................................................158
ARTICLE IX.
TERMINATION
Section 9.01 Termination upon Liquidation or Repurchase of all Mortgage Loans..............................159
Section 9.02 Final Distribution on the Certificates........................................................160
Section 9.03 Additional Termination Requirements...........................................................161
Section 9.04 Auction of the Mortgage Loans and REO Properties..............................................162
ARTICLE X.
MISCELLANEOUS PROVISIONS
Section 10.01 Amendment.....................................................................................166
Section 10.02 Recordation of Agreement; Counterparts........................................................168
Section 10.03 Governing Law.................................................................................168
Section 10.04 Intention of Parties..........................................................................168
Section 10.05 Notices.......................................................................................170
Section 10.06 Severability of Provisions....................................................................171
Section 10.07 Assignment....................................................................................171
Section 10.08 Limitation on Rights of Certificateholders....................................................171
Section 10.09 Inspection and Audit Rights...................................................................172
Section 10.10 Certificates Nonassessable and Fully Paid.....................................................172
iii
Section 10.11 Rights of NIM Insurer.........................................................................172
ARTICLE XI.
EXCHANGE ACT REPORTING
Section 11.01 Filing Obligations............................................................................174
Section 11.02 Form 10-D Filings.............................................................................174
Section 11.03 Form 8-K Filings..............................................................................175
Section 11.04 Form 10-K Filings.............................................................................175
Section 11.05 Xxxxxxxx-Xxxxx Certification..................................................................176
Section 11.06 Form 15 Filing................................................................................176
Section 11.07 Report on Assessment of Compliance and Attestation............................................177
Section 11.08 Use of Subservicers and Subcontractors........................................................178
Section 11.09 Amendments....................................................................................179
Section 11.10 Reconciliation of Accounts....................................................................179
Exhibits
--------
EXHIBIT A Forms of Certificates
EXHIBIT A-1 Form of Class 1-A Certificate
EXHIBIT A-2 Form of Class 2-A-1 Certificate
EXHIBIT A-3 Form of Class 2-A-2 Certificate
EXHIBIT A-4 Form of Class 2-A-3 Certificate
EXHIBIT A-5 Form of Class 2-A-4 Certificate
EXHIBIT A-6 Form of Class M-1 Certificate
EXHIBIT A-7 Form of Class M-2 Certificate
EXHIBIT A-8 Form of Class M-3 Certificate
EXHIBIT A-9 Form of Class M-4 Certificate
EXHIBIT A-10 Form of Class M-5 Certificate
EXHIBIT A-11 Form of Class M-6 Certificate
EXHIBIT A-12 Form of Class M-7 Certificate
EXHIBIT A-13 Form of Class M-8 Certificate
EXHIBIT A-14 Form of Class M-9 Certificate
EXHIBIT A-15 Form of Class B Certificate
EXHIBIT B Form of Class P Certificate
EXHIBIT C Form of Class C Certificate
EXHIBIT D Form of Class A-R Certificate
EXHIBIT E Form of Tax Matters Person Certificate
EXHIBIT F Mortgage Loan Schedule
EXHIBIT F-1 List of Mortgage Loans
EXHIBIT F-2 Mortgage Loans for which All or a Portion of a
Related Mortgage File is not Delivered to the Trustee
on or prior to the Closing Date
EXHIBIT G Forms of Certification of Trustee
EXHIBIT G-1 Form of Initial Certification of Trustee (Initial
Mortgage Loans)
EXHIBIT G-2 Form of Interim Certification of Trustee
EXHIBIT G-3 Form of Delay Delivery Certification
iv
EXHIBIT G-4 Form of Initial Certification of Trustee (Subsequent
Mortgage Loans)
EXHIBIT H Form of Final Certification of Trustee
EXHIBIT I Transfer Affidavit for Class A-R Certificates
EXHIBIT J-1 Form of Transferor Certificate for Class A-R
Certificates
EXHIBIT J-2 Form of Transferor Certificate for Private
Certificates
EXHIBIT K Form of Investment Letter (Non-Rule 144A)
EXHIBIT L Form of Rule 144A Letter
EXHIBIT M Form of Request for Document Release
EXHIBIT N Form of Request for File Release
EXHIBIT O Copy of Depository Agreement
EXHIBIT P Form of Subsequent Transfer Agreement
EXHIBIT Q [Reserved]
EXHIBIT R [Reserved]
EXHIBIT S-1 [Reserved]
EXHIBIT S-2 [Reserved]
EXHIBIT T Officer's Certificate with respect to Prepayments
EXHIBIT U Form of Swap Contract
EXHIBIT V-1 Form of Swap Contract Assignment Agreement
EXHIBIT V-2 Form of Swap Contract Administration Agreement
EXHIBIT W Form of Monthly Statement
EXHIBIT X-1 Form of Performance Certification (Subservicer)
EXHIBIT X-2 Form of Performance Certification (Trustee)
EXHIBIT Y Form of Servicing Criteria to be Addressed in
Assessment of Compliance Statement
EXHIBIT Z List of Item 1119 Parties
EXHIBIT AA Form of Xxxxxxxx-Xxxxx Certification (Replacement
Master Servicer)
SCHEDULE I Prepayment Charge Schedule and Prepayment Charge
Summary
SCHEDULE II Collateral Schedule
SCHEDULE III 40-Year Target Schedule
v
POOLING AND SERVICING AGREEMENT, dated as of November 1, 2006, by
and among CWABS, INC., a Delaware corporation, as depositor (the "Depositor"),
COUNTRYWIDE HOME LOANS, INC., a New York corporation, as seller ("CHL" or a
"Seller"), PARK MONACO INC., a Delaware corporation, as a seller ("Park Monaco"
or a "Seller"), PARK SIENNA LLC, a Delaware limited liability company, as a
seller ("Park Sienna" or a "Seller", and together with CHL and Park Monaco, the
"Sellers"), COUNTRYWIDE HOME LOANS SERVICING LP, a Texas limited partnership, as
master servicer (the "Master Servicer"), THE BANK OF NEW YORK, a New York
banking corporation, as trustee (the "Trustee"), and THE BANK OF NEW YORK TRUST
COMPANY, N.A., a national banking association, as co-trustee (the "Co-Trustee").
PRELIMINARY STATEMENT
The Depositor is the owner of the Trust Fund that is hereby conveyed
to the Trustee in return for the Certificates. The Trust Fund (excluding the
Credit Comeback Excess Account, the Carryover Reserve Fund and the assets held
in the Pre-Funding Account) for federal income tax purposes will consist of
three REMICs (the "Swap-IO REMIC," the "Strip REMIC" and the "Master REMIC").
Each Certificate, other than the Class A-R Certificate, will represent ownership
of one or more regular interests in the Master REMIC for purposes of the REMIC
Provisions. The Class A-R Certificate represents ownership of the sole class of
residual interest in the Swap-IO REMIC, the Strip REMIC and the Master REMIC.
The Master REMIC will hold as assets the several classes of uncertificated Strip
REMIC Interests (other than the STR-A-R Interest). Each Strip REMIC Interest
(other than the STR-A-R Interest) is hereby designated as a regular interest in
the Strip REMIC. The Strip REMIC will hold as assets the several classes of
uncertificated Swap-IO REMIC Interests (other than the SWR-A-R Interest). Each
Swap-IO REMIC Interest (other than the SWR-A-R Interest) is hereby designated as
a regular interest in the Swap-IO REMIC. The Swap-IO REMIC will hold as assets
all property of the Trust Fund (excluding the Credit Comeback Excess Account,
the Carryover Reserve Fund and the assets held in the Pre-Funding Account). The
latest possible maturity date of all REMIC regular interests created in this
Agreement shall be the Latest Possible Maturity Date.
None of the REMICs described herein shall hold any interest in the
Swap Trust, Swap Contract, Swap Account or Final Maturity Reserve Trust.
SWAP-IO REMIC:
The Swap-IO REMIC Interests will have the principal balances and
pass-through rates as set forth below.
Swap-IO REMIC Interest Initial Principal Balance(1) Pass-Through Rate
---------------------- ---------------------------- -----------------
SWR-1A $4,869,433.00 (2)
SWR-1B $4,869,433.00 (3)
SWR-2A $5,471,308.50 (2)
SWR-2B $5,471,308.50 (3)
SWR-3A $6,066,768.50 (2)
SWR-3B $6,066,768.50 (3)
SWR-4A $6,653,560.00 (2)
1
Swap-IO REMIC Interest Initial Principal Balance(1) Pass-Through Rate
---------------------- ---------------------------- -----------------
SWR-4B $6,653,560.00 (3)
SWR-5A $7,229,423.50 (2)
SWR-5B $7,229,423.50 (3)
SWR-6A $7,793,895.50 (2)
SWR-6B $7,793,895.50 (3)
SWR-7A $8,155,851.00 (2)
SWR-7B $8,155,851.00 (3)
SWR-8A $8,684,429.00 (2)
SWR-8B $8,684,429.00 (3)
SWR-9A $9,007,259.00 (2)
SWR-9B $9,007,259.00 (3)
SWR-10A $9,463,290.50 (2)
SWR-10B $9,463,290.50 (3)
SWR-11A $9,986,859.50 (2)
SWR-11B $9,986,859.50 (3)
SWR-12A $141,383,096.00 (2)
SWR-12B $141,383,096.00 (3)
SWR-13A $7,493,850.00 (2)
SWR-13B $7,493,850.00 (3)
SWR-14A $7,769,424.00 (2)
SWR-14B $7,769,424.00 (3)
SWR-15A $8,022,676.00 (2)
SWR-15B $8,022,676.00 (3)
SWR-16A $8,252,561.50 (2)
SWR-16B $8,252,561.50 (3)
SWR-17A $8,347,759.50 (2)
SWR-17B $8,347,759.50 (3)
SWR-18A $8,409,194.50 (2)
SWR-18B $8,409,194.50 (3)
SWR-19A $8,118,003.50 (2)
SWR-19B $8,118,003.50 (3)
SWR-20A $7,836,293.00 (2)
SWR-20B $7,836,293.00 (3)
SWR-21A $7,563,744.50 (2)
SWR-21B $7,563,744.50 (3)
SWR-22A $7,300,051.00 (2)
SWR-22B $7,300,051.00 (3)
SWR-23A $7,044,916.00 (2)
SWR-23B $7,044,916.00 (3)
SWR-24A $26,227,418.50 (2)
SWR-24B $26,227,418.50 (3)
SWR-25A $9,798,520.00 (2)
SWR-25B $9,798,520.00 (3)
SWR-26A $9,227,088.00 (2)
SWR-26B $9,227,088.00 (3)
2
Swap-IO REMIC Interest Initial Principal Balance(1) Pass-Through Rate
---------------------- ---------------------------- -----------------
SWR-27A $8,688,901.50 (2)
SWR-27B $8,688,901.50 (3)
SWR-28A $8,181,953.00 (2)
SWR-28B $8,181,953.00 (3)
SWR-29A $7,704,351.50 (2)
SWR-29B $7,704,351.50 (3)
SWR-30A $4,787,691.00 (2)
SWR-30B $4,787,691.00 (3)
SWR-31A $4,608,290.00 (2)
SWR-31B $4,608,290.00 (3)
SWR-32A $4,434,791.50 (2)
SWR-32B $4,434,791.50 (3)
SWR-33A $4,266,991.50 (2)
SWR-33B $4,266,991.50 (3)
SWR-34A $4,104,693.00 (2)
SWR-34B $4,104,693.00 (3)
SWR-35A $4,098,896.00 (2)
SWR-35B $4,098,896.00 (3)
SWR-36A $39,013,619.50 (2)
SWR-36B $39,013,619.50 (3)
SWR-37A $1,272,732.50 (2)
SWR-37B $1,272,732.50 (3)
SWR-38A $1,331,078.00 (2)
SWR-38B $1,331,078.00 (3)
SWR-39A $1,053,845.00 (2)
SWR-39B $1,053,845.00 (3)
SWR-40A $1,010,185.00 (2)
SWR-40B $1,010,185.00 (3)
SWR-41A $1,188,732.50 (2)
SWR-41B $1,188,732.50 (3)
SWR-42A $1,141,994.50 (2)
SWR-42B $1,141,994.50 (3)
SWR-43A $1,148,311.50 (2)
SWR-43B $1,148,311.50 (3)
SWR-44A $1,108,714.50 (2)
SWR-44B $1,108,714.50 (3)
SWR-45A $1,125,932.00 (2)
SWR-45B $1,125,932.00 (3)
SWR-46A $1,091,921.00 (2)
SWR-46B $1,091,921.00 (3)
SWR-47A $995,408.50 (2)
SWR-47B $995,408.50 (3)
SWR-48A $1,036,444.50 (2)
SWR-48B $1,036,444.50 (3)
SWR-49A $940,405.50 (2)
3
Swap-IO REMIC Interest Initial Principal Balance(1) Pass-Through Rate
---------------------- ---------------------------- -----------------
SWR-49B $940,405.50 (3)
SWR-50A $1,008,570.00 (2)
SWR-50B $1,008,570.00 (3)
SWR-51A $821,959.50 (2)
SWR-51B $821,959.50 (3)
SWR-52A $804,049.50 (2)
SWR-52B $804,049.50 (3)
SWR-53A $945,561.00 (2)
SWR-53B $945,561.00 (3)
SWR-54A $896,791.00 (2)
SWR-54B $896,791.00 (3)
SWR-55A $889,699.50 (2)
SWR-55B $889,699.50 (3)
SWR-56A $843,052.50 (2)
SWR-56B $843,052.50 (3)
SWR-57A $834,631.00 (2)
SWR-57B $834,631.00 (3)
SWR-58A $828,041.50 (2)
SWR-58B $828,041.50 (3)
SWR-59A $970,167.00 (2)
SWR-59B $970,167.00 (3)
SWR-60A $60,844,920.00 (2)
SWR-60B $60,844,920.00 (3)
SWR-Support (4) (5)
SWR-P $ 100.00 (6)
SWR-40 Year Reserve (7) (7)
SW-A-R (8) (8)
------------------
(1) Scheduled principal, prepayments and Realized Losses will be allocated
first, to the SWR-Support Interest and second, to the numbered classes
sequentially (from lowest to highest). Amounts so allocated to a numbered
class shall be further allocated among the "A" and "B" components of such
numbered class pro-rata until the entire class is reduced to zero.
(2) Prior to the 61st Distribution Date, a rate equal to twice the Pool Tax Cap
less 10.40% per annum. On and after the 61st Distribution Date a rate equal
to the Pool Tax Cap. The "Pool Tax Cap" means the weighted average of the
Adjusted Net Mortgage Rates of all the Mortgage Loans. For this purpose,
beginning on the Distribution Date in December 2016 and ending on the Last
Scheduled Distribution Date, the Adjusted Net Mortgage Rate shall be
determined by first reducing the interest payable on each 40-Year Mortgage
Loan by the 40-Year Reserve Rate.
(3) Prior to the 61st Distribution Date, a rate equal to the lesser of (i)
10.40% per annum and (ii) twice the Pool Tax Cap. On and after the 61st
Distribution Date, a rate equal to the Pool Tax Cap.
4
(4) On the Closing Date and on each Distribution Date, following the allocation
of Principal Amounts and Realized Losses, the principal balance in respect
of the SWR-Support Interest will equal the excess of (a) the sum of (i) the
principal balance of the Mortgage Loans (as of the end of the related Due
Period, reduced by principal prepayments received after such Due Period
that are to be distributed on such Distribution Date) and (ii) the amount,
if any, on deposit in the Pre-Funding Account in respect of the Mortgage
Loans over (b) the principal balance in respect of the remaining Swap-IO
REMIC Interests other than the SWR-P and the SWR-A-R Interests.
(5) A rate equal to the Pool Tax Cap.
(6) On each Distribution Date the SWR-P Interest is entitled to all Prepayment
Charges collected with respect to the Mortgage Loans. It pays no interest.
(7) Beginning on the Distribution Date in December 2016 and ending on the
Distribution in November 2036 (the "Last Scheduled Distribution Date"), the
SW-40 Year Reserve Interest shall be entitled to a specific portion of the
interest payable on each 40-Year Mortgage Loan. Specifically, the SW-40
Year Reserve Interest shall be entitled to a specific portion of the
interest payable on the Stated Principal Balance of each 40-Year Mortgage
Loan as of the Due Date in the month preceding the month of that
Distribution Date (after giving effect to principal prepayments in the
Prepayment Period related to that prior Due Date) at a per annum rate equal
to 0.80% (the "40-Year Reserve Rate").
(8) The SW-A-R Interest is the sole class of residual interest in the Swap-IO
REMIC. It has no principal and pays no principal or interest.
On each Distribution Date, the Interest Funds and the Principal
Distribution Amount payable with respect to the Mortgage Loans shall be payable
with respect to the Swap-IO REMIC Interests in the following manner:
(1) Interest. Interest is to be distributed with respect to each Swap-IO
REMIC Interest at the rate, or according to the formulas, described above.
(2) Principal. Principal Distribution Amounts shall be allocated among the
Swap-IO REMIC Interests as described above.
(3) Prepayment Penalties. All Prepayment Charges are allocated to the
SWR-P Interest.
STRIP REMIC:
The Strip REMIC Regular Interests will have the principal balances, pass-through
rates and Corresponding Classes of Certificates as set forth in the following
table:
------------------------------------------------------------------------------------------
Initial Principal Pass-Through Corresponding Class
Strip REMIC Interest Balance Rate of Certificates
------------------------------------------------------------------------------------------
STR-1-A................ (1) (2) 1-A
------------------------------------------------------------------------------------------
STR-2-A-1.............. (1) (2) 2-A-1
------------------------------------------------------------------------------------------
STR-2-A-2.............. (1) (2) 2-A-2
------------------------------------------------------------------------------------------
STR-2-A-3.............. (1) (2) 2-A-3
------------------------------------------------------------------------------------------
STR-2-A-4.............. (1) (2) 2-A-4
------------------------------------------------------------------------------------------
5
------------------------------------------------------------------------------------------
Initial Principal Pass-Through Corresponding Class
Strip REMIC Interest Balance Rate of Certificates
------------------------------------------------------------------------------------------
STR-M-1................ (1) (2) M-1
------------------------------------------------------------------------------------------
STR-M-2................ (1) (2) M-2
------------------------------------------------------------------------------------------
STR-M-3................ (1) (2) M-3
------------------------------------------------------------------------------------------
STR-M-4................ (1) (2) M-4
------------------------------------------------------------------------------------------
STR-M-5................ (1) (2) M-5
------------------------------------------------------------------------------------------
STR-M-6................ (1) (2) M-6
------------------------------------------------------------------------------------------
STR-M-7................ (1) (2) M-7
------------------------------------------------------------------------------------------
STR-M-8................ (1) (2) M-8
------------------------------------------------------------------------------------------
STR-M-9................ (1) (2) M-9
------------------------------------------------------------------------------------------
STR-B.................. (1) (2) B
------------------------------------------------------------------------------------------
STR-$100............... $100 (3) A-R
------------------------------------------------------------------------------------------
STR-C-OC............... (4) (2) N/A
------------------------------------------------------------------------------------------
STR-C-Swap-IO (5) (5) N/A
------------------------------------------------------------------------------------------
STR-C-40 Year IO (6) (6) N/A
------------------------------------------------------------------------------------------
STR-P.................. $100 (7) P
------------------------------------------------------------------------------------------
STR-A-R................ (8) (8) N/A
------------------------------------------------------------------------------------------
(1) This Strip REMIC Interest has a principal balance that is initially equal to
100% of its Corresponding Certificate Class issued by the Master REMIC.
Principal payments, both scheduled and prepaid, Realized Losses and Subsequent
Recoveries attributable to the Swap-IO REMIC Interests held by the Strip REMIC
will be allocated to this class to maintain its size relative to its
Corresponding Certificate Class.
(2) On each Distribution Date, the pass-through rate for this Strip REMIC
Interest will be the "Strip REMIC Cap," which will equal the weighted average of
the pass-through rates of the Swap-IO REMIC Interests (other than the SWR-P,
SWR-40 Year Reserve and SWR-A-R Interests) treating each "B" Interest the
cardinal number of which (for example, XX-0X, XX-0X, XX-0X, etc.) is not less
than the ordinal number of the Distribution Date (first Distribution Date,
second Distribution Date, third Distribution Date, etc.) as capped at a rate
equal to the product of (i) 2 and (ii) LIBOR.
(3) This Strip REMIC Interest pays no interest.
(4) This Strip REMIC Interest has a principal balance that is initially equal to
100% of the Overcollateralized Amount. Principal payments, both scheduled and
prepaid, Realized Losses and Subsequent Recoveries attributable to the Swap-IO
REMIC Interests held by the Strip REMIC will be allocated to this class to
maintain its size relative to the Overcollateralized Amount.
(5) For each Distribution Date, the STR-C-Swap-IO Interest is entitled to
receive from each Swap REMIC "B" Interest the cardinal number of which (for
example, XX-0X, XX-0X, XX-0X, etc.) is not less than the ordinal number of the
Distribution Date (first Distribution Date, second Distribution Date, third
Distribution Date, etc. ) the interest accruing on such interest in excess of a
per annum rate equal to the product of (i) 2 and (ii) LIBOR.
6
(6) The STR-C-40 Year IO is entitled to all amounts payable with respect to the
SWR-40 Year Reserve Interest.
(7) The STR-P Interest is entitled to all amounts payable with respect to the
SWR-P Interest. It pays no interest.
(8) The STR-A-R Interest is the sole class of residual interest in the Strip
REMIC. It has no principal balance and pays no principal or interest.
On each Distribution Date, the Interest Funds and the Principal
Distribution Amount payable with respect to the Swap-IO Interests shall be
payable with respect to the Strip REMIC Interests in the following manner:
(1) Interest. Interest is to be distributed with respect to each Strip
REMIC Interest at the rate, or according to the formulas, described above.
(2) Principal. Principal Distribution Amounts shall be allocated among the
Strip REMIC Interests as described above.
(3) Prepayment Penalties. All Prepayment Charges are allocated to the
STR-P Interest.
7
MASTER REMIC:
The following table specifies the class designation, interest rate,
and principal amount for each class of Master REMIC Interest:
Original Certificate
Class Principal Balance Pass-Through Rate
--------------------------------- -------------------- -----------------
Class 1-A........................ $328,048,000 (1)
Class 2-A-1...................... $256,839,000 (1)
Class 2-A-2...................... $53,000,000 (1)
Class 2-A-3...................... $184,662,000 (1)
Class 2-A-4...................... $66,251,000 (1)
Class M-1........................ $50,600,000 (1)
Class M-2........................ $31,900,000 (1)
Class M-3........................ $20,350,000 (1)
Class M-4........................ $17,050,000 (1)
Class M-5........................ $16,500,000 (1)
Class M-6........................ $13,750,000 (1)
Class M-7........................ $11,000,000 (1)
Class M-8........................ $11,000,000 (1)
Class M-9........................ $8,800,000 (1)
Class B.......................... $11,000,000 (1)
Class C.......................... (2) (3)
Class P.......................... $100 (4)
Class A-R........................ $100 (5)
(1) The Certificates will accrue interest at the related Pass-Through Rates
identified in this Agreement. For federal income tax purposes, including
the computation of the Class C Distributable Amount and entitlement to Net
Rate Carryover the pass-through rate in respect of each Class 1-A
Certificate, Class 2-A Certificate, Class M Certificate and Class B
Certificate will be subject to a cap equal to the Strip REMIC Cap rather
than its applicable Net Rate Cap.
(2) For federal income tax purposes, the Class C Certificates will be treated
as having a Certificate Principal Balance equal to the Overcollateralized
Amount.
(3) For each Interest Accrual Period the Class C Certificates are entitled to
an amount (the "Class C Distributable Amount") equal to the sum of (a) the
interest payable on the STR-C-Swap-IO Interest, (b) the interest payable
on the STR-C-OC Interest (c) the interest payable on the STR-C-40 Year IO
and (d) a specified portion of the interest payable on the Strip REMIC
Regular Interests (other than the STR-$100, STR-C-OC, STR-C-Swap-IO,
STR-C-40 Year IO and STR-P Interests) equal to the excess of the Strip
REMIC Cap over the weighted average interest rate of the Strip REMIC
Regular Interests (other than the STR-$100, STR-C-OC, STR-C-Swap-IO,
STR-C-40 Year IO and STR-P Interests) with each such Class subject to a
cap equal to the Pass-Through Rate of the Corresponding Master REMIC
Class. The Pass-Through Rate of the Class C Certificates shall be a rate
sufficient to entitle it to an amount equal to all interest accrued on the
Mortgage Loans less the interest accrued on the other interests issued by
the Master REMIC. The Class C Distributable Amount for any Distribution
Date is payable from
8
current interest on the Mortgage Loans and any related
Overcollateralization Reduction Amount for that Distribution Date.
(4) For each Distribution Date the Class P Certificates are entitled to all
Prepayment Charges distributed with respect to the STR-P Interest.
(5) The Class A-R Certificates represent the sole class of residual interest
in each REMIC created hereunder. The Class A-R Certificates are not
entitled to distributions of interest.
The foregoing REMIC structure is intended to cause all of the cash
from the Mortgage Loans to flow through to the Master REMIC as cash flow on
REMIC regular interests, without creating any shortfall--actual or potential
(other than for credit losses)-- to any REMIC regular interest. It is not
intended that the Class A-R Certificates be entitled to any cash flows pursuant
to this Agreement except as provided in Section 3.08(a) hereunder.
9
ARTICLE I.
DEFINITIONS
Section 1.01 Defined Terms.
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
40-Year Target Schedule: Schedule III hereto.
40-Year Mortgage Loan: A Mortgage Loan with an original term to
maturity of 40 years.
40-Year Reserve Rate: As defined in the Preliminary Statement.
Acceptable Bid Amount: Either (i) a bid equal to or greater than the
Minimum Auction Amount or (ii) the highest bid submitted by a Qualified Bidder
in an auction if the Directing Certificateholder agrees to pay the related
Auction Supplement Amount.
Account: Any Escrow Account, the Carryover Reserve Fund, the
Certificate Account, the Credit Comeback Excess Account, the Distribution
Account, the Pre-Funding Account, the Principal Reserve Fund, the Swap Account,
the Final Maturity Reserve Fund or any other account related to the Trust Fund
or the Mortgage Loans.
Accrual Period: With respect to any Distribution Date and each Class
of Interest-Bearing Certificates, the period commencing on the immediately
preceding Distribution Date (or, in the case of the first Distribution Date, the
Closing Date) and ending on the day immediately preceding such Distribution
Date. With respect to any Distribution Date and the Class C Certificates, the
calendar month preceding the month in which such Distribution Date occurs. All
calculations of interest on the Interest-Bearing Certificates will be made on
the basis of the actual number of days elapsed in the related Accrual Period and
on a 360-day year. All calculations of interest on the Class C Certificates will
be made on the basis of a 360-day year consisting of twelve 30-day months.
Additional Designated Information: As defined in Section 11.02.
Adjustable Rate Mortgage Loans: The Mortgage Loans identified in the
Mortgage Loan Schedule as having a Mortgage Rate which is adjustable in
accordance with the terms of the related Mortgage Note.
Adjusted Net Mortgage Rate: As to each Mortgage Loan, the Mortgage
Rate less the related Expense Fee Rate.
Adjusted Replacement Upfront Amount: As defined in Section 3.21.
Adjustment Date: As to each Adjustable Rate Mortgage Loan, each date
on which the related Mortgage Rate is subject to adjustment, as provided in the
related Mortgage Note.
10
Advance: The aggregate of the advances required to be made by the
Master Servicer with respect to any Distribution Date pursuant to Section 4.01,
the amount of any such advances being equal to the aggregate of payments of
principal of, and interest on the Stated Principal Balance of, the Mortgage
Loans (net of the Servicing Fees) that were due on the related Due Date and not
received by the Master Servicer as of the close of business on the related
Determination Date including an amount equivalent to interest on the Stated
Principal Balance of each Mortgage Loan as to which the related Mortgaged
Property is an REO Property or as to which the related Mortgaged Property has
been liquidated but such Mortgage Loan has not yet become a Liquidated Mortgage
Loan; provided, however, that the net monthly rental income (if any) from such
REO Property deposited in the Certificate Account for such Distribution Date
pursuant to Section 3.12 may be used to offset such Advance for the related REO
Property; provided, further, that for the avoidance of doubt, no Advances shall
be required to be made in respect of any Liquidated Mortgage Loan.
Agreement: This Pooling and Servicing Agreement and any and all
amendments or supplements hereto made in accordance with the terms herein.
Amount Held for Future Distribution: As to any Distribution Date,
the aggregate amount held in the Certificate Account at the close of business on
the immediately preceding Determination Date on account of (i) all Scheduled
Payments or portions thereof received in respect of the Mortgage Loans due after
the related Due Date, (ii) Principal Prepayments received in respect of such
Mortgage Loans after the last day of the related Prepayment Period and (iii)
Liquidation Proceeds and Subsequent Recoveries received in respect of such
Mortgage Loans after the last day of the related Due Period.
Applied Realized Loss Amount: With respect to any Distribution Date
and any Loan Group or Loan Groups, the amount, if any, by which, the aggregate
Certificate Principal Balance of the Class(es) of Certificates listed opposite
such Loan Group(s) in the following table (after all distributions of principal
on such Distribution Date) exceeds the sum of (x) the aggregate Stated Principal
Balance of the Mortgage Loans in such Loan Group(s) for such Distribution Date
and (y) the amount on deposit in the Pre-Funding Account in respect of such Loan
Group(s); provided, however, that an Applied Realized Loss Amount will not exist
for a Class of Class A Certificates unless the Certificate Principal Balances of
the Subordinate Certificates have been reduced to zero.
Loan Group(s) Class(es) of Certificates
1 and 2 Interest-Bearing
1 1-A
2 2-A
Appraised Value: The appraised value of the Mortgaged Property based
upon the appraisal made for the originator of the related Mortgage Loan by an
independent fee appraiser at the time of the origination of the related Mortgage
Loan, or the sales price of the Mortgaged Property at the time of such
origination, whichever is less, or with respect to any Mortgage Loan originated
in connection with a refinancing, the appraised value of the Mortgaged Property
based upon the appraisal made at the time of such refinancing.
11
Auction Supplement Amount: As defined in Section 9.04(c).
Bankruptcy Code: Title 11 of the United States Code.
Bid Determination Date: As defined in Section 9.04(b).
Book-Entry Certificates: Any of the Certificates that shall be
registered in the name of the Depository or its nominee, the ownership of which
is reflected on the books of the Depository or on the books of a person
maintaining an account with the Depository (directly, as a "Depository
Participant", or indirectly, as an indirect participant in accordance with the
rules of the Depository and as described in Section 5.06). As of the Closing
Date, each Class of Interest-Bearing Certificates constitutes a Class of
Book-Entry Certificates.
Business Day: Any day other than (i) a Saturday or a Sunday or (ii)
a day on which banking institutions in the State of New York or California or
the city in which the Corporate Trust Office of the Trustee is located are
authorized or obligated by law or executive order to be closed.
Carryover Reserve Fund: The separate Eligible Account created and
initially maintained by the Trustee pursuant to Section 4.07 in the name of the
Trustee for the benefit of the Certificateholders and designated "The Bank of
New York in trust for registered Holders of CWABS, Inc., Asset-Backed
Certificates, Series 2006-21". Funds in the Carryover Reserve Fund shall be held
in trust for the Certificateholders for the uses and purposes set forth in this
Agreement.
Certificate: Any one of the certificates of any Class executed and
authenticated by the Trustee in substantially the forms attached hereto as
Exhibits A-1 through X-00, Xxxxxxx X, Xxxxxxx X, Xxxxxxx X and Exhibit E.
Certificate Account: The separate Eligible Account created and
initially maintained by the Master Servicer pursuant to Section 3.05(b) with a
depository institution in the name of the Master Servicer for the benefit of the
Trustee on behalf of the Certificateholders and designated "Countrywide Home
Loans Servicing LP in trust for registered Holders of CWABS, Inc., Asset-Backed
Certificates, Series 2006-21". Funds in the Certificate Account shall be held in
trust for the Certificateholders for the uses and purposes set forth in this
Agreement.
Certificate Owner: With respect to a Book-Entry Certificate, the
person that is the beneficial owner of such Book-Entry Certificate.
Certificate Principal Balance: As to any Certificate (other than the
Class C Certificates) and as of any Distribution Date, the Initial Certificate
Principal Balance of such Certificate (A) less the sum of (i) all amounts
distributed with respect to such Certificate in reduction of the Certificate
Principal Balance thereof on previous Distribution Dates pursuant to Section
4.04(b) and (ii) any Applied Realized Loss Amounts allocated to such Certificate
on previous Distribution Dates pursuant to Section 4.04(g), and (B) increased by
any Subsequent Recoveries allocated to such Certificate pursuant to Section
4.04(h) on such Distribution Date. References herein to the Certificate
Principal Balance of a Class of Certificates shall mean the Certificate
Principal Balances of all Certificates in such Class. The Class C Certificates
do not
12
have a Certificate Principal Balance. With respect to any Certificate (other
than the Class C Certificates) of a Class and any Distribution Date, the portion
of the Certificate Principal Balance of such Class represented by such
Certificate equal to the product of the Percentage Interest evidenced by such
Certificate and the Certificate Principal Balance of such Class.
Certificate Register: The register maintained pursuant to Section
5.02 hereof.
Certificateholder or Holder: The person in whose name a Certificate
is registered in the Certificate Register (initially, Cede & Co., as nominee for
the Depository, in the case of any Class of Book-Entry Certificates), except
that solely for the purpose of giving any consent pursuant to this Agreement,
any Certificate registered in the name of the Depositor or any affiliate of the
Depositor shall be deemed not to be Outstanding and the Voting Interest
evidenced thereby shall not be taken into account in determining whether the
requisite amount of Voting Interests necessary to effect such consent has been
obtained; provided that if any such Person (including the Depositor) owns 100%
of the Voting Interests evidenced by a Class of Certificates, such Certificates
shall be deemed to be Outstanding for purposes of any provision hereof (other
than the second sentence of Section 10.01 hereof) that requires the consent of
the Holders of Certificates of a particular Class as a condition to the taking
of any action hereunder. The Trustee is entitled to rely conclusively on a
certification of the Depositor or any affiliate of the Depositor in determining
which Certificates are registered in the name of an affiliate of the Depositor.
Certification Party: As defined in Section 11.05.
Certifying Person: As defined in Section 11.05.
CHL: Countrywide Home Loans, Inc., a New York corporation, and its
successors and assigns.
CHL Mortgage Loans: The Mortgage Loans identified as such on the
Mortgage Loan Schedule for which CHL is the applicable Seller.
Class: All Certificates bearing the same Class designation as set
forth in Section 5.01 hereof.
Class 1-A Certificate: Any Certificate designated as a "Class 1-A
Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to distributions as set forth herein.
Class 1-A Net Rate Cap: For any Distribution Date, the weighted
average Adjusted Net Mortgage Rate of the Mortgage Loans in Loan Group 1 as of
the first day of the related Due Period (after giving effect to Principal
Prepayments received during the Prepayment Period that ends during such Due
Period), adjusted to an effective rate reflecting the calculation of interest on
the basis of the actual number of days elapsed during the related Accrual Period
and a 360-day year, minus a fraction, expressed as a percentage, the numerator
of which is (a) the product of (x) the sum of (1) the sum of the Net Swap
Payment payable to the Swap Counterparty with respect to such Distribution Date
and the Final Maturity Reserve Deposit for such Distribution Date times a
fraction, the numerator of which is equal to 360 and the
13
denominator of which is equal to the actual number of days in the related
Accrual Period and (2) any Swap Termination Payment payable to the Swap
Counterparty for such Distribution Date (other than a Swap Termination Payment
due to a Swap Counterparty Trigger Event) and (y) a fraction, the numerator of
which is the Interest Funds for Loan Group 1 for such Distribution Date, and the
denominator of which is the Interest Funds for Loan Group 1 and Loan Group 2 for
such Distribution Date, and the denominator of which is (b) the sum of the
aggregate Stated Principal Balance of the Mortgage Loans in Loan Group 1 as of
the first day of the related Due Period (after giving effect to Principal
Prepayments received during the Prepayment Period that ends during such Due
Period) plus any amounts on deposit in the Pre-Funding Account in respect of
Loan Group 1 as of the first day of that Due Period.
Class 1-A Principal Distribution Amount: With respect to any
Distribution Date, the product of (x) the Class A Principal Distribution Target
Amount and (y) a fraction, the numerator of which is the Principal Remittance
Amount for Loan Group 1 and the denominator of which is the Principal Remittance
Amount for both Loan Groups.
Class 2-A-1 Certificate: Any Certificate designated as a "Class
2-A-1 Certificate" on the face thereof, in the form of Exhibit A-2 hereto,
representing the right to distributions as set forth herein.
Class 2-A-2 Certificate: Any Certificate designated as a "Class
2-A-2 Certificate" on the face thereof, in the form of Exhibit A-3 hereto,
representing the right to distributions as set forth herein.
Class 2-A-3 Certificate: Any Certificate designated as a "Class
2-A-3 Certificate" on the face thereof, in the form of Exhibit A-4 hereto,
representing the right to distributions as set forth herein.
Class 2-A-4 Certificate: Any Certificate designated as a "Class
2-A-4 Certificate" on the face thereof, in the form of Exhibit A-5 hereto,
representing the right to distributions as set forth herein.
Class 2-A Certificate: Any Class 2-A-1, Class 2-A-2, Class 2-A-3 or
Class 2-A-4 Certificate.
Class 2-A Net Rate Cap: For any Distribution Date, the weighted
average Adjusted Net Mortgage Rate of the Mortgage Loans in Loan Group 2 as of
the first day of the related Due Period (after giving effect to Principal
Prepayments received during the Prepayment Period that ends during such Due
Period), adjusted to an effective rate reflecting the calculation of interest on
the basis of the actual number of days elapsed during the related Accrual Period
and a 360-day year, minus a fraction, expressed as a percentage, the numerator
of which is (a) the product of (x) the sum of (1) the sum of the Net Swap
Payment payable to the Swap Counterparty with respect to such Distribution Date
and the Final Maturity Reserve Deposit for such Distribution Date times a
fraction, the numerator of which is equal to 360 and the denominator of which is
equal to the actual number of days in the related Accrual Period and (2) any
Swap Termination Payment payable to the Swap Counterparty for such Distribution
Date (other than a Swap Termination Payment due to a Swap Counterparty Trigger
Event) and (y) a
14
fraction, the numerator of which is the Interest Funds for Loan Group 2 for such
Distribution Date, and the denominator of which is the Interest Funds for Loan
Group 1 and Loan Group 2 for such Distribution Date, and the denominator of
which is (b) the sum of the aggregate Stated Principal Balance of the Mortgage
Loans in Loan Group 2 as of the first day of the related Due Period (after
giving effect to Principal Prepayments received during the Prepayment Period
that ends during such Due Period) plus any amounts on deposit in the Pre-Funding
Account in respect of Loan Group 2 as of the first day of that Due Period.
Class 2-A Principal Distribution Amount: With respect to any
Distribution Date, the product of (x) the Class A Principal Distribution Target
Amount and (y) a fraction, the numerator of which is the Principal Remittance
Amount for Loan Group 2 and the denominator of which is the Principal Remittance
Amount for both Loan Groups.
Class A-R Certificate: Any Certificate designated as a "Class A-R
Certificate" on the face thereof, in the form of Exhibit D hereto or, in the
case of the Tax Matters Person Certificate, Exhibit E hereto, in either case
representing the right to distributions as set forth herein.
Class A Certificate: Any Class 1-A or Class 2-A Certificate.
Class A Principal Distribution Target Amount: With respect to any
Distribution Date, the excess of (1) the aggregate Certificate Principal Balance
of the Class A Certificates immediately prior to such Distribution Date, over
(2) the lesser of (x) 61.60% of the aggregate Stated Principal Balance of the
Mortgage Loans for such Distribution Date and (y) the aggregate Stated Principal
Balance of the Mortgage Loans for such Distribution Date minus the OC Floor.
Class B Certificate: Any Certificate designated as a "Class B
Certificate" on the face thereof, in the form of Exhibit A-15 hereto,
representing the right to distributions as set forth herein.
Class C Certificate: Any Certificate designated as a "Class C
Certificate" on the face thereof, in the form of Exhibit C hereto, representing
the right to distributions as set forth herein.
Class C Distributable Amount: As defined in the Preliminary
Statement.
Class M-1 Certificate: Any Certificate designated as a "Class M-1
Certificate" on the face thereof, in the form of Exhibit A-6 hereto,
representing the right to distributions as set forth herein.
Class M-2 Certificate: Any Certificate designated as a "Class M-2
Certificate" on the face thereof, in the form of Exhibit A-7 hereto,
representing the right to distributions as set forth herein.
Class M-3 Certificate: Any Certificate designated as a "Class M-3
Certificate" on the face thereof, in the form of Exhibit A-8 hereto,
representing the right to distributions as set forth herein.
15
Class M-4 Certificate: Any Certificate designated as a "Class M-4
Certificate" on the face thereof, in the form of Exhibit A-9 hereto,
representing the right to distributions as set forth herein.
Class M-5 Certificate: Any Certificate designated as a "Class M-5
Certificate" on the face thereof, in the form of Exhibit A-10 hereto,
representing the right to distributions as set forth herein.
Class M-6 Certificate: Any Certificate designated as a "Class M-6
Certificate" on the face thereof, in the form of Exhibit A-11 hereto,
representing the right to distributions as set forth herein.
Class M-7 Certificate: Any Certificate designated as a "Class M-7
Certificate" on the face thereof, in the form of Exhibit A-12 hereto,
representing the right to distributions as set forth herein.
Class M-8 Certificate: Any Certificate designated as a "Class M-8
Certificate" on the face thereof, in the form of Exhibit A-13 hereto,
representing the right to distributions as set forth herein.
Class M-9 Certificate: Any Certificate designated as a "Class M-9
Certificate" on the face thereof, in the form of Exhibit A-14 hereto,
representing the right to distributions as set forth herein.
Class P Certificate: Any Certificate designated as a "Class P
Certificate" on the face thereof, in the form of Exhibit B hereto, representing
the right to distributions as set forth herein.
Class P Principal Distribution Date: The first Distribution Date
that occurs after the end of the latest Prepayment Charge Period for all
Mortgage Loans that have a Prepayment Charge Period.
Closing Date: November 30, 2006.
Code: The Internal Revenue Code of 1986, including any successor or
amendatory provisions.
Collateral Schedule: Schedule II hereto.
Combined Class M-1, M-2 and M-3 Principal Distribution Amount: With
respect to any Distribution Date, the excess of (1) the sum of (a) the aggregate
Certificate Principal Balance of the Class A Certificates (after taking into
account distribution of the Class 1-A Principal Distribution Amount and Class
2-A Principal Distribution Amount for such Distribution Date) and (b) the
aggregate Certificate Principal Balance of the Class M-1, Class M-2 and Class
M-3 Certificates immediately prior to the Distribution Date over (2) the lesser
of (a) 80.30% of the aggregate Stated Principal Balance of the Mortgage Loans
for the Distribution Date and (b) the aggregate Stated Principal Balance of the
Mortgage Loans for the Distribution Date minus the OC Floor; provided, however,
that if the Class M-1, Class M-2 and/or Class M-3
16
Certificates are the only Classes of Subordinate Certificates outstanding on
such Distribution Date, those Classes will be entitled to receive the entire
remaining Principal Distribution Amount for Loan Group 1 and Loan Group 2 until
the Certificate Principal Balances thereof are reduced to zero.
Commission: The U.S. Securities and Exchange Commission.
Compensating Interest: With respect to each Loan Group and any
Distribution Date, an amount equal to, in that Loan Group, the lesser of (x)
one-half of the Servicing Fee for the related Due Period and (y) the aggregate
Prepayment Interest Shortfalls for the Mortgage Loans in that Loan Group for
such Distribution Date.
Corporate Trust Office: The designated office of the Trustee in the
State of New York where at any particular time its corporate trust business with
respect to this Agreement shall be administered, which office at the date of the
execution of this Agreement is located at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 (Attention: Corporate Trust MBS Administration), telephone: (212)
000-0000, facsimile: (000) 000-0000.
Co-Trustee: The Bank of New York Trust Company, N.A., a national
banking association, not in its individual capacity, but solely in its capacity
as co-trustee for the benefit of the Certificateholders under this Agreement,
and any successor thereto, and any corporation or national banking association
resulting from or surviving any consolidation or merger to which it or its
successors may be a party.
Covered Mortgage Loan: A Mortgage Loan listed on the Mortgage Loan
Schedule as being covered by a Mortgage Insurance Policy.
Credit Bureau Risk Score: A statistical credit score obtained by CHL
in connection with the origination of a Mortgage Loan.
Credit Comeback Excess Account: The separate Eligible Account
created and initially maintained by the Trustee pursuant to Section 4.08 in the
name of the Trustee for the benefit of the Certificateholders and designated
"The Bank of New York in trust for registered Holders of CWABS, Inc.,
Asset-Backed Certificates, Series 2006-21". Funds in the Credit Comeback Excess
Account shall be held in trust for the Certificateholders for the uses and
purposes set forth in this Agreement.
Credit Comeback Excess Amount: With respect to the Credit Comeback
Loans in any Loan Group and any Master Servicer Advance Date, the portion of the
sum of the following (without duplication) attributable to the excess, if any,
of the actual mortgage rate on each Credit Comeback Loan in such Loan Group and
the Mortgage Rate on such Credit Comeback Loan: (i) all scheduled interest
collected during the related Due Period with respect to the Credit Comeback
Loans in such Loan Group, (ii) all interest on prepayments received during the
related Prepayment Period with respect to the Credit Comeback Loans in such Loan
Group, other than
17
Prepayment Interest Excess, (iii) all Advances relating to interest with respect
to the Credit Comeback Loans in such Loan Group, (iv) all Compensating Interest
with respect to the Credit Comeback Loans in such Loan Group and (v) Liquidation
Proceeds with respect to the Credit Comeback Loans in such Loan Group collected
during the related Due Period (to the extent such Liquidation Proceeds relate to
interest), less all Nonrecoverable Advances for such Loan Group relating to
interest reimbursed during the related Due Period.
Credit Comeback Excess Cashflow: With respect to any Distribution
Date, any amounts in the Credit Comeback Excess Account available for such
Distribution Date.
Credit Comeback Loan: Any Fixed Rate Mortgage Loan for which the
related Mortgage Rate is subject to reduction (not exceeding 0.375% per annum)
for good payment history of Scheduled Payments by the related Mortgagor.
Cumulative Loss Trigger Event: With respect to a Distribution Date
on or after the Stepdown Date, a Cumulative Loss Trigger Event will be in effect
if (x) the aggregate amount of Realized Losses on the Mortgage Loans from the
Cut-off Date for each such Mortgage Loan to (and including) the last day of the
related Due Period (reduced by the aggregate amount of any Subsequent Recoveries
received through the last day of that Due Period) exceeds (y) the applicable
percentage, for such Distribution Date, of the sum of the aggregate Cut-off Date
Principal Balance of the Initial Mortgage Loans and the Pre-Funded Amount, as
set forth below:
Distribution Date Percentage
----------------- ----------
December 2008 -- November 2009................. 1.10% with respect to December 2008, plus
an additional 1/12th of 1.40% for each
month thereafter through November 2009
December 2009 -- November 2010................. 2.50% with respect to December 2009, plus
an additional 1/12th of 1.45% for each
month thereafter through November 2010
December 2010 -- November 2011................. 3.95% with respect to December 2010, plus
an additional 1/12th of 1.20% for each
month thereafter through November 2011
December 2011 -- November 2012................. 5.15% with respect to December 2011, plus
an additional 1/12th of 0.65% for each
month thereafter through November 2012
December 2012 -- November 2013................. 5.80% with respect to December 2012, plus
an additional 1/12th of 0.05% for each
month thereafter through November 2013
18
Distribution Date Percentage
----------------- ----------
December 2013 and thereafter.................. 5.85%
Current Interest: With respect to each Class of Interest-Bearing
Certificates and each Distribution Date, the interest accrued at the applicable
Pass-Through Rate for the applicable Accrual Period on the Certificate Principal
Balance of such Class immediately prior to such Distribution Date.
Cut-off Date: When used with respect to any Mortgage Loan the
"Cut-off Date" shall mean the Initial Cut-off Date or the related Subsequent
Cut-off Date, as the case may be.
Cut-off Date Principal Balance: As to any Mortgage Loan, the unpaid
principal balance thereof as of the close of business on the Cut-off Date after
application of all payments of principal due on or prior to the Cut-off Date,
whether or not received, and all Principal Prepayments received on or prior to
the Cut-off Date, but without giving effect to any installments of principal
received in respect of Due Dates after the Cut-off Date.
Debt Service Reduction: With respect to any Mortgage Loan, a
reduction by a court of competent jurisdiction in a proceeding under the
Bankruptcy Code in the Scheduled Payment for such Mortgage Loan that became
final and non-appealable, except such a reduction resulting from a Deficient
Valuation or any other reduction that results in a permanent forgiveness of
principal.
Deficient Valuation: With respect to any Mortgage Loan, a valuation
by a court of competent jurisdiction of the Mortgaged Property in an amount less
than the then outstanding indebtedness under such Mortgage Loan, or any
reduction in the amount of principal to be paid in connection with any Scheduled
Payment that results in a permanent forgiveness of principal, which valuation or
reduction results from an order of such court that is final and non-appealable
in a proceeding under the Bankruptcy Code.
Definitive Certificates: As defined in Section 5.06.
Delay Delivery Mortgage Loans: (i) The Initial Mortgage Loans
identified on the schedule of Mortgage Loans hereto set forth on Exhibit F-2
hereof for which all or a portion of a related Mortgage File is not delivered to
the Co-Trustee on or prior to the Closing Date, and (ii) the Subsequent Mortgage
Loans identified on the schedule of Subsequent Mortgage Loans set forth in Annex
A to each related Subsequent Transfer Agreement for which all or a portion of
the related Mortgage File is not delivered to the Co-Trustee on or prior to the
related Subsequent Transfer Date. The Depositor shall deliver (or cause delivery
of) the Mortgage Files to the Co-Trustee: (A) with respect to at least 50% of
the Initial Mortgage Loans in each Loan Group, not later than the Closing Date
and with respect to at least 10% of the Subsequent Mortgage Loans in each Loan
Group conveyed on a Subsequent Transfer Date, not later than such Subsequent
Transfer Date, (B) with respect to at least an additional 40% of the Initial
Mortgage Loans in each Loan Group, not later than 20 days after the Closing
Date, and not later than 20 days after the relevant Subsequent Transfer Date
with respect to the remaining Subsequent Mortgage Loans conveyed on such
Subsequent Transfer Date, and (C) with respect to the remaining Initial
19
Mortgage Loans, not later than thirty days after the Closing Date. To the extent
that Countrywide Home Loans, Inc. shall be in possession of any Mortgage Files
with respect to any Delay Delivery Mortgage Loan, until delivery of such
Mortgage File to the Co-Trustee as provided in Section 2.01, Countrywide Home
Loans, Inc. shall hold such files as agent and in trust for the Co-Trustee.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by
a Replacement Mortgage Loan.
Delinquency Trigger Event: With respect to any Distribution Date on
or after the Stepdown Date, a Delinquency Trigger Event will be in effect if the
Rolling Sixty-Day Delinquency Rate for Outstanding Mortgage Loans equals or
exceeds the product of (x) the Senior Enhancement Percentage for such
Distribution Date and (y) the applicable percentage listed below for the most
senior Class of Interest-Bearing Certificates:
Class Percentage
A.............. 41.50%
M-1............ 54.58%
M-2............ 68.10%
M-3............ 80.89%
M-4............ 96.00%
M-5............ 117.18%
M-6............ 143.57%
M-7............ 175.12%
M-8............ 224.45%
M-9............ 289.75%
B.............. 455.31%
Denomination: With respect to each Certificate, the amount set forth
on the face thereof as the "Initial Certificate Balance of this Certificate" or,
if not the foregoing, the Percentage Interest appearing on the face thereof, as
applicable.
Depositor: CWABS, Inc., a Delaware corporation, or its successor in
interest.
Depository: The initial Depository shall be The Depository Trust
Company, the nominee of which is Cede & Co., or any other organization
registered as a "clearing agency" pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended. The Depository shall initially be the
registered Holder of the Book-Entry Certificates. The Depository shall at all
times be a "clearing corporation" as defined in Section 8-102(a)(5) of the
Uniform Commercial Code of the State of New York.
Depository Agreement: With respect to the Book-Entry Certificates,
the agreement among the Depositor and the initial Depository, dated as of the
Closing Date, substantially in the form of Exhibit O.
20
Depository Participant: A broker, dealer, bank or other financial
institution or other person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: With respect to any Distribution Date, the 15th
day of the month of such Distribution Date or, if such 15th day is not a
Business Day, the immediately preceding Business Day.
Directing Certificateholder: As defined in Section 9.04(a).
Distribution Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3.05(c) in the name of the Trustee
for the benefit of the Certificateholders and designated "The Bank of New York,
in trust for registered Holders of CWABS, Inc., Asset-Backed Certificates,
Series 2006-21". Funds in the Distribution Account shall be held in trust for
the Certificateholders for the uses and purposes set forth in this Agreement.
Distribution Account Deposit Date: As to any Distribution Date, 1:00
p.m. Pacific time on the Business Day immediately preceding such Distribution
Date.
Distribution Date: The 25th day of each month, or if such day is not
a Business Day, on the first Business Day thereafter, commencing in December
2006.
Due Date: With respect to any Mortgage Loan and Due Period, the due
date for Scheduled Payments of interest and/or principal on that Mortgage Loan
occurring in such Due Period as provided in the related Mortgage Note.
Due Period: With respect to any Distribution Date, the period
beginning on the second day of the calendar month preceding the calendar month
in which such Distribution Date occurs and ending on the first day of the month
in which such Distribution Date occurs.
XXXXX: The Commission's Electronic Data Gathering, Analysis and
Retrieval system.
Eligible Account: Any of (i) an account or accounts maintained with
a federal or state chartered depository institution or trust company, the
long-term unsecured debt obligations and short-term unsecured debt obligations
of which (or, in the case of a depository institution or trust company that is
the principal subsidiary of a holding company, the debt obligations of such
holding company, if Xxxxx'x is not a Rating Agency) are rated by each Rating
Agency in one of its two highest long-term and its highest short-term rating
categories respectively, at the time any amounts are held on deposit therein, or
(ii) an account or accounts in a depository institution or trust company in
which such accounts are insured by the FDIC (to the limits established by the
FDIC) and the uninsured deposits in which accounts are otherwise secured such
that, as evidenced by an Opinion of Counsel delivered to the Trustee and to each
Rating Agency, the Certificateholders have a claim with respect to the funds in
such account or a perfected first priority security interest against any
collateral (which shall be limited to Permitted Investments) securing such funds
that is superior to claims of any other depositors or creditors of the
depository institution or trust company in which such account is maintained, or
(iii) a trust
21
account or accounts maintained with the corporate trust department of a federal
or state chartered depository institution or trust company having capital and
surplus of not less than $50,000,000, acting in its fiduciary capacity or (iv)
any other account acceptable to the Rating Agencies without reduction or
withdrawal of their then-current ratings of the Certificates as evidenced by a
letter from each Rating Agency to the Trustee. Eligible Accounts may bear
interest, and may include, if otherwise qualified under this definition,
accounts maintained with the Trustee.
Eligible Repurchase Month: As defined in Section 3.12(d) hereof.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
ERISA-Qualifying Underwriting: A best efforts or firm commitment
underwriting or private placement that meets the applicable requirements of the
Underwriter's Exemption.
ERISA-Restricted Certificates: The Class A-R Certificates, Class P
Certificates, Class C Certificates and Certificates of any Class that does not
have or no longer has a rating of BBB- or its equivalent, or better, from at
least one Rating Agency.
Escrow Account: As defined in Section 3.06 hereof.
Event of Default: As defined in Section 7.01 hereof.
Excess Cashflow: With respect to any Distribution Date the sum of
(i) the amount remaining after the distribution of interest to
Certificateholders for such Distribution Date pursuant to Section 4.04(a)(v)(b),
(ii) the amount remaining after the distribution of principal to
Certificateholders for such Distribution Date, pursuant to Section
4.04(b)(1)(B)(ii) or 4.04(b)(2)(B)(iii) and (iii) the Overcollateralization
Reduction Amount for such Distribution Date.
Excess Deposit: As defined in Section 8.11 hereof.
Excess Overcollateralization Amount: With respect to any
Distribution Date, the excess, if any, of the Overcollateralized Amount for such
Distribution Date over the Overcollateralization Target Amount for such
Distribution Date.
Excess Proceeds: With respect to any Liquidated Mortgage Loan, the
amount, if any, by which the sum of any Liquidation Proceeds and Subsequent
Recoveries are in excess of the sum of (i) the unpaid principal balance of such
Liquidated Mortgage Loan as of the date of liquidation of such Liquidated
Mortgage Loan plus (ii) interest at the Mortgage Rate from the Due Date as to
which interest was last paid or advanced to Certificateholders (and not
reimbursed to the Master Servicer) up to the Due Date in the month in which
Liquidation Proceeds are required to be distributed on the Stated Principal
Balance of such Liquidated Mortgage Loan outstanding during each Due Period as
to which such interest was not paid or advanced.
Exchange Act: The Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
22
Exchange Act Reports: Any reports on Form 10-D, Form 8-K and Form
10-K required to be filed by the Depositor with respect to the Trust Fund under
the Exchange Act.
Expense Fee Rate: With respect to any Mortgage Loan, the sum of (i)
the Servicing Fee Rate, (ii) the Trustee Fee Rate, (iii) with respect to a
Covered Mortgage Loan, the applicable Mortgage Insurance Premium Rate and (iv)
with respect to any Mortgage Loan covered by a lender paid mortgage insurance
policy (other than a Mortgage Insurance Policy), the related mortgage insurance
premium rate.
Extra Principal Distribution Amount: With respect to any
Distribution Date and each of Loan Group 1 and Loan Group 2, the lesser of (1)
the Overcollateralization Deficiency Amount and (2) the Excess Cashflow and
Credit Comeback Excess Cashflow available for payment thereof, to be allocated
between Loan Group 1 and Loan Group 2, pro rata, based on the Principal
Remittance Amount for each such Loan Group for such Distribution Date.
Xxxxxx Mae: The Federal National Mortgage Association, a federally
chartered and privately owned corporation organized and existing under the
Federal National Mortgage Association Charter Act, or any successor thereto.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
Final Maturity Funding Cap: For any Distribution Date beginning with
the Distribution Date in December 2016, the least of (i) the aggregate
Certificate Principal Balance of the Interest-Bearing Certificates immediately
prior to that Distribution Date, (ii) the aggregate Stated Principal Balance of
all outstanding 40-Year Mortgage Loans as of the first day of the related Due
Period (after giving effect to Principal Prepayments received during the
Prepayment Period that ends during such Due Period) and (iii) $20,288,180.
Final Maturity OC Trigger: With respect to any Distribution Date on
or after the Distribution Date in December 2026, the Final Maturity OC Trigger
will be in effect if and for so long as the sum of (x) the amount on deposit in
the Final Maturity Reserve Fund on that Distribution Date and (y) the
Overcollateralized Amount for that Distribution Date is less than the
outstanding Stated Principal Balance of all 40-Year Mortgage Loans as of the
first day of the related Due Period (after giving effect to Principal
Prepayments received during the Prepayment Period that ends during such Due
Period).
Final Maturity Required Deposit Trigger: With respect to any
Distribution Date on or after the Distribution Date in December 2016 up to and
including the Distribution Date in November 2036, the Final Maturity Required
Deposit Trigger shall be in effect with respect to such Distribution Date if the
aggregate Stated Principal Balance of the 40-Year Mortgage Loans as of the Due
Date occurring in the month preceding the month of that Distribution Date (after
giving effect to Principal Prepayments in the Prepayment Period related to that
prior Due Date) is greater than the "40-Year Target" specified on the 40-Year
Target Schedule for such Distribution Date.
Final Maturity Reserve Deposit: For any Distribution Date beginning
on the Distribution Date in December 2016 up to and including the Distribution
Date in November 2036, if the Final Maturity Required Deposit Trigger is not in
effect with respect to such
23
Distribution Date, then the Final Maturity Reserve Deposit with respect to such
Distribution Date shall be $0, and if the Final Maturity Required Deposit
Trigger is in effect with respect to such Distribution Date, then the Final
Maturity Reserve Deposit with respect to such Distribution Date shall be an
amount equal to the lesser of (a) one-twelfth of the product of (i) 0.80% and
(ii) the aggregate Stated Principal Balance of the 40-Year Mortgage Loans as of
the Due Date occurring in the month preceding the month of that Distribution
Date (after giving effect to Principal Prepayments in the Prepayment Period
related to that prior Due Date) and (b) the excess of (i) the Final Maturity
Funding Cap for such Distribution Date over (ii) the amount on deposit in the
Final Maturity Reserve Fund immediately prior to such Distribution Date.
Final Maturity Reserve Fund: The separate Eligible Account created
and initially maintained by the Trustee pursuant to Section 4.09 in the name of
the Trustee for the benefit of the Certificateholders and designated "The Bank
of New York in trust for registered Holders of CWABS, Inc., Asset-Backed
Certificates, Series 2006-21". Funds in the Final Maturity Reserve Fund shall be
held in trust for the Certificateholders for the uses and purposes set forth in
this Agreement.
Final Maturity Reserve Trust: The trust fund established by Section
4.10.
Final Maturity Reserve Trustee: The Bank of New York, a New York
banking corporation, not in its individual capacity, but solely in its capacity
as trustee for the benefit of the Holders of the Certificates under this
Agreement, and any successor thereto, and any corporation or national banking
association resulting from or surviving any consolidation or merger to which it
or its successors may be a party and any successor trustee as may from time to
time be serving as successor trustee hereunder.
Five-Year Hybrid Mortgage Loan: A Mortgage Loan having a Mortgage
Rate that is fixed for 60 months after origination thereof before such Mortgage
Rate becomes subject to adjustment.
Fixed Rate Mortgage Loans: The Mortgage Loans identified in the
Mortgage Loan Schedule as having a Mortgage Rate which is fixed for the life of
the related Mortgage and any Credit Comeback Loans, including in each case any
Mortgage Loans delivered in replacement thereof.
Form 10-D Disclosure Item: With respect to any Person, any material
litigation or governmental proceedings pending against such Person, or against
any of the Trust Fund, the Depositor, the Trustee, any co-trustee, the Master
Servicer or any Subservicer, if such Person has actual knowledge thereof.
Form 10-K Disclosure Item: With respect to any Person, (a) Form 10-D
Disclosure Item, and (b) any affiliations or relationships between such Person
and any Item 1119 Party.
Xxxxxxx Mac: The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of the
Emergency Home Finance Act of 1970, as amended, or any successor thereto.
24
Funding Period: The period from the Closing Date to and including
the earlier to occur of (x) the date the amount in the Pre-Funding Account is
less than $175,000 and (y) January 16, 2007.
Gross Margin: The percentage set forth in the related Mortgage Note
to be added to the Index for use in determining the Mortgage Rate for each
Adjustable Rate Mortgage Loan on each of its Adjustment Dates.
Group 1 Mortgage Loans: The group of Mortgage Loans identified in
the related Mortgage Loan Schedule as "Group 1 Mortgage Loans", including in
each case any Mortgage Loans delivered in replacement thereof.
Group 1 Overcollateralization Reduction Amount: With respect to any
Distribution Date, the Overcollateralization Reduction Amount for such
Distribution Date multiplied by a fraction, the numerator of which is (x) the
Principal Remittance Amount for Loan Group 1 for such Distribution Date, and the
denominator of which is (y) the aggregate Principal Remittance Amount for Loan
Group 1 and Loan Group 2 for such Distribution Date.
Group 1 Pre-Funded Amount: The portion of the Pre-Funded Amount
allocable for purchase of Subsequent Mortgage Loans as Group 1 Mortgage Loans on
the Closing Date, which shall equal $100,676,789.47.
Group 2 Mortgage Loans: The group of Mortgage Loans identified in
the related Mortgage Loan Schedule as "Group 2 Mortgage Loans", including in
each case any Mortgage Loans delivered in replacement thereof.
Group 2 Overcollateralization Reduction Amount: With respect to any
Distribution Date, the Overcollateralization Reduction Amount for such
Distribution Date multiplied by a fraction, the numerator of which is the
Principal Remittance Amount for Loan Group 2 for such Distribution Date, and the
denominator of which is the aggregate Principal Remittance Amount for Loan Group
1 and Loan Group 2 for such Distribution Date.
Group 2 Pre-Funded Amount: The portion of the Pre-Funded Amount
allocable for purchase of Subsequent Mortgage Loans as Group 2 Mortgage Loans on
the Closing Date, which shall equal $166,083,322.65.
Index: As to any Adjustable Rate Mortgage Loan on any Adjustment
Date related thereto, the index for the adjustment of the Mortgage Rate set
forth as such in the related Mortgage Note, or, if the Index in the Mortgage
Note ceases to be published or becomes unavailable for any reason, then the
Index shall be a new index selected by the Master Servicer, based on comparable
information and in accordance with the Mortgage Note and applicable law.
Initial Adjustment Date: As to any Adjustable Rate Mortgage Loan,
the first Adjustment Date following the origination of such Mortgage Loan.
Initial Certificate Account Deposit: An amount equal to the
aggregate of all amounts in respect of (i) principal of the Initial Mortgage
Loans due after the Initial Cut-off Date and received by the Master Servicer
before the Closing Date and not applied in computing the
25
Cut-off Date Principal Balance thereof and (ii) interest on the Initial Mortgage
Loans due after the Initial Cut-off Date and received by the Master Servicer
before the Closing Date.
Initial Certificate Principal Balance: With respect to any
Certificate (other than the Class C Certificates) the Certificate Principal
Balance of such Certificate or any predecessor Certificate on the Closing Date.
Initial Cut-off Date: In the case of any Initial Mortgage Loan, the
later of (x) November 1, 2006 and (y) the date of origination of such Mortgage
Loan.
Initial Mortgage Loan: A Mortgage Loan conveyed to the Trustee on
the Closing Date pursuant to this Agreement as identified on the Mortgage Loan
Schedule delivered to the Trustee on the Closing Date.
Initial Mortgage Rate: As to each Adjustable Rate Mortgage Loan, the
Mortgage Rate in effect prior to the Initial Adjustment Date.
Initial Periodic Rate Cap: With respect to each Adjustable Rate
Mortgage Loan, the percentage specified in the related Mortgage Note that limits
the permissible increase or decrease in the Mortgage Rate on its initial
Adjustment Date.
Institutional Accredited Investor or IAI: An "accredited investor"
as defined in any of paragraphs (1), (2), (3)and (7) of Rule 501(a) under the
Securities Act or any entity in which all of the equity owners come within such
paragraphs.
Insurance Policy: With respect to any Mortgage Loan included in the
Trust Fund, any insurance policy, including each Mortgage Insurance Policy and
all riders and endorsements to each such Mortgage Insurance Policy in effect
with respect to such Mortgage Loan, including any replacement policy or policies
for any Insurance Policy.
Insurance Proceeds: Proceeds paid in respect of the Mortgage Loans
pursuant to any Insurance Policy or any other insurance policy covering a
Mortgage Loan, to the extent such proceeds are payable to the mortgagee under
the Mortgage, the Master Servicer or the trustee under the deed of trust and are
not applied to the restoration of the related Mortgaged Property or released to
the Mortgagor in accordance with the procedures that the Master Servicer would
follow in servicing mortgage loans held for its own account, in each case other
than any amount included in such Insurance Proceeds in respect of Insured
Expenses and received either prior to or in connection with such Mortgage Loan
becoming a Liquidated Mortgage Loan.
Insured Expenses: Expenses covered by an Insurance Policy or any
other insurance policy with respect to the Mortgage Loans.
Interest-Bearing Certificates: The Class A Certificates and the
Subordinate Certificates.
Interest Carry Forward Amount: With respect to each Class of
Interest-Bearing Certificates and each Distribution Date, the excess of (i) the
Current Interest for such Class with
26
respect to prior Distribution Dates over (ii) the amount actually distributed to
such Class with respect to interest on such prior Distribution Dates.
Interest Determination Date: With respect to the first Accrual
Period for the Interest-Bearing Certificates, November 28, 2006. With respect to
any Accrual Period for the Interest-Bearing Certificates thereafter, the second
LIBOR Business Day preceding the commencement of such Accrual Period.
Interest Funds: With respect to any Distribution Date and Loan
Group, the Interest Remittance Amount for such Loan Group and Distribution Date,
less the portion of the Trustee Fee for such Distribution Date allocable to such
Loan Group, plus the Adjusted Replacement Upfront Amount, if any, allocable to
that Loan Group, less the Mortgage Insurance Premiums for the Covered Mortgage
Loans in that Loan Group for such Distribution Date..
Interest Remittance Amount: With respect to the Mortgage Loans in
each Loan Group and any Distribution Date, (x) the sum, without duplication, of
(i) all scheduled interest collected during the related Due Period (for the
avoidance of doubt, other than Credit Comeback Excess Amounts) with respect to
the related Mortgage Loans less the related Servicing Fee, (ii) all interest on
prepayments received during the related Prepayment Period with respect to such
Mortgage Loans, other than Prepayment Interest Excess, (iii) all related
Advances relating to interest with respect to such Mortgage Loans, (iv) all
related Compensating Interest with respect to such Mortgage Loans, (v)
Liquidation Proceeds with respect to such Mortgage Loans collected during the
related Due Period (to the extent such Liquidation Proceeds relate to interest)
and (vi) the related Seller Shortfall Interest Requirement, less (y) all
reimbursements to the Master Servicer during the related Due Period for Advances
of interest previously made allocable to such Loan Group.
Investment Letter: As defined in Section 5.02(b).
Item 1119 Party: The Depositor, any Seller, the Master Servicer, the
Trustee, any Subservicer, any originator identified in the Prospectus
Supplement, the Swap Counterparty and any other material transaction party, as
identified in Exhibit Z hereto, as updated pursuant to Section 11.04.
Latest Possible Maturity Date: The Distribution Date following the
third anniversary of the scheduled maturity date of the Mortgage Loan having the
latest scheduled maturity date as of the Cut-off Date.
LIBOR Business Day: Any day on which banks in the City of London,
England and New York City, U.S.A. are open and conducting transactions in
foreign currency and exchange.
Limited Exchange Act Reporting Obligations: The obligations of the
Master Servicer under Section 3.17(b), Section 6.02 and Section 6.04 with
respect to notice and information to be provided to the Depositor and Article XI
(except Section 11.07(a)(1) and (2)).
Liquidated Mortgage Loan: With respect to any Distribution Date, a
defaulted Mortgage Loan that has been liquidated through deed-in-lieu of
foreclosure, foreclosure sale,
27
trustee's sale or other realization as provided by applicable law governing the
real property subject to the related Mortgage and any security agreements and as
to which the Master Servicer has certified in the related Prepayment Period that
it has received all amounts it expects to receive in connection with such
liquidation.
Liquidation Proceeds: Amounts, including Insurance Proceeds,
received in connection with the partial or complete liquidation of Mortgage
Loans, whether through trustee's sale, foreclosure sale or otherwise or amounts
received in connection with any condemnation or partial release of a Mortgaged
Property and any other proceeds received in connection with an REO Property
received in connection with or prior to such Mortgage Loan becoming a Liquidated
Mortgage Loan (other than the amount of such net proceeds representing any
profit realized by the Master Servicer in connection with the disposition of any
such properties), less the sum of related unreimbursed Advances, Servicing Fees
and Servicing Advances.
Loan Group: Either of Loan Group 1 or Loan Group 2.
Loan Group 1: The Group 1 Mortgage Loans.
Loan Group 2: The Group 2 Mortgage Loans.
Loan Number and Borrower Identification Mortgage Loan Schedule: With
respect to any Subsequent Transfer Date, the Loan Number and Borrower
Identification Mortgage Loan Schedule delivered in connection with such
Subsequent Transfer Date pursuant to Section 2.01(f). Each Loan Number and
Borrower Identification Mortgage Loan Schedule shall contain the information
specified in the definition of "Mortgage Loan Schedule" with respect to the
Subsequent Mortgage Loans conveyed on such Subsequent Transfer Date, and each
Loan Number and Borrower Identification Mortgage Loan Schedule shall be deemed
to be included in the Mortgage Loan Schedule.
Loan-to-Value Ratio: As to any Mortgage Loan, the fraction,
expressed as a percentage, the numerator of which is the original principal
balance of such Mortgage Loan and the denominator of which is the Appraised
Value of the related Mortgaged Property.
Majority Holder: The Holders of Certificates evidencing at least 51%
of the Voting Rights allocated to such Class of Certificates.
Master REMIC: As defined in the Preliminary Statement.
Master Servicer: Countrywide Home Loans Servicing LP, a Texas
limited partnership, and its successors and assigns, in its capacity as master
servicer hereunder.
Master Servicer Advance Date: As to any Distribution Date, the
Business Day immediately preceding such Distribution Date.
Master Servicer Prepayment Charge Payment Amount: The amounts (i)
payable by the Master Servicer in respect of any Prepayment Charges waived other
than in accordance with the standard set forth in the first sentence of Section
3.20(a), or (ii) collected from the
28
Master Servicer in respect of a remedy for the breach of the representation made
by CHL set forth in Section 3.20(c).
Maximum Mortgage Rate: With respect to each Adjustable Rate Mortgage
Loan, the maximum rate of interest set forth as such in the related Mortgage
Note.
MERS: Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.
MERS Mortgage Loan: Any Mortgage Loan registered with MERS on the
MERS(R) System.
MERS(R) System: The system of recording transfers of mortgages
electronically maintained by MERS.
MIN: The Mortgage Identification Number for any MERS Mortgage Loan.
Minimum Auction Amount: With respect to any auction of the Mortgage
Loans and any REO Properties pursuant to Section 9.04, the sum of (i) the
Termination Price that would be payable by the NIM Insurer if the Optional
Termination were exercised in the following calendar month pursuant to Section
9.01 and (ii) all reasonable fees and expenses incurred by the Trustee in
connection with any auction conducted pursuant to Section 9.04.
Minimum Mortgage Rate: With respect to each Adjustable Rate Mortgage
Loan, the minimum rate of interest set forth as such in the related Mortgage
Note.
Modified Mortgage Loan: As defined in Section 3.12(a).
MOM Loan: Any Mortgage Loan, as to which MERS is acting as
mortgagee, solely as nominee for the originator of such Mortgage Loan and its
successors and assigns.
Monthly Statement: The statement delivered to the Certificateholders
pursuant to Section 4.05.
Moody's: Xxxxx'x Investors Service, Inc. and its successors.
Mortgage: The mortgage, deed of trust or other instrument creating a
first lien on or first priority ownership interest in an estate in fee simple in
real property securing a Mortgage Note.
Mortgage File: The mortgage documents listed in Section 2.01 hereof
pertaining to a particular Mortgage Loan and any additional documents delivered
to the Trustee to be added to the Mortgage File pursuant to this Agreement.
Mortgage Insurance Policy: Either of the Mortgage Insurance Policy
issued by United Guaranty Mortgage Indemnity Company or the Mortgage Insurance
Policy issued by Mortgage Guaranty Insurance Corporation with respect to certain
Mortgage Loans identified in the Mortgage Loan Schedule.
Mortgage Insurance Premium: Either of the premium payable on the
Mortgage Insurance Policy issued by United Guaranty Mortgage Indemnity Company
or the premium payable on the Mortgage Insurance Policy issued by Mortgage
Guaranty Insurance Corporation, each on each Distribution Date and amounts due
for premium taxes with respect to West Virginia and Kentucky.
29
Mortgage Insurance Premium Rate: With respect to a Covered Mortgage
Loan and any Distribution Date, the per annum rate equal to a fraction
(expressed as a percentage), the numerator of which is equal to the portion of
the applicable Mortgage Insurance Premium payable with respect to such
Distribution Date attributable to such Covered Mortgage Loan multiplied by
twelve and the denominator of which is equal to the Stated Principal Balance of
such Covered Mortgage Loan.
Mortgage Insurer: Either of United Guaranty Mortgage Indemnity
Company or Mortgage Guaranty Insurance Corporation or any replacement Mortgage
Insurer, as applicable.
Mortgage Loan Schedule: The list of Mortgage Loans (as from time to
time amended by the Master Servicer to reflect the deletion of Liquidated
Mortgage Loans and Deleted Mortgage Loans and the addition of (x) Replacement
Mortgage Loans pursuant to the provisions of this Agreement and (y) Subsequent
Mortgage Loans pursuant to the provisions of this Agreement and any Subsequent
Transfer Agreement) transferred to the Trustee as part of the Trust Fund and
from time to time subject to this Agreement, attached hereto as Exhibit F-1,
setting forth in the following information with respect to each Mortgage Loan:
(i) the loan number;
(ii) the Loan Group;
(iii) the Appraised Value;
(iv) the Initial Mortgage Rate;
(v) the maturity date;
(vi) the original principal balance;
(vii) the Cut-off Date Principal Balance;
(viii) the first payment date of the Mortgage Loan;
(ix) the Scheduled Payment in effect as of the Cut-off Date;
(x) the Loan-to-Value Ratio at origination;
(xi) a code indicating whether the residential dwelling at the time
of origination was represented to be owner-occupied;
(xii) a code indicating whether the residential dwelling is either
(a) a detached single-family dwelling, (b) a two-family
residential property, (c) a three-family residential property,
(d) a four-family residential property, (e) planned unit
development, (f) a low-rise condominium unit, (g) a high-rise
condominium unit or (h) manufactured housing;
30
(xiii) a code indicating whether such Mortgage Loan is a Credit
Comeback Loan;
(xiv) the purpose of the Mortgage Loan;
(xv) with respect to each Adjustable Rate Mortgage Loan:
(a) the frequency of each Adjustment Date;
(b) the next Adjustment Date;
(c) the Maximum Mortgage Rate;
(d) the Minimum Mortgage Rate;
(e) the Mortgage Rate as of the Cut-off Date;
(f) the related Initial Periodic Rate Cap and Subsequent
Periodic Rate Cap; and
(g) the Gross Margin;
(xvi) a code indicating whether the Mortgage Loan is a CHL Mortgage
Loan, a Park Monaco Mortgage Loan or a Park Sienna Mortgage
Loan;
(xvii) the premium rate for any lender-paid mortgage insurance, if
applicable;
(xviii) a code indicating whether the Mortgage Loan is a Fixed Rate
Mortgage Loan or an Adjustable Rate Mortgage Loan;
(xix) a code indicating if such Mortgage Loan is a Covered Mortgage
Loan, the applicable Mortgage Insurance Policy and the rate
for the applicable Mortgage Insurance Premium, if applicable;
and
(xx) the Servicing Fee Rate for the Mortgage Loan as of the
applicable Cut-off Date and, if the Servicing Fee Rate is
subject to increase following the initial Adjustment Date for
the Mortgage Loan, the Servicing Fee Rate for the Mortgage
Loan following the initial Adjustment Date.
Such schedule shall also set forth the total of the amounts described under
(vii) above for all of the Mortgage Loans and for each Loan Group. The Mortgage
Loan Schedule shall be deemed to include each Loan Number and Borrower
Identification Mortgage Loan Schedule delivered pursuant to Section 2.01(f) and
all the related Subsequent Mortgage Loans and Subsequent Mortgage Loan
information included therein.
31
Mortgage Loans: Such of the mortgage loans transferred and assigned
to the Trustee pursuant to the provisions hereof and any Subsequent Transfer
Agreement as from time to time are held as part of the Trust Fund (including any
REO Property), the mortgage loans so held being identified in the Mortgage Loan
Schedule, notwithstanding foreclosure or other acquisition of title of the
related Mortgaged Property. Any mortgage loan that was intended by the parties
hereto to be transferred to the Trust Fund as indicated by such Mortgage Loan
Schedule which is in fact not so transferred for any reason, including a breach
of the representation contained in Section 2.02 hereof, shall continue to be a
Mortgage Loan hereunder until the Purchase Price with respect thereto has been
paid to the Trust Fund.
Mortgage Note: The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan.
Mortgage Pool: The aggregate of the Mortgage Loans identified in the
Mortgage Loan Schedule.
Mortgage Rate: The annual rate of interest borne by a Mortgage Note
from time to time; provided, however, the Mortgage Rate for each Credit Comeback
Loan shall be treated for all purposes of payments on the Certificates,
including the calculation of the Pass-Through Rates and the applicable Net Rate
Cap, as reduced by 0.375% on the Due Date following the end of each of the first
four annual periods after the origination date, irrespective of whether the
Mortgagor qualifies for the reduction by having a good payment history.
Mortgaged Property: The underlying property securing a Mortgage
Loan.
Mortgagor: The obligors on a Mortgage Note.
Net Mortgage Rate: As to each Mortgage Loan, and at any time, the
per annum rate equal to the Mortgage Rate less the Servicing Fee Rate.
Net Rate Cap: With respect to any Distribution Date and (i) the
Class 1-A Certificates, the Class 1-A Net Rate Cap, (ii) each Class of Class 2-A
Certificates, the Class 2-A Net Rate Cap and (iii) each Class of Subordinate
Certificates, the Subordinate Net Rate Cap.
Net Rate Carryover: With respect to any Class of Interest-Bearing
Certificates and any Distribution Date, the sum of (A) the excess of (i) the
amount of interest that such Class would otherwise have accrued for such
Distribution Date had the Pass-Through Rate for such Class and the related
Accrual Period not been determined based on the applicable Net Rate Cap, over
(ii) the amount of interest accrued on such Class at the applicable Net Rate Cap
for such Distribution Date and (B) the Net Rate Carryover for such Class for all
previous Distribution Dates not previously paid pursuant to Section 4.04,
together with interest thereon at the then-applicable Pass-Through Rate for such
Class, without giving effect to the applicable Net Rate Cap.
Net Swap Payment: With respect to any Distribution Date and payment
by the Swap Contract Administrator to the Swap Counterparty, the excess, if any,
of the "Fixed Amount" (as defined in the Swap Contract) with respect to such
Distribution Date over the "Floating Amount" (as defined in the Swap Contract)
with respect to such Distribution Date.
32
With respect to any Distribution Date and payment by the Swap Counterparty to
the Swap Contract Administrator, the excess, if any, of the "Floating Amount"
(as defined in the Swap Contract) with respect to such Distribution Date over
the "Fixed Amount" (as defined in the Swap Contract) with respect to such
Distribution Date.
New Confirmation: The confirmation, reference number FXCWL0621,
with a trade date of November 30, 2006, evidencing a transaction between the
Swap Counterparty and the Swap Contract Administrator relating to the Swap
Contract.
NIM Insurer: Any insurer guarantying at the request of CHL certain
payments under notes backed or secured by the Class C or Class P Certificates.
Nonrecoverable Advance: Any portion of an Advance previously made or
proposed to be made by the Master Servicer that, in the good faith judgment of
the Master Servicer, will not or, in the case of a current delinquency, would
not, be ultimately recoverable by the Master Servicer from the related
Mortgagor, related Liquidation Proceeds or otherwise.
Non-United States Person: A Person that is not a citizen or resident
of the United States, a corporation, partnership, or other entity (treated as a
corporation or a partnership for federal income tax purposes) created or
organized in or under the laws of the United States, any state thereof or the
District of Columbia, an estate whose income from sources without the United
States is includible in gross income for United States federal income tax
purposes regardless of its connection with the conduct of a trade or business
within the United States, or a trust if a court within the United States is able
to exercise primary supervision over the administration of the trust and one or
more United States persons have authority to control all substantial decisions
of the trustor.
OC Floor: With respect to any Distribution Date, an amount equal to
0.50% of the sum of the aggregate Cut-off Date Principal Balance of the Initial
Mortgage Loans and the Pre-Funded Amount.
Officer's Certificate: A certificate (i) in the case of the
Depositor, signed by the Chairman of the Board, the Vice Chairman of the Board,
the President, a Managing Director, a Vice President (however denominated), an
Assistant Vice President, the Treasurer, the Secretary, or one of the Assistant
Treasurers or Assistant Secretaries of the Depositor, (ii) in the case of the
Master Servicer, signed by the President, an Executive Vice President, a Vice
President, an Assistant Vice President, the Treasurer, or one of the Assistant
Treasurers or Assistant Secretaries of Countrywide GP, Inc., its general
partner, (iii) if provided for in this Agreement, signed by a Servicing Officer,
as the case may be, and delivered to the Depositor and the Trustee, as the case
may be, as required by this Agreement, or (iv) in the case of any other Person,
signed by an authorized officer of such Person.
Old Confirmation: The confirmation, reference number CXCWL0621,
with a trade date of November 8, 2006 evidencing a transaction between Bear
Xxxxxxx Capital Markets Inc. and CHL relating to the Swap Contract.
One-Month LIBOR: With respect to any Accrual Period for the
Interest-Bearing Certificates, the rate determined by the Trustee on the related
Interest Determination Date on the basis of the rate for U.S. dollar deposits
for one month as quoted on the Bloomberg Terminal on such Interest Determination
Date; provided that the parties hereto acknowledge that One-Month LIBOR
calculated for the first Accrual Period for the Interest-Bearing Certificates
shall equal 5.32000% per annum. If such rate is not quoted on the Bloomberg
Terminal (or if such service is no longer offered, such other service for
displaying One-Month LIBOR or comparable rates as may be reasonably selected by
the Trustee), One-Month LIBOR for the applicable Accrual Period for the
Interest-Bearing Certificates will be the Reference Bank Rate. If no such
33
quotations can be obtained by the Trustee and no Reference Bank Rate is
available, One-Month LIBOR will be One-Month LIBOR applicable to the preceding
Accrual Period for the Interest-Bearing Certificates.
Opinion of Counsel: A written opinion of counsel, who may be counsel
for the Depositor or the Master Servicer, reasonably acceptable to each
addressee of such opinion; provided that with respect to Section 6.04 or 10.01,
or the interpretation or application of the REMIC Provisions, such counsel must
(i) in fact be independent of the Depositor and the Master Servicer, (ii) not
have any direct financial interest in the Depositor or the Master Servicer or in
any affiliate of either and (iii) not be connected with the Depositor or the
Master Servicer as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions.
Optional Termination: The termination of the Trust Fund pursuant to
clause (a) of the first sentence of Section 9.01.
Optional Termination Date: The first Distribution Date on which the
aggregate Stated Principal Balance of the Mortgage Loans is less than or equal
to 10% of the sum of the aggregate Cut-off Date Principal Balance of the Initial
Mortgage Loans and the Pre-Funded Amount.
Original Value: The value of the property underlying a Mortgage Loan
based, in the case of the purchase of the underlying Mortgaged Property, on the
lower of an appraisal satisfactory to the Master Servicer or the sales price of
such property or, in the case of a refinancing, on an appraisal satisfactory to
the Master Servicer.
OTS: The Office of Thrift Supervision.
Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and authenticated under
this Agreement except:
(i) Certificates theretofore canceled by the Trustee or
delivered to the Trustee for cancellation; and
(ii) Certificates in exchange for which or in lieu of which
other Certificates have been executed and delivered by the Trustee
pursuant to this Agreement.
Outstanding Mortgage Loan: As of any Distribution Date, a Mortgage
Loan with a Stated Principal Balance greater than zero that was not the subject
of a Principal Prepayment in full, and that did not become a Liquidated Mortgage
Loan, prior to the end of the related Prepayment Period.
Overcollateralization Deficiency Amount: With respect to any
Distribution Date, the amount, if any, by which the Overcollateralization Target
Amount exceeds the Overcollateralized Amount on such Distribution Date (after
giving effect to distribution of the Principal Distribution Amount (other than
the portion thereof consisting of the Extra Principal Distribution Amount) on
such Distribution Date).
34
Overcollateralization Reduction Amount: With respect to any
Distribution Date, an amount equal to the lesser of (i) the Excess
Overcollateralization Amount for such Distribution Date and (ii) the aggregate
Principal Remittance Amount for Loan Group 1 and Loan Group 2 for such
Distribution Date.
Overcollateralization Target Amount: With respect to any
Distribution Date (a) prior to the Stepdown Date, an amount equal to 1.75% of
the sum of the aggregate Cut-off Date Principal Balance of the Initial Mortgage
Loans and the Pre-Funded Amount and (b) on or after the Stepdown Date, the
greater of (i) an amount equal to 3.50% of the aggregate Stated Principal
Balance of the Mortgage Loans for the current Distribution Date and (ii) the OC
Floor; provided, however, that if a Trigger Event is in effect on any
Distribution Date, the Overcollateralization Target Amount will be the
Overcollateralization Target Amount as in effect for the prior Distribution
Date.
Overcollateralized Amount: With respect to any Distribution Date,
the amount, if any, by which (x) the sum of the aggregate Stated Principal
Balance of the Mortgage Loans for such Distribution Date and any amount on
deposit in the Pre-Funding Account exceeds (y) the aggregate Certificate
Principal Balance of the Interest-Bearing Certificates as of such Distribution
Date (after giving effect to distribution of the Principal Remittance Amounts to
be made on such Distribution Date and, in the case of the Distribution Date
immediately following the end of the Funding Period, any amounts to be released
from the Pre-Funding Account).
Ownership Interest: As to any Certificate, any ownership interest in
such Certificate including any interest in such Certificate as the Holder
thereof and any other interest therein, whether direct or indirect, legal or
beneficial.
Park Monaco: Park Monaco Inc., a Delaware corporation, and its
successors and assigns.
Park Monaco Mortgage Loans: The Mortgage Loans identified as such on
the Mortgage Loan Schedule for which Park Monaco is the applicable Seller.
Park Sienna: Park Sienna LLC, a Delaware limited liability company,
and its successors and assigns.
Park Sienna Mortgage Loans: The Mortgage Loans identified as such on
the Mortgage Loan Schedule for which Park Sienna is the applicable Seller.
Pass-Through Margin: With respect to any Accrual Period and Class of
Interest-Bearing Certificates, the per annum rate indicated in the following
table:
35
------------------------------------------------------
Pass-ThrougPass-Through
Class Margin (1) Margin (2)
------------------------------------------------------
Class 1-A.................. 0.140% 0.280%
------------------------------------------------------
Class 2-A-1................ 0.050% 0.100%
------------------------------------------------------
Class 2-A-2................ 0.110% 0.220%
------------------------------------------------------
Class 2-A-3................ 0.150% 0.300%
------------------------------------------------------
Class 2-A-4................ 0.230% 0.460%
------------------------------------------------------
Class M-1.................. 0.230% 0.345%
------------------------------------------------------
Class M-2.................. 0.270% 0.405%
------------------------------------------------------
Class M-3.................. 0.330% 0.495%
------------------------------------------------------
Class M-4.................. 0.370% 0.555%
------------------------------------------------------
Class M-5.................. 0.390% 0.585%
------------------------------------------------------
Class M-6.................. 0.470% 0.705%
------------------------------------------------------
Class M-7.................. 0.880% 1.320%
------------------------------------------------------
Class M-8.................. 1.450% 2.175%
------------------------------------------------------
Class M-9.................. 2.000% 3.000%
------------------------------------------------------
Class B.................... 2.000% 3.000%
------------------------------------------------------
(1) For any Accrual Period relating to any Distribution Date occurring on or
prior to the Optional Termination Date.
(2) For any Accrual Period relating to any Distribution Date occurring after
the Optional Termination Date.
Pass-Through Rate: With respect to any Accrual Period and each Class
of Interest-Bearing Certificates the lesser of (x) One-Month LIBOR for such
Accrual Period plus the Pass-Through Margin for such Class and Accrual Period
and (y) the applicable Net Rate Cap for such Class and the related Distribution
Date.
Percentage Interest: With respect to any Interest-Bearing
Certificate, a fraction, expressed as a percentage, the numerator of which is
the Certificate Principal Balance represented by such Certificate and the
denominator of which is the aggregate Certificate Principal Balance of the
related Class. With respect to the Class C, Class P and Class A-R Certificates,
the portion of the Class evidenced thereby, expressed as a percentage, as stated
on the face of such Certificate.
Performance Certification: As defined in Section 11.05.
Permitted Investments: At any time, any one or more of the following
obligations and securities:
(i) obligations of the United States or any agency thereof,
provided such obligations are backed by the full faith and credit of
the United States;
(ii) general obligations of or obligations guaranteed by any
state of the United States or the District of Columbia receiving the
highest long-term debt rating of each Rating Agency, or such lower
rating as each Rating Agency has
36
confirmed in writing is sufficient for the ratings originally
assigned to the Certificates by such Rating Agency;
(iii) commercial or finance company paper which is then
receiving the highest commercial or finance company paper rating of
each Rating Agency, or such lower rating as each Rating Agency has
confirmed in writing is sufficient for the ratings originally
assigned to the Certificates by such Rating Agency;
(iv) certificates of deposit, demand or time deposits, or
bankers' acceptances issued by any depository institution or trust
company incorporated under the laws of the United States or of any
state thereof and subject to supervision and examination by federal
and/or state banking authorities, provided that the commercial paper
and/or long term unsecured debt obligations of such depository
institution or trust company (or in the case of the principal
depository institution in a holding company system, the commercial
paper or long-term unsecured debt obligations of such holding
company, but only if Xxxxx'x is not a Rating Agency) are then rated
one of the two highest long-term and the highest short-term ratings
of each such Rating Agency for such securities, or such lower
ratings as each Rating Agency has confirmed in writing is sufficient
for the ratings originally assigned to the Certificates by such
Rating Agency;
(v) repurchase obligations with respect to any security
described in clauses (i) and (ii) above, in either case entered into
with a depository institution or trust company (acting as principal)
described in clause (iv) above;
(vi) securities (other than stripped bonds, stripped coupons
or instruments sold at a purchase price in excess of 115% of the
face amount thereof) bearing interest or sold at a discount issued
by any corporation incorporated under the laws of the United States
or any state thereof which, at the time of such investment, have one
of the two highest long term ratings of each Rating Agency (except
(x) if the Rating Agency is Moody's, such rating shall be the
highest commercial paper rating of S&P for any such securities) and
(y), or such lower rating as each Rating Agency has confirmed in
writing is sufficient for the ratings originally assigned to the
Certificates by such Rating Agency;
(vii) interests in any money market fund which at the date of
acquisition of the interests in such fund and throughout the time
such interests are held in such fund has the highest applicable long
term rating by each Rating Agency or such lower rating as each
Rating Agency has confirmed in writing is sufficient for the ratings
originally assigned to the Certificates by such Rating Agency;
(viii) short term investment funds sponsored by any trust
company or national banking association incorporated under the laws
of the United States or any state thereof which on the date of
acquisition has been rated by each Rating Agency in their respective
highest applicable rating category or such lower rating as each
Rating Agency has confirmed in writing is sufficient for the ratings
originally assigned to the Certificates by such Rating Agency; and
37
(ix) such other relatively risk free investments having a
specified stated maturity and bearing interest or sold at a discount
acceptable to each Rating Agency as will not result in the
downgrading or withdrawal of the rating then assigned to the
Certificates by any Rating Agency, as evidenced by a signed writing
delivered by each Rating Agency, and reasonably acceptable to the
NIM Insurer, as evidenced by a signed writing delivered by the NIM
Insurer;
provided, that no such instrument shall be a Permitted Investment if such
instrument (i) evidences the right to receive interest only payments with
respect to the obligations underlying such instrument, (ii) is purchased at a
premium or (iii) is purchased at a deep discount; provided further that no such
instrument shall be a Permitted Investment (A) if such instrument evidences
principal and interest payments derived from obligations underlying such
instrument and the interest payments with respect to such instrument provide a
yield to maturity of greater than 120% of the yield to maturity at par of such
underlying obligations, or (B) if it may be redeemed at a price below the
purchase price (the foregoing clause (B) not to apply to investments in units of
money market funds pursuant to clause (vii) above); provided further that no
amount beneficially owned by any REMIC (including, without limitation, any
amounts collected by the Master Servicer but not yet deposited in the
Certificate Account) may be invested in investments (other than money market
funds) treated as equity interests for Federal income tax purposes, unless the
Master Servicer shall receive an Opinion of Counsel, at the expense of Master
Servicer, to the effect that such investment will not adversely affect the
status of any such REMIC as a REMIC under the Code or result in imposition of a
tax on any such REMIC. Permitted Investments that are subject to prepayment or
call may not be purchased at a price in excess of par.
Permitted Transferee: Any Person other than (i) the United States,
any State or political subdivision thereof, or any agency or instrumentality of
any of the foregoing, (ii) a foreign government, International Organization or
any agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in section 521 of the Code) that
is exempt from tax imposed by Chapter 1 of the Code (including the tax imposed
by section 511 of the Code on unrelated business taxable income) on any excess
inclusions (as defined in section 860E(c)(1) of the Code) with respect to any
Class A-R Certificate, (iv) rural electric and telephone cooperatives described
in section 1381(a)(2)(C) of the Code, (v) an "electing large partnership" as
defined in section 775 of the Code, (vi) a Person that is not a citizen or
resident of the United States, a corporation, partnership, or other entity
(treated as a corporation or a partnership for federal income tax purposes)
created or organized in or under the laws of the United States, any state
thereof or the District of Columbia, or an estate whose income from sources
without the United States is includible in gross income for United States
federal income tax purposes regardless of its connection with the conduct of a
trade or business within the United States, or a trust if a court within the
United States is able to exercise primary supervision over the administration of
the trust and one or more United States Persons have authority to control all
substantial decisions of the trustor unless such Person has furnished the
transferor and the Trustee with a duly completed Internal Revenue Service Form
W-8ECI, and (vii) any other Person so designated by the Trustee based upon an
Opinion of Counsel that the Transfer of an Ownership Interest in a Class A-R
Certificate to such Person may cause any REMIC formed hereunder to fail to
qualify as a REMIC at any time that any Certificates are Outstanding. The terms
"United States," "State" and "International Organization" shall have the
38
meanings set forth in section 7701 of the Code or successor provisions. A
corporation will not be treated as an instrumentality of the United States or of
any State or political subdivision thereof for these purposes if all of its
activities are subject to tax and, with the exception of the Federal Home Loan
Mortgage Corporation, a majority of its board of directors is not selected by
such government unit.
Person: Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government, or any agency or political subdivision thereof.
Plan: An "employee benefit plan" as defined in section 3(3)of ERISA
that is subject to Title I of ERISA, a "plan" as defined in section 4975 of the
Code that is subject to section 4975 of the Code, or any Person investing on
behalf of or with plan assets (as defined in 29 CFR ss.2510.3-101 or otherwise
under ERISA) of such an employee benefit plan or plan.
Pool Tax Cap: As defined in the Preliminary Statement.
Pool Stated Principal Balance: The aggregate of the Stated Principal
Balances of the Mortgage Loans which were Outstanding Mortgage Loans.
Pre-Funded Amount: The amount deposited in the Pre-Funding Account
on the Closing Date, which shall equal $266,760,112.12.
Pre-Funding Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3.05 in the name of the Trustee
for the benefit of the Certificateholders and designated "The Bank of New York,
in trust for registered holders of CWABS, Inc., Asset-Backed Certificates,
Series 2006-21." Funds in the Pre-Funding Account shall be held in trust for the
Certificateholders for the uses and purposes set forth in this Agreement and
shall not be a part of any REMIC created hereunder, provided, however that any
investment income earned from Permitted Investments made with funds in the
Pre-Funding Account will be for the account of CHL.
Prepayment Assumption: The applicable rate of prepayment, as
described in the Prospectus Supplement relating to the Certificates.
Prepayment Charge: With respect to any Mortgage Loan, the charges or
premiums, if any, due in connection with a full or partial prepayment of such
Mortgage Loan within the related Prepayment Charge Period in accordance with the
terms thereof (other than any Master Servicer Prepayment Charge Payment Amount).
Prepayment Charge Period: With respect to any Mortgage Loan, the
period of time during which a Prepayment Charge may be imposed.
39
Prepayment Charge Schedule: As of the Initial Cut-off Date with
respect to each Initial Mortgage Loan and as of the Subsequent Cut-off Date with
respect to each Subsequent Mortgage Loan, a list attached hereto as Schedule I
(including the Prepayment Charge Summary attached thereto), setting forth the
following information with respect to each Prepayment Charge:
(i) the Mortgage Loan identifying number;
(ii) a code indicating the type of Prepayment Charge;
(iii) the state of origination of the related Mortgage Loan;
(iv) the date on which the first monthly payment was due on
the related Mortgage Loan;
(v) the term of the related Prepayment Charge; and
(vi) the principal balance of the related Mortgage Loan as of
the Cut-off Date.
As of the Closing Date, the Prepayment Charge Schedule shall contain
the necessary information for each Initial Mortgage Loan. The Prepayment Charge
Schedule shall be amended by the Master Servicer upon the sale of any Subsequent
Mortgage Loans to the Trust Fund. In addition, the Prepayment Charge Schedule
shall be amended from time to time by the Master Servicer in accordance with the
provisions of this Agreement and a copy of each related amendment shall be
furnished by the Master Servicer to the Class P and Class C Certificateholders
and the NIM Insurer.
Prepayment Interest Excess: With respect to any Distribution Date,
for each Mortgage Loan that was the subject of a Principal Prepayment during the
period from the related Due Date to the end of the related Prepayment Period,
any payment of interest received in connection therewith (net of any applicable
Servicing Fee) representing interest accrued for any portion of such month of
receipt.
Prepayment Interest Shortfall: With respect to any Distribution
Date, for each Mortgage Loan that was the subject of a partial Principal
Prepayment or a Principal Prepayment in full during the period from the
beginning of the related Prepayment Period to the Due Date in such Prepayment
Period (other than a Principal Prepayment in full resulting from the purchase of
a Mortgage Loan pursuant to Section 2.02, 2.03, 2.04, 3.12 or 9.01 hereof) and
for each Mortgage Loan that became a Liquidated Mortgage Loan during the related
Due Period, the amount, if any, by which (i) one month's interest at the
applicable Net Mortgage Rate on the Stated Principal Balance of such Mortgage
Loan immediately prior to such prepayment (or liquidation) or in the case of a
partial Principal Prepayment on the amount of such prepayment (or Liquidation
Proceeds) exceeds (ii) the amount of interest paid or collected in connection
with such Principal Prepayment or such Liquidation Proceeds.
Prepayment Period: As to any Distribution Date and related Due Date,
the period beginning with the opening of business on the sixteenth day of the
calendar month preceding the
40
month in which such Distribution Date occurs (or, with respect to the first
Distribution Date, the period beginning with the opening of business on November
2, 2006) and ending on the close of business on the fifteenth day of the month
in which such Distribution Date occurs.
Prime Rate: The prime commercial lending rate of The Bank of New
York, as publicly announced to be in effect from time to time. The Prime Rate
shall be adjusted automatically, without notice, on the effective date of any
change in such prime commercial lending rate. The Prime Rate is not necessarily
The Bank of New York's lowest rate of interest.
Principal Distribution Amount: With respect to each Distribution
Date and a Loan Group, the sum of (i) the Principal Remittance Amount for such
Loan Group for such Distribution Date less any portion of such amount used to
cover any payment due to the Swap Counterparty with respect to such Distribution
Date pursuant to Section 4.09, (ii) the Extra Principal Distribution Amount for
such Loan Group for such Distribution Date, and (iii) with respect to the
Distribution Date immediately following the end of the Funding Period, the
amount, if any, remaining in the Pre-Funding Account at the end of the Funding
Period (net of any investment income therefrom) allocable to such Loan Group,
minus (iv) (a) the amount of any Group 1 Overcollateralization Reduction Amount,
in the case of Loan Group 1 and (b) the amount of any Group 2
Overcollateralization Reduction Amount, in the case of Loan Group 2.
Principal Prepayment: Any Mortgagor payment or other recovery of (or
proceeds with respect to) principal on a Mortgage Loan (including loans
purchased or repurchased under Sections 2.02, 2.03, 2.04, 3.12 and 9.01 hereof)
that is received in advance of its scheduled Due Date to the extent it is not
accompanied by an amount as to interest representing scheduled interest due on
any date or dates in any month or months subsequent to the month of prepayment.
Partial Principal Prepayments shall be applied by the Master Servicer in
accordance with the terms of the related Mortgage Note.
Principal Remittance Amount: With respect to the Mortgage Loans in
each Loan Group and any Distribution Date, (a) the sum, without duplication, of:
(i) the scheduled principal collected with respect to the Mortgage Loans during
the related Due Period or advanced with respect to such Distribution Date, (ii)
Principal Prepayments collected in the related Prepayment Period, with respect
to the Mortgage Loans, (iii) the Stated Principal Balance of each Mortgage Loan
that was repurchased by a Seller or purchased by the Master Servicer with
respect to such Distribution Date, (iv) the amount, if any, by which the
aggregate unpaid principal balance of any Replacement Mortgage Loans delivered
by the Sellers in connection with a substitution of a Mortgage Loan is less than
the aggregate unpaid principal balance of any Deleted Mortgage Loans and (v) all
Liquidation Proceeds (to the extent such Liquidation Proceeds related to
principal) and Subsequent Recoveries collected during the related Due Period;
less (b) all Advances relating to principal and certain expenses reimbursable
pursuant to Section 6.03 and reimbursed during the related Due Period, in each
case with respect to such Loan Group.
Principal Reserve Fund: The separate Eligible Account created and
initially maintained by the Trustee pursuant to Section 3.08 in the name of the
Trustee for the benefit of the Certificateholders and designated "The Bank of
New York in trust for registered Holders of CWABS, Inc., Asset-Backed
Certificates, Series 2006-21". Funds in the Principal Reserve Fund
41
shall be held in trust for the Certificateholders for the uses and purposes set
forth in this Agreement.
Private Certificates: The Class B, Class C and Class P Certificates.
Prospectus: The prospectus dated November 27, 2006, relating to
asset-backed securities to be sold by the Depositor.
Prospectus Supplement: The prospectus supplement dated November 29,
2006, relating to the public offering of the certain Classes of Certificates
offered thereby.
PTCE 95-60: As defined in Section 5.02(b).
PUD: A Planned Unit Development.
Purchase Price: With respect to any Mortgage Loan (x) required to be
(1) repurchased by a Seller or purchased by the Master Servicer, as applicable,
pursuant to Section 2.02, 2.03 or 3.12 hereof or (2) repurchased by the
Depositor pursuant to Section 2.04 hereof, or (y) that the Master Servicer has a
right to purchase pursuant to Section 3.12 hereof, an amount equal to the sum of
(i) 100% of the unpaid principal balance (or, if such purchase or repurchase, as
the case may be, is effected by the Master Servicer, the Stated Principal
Balance) of the Mortgage Loan as of the date of such purchase, (ii) accrued
interest thereon at the applicable Mortgage Rate (or, if such purchase or
repurchase, as the case may be, is effected by the Master Servicer, at the Net
Mortgage Rate) from (a) the date through which interest was last paid by the
Mortgagor (or, if such purchase or repurchase, as the case may be, is effected
by the Master Servicer, the date through which interest was last advanced and
not reimbursed by the Master Servicer) to (b) the Due Date in the month in which
the Purchase Price is to be distributed to Certificateholders and (iii) any
costs, expenses and damages incurred by the Trust Fund resulting from any
violation of any predatory or abusive lending law in connection with such
Mortgage Loan.
Qualified Bidder: With respect to any auction pursuant to Section
9.04, any institution that is a regular purchaser and/or seller in the secondary
market of residential mortgage loans as determined by the Trustee (or any
advisor on its behalf), in its sole discretion, and any holder of an interest in
the Class C Certificates; provided, however, that neither CHL nor any of its
affiliates shall constitute a Qualified Bidder.
Qualified Institutional Buyer or QIB: A "qualified institutional
buyer" within the meaning of Rule 144A.
Rating Agency: Each of Moody's and S&P. If any such organization or
its successor is no longer in existence, "Rating Agency" shall be a nationally
recognized statistical rating organization, or other comparable Person,
identified as a "Rating Agency" in the Underwriter's Exemption and designated by
the Depositor, notice of which designation shall be given to the Trustee.
References herein to a given rating category of a Rating Agency shall mean such
rating category without giving effect to any modifiers.
42
Realized Loss: With respect to each Liquidated Mortgage Loan, an
amount (not less than zero or more than the Stated Principal Balance of the
Mortgage Loan) as of the date of such liquidation, equal to (i) the Stated
Principal Balance of such Liquidated Mortgage Loan as of the date of such
liquidation, minus (ii) the Liquidation Proceeds, if any, received in connection
with such liquidation during the month in which such liquidation occurs, to the
extent applied as recoveries of principal of the Liquidated Mortgage Loan. With
respect to each Mortgage Loan that has become the subject of a Deficient
Valuation, (i) if the value of the related Mortgaged Property was reduced below
the principal balance of the related Mortgage Note, the amount by which the
value of the Mortgaged Property was reduced below the principal balance of the
related Mortgage Note, and (ii) if the principal amount due under the related
Mortgage Note has been reduced, the difference between the principal balance of
the Mortgage Loan outstanding immediately prior to such Deficient Valuation and
the principal balance of the Mortgage Loan as reduced by the Deficient
Valuation.
Record Date: With respect to any Distribution Date and the
Interest-Bearing Certificates, the Business Day immediately preceding such
Distribution Date, or if any such Certificates are no longer Book-Entry
Certificates, the Record Date with respect to such Certificates shall be the
last Business Day of the month preceding the month of such Distribution Date.
With respect to any Distribution Date and the Class A-R, Class C and Class P
Certificates and the first Distribution Date, the Closing Date, and with respect
to any other Distribution Date, the last Business Day of the month preceding the
month of such Distribution Date.
Reference Bank Rate: With respect to any Accrual Period, the
arithmetic mean (rounded upwards, if necessary, to the nearest whole multiple of
0.03125%) of the offered rates for United States dollar deposits for one month
that are quoted by the Reference Banks as of 11:00 a.m., New York City time, on
the related Interest Determination Date to prime banks in the London interbank
market for a period of one month in amounts approximately equal to the
outstanding aggregate Certificate Principal Balance of the Interest-Bearing
Certificates on such Interest Determination Date, provided that at least two
such Reference Banks provide such rate. If fewer than two offered rates appear,
the Reference Bank Rate will be the arithmetic mean (rounded upwards, if
necessary, to the nearest whole multiple of 0.03125%) of the rates quoted by one
or more major banks in New York City, selected by the Trustee, as of 11:00 a.m.,
New York City time, on such date for loans in U.S. dollars to leading European
banks for a period of one month in amounts approximately equal to the aggregate
Certificate Principal Balance of the Interest-Bearing Certificates on such
Interest Determination Date.
Reference Banks: Barclays Bank PLC, Deutsche Bank and NatWest, N.A.,
provided that if any of the foregoing banks are not suitable to serve as a
Reference Bank, then any leading banks selected by the Trustee which are engaged
in transactions in Eurodollar deposits in the international Eurocurrency market
(i) with an established place of business in London, England, (ii) not
controlling, under the control of or under common control with the Depositor,
CHL or the Master Servicer and (iii) which have been designated as such by the
Trustee.
Refinancing Mortgage Loan: Any Mortgage Loan originated in
connection with the refinancing of an existing mortgage loan.
43
Regular Certificate: Any Certificate other than the Class A-R
Certificates.
Regulation AB: Subpart 229.1100 - Asset Backed Securities
(Regulation AB), 17 C.F.R. ss.ss.229.1100-229.1123, as such may be amended from
time to time, and subject to such clarification and interpretation as have been
provided by the Commission in the adopting release (Asset-Backed Securities,
Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or
by the staff of the Commission, or as may be provided by the Commission or its
staff from time to time and publicly available.
Relief Act: The Servicemembers Civil Relief Act.
REMIC Provisions: Provisions of the federal income tax law relating
to real estate mortgage investment conduits which appear at section 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations and rulings promulgated thereunder, as the foregoing may be in
effect from time to time.
Remittance Report: A report prepared by the Master Servicer and
delivered to the Trustee and the NIM Insurer in accordance with Section 4.04.
REO Property: A Mortgaged Property acquired by the Master Servicer
through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Mortgage Loan.
Replacement Mortgage Loan: A Mortgage Loan substituted by a Seller
for a Deleted Mortgage Loan which must, on the date of such substitution, as
confirmed in a Request for File Release, (i) have a Stated Principal Balance,
after deduction of the principal portion of the Scheduled Payment due in the
month of substitution, not in excess of, and not less than 90% of the Stated
Principal Balance of the Deleted Mortgage Loan; (ii) with respect to any Fixed
Rate Mortgage Loan, have a Mortgage Rate not less than or no more than 1% per
annum higher than the Mortgage Rate of the Deleted Mortgage Loan and, with
respect to any Adjustable Rate Mortgage Loan: (a) have a Maximum Mortgage Rate
no more than 1% per annum higher or lower than the Maximum Mortgage Rate of the
Deleted Mortgage Loan; (b) have a Minimum Mortgage Rate no more than 1% per
annum higher or lower than the Minimum Mortgage Rate of the Deleted Mortgage
Loan; (c) have the same Index and intervals between Adjustment Dates as that of
the Deleted Mortgage Loan; (d) have a Gross Margin not more than 1% per annum
higher or lower than that of the Deleted Mortgage Loan; and (e) have an Initial
Periodic Rate Cap and a Subsequent Periodic Rate Cap each not more than 1% lower
than that of the Deleted Mortgage Loan; (iii) have the same or higher credit
quality characteristics than that of the Deleted Mortgage Loan; (iv) be accruing
interest at a rate not more than 1% per annum higher or lower than that of the
Deleted Mortgage Loan; (v) have a Loan-to-Value Ratio no higher than that of the
Deleted Mortgage Loan; (vi) have a remaining term to maturity not greater than
(and not more than one year less than) that of the Deleted Mortgage Loan; (vii)
not permit conversion of the Mortgage Rate from a fixed rate to a variable rate
or vice versa; (viii) provide for a Prepayment Charge on terms substantially
similar to those of the Prepayment Charge, if any, of the Deleted Mortgage Loan;
(ix) have the same occupancy type and lien priority as the Deleted Mortgage
Loan; (x) be covered by the applicable Mortgage Insurance Policy if the Deleted
Mortgage Loan was covered by such Mortgage Insurance Policy and (xi) comply with
each representation and warranty set forth in Section 2.03 as of the date of
substitution; provided,
44
however, that notwithstanding the foregoing, to the extent that compliance with
clause (xi) of this definition would cause a proposed Replacement Mortgage Loan
to fail to comply with one or more of clauses (i), (ii), (iv), (viii) and/or
(ix) of this definition, then such proposed Replacement Mortgage Loan must
comply with clause (xi) and need not comply with one or more of clauses (i),
(ii), (iv), (viii) and/or (ix), to the extent, and only to the extent, necessary
to assure that the Replacement Mortgage Loan otherwise complies with clause
(xi).
Reportable Event: Any event required to be reported on Form 8-K, and
in any event, the following:
(a) entry into a definitive agreement related to the Trust Fund, the
Certificates or the Mortgage Loans, or an amendment to a Transaction Document,
even if the Depositor is not a party to such agreement (e.g., a servicing
agreement with a servicer contemplated by Item 1108(a)(3)of Regulation AB);
(b) termination of a Transaction Document (other than by expiration
of the agreement on its stated termination date or as a result of all parties
completing their obligations under such agreement), even if the Depositor is not
a party to such agreement (e.g., a servicing agreement with a servicer
contemplated by Item 1108(a)(3)of Regulation AB);
(c) with respect to the Master Servicer only, if the Master Servicer
becomes aware of any bankruptcy or receivership with respect to CHL, the
Depositor, the Master Servicer, any Subservicer, the Trustee, the Swap
Counterparty, any enhancement or support provider contemplated by Items 1114(b)
or 1115 of Regulation AB, or any other material party contemplated by Item
1101(d)(1) of Regulation AB;
(d) with respect to the Trustee, the Master Servicer and the
Depositor only, the occurrence of an early amortization, performance trigger or
other event, including an Event of Default under this Agreement;
(e) any amendment to this Agreement;
(f) the resignation, removal, replacement, substitution of the
Master Servicer, any Subservicer, the Trustee or any co-trustee;
(g) with respect to the Master Servicer only, if the Master Servicer
becomes aware that (i) any material enhancement or support specified in Item
1114(a)(1) through (3)of Regulation AB or Item 1115 of Regulation AB that was
previously applicable regarding one or more classes of the Certificates has
terminated other than by expiration of the contract on its stated termination
date or as a result of all parties completing their obligations under such
agreement; (ii) any material enhancement specified in Item 1114(a)(1) through
(3)of Regulation AB or Item 1115 of Regulation AB has been added with respect to
one or more classes of the Certificates; or (iii) any existing material
enhancement or support specified in Item 1114(a)(1) through (3)of Regulation AB
or Item 1115 of Regulation AB with respect to one or more classes of the
Certificates has been materially amended or modified; and
45
(h) with respect to the Trustee, the Master Servicer and the
Depositor only, a required distribution to Holders of the Certificates is not
made as of the required Distribution Date under this Agreement.
Reporting Subcontractor: With respect to the Master Servicer or the
Trustee, any Subcontractor determined by such Person pursuant to Section
11.08(b) to be "participating in the servicing function" within the meaning of
Item 1122 of Regulation AB. References to a Reporting Subcontractor shall refer
only to the Subcontractor of such Person and shall not refer to Subcontractors
generally.
Representing Party: As defined in Section 2.03(e).
Request for Document Release: A Request for Document Release
submitted by the Master Servicer to the Co-Trustee, substantially in the form of
Exhibit M.
Request for File Release: A Request for File Release submitted by
the Master Servicer to the Co-Trustee, substantially in the form of Exhibit N.
Required Carryover Reserve Fund Deposit: With respect to any
Distribution Date, an amount equal to the excess of (i) $1,000 over (ii) the
amount of funds on deposit in the Carryover Reserve Fund after all other
deposits and withdrawals from such account on such Distribution Date.
Required Insurance Policy: With respect to any Mortgage Loan, any
insurance policy that is required to be maintained from time to time under this
Agreement, including the applicable Mortgage Insurance Policy with respect to a
Covered Mortgage Loan.
Responsible Officer: When used with respect to the Trustee, any Vice
President, any Assistant Vice President, the Secretary, any Assistant Secretary,
any Trust Officer or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also to whom, with respect to a particular matter, such matter is referred
because of such officer's knowledge of and familiarity with the particular
subject.
Rolling Sixty-Day Delinquency Rate: With respect to any Distribution
Date on or after the Stepdown Date and any Loan Group or Loan Groups, the
average of the Sixty-Day Delinquency Rates for such Loan Group or Loan Groups
and such Distribution Date and the two immediately preceding Distribution Dates.
Rule 144A: Rule 144A under the Securities Act.
Rule 144A Letter: As defined in Section 5.02(b).
S&P: Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc. and its successors.
Xxxxxxxx-Xxxxx Certification: As defined in Section 11.05.
46
Scheduled Payment: With respect to any Mortgage Loan, the scheduled
monthly payment of principal and/or interest due on any Due Date on such
Mortgage Loan which is payable by the related Mortgagor from time to time under
the related Mortgage Note, determined: (a) after giving effect to (i) any
Deficient Valuation and/or Debt Service Reduction with respect to such Mortgage
Loan and (ii) any reduction in the amount of interest collectible from the
related Mortgagor pursuant to the Relief Act or any similar state or local law;
(b) without giving effect to any extension granted or agreed to by the Master
Servicer pursuant to Section 3.05(a); and (c) on the assumption that all other
amounts, if any, due under such Mortgage Loan are paid when due.
Securities Act: The Securities Act of 1933, as amended.
Sellers: CHL, in its capacity as seller of the CHL Mortgage Loans to
the Depositor, Park Monaco, in its capacity as seller of the Park Monaco
Mortgage Loans to the Depositor and Park Sienna, in its capacity as seller of
the Park Sienna Mortgage Loans to the Depositor.
Seller Shortfall Interest Requirement: With respect to the
Distribution Date in each of December 2006, January 2007 and February 2007, is
the sum of:
(a) the product of: (1) the excess of the aggregate Stated Principal
Balance for such Distribution Date of all the Mortgage Loans in the Mortgage
Pool (including the Subsequent Mortgage Loans, if any) owned by the Trust Fund
at the beginning of the related Due Period, over the aggregate Stated Principal
Balance for such Distribution Date of such Mortgage Loans (including such
Subsequent Mortgage Loans, if any) that have a scheduled payment of interest due
in the related Due Period, and (2) a fraction, the numerator of which is the
weighted average Net Mortgage Rate of all the Mortgage Loans in the Mortgage
Pool (including such Subsequent Mortgage Loans, if any) (weighted on the basis
of the Stated Principal Balances thereof for such Distribution Date) and the
denominator of which is 12; and
(b) the product of: (1) the amount on deposit in the Pre-Funding
Account at the beginning of the related Due Period, and (2) a fraction, the
numerator of which is the weighted average Net Mortgage Rate of the Mortgage
Loans (including Subsequent Mortgage Loans, if any) owned by the Trust Fund at
the beginning of the related Due Period (weighted on the basis of the Stated
Principal Balances thereof for such Distribution Date) and the denominator of
which is 12.
Senior Certificates: The Class A and Class A-R Certificates.
Senior Enhancement Percentage: With respect to a Distribution Date
on or after the Stepdown Date, the fraction (expressed as a percentage) (1) the
numerator of which is the excess of (a) the aggregate Stated Principal Balance
of the Mortgage Loans for the preceding Distribution Date over (b) (i) before
the Certificate Principal Balances of the Senior Certificates have been reduced
to zero, the sum of the Certificate Principal Balances of the Senior
Certificates, or (ii) after the Certificate Principal Balances of the Senior
Certificates have been reduced to zero, the Certificate Principal Balance of the
most senior Class of Subordinate Certificates outstanding, as of the related
Master Servicer Advance Date, and (2) the
47
denominator of which is the aggregate Stated Principal Balance of the Mortgage
Loans for the preceding Distribution Date.
Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses incurred in the performance by the Master Servicer of
its servicing obligations hereunder, including, but not limited to, the cost of
(i) the preservation, restoration and protection of a Mortgaged Property, (ii)
any enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of any REO Property and (iv) compliance with the
obligations under Section 3.10.
Servicing Criteria: The "servicing criteria" set forth in Item
1122(d) of Regulation AB.
Servicing Fee: As to each Mortgage Loan and any Distribution Date,
an amount equal to one month's interest at the Servicing Fee Rate on the Stated
Principal Balance of such Mortgage Loan for the preceding Distribution Date or,
in the event of any payment of interest that accompanies a Principal Prepayment
in full made by the Mortgagor, interest at the Servicing Fee Rate on the Stated
Principal Balance of such Mortgage Loan for the period covered by such payment
of interest.
Servicing Fee Rate: With respect to each Mortgage Loan, the per
annum rate set forth on the Mortgage Loan Schedule for such Mortgage Loan.
Servicing Officer: Any officer of the Master Servicer involved in,
or responsible for, the administration and servicing of the Mortgage Loans whose
name and facsimile signature appear on a list of servicing officers furnished to
the Trustee by the Master Servicer on the Closing Date pursuant to this
Agreement, as such list may from time to time be amended.
Sixty-Day Delinquency Rate: With respect to any Distribution Date on
or after the Stepdown Date, a fraction, expressed as a percentage, the numerator
of which is the aggregate Stated Principal Balance for such Distribution Date of
all Mortgage Loans 60 or more days delinquent as of the close of business on the
last day of the calendar month preceding such Distribution Date (including
Mortgage Loans in foreclosure, bankruptcy and REO Properties) and the
denominator of which is the aggregate Stated Principal Balance for such
Distribution Date of all Mortgage Loans.
Stated Principal Balance: With respect to any Mortgage Loan or
related REO Property (i) as of the Cut-off Date, the unpaid principal balance of
the Mortgage Loan as of such date (before any adjustment to the amortization
schedule for any moratorium or similar waiver or grace period), after giving
effect to any partial prepayments or Liquidation Proceeds received prior to such
date and to the payment of principal due on or prior to such date and
irrespective any delinquency in payment by the related Mortgagor, and (ii) as of
any other Distribution Date, the Stated Principal Balance of the Mortgage Loan
as of its Cut-off Date, minus the sum of (a) the principal portion of the
Scheduled Payments (x) due with respect to such Mortgage Loan during each Due
Period ending prior to such Distribution Date and (y) that were received by the
Master Servicer as of the close of business on the Determination Date related to
such Distribution Date or with respect to which Advances were made as of the
Master Servicer
48
Advance Date related to such Distribution Date, (b) all Principal Prepayments
with respect to such Mortgage Loan received by the Master Servicer during each
Prepayment Period ending prior to such Distribution Date, (c) all Liquidation
Proceeds collected with respect to such Mortgage Loan during each Due Period
ending prior to such Distribution Date, to the extent applied by the Master
Servicer as recoveries of principal in accordance with Section 3.12 and (d) any
Realized Loss previously incurred in connection with a Deficient Valuation. The
Stated Principal Balance of any Mortgage Loan that becomes a Liquidated Mortgage
Loan will be zero on each date following the Due Period in which such Mortgage
Loan becomes a Liquidated Mortgage Loan. References herein to the Stated
Principal Balance of the Mortgage Loans at any time shall mean the aggregate
Stated Principal Balance of all Mortgage Loans in the Trust Fund as of such
time, and references herein to the Stated Principal Balance of a Loan Group at
any time shall mean the aggregate Stated Principal Balance of all Mortgage Loans
in such Loan Group at such time.
Stepdown Date: The earlier to occur of (a) the Distribution Date
following the Distribution Date on which the aggregate Certificate Principal
Balance of the Senior Certificates is reduced to zero, and (b) the later to
occur of (x) the Distribution Date in December 2009 and (y) the first
Distribution Date on which the aggregate Certificate Principal Balance of the
Senior Certificates (after calculating anticipated distributions on such
Distribution Date) is less than or equal to 61.60% of the aggregate Stated
Principal Balance of the Mortgage Loans for such Distribution Date.
Stepdown Target Subordination Percentage: For each Class of
Subordinate Certificates (other than the Class M-1, Class M-2 and Class M-3
Certificates), the respective percentage indicated in the following table:
Stepdown Target
Subordination
Percentage
----------
Class M-4.................... 16.60%
Class M-5.................... 13.60%
Class M-6.................... 11.10%
Class M-7.................... 9.10%
Class M-8.................... 7.10%
Class M-9.................... 5.50%
Class B...................... 3.50%
Strip REMIC: As defined in the Preliminary Statement.
Strip REMIC Cap: As defined in the Preliminary Statement.
Subcontractor: Any vendor, subcontractor or other Person that is not
responsible for the overall servicing (as "servicing" is commonly understood by
participants in the mortgage-backed securities market) of Mortgage Loans but
performs one or more discrete functions identified in Item 1122(d) of Regulation
AB with respect to the Mortgage Loans under the direction or authority of the
Master Servicer or a Subservicer or the Trustee, as the case may be.
49
Subordinate Certificates: The Class M-1, Class M-2, Class M-3, Class
M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class M-9 and Class B
Certificates.
Subordinate Class Principal Distribution Amount: With respect to any
Distribution Date and any Class of Subordinate Certificates (other than the
Class M-1, Class M-2 and Class M-3 Certificates), the excess of (1) the sum of
(a) the aggregate Certificate Principal Balance of the Class A Certificates
(after taking into account distribution of the Class 1-A Principal Distribution
Amount and the Class 2-A Principal Distribution Amount for such Distribution
Date), (b) the aggregate Certificate Principal Balance of the Class M-1, Class
M-2 and Class M-3 Certificates (after taking into account distribution of the
Combined Class M-1, M-2 and M-3 Principal Distribution Amount for such
Distribution Date), (c) the aggregate Certificate Principal Balance of any
Classes of Subordinate Certificates (other than the Class M-1, Class M-2 and
Class M-3 Certificates) that are senior to the subject Class (in each case,
after taking into account distribution of the Subordinate Class Principal
Distribution Amount(s) for such senior Class(es) of Certificates for such
Distribution Date) and (d) the Certificate Principal Balance of the subject
Class of Subordinate Certificates immediately prior to such Distribution Date
over (2) the lesser of (a) the product of (x) 100% minus the Stepdown Target
Subordination Percentage for the subject Class of Certificates and (y) the
aggregate Stated Principal Balance of the Mortgage Loans for such Distribution
Date and (b) the aggregate Stated Principal Balance of the Mortgage Loans for
such Distribution Date minus the OC Floor; provided, however, that if such Class
of Subordinate Certificates is the only Class of Subordinate Certificates
outstanding on such Distribution Date, that Class will be entitled to receive
the entire remaining Principal Distribution Amount for Loan Group 1 and Loan
Group 2 until the Certificate Principal Balance thereof is reduced to zero.
Subordinate Net Rate Cap: With respect to any Distribution Date and
each Class of Subordinate Certificates, the weighted average of the Class 1-A
Net Rate Cap and the Class 2-A Net Rate Cap, weighted on the basis of the excess
(if any) of the sum of the aggregate Stated Principal Balance of the Mortgage
Loans in the related Loan Group as of the first day of the related Due Period
(after giving effect to Principal Prepayments received during the Prepayment
Period that ends during such Due Period) and the amount on deposit in the
Pre-Funding Account in respect of that Loan Group as of the first day of such
Due Period over the Certificate Principal Balance of the related Senior
Certificates immediately prior to such Distribution Date.
Subsequent Certificate Account Deposit: With respect to any
Subsequent Transfer Date, an amount equal to the aggregate of all amounts in
respect of (i) principal of the related Subsequent Mortgage Loans due after the
related Subsequent Cut-off Date and received by the Master Servicer on or before
such Subsequent Transfer Date and not applied in computing the Cut-off Date
Principal Balance thereof and (ii) interest on such Subsequent Mortgage Loans
due after such Subsequent Cut-off Date and received by the Master Servicer on or
before the Subsequent Transfer Date.
Subsequent Cut-off Date: In the case of any Subsequent Mortgage
Loan, the later of (x) the first day of the month of the related Subsequent
Transfer Date and (y) the date of origination of such Subsequent Mortgage Loan.
50
Subsequent Mortgage Loan: Any Mortgage Loan conveyed to the Trustee
on a Subsequent Transfer Date, and listed on the related Loan Number and
Borrower Identification Mortgage Loan Schedule delivered pursuant to Section
2.01(f). When used with respect to a single Subsequent Transfer Date,
"Subsequent Mortgage Loan" shall mean a Subsequent Mortgage Loan conveyed to the
Trustee on such Subsequent Transfer Date.
Subsequent Periodic Rate Cap: With respect to each Adjustable Rate
Mortgage Loan, the percentage specified in the related Mortgage Note that limits
permissible increases and decreases in the Mortgage Rate on any Adjustment Date
(other than the initial Adjustment Date).
Subsequent Recoveries: As to any Distribution Date, with respect to
a Liquidated Mortgage Loan that resulted in a Realized Loss in a prior calendar
month, unexpected amounts received by the Master Servicer (net of any related
expenses permitted to be reimbursed pursuant to Section 3.08 and 3.12)
specifically related to such Liquidated Mortgage Loan after the classification
of such Mortgage Loan as a Liquidated Mortgage Loan.
Subsequent Transfer Agreement: A Subsequent Transfer Agreement
substantially in the form of Exhibit P hereto, executed and delivered by the
Sellers, the Depositor and the Trustee as provided in Section 2.01(d).
Subsequent Transfer Date: For any Subsequent Transfer Agreement, the
"Subsequent Transfer Date" identified in such Subsequent Transfer Agreement;
provided, however, the Subsequent Transfer Date for any Subsequent Transfer
Agreement must be a Business Day and may not be a date earlier than the date on
which the Subsequent Transfer Agreement is executed and delivered by the parties
thereto pursuant to Section 2.01(d).
Subsequent Transfer Date Purchase Amount: With respect to any
Subsequent Transfer Date, the "Subsequent Transfer Date Purchase Amount"
identified in the related Subsequent Transfer Agreement which shall be an
estimate of the aggregate Stated Principal Balances of the Subsequent Mortgage
Loans identified in such Subsequent Transfer Agreement.
Subsequent Transfer Date Transfer Amount: With respect to any
Subsequent Transfer Date, an amount equal to the lesser of (i) the aggregate
Stated Principal Balances as of the related Subsequent Cut-off Dates of the
Subsequent Mortgage Loans conveyed on such Subsequent Transfer Date, as listed
on the related Loan Number and Borrower Identification Mortgage Loan Schedule
delivered pursuant to Section 2.01(f) and (ii) the amount on deposit in the
Pre-Funding Account.
Subservicer: As defined in Section 3.02(a).
Subservicing Agreement: As defined in Section 3.02(a).
Substitution Adjustment Amount: The meaning ascribed to such term
pursuant to Section 2.03(e).
Substitution Amount: With respect to any Mortgage Loan substituted
pursuant to Section 2.03(e), the excess of (x) the principal balance of the
Mortgage Loan that is substituted
51
for, over (y) the principal balance of the related substitute Mortgage Loan,
each balance being determined as of the date of substitution.
Successful Auction: An auction held pursuant to Section 9.04 at
which at least three Qualified Bidders submitted bids and at least one of those
bids was an Acceptable Bid Amount.
Swap Account: The separate Eligible Account created and initially
maintained by the Swap Trustee pursuant to Section 4.09.
Swap Contract: The transaction evidenced by the New Confirmation (as
assigned to the Swap Contract Administrator pursuant to the Swap Contract
Assignment Agreement), a form of which is attached hereto as Exhibit U.
Swap Contract Administration Agreement: The swap contract
administration agreement dated as of the Closing Date among CHL, the Trustee and
the Swap Contract Administrator, a form of which is attached hereto as Exhibit
V-2.
Swap Contract Administrator: The Bank of New York, in its capacity
as swap contract administrator under the Swap Contract Administration Agreement
and its successors and assigns.
Swap Contract Assignment Agreement: The Assignment Agreement dated
as of the Closing Date among CHL, the Swap Contract Administrator, Bear
Xxxxxxx Capital Markets Inc. and the Swap Counterparty, a form of which is
attached hereto as Exhibit V-1.
Swap Contract Termination Date: The Distribution Date in November
2011.
Swap Counterparty: Bear Xxxxxxx Financial Products Inc. and its
successors.
Swap Counterparty Trigger Event: Either (i) an "Event of Default"
under the Swap Contract with respect to which the Swap Counterparty is the
sole "Defaulting Party" (as defined in the Swap Contract) or (ii) a
"Termination Event" (other than an Illegality or a Tax Event (as such terms
are defined in the Swap Contract)) or "Additional Termination Event" under the
Swap Contract with respect to which the Swap Counterparty is the sole
"Affected Party" (as defined in the Swap Contract).
Swap-IO REMIC: As defined in the Preliminary Statement.
Swap Termination Payment: The payment payable to either party under
the Swap Contract due to an early termination of the Swap Contract.
Swap Trust: The trust fund established by Section 4.09.
Swap Trustee: The Bank of New York, a New York banking corporation,
not in its individual capacity, but solely in its capacity as trustee for the
benefit of the Holders of the Interest-Bearing Certificates under this
Agreement, and any successor thereto, and any corporation or national banking
association resulting from or surviving any consolidation or
52
merger to which it or its successors may be a party and any successor trustee as
may from time to time be serving as successor trustee hereunder.
Tax Matters Person: The person designated as "tax matters person" in
the manner provided under Treasury regulation ss. 1.860F-4(d) and Treasury
regulation ss. 301.6231(a)(7)-1. Initially, this person shall be the Trustee.
Tax Matters Person Certificate: With respect to the Master REMIC,
the Strip REMIC and the Swap-IO REMIC, the Class A-R Certificate with a
Denomination of $0.05 and in the form of Exhibit E hereto.
Termination Price: As defined in Section 9.01.
Terminator: As defined in Section 9.01.
Three-Year Hybrid Mortgage Loan: A Mortgage Loan having a Mortgage
Rate that is fixed for 36 months after origination thereof before such Mortgage
Rate becomes subject to adjustment.
Transaction Documents: This Agreement, the Swap Contract, the Swap
Contract Administration Agreement, each Mortgage Insurance Policy and any other
document or agreement entered into in connection with the Trust Fund, the
Certificates or the Mortgage Loans.
Transfer: Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate.
Transfer Affidavit: As defined in Section 5.02(c).
Transferor Certificate: As defined in Section 5.02(b).
Trigger Event: With respect to any Distribution Date on or after the
Stepdown Date, either a Delinquency Trigger Event with respect to that
Distribution Date or a Cumulative Loss Trigger Event with respect to that
Distribution Date.
Trust Fund: The corpus of the trust created hereunder consisting of
(i) the Mortgage Loans and all interest and principal received on or with
respect thereto after the Cut-off Date to the extent not applied in computing
the Cut-off Date Principal Balance thereof, exclusive of interest not required
to be deposited in the Certificate Account pursuant to Section 3.05(b)(2); (ii)
the Certificate Account, the Distribution Account, the Principal Reserve Fund,
the Carryover Reserve Fund, the Credit Comeback Excess Account, the Pre-Funding
Account and all amounts deposited therein pursuant to the applicable provisions
of this Agreement; (iii) property that secured a Mortgage Loan and has been
acquired by foreclosure, deed in lieu of foreclosure or otherwise; (iv) the
mortgagee's rights under the Insurance Policies with respect to the Mortgage
Loan; and (v) all proceeds of the conversion, voluntary or involuntary, of any
of the foregoing into cash or other liquid property.
53
Trustee: The Bank of New York, a New York banking corporation, not
in its individual capacity, but solely in its capacity as trustee for the
benefit of the Certificateholders under this Agreement, and any successor
thereto, and any corporation or national banking association resulting from or
surviving any consolidation or merger to which it or its successors may be a
party and any successor trustee as may from time to time be serving as successor
trustee hereunder.
Trustee Advance Notice: As defined in Section 4.01(d).
Trustee Advance Rate: With respect to any Advance made by the
Trustee pursuant to Section 4.01(d), a per annum rate of interest determined as
of the date of such Advance equal to the Prime Rate in effect on such date plus
5.00%.
Trustee Fee: As to any Distribution Date, an amount equal to
one-twelfth of the Trustee Fee Rate multiplied by the sum of (i) the Pool Stated
Principal Balance and (ii) any amounts remaining in the Pre-Funding Account
(excluding any investment earnings thereon) with respect to such Distribution
Date.
Trustee Fee Rate: With respect to each Mortgage Loan, the per annum
rate agreed upon in writing on or prior to the Closing Date by the Trustee and
the Depositor, which is 0.009% per annum.
Two-Year Hybrid Mortgage Loan: A Mortgage Loan having a Mortgage
Rate that is fixed for 24 months after origination thereof before such Mortgage
Rate becomes subject to adjustment.
Underwriter's Exemption: Prohibited Transaction Exemption 2002-41,
67 Fed. Reg. 54487 (2002), as amended (or any successor thereto), or any
substantially similar administrative exemption granted by the U.S. Department of
Labor.
Underwriters: Countrywide Securities Corporation, Greenwich Capital
Markets, Inc. and X.X. Xxxxxx Securities Inc.
Unpaid Realized Loss Amount: For any Class of Certificates and any
Distribution Date, (x) the portion of the aggregate Applied Realized Loss Amount
previously allocated to that Class remaining unpaid from prior Distribution
Dates minus (y) any increase in the Certificate Principal Balance of that Class
due to the allocation of Subsequent Recoveries to the Certificate Principal
Balance of that Class pursuant to Section 4.04(h).
Voting Rights: The voting rights of all the Certificates that are
allocated to any Certificates for purposes of the voting provisions hereunder.
Voting Rights allocated to each Class of Certificates shall be allocated 97% to
the Certificates other than the Class A-R, Class C and Class P Certificates
(with the allocation among the Certificates to be in proportion to the
Certificate Principal Balance of each Class relative to the Certificate
Principal Balance of all other such Classes), and 1% to each of the Class A-R,
Class C and Class P Certificates. Voting Rights will be allocated among the
Certificates of each such Class in accordance with their respective Percentage
Interests.
54
Winning Bidder: With respect to a Successful Auction, the Qualified
Bidder that bids the highest price.
Section 1.02 Certain Interpretive Provisions.
All terms defined in this Agreement shall have the defined meanings
when used in any certificate, agreement or other document delivered pursuant
hereto unless otherwise defined therein. For purposes of this Agreement and all
such certificates and other documents, unless the context otherwise requires:
(a) accounting terms not otherwise defined in this Agreement, and accounting
terms partly defined in this Agreement to the extent not defined, shall have the
respective meanings given to them under generally accepted accounting
principles; (b) the words "hereof," "herein" and "hereunder" and words of
similar import refer to this Agreement (or the certificate, agreement or other
document in which they are used) as a whole and not to any particular provision
of this Agreement (or such certificate, agreement or document); (c) references
to any Section, Schedule or Exhibit are references to Sections, Schedules and
Exhibits in or to this Agreement, and references to any paragraph, subsection,
clause or other subdivision within any Section or definition refer to such
paragraph, subsection, clause or other subdivision of such Section or
definition; (d) the term "including" means "including without limitation"; (e)
references to any law or regulation refer to that law or regulation as amended
from time to time and include any successor law or regulation; (f) references to
any agreement refer to that agreement as amended from time to time; (g)
references to any Person include that Person's permitted successors and assigns;
and (h) a Mortgage Loan is "30 days delinquent" if a Scheduled Payment has not
been received by the close of business on the Due Date on which the next
Scheduled Payment is due. Similarly for "60 days delinquent," "90 days
delinquent" and so on.
ARTICLE II.
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
Section 2.01 Conveyance of Mortgage Loans.
(a) Each Seller hereby sells, transfers, assigns, sets over and
otherwise conveys to the Depositor, without recourse, all the right, title and
interest of such Seller in and to the applicable Initial Mortgage Loans,
including all interest and principal received and receivable by such Seller on
or with respect to applicable Initial Mortgage Loans after the Initial Cut-off
Date (to the extent not applied in computing the Cut-off Date Principal Balance
thereof) or deposited into the Certificate Account by the Master Servicer on
behalf of such Seller as part of the Initial Certificate Account Deposit as
provided in this Agreement, other than principal due on the applicable Initial
Mortgage Loans on or prior to the Initial Cut-off Date and interest accruing
prior to the Initial Cut-off Date. The Master Servicer confirms that, on behalf
of the Sellers, concurrently with the transfer and assignment, it has deposited
into the Certificate Account the Initial Certificate Account Deposit.
Immediately upon the conveyance of the Initial Mortgage Loans
referred to in the preceding paragraph, the Depositor sells, transfers, assigns,
sets over and otherwise conveys to
55
the Trustee for benefit of the Certificateholders, without recourse, all right,
title and interest in and to the Initial Mortgage Loans.
CHL further agrees (x) to cause The Bank of New York to enter into
the Swap Contract Administration Agreement as Swap Contract Administrator and
(y) to assign all of its right, title and interest in and to the interest rate
swap transaction evidenced by the Old Confirmation, and to cause all of its
obligations in respect of such transaction to be assumed by, the Swap Contract
Administrator, on the terms and conditions set forth in the Swap Contract
Assignment Agreement.
(b) Subject to the execution and delivery of the related Subsequent
Transfer Agreement as provided by Section 2.01(d) and the terms and conditions
of this Agreement, each Seller sells, transfers, assigns, sets over and
otherwise conveys to the Depositor, without recourse, on each Subsequent
Transfer Date, all the right, title and interest of such Seller in and to the
related Subsequent Mortgage Loans, including all interest and principal received
and receivable by such Seller on or with respect to such Subsequent Mortgage
Loans after the related Subsequent Cut-off Date (to the extent not applied in
computing the Cut-off Date Principal Balance thereof) or deposited into the
Certificate Account by the Master Servicer on behalf of such Seller as part of
any related Subsequent Certificate Account Deposit as provided in this
Agreement, other than principal due on such Subsequent Mortgage Loans on or
prior to the related Subsequent Cut-off Date and interest accruing prior to the
related Subsequent Cut-off Date.
Immediately upon the conveyance of the Subsequent Mortgage Loans
referred to in the preceding paragraph, the Depositor sells, transfers, assigns,
sets over and otherwise conveys to the Trustee for benefit of the
Certificateholders, without recourse, all right, title and interest in the
Subsequent Mortgage Loans.
(c) Each Seller has entered into this Agreement in consideration for
the purchase of the Mortgage Loans by the Depositor and has agreed to take the
actions specified herein. The Depositor, concurrently with the execution and
delivery of this Agreement, hereby sells, transfers, assigns and otherwise
conveys to the Trustee for the use and benefit of the Certificateholders,
without recourse, all right, title and interest in the portion of the Trust Fund
not otherwise conveyed to the Trustee pursuant to Section 2.01(a) or (b).
(d) On any Business Day during the Funding Period designated by CHL
to the Trustee, the Sellers, the Depositor and the Trustee shall complete,
execute and deliver a Subsequent Transfer Agreement. After the execution and
delivery of such Subsequent Transfer Agreement, on the Subsequent Transfer Date,
the Trustee shall set aside in the Pre-Funding Account an amount equal to the
related Subsequent Transfer Date Purchase Amount.
(e) The transfer of Subsequent Mortgage Loans on the Subsequent
Transfer Date is subject to the satisfaction of each of the following
conditions:
(1) the Trustee and the Underwriters will be provided Opinions of
Counsel addressed to the Rating Agencies as with respect to the sale of
the Subsequent Mortgage Loans conveyed on such Subsequent Transfer Date
(such opinions being
56
substantially similar to the opinions delivered on the Closing Date to the
Rating Agencies with respect to the sale of the Initial Mortgage Loans on
the Closing Date), to be delivered as provided in Section 2.01(f);
(2) the execution and delivery of such Subsequent Transfer Agreement
or conveyance of the related Subsequent Mortgage Loans does not result in
a reduction or withdrawal of any ratings assigned to the Certificates by
the Rating Agencies;
(3) the Depositor shall deliver to the Trustee an Officer's
Certificate confirming the satisfaction of each of the conditions set
forth in this Section 2.01(e) required to be satisfied by such Subsequent
Transfer Date;
(4) each Subsequent Mortgage Loan conveyed on such Subsequent
Transfer Date satisfies the representations and warranties applicable to
it under this Agreement, provided, however, that with respect to a breach
of a representation and warranty with respect to a Subsequent Mortgage
Loan set forth in this clause (4), the obligation under Section 2.03(e) of
this Agreement of the applicable Seller, to cure, repurchase or replace
such Subsequent Mortgage Loan shall constitute the sole remedy against
such Seller respecting such breach available to Certificateholders, the
Depositor or the Trustee;
(5) the Subsequent Mortgage Loans conveyed on such Subsequent
Transfer Date were selected in a manner reasonably believed not to be
adverse to the interests of the Certificateholders;
(6) no Subsequent Mortgage Loan conveyed on such Subsequent Transfer
Date was 30 or more days delinquent as of the related Cut-off Date;
(7) following the conveyance of the Subsequent Mortgage Loans on
such Subsequent Transfer Date, the characteristics of each Loan Group will
not vary by more than the amount specified below (other than (i) the
percentage of Mortgage Loans secured by Mortgaged Properties located in
the State of California, which will not exceed 50% of the Mortgage Loans
in each Loan Group and (ii) the percentage of Mortgage Loans in the Credit
Grade Categories of "C" or below, which will not exceed 15% of the
Mortgage Loans in each Loan Group) from the characteristics listed below;
provided that for the purpose of making such calculations, the
characteristics for any Initial Mortgage Loan made will be taken as of the
Initial Cut-off Date and the characteristics for any Subsequent Mortgage
Loans will be taken as of the Subsequent Cut-off Date:
Loan Group 1
Characteristic Value Permitted Variance
-------------- ----- ------------------
Weighted Average Mortgage Rate........ 8.498% +/-0.10%
Weighted Average Original Loan-to-Value Ratio 77.96% +/-3.00%
Weighted Average Credit Bureau Risk Score 589 points +/-5 points
Percentage Originated under CHL's Full
Documentation Program................. 66.38% +/-3.00%
57
Weighted Average Gross Margin of Adjustable Rate
Mortgage Loans........................ 6.525% +/-0.10%
Loan Group 2
Characteristic Value Permitted Variance
-------------- ----- ------------------
Weighted Average Mortgage Rate........ 8.111% +/-0.10%
Weighted Average Original Loan-to-Value Ratio 80.08% +/-3.00%
Weighted Average Credit Bureau Risk Score 627 points +/-5 points
Percentage Originated under CHL's Full
Documentation Program................. 50.19% +/-3.00%
Weighted Average Gross Margin of Adjustable Rate
Mortgage Loans........................ 6.152% +/-0.10%
(8) none of the Sellers or the Depositor is insolvent and neither of
the Sellers nor the Depositor will be rendered insolvent by the conveyance
of Subsequent Mortgage Loans on such Subsequent Transfer Date; and
(9) the Trustee and the Underwriters will be provided with an
Opinion of Counsel, which Opinion of Counsel shall not be at the expense
of either the Trustee or the Trust Fund, addressed to the Trustee, to the
effect that such purchase of Subsequent Mortgage Loans will not (i) result
in the imposition of the tax on "prohibited transactions" on the Trust
Fund or contributions after the Startup Date, as defined in Sections
860F(a)(2) and 860G(d) of the Code, respectively or (ii) cause any REMIC
formed hereunder to fail to qualify as a REMIC, such opinion to be
delivered as provided in Section 2.01(f).
The Trustee shall not be required to investigate or otherwise verify
compliance with these conditions, except for its own receipt of documents
specified above, and shall be entitled to rely on the required Officer's
Certificate.
(f) Within six Business Days after each Subsequent Transfer Date,
upon (1) delivery to the Trustee by the Depositor of the Opinions of Counsel
referred to in Section 2.01(e)(1) and (e)(9), (2) delivery to the Trustee by CHL
(on behalf of each Seller) of a Loan Number and Borrower Identification Mortgage
Loan Schedule reflecting the Subsequent Mortgage Loans conveyed on such
Subsequent Transfer Date and the Loan Group into which each Subsequent Mortgage
Loan was conveyed, (3)deposit in the Certificate Account by the Master Servicer
on behalf of the Sellers of the applicable Subsequent Certificate Account
Deposit, and (4) delivery to the Trustee by the Depositor of an Officer's
Certificate confirming the satisfaction of each of the conditions precedent set
forth in this Section 2.01(f), the Trustee shall pay the applicable Seller the
Subsequent Transfer Date Transfer Amount from such funds that were set aside in
the Pre-Funding Account pursuant to Section 2.01(d). The positive difference, if
any, between the Subsequent Transfer Date Transfer Amount and the Subsequent
Transfer Date Purchase Amount shall be re-invested by the Trustee in the
Pre-Funding Account.
58
The Trustee shall not be required to investigate or otherwise verify
compliance with the conditions set forth in the preceding paragraph, except for
its own receipt of documents specified above, and shall be entitled to rely on
the required Officer's Certificate.
Within thirty days after each Subsequent Transfer Date, the
Depositor shall deliver to the Trustee a letter of a nationally recognized firm
of independent public accountants stating whether or not the Subsequent Mortgage
Loans conveyed on such Subsequent Transfer Date conform to the characteristics
described in Section 2.01(e)(6) and (7).
(g) In connection with the transfer and assignment of each Mortgage
Loan, the Depositor has delivered to, and deposited with, the Co-Trustee (or, in
the case of the Delay Delivery Mortgage Loans, will deliver to, and deposit
with, the Co-Trustee within the time periods specified in the definition of
Delay Delivery Mortgage Loans) (except as provided in clause (vi) below) for the
benefit of the Certificateholders, the following documents or instruments with
respect to each such Mortgage Loan so assigned (with respect to each Mortgage
Loan, clause (i) through (vi) below, together, the "Mortgage File" for each such
Mortgage Loan):
(i) the original Mortgage Note, endorsed by manual or
facsimile signature in blank in the following form: "Pay to the
order of ________________ without recourse", with all intervening
endorsements that show a complete chain of endorsement from the
originator to the Person endorsing the Mortgage Note (each such
endorsement being sufficient to transfer all right, title and
interest of the party so endorsing, as noteholder or assignee
thereof, in and to that Mortgage Note), or, if the original Mortgage
Note has been lost or destroyed and not replaced, an original lost
note affidavit, stating that the original Mortgage Note was lost or
destroyed, together with a copy of the related Mortgage Note and all
such intervening endorsements;
(ii) in the case of each Mortgage Loan that is not a MERS
Mortgage Loan, the original recorded Mortgage or a copy of such
Mortgage, with recording information, and in the case of each MERS
Mortgage Loan, the original Mortgage or a copy of such Mortgage,
with recording information, noting the presence of the MIN of the
Mortgage Loan and language indicating that the Mortgage Loan is a
MOM Loan if the Mortgage Loan is a MOM Loan, with evidence of
recording indicated thereon, or a copy of the Mortgage certified by
the public recording office in which such Mortgage has been
recorded;
(iii) in the case of each Mortgage Loan that is not a MERS
Mortgage Loan, a duly executed assignment of the Mortgage to
"Asset-Backed Certificates, Series 2006-21, CWABS, Inc., by The Bank
of New York, a New York banking corporation, as trustee under the
Pooling and Servicing Agreement dated as of November 1, 2006,
without recourse" or a copy of such assignment, with recording
information, (each such assignment, when duly and validly completed,
to be in recordable form and sufficient to effect the assignment of
and transfer to the assignee thereof, under the Mortgage to which
such assignment relates);
59
(iv) the original recorded assignment or assignments of the
Mortgage or a copy of such assignments, with recording information,
together with all interim recorded assignments of such Mortgage or a
copy of such assignments, with recording information (in each case
noting the presence of a MIN in the case of each MERS Mortgage
Loan);
(v) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any; and
(vi) the original or duplicate original lender's title policy
or a copy of lender's title policy or a printout of the electronic
equivalent and all riders thereto or, in the event such original
title policy has not been received from the insurer, such original
or duplicate original lender's title policy and all riders thereto
shall be delivered within one year of the Closing Date.
In addition, in connection with the assignment of any MERS Mortgage
Loan, each Seller agrees that it will cause, at such Seller's own expense, the
MERS(R) System to indicate (and provide evidence to the Trustee that it has done
so) that such Mortgage Loans have been assigned by such Seller to the Trustee in
accordance with this Agreement for the benefit of the Certificateholders by
including (or deleting, in the case of Mortgage Loans which are repurchased in
accordance with this Agreement) in such computer files (a) the code "[IDENTIFY
TRUSTEE SPECIFIC CODE]" in the field "[IDENTIFY THE FIELD NAME FOR TRUSTEE]"
which identifies the Trustee and (b) the code "[IDENTIFY SERIES SPECIFIC CODE
NUMBER]" in the field "Pool Field" which identifies the series of the
Certificates issued in connection with such Mortgage Loans. The Sellers further
agree that they will not, and will not permit the Master Servicer to, and the
Master Servicer agrees that it will not, alter the codes referenced in this
paragraph with respect to any Mortgage Loan during the term of this Agreement
unless and until such Mortgage Loan is repurchased in accordance with the terms
of this Agreement.
In the event that in connection with any Mortgage Loan that is not a
MERS Mortgage Loan a Seller cannot deliver the original recorded Mortgage or all
interim recorded assignments of the Mortgage satisfying the requirements of
clause (ii), (iii) or (iv) concurrently with the execution and delivery hereof,
such Seller shall deliver or cause to be delivered to the Co-Trustee a true copy
of such Mortgage and of each such undelivered interim assignment of the Mortgage
each certified by such Seller, the applicable title company, escrow agent or
attorney, or the originator of such Mortgage, as the case may be, to be a true
and complete copy of the original Mortgage or assignment of Mortgage submitted
for recording. For any such Mortgage Loan that is not a MERS Mortgage Loan each
Seller shall promptly deliver or cause to be delivered to the Co-Trustee such
original Mortgage and such assignment or assignments with evidence of recording
indicated thereon upon receipt thereof from the public recording official, or a
copy thereof, certified, if appropriate, by the relevant recording office, but
in no event shall any such delivery be made later than 270 days following the
Closing Date; provided that in the event that by such date such Seller is unable
to deliver or cause to be delivered each such Mortgage and each interim
assignment by reason of the fact that any such documents have not been returned
by the appropriate recording office, or, in the case of each interim assignment,
because the related Mortgage has not been returned by the appropriate recording
office, such
60
Seller shall deliver or cause to be delivered such documents to the Co-Trustee
as promptly as possible upon receipt thereof. If the public recording office in
which a Mortgage or interim assignment thereof is recorded retains the original
of such Mortgage or assignment, a copy of the original Mortgage or assignment so
retained, with evidence of recording thereon, certified to be true and complete
by such recording office, shall satisfy a Seller's obligations in Section 2.01.
If any document submitted for recording pursuant to this Agreement is (x) lost
prior to recording or rejected by the applicable recording office, the
applicable Seller shall immediately prepare or cause to be prepared a substitute
and submit it for recording, and shall deliver copies and originals thereof in
accordance with the foregoing or (y) lost after recording, the applicable Seller
shall deliver to the Co-Trustee a copy of such document certified by the
applicable public recording office to be a true and complete copy of the
original recorded document. Each Seller shall promptly forward or cause to be
forwarded to the Co-Trustee (x) from time to time additional original documents
evidencing an assumption or modification of a Mortgage Loan and (y) any other
documents required to be delivered by the Depositor or the Master Servicer to
the Co-Trustee within the time periods specified in this Section 2.01.
With respect to each Mortgage Loan other than a MERS Mortgage Loan
as to which the related Mortgaged Property and Mortgage File are located in any
jurisdiction under the laws of which the recordation of the assignment specified
in clause (iii) above is not necessary to protect the Trustee's and the
Certificateholders' interest in the related Mortgage Loan, as evidenced by an
Opinion of Counsel delivered by CHL to the Trustee within 90 days of the Closing
Date (which opinion may be in the form of a "survey" opinion and is not required
to be delivered by counsel admitted to practice law in the jurisdiction as to
which such opinion applies), in lieu of recording the assignment specified in
clause (iii) above, the applicable Seller may deliver an unrecorded assignment
in blank, in form otherwise suitable for recording to the Co-Trustee; provided
that if the related Mortgage has not been returned from the applicable public
recording office, such assignment, or any copy thereof, of the Mortgage may
exclude the information to be provided by the recording office. As to any
Mortgage Loan other than a MERS Mortgage Loan, the procedures of the preceding
sentence shall be applicable only so long as the related Mortgage File is
maintained in the possession of the Co-Trustee in the State or jurisdiction
described in such sentence. In the event that with respect to Mortgage Loans
other than MERS Mortgage Loans (I) any Seller, the Depositor, the Master
Servicer or the NIM Insurer gives written notice to the Trustee that recording
is required to protect the right, title and interest of the Trustee on behalf of
the Certificateholders in and to any Mortgage Loan, (II) a court recharacterizes
any sale of the Mortgage Loans as a financing, or (III) as a result of any
change in or amendment to the laws of the State or jurisdiction described in the
first sentence of this paragraph or any applicable political subdivision
thereof, or any change in official position regarding application or
interpretation of such laws, including a holding by a court of competent
jurisdiction, such recording is so required, the Co-Trustee shall complete the
assignment in the manner specified in clause (iii) above and CHL shall submit or
cause to be submitted for recording as specified above or, should CHL fail to
perform such obligations, the Trustee shall cause the Master Servicer, at the
Master Servicer's expense, to cause each such previously unrecorded assignment
to be submitted for recording as specified above. In the event a Mortgage File
is released to the Master Servicer as a result of the Master Servicer's having
completed a Request for Document Release, the Trustee shall complete the
assignment of the related Mortgage in the manner specified in clause (iii)
above.
61
So long as the Co-Trustee or its agent maintains an office in the
State of California, the Co-Trustee or its agent shall maintain possession of
and not remove or attempt to remove from the State of California any of the
Mortgage Files as to which the related Mortgaged Property is located in such
State. In the event that a Seller fails to record an assignment of a Mortgage
Loan as herein provided within 90 days of notice of an event set forth in clause
(I), (II) or (III) of the preceding paragraph, the Master Servicer shall prepare
and, if required hereunder, file such assignments for recordation in the
appropriate real property or other records office. Each Seller hereby appoints
the Master Servicer (and any successor servicer hereunder) as its
attorney-in-fact with full power and authority acting in its stead for the
purpose of such preparation, execution and filing.
In the case of Mortgage Loans that become the subject of a Principal
Prepayment between the Closing Date (in the case of Initial Mortgage Loans) or
related Subsequent Transfer Date (in the case of Subsequent Mortgage Loans) and
the Cut-off Date, CHL shall deposit or cause to be deposited in the Certificate
Account the amount required to be deposited therein with respect to such payment
pursuant to Section 3.05 hereof.
Notwithstanding anything to the contrary in this Agreement, within
thirty days after the Closing Date (in the case of Initial Mortgage Loans) or
within twenty days after the related Subsequent Transfer Date (in the case of
Subsequent Mortgage Loans), CHL (on behalf of each Seller) shall either (i)
deliver to the Co-Trustee the Mortgage File as required pursuant to this Section
2.01 for each Delay Delivery Mortgage Loan or (ii) (A) repurchase the Delay
Delivery Mortgage Loan or (B) substitute the Delay Delivery Mortgage Loan for a
Replacement Mortgage Loan, which repurchase or substitution shall be
accomplished in the manner and subject to the conditions set forth in Section
2.03, provided that if CHL fails to deliver a Mortgage File for any Delay
Delivery Mortgage Loan within the period provided in the prior sentence, the
cure period provided for in Section 2.02 or in Section 2.03 shall not apply to
the initial delivery of the Mortgage File for such Delay Delivery Mortgage Loan,
but rather CHL shall have five (5) Business Days to cure such failure to
deliver. CHL shall promptly provide each Rating Agency with written notice of
any cure, repurchase or substitution made pursuant to the proviso of the
preceding sentence. On or before the thirtieth (30th) day (or if such thirtieth
day is not a Business Day, the succeeding Business Day) after the Closing Date
(in the case of Initial Mortgage Loans) or within twenty days after the related
Subsequent Transfer Date (in the case of Subsequent Mortgage Loans), the Trustee
shall, in accordance with the provisions of Section 2.02, send a Delay Delivery
Certification substantially in the form annexed hereto as Exhibit G-3 (with any
applicable exceptions noted thereon) for all Delay Delivery Mortgage Loans
delivered within thirty (30) days after such date. The Trustee will promptly
send a copy of such Delay Delivery Certification to each Rating Agency.
Each Seller has entered into this Agreement in consideration for the
purchase of the Mortgage Loans sold by such Seller to the Depositor and has
agreed to take the actions specified herein. The Depositor, concurrently with
the execution and delivery of this Agreement, hereby sells, transfers, assigns
and otherwise conveys to the Trustee for the use and benefit of the
Certificateholders, without recourse, all right, title and interest in the
portion of the Trust Fund not otherwise conveyed to the Trustee pursuant to
Sections 2.01(a) or (b).
62
Section 2.02 Acceptance by Trustee of the Mortgage Loans.
(a) The Co-Trustee acknowledges receipt, subject to the limitations
contained in and any exceptions noted in the Initial Certification in the form
annexed hereto as Exhibit G-1 and in the list of exceptions attached thereto, of
the documents referred to in clauses (i) and (iii) of Section 2.01(g) above with
respect to the Initial Mortgage Loans and all other assets included in the Trust
Fund and declares that it holds and will hold such documents and the other
documents delivered to it constituting the Mortgage Files, and that it holds or
will hold such other assets included in the Trust Fund, in trust for the
exclusive use and benefit of all present and future Certificateholders.
The Trustee agrees to execute and deliver on the Closing Date to the
Depositor, the Master Servicer and CHL (on behalf of each Seller) an Initial
Certification substantially in the form annexed hereto as Exhibit G-1 to the
effect that, as to each Initial Mortgage Loan listed in the Mortgage Loan
Schedule (other than any Initial Mortgage Loan paid in full or any Initial
Mortgage Loan specifically identified in such certification as not covered by
such certification), the documents described in Section 2.01(g)(i) and, in the
case of each Initial Mortgage Loan that is not a MERS Mortgage Loan, the
documents described in Section 2.01(g)(iii) with respect to such Initial
Mortgage Loans as are in the Co-Trustee's possession and based on its review and
examination and only as to the foregoing documents, such documents appear
regular on their face and relate to such Initial Mortgage Loan. The Trustee
agrees to execute and deliver within 30 days after the Closing Date to the
Depositor, the Master Servicer and CHL (on behalf of each Seller) an Interim
Certification substantially in the form annexed hereto as Exhibit G-2 to the
effect that, as to each Initial Mortgage Loan listed in the Mortgage Loan
Schedule (other than any Initial Mortgage Loan paid in full or any Initial
Mortgage Loan specifically identified in such certification as not covered by
such certification) all documents required to be delivered to the Co-Trustee
pursuant to the Agreement with respect to such Initial Mortgage Loans are in its
possession (except those documents described in Section 2.01(g)(vi)) and based
on its review and examination and only as to the foregoing documents, (i) such
documents appear regular on their face and relate to such Initial Mortgage Loan,
and (ii) the information set forth in items (i), (iv), (v), (vi), (viii), (ix)
and (xv) of the definition of the "Mortgage Loan Schedule" accurately reflects
information set forth in the Mortgage File. On or before the thirtieth (30th)
day after the Closing Date (or if such thirtieth day is not a Business Day, the
succeeding Business Day), the Trustee shall deliver to the Depositor, the Master
Servicer and CHL (on behalf of each Seller) a Delay Delivery Certification with
respect to the Initial Mortgage Loans substantially in the form annexed hereto
as Exhibit G-3, with any applicable exceptions noted thereon. The Trustee or the
Co-Trustee, as applicable, shall be under no duty or obligation to inspect,
review or examine such documents, instruments, certificates or other papers to
determine that the same are genuine, enforceable or appropriate for the
represented purpose or that they have actually been recorded in the real estate
records or that they are other than what they purport to be on their face.
Not later than 180 days after the Closing Date, the Trustee shall
deliver to the Depositor, the Master Servicer, CHL (on behalf of each Seller)
and any Certificateholder that so requests, a Final Certification with respect
to the Initial Mortgage Loans substantially in the form annexed hereto as
Exhibit H, with any applicable exceptions noted thereon.
63
In connection with the Trustee's completion and delivery of such
Final Certification, the Co-Trustee, at the direction of the Trustee, shall
review each Mortgage File with respect to the Initial Mortgage Loans to
determine that such Mortgage File contains the following documents:
(i) the original Mortgage Note, endorsed by manual or
facsimile signature in blank in the following form: "Pay to the
order of ________________ without recourse", with all intervening
endorsements that show a complete chain of endorsement from the
originator to the Person endorsing the Mortgage Note (each such
endorsement being sufficient to transfer all right, title and
interest of the party so endorsing, as noteholder or assignee
thereof, in and to that Mortgage Note), or, if the original Mortgage
Note has been lost or destroyed and not replaced, an original lost
note affidavit, stating that the original Mortgage Note was lost or
destroyed, together with a copy of the related Mortgage Note and all
such intervening endorsements;
(ii) in the case of each Initial Mortgage Loan that is not a
MERS Mortgage Loan, the original recorded Mortgage or a copy of such
Mortgage, with recording information, and in the case of each
Initial Mortgage Loan that is a MERS Mortgage Loan, the original
Mortgage or a copy of such Mortgage, with recording information,
noting the presence of the MIN of the Initial Mortgage Loan and
language indicating that the Mortgage Loan is a MOM Loan if the
Initial Mortgage Loan is a MOM Loan, with evidence of recording
indicated thereon, or a copy of the Mortgage certified by the public
recording office in which Mortgage has been recorded;
(iii) in the case of each Initial Mortgage Loan that is not a
MERS Mortgage Loan, a duly executed assignment of the Mortgage or a
copy thereof with recording information, in either case in the form
permitted by Section 2.01;
(iv) the original recorded assignment or assignments of the
Mortgage or a copy of such assignments, with recording information,
together with all interim recorded assignments of such Mortgage or a
copy of such assignments, with recording information (in each case
noting the presence of a MIN in the case of each MERS Mortgage
Loan);
(v) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any; and
(vi) the original or duplicate original lender's title policy
or a copy of lender's title policy or a printout of the electronic
equivalent and all riders thereto.
If, in the course of such review, the Co-Trustee finds any document
or documents constituting a part of such Mortgage File that do not meet the
requirements of clauses (i)-(iv) and (vi) above, the Trustee shall include such
exceptions in such Final Certification (and the Trustee shall state in such
Final Certification whether any Mortgage File does not then include the original
or duplicate original lender's title policy or a printout of the electronic
equivalent and all
64
riders thereto). If the public recording office in which a Mortgage or
assignment thereof is recorded retains the original of such Mortgage or
assignment, a copy of the original Mortgage or assignment so retained, with
evidence of recording thereon, certified to be true and complete by such
recording office, shall be deemed to satisfy the requirements of clause (ii),
(iii) or (iv) above, as applicable. CHL shall promptly correct or cure such
defect referred to above within 90 days from the date it was so notified of such
defect and, if CHL does not correct or cure such defect within such period, CHL
shall either (A) if the time to cure such defect expires prior to the end of the
second anniversary of the Closing Date, substitute for the related Initial
Mortgage Loan a Replacement Mortgage Loan, which substitution shall be
accomplished in the manner and subject to the conditions set forth in Section
2.03, or (B) purchase such Initial Mortgage Loan from the Trust Fund within 90
days from the date CHL was notified of such defect in writing at the Purchase
Price of such Initial Mortgage Loan; provided that any such substitution
pursuant to (A) above or repurchase pursuant to (B) above shall not be effected
prior to the delivery to the Trustee of the Opinion of Counsel required by
Section 2.05 hereof and any substitution pursuant to (A) above shall not be
effected prior to the additional delivery to the Co-Trustee of a Request for
File Release. No substitution will be made in any calendar month after the
Determination Date for such month. The Purchase Price for any such Initial
Mortgage Loan shall be deposited by CHL in the Certificate Account and, upon
receipt of such deposit and Request for File Release with respect thereto, the
Co-Trustee shall release the related Mortgage File to CHL and shall execute and
deliver at CHL's request such instruments of transfer or assignment as CHL has
prepared, in each case without recourse, as shall be necessary to vest in CHL,
or a designee, the Trustee's interest in any Initial Mortgage Loan released
pursuant hereto. If pursuant to the foregoing provisions CHL repurchases an
Initial Mortgage Loan that is a MERS Mortgage Loan, the Master Servicer shall
cause MERS to execute and deliver an assignment of the Mortgage in recordable
form to transfer the Mortgage from MERS to CHL and shall cause such Mortgage to
be removed from registration on the MERS(R) System in accordance with MERS'
rules and regulations.
The Co-Trustee shall retain possession and custody of each Mortgage
File in accordance with and subject to the terms and conditions set forth
herein. Each Seller shall promptly deliver to the Co-Trustee, upon the execution
or receipt thereof, the originals of such other documents or instruments
constituting the Mortgage File that come into the possession of such Seller from
time to time.
It is understood and agreed that the obligation of CHL to substitute
for or to purchase any Mortgage Loan that does not meet the requirements of
Section 2.02(a) above shall constitute the sole remedy respecting such defect
available to the Trustee, the Co-Trustee, the Depositor and any
Certificateholder against any Seller.
It is understood and agreed that the obligation of CHL to substitute
for or to purchase, pursuant to Section 2.02(a), any Initial Mortgage Loan whose
Mortgage File contains any document or documents that does not meet the
requirements of clauses (i)-(iv) and (vi) above and which defect is not
corrected or cured by CHL within 90 days from the date it was notified of such
defect, shall constitute the sole remedy respecting such defect available to the
Trustee, the Co-Trustee, the Depositor and any Certificateholder against any
Seller.
65
(b) The Trustee agrees to execute and deliver on the Subsequent
Transfer Date to the Depositor, the Master Servicer and CHL (on behalf of each
Seller) an Initial Certification substantially in the form annexed hereto as
Exhibit G-4 to the effect that, as to each Subsequent Mortgage Loan listed in
the Mortgage Loan Schedule (other than any Subsequent Mortgage Loan paid in full
or any Subsequent Mortgage Loan specifically identified in such certification as
not covered by such certification), the documents described in Section
2.01(g)(i) and, in the case of each Subsequent Mortgage Loan that is not a MERS
Mortgage Loan, the documents described in Section 2.01(g)(iii), with respect to
such Subsequent Mortgage Loan are in its possession, and based on its review and
examination and only as to the foregoing documents, such documents appear
regular on their face and relate to such Subsequent Mortgage Loan.
The Trustee agrees to execute and deliver within 30 days after the
Subsequent Transfer Date to the Depositor, the Master Servicer and CHL (on
behalf of each Seller) an Interim Certification substantially in the form
annexed hereto as Exhibit G-2 to the effect that, as to each Subsequent Mortgage
Loan listed in the Mortgage Loan Schedule (other than any Subsequent Mortgage
Loan paid in full or any Subsequent Mortgage Loan specifically identified in
such certification as not covered by such certification), all documents required
to be delivered to it pursuant to this Agreement with respect to such Subsequent
Mortgage Loan are in its possession (except those described in Section
2.01(g)(vi)) and based on its review and examination and only as to the
foregoing documents, (i) such documents appear regular on their face and relate
to such Subsequent Mortgage Loan, and (ii) the information set forth in items
(i), (iv), (v), (vi), (viii), (ix) and (xv) of the definition of the "Mortgage
Loan Schedule" accurately reflects information set forth in the Mortgage File.
On or before the thirtieth (30th) day after the Subsequent Transfer Date (or if
such thirtieth day is not a Business Day, the succeeding Business Day), the
Trustee shall deliver to the Depositor, the Master Servicer and CHL (on behalf
of each Seller) a Delay Delivery Certification with respect to the Subsequent
Mortgage Loans substantially in the form annexed hereto as Exhibit G-3, with any
applicable exceptions noted thereon, together with a Subsequent Certification
substantially in the form annexed hereto as Exhibit G-4. The Trustee shall be
under no duty or obligation to inspect, review or examine such documents,
instruments, certificates or other papers to determine that the same are
genuine, enforceable or appropriate for the represented purpose or that they
have actually been recorded in the real estate records or that they are other
than what they purport to be on their face.
Not later than 180 days after the Subsequent Transfer Date, the
Trustee shall deliver to the Depositor, the Master Servicer, CHL (on behalf of
each Seller) and to any Certificateholder that so requests a Final Certification
with respect to the Subsequent Mortgage Loans substantially in the form annexed
hereto as Exhibit H, with any applicable exceptions noted thereon.
In connection with the Trustee's completion and delivery of such
Final Certification, the Co-Trustee shall review each Mortgage File with respect
to the Subsequent Mortgage Loans to determine that such Mortgage File contains
the following documents:
(i) the original Mortgage Note, endorsed by manual or
facsimile signature in blank in the following form: "Pay to the
order of ________________ without recourse", with all intervening
endorsements that show a complete chain
66
of endorsement from the originator to the Person endorsing the
Mortgage Note (each such endorsement being sufficient to transfer
all right, title and interest of the party so endorsing, as
noteholder or assignee thereof, in and to that Mortgage Note), or,
if the original Mortgage Note has been lost or destroyed and not
replaced, an original lost note affidavit, stating that the original
Mortgage Note was lost or destroyed, together with a copy of the
related Mortgage Note and all such intervening endorsements;
(ii) in the case of each Subsequent Mortgage Loan that is not
a MERS Mortgage Loan, the original recorded Mortgage or a copy of
such Mortgage, with recording information, and in the case of each
Subsequent Mortgage Loan that is a MERS Mortgage Loan, the original
Mortgage or a copy of such Mortgage, with recording information,
noting the presence of the MIN of the Subsequent Mortgage Loan and
language indicating that the Subsequent Mortgage Loan is a MOM Loan
if the Subsequent Mortgage Loan is a MOM Loan, with evidence of
recording indicated thereon, or a copy of the Mortgage certified by
the public recording office in which Mortgage has been recorded;
(iii) in the case of each Subsequent Mortgage Loan that is not
a MERS Mortgage Loan, a duly executed assignment of the Mortgage or
a copy thereof with recording information, in either case in the
form permitted by Section 2.01;
(iv) the original recorded assignment or assignments of the
Mortgage or a copy of such assignments, with recording information,
together with all interim recorded assignments of such Mortgage or a
copy of such assignments, with recording information (in each case
noting the presence of a MIN in the case of each MERS Mortgage
Loan);
(v) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any; and
(vi) the original or duplicate original lender's title policy
or a copy of lender's title policy or a printout of the electronic
equivalent and all riders thereto.
If, in the course of such review, the Trustee finds any document or
documents constituting a part of such Mortgage File that do not meet the
requirements of clauses (i)-(iv) and (vi) above, the Trustee shall include such
exceptions in such Final Certification (and the Trustee shall state in such
Final Certification whether any Mortgage File does not then include the original
or duplicate original lender's title policy or a printout of the electronic
equivalent and all riders thereto). If the public recording office in which a
Mortgage or assignment thereof is recorded retains the original of such Mortgage
or assignment, a copy of the original Mortgage or assignment so retained, with
evidence of recording thereon, certified to be true and complete by such
recording office, shall be deemed to satisfy the requirements of clause (ii),
(iii) or (iv) above, as applicable. CHL shall promptly correct or cure such
defect referred to above within 90 days from the date it was so notified of such
defect and, if CHL does not correct or cure such defect within such period, CHL
shall either (A) if the time to cure such defect expires prior to the end of the
second anniversary of the Closing Date, substitute for the related Subsequent
67
Mortgage Loan a Replacement Mortgage Loan, which substitution shall be
accomplished in the manner and subject to the conditions set forth in Section
2.03, or (B) purchase such Subsequent Mortgage Loan from the Trust Fund within
90 days from the date CHL was notified of such defect in writing at the Purchase
Price of such Subsequent Mortgage Loan; provided that any such substitution
pursuant to (A) above or repurchase pursuant to (B) above shall not be effected
prior to the delivery to the Trustee of the Opinion of Counsel required by
Section 2.05 hereof and any substitution pursuant to (A) above shall not be
effected prior to the additional delivery to the Trustee of a Request for File
Release. No substitution will be made in any calendar month after the
Determination Date for such month. The Purchase Price for any such Subsequent
Mortgage Loan shall be deposited by CHL in the Certificate Account and, upon
receipt of such deposit and Request for File Release with respect thereto, the
Trustee shall release the related Mortgage File to CHL and shall execute and
deliver at CHL's request such instruments of transfer or assignment as CHL has
prepared, in each case without recourse, as shall be necessary to vest in CHL,
or a designee, the Trustee's interest in any Subsequent Mortgage Loan released
pursuant hereto. If pursuant to the foregoing provisions CHL repurchases a
Subsequent Mortgage Loan that is a MERS Mortgage Loan, the Master Servicer shall
cause MERS to execute and deliver an assignment of the Mortgage in recordable
form to transfer the Mortgage from MERS to CHL and shall cause such Mortgage to
be removed from registration on the MERS(R) System in accordance with MERS'
rules and regulations.
The Co-Trustee shall retain possession and custody of each Mortgage
File in accordance with and subject to the terms and conditions set forth
herein. Each Seller shall promptly deliver to the Co-Trustee, upon the execution
or receipt thereof, the originals of such other documents or instruments
constituting the Mortgage File that come into the possession of such Seller from
time to time.
It is understood and agreed that the obligation of the Sellers to
substitute for or to purchase, pursuant to Section 2.02(b), any Subsequent
Mortgage Loan whose Mortgage File contains any document or documents that does
not meet the requirements of clauses (i)-(iv) and (vi) above and which defect is
not corrected or cured by such Seller within 90 days from the date it was
notified of such defect, shall constitute the sole remedy respecting such defect
available to the Trustee, the Co-Trustee, the Depositor and any
Certificateholder against the Sellers.
Section 2.03 Representations, Warranties and Covenants of
the Master Servicer and the Sellers.
(a) The Master Servicer hereby represents and warrants to the
Depositor and the Trustee as follows, as of the date hereof with respect to the
Initial Mortgage Loans, and the related Subsequent Transfer Date with respect to
the Subsequent Mortgage Loans:
(1) The Master Servicer is duly organized as a Texas limited
partnership and is validly existing and in good standing under the
laws of the State of Texas and is duly authorized and qualified to
transact any and all business contemplated by this Agreement to be
conducted by the Master Servicer in any state in which a Mortgaged
Property is located or is otherwise not required under applicable
law to effect such qualification and, in any event, is in compliance
with the doing business laws of any such state, to the extent
necessary to ensure its ability to enforce each Mortgage Loan, to
68
service the Mortgage Loans in accordance with the terms of this
Agreement and to perform any of its other obligations under this
Agreement in accordance with the terms hereof.
(2) The Master Servicer has the full partnership power and
authority to sell and service each Mortgage Loan, and to execute,
deliver and perform, and to enter into and consummate the
transactions contemplated by this Agreement and has duly authorized
by all necessary partnership action on the part of the Master
Servicer the execution, delivery and performance of this Agreement;
and this Agreement, assuming the due authorization, execution and
delivery hereof by the other parties hereto, constitutes a legal,
valid and binding obligation of the Master Servicer, enforceable
against the Master Servicer in accordance with its terms, except
that (a) the enforceability hereof may be limited by bankruptcy,
insolvency, moratorium, receivership and other similar laws relating
to creditors' rights generally and (b) the remedy of specific
performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
(3) The execution and delivery of this Agreement by the Master
Servicer, the servicing of the Mortgage Loans by the Master Servicer
under this Agreement, the consummation of any other of the
transactions contemplated by this Agreement, and the fulfillment of
or compliance with the terms hereof are in the ordinary course of
business of the Master Servicer and will not (A) result in a
material breach of any term or provision of the certificate of
limited partnership, partnership agreement or other organizational
document of the Master Servicer or (B) materially conflict with,
result in a material breach, violation or acceleration of, or result
in a material default under, the terms of any other material
agreement or instrument to which the Master Servicer is a party or
by which it may be bound, or (C) constitute a material violation of
any statute, order or regulation applicable to the Master Servicer
of any court, regulatory body, administrative agency or governmental
body having jurisdiction over the Master Servicer; and the Master
Servicer is not in breach or violation of any material indenture or
other material agreement or instrument, or in violation of any
statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over
it which breach or violation may materially impair the Master
Servicer's ability to perform or meet any of its obligations under
this Agreement.
(4) The Master Servicer is an approved servicer of
conventional mortgage loans for Xxxxxx Xxx and Xxxxxxx Mac and is a
mortgagee approved by the Secretary of Housing and Urban Development
pursuant to sections 203 and 211 of the National Housing Act.
(5) No litigation is pending or, to the best of the Master
Servicer's knowledge, threatened, against the Master Servicer that
would materially and adversely affect the execution, delivery or
enforceability of this Agreement or the ability of the Master
Servicer to service the Mortgage Loans or to perform any of its
other obligations under this Agreement or any Subsequent Transfer
Agreement in accordance with the terms hereof or thereof.
69
(6) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution,
delivery and performance by the Master Servicer of, or compliance by
the Master Servicer with, this Agreement or the consummation of the
transactions contemplated hereby, or if any such consent, approval,
authorization or order is required, the Master Servicer has obtained
the same.
(7) The Master Servicer is a member of MERS in good standing,
and will comply in all material respects with the rules and
procedures of MERS in connection with the servicing of the Mortgage
Loans for as long as such Mortgage Loans are registered with MERS.
(8) The Master Servicer has fully furnished and will fully
furnish, in accordance with the Fair Credit Reporting Act and its
implementing regulations, accurate and complete information (i.e.,
favorable and unfavorable) on its borrower credit files to Equifax,
Experian, and Trans Union Credit Information Company (three of the
credit repositories), on a monthly basis for the Mortgage Loans in
Loan Group 1.
(b) CHL hereby represents and warrants to the Depositor and the
Trustee as follows, as of the Initial Cut-off Date in the case of the Initial
Mortgage Loans and as of the related Subsequent Cut-off Date in the case of the
Subsequent Mortgage Loans (unless otherwise indicated or the context otherwise
requires, percentages with respect to the Initial Mortgage Loans in the Trust
Fund or in a Loan Group or Loan Groups are measured by the Cut-off Date
Principal Balance of the Initial Mortgage Loans in the Trust Fund or of the
Initial Mortgage Loans in the related Loan Group or Loan Groups, as applicable):
(1) CHL is duly organized as a New York corporation and is
validly existing and in good standing under the laws of the State of
New York and is duly authorized and qualified to transact any and
all business contemplated by this Agreement and each Subsequent
Transfer Agreement to be conducted by CHL in any state in which a
Mortgaged Property is located or is otherwise not required under
applicable law to effect such qualification and, in any event, is in
compliance with the doing business laws of any such state, to the
extent necessary to ensure its ability to enforce each Mortgage
Loan, to sell the CHL Mortgage Loans in accordance with the terms of
this Agreement and each Subsequent Transfer Agreement and to perform
any of its other obligations under this Agreement and each
Subsequent Transfer Agreement in accordance with the terms hereof
and thereof.
(2) CHL has the full corporate power and authority to sell
each CHL Mortgage Loan, and to execute, deliver and perform, and to
enter into and consummate the transactions contemplated by this
Agreement and each Subsequent Transfer Agreement and has duly
authorized by all necessary corporate action on the part of CHL the
execution, delivery and performance of this Agreement and each
Subsequent Transfer Agreement; and this Agreement and each
Subsequent Transfer Agreement, assuming the due authorization,
execution and delivery hereof by the other parties hereto,
constitutes a legal, valid and binding obligation of CHL,
enforceable against CHL in accordance with its terms, except that
(a) the enforceability hereof may be limited by bankruptcy,
insolvency, moratorium, receivership and other similar laws relating
to creditors' rights
70
generally and (b) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(3) The execution and delivery of this Agreement and each
Subsequent Transfer Agreement by CHL, the sale of the CHL Mortgage
Loans by CHL under this Agreement and each Subsequent Transfer
Agreement, the consummation of any other of the transactions
contemplated by this Agreement and each Subsequent Transfer
Agreement, and the fulfillment of or compliance with the terms
hereof and thereof are in the ordinary course of business of CHL and
will not (A) result in a material breach of any term or provision of
the charter or by-laws of CHL or (B) materially conflict with,
result in a material breach, violation or acceleration of, or result
in a material default under, the terms of any other material
agreement or instrument to which CHL is a party or by which it may
be bound, or (C) constitute a material violation of any statute,
order or regulation applicable to CHL of any court, regulatory body,
administrative agency or governmental body having jurisdiction over
CHL; and CHL is not in breach or violation of any material indenture
or other material agreement or instrument, or in violation of any
statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over
it which breach or violation may materially impair CHL's ability to
perform or meet any of its obligations under this Agreement and each
Subsequent Transfer Agreement.
(4) CHL is an approved seller of conventional mortgage loans
for Xxxxxx Mae and Xxxxxxx Mac and is a mortgagee approved by the
Secretary of Housing and Urban Development pursuant to sections 203
and 211 of the National Housing Act.
(5) No litigation is pending or, to the best of CHL's
knowledge, threatened, against CHL that would materially and
adversely affect the execution, delivery or enforceability of this
Agreement or any Subsequent Transfer Agreement or the ability of CHL
to sell the CHL Mortgage Loans or to perform any of its other
obligations under this Agreement or any Subsequent Transfer
Agreement in accordance with the terms hereof or thereof.
(6) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution,
delivery and performance by CHL of, or compliance by CHL with, this
Agreement or any Subsequent Transfer Agreement or the consummation
of the transactions contemplated hereby, or if any such consent,
approval, authorization or order is required, CHL has obtained the
same.
(7) The information set forth on Exhibit F-1 hereto with
respect to each Initial Mortgage Loan is true and correct in all
material respects as of the Closing Date.
(8) CHL will treat the transfer of the CHL Mortgage Loans to
the Depositor as a sale of the CHL Mortgage Loans for all tax,
accounting and regulatory purposes.
71
(9) None of the Mortgage Loans is 30 days or more delinquent.
(10) No Mortgage Loan had a Loan-to-Value Ratio at origination
in excess of 100.00%.
(11) Each Mortgage Loan is secured by a valid and enforceable
first lien on the related Mortgaged Property subject only to (1) the
lien of non-delinquent current real property taxes and assessments,
(2) covenants, conditions and restrictions, rights of way, easements
and other matters of public record as of the date of recording of
such Mortgage, such exceptions appearing of record being acceptable
to mortgage lending institutions generally or specifically reflected
in the appraisal made in connection with the origination of the
related Mortgage Loan and (3)other matters to which like properties
are commonly subject that do not materially interfere with the
benefits of the security intended to be provided by such Mortgage.
(12) Immediately prior to the assignment of each CHL Mortgage
Loan to the Depositor, CHL had good title to, and was the sole owner
of, such CHL Mortgage Loan free and clear of any pledge, lien,
encumbrance or security interest and had full right and authority,
subject to no interest or participation of, or agreement with, any
other party, to sell and assign the same pursuant to this Agreement.
(13) There is no delinquent tax or assessment lien against any
Mortgaged Property.
(14) There is no valid offset, claim, defense or counterclaim
to any Mortgage Note or Mortgage, including the obligation of the
Mortgagor to pay the unpaid principal of or interest on such
Mortgage Note.
(15) There are no mechanics' liens or claims for work, labor
or material affecting any Mortgaged Property that are or may be a
lien prior to, or equal with, the lien of such Mortgage, except
those that are insured against by the title insurance policy
referred to in item (18) below.
(16) As of the Closing Date in the case of the Initial
Mortgage Loans and as of the related Subsequent Transfer Date in the
case of the Subsequent Mortgage Loans, to the best of CHL's
knowledge, each Mortgaged Property is free of material damage and is
in good repair.
(17) As of the Closing Date in the case of the Initial
Mortgage Loans and as of the related Subsequent Transfer Date in the
case of the Subsequent Mortgage Loans, neither CHL nor any prior
holder of any Mortgage has modified the Mortgage in any material
respect (except that a Mortgage Loan may have been modified by a
written instrument that has been recorded or submitted for
recordation, if necessary, to protect the interests of the
Certificateholders and the original or a copy of which has been
delivered to the Trustee); satisfied, cancelled or subordinated such
Mortgage in whole or in part; released the related Mortgaged
Property in whole or in part from the lien of such Mortgage; or
executed any instrument of release, cancellation, modification
(except as expressly permitted above) or satisfaction with respect
thereto.
72
(18) A lender's policy of title insurance together with a
condominium endorsement and extended coverage endorsement, if
applicable, in an amount at least equal to the Cut-off Date
Principal Balance of each such Mortgage Loan or a commitment
(binder) to issue the same was effective on the date of the
origination of each Mortgage Loan, each such policy is valid and
remains in full force and effect, and each such policy was issued by
a title insurer qualified to do business in the jurisdiction where
the Mortgaged Property is located and acceptable to Xxxxxx Xxx and
Xxxxxxx Mac and is in a form acceptable to Xxxxxx Xxx and Xxxxxxx
Mac, which policy insures the Sellers and successor owners of
indebtedness secured by the insured Mortgage, as to the first
priority lien, of the Mortgage subject to the exceptions set forth
in paragraph (11) above; to the best of CHL's knowledge, no claims
have been made under such mortgage title insurance policy and no
prior holder of the related Mortgage, including any Seller, has
done, by act or omission, anything that would impair the coverage of
such mortgage title insurance policy.
(19) No Initial Mortgage Loan was the subject of a Principal
Prepayment in full between the Initial Cut-off Date and the Closing
Date. No Subsequent Mortgage Loan was the subject of a Principal
Prepayment in full between the Subsequent Cut-off Date and the
Subsequent Transfer Date.
(20) To the best of CHL's knowledge, all of the improvements
that were included for the purpose of determining the Appraised
Value of the Mortgaged Property lie wholly within the boundaries and
building restriction lines of such property, and no improvements on
adjoining properties encroach upon the Mortgaged Property.
(21) To the best of CHL's knowledge, no improvement located on
or being part of the Mortgaged Property is in violation of any
applicable zoning law or regulation. To the best of CHL's knowledge,
all inspections, licenses and certificates required to be made or
issued with respect to all occupied portions of the Mortgaged
Property and, with respect to the use and occupancy of the same,
including but not limited to certificates of occupancy and fire
underwriting certificates, have been made or obtained from the
appropriate authorities, unless the lack thereof would not have a
material adverse effect on the value of such Mortgaged Property, and
the Mortgaged Property is lawfully occupied under applicable law.
(22) The Mortgage Note and the related Mortgage are genuine,
and each is the legal, valid and binding obligation of the maker
thereof, enforceable in accordance with its terms and under
applicable law, except that (a) the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium, receivership and
other similar laws relating to creditors' rights generally and (b)
the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought. To the best of CHL's knowledge, all parties to the Mortgage
Note and the Mortgage had legal capacity to execute the Mortgage
Note and the Mortgage and each Mortgage Note and Mortgage have been
duly and properly executed by such parties.
73
(23) The proceeds of the Mortgage Loan have been fully
disbursed, there is no requirement for future advances thereunder,
and any and all requirements as to completion of any on-site or
off-site improvements and as to disbursements of any escrow funds
therefor have been complied with. All costs, fees and expenses
incurred in making, or closing or recording the Mortgage Loan were
paid.
(24) The related Mortgage contains customary and enforceable
provisions that render the rights and remedies of the holder thereof
adequate for the realization against the Mortgaged Property of the
benefits of the security, including, (i) in the case of a Mortgage
designated as a deed of trust, by trustee's sale, and (ii) otherwise
by judicial foreclosure.
(25) With respect to each Mortgage constituting a deed of
trust, a trustee, duly qualified under applicable law to serve as
such, has been properly designated and currently so serves and is
named in such Mortgage, and no fees or expenses are or will become
payable by the Certificateholders to the trustee under the deed of
trust, except in connection with a trustee's sale after default by
the Mortgagor.
(26) Each Mortgage Note and each Mortgage is acceptable in
form to Xxxxxx Mae and Xxxxxxx Mac.
(27) There exist no deficiencies with respect to escrow
deposits and payments, if such are required, for which customary
arrangements for repayment thereof have not been made, and no escrow
deposits or payments of other charges or payments due the Sellers
have been capitalized under the Mortgage or the related Mortgage
Note.
(28) The origination, underwriting, servicing and collection
practices with respect to each Mortgage Loan have been in all
respects legal, proper, prudent and customary in the mortgage
lending and servicing business, as conducted by prudent lending
institutions which service mortgage loans of the same type in the
jurisdiction in which the Mortgaged Property is located.
(29) There is no pledged account or other security other than
real estate securing the Mortgagor's obligations.
(30) No Mortgage Loan has a shared appreciation feature, or
other contingent interest feature.
(31) Each Mortgage Loan contains a customary "due on sale"
clause.
(32) No less than approximately the percentage specified in
the Collateral Schedule of the Initial Mortgage Loans in Loan Group
1 and Loan Group 2 are secured by single family detached dwellings.
No more than approximately the percentage specified in the
Collateral Schedule of the Initial Mortgage Loans in Loan Group 1
and Loan Group 2 are secured by two- to four-family dwellings. No
more than approximately the percentage specified in the Collateral
Schedule of the Initial Mortgage Loans in Loan Group 1 and Loan
Group 2 are secured by low-rise condominium units. No more than
approximately the percentage specified in the Collateral Schedule of
the
74
Initial Mortgage Loans in Loan Group 1 and Loan Group 2 are secured
by high-rise condominium units. No more than approximately the
percentage specified in the Collateral Schedule of the Initial
Mortgage Loans in Loan Group 1 and Loan Group 2 are secured by
manufactured housing. No more than approximately the percentage
specified in the Collateral Schedule of the Initial Mortgage Loans
in Loan Group 1 and Loan Group 2 are secured by PUDs.
(33) Each Initial Mortgage Loan in Loan Group 1 and Loan Group
2 was originated on or after the date specified in the Collateral
Schedule.
(34) Each Initial Mortgage Loan that is an Adjustable Rate
Mortgage Loan, other than a Two-Year Hybrid Mortgage Loan, a
Three-Year Hybrid Mortgage Loan or a Five-Year Hybrid Mortgage Loan,
had an initial Adjustment Date no later than the applicable date
specified on the Collateral Schedule; each Initial Mortgage Loan
that is a Two-Year Hybrid Mortgage Loan had an initial Adjustment
Date no later than the applicable date specified on the Collateral
Schedule; each Initial Mortgage Loan that is a Three-Year Hybrid
Mortgage Loan had an initial Adjustment Date no later than the
applicable date specified on the Collateral Schedule; and each
Initial Mortgage Loan that is a Five-Year Hybrid Mortgage Loan had
an initial Adjustment Date no later than the applicable date
specified on the Collateral Schedule.
(35) Approximately the percentage specified in the Collateral
Schedule of the Initial Mortgage Loans in Loan Group 1 and Loan
Group 2 provide for a Prepayment Charge.
(36) On the basis of representations made by the Mortgagors in
their loan applications, no more than approximately the percentage
specified in the Collateral Schedule of the Initial Mortgage Loans
in Loan Group 1 and Loan Group 2, respectively, are secured by
investor properties, and no less than approximately the percentage
specified in the Collateral Schedule of the Initial Mortgage Loans
in Loan Group 1 and Loan Group 2 respectively, are secured by
owner-occupied Mortgaged Properties that are primary residences.
(37) At the Cut-off Date, the improvements upon each Mortgaged
Property are covered by a valid and existing hazard insurance policy
with a generally acceptable carrier that provides for fire and
extended coverage and coverage for such other hazards as are
customary in the area where the Mortgaged Property is located in an
amount that is at least equal to the lesser of (i) the maximum
insurable value of the improvements securing such Mortgage Loan or
(ii) the greater of (a) the outstanding principal balance of the
Mortgage Loan and (b) an amount such that the proceeds of such
policy shall be sufficient to prevent the Mortgagor and/or the
mortgagee from becoming a co-insurer. If the Mortgaged Property is a
condominium unit, it is included under the coverage afforded by a
blanket policy for the condominium unit. All such individual
insurance policies and all flood policies referred to in item (38)
below contain a standard mortgagee clause naming the applicable
Seller or the original mortgagee, and its successors in interest, as
mortgagee, and the applicable Seller has received no notice that any
premiums due and payable thereon have not been paid; the Mortgage
obligates the
75
Mortgagor thereunder to maintain all such insurance, including flood
insurance, at the Mortgagor's cost and expense, and upon the
Mortgagor's failure to do so, authorizes the holder of the Mortgage
to obtain and maintain such insurance at the Mortgagor's cost and
expense and to seek reimbursement therefor from the Mortgagor.
(38) If the Mortgaged Property is in an area identified in the
Federal Register by the Federal Emergency Management Agency as
having special flood hazards, a flood insurance policy in a form
meeting the requirements of the current guidelines of the Flood
Insurance Administration is in effect with respect to such Mortgaged
Property with a generally acceptable carrier in an amount
representing coverage not less than the least of (A) the original
outstanding principal balance of the Mortgage Loan, (B) the minimum
amount required to compensate for damage or loss on a replacement
cost basis, or (C) the maximum amount of insurance that is available
under the Flood Disaster Protection Act of 1973, as amended.
(39) To the best of CHL's knowledge, there is no proceeding
occurring, pending or threatened for the total or partial
condemnation of the Mortgaged Property.
(40) There is no material monetary default existing under any
Mortgage or the related Mortgage Note and, to the best of CHL's
knowledge, there is no material event that, with the passage of time
or with notice and the expiration of any grace or cure period, would
constitute a default, breach, violation or event of acceleration
under the Mortgage or the related Mortgage Note; and no Seller has
waived any default, breach, violation or event of acceleration.
(41) Each Mortgaged Property is improved by a one- to
four-family residential dwelling, including condominium units and
dwelling units in PUDs. To the best of CHL's knowledge, no
improvement to a Mortgaged Property includes a cooperative or a
mobile home or constitutes other than real property under state law.
(42) Each Mortgage Loan is being serviced by the Master
Servicer.
(43) Any future advances made prior to the Cut-off Date have
been consolidated with the outstanding principal amount secured by
the Mortgage, and the secured principal amount, as consolidated,
bears a single interest rate and single repayment term reflected on
the Mortgage Loan Schedule. The consolidated principal amount does
not exceed the original principal amount of the Mortgage Loan. The
Mortgage Note does not permit or obligate the Master Servicer to
make future advances to the Mortgagor at the option of the
Mortgagor.
(44) All taxes, governmental assessments, insurance premiums,
water, sewer and municipal charges, leasehold payments or ground
rents that previously became due and owing have been paid, or an
escrow of funds has been established in an amount sufficient to pay
for every such item that remains unpaid and that has been assessed,
but is not yet due and payable. Except for (A) payments in the
nature of escrow payments, and (B) interest accruing from the date
of the Mortgage Note or date of disbursement of the Mortgage
proceeds, whichever is later, to the day that precedes by one month
the Due
76
Date of the first installment of principal and interest, including
without limitation, taxes and insurance payments, the Master
Servicer has not advanced funds, or induced, solicited or knowingly
received any advance of funds by a party other than the Mortgagor,
directly or indirectly, for the payment of any amount required by
the Mortgage.
(45) The Mortgage Loans originated by CHL were underwritten in
all material respects in accordance with CHL's underwriting
guidelines for credit blemished quality mortgage loans or, with
respect to Mortgage Loans purchased by CHL were underwritten in all
material respects in accordance with customary and prudent
underwriting guidelines generally used by originators of credit
blemished quality mortgage loans.
(46) Prior to the approval of the Mortgage Loan application,
an appraisal of the related Mortgaged Property was obtained from a
qualified appraiser, duly appointed by the originator, who had no
interest, direct or indirect, in the Mortgaged Property or in any
loan made on the security thereof, and whose compensation is not
affected by the approval or disapproval of the Mortgage Loan; such
appraisal is in a form acceptable to Xxxxxx Xxx and Xxxxxxx Mac.
(47) None of the Mortgage Loans is a graduated payment
mortgage loan or a growing equity mortgage loan, and no Mortgage
Loan is subject to a buydown or similar arrangement.
(48) The Mortgage Rates borne by the Initial Mortgage Loans in
Loan Group 1 and Loan Group 2 as of the Cut-off Date ranged between
the approximate per annum percentages specified on the Collateral
Schedule and the weighted average Mortgage Rate as of the Cut-off
Date was approximately the per annum rate specified on the
Collateral Schedule.
(49) The Mortgage Loans were selected from among the
outstanding one- to four-family mortgage loans in the applicable
Seller's portfolio at the Closing Date as to which the
representations and warranties made as to the Mortgage Loans set
forth in this Section 2.03(b) and Sections 2.03(c) and 2.03(d) can
be made. No selection was made in a manner that would adversely
affect the interests of Certificateholders.
(50) The Gross Margins on the Initial Mortgage Loans in Loan
Group 1 and Loan Group 2 range between the approximate percentages
specified on the Collateral Schedule, and the weighted average Gross
Margin was approximately the percentage specified in the Collateral
Schedule.
(51) Each of the Initial Mortgage Loans in the Mortgage Pool
has a Due Date on or before the date specified in the Collateral
Schedule.
(52) The Mortgage Loans, individually and in the aggregate,
conform in all material respects to the descriptions thereof in the
Prospectus Supplement.
77
(53) There is no obligation on the part of any Seller under
the terms of the Mortgage or related Mortgage Note to make payments
in addition to those made by the Mortgagor.
(54) Any leasehold estate securing a Mortgage Loan has a term
of not less than five years in excess of the term of the related
Mortgage Loan.
(55) Each Mortgage Loan represents a "qualified mortgage"
within the meaning of Section 860(a)(3)of the Code (but without
regard to the rule in Treasury Regulation ss. 1.860G-2(f)(2) that
treats a defective obligation as a qualified mortgage, or any
substantially similar successor provision) and applicable Treasury
regulations promulgated thereunder.
(56) No Mortgage Loan was either a "consumer credit contract"
or a "purchase money loan" as such terms are defined in 16 C.F.R.
ss. 433 nor is any Mortgage Loan a "mortgage" as defined in 15
U.S.C. ss. 1602(aa).
(57) To the extent required under applicable law, each
originator and subsequent mortgagee or servicer of the Mortgage Loan
complied with all licensing requirements and was authorized to
transact and do business in the jurisdiction in which the related
Mortgaged Property is located at all times when it held or serviced
the Mortgage Loan. Any and all requirements of any federal, state or
local laws or regulations, including, without limitation, usury,
truth-in-lending, real estate settlement procedures, consumer credit
protection, anti-predatory lending, fair credit reporting, unfair
collection practice, equal credit opportunity, fair housing and
disclosure laws and regulations, applicable to the solicitation,
origination, collection and servicing of such Mortgage Loan have
been complied with in all material respects; and any obligations of
the holder of the Mortgage Note, Mortgage and other loan documents
have been complied with in all material respects; servicing of each
Mortgage Loan has been in accordance with prudent mortgage servicing
standards, any applicable laws, rules and regulations and in
accordance with the terms of the Mortgage Notes, Mortgage and other
loan documents, whether such origination and servicing was done by
the applicable Seller, its affiliates, or any third party which
originated the Mortgage Loan on behalf of, or sold the Mortgage Loan
to, any of them, or any servicing agent of any of the foregoing.
(58) The methodology used in underwriting the extension of
credit for the Mortgage Loan employs objective mathematical
principles which relate the borrower's income, assets and
liabilities to the proposed payment and such underwriting
methodology does not rely on the extent of the borrower's equity in
the collateral as the principal determining factor in approving such
credit extension. Such underwriting methodology confirmed that at
the time of origination (application/approval) the borrower had a
reasonable ability to make timely payments on the Mortgage Loan.
(59) No borrower was required to purchase any credit life,
disability, accident or health insurance product as a condition of
obtaining the extension of credit.
78
No borrower obtained a prepaid single-premium credit life,
disability, accident or health insurance policy in connection with
the origination of the Mortgage Loan.
(60) If the Mortgage Loan provides that the interest rate on
the principal balance of the related Mortgage Loan may be adjusted,
all of the terms of the related Mortgage pertaining to interest rate
adjustments, payment adjustments and adjustments of the outstanding
principal balance have been made in accordance with the terms of the
related Mortgage Note and applicable law and are enforceable and
such adjustments will not affect the priority of the Mortgage lien.
(61) The Mortgaged Property complies with all applicable laws,
rules and regulations relating to environmental matters, including
but not limited to those relating to radon, asbestos and lead paint
and no Seller nor, to the best of CHL's knowledge, the Mortgagor,
has received any notice of any violation or potential violation of
such law.
(62) There is no action, suit or proceeding pending, or to the
best of CHL's knowledge, threatened or likely to be asserted with
respect to the Mortgage Loan against or affecting any Seller before
or by any court, administrative agency, arbitrator or governmental
body.
(63) No action, inaction, or event has occurred and no state
of fact exists or has existed that has resulted or will result in
the exclusion from, denial of, or defense to coverage under any
applicable hazard insurance policy, irrespective of the cause of
such failure of coverage. In connection with the placement of any
such insurance, no commission, fee, or other compensation has been
or will be received by CHL or any designee of CHL or any corporation
in which CHL or any officer, director, or employee had a financial
interest at the time of placement of such insurance.
(64) Each Mortgage Loan has a fully assignable life of loan
tax service contract which may be assigned without the payment of
any fee.
(65) No Mortgagor has notified CHL or the Master Servicer on
CHL's behalf, and CHL has no knowledge, of any relief requested or
allowed to a Mortgagor under the Relief Act or any similar state or
local law.
(66) Each Mortgage Loan was originated by a savings and loan
association, savings bank, commercial bank, credit union, insurance
company, or mortgage banking company which is supervised and
examined by a federal or state authority, or by a mortgagee approved
by the Secretary of Housing and Urban Development pursuant to
Sections 2.03 and 2.11 of the National Housing Act.
(67) Each Mortgage Loan was (A) originated no earlier than six
months prior to the time the applicable Seller purchased such
Mortgage Loan pursuant to a mortgage loan purchase agreement or
other similar agreement and (B) underwritten or reunderwritten by
the applicable Seller in accordance with the applicable Seller's
underwriting guidelines in effect at the time the loan was
underwritten or reunderwritten, as applicable.
79
(68) Each Mortgage Loan, at the time it was originated and as
of the Closing Date or the related Subsequent Transfer Date, as
applicable, complied in all material respects with applicable local,
state and federal laws, including, but not limited to, all predatory
and abusive lending laws.
(69) None of the Mortgage Loans is a "high cost" mortgage loan
as defined by applicable federal, state and local predatory and
abusive lending laws.
(70) Each Prepayment Charge is enforceable and was originated
in compliance with all applicable federal, state and local laws.
(71) None of the Mortgage Loans that are secured by property
located in the State of Illinois are in violation of the provisions
of the Illinois Interest Act; 815 Ill. Comp. Stat. 205/0.01 (2004).
(72) There is no Mortgage Loan in the Trust Fund that was
originated on or after March 7, 2003, which is a "high cost home
loan" as defined under the Georgia Fair Lending Act.
(73) No Mortgage Loan in the Trust Fund is a High Cost Loan or
Covered Loan, as applicable (as such terms are defined in the
then-current Standard & Poor's LEVELS(R) Glossary) and no Mortgage
Loan originated on or after October 1, 2002 through March 6, 2003 is
governed by the Georgia Fair Lending Act.
(74) Each Mortgage Loan is secured by a "single family
residence" within the meaning of Section 25(e)(10) of the Code. The
fair market value of the manufactured home securing each Mortgage
Loan was at least equal to 80% of the adjusted issue price of the
contract at either (i) the time the contract was originated
(determined pursuant to the REMIC Provisions) or (ii) the time the
contract is transferred to the purchaser.
(75) No Mortgage Loan in the Trust Fund is a "high cost home,"
"covered" (excluding home loans defined as "covered home loans" in
the New Jersey Home Ownership Security Act of 2002 that were
originated between November 26, 2003 and July 7, 2004), "high risk
home" or "predatory" loan under any applicable state, federal or
local law (or a similarly classified loan using different
terminology under a law imposing heightened regulatory scrutiny or
additional legal liability for residential mortgage loans having
high interest rates, points and/or fees).
(76) There is no Mortgage Loan in the Trust Fund that was
originated on or after October 1, 2002 and before March 7, 2003,
which is secured by property located in the State of Georgia.
(77) Representations and Warranties relating to the Mortgage
Loans in Loan Group 1:
80
(i) Each Mortgage Loan in Loan Group 1 is in compliance with
the anti-predatory lending eligibility for purchase requirements of
Xxxxxx Mae's Selling Guide;
(ii) No Mortgage Loan in Loan Group 1 is subject to the
requirements of the Home Ownership and Equity Protection Act of 1994
("HOEPA");
(iii) Each Mortgage Loan in Loan Group 1 at the time it was
made complied in all material respects with applicable local, state,
and federal laws, including, but not limited to, all applicable
predatory and abusive lending laws;
(iv) No Mortgage Loan in Loan Group 1 is a "High-Cost Home
Loan" as defined in the Georgia Fair Lending Act, as amended (the
"Georgia Act"). No Mortgage Loan in Loan Group 1 subject to the
Georgia Act and secured by owner occupied real property or an owner
occupied manufactured home located in the State of Georgia was
originated (or modified) on or after October 1, 2002 through and
including March 6, 2003;
(v) No Mortgage Loan in Loan Group 1 is a "High-Cost Home
Loan" as defined in New York Banking Law 6-1;
(vi) No Mortgage Loan in Loan Group 1 is a "High-Cost Home
Loan" as defined in the Arkansas Home Loan Protection Act effective
July 16, 2003 (Act 1340 of 2003);
(vii) No Mortgage Loan in Loan Group 1 is a "High-Cost Home
Loan" as defined in the Kentucky high-cost home loan statute
effective June 24, 2003 (Ky. Rev. Stat. Section 360.100);
(viii) No Mortgage Loan in Loan Group 1 is a "High-Cost Home
Loan" as defined in the New Jersey Home Ownership Act effective
November 27, 2003 (N.J.S.A. 46:10B-22 et seq.);
(ix) No Mortgage Loan in Loan Group 1 is a "High-Cost Home
Loan" as defined in the New Mexico Home Loan Protection Act
effective January 1, 2004 (N.M. Stat. Xxx. xx.xx. 58-21A-1 et seq.);
(x) No Mortgage Loan in Loan Group 1 is a "High-Risk Home
Loan" as defined in the Illinois High-Risk Home Loan Act effective
January 1, 2004 (815 Ill. Comp. Stat. 137/1 et seq.);
(xi) No Mortgage Loan in Loan Group 1 is a "High-Cost Home
Mortgage Loan" as defined in the Massachusetts Predatory Home Loan
Practices Act, effective November 7, 2004 (Mass. Xxx. Laws Ch.
183C);
(xii) No Mortgage Loan in Loan Group 1 is a "High Cost Home
Loan" as defined in the Indiana Home Loan Practices Act, effective
January 1, 2005 (Ind. Code Xxx. Sections 24-9-1 through 24-9-9);
81
(xiii) No Mortgage Loan in Loan Group 1 is a balloon mortgage
loan that has an original stated maturity of less than seven (7)
years;
(xiv) No borrower related to a Mortgage Loan in Loan Group 1
was encouraged or required to select a Mortgage Loan product offered
by the Mortgage Loan's originator which is a higher cost product
designed for less creditworthy borrowers, unless at the time of such
Mortgage Loan's origination, such borrower did not qualify taking
into account credit history and debt-to-income ratios for a
lower-cost credit product then offered by such Mortgage Loan's
originator or any affiliate of the Mortgage Loan's originator. If,
at the time of loan application, the borrower may have qualified for
a lower-cost credit product then offered by any mortgage lending
affiliate of the Mortgage Loan's originator, the Mortgage Loan's
originator referred the borrower's application to such affiliate for
underwriting consideration;
(xv) The methodology used in underwriting the extension of
credit for each Mortgage Loan in Loan Group 1 employs objective
mathematical principles which relate the borrower's income, assets
and liabilities to the proposed payment and such underwriting
methodology does not rely on the extent of the borrower's equity in
the collateral as the principal determining factor in approving such
credit extension. Such underwriting methodology confirmed that at
the time of origination (application/approval) the borrower had a
reasonable ability to make timely payments on such Mortgage Loan;
(xvi) With respect to any Mortgage Loan in Loan Group 1 that
contains a provision permitting imposition of a premium upon a
prepayment prior to maturity: (i) prior to the loan's origination,
the borrower agreed to such premium in exchange for a monetary
benefit, including but not limited to a rate or fee reduction, (ii)
prior to the loan's origination, the borrower was offered the option
of obtaining a mortgage loan that did not require payment of such a
premium, (iii) the prepayment premium is disclosed to the borrower
in the loan documents pursuant to applicable state and federal law,
(iv) for loans originated on or after September 1, 2004, the
duration of the prepayment period shall not exceed three (3)years
from the date of the note, unless the loan was modified to reduce
the prepayment period to no more than three years from the date of
the note and the borrower was notified in writing of such reduction
in prepayment period, and (v) notwithstanding any state or federal
law to the contrary, the Master Servicer shall not impose such
prepayment premium in any instance when the mortgage debt is
accelerated as the result of the borrower's default in making the
loan payments;
(xvii) No borrower related to a Mortgage Loan in Loan Group 1
was required to purchase any credit, life, disability, accident or
health insurance product as a condition of obtaining the extension
of credit. No borrower related to a Mortgage Loan in Loan Group 1
obtained a prepaid single-premium credit, life, disability, accident
or health insurance policy in connection with the origination of the
Mortgage Loan in Loan Group 1; No proceeds from any Mortgage Loan in
Loan Group 1 were used to purchase single premium credit
82
insurance policies as part of the origination of, or as a condition
to closing, such Mortgage Loan;
(xviii) All points and fees related to each Mortgage Loan in
Loan Group 1 were disclosed in writing to the borrower in accordance
with applicable state and federal law and regulation. Except in the
case of a Mortgage Loan in Loan Group 1 in an original principal
amount of less than $60,000 which would have resulted in an
unprofitable origination, no borrower was charged "points and fees"
(whether or not financed) in an amount greater than 5% of the
principal amount of such loan, such 5% limitation is calculated in
accordance with Xxxxxx Mae's anti-predatory lending requirements as
set forth in the Xxxxxx Xxx Selling Guide;
(xix) All fees and charges (including finance charges) and
whether or not financed, assessed, collected or to be collected in
connection with the origination and servicing of each Mortgage Loan
in Loan Group 1 has been disclosed in writing to the borrower in
accordance with applicable state and federal law and regulation; and
(xx) The Master Servicer will transmit full-file credit
reporting data for each Mortgage Loan pursuant to Xxxxxx Mae Guide
Announcement 95-19 and that for each Mortgage Loan, Master Servicer
agrees it shall report one of the following statuses each month as
follows: new origination, current, delinquent (30-, 60-, 90-days,
etc.), foreclosed, or charged-off.
(78) The representations in Section 2.03(c)(1)-(6) and
2.03(d)(1)-(6) are true and correct.
(c) Park Monaco hereby represents and warrants to the Depositor and
the Trustee as follows, as of the Cut-off Date:
(1) Park Monaco is duly organized as a Delaware corporation
and is validly existing and in good standing under the laws of the
State of Delaware and is duly authorized and qualified to transact
any and all business contemplated by this Agreement and each
Subsequent Transfer Agreement to be conducted by Park Monaco in any
state in which a Mortgaged Property securing a Park Monaco Mortgage
Loan is located or is otherwise not required under applicable law to
effect such qualification and, in any event, is in compliance with
the doing business laws of any such state, to the extent necessary
to ensure its ability to enforce each Park Monaco Mortgage Loan, to
sell the Park Monaco Mortgage Loans in accordance with the terms of
this Agreement and each Subsequent Transfer Agreement and to perform
any of its other obligations under this Agreement in accordance with
the terms hereof.
(2) Park Monaco has the full company power and authority to
sell each Park Monaco Mortgage Loan, and to execute, deliver and
perform, and to enter into and consummate the transactions
contemplated by this Agreement and each Subsequent Transfer
Agreement and has duly authorized by all necessary corporate action
on the part of Park Monaco the execution, delivery and performance
of this Agreement and each
83
Subsequent Transfer Agreement; and this Agreement and each
Subsequent Transfer Agreement, assuming the due authorization,
execution and delivery hereof by the other parties hereto,
constitutes a legal, valid and binding obligation of Park Monaco,
enforceable against Park Monaco in accordance with its terms, except
that (a) the enforceability hereof may be limited by bankruptcy,
insolvency, moratorium, receivership and other similar laws relating
to creditors' rights generally and (b) the remedy of specific
performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
(3) The execution and delivery of this Agreement and each
Subsequent Transfer Agreement by Park Monaco, the sale of the Park
Monaco Mortgage Loans by Park Monaco under this Agreement and each
Subsequent Transfer Agreement, the consummation of any other of the
transactions contemplated by this Agreement and each Subsequent
Transfer Agreement, and the fulfillment of or compliance with the
terms hereof are in the ordinary course of business of Park Monaco
and will not (A) result in a material breach of any term or
provision of the certificate of incorporation or by-laws of Park
Monaco or (B) materially conflict with, result in a material breach,
violation or acceleration of, or result in a material default under,
the terms of any other material agreement or instrument to which
Park Monaco is a party or by which it may be bound, or (C)
constitute a material violation of any statute, order or regulation
applicable to Park Monaco of any court, regulatory body,
administrative agency or governmental body having jurisdiction over
Park Monaco; and Park Monaco is not in breach or violation of any
material indenture or other material agreement or instrument, or in
violation of any statute, order or regulation of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over it which breach or violation may materially impair
Park Monaco's ability to perform or meet any of its obligations
under this Agreement.
(4) No litigation is pending or, to the best of Park Monaco's
knowledge, threatened, against Park Monaco that would materially and
adversely affect the execution, delivery or enforceability of this
Agreement or any Subsequent Transfer Agreement or the ability of
Park Monaco to sell the Park Monaco Mortgage Loans or to perform any
of its other obligations under this Agreement or any Subsequent
Transfer Agreement in accordance with the terms hereof or thereof.
(5) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution,
delivery and performance by Park Monaco of, or compliance by Park
Monaco with, this Agreement or any Subsequent Transfer Agreement or
the consummation of the transactions contemplated hereby, or if any
such consent, approval, authorization or order is required, Park
Monaco has obtained the same.
(6) Park Monaco will treat the transfer of the Park Monaco
Mortgage Loans to the Depositor as a sale of the Park Monaco
Mortgage Loans for all tax, accounting and regulatory purposes.
84
(7) Immediately prior to the assignment of each Park Monaco
Mortgage Loan to the Depositor, Park Monaco had good title to, and
was the sole owner of, such Park Monaco Mortgage Loan free and clear
of any pledge, lien, encumbrance or security interest and had full
right and authority, subject to no interest or participation of, or
agreement with, any other party, to sell and assign the same
pursuant to this Agreement.
(d) Park Sienna hereby represents and warrants to the Depositor and
the Trustee as follows, as of the Cut-off Date:
(1) Park Sienna is duly organized as a Delaware limited
liability company and is validly existing and in good standing under
the laws of the State of Delaware and is duly authorized and
qualified to transact any and all business contemplated by this
Agreement and each Subsequent Transfer Agreement to be conducted by
Park Sienna in any state in which a Mortgaged Property securing a
Park Sienna Mortgage Loan is located or is otherwise not required
under applicable law to effect such qualification and, in any event,
is in compliance with the doing business laws of any such state, to
the extent necessary to ensure its ability to enforce each Park
Sienna Mortgage Loan, to sell the Park Sienna Mortgage Loans in
accordance with the terms of this Agreement and each Subsequent
Transfer Agreement and to perform any of its other obligations under
this Agreement in accordance with the terms hereof.
(2) Park Sienna has the full company power and authority to
sell each Park Sienna Mortgage Loan, and to execute, deliver and
perform, and to enter into and consummate the transactions
contemplated by this Agreement and each Subsequent Transfer
Agreement and has duly authorized by all necessary company action on
the part of Park Sienna the execution, delivery and performance of
this Agreement and each Subsequent Transfer Agreement; and this
Agreement and each Subsequent Transfer Agreement, assuming the due
authorization, execution and delivery hereof by the other parties
hereto, constitutes a legal, valid and binding obligation of Park
Sienna, enforceable against Park Sienna in accordance with its
terms, except that (a) the enforceability hereof may be limited by
bankruptcy, insolvency, moratorium, receivership and other similar
laws relating to creditors' rights generally and (b) the remedy of
specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
(3) The execution and delivery of this Agreement and each
Subsequent Transfer Agreement by Park Sienna, the sale of the Park
Sienna Mortgage Loans by Park Sienna under this Agreement and each
Subsequent Transfer Agreement, the consummation of any other of the
transactions contemplated by this Agreement and each Subsequent
Transfer Agreement and the fulfillment of or compliance with the
terms hereof are in the ordinary course of business of Park Sienna
and will not (A) result in a material breach of any term or
provision of the certificate of formation or limited liability
company agreement of Park Sienna or (B) materially conflict with,
result in a material breach, violation or acceleration of, or result
in a material default under, the terms of any other material
agreement or instrument to which Park Sienna is a party or by which
it
85
may be bound, or (C) constitute a material violation of any statute,
order or regulation applicable to Park Sienna of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over Park Sienna; and Park Sienna is not in breach or
violation of any material indenture or other material agreement or
instrument, or in violation of any statute, order or regulation of
any court, regulatory body, administrative agency or governmental
body having jurisdiction over it which breach or violation may
materially impair Park Sienna's ability to perform or meet any of
its obligations under this Agreement.
(4) No litigation is pending or, to the best of Park Sienna's
knowledge, threatened, against Park Sienna that would materially and
adversely affect the execution, delivery or enforceability of this
Agreement or any Subsequent Transfer Agreement or the ability of
Park Sienna to sell the Park Sienna Mortgage Loans or to perform any
of its other obligations under this Agreement or any Subsequent
Transfer Agreement in accordance with the terms hereof or thereof.
(5) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution,
delivery and performance by Park Sienna of, or compliance by Park
Sienna with, this Agreement or any Subsequent Transfer Agreement or
the consummation of the transactions contemplated hereby, or if any
such consent, approval, authorization or order is required, Park
Sienna has obtained the same.
(6) Park Sienna will treat the transfer of the Park Sienna
Mortgage Loans to the Depositor as a sale of the Park Sienna
Mortgage Loans for all tax, accounting and regulatory purposes.
(7) Immediately prior to the assignment of each Park Sienna
Mortgage Loan to the Depositor, Park Sienna had good title to, and
was the sole owner of, such the Park Sienna Mortgage Loan free and
clear of any pledge, lien, encumbrance or security interest and had
full right and authority, subject to no interest or participation
of, or agreement with, any other party, to sell and assign the same
pursuant to this Agreement.
(e) Upon discovery by any of the parties hereto of a breach of a
representation or warranty set forth in Section 2.03(a) through (d) that
materially and adversely affects the interests of the Certificateholders in any
Mortgage Loan, the party discovering such breach shall give prompt notice
thereof to the other parties, the NIM Insurer and the Swap Counterparty. Each of
the Master Servicer and the Sellers (each, a "Representing Party") hereby
covenants with respect to the representations and warranties set forth in
Sections 2.03(a) through (d) that within 90 days of the earlier of the discovery
by such Representing Party or receipt of written notice by such Representing
Party from any party of a breach of any representation or warranty set forth
herein made that materially and adversely affects the interests of the
Certificateholders in any Mortgage Loan, it shall cure such breach in all
material respects and, if such breach is not so cured, shall, (i) if such 90-day
period expires prior to the second anniversary of the Closing Date, remove such
Mortgage Loan (a "Deleted Mortgage Loan") from the Trust Fund and substitute in
its place a Replacement Mortgage Loan, in the manner and subject to the
conditions set forth in this Section; or (ii) repurchase the affected Mortgage
Loan or Mortgage Loans from
86
the Trustee at the Purchase Price in the manner set forth below; provided that
(a) any such substitution pursuant to (i) above or repurchase pursuant to (ii)
above shall not be effected prior to the delivery to the Trustee of the Opinion
of Counsel required by Section 2.05 hereof, (b) any such substitution pursuant
to (i) above shall not be effected prior to the additional delivery to the
Trustee of a Request for File Release and (c) any such substitution pursuant to
(i) above shall include a payment by the applicable Representing Party of any
amount as calculated under item (iii) of the definition of "Purchase Price". Any
Representing Party liable for a breach under this Section 2.03 shall promptly
reimburse the Master Servicer or the Trustee for any expenses reasonably
incurred by the Master Servicer or the Trustee in respect of enforcing the
remedies for such breach. To enable the Master Servicer to amend the Mortgage
Loan Schedule, any Representing Party liable for a breach under this Section
2.03 shall, unless it cures such breach in a timely fashion pursuant to this
Section 2.03, promptly notify the Master Servicer whether such Representing
Party intends either to repurchase, or to substitute for, the Mortgage Loan
affected by such breach. With respect to the representations and warranties
described in this Section that are made to the best of the Representing Party's
knowledge, if it is discovered by any of the Depositor, the Master Servicer, the
Sellers or the Trustee that the substance of such representation and warranty is
inaccurate and such inaccuracy materially and adversely affects the value of the
related Mortgage Loan, notwithstanding the Representing Party's lack of
knowledge with respect to the substance of such representation or warranty, such
inaccuracy shall be deemed a breach of the applicable representation or
warranty. Any breach of a representation set forth in Section 2.03(a)(8),
(b)(72), (b)(75), (b)(76) or (b)(77) shall be deemed to materially and adversely
affect the Certificateholders.
With respect to any Replacement Mortgage Loan or Loans, the
applicable Seller delivering such Replacement Mortgage Loan shall deliver to the
Trustee for the benefit of the Certificateholders the related Mortgage Note,
Mortgage and assignment of the Mortgage, and such other documents and agreements
as are required by Section 2.01, with the Mortgage Note endorsed and the
Mortgage assigned as required by Section 2.01. No substitution will be made in
any calendar month after the Determination Date for such month. Scheduled
Payments due with respect to Replacement Mortgage Loans in the Due Period
related to the Distribution Date on which such proceeds are to be distributed
shall not be part of the Trust Fund and will be retained by the applicable
Seller delivering such Replacement Mortgage Loan on such Distribution Date. For
the month of substitution, distributions to Certificateholders will include the
Scheduled Payment due on any Deleted Mortgage Loan for the related Due Period
and thereafter the applicable Seller shall be entitled to retain all amounts
received in respect of such Deleted Mortgage Loan. The Master Servicer shall
amend the Mortgage Loan Schedule for the benefit of the Certificateholders to
reflect the removal of such Deleted Mortgage Loan and the substitution of the
Replacement Mortgage Loan or Loans and the Master Servicer shall deliver the
amended Mortgage Loan Schedule to the Trustee. Upon such substitution, the
Replacement Mortgage Loan or Loans shall be subject to the terms of this
Agreement in all respects, and the applicable Seller delivering such Replacement
Mortgage Loan shall be deemed to have made with respect to such Replacement
Mortgage Loan or Loans, as of the date of substitution, the representations and
warranties set forth in Section 2.03(b), (c) or (d) with respect to such
Mortgage Loan. Upon any such substitution and the deposit to the Certificate
Account of the amount required to be deposited therein in connection with such
substitution as described in the following paragraph, the Co-Trustee shall
release to the Representing Party the Mortgage File relating to such Deleted
Mortgage Loan and held for the benefit of the Certificateholders and
87
shall execute and deliver at the Master Servicer's direction such instruments of
transfer or assignment as have been prepared by the Master Servicer, in each
case without recourse, as shall be necessary to vest in the applicable Seller,
or its respective designee, title to the Trustee's interest in any Deleted
Mortgage Loan substituted for pursuant to this Section 2.03.
For any month in which any Seller substitutes one or more
Replacement Mortgage Loans for one or more Deleted Mortgage Loans, the Master
Servicer will determine the amount (if any) by which the aggregate principal
balance of all such Replacement Mortgage Loans as of the date of substitution is
less than the Stated Principal Balance (after application of the principal
portion of the Scheduled Payment due in the month of substitution) of all such
Deleted Mortgage Loans. An amount equal to the aggregate of the deficiencies
described in the preceding sentence (such amount, the "Substitution Adjustment
Amount") shall be forwarded by the applicable Seller to the Master Servicer and
deposited by the Master Servicer into the Certificate Account not later than the
Determination Date for the Distribution Date relating to the Prepayment Period
during which the related Mortgage Loan became required to be purchased or
replaced hereunder.
In the event that a Seller shall have repurchased a Mortgage Loan,
the Purchase Price therefor shall be deposited in the Certificate Account
pursuant to Section 3.05 on the Determination Date for the Distribution Date in
the month following the month during which such Seller became obligated to
repurchase or replace such Mortgage Loan and upon such deposit of the Purchase
Price, the delivery of the Opinion of Counsel required by Section 2.05, if any,
and the receipt of a Request for File Release, the Co-Trustee shall release the
related Mortgage File held for the benefit of the Certificateholders to such
Seller, and the Trustee shall execute and deliver at such Person's direction the
related instruments of transfer or assignment prepared by such Seller, in each
case without recourse, as shall be necessary to transfer title from the Trustee
for the benefit of the Certificateholders and transfer the Trustee's interest to
such Seller to any Mortgage Loan purchased pursuant to this Section 2.03. It is
understood and agreed that the obligation under this Agreement of the Sellers to
cure, repurchase or replace any Mortgage Loan as to which a breach has occurred
and is continuing shall constitute the sole remedy against the Sellers
respecting such breach available to Certificateholders, the Depositor or the
Trustee.
(f) The representations and warranties set forth in this Section
2.03 shall survive delivery of the respective Mortgage Files to the Co-Trustee
for the benefit of the Certificateholders with respect to each Mortgage Loan.
Section 2.04 Representations and Warranties of the Depositor.
The Depositor hereby represents and warrants to the Master Servicer
and the Trustee as follows, as of the date hereof and as of each Subsequent
Transfer Date:
(1) The Depositor is duly organized and is validly existing as
a corporation in good standing under the laws of the State of
Delaware and has full power and authority (corporate and other)
necessary to own or hold its properties and to conduct its business
as now conducted by it and to enter into and perform its obligations
under this Agreement and each Subsequent Transfer Agreement.
88
(2) The Depositor has the full corporate power and authority
to execute, deliver and perform, and to enter into and consummate
the transactions contemplated by, this Agreement and each Subsequent
Transfer Agreement and has duly authorized, by all necessary
corporate action on its part, the execution, delivery and
performance of this Agreement and each Subsequent Transfer
Agreement; and this Agreement and each Subsequent Transfer
Agreement, assuming the due authorization, execution and delivery
hereof by the other parties hereto, constitutes a legal, valid and
binding obligation of the Depositor, enforceable against the
Depositor in accordance with its terms, subject, as to
enforceability, to (i) bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting creditors' rights
generally and (ii) general principles of equity, regardless of
whether enforcement is sought in a proceeding in equity or at law.
(3) The execution and delivery of this Agreement and each
Subsequent Transfer Agreement by the Depositor, the consummation of
the transactions contemplated by this Agreement, and the fulfillment
of or compliance with the terms hereof are in the ordinary course of
business of the Depositor and will not (A) result in a material
breach of any term or provision of the charter or by-laws of the
Depositor or (B) materially conflict with, result in a material
breach, violation or acceleration of, or result in a material
default under, the terms of any other material agreement or
instrument to which the Depositor is a party or by which it may be
bound or (C) constitute a material violation of any statute, order
or regulation applicable to the Depositor of any court, regulatory
body, administrative agency or governmental body having jurisdiction
over the Depositor; and the Depositor is not in breach or violation
of any material indenture or other material agreement or instrument,
or in violation of any statute, order or regulation of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over it which breach or violation may materially impair
the Depositor's ability to perform or meet any of its obligations
under this Agreement.
(4) No litigation is pending, or, to the best of the
Depositor's knowledge, threatened, against the Depositor that would
materially and adversely affect the execution, delivery or
enforceability of this Agreement or any Subsequent Transfer
Agreement or the ability of the Depositor to perform its obligations
under this Agreement or any Subsequent Transfer Agreement in
accordance with the terms hereof or thereof.
(5) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution,
delivery and performance by the Depositor of, or compliance by the
Depositor with, this Agreement or any Subsequent Transfer Agreement
or the consummation of the transactions contemplated hereby, or if
any such consent, approval, authorization or order is required, the
Depositor has obtained the same.
The Depositor hereby represents and warrants to the Trustee with
respect to each Mortgage Loan, as of the Closing Date or the related Subsequent
Transfer Date, as applicable, following the transfer of such Mortgage Loan to it
by the Sellers, the Depositor had good title to the Initial Mortgage Loans or
related Subsequent Mortgage Loans, as applicable, and the related Mortgage Notes
were subject to no offsets, claims, defenses or counterclaims.
89
It is understood and agreed that the representations and warranties
set forth in the two immediately preceding paragraphs shall survive delivery of
the Mortgage Files to the Co-Trustee. Upon discovery by the Depositor or the
Trustee, of a breach of any of the foregoing representations and warranties set
forth in the immediately preceding paragraph (referred to herein as a "breach"),
which breach materially and adversely affects the interest of the
Certificateholders, the party discovering such breach shall give prompt written
notice to the others and to each Rating Agency, the NIM Insurer and the Swap
Counterparty. The Depositor hereby covenants with respect to the representations
and warranties made by it in this Section 2.04 that within 90 days of the
earlier of the discovery by it or receipt of written notice by it from any party
of a breach of any representation or warranty set forth herein made that
materially and adversely affects the interests of the Certificateholders in any
Mortgage Loan, it shall cure such breach in all material respects and, if such
breach is not so cured, shall repurchase or replace the affected Mortgage Loan
or Loans in accordance with the procedure set forth in Section 2.03(e).
Section 2.05 Delivery of Opinion of Counsel in Connection with
Substitutions and Repurchases.
(a) Notwithstanding any contrary provision of this Agreement, with
respect to any Mortgage Loan that is not in default or as to which default is
not imminent, no repurchase or substitution pursuant to Sections 2.02, 2.03 or
2.04 shall be made unless the Representing Party making such repurchase or
substitution delivers to the Trustee an Opinion of Counsel (which such
Representing Party shall use reasonable efforts to obtain), addressed to the
Trustee to the effect that such repurchase or substitution would not (i) result
in the imposition of the tax on "prohibited transactions" of the Trust Fund or
contributions after the Closing Date, as defined in sections 860F(a)(2) and
860G(d) of the Code, respectively or (ii) cause any REMIC formed hereunder to
fail to qualify as a REMIC at any time that any Certificates are outstanding.
Any Mortgage Loan as to which repurchase or substitution was delayed pursuant to
this paragraph shall be repurchased or the substitution therefor shall occur
(subject to compliance with Sections 2.02, 2.03 or 2.04) upon the earlier of (a)
the occurrence of a default or imminent default with respect to such loan and
(b) receipt by the Trustee of an Opinion of Counsel to the effect that such
repurchase or substitution, as applicable, will not result in the events
described in clause (i) or clause (ii) of the preceding sentence.
(b) Upon discovery by the Depositor, any Seller, the Master Servicer
or the Trustee that any Mortgage Loan does not constitute a "qualified mortgage"
within the meaning of section 860G(a)(3)of the Code, the party discovering such
fact shall promptly (and in any event within five Business Days of discovery)
give written notice thereof to the other parties and the NIM Insurer. In
connection therewith, the Trustee shall require CHL, at CHL's option, to either
(i) substitute, if the conditions in Section 2.03(e) with respect to
substitutions are satisfied, a Replacement Mortgage Loan for the affected
Mortgage Loan, or (ii) repurchase the affected Mortgage Loan within 90 days of
such discovery in the same manner as it would a Mortgage Loan for a breach of
representation or warranty contained in Section 2.03. The Trustee shall reconvey
to CHL the Mortgage Loan to be released pursuant hereto in the same manner, and
on the same terms and conditions, as it would a Mortgage Loan repurchased for
breach of a representation or warranty contained in Section 2.03.
90
Section 2.06 Authentication and Delivery of Certificates.
The Trustee acknowledges the transfer and assignment to it of the
Trust Fund and, concurrently with such transfer and assignment, has executed,
authenticated and delivered, to or upon the order of the Depositor, the
Certificates in authorized denominations evidencing the entire ownership of the
Trust Fund. The Trustee agrees to hold the Trust Fund and exercise the rights
referred to above for the benefit of all present and future Holders of the
Certificates and to perform the duties set forth in this Agreement.
Section 2.07 Covenants of the Master Servicer.
The Master Servicer hereby covenants to the Depositor and the
Trustee as follows:
(a) the Master Servicer shall comply in the performance of its
obligations under this Agreement with all reasonable rules and requirements of
the insurer under each Required Insurance Policy; and
(b) no written information, certificate of an officer, statement
furnished in writing or written report delivered to the Depositor, any affiliate
of the Depositor or the Trustee and prepared by the Master Servicer pursuant to
this Agreement will contain any untrue statement of a material fact or omit to
state a material fact necessary to make the information, certificate, statement
or report not misleading.
ARTICLE III.
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01 Master Servicer to Service Mortgage Loans.
For and on behalf of the Certificateholders, the Master Servicer
shall service and administer the Mortgage Loans in accordance with customary and
usual standards of practice of prudent mortgage loan lenders in the respective
states in which the Mortgaged Properties are located, including taking all
required and appropriate actions under each Required Insurance Policy and taking
all required and appropriate actions under each Mortgage Insurance Policy on
behalf of the Co-Trustee, other than the payment of each Mortgage Insurance
Premium and obtaining the approval of each Mortgage Insurer with respect to the
appointment of a successor servicer. In connection with such servicing and
administration, the Master Servicer shall have full power and authority, acting
alone and/or through subservicers as provided in Section 3.02 hereof, subject to
the terms hereof (i) to execute and deliver, on behalf of the Certificateholders
and the Trustee, customary consents or waivers and other instruments and
documents, (ii) to consent to transfers of any Mortgaged Property and
assumptions of the Mortgage Notes and related Mortgages (but only in the manner
provided in this Agreement), (iii) to collect any Insurance Proceeds, other
Liquidation Proceeds and Subsequent Recoveries, and (iv) subject to Section
3.12(b), to effectuate foreclosure or other conversion of the ownership of the
Mortgaged Property securing any Mortgage Loan; provided that the Master Servicer
shall take no action that is inconsistent with or prejudices the interests of
the Trustee or the Certificateholders in any Mortgage Loan or the rights and
interests of the Depositor and the Trustee under this Agreement. The Master
Servicer shall represent and protect the interest of the Trustee in the same
manner as
91
it currently protects its own interest in mortgage loans in its own portfolio in
any claim, proceeding or litigation regarding a Mortgage Loan and shall not make
or permit any modification, waiver or amendment of any term of any Mortgage Loan
which would (i) cause any REMIC formed hereunder to fail to qualify as a REMIC,
(ii) result in the imposition of any tax under section 860(a) or 860(d) of the
Code or (iii) cause any Covered Mortgage Loan to not be covered by the
applicable Mortgage Insurance Policy, but in any case the Master Servicer shall
not act in any manner that is a lesser standard than that provided in the first
sentence of this Section 3.01. Without limiting the generality of the foregoing,
the Master Servicer, in its own name or in the name of the Depositor and the
Trustee, is hereby authorized and empowered by the Depositor and the Trustee,
when the Master Servicer believes it appropriate in its reasonable judgment, to
execute and deliver, on behalf of the Trustee, the Depositor, the
Certificateholders or any of them, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge and all other
comparable instruments, with respect to the Mortgage Loans, and with respect to
the Mortgaged Properties held for the benefit of the Certificateholders. The
Master Servicer shall prepare and deliver to the Depositor and/or the Trustee
such documents requiring execution and delivery by any or all of them as are
necessary or appropriate to enable the Master Servicer to service and administer
the Mortgage Loans. Upon receipt of such documents, the Depositor and/or the
Trustee shall execute such documents and deliver them to the Master Servicer.
The Master Servicer further is authorized and empowered by the Trustee, on
behalf of the Certificateholders and the Trustee, in its own name or in the name
of the Subservicer, when the Master Servicer or the Subservicer, as the case may
be, believes it appropriate in its best judgment to register any Mortgage Loan
on the MERS(R) System, or cause the removal from the registration of any
Mortgage Loan on the MERS(R) System, to execute and deliver, on behalf of the
Trustee and the Certificateholders or any of them, any and all instruments of
assignment and other comparable instruments with respect to such assignment or
re-recording of a Mortgage in the name of MERS, solely as nominee for the
Trustee and its successors and assigns.
In accordance with the standards of the preceding paragraph, the
Master Servicer shall advance or cause to be advanced funds as necessary for the
purpose of effecting the payment of taxes and assessments on the Mortgaged
Properties, which advances shall be reimbursable in the first instance from
related collections from the Mortgagors pursuant to Section 3.06, and further as
provided in Section 3.08. All costs incurred by the Master Servicer, if any, in
effecting the timely payments of taxes and assessments on the Mortgaged
Properties and related insurance premiums shall not, for the purpose of
calculating monthly distributions to the Certificateholders, be added to the
Stated Principal Balance under the related Mortgage Loans, notwithstanding that
the terms of such Mortgage Loans so permit.
The Master Servicer shall deliver a list of Servicing Officers to
the Trustee by the Closing Date.
In addition, the Master Servicer shall administer each Mortgage
Insurance Policy on behalf of itself, the Sellers, the Depositor and the Trustee
for the benefit of the Certificateholders, when it is necessary to make claims
and receive payments under each Mortgage Insurance Policy. In connection with
its activities as Master Servicer of the Mortgage Loans, the Master Servicer
agrees to present, on behalf of itself, the Trustee and the Certificateholders,
claims to the insurer under any primary insurance policies and, in this regard,
to take any reasonable action necessary to permit recovery under any primary
insurance policies
92
respecting defaulted Mortgage Loans. Any amounts collected by the Master
Servicer under any primary insurance policies shall be deposited in the
Certificate Account.
The Master Servicer shall take whatever action is appropriate to
maximize the amounts payable under each Mortgage Insurance Policy and to service
the Covered Mortgage Loans in the manner required by the applicable Mortgage
Insurance Policy. The Master Servicer shall prepare and submit all claims
eligible for submission under each Mortgage Insurance Policy and shall, except
as otherwise specified in this Agreement, perform all of the obligations of the
insured under each Mortgage Insurance Policy. If either Mortgage Insurance
Policy is terminated for any reason other than the exhaustion of its coverage,
or if the financial strength rating of either Mortgage Insurer is reduced to
below investment grade, the Master Servicer will use its best efforts to obtain
a comparable policy from an insurer that is acceptable to the Rating Agencies.
The replacement policy, if available, shall provide coverage equal to the then
remaining coverage of the applicable Mortgage Insurance Policy. However, if the
premium cost of a replacement policy exceeds the premium cost of that Mortgage
Insurance Policy, the coverage amount of the replacement policy will be reduced
so that its premium cost will not exceed the premium cost of that Mortgage
Insurance Policy.
In the event that a shortfall in any collection on or liability with
respect to any Mortgage Loan results from or is attributable to adjustments to
Mortgage Rates, Scheduled Payments or Stated Principal Balances that were made
by the Master Servicer in a manner not consistent with the terms of the related
Mortgage Note and this Agreement, the Master Servicer, upon discovery or receipt
of notice thereof, immediately shall deliver to the Trustee for deposit in the
Distribution Account from its own funds the amount of any such shortfall and
shall indemnify and hold harmless the Trust Fund, the Trustee, the Depositor and
any successor master servicer in respect of any such liability. Such indemnities
shall survive the termination or discharge of this Agreement. Notwithstanding
the foregoing, this Section 3.01 shall not limit the ability of the Master
Servicer to seek recovery of any such amounts from the related Mortgagor under
the terms of the related Mortgage Note, as permitted by law and shall not be an
expense of the Trust.
Section 3.02 Subservicing; Enforcement of the Obligations of
Master Servicer.
(a) The Master Servicer may arrange for the subservicing of any
Mortgage Loan by a subservicer (each, a "Subservicer") pursuant to a
subservicing agreement (each, a "Subservicing Agreement"); provided that (i)
such subservicing arrangement and the terms of the related subservicing
agreement must provide for the servicing of such Mortgage Loans in a manner
consistent with the servicing arrangements contemplated hereunder, (ii) that
such subservicing agreements would not result in a withdrawal or a downgrading
by any Rating Agency of the ratings on any Class of Certificates, as evidenced
by a letter to that effect delivered by each Rating Agency to the Depositor and
the NIM Insurer and (iii) the NIM Insurer shall have consented to such
subservicing agreements (which consent shall not be unreasonably withheld) with
Subservicers, for the servicing and administration of the Mortgage Loans. The
Master Servicer shall deliver to the Trustee copies of all Sub-Servicing
Agreements, and any amendments or modifications thereof, promptly upon the
Master Servicer's execution and delivery of such instruments. The Master
Servicer, with the written consent of the NIM Insurer (which consent shall not
be unreasonably withheld), shall be entitled to terminate any
93
Subservicing Agreement and the rights and obligations of any Subservicer
pursuant to any Subservicing Agreement in accordance with the terms and
conditions of such Subservicing Agreement. Notwithstanding the provisions of any
subservicing agreement, any of the provisions of this Agreement relating to
agreements or arrangements between the Master Servicer or a subservicer or
reference to actions taken through a Master Servicer or otherwise, the Master
Servicer shall remain obligated and liable to the Depositor, the Trustee and the
Certificateholders for the servicing and administration of the Mortgage Loans in
accordance with the provisions of this Agreement without diminution of such
obligation or liability by virtue of such subservicing agreements or
arrangements or by virtue of indemnification from the subservicer and to the
same extent and under the same terms and conditions as if the Master Servicer
alone were servicing and administering the Mortgage Loans. Every subservicing
agreement entered into by the Master Servicer shall contain a provision giving
the successor Master Servicer the option to terminate such agreement without
cost in the event a successor Master Servicer is appointed. All actions of each
subservicer performed pursuant to the related subservicing agreement shall be
performed as an agent of the Master Servicer with the same force and effect as
if performed directly by the Master Servicer.
(b) For purposes of this Agreement, the Master Servicer shall be
deemed to have received any collections, recoveries or payments with respect to
the Mortgage Loans that are received by a subservicer regardless of whether such
payments are remitted by the subservicer to the Master Servicer.
Section 3.03 Rights of the Depositor, the Sellers, the
Certificateholders, the NIM Insurer and the Trustee in
Respect of the Master Servicer.
None of the Trustee, the Sellers, the Certificateholders, the NIM
Insurer or the Depositor shall have any responsibility or liability for any
action or failure to act by the Master Servicer, and none of them is obligated
to supervise the performance of the Master Servicer hereunder or otherwise. The
Master Servicer shall afford (and any Subservicing Agreement shall provide that
each Subservicer shall afford) the Depositor, the NIM Insurer and the Trustee,
upon reasonable notice, during normal business hours, access to all records
maintained by the Master Servicer (and any such Subservicer) in respect of the
Master Servicer's rights and obligations hereunder and access to officers of the
Master Servicer (and those of any such Subservicer) responsible for such
obligations. Upon request, the Master Servicer shall furnish to the Depositor,
the NIM Insurer and the Trustee its (and any such Subservicer's) most recent
financial statements and such other information relating to the Master
Servicer's capacity to perform its obligations under this Agreement that it
possesses. To the extent such information is not otherwise available to the
public, the Depositor, the NIM Insurer and the Trustee shall not disseminate any
information obtained pursuant to the preceding two sentences without the Masters
Servicer's (or any such Subservicer's) written consent, except as required
pursuant to this Agreement or to the extent that it is necessary to do so (i) in
working with legal counsel, auditors, taxing authorities or other governmental
agencies, rating agencies or reinsurers or (ii) pursuant to any law, rule,
regulation, order, judgment, writ, injunction or decree of any court or
governmental authority having jurisdiction over the Depositor, the Trustee, the
NIM Insurer or the Trust Fund, and in either case, the Depositor, the NIM
Insurer or the Trustee, as the case may be, shall use its reasonable best
efforts to assure the confidentiality of any such disseminated non-public
information. The Depositor may, but is not obligated to, enforce the obligations
of
94
the Master Servicer under this Agreement and may, but is not obligated to,
perform, or cause a designee to perform, any defaulted obligation of the Master
Servicer under this Agreement or exercise the rights of the Master Servicer
under this Agreement; provided by virtue of such performance by the Depositor of
its designee. The Depositor shall not have any responsibility or liability for
any action or failure to act by the Master Servicer and is not obligated to
supervise the performance of the Master Servicer under this Agreement or
otherwise.
Section 3.04 Trustee to Act as Master Servicer.
In the event that the Master Servicer shall for any reason no longer
be the Master Servicer hereunder (including by reason of an Event of Default or
termination by the Depositor), the Trustee or its designee shall thereupon
assume all of the rights and obligations of the Master Servicer hereunder
arising thereafter (except that the Trustee shall not be (i) liable for losses
of the Master Servicer pursuant to Section 3.10 hereof or any acts or omissions
of the predecessor Master Servicer hereunder, (ii) obligated to make Advances if
it is prohibited from doing so by applicable law, (iii) obligated to effectuate
repurchases or substitutions of Mortgage Loans hereunder, including pursuant to
Section 2.02 or 2.03 hereof, (iv) responsible for expenses of the Master
Servicer pursuant to Section 2.03 or (v) deemed to have made any representations
and warranties hereunder, including pursuant to Section 2.03 or the first
paragraph of Section 6.02 hereof). If the Master Servicer shall for any reason
no longer be the Master Servicer (including by reason of any Event of Default or
termination by the Depositor), the Trustee (or any other successor servicer)
may, at its option, succeed to any rights and obligations of the Master Servicer
under any subservicing agreement in accordance with the terms thereof; provided
that the Trustee (or any other successor servicer) shall not incur any liability
or have any obligations in its capacity as servicer under a subservicing
agreement arising prior to the date of such succession unless it expressly
elects to succeed to the rights and obligations of the Master Servicer
thereunder; and the Master Servicer shall not thereby be relieved of any
liability or obligations under the subservicing agreement arising prior to the
date of such succession.
The Master Servicer shall, upon request of the Trustee, but at the
expense of the Master Servicer, deliver to the assuming party all documents and
records relating to each subservicing agreement and the Mortgage Loans then
being serviced thereunder and an accounting of amounts collected held by it and
otherwise use its best efforts to effect the orderly and efficient transfer of
the subservicing agreement to the assuming party.
Section 3.05 Collection of Mortgage Loan Payments; Certificate
Account; Distribution Account; Pre-Funding
Account; Seller Shortfall Interest Requirement.
(a) The Master Servicer shall make reasonable efforts in accordance
with customary and usual standards of practice of prudent mortgage lenders in
the respective states in which the Mortgaged Properties are located to collect
all payments called for under the terms and provisions of the Mortgage Loans to
the extent such procedures shall be consistent with this Agreement and the terms
and provisions of any related Required Insurance Policy. Consistent with the
foregoing, the Master Servicer may in its discretion (i) waive any late payment
charge or, subject to Section 3.20, any Prepayment Charge or penalty interest in
connection with the prepayment of a Mortgage Loan and (ii) extend the due dates
for payments due on a Mortgage
95
Note for a period not greater than 270 days. In the event of any such
arrangement, the Master Servicer shall make Advances on the related Mortgage
Loan during the scheduled period in accordance with the amortization schedule of
such Mortgage Loan without modification thereof by reason of such arrangements.
In addition, the NIM Insurer's prior written consent shall be required for any
waiver of Prepayment Charges or for the extension of the due dates for payments
due on a Mortgage Note, if the aggregate number of outstanding Mortgage Loans
that have been granted such waivers or extensions exceeds 5% of the aggregate
number of Initial Mortgage Loans and Subsequent Mortgage Loans. The Master
Servicer shall not be required to institute or join in litigation with respect
to collection of any payment (whether under a Mortgage, Mortgage Note or
otherwise or against any public or governmental authority with respect to a
taking or condemnation) if it reasonably believes that enforcing the provision
of the Mortgage or other instrument pursuant to which such payment is required
is prohibited by applicable law.
(b) The Master Servicer shall establish and maintain a Certificate
Account into which the Master Servicer shall deposit or cause to be deposited on
a daily basis within two Business Days of receipt, except as otherwise
specifically provided herein, the following payments and collections remitted by
Subservicers or received by it in respect of Mortgage Loans subsequent to the
Cut-off Date (other than in respect of principal and interest due on the
Mortgage Loans on or before the Cut-off Date) and the following amounts required
to be deposited hereunder:
(1) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
(2) all payments on account of interest on the Mortgage Loans
(net of the related Servicing Fee and Prepayment Interest Excess
permitted under Section 3.15 hereof to the extent not previously
paid to or withheld by the Master Servicer);
(3) all Insurance Proceeds;
(4) all Liquidation Proceeds and Subsequent Recoveries, other
than proceeds to be applied to the restoration or repair of the
Mortgaged Property or released to the Mortgagor in accordance with
the Master Servicer's normal servicing procedures;
(5) all Compensating Interest;
(6) any amount required to be deposited by the Master Servicer
pursuant to Section 3.05(e) in connection with any losses on
Permitted Investments;
(7) any amounts required to be deposited by the Master
Servicer pursuant to Section 3.10 hereof;
(8) the Purchase Price and any Substitution Adjustment Amount;
(9) all Advances made by the Master Servicer or the Trustee
pursuant to Section 4.01 hereof;
96
(10) all Prepayment Charges and Master Servicer Prepayment
Charge Payment Amounts; and
(11) any other amounts required to be deposited hereunder.
The foregoing requirements for remittance by the Master Servicer
into the Certificate Account shall be exclusive, it being understood and agreed
that, without limiting the generality of the foregoing, payments in the nature
of late payment charges or assumption fees, if collected, need not be remitted
by the Master Servicer. In the event that the Master Servicer shall remit any
amount not required to be remitted and not otherwise subject to withdrawal
pursuant to Section 3.08 hereof, it may at any time withdraw or direct the
institution maintaining the Certificate Account, to withdraw such amount from
the Certificate Account, any provision herein to the contrary notwithstanding.
Such withdrawal or direction may be accomplished by delivering written notice
thereof to the institution maintaining the Certificate Account, that describes
the amounts deposited in error in the Certificate Account. The Master Servicer
shall maintain adequate records with respect to all withdrawals made pursuant to
this Section. All funds deposited in the Certificate Account shall be held in
trust for the Certificateholders until withdrawn in accordance with Section
3.08.
No later than 1:00 p.m. Pacific time on the Master Servicer Advance
Date in each of December 2006, January 2007 and February 0000, XXX shall remit
to the Master Servicer, and the Master Servicer shall deposit in the Certificate
Account, the Seller Shortfall Interest Requirement (if any) for such Master
Servicer Advance Date.
(c) The Trustee shall establish and maintain, on behalf of the
Certificateholders, the Distribution Account. The Trustee shall, promptly upon
receipt, deposit in the Distribution Account and retain therein the following:
(1) the aggregate amount remitted by the Master Servicer
pursuant to the second paragraph of Section 3.08(a); and
(2) any amount required to be deposited by the Master Servicer
pursuant to Section 3.05(e) in connection with any losses on
Permitted Investments.
The foregoing requirements for remittance by the Master Servicer and
deposit by the Trustee into the Distribution Account shall be exclusive. In the
event that the Master Servicer shall remit any amount not required to be
remitted and not otherwise subject to withdrawal pursuant to Section 3.08
hereof, it may at any time direct the Trustee to withdraw such amount from the
Distribution Account, any provision herein to the contrary notwithstanding. Such
direction may be accomplished by delivering a written notice to the Trustee that
describes the amounts deposited in error in the Distribution Account. All funds
deposited in the Distribution Account shall be held by the Trustee in trust for
the Certificateholders until disbursed in accordance with this Agreement or
withdrawn in accordance with Section 3.08. In no event shall the Trustee incur
liability for withdrawals from the Distribution Account at the direction of the
Master Servicer.
(d) If the Pre-Funded Amount is greater than zero, the Trustee shall
establish and maintain, on behalf of the Certificateholders, the Pre-Funding
Account, and on the Closing
97
Date, CHL shall remit the Pre-Funded Amount to the Trustee for deposit in the
Pre-Funding Account.
On the Business Day before the Distribution Date following the end
of the Funding Period, the Trustee shall (i) withdraw the amount on deposit in
the Pre-Funding Account (net of investment income), (ii) promptly deposit such
amount in the Distribution Account, and (iii) distribute each amount to the
Certificates on the Distribution Date pursuant to Section 4.04.
(e) Each institution that maintains the Certificate Account, the
Distribution Account or the Pre-Funding Account shall invest the funds in each
such account, as directed by the Master Servicer, in Permitted Investments,
which shall mature not later than (x) in the case of the Certificate Account,
the second Business Day next preceding the related Distribution Account Deposit
Date (except that if such Permitted Investment is an obligation of the
institution that maintains such Certificate Account, then such Permitted
Investment shall mature not later than the Business Day next preceding such
Distribution Account Deposit Date) and (y) in the case of the Distribution
Account and the Pre-Funding Account, the Business Day immediately preceding the
first Distribution Date that follows the date of such investment (except that if
such Permitted Investment is an obligation of the institution that maintains
such Distribution Account or Pre-Funding Account, then such Permitted Investment
shall mature not later than such Distribution Date), in each case, shall not be
sold or disposed of prior to its maturity. All such Permitted Investments shall
be made in the name of the Trustee, for the benefit of the Certificateholders.
In the case of (i) the Certificate Account and the Distribution Account, all
income and gain net of any losses realized from any such investment shall be for
the benefit of the Master Servicer as servicing compensation and shall be
remitted to it monthly as provided herein and (ii) the Pre-Funding Account, all
income and gain net of any losses realized from any such investment shall be for
the benefit of the Depositor and shall be remitted to the Depositor as provided
herein. The amount of any losses incurred in the Certificate Account or the
Distribution Account in respect of any such investments shall be deposited by
the Master Servicer in the Certificate Account or paid to the Trustee for
deposit into the Distribution Account out of the Master Servicer's own funds
immediately as realized. The amount of any losses incurred in the Pre-Funding
Account in respect of any such investments shall be paid by the Master Servicer
to the Trustee for deposit into the Pre-Funding Account out of the Master
Servicer's own funds immediately as realized. The Trustee shall not be liable
for the amount of any loss incurred in respect of any investment or lack of
investment of funds held in the Certificate Account, the Distribution Account or
the Pre-Funding Account and made in accordance with this Section 3.05.
(f) The Master Servicer shall give at least 30 days' advance notice
to the Trustee, each Seller, each Rating Agency and the Depositor of any
proposed change of location of the Certificate Account prior to any change
thereof. The Trustee shall give at least 30 days' advance notice to the Master
Servicer, each Seller, each Rating Agency and the Depositor of any proposed
change of the location of the Distribution Account, the Pre-Funding Account or
the Carryover Reserve Fund prior to any change thereof.
(g) Except as otherwise expressly provided in this Agreement, if any
default occurs under any Permitted Investment, the Trustee may and, subject to
Sections 8.01 and
98
8.02(a)(4), at the request of the Holders of Certificates representing more than
50% of the Voting Rights or the NIM Insurer, shall take any action appropriate
to enforce payment or performance, including the institution and prosecution of
appropriate proceedings.
Section 3.06 Collection of Taxes, Assessments and Similar
Items; Escrow Accounts.
To the extent required by the related Mortgage Note, the Master
Servicer shall establish and maintain one or more accounts (each, an "Escrow
Account") and deposit and retain therein all collections from the Mortgagors (or
advances by the Master Servicer) for the payment of taxes, assessments, hazard
insurance premiums or comparable items for the account of the Mortgagors.
Nothing herein shall require the Master Servicer to compel a Mortgagor to
establish an Escrow Account in violation of applicable law.
Withdrawals of amounts so collected from the Escrow Accounts may be
made only to effect timely payment of taxes, assessments, hazard insurance
premiums, condominium or PUD association dues, or comparable items, to reimburse
the Master Servicer out of related collections for any payments made pursuant to
Sections 3.01 hereof (with respect to taxes and assessments and insurance
premiums) and 3.10 hereof (with respect to hazard insurance), to refund to any
Mortgagors any sums as may be determined to be overages, to pay interest, if
required by law or the terms of the related Mortgage or Mortgage Note, to
Mortgagors on balances in the Escrow Account or to clear and terminate the
Escrow Account at the termination of this Agreement in accordance with Section
9.01 hereof. The Escrow Accounts shall not be a part of the Trust Fund.
Section 3.07 Access to Certain Documentation and Information
Regarding the Mortgage Loans.
The Master Servicer shall afford the Depositor, the NIM Insurer and
the Trustee reasonable access to all records and documentation regarding the
Mortgage Loans and all accounts, insurance policies and other matters relating
to this Agreement, such access being afforded without charge, but only upon
reasonable request and during normal business hours at the offices of the Master
Servicer designated by it. Upon request, the Master Servicer shall furnish to
the Trustee and the NIM Insurer its most recent publicly available financial
statements and any other information relating to its capacity to perform its
obligations under this Agreement reasonably requested by the NIM Insurer.
Upon reasonable advance notice in writing if required by federal
regulation, the Master Servicer will provide to each Certificateholder or
Certificate Owner that is a savings and loan association, bank or insurance
company certain reports and reasonable access to information and documentation
regarding the Mortgage Loans sufficient to permit such Certificateholder or
Certificate Owner to comply with applicable regulations of the OTS or other
regulatory authorities with respect to investment in the Certificates; provided
that the Master Servicer shall be entitled to be reimbursed by each such
Certificateholder or Certificate Owner for actual expenses incurred by the
Master Servicer in providing such reports and access.
99
Section 3.08 Permitted Withdrawals from the Certificate
Account, Distribution Account, Carryover Reserve
Fund and the Principal Reserve Fund.
(a) The Master Servicer may from time to time make withdrawals from
the Certificate Account for the following purposes:
(i) to pay to the Master Servicer (to the extent not
previously paid to or withheld by the Master Servicer), as servicing
compensation in accordance with Section 3.15, that portion of any
payment of interest that equals the Servicing Fee for the period
with respect to which such interest payment was made, and, as
additional servicing compensation to the Master Servicer, those
other amounts set forth in Section 3.15;
(ii) to reimburse each of the Master Servicer and the Trustee
for Advances made by it with respect to the Mortgage Loans, such
right of reimbursement pursuant to this subclause (ii) being limited
to amounts received on particular Mortgage Loan(s) (including, for
this purpose, Liquidation Proceeds, Insurance Proceeds and
Subsequent Recoveries) that represent late recoveries of payments of
principal and/or interest on such particular Mortgage Loan(s) in
respect of which any such Advance was made;
(iii) [Reserved];
(iv) to reimburse each of the Master Servicer and the Trustee
for any Nonrecoverable Advance previously made;
(v) to reimburse the Master Servicer from Insurance Proceeds
for Insured Expenses covered by the related Insurance Policy;
(vi) to pay the Master Servicer any unpaid Servicing Fees and
to reimburse it for any unreimbursed Servicing Advances, the Master
Servicer's right to reimbursement of Servicing Advances pursuant to
this subclause (vi) with respect to any Mortgage Loan being limited
to amounts received on particular Mortgage Loan(s) (including, for
this purpose, Liquidation Proceeds, Insurance Proceeds and
Subsequent Recoveries and purchase and repurchase proceeds) that
represent late recoveries of the payments for which such advances
were made pursuant to Section 3.01 or Section 3.06;
(vii) to pay to the applicable Seller, the Depositor or the
Master Servicer, as applicable, with respect to each Mortgage Loan
or property acquired in respect thereof that has been purchased
pursuant to Section 2.02, 2.03, 2.04 or 3.12, all amounts received
thereon and not taken into account in determining the related
Purchase Price of such repurchased Mortgage Loan;
(viii) to reimburse the applicable Seller, the Master
Servicer, the NIM Insurer or the Depositor for expenses incurred by
any of them in connection with the Mortgage Loans or Certificates
and reimbursable pursuant to Section 6.03 hereof; provided that such
amount shall only be withdrawn following the
100
withdrawal from the Certificate Account for deposit into the
Distribution Account pursuant to the following paragraph;
(ix) to pay any lender-paid primary mortgage insurance
premiums;
(x) to withdraw any amount deposited in the Certificate
Account and not required to be deposited therein; and
(xi) to clear and terminate the Certificate Account upon
termination of this Agreement pursuant to Section 9.01 hereof.
In addition, no later than 1:00 p.m. Pacific time on the
Distribution Account Deposit Date, the Master Servicer shall withdraw from the
Certificate Account and remit to the Trustee the Interest Remittance Amount,
Principal Remittance Amount, Prepayment Charges collected and the Master
Servicer Prepayment Charge Payment Amount for each Loan Group, and the Trustee
shall deposit such amount in the Distribution Account.
The Trustee shall establish and maintain, on behalf of the
Certificateholders, a Principal Reserve Fund in the name of the Trustee. On the
Closing Date, CHL shall deposit into the Principal Reserve Fund $200.00. Funds
on deposit in the Principal Reserve Fund shall not be invested. The Principal
Reserve Fund shall be treated as an "outside reserve fund" under applicable
Treasury regulations and shall not be part of any REMIC created under this
Agreement.
On the Business Day before the first Distribution Date, the Trustee
shall transfer $100.00 from the Principal Reserve Fund to the Distribution
Account, and on the first Distribution Date, the Trustee shall withdraw $100 and
distribute such amount to the Class A-R Certificates in reduction of the
Certificate Principal Balance thereof.
On the Business Day before the Class P Principal Distribution Date,
the Trustee shall transfer from the Principal Reserve Fund to the Distribution
Account $100.00 and shall distribute such amount to the Class P Certificates on
the Class P Principal Distribution Date. Following the distributions to be made
in accordance with the preceding sentence, the Trustee shall then terminate the
Principal Reserve Fund.
The Master Servicer shall keep and maintain separate accounting, on
a Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Certificate Account pursuant to subclauses (i), (ii), (iv),
(v), (vi), (vii), (viii) and (ix) above. Prior to making any withdrawal from the
Certificate Account pursuant to subclause (iv), the Master Servicer shall
deliver to the Trustee an Officer's Certificate of a Servicing Officer
indicating the amount of any previous Advance determined by the Master Servicer
to be a Nonrecoverable Advance and identifying the related Mortgage Loan(s), and
their respective portions of such Nonrecoverable Advance.
(b) The Trustee shall withdraw funds from the Distribution Account
for distribution to the Certificateholders and remittance to the Final Maturity
Reserve Fund and the Swap Account in the manner specified in this Agreement (and
to withhold from the amounts so withdrawn, the amount of any taxes that it is
authorized to retain pursuant to the third paragraph
101
of Section 8.11). In addition, the Trustee may from time to time make
withdrawals from the Distribution Account for the following purposes:
(i) to pay the Trustee the Trustee Fee on each Distribution
Date;
(ii) to pay to the Master Servicer, as additional servicing
compensation, earnings on or investment income with respect to funds
in or credited to the Distribution Account;
(iii) to withdraw pursuant to Section 3.05 any amount
deposited in the Distribution Account and not required to be
deposited therein;
(iv) to reimburse the Trustee for any unreimbursed Advances
made by it pursuant to Section 4.01(d) hereof, such right of
reimbursement pursuant to this subclause (iv) being limited to (x)
amounts received on the related Mortgage Loan(s) in respect of which
any such Advance was made and (y) amounts not otherwise reimbursed
to the Trustee pursuant to Section 3.08(a)(ii) hereof;
(v) to reimburse the Trustee for any Nonrecoverable Advance
previously made by the Trustee pursuant to Section 4.01(d) hereof,
such right of reimbursement pursuant to this subclause (v) being
limited to amounts not otherwise reimbursed to the Trustee pursuant
to Section 3.08(a)(iv) hereof;
(vi) to pay to the Co-Trustee, for payment to each Mortgage
Insurer as provided below, the related Mortgage Insurance Premium;
and
(vii) to clear and terminate the Distribution Account upon
termination of the Agreement pursuant to Section 9.01 hereof.
The Co-Trustee shall pay the applicable Mortgage Insurance Premium
to the related Mortgage Insurer in accordance with the following wiring
instructions:
United Guaranty Mortgage Indemnity Company, Account #2035650940583,
Wachovia Bank, 000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000, ABA
#000000000, Txt: Attention: Xxxx Xxxxx, CWABS 2006-21 Pool, Bulk Deal 74.
Mortgage Guaranty Insurance Corporation, Account #112663706, US
Bank, 000 X. Xxxxxxxxx Xxx., Xxxxxxxxx, Xxxxxxxxx 00000, ABA #000000000, Txt:
Attention: Premium Pay - ID 147644538 deal #2059.
(c) The Trustee shall withdraw funds from the Carryover Reserve Fund
for distribution to the Certificateholders in the manner specified in this
Agreement (and to withhold from the amounts so withdrawn, the amount of any
taxes that it is authorized to retain pursuant to the third paragraph of Section
8.11). In addition, the Trustee may from time to time make withdrawals from the
Carryover Reserve Fund for the following purposes:
(1) to withdraw any amount deposited in the Carryover Reserve
Fund and not required to be deposited therein; and
102
(2) to clear and terminate the Carryover Reserve Fund upon
termination of the Agreement pursuant to Section 9.01 hereof.
Section 3.09 [Reserved].
Section 3.10 Maintenance of Hazard Insurance.
The Master Servicer shall cause to be maintained, for each Mortgage
Loan, hazard insurance with extended coverage in an amount that is at least
equal to the lesser of (i) the maximum insurable value of the improvements
securing such Mortgage Loan and (ii) the greater of (a) the outstanding
principal balance of the Mortgage Loan and (b) an amount such that the proceeds
of such policy shall be sufficient to prevent the related Mortgagor and/or
mortgagee from becoming a co-insurer. Each such policy of standard hazard
insurance shall contain, or have an accompanying endorsement that contains, a
standard mortgagee clause. The Master Servicer shall also cause flood insurance
to be maintained on property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan, to the extent described below. Pursuant to
Section 3.05 hereof, any amounts collected by the Master Servicer under any such
policies (other than the amounts to be applied to the restoration or repair of
the related Mortgaged Property or property thus acquired or amounts released to
the Mortgagor in accordance with the Master Servicer's normal servicing
procedures) shall be deposited in the Certificate Account. Any cost incurred by
the Master Servicer in maintaining any such insurance shall not, for the purpose
of calculating monthly distributions to the Certificateholders or remittances to
the Trustee for their benefit, be added to the principal balance of the Mortgage
Loan, notwithstanding that the terms of the Mortgage Loan so permit. Such costs
shall be recoverable by the Master Servicer out of late payments by the related
Mortgagor or out of Liquidation Proceeds or Subsequent Recoveries to the extent
permitted by Section 3.08 hereof. It is understood and agreed that no earthquake
or other additional insurance is to be required of any Mortgagor or maintained
on property acquired in respect of a Mortgage other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance. If the Mortgaged Property is located at the
time of origination of the Mortgage Loan in a federally designated special flood
hazard area and such area is participating in the national flood insurance
program, the Master Servicer shall cause flood insurance to be maintained with
respect to such Mortgage Loan. Such flood insurance shall be in an amount equal
to the lesser of (i) the original principal balance of the related Mortgage
Loan, (ii) the replacement value of the improvements that are part of such
Mortgaged Property, or (iii) the maximum amount of such insurance available for
the related Mortgaged Property under the Flood Disaster Protection Act of 1973,
as amended. If the hazard policy contains a deductible clause, the Master
Servicer will be required to deposit from its own funds into the Certificate
Account the amounts that would have been deposited therein but for the
deductible clause.
Section 3.11 Enforcement of Due-On-Sale Clauses; Assumption
Agreements.
(a) Except as otherwise provided in this Section 3.11(a), when any
property subject to a Mortgage has been or is about to be conveyed by the
Mortgagor, the Master Servicer shall to the extent that it has knowledge of such
conveyance, enforce any due-on-sale clause contained in any Mortgage Note or
Mortgage, to the extent permitted under applicable law and governmental
regulations, but only to the extent that such enforcement will not adversely
affect
103
or jeopardize coverage under any Required Insurance Policy. Notwithstanding the
foregoing, the Master Servicer is not required to exercise such rights with
respect to a Mortgage Loan if the Person to whom the related Mortgaged Property
has been conveyed or is proposed to be conveyed satisfies the terms and
conditions contained in the Mortgage Note and Mortgage related thereto and the
consent of the mortgagee under such Mortgage Note or Mortgage is not otherwise
so required under such Mortgage Note or Mortgage as a condition to such
transfer. In the event that the Master Servicer is prohibited by law from
enforcing any such due-on-sale clause, or if coverage under any Required
Insurance Policy would be adversely affected, or if nonenforcement is otherwise
permitted hereunder, the Master Servicer is authorized, subject to Section
3.11(b), to take or enter into an assumption and modification agreement from or
with the person to whom such property has been or is about to be conveyed,
pursuant to which such person becomes liable under the Mortgage Note and, unless
prohibited by applicable state law, the Mortgagor remains liable thereon,
provided that the Mortgage Loan shall continue to be covered (if so covered
before the Master Servicer enters such agreement) by the applicable Required
Insurance Policies. The Master Servicer, subject to Section 3.11(b), is also
authorized with the prior approval of the insurers under any Required Insurance
Policies to enter into a substitution of liability agreement with such Person,
pursuant to which the original Mortgagor is released from liability and such
Person is substituted as Mortgagor and becomes liable under the Mortgage Note.
The Master Servicer shall notify the Trustee that any such substitution,
modification or assumption agreement has been completed by forwarding to the
Co-Trustee the executed original of such substitution or assumption agreement,
which document shall be added to the related Mortgage File and shall, for all
purposes, be considered a part of such Mortgage File to the same extent as all
other documents and instruments constituting a part thereof.
(b) Subject to the Master Servicer's duty to enforce any due-on-sale
clause to the extent set forth in Section 3.11(a) hereof, in any case in which a
Mortgaged Property has been conveyed to a Person by a Mortgagor, and such Person
is to enter into an assumption agreement or modification agreement or supplement
to the Mortgage Note or Mortgage that requires the signature of the Trustee, or
if an instrument of release signed by the Trustee is required releasing the
Mortgagor from liability on the Mortgage Loan, the Master Servicer shall prepare
and deliver or cause to be prepared and delivered to the Trustee for signature
and shall direct, in writing, the Trustee to execute the assumption agreement
with the Person to whom the Mortgaged Property is to be conveyed and such
modification agreement or supplement to the Mortgage Note or Mortgage or other
instruments as are reasonable or necessary to carry out the terms of the
Mortgage Note or Mortgage or otherwise to comply with any applicable laws
regarding assumptions or the transfer of the Mortgaged Property to such Person.
In connection with any such assumption, no material term of the Mortgage Note
(including, but not limited to, the Mortgage Rate, the amount of the Scheduled
Payment, the Maximum Mortgage Rate, the Minimum Mortgage Rate, the Gross Margin,
the Initial Periodic Rate Cap, the Subsequent Periodic Rate Cap, the Adjustment
Date and any other term affecting the amount or timing of payment on the
Mortgage Loan) may be changed. In addition, the substitute Mortgagor and the
Mortgaged Property must be acceptable to the Master Servicer in accordance with
its underwriting standards as then in effect. The Master Servicer shall notify
the Trustee that any such substitution or assumption agreement has been
completed by forwarding to the Trustee the original of such substitution or
assumption agreement, which in the case of the original shall be added to the
related Mortgage File and shall, for all purposes, be considered a part of such
Mortgage File to the same extent as all other documents and instruments
constituting a part
104
thereof. Any fee collected by the Master Servicer for entering into an
assumption or substitution of liability agreement will be retained by the Master
Servicer as additional servicing compensation.
Section 3.12 Realization Upon Defaulted Mortgage Loans;
Determination of Excess Proceeds and Realized
Losses; Repurchase of Certain Mortgage Loans.
(a) The Master Servicer may agree to a modification of any Mortgage
Loan (the "Modified Mortgage Loan") if (i) CHL purchases the Modified Mortgage
Loan from the Trust Fund immediately following the modification as described
below and (ii) the Stated Principal Balance of such Mortgage Loan, when taken
together with the aggregate of the Stated Principal Balances of all other
Mortgage Loans in the same Loan Group that have been so modified since the
Closing Date at the time of those modifications, does not exceed an amount equal
to 5% of the aggregate Certificate Principal Balance of the Certificates.
Effective immediately after the modification, and, in any event, on the same
Business Day on which the modification occurs, all interest of the Trustee in
the Modified Mortgage Loan shall automatically be deemed transferred and
assigned to CHL and all benefits and burdens of ownership thereof, including the
right to accrued interest thereon from the date of modification and the risk of
default thereon, shall pass to CHL. The Master Servicer shall promptly deliver
to the Trustee a certification of a Servicing Officer to the effect that all
requirements of this paragraph have been satisfied with respect to the Modified
Mortgage Loan. For federal income tax purposes, the Trustee shall account for
such purchase as a prepayment in full of the Modified Mortgage Loan. CHL shall
remit the Purchase Price to the Master Servicer for deposit into the Certificate
Account pursuant to Section 3.05 within one Business Day after the purchase of
the Modified Mortgage Loan. Upon receipt by the Trustee of written notification
of any such deposit signed by a Servicing Officer, the Trustee shall release to
CHL or its designee the related Mortgage File and shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, as shall
be necessary to vest in CHL any Modified Mortgage Loan previously transferred
and assigned pursuant hereto. CHL covenants and agrees to indemnify the Trust
Fund against any liability for any "prohibited transaction" taxes and any
related interest, additions, and penalties imposed on the Trust Fund established
hereunder as a result of any modification of a Mortgage Loan effected pursuant
to this subsection (a), any holding of a Modified Mortgage Loan by the Trust
Fund or any purchase of a Modified Mortgage Loan by CHL (but such obligation
shall not prevent CHL or any other appropriate Person from in good faith
contesting any such tax in appropriate proceedings and shall not prevent CHL
from withholding payment of such tax, if permitted by law, pending the outcome
of such proceedings). CHL shall have no right of reimbursement for any amount
paid pursuant to the foregoing indemnification, except to the extent that the
amount of any tax, interest, and penalties, together with interest thereon, is
refunded to the Trust Fund or CHL. If the Master Servicer agrees to a
modification of any Mortgage Loan pursuant to this Section 3.12(a), and if such
Mortgage Loan carries a Prepayment Charge provision, CHL shall deliver to the
Trustee the amount of the Prepayment Charge, if any, that would have been due
had such Mortgage Loan been prepaid at the time of such modification, for
deposit into the Certificate Account (not later than 1:00 p.m. Pacific time on
the Master Servicer Advance Date immediately succeeding the date of such
modification) for distribution in accordance with the terms of this Agreement.
105
(b) The Master Servicer shall use reasonable efforts to foreclose
upon or otherwise comparably convert the ownership of properties securing such
of the Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments. In
connection with such foreclosure or other conversion, the Master Servicer shall
follow such practices and procedures as it shall deem necessary or advisable and
as shall be normal and usual in its general mortgage servicing activities and
the requirements of the insurer under any Required Insurance Policy; provided
that the Master Servicer shall not be required to expend its own funds in
connection with any foreclosure or towards the restoration of any property
unless it shall determine (i) that such restoration and/or foreclosure will
increase the proceeds of liquidation of the Mortgage Loan after reimbursement to
itself of such expenses and (ii) that such expenses will be recoverable to it
through Liquidation Proceeds (respecting which it shall have priority for
purposes of withdrawals from the Certificate Account pursuant to Section 3.08
hereof). The Master Servicer shall be responsible for all other costs and
expenses incurred by it in any such proceedings; provided that it shall be
entitled to reimbursement thereof from the proceeds of liquidation of the
related Mortgaged Property and any related Subsequent Recoveries, as
contemplated in Section 3.08 hereof. If the Master Servicer has knowledge that a
Mortgaged Property that the Master Servicer is contemplating acquiring in
foreclosure or by deed-in-lieu of foreclosure is located within a one-mile
radius of any site with environmental or hazardous waste risks known to the
Master Servicer, the Master Servicer will, prior to acquiring the Mortgaged
Property, consider such risks and only take action in accordance with its
established environmental review procedures.
With respect to any REO Property, the deed or certificate of sale
shall be taken in the name of the Trustee for the benefit of the
Certificateholders (or the Trustee's nominee on behalf of the
Certificateholders). The Trustee's name shall be placed on the title to such REO
Property solely as the Trustee hereunder and not in its individual capacity. The
Master Servicer shall ensure that the title to such REO Property references this
Agreement and the Trustee's capacity thereunder. Pursuant to its efforts to sell
such REO Property, the Master Servicer shall either itself or through an agent
selected by the Master Servicer protect and conserve such REO Property in the
same manner and to such extent as is customary in the locality where such REO
Property is located and may, incident to its conservation and protection of the
interests of the Certificateholders, rent the same, or any part thereof, as the
Master Servicer deems to be in the best interest of the Master Servicer and the
Certificateholders for the period prior to the sale of such REO Property. The
Master Servicer shall prepare for and deliver to the Trustee a statement with
respect to each REO Property that has been rented showing the aggregate rental
income received and all expenses incurred in connection with the management and
maintenance of such REO Property at such times as is necessary to enable the
Trustee to comply with the reporting requirements of the REMIC Provisions. The
net monthly rental income, if any, from such REO Property shall be deposited in
the Certificate Account no later than the close of business on each
Determination Date. The Master Servicer shall perform the tax reporting and
withholding related to foreclosures, abandonments and cancellation of
indebtedness income as specified by Sections 1445, 6050J and 6050P of the Code
by preparing and filing such tax and information returns, as may be required.
In the event that the Trust Fund acquires any Mortgaged Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, the Master Servicer shall dispose of such Mortgaged Property as
soon as practicable in a manner that
106
maximizes the Liquidation Proceeds, but in no event later than three years after
its acquisition by the Trust Fund or, at the expense of the Trust Fund, the
Master Servicer shall request, more than 60 days prior to the day on which such
three-year period would otherwise expire, an extension of the three-year grace
period. In the event the Trustee shall have been supplied with an Opinion of
Counsel (such opinion not to be an expense of the Trustee) to the effect that
the holding by the Trust Fund of such Mortgaged Property subsequent to such
three-year period will not result in the imposition of taxes on "prohibited
transactions" of the Trust Fund as defined in section 860F of the Code or cause
any REMIC formed hereunder to fail to qualify as a REMIC at any time that any
Certificates are outstanding, and the Trust Fund may continue to hold such
Mortgaged Property (subject to any conditions contained in such Opinion of
Counsel) after the expiration of such three-year period. Notwithstanding any
other provision of this Agreement, no Mortgaged Property acquired by the Trust
Fund shall be rented (or allowed to continue to be rented) or otherwise used for
the production of income by or on behalf of the Trust Fund in such a manner or
pursuant to any terms that would (i) cause such Mortgaged Property to fail to
qualify as "foreclosure property" within the meaning of section 860G(a)(8) of
the Code or (ii) subject the Trust Fund to the imposition of any federal, state
or local income taxes on the income earned from such Mortgaged Property under
section 860G(c) of the Code or otherwise, unless the Master Servicer has agreed
to indemnify and hold harmless the Trust Fund with respect to the imposition of
any such taxes.
The decision of the Master Servicer to foreclose on a defaulted
Mortgage Loan shall be subject to a determination by the Master Servicer that
the proceeds of such foreclosure would exceed the costs and expenses of bringing
such a proceeding. The income earned from the management of any Mortgaged
Properties acquired through foreclosure or other judicial proceeding, net of
reimbursement to the Master Servicer for expenses incurred (including any
property or other taxes) in connection with such management and net of
unreimbursed Servicing Fees, Advances, Servicing Advances and any management fee
paid or to be paid with respect to the management of such Mortgaged Property,
shall be applied to the payment of principal of, and interest on, the related
defaulted Mortgage Loans (with interest accruing as though such Mortgage Loans
were still current) and all such income shall be deemed, for all purposes in
this Agreement, to be payments on account of principal and interest on the
related Mortgage Notes and shall be deposited into the Certificate Account. To
the extent the income received during a Prepayment Period is in excess of the
amount attributable to amortizing principal and accrued interest at the related
Mortgage Rate on the related Mortgage Loan, such excess shall be considered to
be a partial Principal Prepayment for all purposes hereof.
The Liquidation Proceeds from any liquidation of a Mortgage Loan and
any Subsequent Recoveries, net of any payment to the Master Servicer as provided
above, shall be deposited in the Certificate Account as provided in Section 3.05
for distribution on the related Distribution Date, except that any Excess
Proceeds shall be retained by the Master Servicer as additional servicing
compensation.
The proceeds of any Liquidated Mortgage Loan, as well as any
recovery resulting from a partial collection of Liquidation Proceeds or any
income from an REO Property, will be applied in the following order of priority:
first, to reimburse the Master Servicer for any related unreimbursed Servicing
Advances and Servicing Fees, pursuant to Section 3.08(a)(vi) or this Section
3.12; second, to reimburse the Master Servicer for any unreimbursed Advances,
pursuant
107
to Section 3.08(a)(ii) or this Section 3.12; third, to accrued and unpaid
interest (to the extent no Advance has been made for such amount) on the
Mortgage Loan or related REO Property, at the Net Mortgage Rate to the Due Date
occurring in the month in which such amounts are required to be distributed; and
fourth, as a recovery of principal of the Mortgage Loan.
(c) [Reserved].
(d) The Master Servicer, in its sole discretion, shall have the
right to elect (by written notice sent to the Trustee) to purchase for its own
account from the Trust Fund any Mortgage Loan that is 150 days or more
delinquent at a price equal to the Purchase Price; provided, however, that the
Master Servicer may only exercise this right on or before the last day of the
calendar month in which such Mortgage Loan became 150 days delinquent (such
month, the "Eligible Repurchase Month"); provided further, that any such
Mortgage Loan which becomes current but thereafter becomes delinquent may be
purchased by the Master Servicer pursuant to this Section in any ensuing
Eligible Repurchase Month. The Purchase Price for any Mortgage Loan purchased
hereunder shall be deposited in the Certificate Account. Any purchase of a
Mortgage Loan pursuant to this Section 3.12(d) shall be accomplished by
remittance to the Master Servicer for deposit in the Certificate Account of the
Purchase Price. The Trustee, upon receipt of certification from the Master
Servicer of such deposit and a Request for File Release from the Master
Servicer, shall release or cause to be released to the purchaser of such
Mortgage Loan the related Mortgage File and shall execute and deliver such
instruments of transfer or assignment prepared by the purchaser of such Mortgage
Loan, in each case without recourse, as shall be necessary to vest in the
purchaser of such Mortgage Loan any Mortgage Loan released pursuant hereto and
the purchaser of such Mortgage Loan shall succeed to all the Trustee's right,
title and interest in and to such Mortgage Loan and all security and documents
related thereto. Such assignment shall be an assignment outright and not for
security. The purchaser of such Mortgage Loan shall thereupon own such Mortgage
Loan, and all security and documents, free of any further obligation to the
Trustee or the Certificateholders with respect thereto.
Section 3.13 Co-Trustee to Cooperate; Release of Mortgage
Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Master Servicer of a notification that payment in full will be escrowed in a
manner customary for such purposes, the Master Servicer will promptly notify the
Co-Trustee by delivering a Request for File Release. Upon receipt of such
request, the Co-Trustee shall promptly release the related Mortgage File to the
Master Servicer, and the Co-Trustee shall at the Master Servicer's direction
execute and deliver to the Master Servicer the request for reconveyance, deed of
reconveyance or release or satisfaction of mortgage or such instrument releasing
the lien of the Mortgage in each case provided by the Master Servicer, together
with the Mortgage Note with written evidence of cancellation thereon. The Master
Servicer is authorized to cause the removal from the registration on the MERS(R)
System of such Mortgage and to execute and deliver, on behalf of the Trust Fund
and the Certificateholders or any of them, any and all instruments of
satisfaction or cancellation or of partial or full release. No expenses incurred
in connection with any instrument of satisfaction or deed of reconveyance shall
be chargeable to the Certificate Account, the Distribution Account, the
Carryover Reserve Fund or the related subservicing account. From time to time
and as shall be appropriate for the servicing or foreclosure of any Mortgage
Loan,
108
including for such purpose, collection under any policy of flood insurance any
fidelity bond or errors or omissions policy, or for the purposes of effecting a
partial release of any Mortgaged Property from the lien of the Mortgage or the
making of any corrections to the Mortgage Note or the Mortgage or any of the
other documents included in the Mortgage File, the Co-Trustee shall, upon
delivery to the Co-Trustee of a Request for Document Release or a Request for
File Release, as applicable, release the documents specified in such request or
the Mortgage File, as the case may be, to the Master Servicer. Subject to the
further limitations set forth below, the Master Servicer shall cause the
Mortgage File or documents so released to be returned to the Co-Trustee when the
need therefor by the Master Servicer no longer exists, unless the Mortgage Loan
is liquidated and the proceeds thereof are deposited in the Certificate Account,
in which case the Master Servicer shall deliver to the Co-Trustee a Request for
File Release for any remaining documents in the Mortgage File not in the
possession of the Master Servicer.
If the Master Servicer at any time seeks to initiate a foreclosure
proceeding in respect of any Mortgaged Property as authorized by this Agreement,
the Master Servicer shall deliver or cause to be delivered to the Trustee, for
signature, as appropriate, any court pleadings, requests for trustee's sale or
other documents necessary to effectuate such foreclosure or any legal action
brought to obtain judgment against the Mortgagor on the Mortgage Note or the
Mortgage or to obtain a deficiency judgment or to enforce any other remedies or
rights provided by the Mortgage Note or the Mortgage or otherwise available at
law or in equity. Notwithstanding the foregoing, the Master Servicer shall cause
possession of any Mortgage File or of the documents therein that shall have been
released by the Co-Trustee to be returned to the Co-Trustee within 21 calendar
days after possession thereof shall have been released by the Co-Trustee unless
(i) the Mortgage Loan has been liquidated and the Liquidation Proceeds relating
to the Mortgage Loan have been deposited in the Certificate Account, and the
Master Servicer shall have delivered to the Co-Trustee a Request for File
Release or (ii) the Mortgage File or document shall have been delivered to an
attorney or to a public trustee or other public official as required by law for
purposes of initiating or pursuing legal action or other proceedings for the
foreclosure of the Mortgaged Property and the Master Servicer shall have
delivered to the Trustee an Officer's Certificate of a Servicing Officer
certifying as to the name and address of the Person to which the Mortgage File
or the documents therein were delivered and the purpose or purposes of such
delivery.
Section 3.14 Documents, Records and Funds in Possession of
Master Servicer to be Held for the Trustee.
Notwithstanding any other provisions of this Agreement, the Master
Servicer shall transmit to the Co-Trustee as required by this Agreement all
documents and instruments in respect of a Mortgage Loan coming into the
possession of the Master Servicer from time to time and shall account fully to
the Trustee for any funds received by the Master Servicer or that otherwise are
collected by the Master Servicer as Liquidation Proceeds, Insurance Proceeds or
Subsequent Recoveries in respect of any Mortgage Loan. All Mortgage Files and
funds collected or held by, or under the control of, the Master Servicer in
respect of any Mortgage Loans, whether from the collection of principal and
interest payments or from Liquidation Proceeds or Subsequent Recoveries
including but not limited to, any funds on deposit in the Certificate Account,
shall be held by the Master Servicer for and on behalf of the Trust Fund and
shall be and remain the sole and exclusive property of the Trust Fund, subject
to the applicable
109
provisions of this Agreement. The Master Servicer also agrees that it shall not
create, incur or subject any Mortgage File or any funds that are deposited in
the Certificate Account, the Distribution Account, the Carryover Reserve Fund or
in any Escrow Account (as defined in Section 3.06), or any funds that otherwise
are or may become due or payable to the Trustee for the benefit of the
Certificateholders, to any claim, lien, security interest, judgment, levy, writ
of attachment or other encumbrance, or assert by legal action or otherwise any
claim or right of set off against any Mortgage File or any funds collected on,
or in connection with, a Mortgage Loan, except, however, that the Master
Servicer shall be entitled to set off against and deduct from any such funds any
amounts that are properly due and payable to the Master Servicer under this
Agreement.
Section 3.15 Servicing Compensation.
As compensation for its activities hereunder, the Master Servicer
shall be entitled to retain or withdraw from the Certificate Account out of each
payment of interest on a Mortgage Loan included in the Trust Fund an amount
equal to interest at the applicable Servicing Fee Rate on the Stated Principal
Balance of the related Mortgage Loan for the period covered by such interest
payment.
Additional servicing compensation in the form of any Excess
Proceeds, assumption fees, late payment charges, Prepayment Interest Excess, and
all income and gain net of any losses realized from Permitted Investments shall
be retained by the Master Servicer to the extent not required to be deposited in
the Certificate Account pursuant to Section 3.05 or 3.12(b) hereof. The Master
Servicer shall be required to pay all expenses incurred by it in connection with
its servicing activities hereunder (including payment of any premiums for hazard
insurance, as required by Section 3.10 hereof and maintenance of the other forms
of insurance coverage required by Section 3.10 hereof) and shall not be entitled
to reimbursement therefor except as specifically provided in Sections 3.08 and
3.12 hereof.
Section 3.16 Access to Certain Documentation.
The Master Servicer shall provide to the OTS and the FDIC and to
comparable regulatory authorities supervising Holders of the Certificates and
Certificate Owners and the examiners and supervisory agents of the OTS, the FDIC
and such other authorities, access to the documentation regarding the Mortgage
Loans required by applicable regulations of the OTS and the FDIC. Such access
shall be afforded without charge, but only upon reasonable and prior written
request and during normal business hours at the offices of the Master Servicer
designated by it. Nothing in this Section shall limit the obligation of the
Master Servicer to observe any applicable law prohibiting disclosure of
information regarding the Mortgagors and the failure of the Master Servicer to
provide access as provided in this Section as a result of such obligation shall
not constitute a breach of this Section.
Section 3.17 Annual Statement as to Compliance.
(a) The Master Servicer shall deliver to the Depositor and the
Trustee on or before March 15 of each year, commencing with its 2007 fiscal
year, an Officer's Certificate stating, as to the signer thereof, that (i) a
review of the activities of the Master Servicer during
110
the preceding calendar year (or applicable portion thereof) and of the
performance of the Master Servicer under this Agreement, has been made under
such officer's supervision and (ii) to the best of such officer's knowledge,
based on such review, the Master Servicer has fulfilled all its obligations
under this Agreement, in all material respects throughout such year (or
applicable portion thereof), or, if there has been a failure to fulfill any such
obligation in any material respect, specifying each such failure known to such
officer and the nature and status thereof and (iii) to the best of such
officer's knowledge, each Subservicer has fulfilled all its obligations under
its Subservicing Agreement in all material respects throughout such year, or, if
there has been a failure to fulfill any such obligation in any material respect
specifying each such failure known to such officer and the nature and status
thereof.
(b) The Master Servicer shall cause each Subservicer to deliver to
the Depositor and the Trustee on or before March 15 of each year, commencing
with its 2007 fiscal year, an Officer's Certificate stating, as to the signer
thereof, that (i) a review of the activities of such Subservicer during the
preceding calendar year (or applicable portion thereof) and of the performance
of the Subservicer under the applicable Subservicing Agreement or primary
servicing agreement, has been made under such officer's supervision and (ii) to
the best of such officer's knowledge, based on such review, such Subservicer has
fulfilled all its obligations under the applicable Subservicing Agreement or
primary servicing agreement, in all material respects throughout such year (or
applicable portion thereof), or, if there has been a failure to fulfill any such
obligation in any material respect, specifying each such failure known to such
officer and the nature and status thereof.
(c) The Trustee shall forward a copy of each such statement to each
Rating Agency. Copies of such statement shall be provided by the Trustee to any
Certificateholder or Certificate Owner upon request at the Master Servicer's
expense, provided such statement is delivered by the Master Servicer to the
Trustee.
Section 3.18 [Reserved].
Section 3.19 [Reserved].
Section 3.20 Prepayment Charges.
(a) Notwithstanding anything in this Agreement to the contrary, in
the event of a Principal Prepayment in full or in part of a Mortgage Loan, the
Master Servicer may not waive any Prepayment Charge or portion thereof required
by the terms of the related Mortgage Note unless (i) such Mortgage Loan is in
default or the Master Servicer believes that such a default is imminent, and the
Master Servicer determines that such waiver would maximize recovery of
Liquidation Proceeds for such Mortgage Loan, taking into account the value of
such Prepayment Charge, or (ii) (A) the enforceability thereof is limited (1) by
bankruptcy, insolvency, moratorium, receivership, or other similar law relating
to creditors' rights generally or (2) due to acceleration in connection with a
foreclosure or other involuntary payment, or (B) the enforceability is otherwise
limited or prohibited by applicable law. In the event of a Principal Prepayment
in full or in part with respect to any Mortgage Loan, the Master Servicer shall
deliver to the Trustee an Officer's Certificate substantially in the form of
Exhibit T no later than the third Business Day following the immediately
succeeding Determination Date with a
111
copy to the Class P Certificateholders. If the Master Servicer has waived or
does not collect all or a portion of a Prepayment Charge relating to a Principal
Prepayment in full or in part due to any action or omission of the Master
Servicer, other than as provided above, the Master Servicer shall deliver to the
Trustee, together with the Principal Prepayment in full or in part, the amount
of such Prepayment Charge (or such portion thereof as had been waived) for
deposit into the Certificate Account (not later than 1:00 p.m. Pacific time on
the immediately succeeding Master Servicer Advance Date, in the case of such
Prepayment Charge) for distribution in accordance with the terms of this
Agreement.
(b) Upon discovery by the Master Servicer or a Responsible Officer
of the Trustee of a breach of the foregoing subsection (a), the party
discovering the breach shall give prompt written notice to the other parties.
(c) CHL represents and warrants to the Depositor and the Trustee, as
of the Closing Date and each Subsequent Transfer Date, that the information in
the Prepayment Charge Schedule (including the attached prepayment charge
summary) is complete and accurate in all material respects at the dates as of
which the information is furnished and each Prepayment Charge is permissible and
enforceable in accordance with its terms under applicable state law, except as
the enforceability thereof is limited due to acceleration in connection with a
foreclosure or other involuntary payment.
(d) Upon discovery by the Master Servicer or a Responsible Officer
of the Trustee of a breach of the foregoing clause (c) that materially and
adversely affects right of the Holders of the Class P Certificates to any
Prepayment Charge, the party discovering the breach shall give prompt written
notice to the other parties. Within 60 days of the earlier of discovery by the
Master Servicer or receipt of notice by the Master Servicer of breach, the
Master Servicer shall cure the breach in all material respects or shall pay into
the Certificate Account the amount of the Prepayment Charge that would otherwise
be due from the Mortgagor, less any amount representing such Prepayment Charge
previously collected and paid by the Master Servicer into the Certificate
Account.
Section 3.21 Swap Contract.
CHL shall cause The Bank of New York to enter into the Swap Contract
Administration Agreement and shall assign all of its right, title and interest
in and to the interest rate swap transaction evidenced by the Swap Contract to,
and shall cause all of its obligations in respect of such transaction to be
assumed by, the Swap Contract Administrator, on the terms and conditions set
forth in the Swap Contract Assignment Agreement. The Trustee's rights to receive
certain proceeds of the Swap Contract as provided in the Swap Contract
Administration Agreement shall be rights of the Trustee as Swap Trustee
hereunder, shall be an asset of the Swap Trust and shall not be an asset of the
Trust Fund nor of any REMIC. The Swap Trustee shall deposit any amounts received
from time to time from the Swap Contract Administrator with respect to the Swap
Contract into the Swap Account. The Master Servicer shall deposit any amounts
received on behalf of the Swap Trustee from time to time with respect to the
Swap Contract into the Swap Account.
112
On the Business Day preceding each Distribution Date, the Swap
Trustee shall notify the Swap Contract Administrator of any amounts
distributable to the Interest-Bearing Certificates pursuant to Section
4.04(d)(3) through (8) that will remain unpaid following all distributions to be
made on such Distribution Date pursuant to Section 4.04(a) through (c).
No later than two Business Days following each Distribution Date,
the Trustee shall provide the Swap Contract Administrator with information
regarding the aggregate Certificate Principal Balance of the Interest-Bearing
Certificates after all distributions on such Distribution Date.
Upon the Swap Contract Administrator obtaining actual knowledge of
a Xxxxx'x First Level Downgrade or a S&P First Level Downgrade with respect to
the Swap Counterparty (each as defined in the Swap Contract) or upon the Swap
Contract Administrator obtaining actual knowledge of a Xxxxx'x Second Level
Downgrade or a S&P Second Level Downgrade with respect to the Swap
Counterparty (each as defined in the Swap Contract), the Swap Trustee shall
direct the Swap Contract Administrator to (i) demand payment of the Delivery
Amount (as defined in the Swap Contract) from the Swap Counterparty on each
Valuation Date (as defined in the Swap Contract) and to perform its other
obligations in accordance with the Swap Contract and (ii) take such other
action required under the Swap Contract. If a Delivery Amount is demanded, the
Swap Contract Administrator, in accordance with the Swap Contract
Administration Agreement, shall establish an account to hold cash and other
eligible investments pledged under the Swap Contract. Any cash or other
Eligible Collateral pledged under the Swap Contract shall not be part of the
Distribution Account or the Swap Account unless remitted to such accounts by
the Swap Contract Administrator in accordance with the Swap Contract
Administration Agreement. If Eligible Collateral with a value equal to the
Delivery Amount is not delivered to the Swap Contract Administrator by the
Swap Counterparty, the Swap Trustee shall direct the Swap Contract
Administrator to notify the Swap Counterparty of such failure.
Upon the Swap Trustee obtaining actual knowledge of an Event of
Default (as defined in the Swap Contract) or Termination Event (as defined in
the Swap Contract) for which the Swap Contract Administrator has the right to
designate an Early Termination Date (as defined in the Swap Contract), the Swap
Trustee shall act at the written direction of the Depositor as to whether to
direct the Swap Contract Administrator to designate an Early Termination Date;
provided, however, that the Swap Trustee shall provide written notice to each
Rating Agency following the Event of Default or Termination Event. Upon the
termination of the Swap Contract under the circumstances contemplated by this
Section 3.21, the Swap Trustee shall use its reasonable best efforts to enforce
the rights of the Swap Contract Administrator as may be permitted by the terms
of the Swap Contract and consistent with the terms hereof, and CHL shall assist
the Swap Contract Administrator in procuring a replacement swap contract with
terms approximating those of the original Swap Contract.
Any Swap Termination Payment received from the Swap Counterparty
shall be used to pay any upfront amount required under any replacement swap
contract and any excess shall be distributed to CHL and will not be available
to make distributions in respect of any Class of Certificates. In the event
that a replacement swap contract cannot be procured, any Swap Termination
Payment received from the Swap Counterparty in respect of the termination of
the original Swap Contract shall, in accordance with the Swap Contract
Administration Agreement, be retained by the Swap Contract Administrator and
remitted to the Swap Trustee on subsequent Distribution Dates up to and
including the Swap Contract Termination Date to pay any amounts distributable
to the Interest-Bearing Certificates pursuant to Section 4.04(d)(3) through
(8) that will remain unpaid following all distributions to be made on such
Distribution Date pursuant to Section 4.04(a) through (c). Any portion of such
upfront amount remaining after the Swap Contract Termination Date shall be
distributed to CHL and will not be available to make distributions in respect
of any Class of Certificates.
In the event that the swap counterparty in respect of a replacement
swap contract pays any upfront amount to the Swap Contract Administrator in
connection with entering into the replacement swap contract and such upfront
amount is received by the Swap Contract Administrator prior to the Distribution
Date on which any Swap Termination Payment will be payable to the Swap
Counterparty in respect of the original Swap Contract, a portion of that upfront
amount equal to the lesser of (x) that upfront amount and (y) the amount of the
Swap Termination Payment due to the Swap Counterparty in respect of the original
Swap Contract (the "Adjusted Replacement Upfront Amount") shall be included in
Interest Funds for Loan Group 1 and Loan Group 2 for that Distribution Date, pro
rata, based upon their respective Interest Funds for that Distribution Date, and
any upfront amount in excess of the Adjusted
113
Replacement Upfront Amount shall be distributed to CHL and will not be
available to make distributions in respect of any Class of Certificates. Any
upfront amount paid to the Swap Contract Administrator by the swap
counterparty in respect of a replacement swap contract after the Distribution
Date on which any Swap Termination Payment will be payable to the Swap
Counterparty in respect of the original Swap Contract, such upfront amount
shall, in accordance with the Swap Contract Administration Agreement,
be retained by the Swap Contract Administrator and remitted to the Swap
Trustee on subsequent Distribution Dates up to and including the Swap Contract
Termination Date to pay any amounts distributable to the Interest-Bearing
Certificates pursuant to Section 4.04(d)(3) through (8) that will remain
unpaid following all distributions to be made on such Distribution Date
pursuant to Section 4.04(a) through (c).
The Swap Counterparty shall be an express third party beneficiary of
this Agreement for the purpose of enforcing the provisions hereof to the extent
of the Swap Counterparty's rights explicitly specified herein as if a party
hereto.
ARTICLE IV.
DISTRIBUTIONS AND ADVANCES BY THE MASTER SERVICER
Section 4.01 Advances; Remittance Reports.
(a) Within two Business Days after each Determination Date, the
Master Servicer shall deliver to the Trustee by facsimile or electronic mail (or
by such other means as the Master Servicer and the Trustee, as the case may be,
may agree from time to time) a Remittance Report with respect to the related
Distribution Date. The Trustee shall not be responsible to recompute,
recalculate or verify any information provided to it by the Master Servicer.
(b) Subject to the conditions of this Article IV, the Master
Servicer, as required below, shall make an Advance and deposit such Advance in
the Certificate Account. Each such Advance shall be remitted to the Certificate
Account no later than 1:00 p.m. Pacific time on the Master Servicer Advance Date
in immediately available funds. The Trustee will provide notice to the Master
Servicer by facsimile by the close of business on any Master Servicer Advance
Date in the event that the amount remitted by the Master Servicer to the Trustee
on the Distribution Account Deposit Date is less than the Advances required to
be made by the Master Servicer for such Distribution Date. The Master Servicer
shall be obligated to make any such Advance only to the extent that such advance
would not be a Nonrecoverable Advance. If the Master Servicer shall have
determined that it has made a Nonrecoverable Advance or that a proposed Advance
or a lesser portion of such Advance would constitute a Nonrecoverable Advance,
the Master Servicer shall deliver (i) to the Trustee for the benefit of the
Certificateholders funds constituting the remaining portion of such Advance, if
applicable, and (ii) to the Depositor, each Rating Agency and the Trustee an
Officer's Certificate setting forth the basis for such determination.
114
(c) In lieu of making all or a portion of such Advance from its own
funds, the Master Servicer may (i) cause to be made an appropriate entry in its
records relating to the Certificate Account that any Amount Held for Future
Distributions has been used by the Master Servicer in discharge of its
obligation to make any such Advance and (ii) transfer such funds from the
Certificate Account to the Distribution Account. Any funds so applied and
transferred shall be replaced by the Master Servicer by deposit in the
Certificate Account no later than the close of business on the Business Day
immediately preceding the Distribution Date on which such funds are required to
be distributed pursuant to this Agreement. The Master Servicer shall be entitled
to be reimbursed from the Certificate Account for all Advances of its own funds
made pursuant to this Section as provided in Section 3.08. The obligation to
make Advances with respect to any Mortgage Loan shall continue until such
Mortgage Loan is paid in full or becomes a Liquidated Mortgage Loan or until the
purchase or repurchase thereof (or substitution therefor) from the Trustee
pursuant to any applicable provision of this Agreement, except as otherwise
provided in this Section 4.01.
(d) If the Master Servicer determines that it will be unable to
comply with its obligation to make the Advances as and when described in
paragraphs (b) and (c) immediately above, it shall use its best efforts to give
written notice thereof to the Trustee (each such notice a "Trustee Advance
Notice"; and such notice may be given by facsimile), not later than 3:00 p.m.,
New York time, on the Business Day immediately preceding the related Master
Servicer Advance Date, specifying the amount that it will be unable to deposit
(each such amount an "Advance Deficiency") and certifying that such Advance
Deficiency constitutes an Advance hereunder and is not a Nonrecoverable Advance.
If the Trustee receives a Trustee Advance Notice on or before 3:30 p.m., (New
York time) on a Master Servicer Advance Date, the Trustee shall, not later than
3:00 p.m., (New York time), on the related Distribution Date, deposit in the
Distribution Account an amount equal to the Advance Deficiency identified in
such Trustee Advance Notice unless it is prohibited from so doing by applicable
law. Notwithstanding the foregoing, the Trustee shall not be required to make
such deposit if the Trustee shall have received written notification from the
Master Servicer that the Master Servicer has deposited or caused to be deposited
in the Certificate Account an amount equal to such Advance Deficiency. All
Advances made by the Trustee pursuant to this Section 4.01(d) shall accrue
interest on behalf of the Trustee at the Trustee Advance Rate from and including
the date such Advances are made to but excluding the date of repayment, with
such interest being an obligation of the Master Servicer and not the Trust Fund.
The Master Servicer shall reimburse the Trustee for the amount of any Advance
made by the Trustee pursuant to this Section 4.01(d) together with accrued
interest, not later than 6:00 p.m. (New York time) on the Business Day following
the related Distribution Date. In the event that the Master Servicer does not
reimburse the Trustee in accordance with the requirements of the preceding
sentence, the Trustee shall immediately (i) terminate all of the rights and
obligations of the Master Servicer under this Agreement in accordance with
Section 7.01 and (ii) subject to the limitations set forth in Section 3.04,
assume all of the rights and obligations of the Master Servicer hereunder.
(e) The Master Servicer shall, not later than the close of business
on the second Business Day immediately preceding each Distribution Date, deliver
to the Trustee a report (in form and substance reasonably satisfactory to the
Trustee) that indicates (i) the Mortgage Loans with respect to which the Master
Servicer has determined that the related Scheduled Payments should be advanced
and (ii) the amount of the related Scheduled Payments.
115
The Master Servicer shall deliver to the Trustee on the related Master Servicer
Advance Date an Officer's Certificate of a Servicing Officer indicating the
amount of any proposed Advance determined by the Master Servicer to be a
Nonrecoverable Advance.
Section 4.02 Reduction of Servicing Compensation in Connection
with Prepayment Interest Shortfalls.
In the event that any Mortgage Loan is the subject of a Prepayment
Interest Shortfall, the Master Servicer shall remit any related Compensating
Interest as part of the related Interest Remittance Amount as provided in this
Agreement. The Master Servicer shall not be entitled to any recovery or
reimbursement for Compensating Interest from the Depositor, the Trustee, any
Seller, the Trust Fund or the Certificateholders.
Section 4.03 [Reserved].
Section 4.04 Distributions.
(a) On each Distribution Date, the Interest Funds for such
Distribution Date shall be distributed by the Trustee from the Distribution
Account in the following order of priority:
(i) from the Interest Funds for Loan Group 1 and Loan Group 2,
pro rata based on the Interest Funds for each such Loan Group, to
the Final Maturity Reserve Fund, the Final Maturity Reserve Deposit
with respect to such Distribution Date;
(ii) from the Interest Funds for Loan Group 1 and Loan Group
2, pro rata based on the Interest Funds for each such Loan Group, to
the Swap Account, the amount of any Net Swap Payment and any Swap
Termination Payment (other than a Swap Termination Payment due to a
Swap Counterparty Trigger Event) payable to the Swap Counterparty
with respect to such Distribution Date;
(iii) concurrently:
(a) from Interest Funds for Loan Group 1, to the Class
1-A Certificates, the Current Interest and Interest Carry
Forward Amount for such Class and such Distribution Date,
(b) from Interest Funds for Loan Group 2, concurrently
to each Class of Class 2-A Certificates, the Current Interest
and Interest Carry Forward Amount for each such Class and such
Distribution Date, pro rata, based on their respective
entitlements;
(iv) from the remaining Interest Funds for Loan Group 1 and
Loan Group 2, concurrently, to each Class of Class A Certificates,
any remaining Current Interest and Interest Carry Forward Amount not
paid pursuant to clause (iii)(a) and (iii)(b), pro rata, based on
the Certificate Principal Balances thereof, to the extent needed to
pay any Current Interest and Interest Carry Forward Amount
116
for each such Class; provided that Interest Funds remaining after
such allocation to pay any Current Interest and Interest Carry
Forward Amount based on the Certificate Principal Balances of the
Certificates will be distributed to each Class of Class A
Certificates with respect to which there remains any unpaid Current
Interest and Interest Carry Forward Amount (after the distribution
based on Certificate Principal Balances), pro rata, based on the
amount of such remaining unpaid Current Interest and Interest Carry
Forward Amount; and
(v) from the remaining Interest Funds for Loan Group 1 and
Loan Group 2, sequentially:
(a) sequentially, to the Class X-0, Xxxxx X-0, Class
M-3, Class M-4, Class M-5, Class M-6, Class M-7, Class M-8,
Class M-9 and Class B Certificates, in that order, the Current
Interest for each such Class, and
(b) any remainder as part of the Excess Cashflow.
(b) On each Distribution Date, the Principal Distribution Amount for
such Distribution Date with respect to Loan Group 1 and Loan Group 2 shall be
distributed by the Trustee from the Distribution Account in the following order
of priority:
(1) with respect to any Distribution Date prior to the
Stepdown Date or on which a Trigger Event is in effect,
sequentially:
(A) concurrently:
(i) from the Principal Distribution Amount for Loan Group 1,
sequentially:
(a) to the Class 1-A Certificates, until the Certificate
Principal Balance thereof is reduced to zero; and
(b) to the Classes of Class 2-A Certificates (after the
distribution of the Principal Distribution Amount from Loan
Group 2 as provided in clause (ii)(a) below), in the order and
priorities set forth in clause (3) below, until the
Certificate Principal Balances thereof are reduced to zero;
(ii) from the Principal Distribution Amount for Loan Group 2,
sequentially:
(a) to the Classes of Class 2-A Certificates, in the
order and priorities set forth in clause (3) below, until the
Certificate Principal Balances thereof are reduced to zero;
and
(b) to the Class 1-A Certificates (after the
distribution of the Principal Distribution Amount from Loan
Group 1 as provided in clause
117
(i)(a) above), until the Certificate Principal Balance thereof
is reduced to zero;
(B) from the remaining Principal Distribution Amounts for Loan
Group 1 and Loan Group 2, sequentially:
(i) sequentially, to the Class X-0, Xxxxx X-0, Class M-3,
Class M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class M-9 and
Class B Certificates, in that order, in each case until the
Certificate Principal Balance thereof is reduced to zero; and
(ii) any remainder as part of the Excess Cashflow.
(2) with respect to any Distribution Date on or after the
Stepdown Date and so long as a Trigger Event is not in effect,
sequentially:
(A) concurrently:
(i) from the Principal Distribution Amount for Loan Group 1,
in an amount up to the Class 1-A Principal Distribution Amount,
sequentially:
(a) to the Class 1-A Certificates, until the Certificate
Principal Balance thereof is reduced to zero; and
(b) to the Classes of Class 2-A Certificates (after the
distribution of the Principal Distribution Amount from Loan
Group 2 as provided in clause (ii)(a) below), in the amounts
and order of priority set forth in clause (3)below, until the
Certificate Principal Balances thereof are reduced to zero;
and
(ii) from the Principal Distribution Amount for Loan Group 2,
in an amount up to the Class 2-A Principal Distribution Amount,
sequentially:
(a) to the Classes of Class 2-A Certificates, in the
amounts and order of priority set forth in clause (3) below,
until the Certificate Principal Balances thereof are reduced
to zero; and
(b) to the Class 1-A Certificates (after the
distribution of the Principal Distribution Amount from Loan
Group 1 as provided in clause (i)(a) above), until the
Certificate Principal Balance thereof is reduced to zero; and
(B) from the remaining Principal Distribution Amounts for Loan
Group 1 and Loan Group 2, sequentially:
(i) sequentially, to the Class M-1, Class M-2 and Class M-3
Certificates, in that order, the Combined Class M-1, M-2 and M-3 Principal
118
Distribution Amount, until the Certificate Principal Balances thereof are
reduced to zero;
(ii) sequentially, to the Class X-0, Xxxxx X-0, Class M-6,
Class M-7, Class M-8, Class M-9 and Class B Certificates, in that order,
the Subordinate Class Principal Distribution Amount for each such Class,
in each case until the Certificate Principal Balance thereof is reduced to
zero; and
(iii) any remainder as part of the Excess Cashflow.
(3) On each Distribution Date on which any principal amounts
are to be distributed to the Class 2-A Certificates, such amounts shall be
distributed sequentially, to the Class 2-A-1, Class 2-A-2, Class 2-A-3 and
Class 2-A-4 Certificates, in that order, in each case until the
Certificate Principal Balances thereof are reduced to zero.
(c) With respect to any Distribution Date, any Excess Cashflow and,
in the case of clauses (1) and (2) below and in the case of the payment of
Unpaid Realized Loss Amounts pursuant to clause (3) below, any Credit Comeback
Excess Cashflow, shall be distributed in the following order of priority, in
each case first to the extent of the remaining Credit Comeback Excess Cashflow,
if applicable, and second to the extent of the remaining Excess Cashflow:
(1) to the Class or Classes of Interest-Bearing Certificates
then entitled to receive distributions in respect of principal, in an
aggregate amount equal to the Extra Principal Distribution Amount for each
Loan Group, payable to each such Class as part of the Principal
Distribution Amount for Loan Group 1 and Loan Group 2 pursuant to Section
4.04(b) above;
(2) concurrently, to each Class of Class A Certificates, pro
rata based on the Unpaid Realized Loss Amount for each such Class, in an
amount equal to the Unpaid Realized Loss Amount for each such Class;
(3) sequentially, to the Class X-0, Xxxxx X-0, Class M-3,
Class M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class M-9 and Class
B Certificates, in that order, in each case first in an amount equal to
any Interest Carry Forward Amount for such Class and then in an amount
equal to the Unpaid Realized Loss Amount for such Class;
(4) to the Carryover Reserve Fund and from the Carryover
Reserve Fund to each Class of Interest-Bearing Certificates, pro rata
based on the Certificate Principal Balances thereof, to the extent needed
to pay any Net Rate Carryover for each such Class; provided that any
Excess Cashflow remaining after such allocation to pay Net Rate Carryover
based on the Certificate Principal Balances of those Classes shall be
distributed to each Class of Interest-Bearing Certificates with respect to
which there remains any unpaid Net Rate Carryover (after the distribution
based on the Certificate Principal Balances), pro rata, based on the
amount of such unpaid Net Rate Carryover;
119
(5) to the Carryover Reserve Fund, in an amount equal to the
Required Carryover Reserve Fund Deposit (after giving effect to other
deposits and withdrawals therefrom on such Distribution Date);
(6) if the Final Maturity OC Trigger is in effect,
sequentially, in the following order of priority:
(i) to the Classes of Class A Certificates, pro rata, based on
the Class 1-A Principal Distribution Amount (in the case of clause (x))
and the Class 2-A Principal Distribution Amount (in the case of clause
(y)), concurrently: (x) to the Class 1-A Certificates, until the
Certificate Principal Balance thereof is reduced to zero, and (y)
sequentially, to the Class 2-A-1, Class 2-A-2, Class 2-A-3 and Class 2-A-4
Certificates, in that order, in each case, until the Certificate Principal
Balance thereof is reduced to zero; provided, however, that any amounts
remaining after such allocation based on the Class 1-A Principal
Distribution Amount and the Class 2-A Principal Distribution Amount will
be distributed to the outstanding Class 1-A Certificates or the
outstanding Classes of Class 2-A Certificates, as the case may be,
pursuant to clause (x) or clause (y), as the case may be; and
(ii) sequentially, to the Class X-0, Xxxxx X-0, Class M-3,
Class M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class M-9 and Class
B Certificates, in that order, in each case until the Certificate
Principal Balance thereof is reduced to zero;
(7) to the Swap Account, in an amount equal to any Swap
Termination Payment due to the Swap Counterparty as a result of a Swap
Counterparty Trigger Event;
(8) to the Class C Certificates, the Class C Distributable
Amount for such Distribution Date; and
(9) to the Class A-R Certificates, any remaining amount.
(d) On each Distribution Date on or prior to the Swap Contract
Termination Date, following the deposits to the Swap Account pursuant to Section
4.04(a)(ii) and Section 4.09 and the distributions described under Section
4.04(c), the Swap Trustee shall distribute amounts on deposit in the Swap
Account in the following amounts and order of priority:
(1) to the Swap Contract Administrator for payment to the Swap
Counterparty, any Net Swap Payment payable to the Swap Counterparty with
respect to such Distribution Date;
(2) to the Swap Contract Administrator for payment to the Swap
Counterparty, any Swap Termination Payment (other than a Swap Termination
Payment due to a Swap Counterparty Trigger Event) payable to the Swap
Counterparty with respect to such Distribution Date;
120
(3) concurrently, to each Class of Class A Certificates, any
remaining Current Interest and Interest Carry Forward Amount, pro rata
based on their respective entitlements;
(4) sequentially, to the Class X-0, Xxxxx X-0, Class M-3,
Class M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class M-9 and Class
B Certificates, in that order, in each case in an amount equal to any
remaining Current Interest and Interest Carry Forward Amount for such
Class;
(5) to the Class or Classes of Interest-Bearing Certificates
then entitled to receive distributions in respect of principal, in an
aggregate amount equal to the Overcollateralization Deficiency Amount
remaining unpaid following the distributions described under Section
4.04(c), payable to such Classes in the same manner in which the Extra
Principal Distribution Amount in respect of Loan Group 1 and Loan Group 2
would be distributed to such Classes as described under Section 4.04(c);
(6) concurrently, to each Class of Interest-Bearing
Certificates, to the extent needed to pay any remaining Net Rate Carryover
for each such Class, pro rata, based on the amount of such remaining Net
Rate Carryover;
(7) concurrently, to each Class of Class A Certificates, pro
rata, based on the remaining Unpaid Realized Loss Amount for each such
Class, in an amount equal to the remaining Unpaid Realized Loss Amount for
each such Class;
(8) sequentially, to the Class X-0, Xxxxx X-0, Class M-3,
Class M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class M-9 and Class
B Certificates, in that order, in each case in an amount equal to the
remaining Unpaid Realized Loss Amount for each such Class; and
(9) to the Swap Contract Administrator for payment to the Swap
Counterparty, any Swap Termination Payment due to a Swap Counterparty
Trigger Event payable to the Swap Counterparty with respect to such
Distribution Date.
(e) To the extent that a Class of Interest-Bearing Certificates
receives interest in excess of the applicable Net Rate Cap, if such interest is
paid pursuant to Section 4.04(c), then it shall be deemed to have been paid to
the Carryover Reserve Fund and then paid by the Carryover Reserve Fund to those
Certificateholders, and if such interest is paid pursuant to Section 4.04(d),
then such interest shall be deemed to have been paid to the Swap Account and
then paid by the Swap Account to those Certificateholders. For purposes of the
Code, amounts deemed deposited in the Carryover Reserve Fund shall be deemed to
have first been distributed to the Class C Certificates.
(f) On each Distribution Date, all Prepayment Charges and Master
Servicer Prepayment Charge Payment Amounts shall be distributed to the Class P
Certificates. On the Class P Principal Distribution Date, the Trustee shall make
the $100.00 distribution to the Class P Certificates as specified in Section
3.08.
121
(g) On each Distribution Date, the Trustee shall allocate any
Applied Realized Loss Amount to reduce the Certificate Principal Balances of the
Class B, Class M-9, Class M-8, Class M-7, Class M-6, Class M-5, Class M-4, Class
M-3, Class M-2 and Class M-1 Certificates, sequentially, in that order, in each
case until the Certificate Principal Balance thereof is reduced to zero. After
the Certificate Principal Balances of the Subordinate Certificates have been
reduced to zero, (i) the Trustee shall allocate any Applied Realized Loss Amount
with respect to Loan Group 1 to reduce the Certificate Principal Balance of the
Class 1-A Certificates, until the Certificate Principal Balance of such Class
has been reduced to zero, and (ii) the Trustee shall allocate any Applied
Realized Loss Amount with respect to Loan Group 2 to reduce the Certificate
Principal Balances of each Class of Class 2-A Certificates, on a pro rata basis
according to their respective Certificate Principal Balances, until the
Certificate Principal Balances of such Classes have been reduced to zero.
(h) On each Distribution Date, the Trustee shall allocate the amount
of the Subsequent Recoveries with respect to either Loan Group, if any, first to
increase the Certificate Principal Balance of the Class 1-A Certificates (in the
case of any Subsequent Recoveries with respect to Loan Group 1) or the
Certificate Principal Balances of the Classes of Class 2-A Certificates (in the
case of any Subsequent Recoveries with respect to Loan Group 2) to which Applied
Realized Loss Amounts have been previously allocated (such increases, in the
case of Subsequent Recoveries with respect to Loan Group 2, to be made among the
Classes of Class 2-A Certificates on a pro rata basis according to their
respective Certificate Principal Balances), in each case by not more than the
amount of the Unpaid Realized Loss Amount of such Class, and then to increase
the Certificate Principal Balance of the Subordinate Certificates to which
Applied Realized Loss Amounts have been previously allocated, sequentially, to
the Class X-0, Xxxxx X-0, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7,
Class M-8, Class M-9 and Class B Certificates, in that order, in each case by
not more than the amount of the Unpaid Realized Loss Amount of such Class.
Holders of Certificates to which any Subsequent Recoveries have been
allocated shall not be entitled to any payment in respect of Current Interest on
the amount of such increases for any Accrual Period preceding the Distribution
Date on which such increase occurs.
Subject to Section 9.02 hereof respecting the final distribution, on
each Distribution Date the Trustee shall make distributions to each
Certificateholder of record on the preceding Record Date either by wire transfer
in immediately available funds to the account of such Holder at a bank or other
entity having appropriate facilities therefor, if (i) such Holder has so
notified the Trustee at least five Business Days prior to the related Record
Date and (ii) such Holder shall hold Regular Certificates with an aggregate
initial Certificate Principal Balance of not less than $1,000,000 or evidencing
a Percentage Interest aggregating 10% or more with respect to such Class or, if
not, by check mailed by first class mail to such Certificateholder at the
address of such Holder appearing in the Certificate Register. Notwithstanding
the foregoing, but subject to Section 9.02 hereof respecting the final
distribution, distributions with respect to Certificates registered in the name
of a Depository shall be made to such Depository in immediately available funds.
On or before 5:00 p.m. Pacific time on the fifth Business Day
following each Determination Date (but in no event later than 5:00 p.m. Pacific
time on the third Business Day
122
before the related Distribution Date), the Master Servicer shall deliver a
report to the Trustee (in the form of a computer readable magnetic tape or by
such other means as the Master Servicer and the Trustee may agree from time to
time) containing such data and information as agreed to by the Master Servicer
and the Trustee (including, without limitation, the actual mortgage rate for
each Credit Comeback Loan) such as to permit the Trustee to prepare the Monthly
Statement and make the required distributions for the related Distribution Date
(the "Remittance Report"). The Trustee shall not be responsible to recompute,
recalculate or verify information provided to it by the Master Servicer and
shall be permitted to conclusively rely on any information provided to it by the
Master Servicer.
(i) On the earlier of (i) the Distribution Date in November 2036 and
(ii) the termination of this Agreement pursuant to Section 9.01, after giving
effect to the distribution of all available funds, all amounts on deposit in the
Final Maturity Reserve Fund will be distributed in the following order of
priority:
(1) to the Classes of Class A Certificates, pro rata, based on
the Class 1-A Principal Distribution Amount (in the case of clause (x))
and the Class 2-A Principal Distribution Amount (in the case of clause
(y)), concurrently: (x) to the Class 1-A Certificates, until the
Certificate Principal Balance thereof is reduced to zero, and (y)
sequentially, to the Class 2-A-1, Class 2-A-2, Class 2-A-3 and Class 2-A-4
Certificates, in that order, in each case, until the Certificate Principal
Balance thereof is reduced to zero; provided, however, that any amounts
remaining after such allocation based on the Class 1-A Principal
Distribution Amount and the Class 2-A Principal Distribution Amount will
be distributed to the outstanding Class 1-A Certificates or the
outstanding Classes of Class 2-A Certificates, as the case may be,
pursuant to clause (x) or clause (y), as the case may be; and
(2) sequentially, to the Class X-0, Xxxxx X-0, Class M-3,
Class M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class M-9 and Class
B Certificates, in that order, until the Certificate Principal Balances
thereof are reduced to zero; and
(3) to the Class C Certificates, all remaining amounts.
Section 4.05 Monthly Statements to Certificateholders.
(a) Concurrently with each distribution on a Distribution Date, the
Trustee will forward by mail to each Rating Agency and make available to
Certificateholders on the Trustee's website
(xxxx://xxx.xxxxxxxxxxxxxxxxxxxx.xxx) a statement generally setting forth the
information contained in Exhibit W.
(b) The Trustee's responsibility for disbursing the above
information to the Certificateholders is limited to the availability, timeliness
and accuracy of the information derived from the Master Servicer. The Trustee
shall send a copy of each statement provided pursuant to this Section 4.05 to
each Rating Agency and the NIM Insurer. The Trustee may make the above
information available to Certificateholders via the Trustee's website at
xxxx://xxx.xxxxxxxxxxxxxxxxxxxx.xxx.
123
(c) Within a reasonable period of time after the end of each
calendar year, the Trustee shall cause to be furnished to each Person who at any
time during the calendar year was a Certificateholder, a statement containing
the information regarding (i) the amount of distributions to that
Certificateholder allocable to principal, separately identifying (A) the
aggregate amount of any Principal Prepayments included therein and (B) the
aggregate of all scheduled payments of principal included therein, (ii) the
amount of distributions to that Certificateholder allocable to interest and
(iii) the related amount of the Servicing Fees paid to or retained by the Master
Servicer, in each case aggregated for such calendar year or applicable portion
thereof during which such Person was a Certificateholder. Such obligation of the
Trustee shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Trustee pursuant to any
requirements of the Code as from time to time in effect.
(d) Upon filing with the Internal Revenue Service, the Trustee shall
furnish to the Holders of the Class A-R Certificates the Form 1066 and each Form
1066Q and shall respond promptly to written requests made not more frequently
than quarterly by any Holder of Class A-R Certificates with respect to the
following matters:
(1) The original projected principal and interest cash flows
on the Closing Date on each related Class of regular and residual
interests created hereunder and on the Mortgage Loans, based on the
Prepayment Assumption;
(2) The projected remaining principal and interest cash flows
as of the end of any calendar quarter with respect to each related Class
of regular and residual interests created hereunder and the Mortgage
Loans, based on the Prepayment Assumption;
(3) The applicable Prepayment Assumption and any interest rate
assumptions used in determining the projected principal and interest cash
flows described above;
(4) The original issue discount (or, in the case of the
Mortgage Loans, market discount) or premium accrued or amortized through
the end of such calendar quarter with respect to each related Class of
regular or residual interests created hereunder and to the Mortgage Loans,
together with each constant yield to maturity used in computing the same;
(5) The treatment of losses realized with respect to the
Mortgage Loans or the regular interests created hereunder, including the
timing and amount of any cancellation of indebtedness income of the
related REMIC with respect to such regular interests or bad debt
deductions claimed with respect to the Mortgage Loans;
(6) The amount and timing of any non-interest expenses of the
related REMIC; and
(7) Any taxes (including penalties and interest) imposed on
the related REMIC, including, without limitation, taxes on "prohibited
transactions," "contributions" or "net income from foreclosure property"
or state or local income or franchise taxes.
124
The information pursuant to clauses (1), (2), (3)and (4) above shall
be provided by the Depositor pursuant to Section 8.11.
Section 4.06 Termination of the Mortgage Insurance Policy
Issued by Mortgage Guaranty Insurance Corporation.
If on any given date the rating of Mortgage Guaranty Insurance
Corporation's claims-paying ability is downgraded below and remains below "AA-"
from S&P or "Aa3" from Xxxxx'x, the Master Servicer may direct the Co-Trustee to
terminate the Mortgage Insurance Policy issued by Mortgage Guaranty Insurance
Corporation and the Co-Trustee shall act in accordance with such direction. The
Master Servicer hereby covenants and agrees that it will not direct the
Co-Trustee to exercise its right to terminate such Mortgage Insurance Policy
unless the Co-Trustee obtains a mortgage insurance policy that meets the
following conditions: (i) such mortgage insurance policy must be issued by a
mortgage insurer that has a rating with respect to its claims-paying ability at
or above "AA " from S&P or "Aa3" from Xxxxx'x and (ii) such mortgage insurance
policy must cover the related Covered Mortgage Loans outstanding as of such
date.
In addition, if during the period which the Depositor is required to
file Exchange Act Reports with respect to the Trust Fund, either (a) Mortgage
Guaranty Insurance Corporation shall fail to provide to CHL any information
required to be provided pursuant to Section 2(b) of the Item 1114 Agreement,
dated as of November 7, 2006, between CHL, the Depositor, CWMBS, Inc., CWALT,
Inc., CWHEQ, Inc. and Mortgage Guaranty Insurance Corporation, within the time
period required by such agreement, or (b) United Guaranty Mortgage Indemnity
Company shall fail to provide to CHL any information reasonably requested by CHL
for the purposes of compliance with Item 1114 of Regulation AB, then the
Co-Trustee shall act at the written direction of the Depositor as to whether to
terminate the applicable Mortgage Insurance Policy; provided, however, that the
Co-Trustee shall provide written notice to each Rating Agency of any such
termination. Upon the termination of such Mortgage Insurance Policy under the
circumstances contemplated by this paragraph, CHL shall assist the Co-Trustee in
procuring a replacement mortgage insurance policy that meets the criteria for a
replacement mortgage insurance policy specified in the preceding paragraph.
Section 4.07 Carryover Reserve Fund.
(a) On the Closing Date, the Trustee shall establish and maintain in
its name, in trust for the benefit of the Holders of the Certificates, the
Carryover Reserve Fund and shall deposit $1,000 therein. The Carryover Reserve
Fund shall be an Eligible Account, and funds on deposit therein shall be held
separate and apart from, and shall not be commingled with, any other moneys,
including without limitation, other moneys held by the Trustee pursuant to this
Agreement.
(b) The Trustee shall make withdrawals from the Carryover Reserve
Fund to make distributions in respect of Net Rate Carryover as to the extent
required by Section 4.04.
125
(c) The Carryover Reserve Fund shall not constitute an asset of any
REMIC created hereunder. The Class C Certificates shall evidence ownership of
the Carryover Reserve Fund for federal tax purposes.
(d) Funds in the Carryover Reserve Fund shall be invested by the
Trustee in The Bank of New York cash reserves. All investments shall be made in
the name of the Trustee, for the benefit of the Holders of the Interest-Bearing
Certificates. Any net investment earnings on such amounts shall be retained
therein until withdrawn as provided in Section 3.08.
Section 4.08 Credit Comeback Excess Account.
On the Closing Date, the Trustee shall establish and maintain in its
name, in trust for the benefit of the Certificateholders, the Credit Comeback
Excess Account. The Credit Comeback Excess Account shall be an Eligible Account,
and funds on deposit therein shall be held separate and apart from, and shall
not be commingled with, any other moneys, including without limitation, other
moneys held by the Trustee pursuant to this Agreement.
On each Distribution Date, the Trustee shall deposit all Credit
Comeback Excess Amounts in the Credit Comeback Excess Account. The Trustee shall
make withdrawals from the Credit Comeback Excess Account to make distributions
as and to the extent required by Section 4.04.
Funds in the Credit Comeback Excess Account with respect to Loan
Group 1 and Loan Group 2 may be invested in Permitted Investments at the written
direction of the Majority Holder of the Class C Certificates, which Permitted
Investments shall mature not later than the Business Day immediately preceding
the first Distribution Date that follows the date of such investment (except
that if such Permitted Investment is an obligation of the institution that
maintains the Credit Comeback Excess Account, then such Permitted Investment
shall mature not later than such Distribution Date) and shall not be sold or
disposed of prior to maturity. All such Permitted Investments shall be made in
the name of the Trustee, for the benefit of the Certificateholders. In the
absence of such written direction, all funds in the Credit Comeback Excess
Account shall be invested by the Trustee in The Bank of New York cash reserves.
Any net investment earnings on amounts in the Credit Comeback Excess Account
with respect to Loan Group 1 and Loan Group 2 shall be payable pro rata to the
Holders of the Class C Certificates in accordance with their Percentage
Interests. Any losses incurred in the Credit Comeback Excess Account in respect
of any such investments shall be charged against amounts on deposit in the
Credit Comeback Excess Account (or such investments) immediately as realized.
The Trustee shall not be liable for the amount of any loss incurred
in respect of any investment or lack of investment of funds held in the Credit
Comeback Excess Account and made in accordance with this Section 4.08. The
Credit Comeback Excess Account shall not constitute an asset of any REMIC
created hereunder. The Class C Certificates shall evidence ownership of the
Credit Comeback Excess Account for federal tax purposes.
126
Section 4.09 Swap Trust and Swap Account.
On the Closing Date, there is hereby established a separate trust
(the "Swap Trust"), the assets of which shall consist of the Trustee's rights
and obligations under the Swap Contract Administration Agreement. The Swap Trust
shall be maintained by the Swap Trustee, who initially, shall be the Trustee.
The Swap Trustee shall hold the assets of the Swap Trust in trust for the
benefit of the Holders of the Interest-Bearing Certificates and the Swap
Counterparty. No later than the Closing Date, the Swap Trustee shall establish
and maintain a separate, segregated trust account to be held in the Swap Trust,
titled, "Swap Account, The Bank of New York, as Swap Trustee, in trust for the
Swap Counterparty and the registered holders of CWABS, Inc., Asset-Backed
Certificates, Series 2006-21." Such account shall be an Eligible Account and
funds on deposit therein shall be held separate and apart from, and shall not be
commingled with, any other moneys, including, without limitation, other moneys
of the Trustee held pursuant to this Agreement. Amounts therein shall be held
uninvested. Funds on deposit in the Swap Account shall be distributed in the
amounts and in the order of priority described under Section 4.04(d). For
federal income tax purposes, the Swap Trust, including the Swap Account, shall
be owned by the Class C Certificates.
On each Distribution Date, the Trustee shall make a deposit to the
Swap Account pursuant to Section 4.04(a)(ii), and to the extent that the amount
of such deposit is insufficient to pay any Net Swap Payment and/or Swap
Termination Payment (other than a Swap Termination Payment due to a Swap
Counterparty Trigger Event) due to the Swap Counterparty with respect to such
Distribution Date, the Trustee shall withdraw, out of amounts on deposit in the
Distribution Account in respect of the Principal Remittance Amount for Loan
Group 1 and Loan Group 2, pro rata on the basis of those respective Principal
Remittance Amounts, such additional amount as is necessary to cover the
remaining portion of any such Net Swap Payment and/or Swap Termination Payment
(other than a Swap Termination Payment due to a Swap Counterparty Trigger Event)
due to the Swap Counterparty with respect to such Distribution Date.
Section 4.10 Final Maturity Reserve Trust and Final Maturity
Reserve Fund.
(a) On the Closing Date, there is hereby established a separate
trust (the "Final Maturity Reserve Trust"), the assets of which shall consist of
the Final Maturity Reserve Fund.
(b) On the Closing Date, the Final Maturity Reserve Trustee shall
establish and maintain in its name, in trust for the benefit of the Holders of
the Interest-Bearing Certificates, the Final Maturity Reserve Fund and shall
deposit $1,000 therein upon receipt from or on behalf of the Depositor of such
amount. The Final Maturity Reserve Fund shall be an Eligible Account, and funds
on deposit therein shall be held separate and apart from, and shall not be
commingled with, any other moneys, including without limitation, other moneys
held by the Trustee pursuant to this Agreement. The Final Maturity Reserve Fund
shall not constitute an asset of the Trust Fund or any REMIC created hereunder.
The Final Maturity Reserve Trustee shall make deposits to and
withdrawals from the Final Maturity Reserve Fund as specified in Section 4.04.
127
Funds in the Final Maturity Reserve Fund may be invested in
Permitted Investments at the direction of the Holders of the Class C
Certificates, which Permitted Investments shall mature not later than the
Business Day immediately preceding the first Distribution Date that follows the
date of such investment (except that if such Permitted Investment is an
obligation of the institution that maintains the Final Maturity Reserve Fund,
then such Permitted Investment shall mature not later than such Distribution
Date) and shall not be sold or disposed of prior to maturity. All such Permitted
Investments shall be made in the name of the Final Maturity Reserve Trustee, for
the benefit of the Holders of the Certificates. In the absence of such written
direction, all funds in the Final Maturity Reserve Fund shall be invested by the
Final Maturity Reserve Trustee in The Bank of New York cash reserves. Any net
investment earnings on such amounts shall be retained therein until withdrawn as
provided in Section 3.08. Any losses incurred in the Final Maturity Reserve Fund
in respect of any such investments shall be charged against amounts on deposit
in the Final Maturity Reserve Fund (or such investments) immediately as
realized. The Final Maturity Reserve Trustee shall not be liable for the amount
of any loss incurred in respect of any investment or lack of investment of funds
held in the Final Maturity Reserve Fund and made in accordance with this Section
4.10.
The Final Maturity Reserve Trustee may withhold from the amounts
withdrawn from the Final Maturity Reserve Fund pursuant to Section 4.04 the
amount of any taxes that it is authorized to retain pursuant to the third
paragraph of Section 8.11. In addition, the Final Maturity Reserve Trustee may
from time to time make withdrawals from the Final Maturity Reserve Fund for the
following purposes:
(i) to withdraw any amount deposited in the Final Maturity Reserve
Fund and not required to be deposited therein; and
(ii) to clear and terminate the Final Maturity Reserve Fund upon the
termination of this Agreement pursuant to Section 9.01.
128
ARTICLE V.
THE CERTIFICATES
Section 5.01 The Certificates.
The Certificates shall be substantially in the forms attached hereto
as Exhibits A-1 through X-00, Xxxxxxx X, Xxxxxxx X, Xxxxxxx X and Exhibit E. The
Certificates shall be issuable in registered form, in the minimum dollar
denominations, integral dollar multiples in excess thereof and aggregate dollar
denominations as set forth in the following table:
Integral Multiples Original
Minimum in Excess of Certificate
Class Denomination Minimum Principal Balance
-------------------------------------------------------------------------------
1-A $20,000 $1 $328,048,000
2-A-1 $20,000 $1 $256,839,000
2-A-2 $20,000 $1 $53,000,000
2-A-3 $20,000 $1 $184,662,000
2-A-4 $20,000 $1 $66,251,000
M-1 $20,000 $1 $50,600,000
M-2 $20,000 $1 $31,900,000
M-3 $20,000 $1 $20,350,000
M-4 $20,000 $1 $17,050,000
M-5 $20,000 $1 $16,500,000
M-6 $20,000 $1 $13,750,000
M-7 $20,000 $1 $11,000,000
M-8 $20,000 $1 $11,000,000
M-9 $20,000 $1 $8,800,000
B $100,000 $1 $11,000,000
A-R $99.95(1) N/A $100
C N/A N/A N/A
P N/A N/A $100
(1) The Tax Matters Person Certificate may be issued in a denomination of
$0.05.
The Certificates shall be executed by manual or facsimile signature
on behalf of the Trustee by an authorized officer. Certificates bearing the
manual or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Trustee shall bind
the Trustee, notwithstanding that such individuals or any of them have ceased to
be so authorized prior to the authentication and delivery of such Certificates
or did not hold such offices at the date of such authentication and delivery. No
Certificate shall be entitled to any benefit under this Agreement, or be valid
for any purpose, unless there appears on such Certificate a certificate of
authentication substantially in the form set forth as attached hereto executed
by the Trustee by manual signature, and such certificate of authentication upon
any Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication. On the Closing
Date, the Trustee shall authenticate the Certificates to be issued at the
written direction of the Depositor, or any affiliate thereof.
129
The Depositor shall provide, or cause to be provided, to the Trustee
on a continuous basis, an adequate inventory of Certificates to facilitate
transfers.
Section 5.02 Certificate Register; Registration of Transfer and
Exchange of Certificates.
(a) The Trustee shall maintain a Certificate Register for the Trust
Fund in which, subject to the provisions of subsections (b) and (c) below and to
such reasonable regulations as it may prescribe, the Trustee shall provide for
the registration of Certificates and of Transfers and exchanges of Certificates
as herein provided. Upon surrender for registration of Transfer of any
Certificate, the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of the same
Class and of like aggregate Percentage Interest.
At the option of a Certificateholder, Certificates may be exchanged
for other Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest upon surrender of the
Certificates to be exchanged at the office or agency of the Trustee. Whenever
any Certificates are so surrendered for exchange, the Trustee shall execute,
authenticate, and deliver the Certificates that the Certificateholder making the
exchange is entitled to receive. Every Certificate presented or surrendered for
registration of Transfer or exchange shall be accompanied by a written
instrument of Transfer in form satisfactory to the Trustee duly executed by the
Holder thereof or his attorney duly authorized in writing.
No service charge to the Certificateholders shall be made for any
registration of Transfer or exchange of Certificates, but payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any Transfer or exchange of Certificates may be required.
All Certificates surrendered for registration of Transfer or
exchange shall be canceled and subsequently destroyed by the Trustee in
accordance with the Trustee's customary procedures.
(b) No Transfer of a Private Certificate shall be made unless such
Transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under the Securities Act and such state securities
laws. In the event that a transfer is to be made in reliance upon an exemption
from the Securities Act and such state securities laws, in order to assure
compliance with the Securities Act and such state securities laws, the
Certificateholder desiring to effect such Transfer and such Certificateholder's
prospective transferee shall (except in connection with any transfer of a
Private Certificate to an affiliate of the Depositor (either directly or through
a nominee) in connection with the initial issuance of the Certificates) each
certify to the Trustee in writing the facts surrounding the Transfer in
substantially the form set forth in Exhibit J-2 (a "Transferor Certificate") and
(i) deliver a letter in substantially the form of either Exhibit K (in the case
of the Class P and Class C Certificates and in the case of a Class B Certificate
that after the proposed transfer will be a Definitive Certificate) (the
"Investment Letter") or Exhibit L (in the case of any Private Certificate) (the
"Rule 144A Letter") or (ii) there shall be delivered to the Trustee at the
expense of the Certificateholder desiring to effect such transfer an Opinion of
130
Counsel that such Transfer may be made pursuant to an exemption from the
Securities Act; provided, however, that in the case of the delivery of an
Investment Letter in connection with the transfer of any Class C or Class P
Certificate to a transferee that is formed with the purpose of issuing notes
backed by such Class C or Class P Certificate, as the case may be, clause (b)
and (c) of the form of Investment Letter shall not be applicable and shall be
deleted by such transferee. The Depositor shall provide to any Holder of a
Private Certificate and any prospective transferee designated by any such
Holder, information regarding the related Certificates and the Mortgage Loans
and such other information as shall be necessary to satisfy the condition to
eligibility set forth in Rule 144A(d)(4) for transfer of any such Certificate
without registration thereof under the Securities Act pursuant to the
registration exemption provided by Rule 144A. The Co-Trustee, the Trustee and
the Master Servicer shall cooperate with the Depositor in providing the Rule
144A information referenced in the preceding sentence, including providing to
the Depositor such information regarding the Certificates, the Mortgage Loans
and other matters regarding the Trust Fund as the Depositor shall reasonably
request to meet its obligation under the preceding sentence. Each Holder of a
Private Certificate desiring to effect such Transfer shall, and does hereby
agree to, indemnify the Co-Trustee, the Trustee, the Depositor, the Trust Fund,
each Seller, the Master Servicer and the NIM Insurer against any liability that
may result if the Transfer is not so exempt or is not made in accordance with
such federal and state laws.
No beneficial interest in any Class B Certificate that is a
Book-Entry Certificate may be held by any Person that is not a Qualified
Institutional Buyer. Notwithstanding the foregoing, a beneficial interest in a
Class B Certificate that is a Book-Entry Certificate may be transferred by any
Certificate Owner holding such interest to any Institutional Accredited Investor
(other than a Qualified Institutional Buyer) that takes delivery in the form of
a Definitive Certificate upon delivery to the Trustee of (i) such certifications
and/or opinions as are contemplated by the first paragraph of this Section
5.02(b) and (ii) such written orders and instructions as are required under the
applicable procedures of the Depository to direct the Trustee to debit the
account of a Depository Participant by the denomination of the transferred
interests in such Book-Entry Certificate. Upon delivery to the Trustee of the
certifications and/or opinions contemplated by the first paragraph of this
Section 5.02(b), the Trustee, subject to and in accordance with the applicable
procedures of the Depository, shall reduce the denomination of the subject
Book-Entry Certificate by the denomination of the transferred interests in such
Book-Entry Certificate, and shall cause a Definitive Certificate of the same
Class as such Book-Entry Certificate, and in a denomination equal to the
reduction in the denomination of such Book-Entry Certificate, to be executed,
authenticated and delivered in accordance with this Agreement to the applicable
transferee. Also notwithstanding the foregoing, any Class B Certificate that is
a Definitive Certificate may be transferred by any Certificateholder holding
such Certificate to any Qualified Institutional Buyer that takes delivery in the
form of a beneficial interest in a Book-Entry Certificate upon delivery to the
Trustee of (i) such certifications and/or opinions as are contemplated by the
first paragraph of this Section 5.02(b) and (ii) such written orders and
instructions as are required under the applicable procedures of the Depository
to direct the Trustee to credit the account of a Depository Participant by the
denomination of the transferred interests in such Class B Certificate. Upon
delivery to the Trustee of the Definitive Certificate to be transferred and the
certifications and/or opinions contemplated by the first paragraph of this
Section 5.02(b), the Trustee, subject to and in accordance with the applicable
procedures of the Depository, shall increase the denomination of the existing
Book-Entry Certificate for the Class
131
B Certificates by the denomination of the transferred interests in such
Definitive Certificate, shall instruct the Depository to credit the account of
the applicable Depository Participant, and shall cause the subject Definitive
Certificate to be cancelled.
No Transfer of an ERISA-Restricted Certificate (other than a
transfer of an ERISA-Restricted Certificate to an affiliate of the Depositor
(either directly or through a nominee) in connection with the initial issuance
of the Certificates) shall be made unless the Trustee shall have received either
(i) a written representation from the transferee of such Certificate acceptable
to and in form and substance satisfactory to the Trustee (in the event such
Certificate is a Private Certificate, such requirement is satisfied only by the
Trustee's receipt of a representation letter from the transferee substantially
in the form of Exhibit K or Exhibit L, or in the event such Certificate is a
Residual Certificate, such requirement is satisfied only by the Trustee's
receipt of a representation letter from the transferee substantially in the form
of Exhibit I), to the effect that (x) such transferee is not a Plan, or (y) in
the case of an ERISA-Restricted Certificate that has been the subject of an
ERISA-Qualifying Underwriting, a representation that the transferee is an
insurance company which is purchasing such Certificate with funds contained in
an "insurance company general account" (as such term is defined in section V(e)
of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the
purchase and holding of such Certificate satisfy the requirements for exemptive
relief under Sections I and III of PTCE 95-60 or (ii) in the case of any
ERISA-Restricted Certificate presented for registration in the name of an
employee benefit plan or arrangement subject to ERISA, or a plan or arrangement
subject to Section 4975 of the Code (or comparable provisions of any subsequent
enactments), or a trustee of any such plan or arrangement or any other person
acting on behalf of any such plan or arrangement, an Opinion of Counsel
satisfactory to the Trustee, addressed to the Trustee and the Master Servicer,
to the effect that the purchase or holding of such ERISA-Restricted Certificate
will not result in a non-exempt prohibited transaction under ERISA or the Code
and will not subject the Trustee or the Master Servicer to any obligation in
addition to those expressly undertaken in this Agreement, which Opinion of
Counsel shall not be an expense of the Trustee, the Master Servicer, or the
Trust Fund. For purposes of the preceding sentence, one of such representations,
as appropriate, shall be deemed to have been made to the Trustee by the
transferee's acceptance of an ERISA-Restricted Certificate (or the acceptance by
a Certificate Owner of the beneficial interest in any such Class of
ERISA-Restricted Certificates) unless the Trustee shall have received from the
transferee an Opinion of Counsel as described in clause (ii) or a written
representation acceptable in form and substance to the Trustee. Notwithstanding
anything else to the contrary herein, any purported transfer of an
ERISA-Restricted Certificate to or on behalf of an employee benefit plan subject
to Section 406 of ERISA or a plan subject to Section 4975 of the Code without
the delivery to the Trustee of an Opinion of Counsel satisfactory to the Trustee
meeting the requirements of clause (i) of the first sentence of this paragraph
as described above shall be void and of no effect. The Trustee shall be under no
liability to any Person for any registration of transfer of any ERISA-Restricted
Certificate that is in fact not permitted by this Section 5.02(b) or for making
any payments due on such Certificate to the Holder thereof or taking any other
action with respect to such Holder under the provisions of this Agreement so
long as the Trustee, with respect to the transfer of such Classes of
Certificates, required delivery of such certificates and other documentation or
evidence as are expressly required by the terms of this Agreement and examined
such certificates and other documentation or evidence to determine compliance as
to form with the express requirements hereof. The Trustee shall be entitled, but
not obligated, to recover from any Holder of any
132
ERISA-Restricted Certificate that was in fact an employee benefit plan or
arrangement subject to Section 406 of ERISA or a plan or arrangement subject to
Section 4975 of the Code or a Person acting on behalf of any such plan or
arrangement at the time it became a Holder or, at such subsequent time as it
became such a plan or arrangement or Person acting on behalf of such a plan or
arrangement, all payments made on such ERISA-Restricted Certificate at and after
either such time. Any such payments so recovered by the Trustee shall be paid
and delivered by the Trustee to the last preceding Holder of such Certificate
that is not such a plan or arrangement or Person acting on behalf of a plan or
arrangement.
Until the Swap Trust and the Final Maturity Reserve Fund terminate,
no transfer of an Interest-Bearing Certificate (other than a transfer of an
Interest-Bearing Certificate to an affiliate of the Depositor (either directly
or through a nominee) in connection with the initial issuance of the
Certificates) shall be made unless the Trustee shall have received either (i) a
written representation from the transferee of such Interest-Bearing Certificate
acceptable to and in form and substance satisfactory to the Trustee to the
effect that such transferee is not a Plan, or (ii) a written representation that
the purchase and holding of the Interest-Bearing Certificate satisfy the
requirements for exemptive relief under XXXX 00-00, XXXX 00-0, XXXX 00-00, XXXX
00-00, XXXX 96-23, the service provider exemption provided under Section 408
(b)(17) of ERISA and Section 4975 (d)(20) of the Code or a similar exemption. In
the event that such representation is not delivered, one of the foregoing
representations, as appropriate, shall be deemed to have been made by the
transferee's (including an initial acquiror's) acceptance of the
Interest-Bearing Certificate. In the event that such representation is violated,
such transfer or acquisition shall be void and of no effect.
(c) Each Person who has or who acquires any Ownership Interest in a
Class A-R Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions, and
the rights of each Person acquiring any Ownership Interest in a Class A-R
Certificate are expressly subject to the following provisions:
(1) Each Person holding or acquiring any Ownership Interest in
a Class A-R Certificate shall be a Permitted Transferee and shall promptly
notify the Trustee of any change or impending change in its status as a
Permitted Transferee.
(2) Except in connection with (i) the registration of the Tax
Matters Person Certificate in the name of the Trustee or (ii) any
registration in the name of, or transfer of a Class A-R Certificate to, an
affiliate of the Depositor (either directly or through a nominee) in
connection with the initial issuance of the Certificates, no Ownership
Interest in a Class A-R Certificate may be registered or transferred, and
the Trustee shall not register the Transfer of any Class A-R Certificate,
unless the Trustee shall have been furnished with a certificate (a
"Transferor Certificate") of the transferor in the form attached hereto as
Exhibit J-1 and an affidavit (a "Transfer Affidavit") of the initial owner
or the proposed transferee in the form attached hereto as Exhibit I.
(3) Each Person holding or acquiring any Ownership Interest in
a Class A-R Certificate shall agree (A) to obtain a Transfer Affidavit
from any other Person to whom such Person attempts to Transfer its
Ownership Interest in a Class A-R Certificate, (B) to obtain a Transfer
Affidavit from any Person for whom such Person is
133
acting as nominee, trustee or agent in connection with any Transfer of a
Class A-R Certificate and (C) not to Transfer its Ownership Interest in a
Class A-R Certificate, or to cause the Transfer of an Ownership Interest
in a Class A-R Certificate to any other Person, if it has actual knowledge
that such Person is not a Permitted Transferee or that such Transfer
Affidavit is false.
(4) Any attempted or purported Transfer of any Ownership
Interest in a Class A-R Certificate in violation of the provisions of this
Section 5.02(c) shall be absolutely null and void and shall vest no rights
in the purported Transferee. If any purported transferee shall become a
Holder of a Class A-R Certificate in violation of the provisions of this
Section 5.02(c), then the last preceding Permitted Transferee shall be
restored to all rights as Holder thereof retroactive to the date of
registration of Transfer of such Class A-R Certificate. The Trustee shall
be under no liability to any Person for any registration of Transfer of a
Class A-R Certificate that is in fact not permitted by Section 5.02(b) and
this Section 5.02(c) or for making any payments due on such Certificate to
the Holder thereof or taking any other action with respect to such Holder
under the provisions of this Agreement so long as the Transfer was
registered after receipt of the related Transfer Affidavit and Transferor
Certificate. The Trustee shall be entitled but not obligated to recover
from any Holder of a Class A-R Certificate that was in fact not a
Permitted Transferee at the time it became a Holder or, at such subsequent
time as it became other than a Permitted Transferee, all payments made on
such Class A-R Certificate at and after either such time. Any such
payments so recovered by the Trustee shall be paid and delivered by the
Trustee to the last preceding Permitted Transferee of such Certificate.
(5) The Master Servicer shall use its best efforts to make
available, upon receipt of written request from the Trustee, all
information necessary to compute any tax imposed under section 860E(e) of
the Code as a result of a Transfer of an Ownership Interest in a Class A-R
Certificate to any Holder who is not a Permitted Transferee.
The restrictions on Transfers of a Class A-R Certificate set forth
in this Section 5.02(c) shall cease to apply (and the applicable portions of the
legend on a Class A-R Certificate may be deleted) with respect to Transfers
occurring after delivery to the Trustee of an Opinion of Counsel, which Opinion
of Counsel shall not be an expense of the Trustee, any Seller or the Master
Servicer, to the effect that the elimination of such restrictions will not cause
any REMIC formed hereunder to fail to qualify as a REMIC at any time that the
Certificates are outstanding or result in the imposition of any tax on the Trust
Fund, a Certificateholder or another Person. Each Person holding or acquiring
any Ownership Interest in a Class A-R Certificate, by acceptance of its
Ownership Interest, shall be deemed to consent to any amendment of this
Agreement that, based on an Opinion of Counsel furnished to the Trustee, is
reasonably necessary (a) to ensure that the record ownership of, or any
beneficial interest in, a Class A-R Certificate is not transferred, directly or
indirectly, to a Person that is not a Permitted Transferee and (b) to provide
for a means to compel the Transfer of a Class A-R Certificate that is held by a
Person that is not a Permitted Transferee to a Holder that is a Permitted
Transferee.
134
(d) The preparation and delivery of all affidavits, certifications
and opinions referred to above in this Section 5.02 shall not be an expense of
the Trust Fund, the Trustee, the Depositor, any Seller or the Master Servicer.
Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate is surrendered to the Trustee, or
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Certificate and of the ownership thereof and (b) there is delivered
to the Master Servicer and the Trustee such security or indemnity as may be
required by them to save each of them harmless, then, in the absence of notice
to the Trustee that such Certificate has been acquired by a bona fide purchaser,
the Trustee shall execute, authenticate and deliver, in exchange for or in lieu
of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate
of like Class, tenor and Percentage Interest. In connection with the issuance of
any new Certificate under this Section 5.03, the Trustee may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees and
expenses of the Trustee) connected therewith. Any replacement Certificate issued
pursuant to this Section 5.03 shall constitute complete and indefeasible
evidence of ownership in the Trust Fund, as if originally issued, whether or not
the lost, stolen or destroyed Certificate shall be found at any time. All
Certificates surrendered to the Trustee under the terms of this Section 5.03
shall be canceled and destroyed by the Trustee in accordance with its standard
procedures without liability on its part.
Section 5.04 Persons Deemed Owners.
The Master Servicer, the Trustee, the NIM Insurer and any agent of
the Master Servicer, the Trustee or the NIM Insurer may treat the person in
whose name any Certificate is registered as the owner of such Certificate for
the purpose of receiving distributions as provided in this Agreement and for all
other purposes whatsoever, and none of the Master Servicer, the Trustee, the NIM
Insurer or any agent of the Master Servicer, the Trustee or the NIM Insurer
shall be affected by any notice to the contrary.
Section 5.05 Access to List of Certificateholders' Names and
Addresses.
If three or more Certificateholders or Certificate Owners (a)
request such information in writing from the Trustee, (b) state that such
Certificateholders or Certificate Owners desire to communicate with other
Certificateholders or Certificate Owners with respect to their rights under this
Agreement or under the Certificates and (c) provide a copy of the communication
that such Certificateholders or Certificate Owners propose to transmit or if the
Depositor or Master Servicer shall request such information in writing from the
Trustee, then the Trustee shall, within ten Business Days after the receipt of
such request, provide the Depositor, the Master Servicer or such
Certificateholders or Certificate Owners at such recipients' expense the most
recent list of the Certificateholders of the Trust Fund held by the Trustee, if
any. The Depositor and every Certificateholder or Certificate Owner, by
receiving and holding a Certificate, agree that the Trustee shall not be held
accountable by reason of the disclosure of any such information as to the list
of the Certificateholders hereunder, regardless of the source from which such
information was derived.
135
Section 5.06 Book-Entry Certificates.
The Book-Entry Certificates, upon original issuance, shall be issued
in the form of one typewritten Certificate (or more than one, if required by the
Depository) for each Class of such Certificates, to be delivered to the
Depository by or on behalf of the Depositor. Such Certificates shall initially
be registered on the Certificate Register in the name of the Depository or its
nominee, and no Certificate Owner of such Certificates will receive a definitive
certificate representing such Certificate Owner's interest in such Certificates,
except as provided in Section 5.08. Unless and until definitive, fully
registered Certificates ("Definitive Certificates") have been issued to the
Certificate Owners of such Certificates pursuant to Section 5.08:
(a) the provisions of this Section shall be in full force and
effect;
(b) the Depositor, the Sellers, the Master Servicer and the Trustee
may deal with the Depository and the Depository Participants for all purposes
(including the making of distributions) as the authorized representative of the
respective Certificate Owners of such Certificates;
(c) registration of the Book-Entry Certificates may not be
transferred by the Trustee except to another Depository;
(d) the rights of the respective Certificate Owners of such
Certificates shall be exercised only through the Depository and the Depository
Participants and shall be limited to those established by law and agreements
between the Owners of such Certificates and the Depository and/or the Depository
Participants. Pursuant to the Depository Agreement, unless and until Definitive
Certificates are issued pursuant to Section 5.08, the Depository will make
book-entry transfers among the Depository Participants and receive and transmit
distributions of principal and interest on the related Certificates to such
Depository Participants;
(e) the Depository may collect its usual and customary fees, charges
and expenses from its Depository Participants;
(f) the Trustee may rely and shall be fully protected in relying
upon information furnished by the Depository with respect to its Depository
Participants; and
(g) to the extent the provisions of this Section conflict with any
other provisions of this Agreement, the provisions of this Section shall
control.
For purposes of any provision of this Agreement requiring or
permitting actions with the consent of, or at the direction of,
Certificateholders evidencing a specified percentage of the aggregate unpaid
principal amount of any Class of Certificates, such direction or consent may be
given by Certificate Owners (acting through the Depository and the Depository
Participants) owning Book-Entry Certificates evidencing the requisite percentage
of principal amount of such Class of Certificates (or, in the case of the Class
B Certificates, by Certificate Owners (acting through the Depository and the
Depository Participants) owning Book-Entry Certificates and by
Certificateholders (other than the Depository) owning Definitive Certificates).
136
Section 5.07 Notices to Depository.
Whenever any notice or other communication is required to be given
to Certificateholders of any Class with respect to which Book-Entry Certificates
have been issued, unless and until Definitive Certificates shall have been
issued to the related Certificate Owners, the Trustee shall give all such
notices and communications to the Depository.
Section 5.08 Definitive Certificates.
If, after Book-Entry Certificates have been issued with respect to
any Certificates, (a) the Depositor advises the Trustee that the Depository is
no longer willing or able to discharge properly its responsibilities under the
Depository Agreement with respect to such Certificates and the Trustee or the
Depositor is unable to locate a qualified successor or (b) after the occurrence
and continuation of an Event of Default, Certificate Owners of such Book-Entry
Certificates having not less than 51% of the Voting Rights evidenced by any
Class of Book-Entry Certificates advise the Trustee and the Depository in
writing through the Depository Participants that the continuation of a
book-entry system with respect to Certificates of such Class through the
Depository (or its successor) is no longer in the best interests of the
Certificate Owners of such Class, then the Trustee shall notify all Certificate
Owners of such Certificates, through the Depository, of the occurrence of any
such event and of the availability of Definitive Certificates to Certificate
Owners of such Class requesting the same. The Depositor shall provide the
Trustee with an adequate inventory of Certificates to facilitate the issuance
and transfer of Definitive Certificates. Upon surrender to the Trustee of any
such Certificates by the Depository, accompanied by registration instructions
from the Depository for registration, the Trustee shall authenticate and deliver
such Definitive Certificates. Neither the Depositor nor the Trustee shall be
liable for any delay in delivery of such instructions and each may conclusively
rely on, and shall be protected in relying on, such instructions. Upon the
issuance of such Definitive Certificates, all references herein to obligations
imposed upon or to be performed by the Depository shall be deemed to be imposed
upon and performed by the Trustee, to the extent applicable with respect to such
Definitive Certificates and the Trustee shall recognize the Holders of such
Definitive Certificates as Certificateholders hereunder.
Section 5.09 Maintenance of Office or Agency.
The Trustee will maintain or cause to be maintained at its expense
an office or offices or agency or agencies in New York City where Certificates
may be surrendered for registration of transfer or exchange. The Trustee
initially designates its offices at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Corporate Trust MBS Administration, as offices for such
purposes. The Trustee will give prompt written notice to the Certificateholders
of any change in such location of any such office or agency.
137
ARTICLE VI.
THE DEPOSITOR, THE MASTER SERVICER AND THE SELLERS
Section 6.01 Respective Liabilities of the Depositor, the
Master Servicer and the Sellers.
The Depositor, the Master Servicer and each Seller shall each be
liable in accordance herewith only to the extent of the obligations specifically
and respectively imposed upon and undertaken by them herein.
Section 6.02 Merger or Consolidation of the Depositor, the
Master Servicer or the Sellers.
The Depositor will keep in full effect its existence, rights and
franchises as a corporation under the laws of the United States or under the
laws of one of the states thereof and will each obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, or any of the Mortgage Loans and to perform
its duties under this Agreement. The Master Servicer will keep in effect its
existence, rights and franchises as a limited partnership under the laws of the
United States or under the laws of one of the states thereof and will obtain and
preserve its qualification or registration to do business as a foreign
partnership in each jurisdiction in which such qualification or registration is
or shall be necessary to protect the validity and enforceability of this
Agreement or any of the Mortgage Loans and to perform its duties under this
Agreement.
Any Person into which the Depositor, the Master Servicer or any
Seller may be merged or consolidated, or any Person resulting from any merger or
consolidation to which the Depositor, the Master Servicer or any Seller shall be
a party, or any person succeeding to the business of the Depositor, the Master
Servicer or any Seller, shall be the successor of the Depositor, the Master
Servicer or such Seller, as the case may be, hereunder, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding; provided that the successor or
surviving Person to the Master Servicer shall be qualified to service mortgage
loans on behalf of Xxxxxx Mae and Xxxxxxx Mac.
As a condition to the effectiveness of any merger or consolidation,
at least 15 calendar days prior to the effective date of any merger or
consolidation of the Master Servicer, the Master Servicer shall provide (x)
written notice to the Depositor of any successor pursuant to this Section and
(y) in writing and in form and substance reasonably satisfactory to the
Depositor, all information reasonably requested by the Depositor in order to
comply with its reporting obligation under Item 6.02 of Form 8-K with respect to
a replacement Master Servicer.
Section 6.03 Limitation on Liability of the Depositor, the
Sellers, the Master Servicer, the NIM Insurer and
Others.
None of the Depositor, the Sellers, the NIM Insurer or the Master
Servicer or any of the directors, officers, employees or agents of the
Depositor, the Sellers, the NIM Insurer or the Master Servicer shall be under
any liability to the Trustee (except as provided in Section
138
8.05), the Trust Fund or the Certificateholders for any action taken or for
refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided that this provision shall not
protect the Depositor, the Sellers, the Master Servicer or any such Person
against any breach of representations or warranties made by it herein or protect
the Depositor, the Sellers, the Master Servicer or any such Person from any
liability that would otherwise be imposed by reasons of willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. The Depositor, the Sellers, the
NIM Insurer, the Master Servicer and any director, officer, employee or agent of
the Depositor, the Sellers, the NIM Insurer or the Master Servicer may rely in
good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising hereunder. The Depositor,
the Sellers, the NIM Insurer, the Master Servicer and any director, officer,
employee or agent of the Depositor, the Sellers, the NIM Insurer or the Master
Servicer shall be indemnified by the Trust Fund and held harmless against any
loss, liability or expense incurred in connection with any audit, controversy or
judicial proceeding relating to a governmental taxing authority or any legal
action relating to this Agreement or the Certificates, other than any loss,
liability or expense related to any specific Mortgage Loan or Mortgage Loans
(except as any such loss, liability or expense shall be otherwise reimbursable
pursuant to this Agreement) and any loss, liability or expense incurred by
reason of willful misfeasance, bad faith or gross negligence in the performance
of duties hereunder or by reason of reckless disregard of obligations and duties
hereunder. None of the Depositor, the Sellers, the NIM Insurer or the Master
Servicer shall be under any obligation to appear in, prosecute or defend any
legal action that is not incidental to its respective duties hereunder and that
in its opinion may involve it in any expense or liability; provided that any of
the Depositor, the Sellers, the NIM Insurer or the Master Servicer may, in its
discretion undertake any such action that it may deem necessary or desirable in
respect of this Agreement and the rights and duties of the parties hereto and
interests of the Trustee and the Certificateholders hereunder. In such event,
the legal expenses and costs of such action and any liability resulting
therefrom shall be, expenses, costs and liabilities of the Trust Fund, and the
Depositor, the Sellers, the NIM Insurer and the Master Servicer shall be
entitled to be reimbursed therefor out of the Certificate Account as provided by
Section 3.08 hereof.
Section 6.04 Limitation on Resignation of Master Servicer.
The Master Servicer shall not resign from the obligations and duties
hereby imposed on it except (i) upon determination that its duties hereunder are
no longer permissible under applicable law or (ii) upon appointment of a
successor servicer that is reasonably acceptable to the Trustee and the NIM
Insurer and the written confirmation from each Rating Agency (which confirmation
shall be furnished to the Depositor, the Trustee and the NIM Insurer) that such
resignation will not cause such Rating Agency to reduce the then-current rating
of the Certificates. Any such determination pursuant to clause (i) of the
preceding sentence permitting the resignation of the Master Servicer shall be
evidenced by an Opinion of Counsel to such effect delivered to the Trustee. No
resignation of the Master Servicer shall become effective until the Trustee
shall have assumed the Master Servicer's responsibilities, duties, liabilities
(other than those liabilities arising prior to the appointment of such
successor) and obligations under this Agreement and the Depositor shall have
received the information described in the following sentence. As a condition to
the effectiveness of any such resignation, at least 15 calendar days prior to
the effective date of such resignation, the Master Servicer shall
139
provide (x) written notice to the Depositor of any successor pursuant to this
Section and (y) in writing and in form and substance reasonably satisfactory to
the Depositor, all information reasonably requested by the Depositor in order to
comply with its reporting obligation under Item 6.02 of Form 8-K with respect to
the resignation of the Master Servicer.
Section 6.05 Errors and Omissions Insurance; Fidelity Bonds.
The Master Servicer shall, for so long as it acts as servicer under
this Agreement, obtain and maintain in force (a) a policy or policies of
insurance covering errors and omissions in the performance of its obligations as
servicer hereunder, and (b) a fidelity bond in respect of its officers,
employees and agents. Each such policy or policies and bond shall, together,
comply with the requirements from time to time of Xxxxxx Xxx and Xxxxxxx Mac for
persons performing servicing for mortgage loans purchased by Xxxxxx Mae and
Xxxxxxx Mac. In the event that any such policy or bond ceases to be in effect,
the Master Servicer shall use its reasonable best efforts to obtain a comparable
replacement policy or bond from an insurer or issuer, meeting the requirements
set forth above as of the date of such replacement.
The Master Servicer shall provide the Trustee and the NIM Insurer
(upon such party's reasonable request) with copies of any such insurance
policies and fidelity bond. The Master Servicer shall be deemed to have complied
with this provision if an Affiliate of the Master Servicer has such errors and
omissions and fidelity bond coverage and, by the terms of such insurance policy
or fidelity bond, the coverage afforded thereunder extends to the Master
Servicer.
ARTICLE VII.
DEFAULT; TERMINATION OF MASTER SERVICER
Section 7.01 Events of Default.
"Event of Default," wherever used herein, means any one of the
following events:
(1) any failure by the Master Servicer to deposit in the
Certificate Account or the Distribution Account or remit to the Trustee
any payment (excluding a payment required to be made under Section 4.01
hereof) required to be made under the terms of this Agreement, which
failure shall continue unremedied for five calendar days and, with respect
to a payment required to be made under Section 4.01(b) or (c) hereof, for
one Business Day, after the date on which written notice of such failure
shall have been given to the Master Servicer by the Trustee, the NIM
Insurer or the Depositor, or to the Trustee, the NIM Insurer and the
Master Servicer by the Holders of Certificates evidencing not less than
25% of the Voting Rights; or
(2) any failure by the Master Servicer to observe or perform
in any material respect any other of the covenants or agreements on the
part of the Master Servicer contained in this Agreement (except with
respect to a failure related to a Limited Exchange Act Reporting
Obligation) or any representation or warranty shall prove to be untrue,
which failure or breach shall continue unremedied for a period of 60 days
after the date on which written notice of such failure shall have been
given to the Master Servicer by the Trustee, the NIM Insurer or the
Depositor, or to the Trustee by the
140
Holders of Certificates evidencing not less than 25% of the Voting Rights;
provided, that the sixty-day cure period shall not apply to the initial
delivery of the Mortgage File for Delay Delivery Mortgage Loans or the
failure to repurchase or substitute in lieu thereof; or
(3) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered against
the Master Servicer and such decree or order shall have remained in force
undischarged or unstayed for a period of 60 consecutive days; or
(4) the Master Servicer shall consent to the appointment of a
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or
relating to the Master Servicer or all or substantially all of the
property of the Master Servicer; or
(5) the Master Servicer shall admit in writing its inability
to pay its debts generally as they become due, file a petition to take
advantage of, or commence a voluntary case under, any applicable
insolvency or reorganization statute, make an assignment for the benefit
of its creditors, or voluntarily suspend payment of its obligations; or
(6) the Master Servicer shall fail to reimburse in full the
Trustee not later than 6:00 p.m. (New York time) on the Business Day
following the related Distribution Date for any Advance made by the
Trustee pursuant to Section 4.01(d) together with accrued and unpaid
interest.
If an Event of Default shall occur, then, and in each and every such
case, so long as such Event of Default shall not have been remedied, the Trustee
shall, but only at the direction of either the NIM Insurer or the Holders of
Certificates evidencing not less than 25% of the Voting Rights, by notice in
writing to the Master Servicer (with a copy to each Rating Agency and the
Depositor), terminate all of the rights and obligations of the Master Servicer
under this Agreement and in and to the Mortgage Loans and the proceeds thereof,
other than its rights as a Certificateholder hereunder. In addition, if during
the period that the Depositor is required to file Exchange Act Reports with
respect to the Trust Fund, the Master Servicer shall fail to observe or perform
any of the obligations that constitute a Limited Exchange Act Reporting
Obligation or the obligations set forth in Section 3.17(a) or Section
11.07(a)(1) and (2), and such failure continues for the lesser of 10 calendar
days or such period in which the applicable Exchange Act Report can be filed
timely (without taking into account any extensions), so long as such failure
shall not have been remedied, the Trustee shall, but only at the direction of
the Depositor, terminate all of the rights and obligations of the Master
Servicer under this Agreement and in and to the Mortgage Loans and the proceeds
thereof, other than its rights as a Certificateholder hereunder. The Depositor
shall not be entitled to terminate the rights and obligations of the Master
Servicer if a failure of the Master Servicer to identify a Subcontractor
"participating in the servicing function" within the meaning of Item 1122 of
Regulation AB was attributable
141
solely to the role or functions of such Subcontractor with respect to mortgage
loans other than the Mortgage Loans.
On or after the receipt by the Master Servicer of such written
notice, all authority and power of the Master Servicer hereunder, whether with
respect to the Mortgage Loans or otherwise, shall pass to and be vested in the
Trustee. The Trustee shall thereupon make any Advance described in Section 4.01
hereof subject to Section 3.04 hereof. The Trustee is hereby authorized and
empowered to execute and deliver, on behalf of the Master Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement or assignment of the Mortgage Loans and related documents, or
otherwise. Unless expressly provided in such written notice, no such termination
shall affect any obligation of the Master Servicer to pay amounts owed pursuant
to Article VIII. The Master Servicer agrees to cooperate with the Trustee in
effecting the termination of the Master Servicer's responsibilities and rights
hereunder, including, without limitation, the transfer to the Trustee of all
cash amounts which shall at the time be credited to the Certificate Account, or
thereafter be received with respect to the Mortgage Loans. The Trustee shall
promptly notify the Rating Agencies and the Depositor of the occurrence of an
Event of Default.
Notwithstanding any termination of the activities of a Master
Servicer hereunder, such Master Servicer shall be entitled to receive, out of
any late collection of a Scheduled Payment on a Mortgage Loan that was due prior
to the notice terminating such Master Servicer's rights and obligations as
Master Servicer hereunder and received after such notice, that portion thereof
to which such Master Servicer would have been entitled pursuant to Sections
3.08(a)(i) through (viii), and any other amounts payable to such Master Servicer
hereunder the entitlement to which arose prior to the termination of its
activities hereunder.
If the Master Servicer is terminated, the Trustee shall provide the
Depositor in writing and in form and substance reasonably satisfactory to the
Depositor, all information reasonably requested by the Depositor in order to
comply with its reporting obligation under Item 6.02 of Form 8-K with respect to
a successor master servicer in the event the Trustee should succeed to the
duties of the Master Servicer as set forth herein.
Section 7.02 Trustee to Act; Appointment of Successor.
On and after the time the Master Servicer receives a notice of
termination pursuant to Section 7.01 hereof, the Trustee shall, to the extent
provided in Section 3.04, be the successor to the Master Servicer in its
capacity as servicer under this Agreement and the transactions set forth or
provided for herein and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Master Servicer by the terms and
provisions hereof and applicable law including the obligation to make advances
pursuant to Section 4.01. As compensation therefor, the Trustee shall be
entitled to all fees, costs and expenses relating to the Mortgage Loans that the
Master Servicer would have been entitled to if the Master Servicer had continued
to act hereunder. Notwithstanding the foregoing, if the Trustee has become the
successor to the Master Servicer in accordance with Section 7.01 hereof, the
Trustee may, if it shall be unwilling to so act, or shall, if it is prohibited
by applicable law from making Advances
142
pursuant to Section 4.01 hereof or if it is otherwise unable to so act, (i)
appoint any established mortgage loan servicing institution reasonably
acceptable to the NIM Insurer (as evidenced by the prior written consent of the
NIM Insurer), or (ii) if it is unable for 60 days to appoint a successor
servicer reasonably acceptable to the NIM Insurer, petition a court of competent
jurisdiction to appoint any established mortgage loan servicing institution, the
appointment of which does not adversely affect the then-current rating of the
Certificates and the NIM Insurer guaranteed notes (without giving any effect to
any policy or guaranty provided by the NIM Insurer) by each Rating Agency as the
successor to the Master Servicer hereunder in the assumption of all or any part
of the responsibilities, duties or liabilities of the Master Servicer hereunder.
Any successor Master Servicer shall be an institution that is a Xxxxxx Mae and
Xxxxxxx Mac approved seller/servicer in good standing, that has been approved by
each Mortgage Insurer if required, that has a net worth of at least $15,000,000
and that is willing to service the Mortgage Loans and executes and delivers to
the Depositor and the Trustee an agreement accepting such delegation and
assignment, that contains an assumption by such Person of the rights, powers,
duties, responsibilities, obligations and liabilities of the Master Servicer
(other than liabilities and indemnities of the Master Servicer under Section
6.03 hereof incurred prior to termination of the Master Servicer under Section
7.01), with like effect as if originally named as a party to this Agreement; and
provided further that each Rating Agency acknowledges that its rating of the
Certificates in effect immediately prior to such assignment and delegation will
not be qualified or reduced as a result of such assignment and delegation. No
appointment of a successor to the Master Servicer hereunder shall be effective
until (i) the Trustee shall have consented thereto, (ii) written notice of such
proposed appointment shall have been provided by the Trustee to each
Certificateholder and (iii) at least 15 calendar days prior to the effective
date of such appointment, (x) the Trustee shall provide written notice to the
Depositor of such successor pursuant to this Section 7.02 and (y) such successor
Master Servicer shall provide to the Depositor in writing and in form and
substance reasonably satisfactory to the Depositor, all information reasonably
requested by the Depositor in order to comply with its reporting obligation
under Item 6.02 of Form 8-K with respect to a replacement master servicer. The
Trustee shall not resign as servicer until a successor servicer has been
appointed and has accepted such appointment. Pending appointment of a successor
to the Master Servicer hereunder, the Trustee, unless the Trustee is prohibited
by law from so acting, shall, subject to Section 3.04 hereof, act in such
capacity as herein above provided. In connection with such appointment and
assumption, the Trustee may make such arrangements for the compensation of such
successor out of payments on Mortgage Loans as it and such successor shall
agree; provided that no such compensation shall be in excess of that permitted
the Master Servicer hereunder. The Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession. Neither the Trustee nor any other successor servicer shall be
deemed to be in default hereunder by reason of any failure to make, or any delay
in making, any distribution hereunder or any portion thereof or any failure to
perform, or any delay in performing, any duties or responsibilities hereunder,
in either case caused by the failure of the Master Servicer to deliver or
provide, or any delay in delivering or providing, any cash, information,
documents or records to it.
Any successor to the Master Servicer as servicer shall give notice
to the NIM Insurer and the Mortgagors of such change of servicer and shall,
during the term of its service as servicer maintain in force the policy or
policies that the Master Servicer is required to maintain pursuant to Section
6.05.
143
In connection with the termination or resignation of the Master
Servicer hereunder, either (i) the successor Master Servicer, including the
Trustee if the Trustee is acting as successor Master Servicer, shall represent
and warrant that it is a member of MERS in good standing and shall agree to
comply in all material respects with the rules and procedures of MERS in
connection with the servicing of the Mortgage Loans that are registered with
MERS, or (ii) the predecessor Master Servicer shall cooperate with the successor
Master Servicer in causing MERS to execute and deliver an assignment of Mortgage
in recordable form to transfer the Mortgage from MERS to the Trustee and to
execute and deliver such other notices, documents and other instruments as may
be necessary or desirable to effect a transfer of such Mortgage Loan or
servicing of such Mortgage Loan on the MERS(R) System to the successor Master
Servicer. The predecessor Master Servicer shall file or cause to be filed any
such assignment in the appropriate recording office. The successor Master
Servicer shall cause such assignment to be delivered to the Trustee promptly
upon receipt of the original with evidence of recording thereon or a copy
certified by the public recording office in which such assignment was recorded.
Section 7.03 Notification to Certificateholders.
(a) Upon any termination of or appointment of a successor to the
Master Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders and to each Rating Agency.
(b) Within 60 days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Certificateholders notice of each such
Event of Default hereunder known to the Trustee, unless such Event of Default
shall have been cured or waived.
ARTICLE VIII.
CONCERNING THE TRUSTEE AND THE CO-TRUSTEE
Section 8.01 Duties of Trustee.
The Trustee, prior to the occurrence of an Event of Default and
after the curing of all Events of Default that may have occurred, shall
undertake to perform such duties and only such duties as are specifically set
forth in this Agreement. In case an Event of Default has occurred and remains
uncured, the Trustee shall exercise such of the rights and powers vested in it
by this Agreement, and use the same degree of care and skill in their exercise
as a prudent person would exercise or use under the circumstances in the conduct
of such person's own affairs.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee (or the Co-Trustee, to the extent provided in this Agreement)
that are specifically required to be furnished pursuant to any provision of this
Agreement shall examine them to determine whether they conform to the
requirements of this Agreement, to the extent provided in this Agreement. If any
such instrument is found not to conform to the requirements of this Agreement in
a material manner, the Trustee shall take action as it deems appropriate to have
the instrument corrected.
144
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own grossly negligent action, its own gross
negligent failure to act or its own misconduct, its grossly negligent failure to
perform its obligations in compliance with this Agreement, or any liability that
would be imposed by reason of its willful misfeasance or bad faith; provided
that:
(1) prior to the occurrence of an Event of Default, and after
the curing of all such Events of Default that may have occurred, the
duties and obligations of the Trustee shall be determined solely by the
express provisions of this Agreement, the Trustee shall not be liable,
individually or as Trustee, except for the performance of such duties and
obligations as are specifically set forth in this Agreement, no implied
covenants or obligations shall be read into this Agreement against the
Trustee and the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Agreement that it reasonably believed in good faith
to be genuine and to have been duly executed by the proper authorities
respecting any matters arising hereunder;
(2) the Trustee shall not be liable, individually or as
Trustee, for an error of judgment made in good faith by a Responsible
Officer or Responsible Officers of the Trustee, unless the Trustee was
grossly negligent or acted in bad faith or with willful misfeasance;
(3) the Trustee shall not be liable, individually or as
Trustee, with respect to any action taken, suffered or omitted to be taken
by it in good faith in accordance with the direction of the Holders of
each Class of Certificates evidencing not less than 25% of the Voting
Rights of such Class relating to the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee under this Agreement; and
(4) without in any way limiting the provisions of this Section
8.01 or Section 8.02 hereof, the Trustee shall be entitled to rely
conclusively on the information delivered to it by the Master Servicer in
a Trustee Advance Notice in determining whether or not it is required to
make an Advance under Section 4.01(d), shall have no responsibility to
ascertain or confirm any information contained in any Trustee Advance
Notice, and shall have no obligation to make any Advance under Section
4.01(d) in the absence of a Trustee Advance Notice or actual knowledge by
a Responsible Officer that (A) a required Advance was not made and (B)
such required Advance was not a Nonrecoverable Advance.
The Trustee hereby represents, warrants, covenants and agrees that,
except as permitted by Article IX hereof, it shall not cause the Trust Fund to
consolidate or amalgamate with, or merge with or into, or transfer all or
substantially all of the Trust Fund to, another Person.
145
Section 8.02 Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
(1) the Trustee may request and rely upon and shall be
protected in acting or refraining from acting upon any resolution,
Officer's Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(2) the Trustee may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection in respect
of any action taken or suffered or omitted by it hereunder in good faith
and in accordance with such Opinion of Counsel;
(3) the Trustee shall not be liable, individually or as
Trustee, for any action taken, suffered or omitted by it in good faith and
believed by it to be authorized or within the discretion or rights or
powers conferred upon it by this Agreement;
(4) prior to the occurrence of an Event of Default hereunder
and after the curing of all Events of Default that may have occurred, the
Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or other
paper or document, unless requested in writing so to do by the NIM Insurer
or the Holders of each Class of Certificates evidencing not less than 25%
of the Voting Rights of such Class; provided, however, that if the payment
within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee not reasonably assured to
the Trustee by the NIM Insurer or such Certificateholders, the Trustee may
require reasonable indemnity against such expense, or liability from the
NIM Insurer or such Certificateholders as a condition to taking any such
action;
(5) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents, accountants or attorneys;
(6) the Trustee shall not be required to expend its own funds
or otherwise incur any financial liability in the performance of any of
its duties hereunder if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such liability
is not assured to it;
(7) the Trustee shall not be liable, individually or as
Trustee, for any loss on any investment of funds pursuant to this
Agreement (other than as issuer of the investment security);
(8) the Trustee shall not be deemed to have knowledge of an
Event of Default until a Responsible Officer of the Trustee shall have
received written notice thereof; and
146
(9) the Trustee shall be under no obligation to exercise any
of the trusts or powers vested in it by this Agreement or to make any
investigation of matters arising hereunder or to institute, conduct or
defend any litigation hereunder or in relation hereto at the request,
order or direction of the NIM Insurer or any of the Certificateholders,
pursuant to the provisions of this Agreement, unless the NIM Insurer or
such Certificateholders, as applicable, shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities that may be incurred therein or thereby.
(b) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee, may be enforced by the Trustee without
the possession of any of the Certificates, or the production thereof at the
trial or other proceeding relating thereto, and any such suit, action or
proceeding instituted by the Trustee shall be brought in its name for the
benefit of all the Holders of the Certificates, subject to the provisions of
this Agreement.
The Depositor hereby directs the Trustee to execute, deliver and
perform its obligations under the Swap Contract Administration Agreement (in its
capacity as Swap Trustee). The Sellers, the Depositor, the Master Servicer and
the Holders of the Interest-Bearing Certificates by their acceptance of such
Certificates acknowledge and agree that the Trustee shall execute, deliver and
perform its obligations under the Swap Contract Administration Agreement and
shall do so solely in its capacity as Swap Trustee, as the case may be, and not
in its individual capacity. Every provision of this Agreement relating to the
conduct or affecting the liability of or affording protection to the Trustee
shall apply to the Trustee's execution of the Swap Contract Administration
Agreement in its capacity as Swap Trustee, and the performance of its duties and
satisfaction of its obligations thereunder.
Section 8.03 Trustee Not Liable for Mortgage Loans.
The recitals contained herein shall be taken as the statements of
the Depositor or the Master Servicer, as the case may be, and the Trustee
assumes no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Agreement or of any
Mortgage Loan or related document or of MERS or the MERS(R) System other than
with respect to the Trustee's execution and authentication of the Certificates.
The Trustee shall not be accountable for the use or application by the Depositor
or the Master Servicer of any funds paid to the Depositor or the Master Servicer
in respect of the Mortgage Loans or deposited in or withdrawn from the
Certificate Account by the Depositor or the Master Servicer.
Section 8.04 Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates with the same rights as it would have if it
were not the Trustee.
Section 8.05 Master Servicer to Pay Trustee's Fees and
Expenses.
The Master Servicer covenants and agrees to pay or reimburse the
Trustee, upon its request, for all reasonable expenses, disbursements and
advances incurred or made by the Trustee on behalf of the Trust Fund in
accordance with any of the provisions of this Agreement
147
(including, without limitation: (A) the reasonable compensation and the expenses
and disbursements of its counsel, but only for representation of the Trustee
acting in its capacity as Trustee hereunder and (B) to the extent that the
Trustee must engage persons not regularly in its employ to perform acts or
services on behalf of the Trust Fund, which acts or services are not in the
ordinary course of the duties of a trustee, paying agent or certificate
registrar, in the absence of a breach or default by any party hereto, the
reasonable compensation, expenses and disbursements of such persons, except any
such expense, disbursement or advance as may arise from its negligence, bad
faith or willful misconduct). The Trustee and any director, officer, employee or
agent of the Trustee shall be indemnified by the Master Servicer and held
harmless against any loss, liability or expense (i) incurred in connection with
any legal action relating to this Agreement or the Certificates, or in
connection with the performance of any of the Trustee's duties hereunder, other
than any loss, liability or expense incurred by reason of willful misfeasance,
bad faith or negligence in the performance of any of the Trustee's duties
hereunder or by reason of reckless disregard of the Trustee's obligations and
duties hereunder or (ii) resulting from any error in any tax or information
return prepared by the Master Servicer. Such indemnity shall survive the
termination of this Agreement or the resignation or removal of the Trustee
hereunder.
Section 8.06 Eligibility Requirements for Trustee.
The Trustee hereunder shall, at all times, be a corporation or
association organized and doing business under the laws of a state or the United
States of America, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least $50,000,000, subject
to supervision or examination by federal or state authority and with a credit
rating that would not cause any of the Rating Agencies to reduce their
respective ratings of any Class of Certificates below the ratings issued on the
Closing Date (or having provided such security from time to time as is
sufficient to avoid such reduction). If such corporation or association
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section 8.06 the combined capital and surplus of such
corporation or association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 8.06, the Trustee shall resign immediately in the
manner and with the effect specified in Section 8.07 hereof. The corporation or
national banking association serving as Trustee may have normal banking and
trust relationships with the Depositor, the Sellers and the Master Servicer and
their respective affiliates; provided that such corporation cannot be an
affiliate of the Master Servicer other than the Trustee in its role as successor
to the Master Servicer.
Section 8.07 Resignation and Removal of Trustee.
The Trustee may at any time resign and be discharged from the trusts
hereby created by (1) giving written notice of resignation to the Depositor and
the Master Servicer and by mailing notice of resignation by first class mail,
postage prepaid, to the Certificateholders at their addresses appearing on the
Certificate Register and each Rating Agency, not less than 60 days before the
date specified in such notice when, subject to Section 8.08, such resignation is
to take effect, and (2) acceptance of appointment by a successor trustee in
accordance with Section
148
8.08 and meeting the qualifications set forth in Section 8.06. If no successor
trustee shall have been so appointed and have accepted appointment within 30
days after the giving of such notice or resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
trustee.
As a condition to the effectiveness of any such resignation, at
least 15 calendar days prior to the effective date of such resignation, the
Trustee shall provide (x) written notice to the Depositor of any successor
pursuant to this Section and (y) in writing and in form and substance reasonably
satisfactory to the Depositor, all information reasonably requested by the
Depositor in order to comply with its reporting obligation under Item 6.02 of
Form 8-K with respect to the resignation of the Trustee.
If at any time (i) the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.06 hereof and shall fail to resign
after written request thereto by the NIM Insurer or the Depositor, (ii) the
Trustee shall become incapable of acting, or shall be adjudged as bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, (iii)(A) a tax is imposed with respect to the Trust Fund by any
state in which the Trustee or the Trust Fund is located, (B) the imposition of
such tax would be avoided by the appointment of a different trustee and (C) the
Trustee fails to indemnify the Trust Fund against such tax, or (iv) during the
period which the Depositor is required to file Exchange Act Reports with respect
to the Trust Fund, the Trustee fails to comply with its obligations under the
last sentence of Section 7.01, the preceding paragraph, Section 8.09 or Article
XI and such failure is not remedied within the lesser of 10 calendar days or
such period in which the applicable Exchange Act Report can be filed timely
(without taking into account any extensions), then, in the case of clauses (i)
through (iii), the Depositor, the NIM Insurer or the Master Servicer, or in the
case of clause (iv), the Depositor, may remove the Trustee and appoint a
successor trustee, reasonably acceptable to the NIM Insurer, by written
instrument, in triplicate, one copy of which instrument shall be delivered to
the Trustee, one copy of which shall be delivered to the Master Servicer and one
copy of which shall be delivered to the successor trustee.
The Holders evidencing at least 51% of the Voting Rights of each
Class of Certificates may at any time remove the Trustee and appoint a successor
trustee by written instrument or instruments, in triplicate, signed by such
Holders or their attorneys-in-fact duly authorized, one complete set of which
instruments shall be delivered by the successor Trustee to the Master Servicer
one complete set to the Trustee so removed, one complete set to the successor so
appointed and one complete set to the Depositor, together with a written
description of the basis for such removal. Notice of any removal of the Trustee
shall be given to each Rating Agency by the successor Trustee.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.07 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 8.08 hereof.
149
Section 8.08 Successor Trustee.
Any successor trustee appointed as provided in Section 8.07 hereof
shall execute, acknowledge and deliver to the Depositor, its predecessor trustee
and the Master Servicer an instrument accepting such appointment hereunder and
thereupon the resignation or removal of the predecessor trustee shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if originally
named as trustee herein. In addition, if the Swap Contract is still outstanding,
the Person appointed as successor trustee shall execute, acknowledge and deliver
to the predecessor trustee, CHL and the Master Servicer an instrument accepting
the appointment as successor Swap Contract Administrator under the Swap Contract
Administration Agreement.
No successor trustee shall accept appointment as provided in this
Section 8.08 unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 8.06 hereof, is reasonably
acceptable to the NIM Insurer, its appointment shall not adversely affect the
then-current ratings of the Certificates and has provided to the Depositor in
writing and in form and substance reasonably satisfactory to the Depositor, all
information reasonably requested by the Depositor in order to comply with its
reporting obligation under Item 6.02 of Form 8-K with respect to a replacement
Trustee. Upon acceptance of appointment by a successor trustee as provided in
this Section 8.08, the Depositor shall mail notice of the succession of such
trustee hereunder to the NIM Insurer and all Holders of Certificates. If the
Depositor fails to mail such notice within ten days after acceptance of
appointment by the successor trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Depositor.
Section 8.09 Merger or Consolidation of Trustee.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to substantially all of the corporate trust business of
the Trustee, shall be the successor of the Trustee hereunder, provided that such
corporation shall be eligible under the provisions of Section 8.06 hereof
without the execution or filing of any paper or further act on the part of any
of the parties hereto, anything herein to the contrary notwithstanding.
As a condition to the effectiveness of any merger or consolidation,
at least 15 calendar days prior to the effective date of any merger or
consolidation of the Trustee, the Trustee shall provide (x) written notice to
the Depositor of any successor pursuant to this Section and (y) in writing and
in form and substance reasonably satisfactory to the Depositor, all information
reasonably requested by the Depositor in order to comply with its reporting
obligation under Item 6.02 of Form 8-K with respect to a replacement Trustee.
Section 8.10 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust
150
Fund or property securing any Mortgage Note may at the time be located, the
Master Servicer and the Trustee acting jointly shall have the power and shall
execute and deliver all instruments to appoint one or more Persons approved by
the Trustee and reasonably acceptable to the NIM Insurer to act as co-trustee or
co-trustees jointly with the Trustee, or separate trustee or separate trustees,
of all or any part of the Trust Fund, and to vest in such Person or Persons, in
such capacity and for the benefit of the Certificateholders, such title to the
Trust Fund or any part thereof, whichever is applicable, and, subject to the
other provisions of this Section 8.10, such powers, duties, obligations, rights
and trusts as the Master Servicer and the Trustee may consider necessary or
desirable. If the Master Servicer shall not have joined in such appointment, or
the NIM Insurer shall not have approved such appointment, within 15 days after
receipt by it of a request to do so, or in the case an Event of Default shall
have occurred and be continuing, the Trustee shall have the power to make such
appointment. No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor trustee under Section 8.06 and no
notice to Certificateholders of the appointment of any co-trustee or separate
trustee shall be required under Section 8.08.
Every separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and conditions:
(1) All rights, powers, duties and obligations conferred or
imposed upon the Trustee, except for the obligation of the Trustee under
this Agreement to advance funds on behalf of the Master Servicer, shall be
conferred or imposed upon and exercised or performed by the Trustee and
such separate trustee or co-trustee jointly (it being understood that such
separate trustee or co-trustee is not authorized to act separately without
the Trustee joining in such act), except to the extent that under any law
of any jurisdiction in which any particular act or acts are to be
performed (whether as Trustee hereunder or as successor to the Master
Servicer hereunder), the Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust Fund or any
portion thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the direction
of the Trustee;
(2) No trustee hereunder shall be held personally liable by
reason of any act or omission of any other trustee hereunder; and
(3) The Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Each separate trustee and co-trustee upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the
151
Trustee. Every such instrument shall be filed with the Trustee and a copy
thereof given to the Master Servicer and the Depositor.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 8.11 Tax Matters.
It is intended that the Trust Fund shall constitute, and that the
affairs of the Trust Fund shall be conducted so that each REMIC created pursuant
to the Preliminary Statement qualifies as, a "real estate mortgage investment
conduit" as defined in and in accordance with the REMIC Provisions. In
furtherance of such intention, the Trustee covenants and agrees that it shall
act as agent (and the Trustee is hereby appointed to act as agent) on behalf of
the Trust Fund and that in such capacity it shall: (a) prepare and file, or
cause to be prepared and filed, in a timely manner, a U.S. Real Estate Mortgage
Investment Conduit Income Tax Returns (Form 1066 or any successor form adopted
by the Internal Revenue Service) and prepare and file or cause to be prepared
and filed with the Internal Revenue Service and applicable state or local tax
authorities income tax or information returns for each taxable year with respect
to each REMIC created hereunder containing such information and at the times and
in the manner as may be required by the Code or state or local tax laws,
regulations, or rules, and furnish or cause to be furnished to
Certificateholders the schedules, statements or information at such times and in
such manner as may be required thereby; (b) within thirty days of the Closing
Date, furnish or cause to be furnished to the Internal Revenue Service, on Forms
8811 or as otherwise may be required by the Code, the name, title, address, and
telephone number of the person that the Holders of the Certificates may contact
for tax information relating thereto, together with such additional information
as may be required by such Form, and update such information at the time or
times in the manner required by the Code for the Trust Fund; (c) make or cause
to be made elections, on behalf of each REMIC created hereunder to be treated as
a REMIC on the federal tax return of each such REMIC for its first taxable year
(and, if necessary, under applicable state law); (d) prepare and forward, or
cause to be prepared and forwarded, to the Certificateholders and to the
Internal Revenue Service and, if necessary, state tax authorities, all
information returns and reports as and when required to be provided to them in
accordance with the REMIC Provisions, including without limitation, the
calculation of any original issue discount using the Prepayment Assumption; (e)
provide information necessary for the computation of tax imposed on the transfer
of a Class A-R Certificate to a Person that is not a Permitted Transferee, or an
agent (including a broker, nominee or other middleman) of a Non-Permitted
Transferee, or a pass-through entity in which a Non-Permitted Transferee is the
record holder of an interest (the reasonable cost of computing and furnishing
such information may be charged to the Person liable for such tax); (f) to the
extent that they are under its control conduct the affairs of the Trust Fund at
all times that any Certificates are outstanding so as to maintain the status of
each REMIC created hereunder as a REMIC under the REMIC Provisions; (g) not
knowingly or intentionally take any action or omit to take any action that would
cause the termination of the REMIC status of any REMIC created hereunder; (h)
pay, from the sources specified in the third paragraph of
152
this Section 8.11, the amount of any federal, state and local taxes, including
prohibited transaction taxes as described below, imposed on any REMIC created
hereunder prior to the termination of the Trust Fund when and as the same shall
be due and payable (but such obligation shall not prevent the Trustee or any
other appropriate Person from contesting any such tax in appropriate proceedings
and shall not prevent the Trustee from withholding payment of such tax, if
permitted by law, pending the outcome of such proceedings); (i) sign or cause to
be signed federal, state or local income tax or information returns; (j)
maintain records relating to each REMIC created hereunder, including but not
limited to the income, expenses, assets and liabilities of each such REMIC, and
the fair market value and adjusted basis of the Trust Fund property determined
at such intervals as may be required by the Code, as may be necessary to prepare
the foregoing returns, schedules, statements or information; and (k) as and when
necessary and appropriate, represent the Trust Fund in any administrative or
judicial proceedings relating to an examination or audit by any governmental
taxing authority, request an administrative adjustment as to any taxable year of
any REMIC created hereunder, enter into settlement agreements with any
governmental taxing agency, extend any statute of limitations relating to any
tax item of the Trust Fund, and otherwise act on behalf of any REMIC created
hereunder in relation to any tax matter involving any such REMIC.
In order to enable the Trustee to perform its duties as set forth
herein, the Depositor shall provide, or cause to be provided, to the Trustee
within ten days after the Closing Date all information or data that the Trustee
requests in writing and determines to be relevant for tax purposes to the
valuations and offering prices of the Certificates, including, without
limitation, the price, yield, prepayment assumption and projected cash flows of
the Certificates and the Mortgage Loans (and, to the extent not part of the
aforementioned, the information referred to in paragraphs (1), (2), (3)and (4)
of Section 4.05(d)). Thereafter, the Depositor shall provide to the Trustee
promptly upon written request therefor, any such additional information or data
that the Trustee may, from time to time, request in order to enable the Trustee
to perform its duties as set forth herein. The Depositor hereby indemnifies the
Trustee for any losses, liabilities, damages, claims or expenses of the Trustee
arising from any errors or miscalculations of the Trustee that result from any
failure of the Depositor to provide, or to cause to be provided, accurate
information or data to the Trustee on a timely basis.
In the event that any tax is imposed on "prohibited transactions" of
the Trust Fund as defined in section 860F(a)(2) of the Code, on the "net income
from foreclosure property" of the Trust Fund as defined in section 860G(c) of
the Code, on any contribution to the Trust Fund after the startup day pursuant
to section 860G(d) of the Code, or any other tax is imposed, including, without
limitation, any federal, state or local tax or minimum tax imposed upon the
Trust Fund pursuant to sections 23153 and 24872 of the California Revenue and
Taxation Code if not paid as otherwise provided for herein, such tax shall be
paid by (i) the Trustee, if any such other tax arises out of or results from a
breach by the Trustee of any of its obligations under this Agreement, (ii) (x)
the Master Servicer, in the case of any such minimum tax, and (y) any party
hereto (other than the Trustee) to the extent any such other tax arises out of
or results from a breach by such other party of any of its obligations under
this Agreement or (iii) in all other cases, or in the event that any liable
party here fails to honor its obligations under the preceding clauses (i) or
(ii), any such tax will be paid first with amounts otherwise to be distributed
to the Class A-R Certificateholders, and second with amounts otherwise to be
distributed to all other Certificateholders in the same manner as if such tax
were a Realized Loss that occurred ratably
153
within each Loan Group. Notwithstanding anything to the contrary contained
herein, to the extent that such tax is payable by the Class A-R Certificates,
the Trustee is hereby authorized to retain on any Distribution Date, from the
Holders of the Class A-R Certificates (and, if necessary, second, from the
Holders of all other Certificates in the priority specified in the preceding
sentence), funds otherwise distributable to such Holders in an amount sufficient
to pay such tax. The Trustee agrees to promptly notify in writing the party
liable for any such tax of the amount thereof and the due date for the payment
thereof.
The Trustee shall treat the Carryover Reserve Fund and the Swap
Trust, including the Swap Account, as outside reserve funds within the meaning
of Treasury Regulation 1.860G-2(h), neither of which is an asset of any REMIC
created hereunder. The Carryover Reserve Fund shall be treated as owned by the
Class C Certificateholders and the Swap Trust, including the Swap Account, shall
be treated as owned by the Class C Certificateholders. The rights of the Holders
of each Class of Certificates (other than the Class P and Class A-R
Certificates) to receive payments from, and the deemed obligations of such
Holders to make payments to, the Carryover Reserve Fund or the Swap Trust,
including the Swap Account, shall be treated as rights and obligations with
respect to notional principal contracts written by the Holders of the Class C
Certificates in respect of any Net Rate Carryover distributed pursuant to
Sections 4.04(c)(4), and (ii) the Swap Counterparty in respect of any Net Rate
Carryover funded by the Swap Contract and in respect of any residual payments
from such Swap Contract received by the Class C Certificates. Thus, the
Certificates (other than the Class P and Class A-R Certificates), shall be
treated as representing ownership of Master REMIC regular interests coupled with
contractual rights and obligations within the meaning of Treasury Regulation
1.860G-2(i). For purposes of determining the issue price of the various Master
REMIC regular interests, the Trustee shall treat the $1,125,000 upfront amount
received by CHL from the Swap Counterparty in connection with the execution of
the Old Confirmation as an additional amount paid by the Certificateholders for
the Master REMIC regular interests. Any differences in the distributions to a
Certificateholder (positive or negative) that would result from the application
of the Strip REMIC Cap rather than the applicable Net Rate Cap shall be treated
by the Trustee as reconciled among the Certificates by swap payments made
pursuant to notional principal contracts entered into among the
Certificateholders.
The Trustee shall treat the entitlement to Credit Comeback Excess
Amounts as owned by the Holders of the Class C Certificates and not as an asset
of, or interest in, any REMIC created hereunder. Further, the Trustee shall
treat any payments of Credit Comeback Excess Amounts to Persons other than the
Holders of the Class C Certificates as payments made by the Holders of the Class
C Certificates pursuant to a credit enhancement contract under Treasury
Regulation 1.860G-2(c). The Trustee shall also treat any amount payable to a
Class C Certificate with respect to the STR-C-OC Interest as deposited into the
Carryover Reserve Fund. To the extent the amount payable with respect to the
Swap Contract exceeds the amount payable with respect to the Class C
Certificates, the Trustee, for federal income tax purposes, shall treat such
excess as Realized Losses from Mortgage Loans and to the extent such Realized
Losses (if they had occurred) would be allocated to a Certificateholder, the
Trustee shall treat such amount as first payable to the Certificateholder as
principal and as then payable by the Certificateholder with respect to a
notional principal contract.
154
The Trustee shall treat the Final Maturity Reserve Fund as an
outside reserve fund within the meaning of Treasury Regulation 1.860G-2(h) that
is owned by the Holders of the Class C Certificates, and that is not an asset of
any REMIC created hereunder. Beginning on the Distribution Date in December
2016, the Trustee shall treat any monies payable to the Class C
Certificateholders with respect to their interest in the STR-C-40 Year IO, as
first paid to the Class C Certificates and then deposited in the Final Maturity
Reserve Fund. Any monies payable on the STR-C-40 Year IO in excess of the Final
Maturity Required Deposit shall be the "Excess Deposit." For income tax
purposes, to the extent the amount of any Excess Deposit is payable to Holders
of Certificates other than the Class C Certificates, such amount shall be
treated as payable to such Holders as Net Rate Carryover and any remaining
amount of Excess Deposit shall be treated as payable to the Holders of the Class
C Certificates. Any other monies received by the Holders of the Interest-Bearing
Certificates from the Final Maturity Reserve Fund will be treated as monies paid
by the Holders of the Class C Certificates to acquire the Interest-Bearing
Certificates receiving such monies. Thus, with respect to such other monies, the
Interest-Bearing Certificates and the Class C Certificates shall be treated as
representing ownership of not only a Master REMIC regular interest, but also
ownership of an interest in a forward purchase contract and the Trustee shall
treat the rights of the holders of the Interest-Bearing Certificates to receive
such other monies from the Final Maturity Reserve Fund as rights in forward
purchase contracts entered into with the Holders of the Class C Certificates.
Section 8.12 Co-Trustee.
(a) The Co-Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Co-Trustee that are specifically required to be furnished pursuant to any
provision of this Agreement shall examine them to determine whether they conform
to the requirements of this Agreement, to the extent required by this Agreement.
If any such instrument is found not to conform to the requirements of this
Agreement in a material manner, the Co-Trustee shall take action as it deems
appropriate to have the instrument corrected. In addition, the Co-Trustee shall
act as the insured under each Mortgage Insurance Policy and hereby directs the
Master Servicer, on behalf of the Co-Trustee, to take all actions appropriate or
required of the Co-Trustee under each Mortgage Insurance Policy, other than the
payment of each Mortgage Insurance Premium and obtaining the approval of each
Mortgage Insurer with respect to the appointment of a successor servicer.
(b) No provision of this Agreement shall be construed to relieve the
Co-Trustee from liability for its own grossly negligent action, its own gross
negligent failure to act or its own misconduct, its grossly negligent failure to
perform its obligations in compliance with this Agreement, or any liability that
would be imposed by reason of its willful misfeasance or bad faith; provided
that:
(1) the duties and obligations of the Co-Trustee shall be
determined solely by the express provisions of this Agreement with the
exception of Section 8.10, the Co-Trustee shall not be liable,
individually or as Co-Trustee, except for the performance of such duties
and obligations as are specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement against
the Co-Trustee and the Co-Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed therein,
upon any certificates or opinions furnished to the Co-
155
Trustee and conforming to the requirements of this Agreement that it
reasonably believed in good faith to be genuine and to have been duly
executed by the proper authorities respecting any matters arising
hereunder; and
(2) the Co-Trustee shall not be liable, individually or as
Co-Trustee, for an error of judgment made in good faith by a Responsible
Officer or Responsible Officers of the Co-Trustee, unless the Co-Trustee
was grossly negligent or acted in bad faith or with willful misfeasance.
(c) Except as otherwise provided in paragraph (b) above:
(1) the Co-Trustee may request and rely upon and shall be
protected in acting or refraining from acting upon any resolution,
Officer's Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(2) the Co-Trustee may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection in respect
of any action taken or suffered or omitted by it hereunder in good faith
and in accordance with such Opinion of Counsel;
(3) the Co-Trustee shall not be liable, individually or as
Co-Trustee, for any action taken, suffered or omitted by it in good faith
and believed by it to be authorized or within the discretion or rights or
powers conferred upon it by this Agreement;
(4) the Co-Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, bond or other paper or document;
(5) the Co-Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents, accountants or attorneys; and
(6) the Co-Trustee shall not be required to expend its own
funds or otherwise incur any financial liability in the performance of any
of its duties hereunder if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such liability
is not assured to it.
(d) The recitals contained herein shall be taken as the statements
of the Depositor or the Master Servicer, as the case may be, and the Co-Trustee
assumes no responsibility for their correctness. The Co-Trustee makes no
representations as to the validity or sufficiency of this Agreement or of any
Mortgage Loan or related document or of MERS or the MERS(R) System. The
Co-Trustee shall not be accountable for the use or application by the Depositor
or the Master Servicer of any funds paid to the Depositor or the Master Servicer
in respect of the Mortgage Loans or deposited in or withdrawn from the
Certificate Account by the Depositor or the Master Servicer.
156
(e) The Co-Trustee in its individual or any other capacity may
become the owner or pledgee of Certificates with the same rights as it would
have if it were not the Co-Trustee.
(f) The Master Servicer covenants and agrees (i) to pay to the
Co-Trustee from time to time, and the Co-Trustee shall be entitled to, such
compensation as shall be agreed in writing by the Master Servicer and the
Co-Trustee (which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust) for all services rendered by it
in the execution of the trusts hereby created and in the exercise and
performance of any of the powers and duties hereunder of the Co-Trustee and (ii)
to pay or reimburse the Co-Trustee, upon its request, for all reasonable
expenses, disbursements and advances incurred or made by the Co-Trustee on
behalf of the Trust Fund in accordance with any of the provisions of this
Agreement (including, without limitation: (A) the reasonable compensation and
the expenses and disbursements of its counsel, but only for representation of
the Co-Trustee acting in its capacity as Co-Trustee hereunder and (B) to the
extent that the Co-Trustee must engage persons not regularly in its employ to
perform acts or services on behalf of the Trust Fund, which acts or services are
not in the ordinary course of the duties of a trustee, paying agent or
certificate registrar, in the absence of a breach or default by any party
hereto, the reasonable compensation, expenses and disbursements of such persons,
except any such expense, disbursement or advance as may arise from its
negligence, bad faith or willful misconduct). The Co-Trustee and any director,
officer, employee or agent of the Co-Trustee shall be indemnified by the Master
Servicer and held harmless against any loss, liability or expense (i) incurred
in connection with any legal action relating to this Agreement or the
Certificates, or in connection with the performance of any of the Co-Trustee's
duties hereunder, other than any loss, liability or expense incurred by reason
of willful misfeasance, bad faith or negligence in the performance of any of the
Co-Trustee's duties hereunder or by reason of reckless disregard of the
Co-Trustee's obligations and duties hereunder and (ii) resulting from any error
in any tax or information return prepared by the Master Servicer. Such indemnity
shall survive the termination of this Agreement or the resignation or removal of
the Co-Trustee hereunder.
(g) The Co-Trustee hereunder shall, at all times, be a corporation
or association organized and doing business under the laws of a state or the
United States of America, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least $50,000,000, subject
to supervision or examination by federal or state authority and with a credit
rating that would not cause any of the Rating Agencies to reduce their
respective ratings of any Class of Certificates below the ratings issued on the
Closing Date (or having provided such security from time to time as is
sufficient to avoid such reduction). If such corporation or association
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section 8.12 the combined capital and surplus of such
corporation or association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Co-Trustee shall cease to be eligible in accordance with
the provisions of this Section 8.12, the Co-Trustee shall resign immediately in
the manner and with the effect specified in paragraph (h) below. The corporation
or national banking association serving as Co-Trustee may have normal banking
and trust relationships with the Depositor, the Sellers and the Master Servicer
and their respective affiliates; provided that such corporation
157
cannot be an affiliate of the Master Servicer other than the Trustee in its role
as successor to the Master Servicer.
(h) The Co-Trustee may at any time resign and be discharged from the
trusts hereby created by giving 30 days prior written notice of resignation to
the Trustee, the Depositor and the Master Servicer. Upon such resignation the
Trustee (x) may appoint a successor Co-Trustee meeting the requirements in
paragraph (g) above and acceptable to the Master Servicer and the NIM Insurer
(in their sole discretion), so long as such Co-Trustee executes and delivers to
the other parties hereto an instrument agreeing to be bound by the provisions of
this Agreement or (y) may if permitted by the Master Servicer (in its sole
discretion) assume the rights and duties of the resigning Co-Trustee so long as
the Trustee executes and delivers an instrument to that effect.
Section 8.13 Access to Records of the Trustee.
The Trustee and the Co-Trustee shall afford the Sellers, the
Depositor, the Master Servicer, the NIM Insurer and each Certificate Owner upon
reasonable notice during normal business hours access to all records maintained
by the Trustee or the Co-Trustee in respect of its duties under this Agreement
and access to officers of the Trustee and the Co-Trustee responsible for
performing its duties. Upon request, the Trustee or the Co-Trustee shall furnish
the Depositor, the Master Servicer, the NIM Insurer and any requesting
Certificate Owner with its most recent financial statements. The Trustee and the
Co-Trustee shall cooperate fully with the Sellers, the Master Servicer, the
Depositor, the NIM Insurer and the Certificate Owner for review and copying any
books, documents, or records requested with respect to the Trustee's and the
Co-Trustee's respective duties under this Agreement. The Sellers, the Depositor,
the Master Servicer and the Certificate Owner shall not have any responsibility
or liability for any action for failure to act by the Trustee or the Co-Trustee
and are not obligated to supervise the performance of the Trustee or the
Co-Trustee under this Agreement or otherwise.
Section 8.14 Suits for Enforcement.
If an Event of Default or other material default by the Master
Servicer or the Depositor under this Agreement occurs and is continuing, at the
direction of the Certificateholders holding not less than 51% of the Voting
Rights or the NIM Insurer, the Trustee shall proceed to protect and enforce its
rights and the rights of the Certificateholders or the NIM Insurer under this
Agreement by a suit, action, or proceeding in equity or at law or otherwise,
whether for the specific performance of any covenant or agreement contained in
this Agreement or in aid of the execution of any power granted in this Agreement
or for the enforcement of any other legal, equitable, or other remedy, as the
Trustee, being advised by counsel, and subject to the foregoing, shall deem most
effectual to protect and enforce any of the rights of the Trustee, the NIM
Insurer and the Certificateholders.
158
ARTICLE IX.
TERMINATION
Section 9.01 Termination upon Liquidation or Repurchase of all
Mortgage Loans.
Subject to Section 9.03 and Section 9.04, the Trust Fund shall
terminate and the obligations and responsibilities of the Depositor, the Master
Servicer, the Sellers, the Trustee and the Co-Trustee created hereby with
respect to the Trust Fund shall terminate upon the earliest of (a) the purchase
by the Master Servicer or NIM Insurer (the party exercising such purchase
option, the "Terminator") of all of the Mortgage Loans (and REO Properties) at a
price (the "Termination Price") equal to the sum of (i) 100% of the Stated
Principal Balance of each Mortgage Loan (other than in respect of an REO
Property), (ii) accrued interest thereon at the applicable Mortgage Rate (or, if
such repurchase is effected by the Master Servicer, at the applicable Net
Mortgage Rate), (iii) the appraised value of any REO Property (up to the Stated
Principal Balance of the related Mortgage Loan), such appraisal to be conducted
by an appraiser mutually agreed upon by the Terminator and the Trustee, (iv) any
remaining unpaid costs and damages incurred by the Trust Fund that arises out of
an actual violation of any predatory or abusive lending law or regulation and
(v) if the Terminator is the NIM Insurer, any unreimbursed Servicing Advances,
and the principal portion of any unreimbursed Advances, made on the Mortgage
Loans prior to the exercise of such repurchase, (b) the purchase by the Winning
Bidder of all of the Mortgage Loans (and REO Properties) after a Successful
Auction is conducted pursuant to Section 9.04 and the related auction proceeds
are distributed pursuant to Section 9.02(c) and (c) the later of (i) the
maturity or other liquidation (or any Advance with respect thereto) of the last
Mortgage Loan remaining in the Trust Fund and the disposition of all REO
Property and (ii) the distribution to the Certificateholders of all amounts
required to be distributed to them pursuant to this Agreement, as applicable. In
no event shall the trusts created hereby continue beyond the earlier of (i) the
expiration of 21 years from the death of the last survivor of the descendants of
Xxxxxx X. Xxxxxxx, the late Ambassador of the United States to the Court of St.
James's, living on the date hereof and (ii) the Latest Possible Maturity Date.
Notwithstanding anything set forth herein to the contrary
(including, without limitation, in Section 9.04), the right to purchase all
Mortgage Loans and REO Properties by the Terminator or the Winning Bidder
pursuant to clause (a) or clause (b) of the immediately preceding paragraph, as
the case may be, shall be conditioned upon (1) the Stated Principal Balance of
the Mortgage Loans, at the time of any such repurchase, aggregating ten percent
(10%) or less of the sum of the aggregate Cut-off Date Principal Balance of the
Initial Mortgage Loans and the Pre-Funded Amount, (2) unless the NIM Insurer
otherwise consents, the purchase price for such Mortgage Loans and REO
Properties shall result in a final distribution on any NIM Insurer guaranteed
notes that is sufficient (x) to pay such notes in full and (y) to pay any
amounts due and payable to the NIM Insurer pursuant to the indenture related to
such notes and (3) only in case of a purchase by the Master Servicer pursuant to
clause (a) of the immediately preceding paragraph, the absence of a request for
an auction, or the absence of a Successful Auction, of the Mortgage Loans and
REO Properties pursuant to Section 9.04.
The NIM Insurer's right to purchase all Mortgage Loans and REO
Properties shall be further conditioned upon the written consent of the Master
Servicer.
159
The Swap Trust shall terminate on the earliest of (i) the Swap
Contract Termination Date, (ii) the reduction of the aggregate Certificate
Principal Balance of the Interest-Bearing Certificates to zero and (iii) the
termination of this Agreement.
Section 9.02 Final Distribution on the Certificates.
(a) Timing of Notice of Final Distribution, Auction or Optional
Termination.
(1) If on any Determination Date, the Master Servicer
determines that there are no Outstanding Mortgage Loans and no other funds
or assets in the Trust Fund other than the funds in the Certificate
Account, then the Master Servicer shall direct the Trustee promptly to
send a final distribution notice to each Certificateholder in accordance
with Section 9.02(b). In the event such notice is given, the Master
Servicer shall cause all funds in the Certificate Account to be remitted
to the Trustee for deposit in the Distribution Account on or before the
Business Day prior to the applicable Distribution Date, net of any amounts
permitted to be withdrawn pursuant to Section 3.08(a). Upon such final
deposit with respect to the Trust Fund and the receipt by the Trustee of a
Request for File Release therefor, the Co-Trustee shall promptly release
to the Master Servicer the Mortgage Files for the Mortgage Loans.
(2) If the Directing Certificateholder chooses to exercise its
right to cause an auction pursuant to Section 9.04, then the Directing
Certificateholder shall provide written notice to the Master Servicer no
later than the first day of the calendar month in which such auction is to
be conducted. If a Successful Auction is held pursuant to the requirements
of Section 9.04, then the Trustee shall distribute the proceeds of the
Successful Auction that have been remitted to the Distribution Account to
the Certificateholders pursuant to Sections 4.04 and 9.04 hereof on the
Distribution Date in the calendar month immediately following the calendar
month in which the Successful Auction occurs.
(3) If the Directing Certificateholder does not exercise its
right to cause an auction pursuant to Section 9.04 and the Terminator
(after prior written notice to the Master Servicer if the Terminator is
the NIM Insurer) elects to terminate the Trust Fund pursuant to Section
9.01, then at least 20 days prior to the date notice is to be mailed to
Certificateholders in accordance with Section 9.02(b), the Terminator
shall notify the Depositor and the Trustee of (a) its election to
terminate the Trust Fund, (b) the Distribution Date on which it intends to
terminate the Trust Fund pursuant to Section 9.01 and (c) the applicable
purchase price of the Mortgage Loans and REO Properties. In the event such
notice is given, the Terminator shall remit to the Master Servicer, on or
before the Business Day prior to the final Distribution Date, for deposit
into the Certificate Account, the Termination Price. The Master Servicer
shall cause all funds in the Certificate Account, including the
Termination Price, net of any amounts permitted to be withdrawn pursuant
to Section 3.08(a), to be remitted to the Trustee for deposit in the
Distribution Account on or before the Business Day prior to the applicable
Distribution Date. Upon such final deposit with respect to the Trust Fund
and the receipt by the Trustee of a Request for File Release therefor, the
Co-Trustee shall promptly release to the Master Servicer the Mortgage
Files for the Mortgage Loans.
160
(b) Timing of Notice to Certificateholders of Termination. Notice of
any termination of the Trust Fund (whether because of a Successful Auction,
Optional Termination or otherwise), specifying the Distribution Date on which
Certificateholders may surrender their Certificates for payment of the final
distribution and cancellation, shall be given promptly by the Trustee by letter
to Certificateholders mailed not earlier than the 10th day and no later than the
15th day of the month immediately preceding the month of such final
distribution. Any such notice shall specify (i) the Distribution Date upon which
final distribution on the Certificates will be made upon presentation and
surrender of such Certificates at the office therein designated, (ii) the amount
of such final distribution, (iii) the location of the office or agency at which
such presentation and surrender must be made, and (iv) that the Record Date
otherwise applicable to such Distribution Date is not applicable, distributions
being made only upon presentation and surrender of such Certificates at the
office therein specified. The Master Servicer will give such notice to each
Rating Agency and the Swap Counterparty at the time such notice is given to
Certificateholders.
(c) Upon presentation and surrender of the Certificates, the Trustee
shall cause to be distributed to the Certificateholders of each Class, in each
case on the final Distribution Date and in the order and priority set forth in
Section 4.04 (and with respect to the Class C Certificates after a Successful
Auction, Sections 9.04(g) and (k)) hereof and in proportion to their respective
Percentage Interests from the Distribution Account (and, if applicable, the
Carryover Reserve Fund) an amount equal to (i) as to each Class of Regular
Certificates, the Certificate Principal Balance thereof plus accrued interest
thereon (or on its Notional Amount, if applicable) in the case of an
interest-bearing Certificate and (ii) as to the Class A-R Certificates, the
amount, if any, which remains on deposit in the Distribution Account (other than
the amounts retained to meet claims) after application pursuant to clause (i)
above. Notwithstanding the reduction of the Certificate Principal Balance of any
Class of Certificates to zero, such Class will be outstanding hereunder (solely
for the purpose of receiving distributions (if any) to which it may be entitled
pursuant to the terms of this Agreement and not for any other purpose) until the
termination of the respective obligations and responsibilities of the Depositor,
each Seller, the Master Servicer and the Trustee hereunder in accordance with
Article IX.
(d) In the event that any affected Certificateholders shall not
surrender their respective Certificates for cancellation within six months after
the date specified in the above mentioned written notice, the Trustee shall give
a second written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within six months after the second notice all the applicable
Certificates shall not have been surrendered for cancellation, the Trustee may
take appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining Certificateholders concerning surrender of their
Certificates, and the cost thereof shall be paid out of the funds and other
assets that remain a part of the Trust Fund. If within one year after the second
notice all Certificates shall not have been surrendered for cancellation, the
Class A-R Certificates shall be entitled to all unclaimed funds and other assets
of the Trust Fund that remain subject to this Agreement.
Section 9.03 Additional Termination Requirements.
(a) In the event the Terminator exercises its purchase option as
provided in Section 9.01 or there is a Successful Auction pursuant to Section
9.04, the Trust Fund shall be
161
terminated in accordance with the following additional requirements, unless the
Trustee has been supplied with an Opinion of Counsel, at the expense of the
Terminator (or the Directing Certificateholder, in the case of a Successful
Auction), to the effect that the failure of the Trust Fund to comply with the
requirements of this Section 9.03 will not (i) result in the imposition of taxes
on "prohibited transactions" on any REMIC as defined in Section 860F of the
Code, or (ii) cause any REMIC created hereunder to fail to qualify as a REMIC at
any time that any Certificates are outstanding:
(1) The Master Servicer shall establish a 90-day liquidation
period and notify the Trustee thereof, which shall in turn specify the
first day of such period in a statement attached to the Trust Fund's final
Tax Return pursuant to Treasury Regulation Section 1.860F-1. The Master
Servicer shall prepare a plan of complete liquidation and shall otherwise
satisfy all the requirements of a qualified liquidation under Section 860F
of the Code and any regulations thereunder, as evidenced by an Opinion of
Counsel delivered to the Trustee and the Depositor obtained at the expense
of the Terminator (or the Directing Certificateholder, in the case of a
Successful Auction); and
(2) Within 90 days after the time of adoption of such a plan
of complete liquidation, the Trustee shall sell all of the assets of the
Trust Fund to the Terminator (or the Winning Bidder in the case of a
Successful Auction) for cash in accordance with Section 9.01 and, if
applicable, Section 9.04.
(b) By their acceptance of the Certificates, the Holders thereof
hereby authorize the Master Servicer to prepare and the Trustee to adopt and
sign a plan of complete liquidation which authorization shall be binding upon
all successor Certificateholders. The Trustee shall attach a statement to the
final federal income tax return for each of any REMIC created hereunder stating
that pursuant to Treasury Regulation Section 1.860F-1, the first day of the
90-day liquidation period for each the REMIC was the date on which the Trustee
sold the assets of the Trust Fund to the Terminator.
(c) The Trustee, as agent for any REMIC created hereunder, hereby
agrees to adopt and sign such a plan of complete liquidation upon the written
request of the Master Servicer, and the receipt of the Opinion of Counsel
referred to in Section 9.03(a)(1) and to take such other action in connection
therewith as may be reasonably requested by the Terminator or the Directing
Certificateholder, as applicable.
Section 9.04 Auction of the Mortgage Loans and REO Properties.
(a) On or after the Optional Termination Date, the Holder of the
largest Percentage Interest of the Class C Certificates (the "Directing
Certificateholder"), at its option, may by written instruction direct the Master
Servicer to direct the Trustee to solicit bids in a commercially reasonable
manner from Qualified Bidders for the purchase of the Mortgage Loans and any REO
Properties owned by the Trust Fund. The Directing Certificateholder shall
provide written notice to the Master Servicer as provided in Section 9.02(a)(2).
Any such direction by the Directing Certificateholder shall (i) be made in
writing and (ii) include contact information for the Directing
Certificateholder. Upon receipt of any direction from the Directing
Certificateholder meeting the requirements of the immediately preceding
sentence, the Trustee
162
shall commence the auction process described in this Section 9.04. The Trustee
may engage a financial advisor, which financial advisor may be CHL or one of its
affiliates, in order to perform any of the duties of the Trustee specified in
Section 9.04. To effectuate such sale, the Trustee (or such financial advisor)
shall follow the procedures specified in Section 9.04(b) below. The Trustee
shall facilitate the sale of the assets in the Trust Fund to the Winning Bidder
so long as the Trustee (or any financial advisor on its behalf) has received at
least three bids from Qualified Bidders and at least one such bid is at least
equal to the Acceptable Bid Amount. In the event the auction is not a Successful
Auction, the Trustee may repeat this process periodically thereafter as directed
by the Directing Certificateholder until a Successful Auction is conducted or
the Terminator purchases all of the Mortgage Loans and REO Properties pursuant
to Section 9.01. The Trustee shall be reimbursed for its reasonable costs,
including expenses associated with engaging any financial advisor, from the
Directing Certificateholder if the auction is not a Successful Auction, and, if
the auction is a Successful Auction, from the proceeds of the auction before the
proceeds are distributed to Certificateholders.
The Trustee, upon inquiry from the Master Servicer, agrees to
provide the Master Servicer with the Percentage Interest of Class C Certificates
held by the Directing Certificateholder.
If CHL or any of its affiliates is the Directing Certificateholder,
such Directing Certificateholder shall not have the right to direct the Trustee
to solicit bids for the purchase of the Mortgage Loans and any REO Properties
owned by the Trust Fund.
(b) The Trustee (or any financial advisor on its behalf) shall
solicit bids for the purchase of assets owned by the Trust Fund as
provided in Section 9.04(a) not later than two Business Days following
receipt of the Directing Certificateholder's written instruction by
contacting by telephone or in writing at least three Qualified Bidders and
requesting that each Qualified Bidder bid on the Mortgage Loans and REO
Properties owned by the Trust Fund (on a non-recourse basis with no
representations or warranties of any nature whatsoever made by the Trustee
(or such financial advisor)) and providing to the Qualified Bidder any
information relating to the Mortgage Loans and REO Properties owned by the
Trust Fund reasonably requested by such Qualified Bidder, subject to the
Qualified Bidder's written agreement not to use such information in the
purchase or sale of Certificates (it being understood no Qualified Bidder
shall be obligated to submit a bid or take any other action in connection
with any auction). The Master Servicer shall cooperate with the Trustee
(and any financial advisor on its behalf) during the auction process. At
1:00 p.m. New York time on the second Business Day after the date on which
bids are last solicited (such second day, the "Bid Determination Date"),
the Trustee (or any financial advisor on its behalf) shall determine the
highest bid based on the bids received by the Trustee (or any financial
advisor on its behalf) on or before such time.
(c) If the highest of the bids that are submitted by Qualified
Bidders are less than the Minimum Auction Amount, then the Trustee shall
promptly inform the Directing Certificateholder of the amount of the
shortfall and indicate that the Directing Certificateholder must notify
the Trustee within 24 hours whether it will contribute the amount of such
difference (such difference being the "Auction Supplement Amount") so that
the auction will be a Successful Auction. If the highest of the bids that
are submitted by Qualified Bidders is equal to or greater than the Minimum
Auction Amount, or if the Directing Certificateholder notifies the
163
Trustee within 24 hours of its receipt of notice as described in the
previous sentence that it will contribute the Auction Supplement Amount,
then the Trustee (or any financial advisor on its behalf) shall notify
promptly (but in any event no later than 3:00 p.m. New York time on the
Business Day following the Bid Determination Date) the Winning Bidder that
its bid was the highest bid and shall provide wiring instructions for
payment of the bid amount into the Certificate Account by 12:00 p.m. New
York time on the second Business Day following the Bid Determination Date
and, if applicable, provide the Directing Certificateholder with wiring
instructions for payment of the Auction Supplement Amount into the
Certificate Account by such time.
(d) If such Winning Bidder does not wire the bid amount so that it
is received in the Certificate Account in immediately available funds by
12:00 p.m. New York time on the second Business Day following the Bid
Determination Date, the Trustee shall repeat the process specified in the
preceding paragraph with respect to the second highest bid, but only if
such bid is at least the Minimum Auction Amount or the Directing
Certificateholder agrees to pay the new Auction Supplement Amount. If no
other bids are available to be accepted pursuant to the preceding
sentence, or if the amount remitted by the Winning Bidder plus any Auction
Supplement Amount remitted by the Directing Certificateholder is less than
the Minimum Auction Amount, then the auction shall be considered to have
failed for all purposes.
(e) The Trustee shall not be liable with regard to the selection or
engagement of, or for any act or omission of, a financial advisor pursuant
to this Section 9.04 if the Trustee engages CHL to be such financial
advisor.
(f) In the event of a Successful Auction and so long as the Winning
Bidder has wired its bid amount (and the Directing Certificateholder has
wired any Auction Supplement Amount, if applicable) to the Certificate
Account as provided above, then the Trustee shall promptly convey to the
Winning Bidder the Mortgage Loans and REO Properties owned by the Trust
Fund. The Master Servicer shall take all reasonable actions requested by
the Trustee to effect such conveyance, including remitting to the
Distribution Account from the Certificate Account, on the Business Day
prior to the Distribution Date on which final distribution on the
Certificates is required to be paid under this Agreement, all amounts on
deposit in the Certificate Account, net of any amounts permitted to be
withdrawn pursuant to Section 3.08(a) and amounts owing to the Trustee in
reimbursement of its reasonable costs, including expenses associated with
engaging any financial advisor, incurred in connection with the auction
process. Such amounts owed to the Trustee shall be withdrawn from the
Certificate Account by the Master Servicer and paid to the Trustee.
(g) Any amount paid by the Winning Bidder in excess of the Minimum
Auction Amount shall be distributed by the Trustee pro rata to the Class C
Certificates on the Distribution Date on which the final distribution on
the Certificates is made.
(h) In the event of a Successful Auction and to the extent the Swap
Contract is still outstanding, the Directing Certificateholder shall
either:
164
(1) if any Swap Termination Payment would be payable by the Swap
Contract Administrator to the Swap Counterparty were the Swap Contract to
be terminated following final distribution on the Certificates, either:
(A) pay to the Swap Contract Administrator any such Swap Termination
Payment; or
(B) accept assignment of the Swap Contract to the extent that
the Directing Certificateholder is an acceptable counterparty for
the Swap Counterparty;
(2) if any Swap Termination Payment would be payable by the Swap
Counterparty to the Swap Contract Administrator were the Swap Contract to
be terminated following final distribution on the Certificates, either
(A) (i) if the Directing Certificateholder does not own 100%
of the Class C Certificates, accept assignment of the Swap Contract
to the extent that the Directing Certificateholder is an acceptable
counterparty for the Swap Counterparty and pay to the Swap Contract
Administrator the Swap Termination Payment that would be owed to the
Swap Contact Administrator by the Swap Counterparty if the Swap
Contract were terminated by the Swap Contract Administrator
following distribution on the Certificates or (ii) if the Directing
Certificateholder owns 100% of the Class C Certificates, accept
assignment of the Swap Contract to the extent that the Directing
Certificateholder is an acceptable counterparty for the Swap
Counterparty; or
(B) instruct the Swap Contract Administrator to accept from
the Swap Counterparty any Swap Termination Payment that would be
owed to the Swap Contract Administrator.
(i) Any amounts paid to the Swap Contract Administrator pursuant to
subsection (h)(2) above shall be distributed to the Class C Certificates, pro
rata, based on entitlement, by the Swap Contract Administrator.
(j) The Master Servicer may purchase the Mortgage Loans and REO
Properties owned by the Trust Fund for its own account pursuant to Section 9.01
or consent to the NIM Insurer's purchase of the Mortgage Loans and REO
Properties owned by the Trust Fund pursuant to Section 9.01 only if (1) the
Directing Certificateholder chooses not to request an auction as described above
or if the immediately preceding auction is unsuccessful or (2) the Master
Servicer notifies the Directing Certificateholder no later than 30 days prior to
the date on which the Master Servicer or the NIM Insurer, as applicable, intends
to effect the purchase of the Mortgage Loans and REO Properties owned by the
Trust Fund and the Directing Certificateholder does not direct the Trustee to
conduct an auction prior to the end of that 30-day period.
(k) If the Directing Certificateholder pays any Auction Supplement
Amount pursuant to Section 9.04(c) or any Swap Termination Payment pursuant to
Section 9.04(h)(1)(A), on the final Distribution Date any amounts to be
distributed to the Class C Certificates pursuant
165
to Section 4.02 will be distributed as follows, first to the Directing
Certificateholder, in an amount up to the sum of such Auction Supplement Amount
and such Swap Termination Payment and second to the Class C Certificates, pro
rata. For federal income tax purposes, such Auction Supplement Amount and such
Swap Termination Payment so distributed shall be deemed paid pro rata to the
Class C Certificates, and the portion of such amounts deemed distributed to
holders of the Class C Certificates other than the Directing Certificateholder
shall be deemed paid from such other holders to the Directing Certificateholder.
ARTICLE X.
MISCELLANEOUS PROVISIONS
Section 10.01 Amendment.
This Agreement may be amended from time to time by the Depositor,
the Master Servicer, the Sellers, the Trustee and the Co-Trustee with the
consent of the NIM Insurer, without the consent of any of the Certificateholders
(i) to cure any ambiguity, (ii) to correct or supplement any provisions herein,
(iii) to conform this Agreement to the Prospectus Supplement or the Prospectus,
(iv) to modify, alter, amend, add to or rescind any of the terms or provisions
contained in this Agreement to comply with any rules or regulations promulgated
by the Securities and Exchange Commission from time to time, or (v) to make such
other provisions with respect to matters or questions arising under this
Agreement, as shall not be inconsistent with any other provisions herein if such
action shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Certificateholder; provided that any such
amendment shall be deemed not to adversely affect in any material respect the
interests of the Certificateholders and no such Opinion of Counsel shall be
required if the Person requesting such amendment obtains a letter from each
Rating Agency stating that such amendment would not result in the downgrading or
withdrawal of the respective ratings then assigned to the Certificates, it being
understood and agreed that any such letter in and of itself will not represent a
determination as to the materiality of any such amendment and will represent a
determination only as to the credit issues affecting any such rating. Any
amendment described above made solely to conform this Agreement to the
Prospectus or the Prospectus Supplement shall be deemed not to adversely affect
in any material respect the interests of the Certificateholders. Notwithstanding
the foregoing, no amendment that significantly changes the permitted activities
of the trust created by this Agreement may be made without the consent of
Certificateholders representing not less than 51% of the Voting Rights of each
Class of Certificates affected by such amendment. Each party to this Agreement
hereby agrees that it will cooperate with each other party in amending this
Agreement pursuant to clause (iv) above.
The Trustee, the Co-Trustee, the Depositor, the Master Servicer and
the Sellers with the consent of the NIM Insurer may also at any time and from
time to time amend this Agreement, without the consent of the
Certificateholders, to modify, eliminate or add to any of its provisions to such
extent as shall be necessary or appropriate to maintain the qualification of the
Trust Fund as a REMIC under the Code or to avoid or minimize the risk of the
imposition of any tax on the Trust Fund pursuant to the Code that would be a
claim against the Trust Fund at any time prior to the final redemption of the
Certificates, provided that the Trustee has been provided an Opinion of Counsel,
which opinion shall be an expense of the party requesting such
166
opinion but in any case shall not be an expense of the Trustee, to the effect
that such action is necessary or appropriate to maintain such qualification or
to avoid or minimize the risk of the imposition of such a tax.
This Agreement may also be amended from time to time by the
Depositor, the Master Servicer, the Sellers, the Trustee and the Co-Trustee with
the consent of the NIM Insurer and the Holders of each Class of Certificates
affected thereby evidencing not less than 51% of the Voting Rights of such Class
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Holders of Certificates; provided that no such
amendment shall (i) reduce in any manner the amount of, or delay the timing of,
payments required to be distributed on any Certificate without the consent of
the Holder of such Certificate, (ii) adversely affect in any material respect
the interests of the Holders of any Class of Certificates in a manner other than
as described in (i), without the consent of the Holders of Certificates of such
Class evidencing 66% or more of the Voting Rights of such Class, or (iii) reduce
the aforesaid percentages of Certificates the Holders of which are required to
consent to any such amendment without the consent of the Holders of all such
Certificates then outstanding.
Notwithstanding any contrary provision of this Agreement, no
amendment shall adversely affect in any material respect the Swap Counterparty
without at least ten Business Days' prior notice to the Swap Counterparty and
without the prior written consent of the Swap Counterparty, which consent shall
not be unreasonably withheld. CHL shall provide the Swap Counterparty with prior
written notice of any proposed material amendment of this Agreement.
Notwithstanding any contrary provision of this Agreement, the
Trustee and the NIM Insurer shall not consent to any amendment to this Agreement
unless each shall have first received an Opinion of Counsel satisfactory to the
Trustee and the NIM Insurer, which opinion shall be an expense of the party
requesting such amendment but in any case shall not be an expense of the Trustee
or the NIM Insurer, to the effect that such amendment will not cause the
imposition of any tax on the Trust Fund or the Certificateholders or cause any
REMIC formed hereunder to fail to qualify as a REMIC at any time that any
Certificates are outstanding.
Promptly after the execution of any amendment to this Agreement, the
Trustee shall furnish written notification of the substance of such amendment to
the Swap Counterparty, to each Certificateholder (if the consent of
Certificateholders is required) and each Rating Agency.
It shall not be necessary for the consent of Certificateholders
under this Section to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
regulations as the Trustee may prescribe.
Nothing in this Agreement shall require the Trustee to enter into an
amendment without receiving an Opinion of Counsel, reasonably satisfactory to
the Trustee and the NIM Insurer that (i) such amendment is permitted and is not
prohibited by this Agreement and that all requirements for amending this
Agreement have been complied with; and (ii) either (A) the
167
amendment does not adversely affect in any material respect the interests of any
Certificateholder or (B) the conclusion set forth in the immediately preceding
clause (A) is not required to be reached pursuant to this Section 10.01.
Section 10.02 Recordation of Agreement; Counterparts.
This Agreement is subject to recordation in all appropriate public
offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the properties subject to the Mortgages are
situated, and in any other appropriate public recording office or elsewhere,
such recordation to be effected by the Master Servicer at its expense.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 10.03 Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND
TO BE PERFORMED IN THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HERETO AND THE CERTIFICATEHOLDERS SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
Section 10.04 Intention of Parties.
(a) It is the express intent of the parties hereto that the
conveyance of the Mortgage Notes, Mortgages, assignments of Mortgages, title
insurance policies and any modifications, extensions and/or assumption
agreements and private mortgage insurance policies relating to the Mortgage
Loans by the Depositor to the Trustee be, and be construed as, an absolute sale
thereof to the Trustee. It is, further, not the intention of the parties that
such conveyance be deemed a pledge thereof by the Depositor to the Trustee.
However, in the event that, notwithstanding the intent of the parties, such
assets are held to be the property of the Depositor, or if for any other reason
this Agreement or any Subsequent Transfer Agreement is held or deemed to create
a security interest in such assets, then (i) this Agreement shall be deemed to
be a security agreement (within the meaning of the Uniform Commercial Code of
the State of New York) with respect to all such assets and security interests
and (ii) the conveyance provided for in this Agreement and any Subsequent
Transfer Agreement shall be deemed to be an assignment and a grant pursuant to
the terms of this Agreement by the Depositor to the Trustee, for the benefit of
the Certificateholders and the Swap Counterparty, of a security interest in all
of the assets that constitute the Trust Fund, whether now owned or hereafter
acquired.
The Depositor for the benefit of the Certificateholders, the NIM
Insurer and the Swap Counterparty shall, to the extent consistent with this
Agreement, take such actions as may be necessary to ensure that, if this
Agreement were deemed to create a security interest in the assets of the Trust
Fund, such security interest would be deemed to be a perfected security interest
of first priority under applicable law and will be maintained as such throughout
the term
168
of the Agreement. The Depositor shall arrange for filing any Uniform Commercial
Code continuation statements in connection with any security interest granted or
assigned to the Trustee for the benefit of the Certificateholders and the Swap
Counterparty.
(b) The Depositor hereby represents that:
(i) This Agreement creates a valid and continuing security
interest (as defined in the Uniform Commercial Code as enacted in
the State of New York (the "NY UCC")) in the Mortgage Notes in favor
of the Trustee, which security interest is prior to all other liens,
and is enforceable as such as against creditors of and purchasers
from the Depositor.
(ii) The Mortgage Notes constitute "instruments" within the
meaning of the NY UCC.
(iii) Immediately prior to the assignment of each Mortgage
Loan to the Trustee, the Depositor owns and has good and marketable
title to such Mortgage Loan free and clear of any lien, claim or
encumbrance of any Person.
(iv) The Depositor has received all consents and approvals
required by the terms of the Mortgage Loans to the sale of the
Mortgage Loans hereunder to the Trustee.
(v) All original executed copies of each Mortgage Note that
are required to be delivered to the Co-Trustee pursuant to Section
2.01 have been delivered to the Co-Trustee.
(vi) Other than the security interest granted to the Trustee
pursuant to this Agreement, the Depositor has not pledged, assigned,
sold, granted a security interest in, or otherwise conveyed any of
the Mortgage Loans. The Depositor has not authorized the filing of
and is not aware of any financing statements against the Depositor
that include a description of collateral covering the Mortgage Loans
other than any financing statement relating to the security interest
granted to the Trustee hereunder or that has been terminated. The
Depositor is not aware of any judgment or tax lien filings against
the Depositor.
(c) The Master Servicer shall take such action as is reasonably
necessary to maintain the perfection and priority of the security interest of
the Trustee in the Mortgage Loans; provided, however, that the obligation to
deliver the Mortgage File to the Co-Trustee pursuant to Section 2.01 shall be
solely the Depositor's obligation and the Master Servicer shall not be
responsible for the safekeeping of the Mortgage Files by the Co-Trustee.
(d) It is understood and agreed that the representations and
warranties set forth in subsection (b) above shall survive delivery of the
Mortgage Files to the Co-Trustee. Upon discovery by the Depositor or the Trustee
of a breach of any of the foregoing representations and warranties set forth in
subsection (b) above, which breach materially and adversely affects the interest
of the Certificateholders, the party discovering such breach shall give prompt
written notice to the others and to each Rating Agency.
169
Section 10.05 Notices.
(a) The Trustee shall use its best efforts to promptly provide
notice to each Rating Agency and the Swap Counterparty with respect to each of
the following of which it has actual knowledge:
(1) Any material change or amendment to this Agreement;
(2) The occurrence of any Event of Default that has not been
cured;
(3) The resignation or termination of the Master Servicer or
the Trustee and the appointment of any successor;
(4) The repurchase or substitution of Mortgage Loans pursuant
to Sections 2.02, 2.03, 2.04 and 3.12; and
(5) The final payment to Certificateholders.
(b) In addition, the Trustee shall promptly furnish to each Rating
Agency copies of the following:
(1) Each report to Certificateholders described in Section
4.05;
(2) Each annual statement as to compliance described in
Section 3.17; and
(3) Each annual independent public accountants' servicing
report described in Section 11.07.
(c) All directions, demands and notices hereunder shall be in
writing and shall be deemed to have been duly given when sent by facsimile
transmission, first class mail or delivered to (i) in the case of the Depositor,
CWABS, Inc., 0000 Xxxx Xxxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000, facsimile number:
(000) 000-0000, Attention: Xxxx Xxxxx, or such other address as may be hereafter
furnished to the Sellers, the Master Servicer and the Trustee by the Depositor
in writing; (ii) in the case of CHL, Countrywide Home Loans, Inc., 0000 Xxxx
Xxxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000, facsimile number (000) 000-0000,
Attention: Xxxx Xxxxx, or such other address as may be hereafter furnished to
the Depositor, the Master Servicer and the Trustee by the Sellers in writing;
(iii) in the case of Park Monaco, Park Monaco Inc., 0000 Xxxx Xxxxxxx,
Xxxxxxxxx, Xxxxxxxxxx 00000, facsimile number (000) 000-0000, Attention: Xxxx
Xxx, or such other address as may be hereafter furnished to the Depositor, the
Master Servicer and the Trustee by the Sellers in writing; (iv) in the case of
Park Sienna, Park Sienna LLC, 0000 Xxxx Xxxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000,
facsimile number (000) 000-0000, Attention: Xxxx Xxx, or such other address as
may be hereafter furnished to the Depositor, the Master Servicer and the Trustee
by the Sellers in writing; (v) in the case of the Master Servicer, Countrywide
Home Loans Servicing LP, 0000 Xxxxxxxxx Xxxxx, Xxxxx, Xxxxx 00000, facsimile
number (000) 000-0000, Attention: Xxxx Xxxx or such other address as may be
hereafter furnished to the Depositor, the Sellers and the Trustee by the Master
Servicer in writing; (vi) in the case of the Trustee, The Bank of New York, 000
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
170
Corporate Trust MBS Administration, CWABS, Series 2006-21, or such other address
as the Trustee may hereafter furnish to the parties hereto; (vii) in the case of
the Co-Trustee, The Bank of New York Trust Company, N.A., 0000 Xxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxxxx 00000, Attention: MBS Support Services, or such other
address as the Co-Trustee may hereafter furnish to the Depositor, the Master
Servicer and the Trustee; (viii) in the case of the Rating Agencies, (x) Xxxxx'x
Investors Service, Inc., Attention: ABS Monitoring Department, 00 Xxxxxx Xxxxxx,
Xxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, and (y) Standard & Poor's Ratings
Services, a division of The XxXxxx-Xxxx Companies, Attention: Mortgage
Surveillance Group, 00 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000; and
(viii) in the case of the Swap Counterparty, Bear Xxxxxxx Financial Products
Inc., Attention: Derivatives Documentation, Facsimile: (000) 000-0000,
Telephone: (000) 000-0000, or such other address as may be hereafter furnished
by the Swap Counterparty. Notices to Certificateholders shall be deemed given
when mailed, first postage prepaid, to their respective addresses appearing in
the Certificate Register.
Section 10.06 Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
Section 10.07 Assignment.
Notwithstanding anything to the contrary contained herein, except as
provided pursuant to Section 6.02, this Agreement may not be assigned by the
Master Servicer without the prior written consent of the Trustee and the
Depositor.
Section 10.08 Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate
to terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representative or heirs to claim an accounting or to
take any action or commence any proceeding in any court for a petition or
winding up of the Trust Fund, or otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
No Certificateholder shall have any right to vote (except as
provided herein) or in any manner otherwise control the operation and management
of the Trust Fund, or the obligations of the parties hereto, nor shall anything
herein set forth or contained in the terms of the Certificates be construed so
as to constitute the Certificateholders from time to time as partners or members
of an association; nor shall any Certificateholder be under any liability to any
third party by reason of any action taken by the parties to this Agreement
pursuant to any provision hereof.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Agreement,
unless such Holder previously shall have given to the Trustee a written notice
of an Event of Default and of the continuance thereof, as hereinbefore
171
provided, the Holders of Certificates evidencing not less than 25% of the Voting
Rights shall also have made written request to the Trustee to institute such
action, suit or proceeding in its own name as Trustee hereunder and shall have
offered to the Trustee such reasonable indemnity as it may require against the
costs, expenses, and liabilities to be incurred therein or thereby, and the
Trustee, for 60 days after its receipt of such notice, request and offer of
indemnity shall have neglected or refused to institute any such action, suit or
proceeding; it being understood and intended, and being expressly covenanted by
each Certificateholder with every other Certificateholder and the Trustee, that
no one or more Holders of Certificates shall have any right in any manner
whatever by virtue or by availing itself or themselves of any provisions of this
Agreement to affect, disturb or prejudice the rights of the Holders of any other
of the Certificates, or to obtain or seek to obtain priority over or preference
to any other such Holder or to enforce any right under this Agreement, except in
the manner herein provided and for the common benefit of all Certificateholders.
For the protection and enforcement of the provisions of this Section 10.08, each
and every Certificateholder and the Trustee shall be entitled to such relief as
can be given either at law or in equity.
Section 10.09 Inspection and Audit Rights.
The Master Servicer agrees that, on reasonable prior notice, it will
permit any representative of the Depositor, any Seller, the NIM Insurer or the
Trustee during the Master Servicer's normal business hours, to examine all the
books of account, records, reports and other papers of the Master Servicer
relating to the Mortgage Loans, to make copies and extracts therefrom, to cause
such books to be audited by independent certified public accountants selected by
the Depositor, a Seller, the NIM Insurer or the Trustee and to discuss its
affairs, finances and accounts relating to the Mortgage Loans with its officers,
employees and independent public accountants (and by this provision the Master
Servicer hereby authorizes such accountants to discuss with such representative
such affairs, finances and accounts), all at such reasonable times and as often
as may be reasonably requested. Any out-of-pocket expense incident to the
exercise by the Depositor, any Seller, the NIM Insurer or the Trustee of any
right under this Section 10.09 shall be borne by the party requesting such
inspection; all other such expenses shall be borne by the Master Servicer.
Section 10.10 Certificates Nonassessable and Fully Paid.
It is the intention of the Depositor that Certificateholders shall
not be personally liable for obligations of the Trust Fund, that the interests
in the Trust Fund represented by the Certificates shall be nonassessable for any
reason whatsoever, and that the Certificates, upon due authentication thereof by
the Trustee pursuant to this Agreement, are and shall be deemed fully paid.
Section 10.11 Rights of NIM Insurer.
(a) The rights of the NIM Insurer under this Agreement shall exist
only so long as either:
(1) the notes certain payments on which are guaranteed by the
NIM Insurer remain outstanding or
172
(2) the NIM Insurer is owed amounts paid by it with respect to
that guaranty.
(b) The rights of the NIM Insurer under this Agreement are
exercisable by the NIM Insurer only so long as no default by the NIM Insurer
under its guaranty of certain payments under notes backed or secured by the
Class C or Class P Certificates has occurred and is continuing. If the NIM
Insurer is the subject of any insolvency proceeding, the rights of the NIM
Insurer under this Agreement will be exercisable by the NIM Insurer only so long
as:
(1) the obligations of the NIM Insurer under its guaranty of
notes backed or secured by the Class C or Class P Certificates have not
been disavowed and
(2) CHL and the Trustee have received reasonable assurances
that the NIM Insurer will be able to satisfy its obligations under its
guaranty of notes backed or secured by the Class C or Class P
Certificates.
(c) The NIM Insurer is a third party beneficiary of this Agreement
to the same extent as if it were a party to this Agreement and may enforce any
of those rights under this Agreement.
(d) A copy of any documents of any nature required by this Agreement
to be delivered by the Trustee, or to the Trustee or the Rating Agencies, shall
in each case at the same time also be delivered to the NIM Insurer. Any notices
required to be given by the Trustee, or to the Trustee or the Rating Agencies,
shall in each case at the same time also be given to the NIM Insurer. If the
Trustee receives a notice or document that is required hereunder to be delivered
to the NIM Insurer, and if such notice or document does not indicate that a copy
thereof has been previously sent to the NIM Insurer, the Trustee shall send the
NIM Insurer a copy of such notice or document. If such document is an Opinion of
Counsel, the NIM Insurer shall be an addressee thereof or such Opinion of
Counsel shall contain language permitting the NIM Insurer to rely thereon as if
the NIM Insurer were an addressee thereof.
(e) Anything in this Agreement that is conditioned on not resulting
in the downgrading or withdrawal of the ratings then assigned to the
Certificates by the Rating Agencies shall also be conditioned on not resulting
in the downgrading or withdrawal of the ratings then assigned by the Rating
Agencies to the notes backed or secured by the Class C or Class P Certificates
(without giving effect to any policy or guaranty provided by the NIM Insurer).
173
ARTICLE XI.
EXCHANGE ACT REPORTING
Section 11.01 Filing Obligations.
The Master Servicer, the Trustee and each Seller shall reasonably
cooperate with the Depositor in connection with the satisfaction of the
Depositor's reporting requirements under the Exchange Act with respect to the
Trust Fund. In addition to the information specified below, if so requested by
the Depositor for the purpose of satisfying its reporting obligation under the
Exchange Act, the Master Servicer, the Trustee and each Seller shall (and the
Master Servicer shall cause each Subservicer to) provide the Depositor with (a)
such information which is available to such Person without unreasonable effort
or expense and within such timeframe as may be reasonably requested by the
Depositor to comply with the Depositor's reporting obligations under the
Exchange Act and (b) to the extent such Person is a party (and the Depositor is
not a party) to any agreement or amendment required to be filed, copies of such
agreement or amendment in XXXXX-compatible form.
Section 11.02 Form 10-D Filings.
(a) In accordance with the Exchange Act, the Trustee shall prepare
for filing and file within 15 days after each Distribution Date (subject to
permitted extensions under the Exchange Act) with the Commission with respect to
the Trust Fund, a Form 10-D with copies of the Monthly Statement and, to the
extent delivered to the Trustee, no later than 10 days following the
Distribution Date, such other information identified by the Depositor or the
Master Servicer, in writing, to be filed with the Commission (such other
information, the "Additional Designated Information"). If the Depositor or
Master Servicer directs that any Additional Designated Information is to be
filed with any Form 10-D, the Depositor or Master Servicer, as the case may be,
shall specify the Item on Form 10-D to which such information is responsive and,
with respect to any Exhibit to be filed on Form 10-D, the Exhibit number. Any
information to be filed on Form 10-D shall be delivered to the Trustee in
XXXXX-compatible form or as otherwise agreed upon by the Trustee and the
Depositor or the Master Servicer, as the case may be, at the Depositor's
expense, and any necessary conversion to XXXXX-compatible format will be at the
Depositor's expense. At the reasonable request of, and in accordance with the
reasonable directions of, the Depositor or the Master Servicer, subject to the
two preceding sentences, the Trustee shall prepare for filing and file an
amendment to any Form 10-D previously filed with the Commission with respect to
the Trust Fund. The Master Servicer shall sign the Form 10-D filed on behalf of
the Trust Fund.
(b) No later than each Distribution Date, each of the Master
Servicer and the Trustee shall notify (and the Master Servicer shall cause any
Subservicer to notify) the Depositor and the Master Servicer of any Form 10-D
Disclosure Item, together with a description of any such Form 10-D Disclosure
Item in form and substance reasonably acceptable to the Depositor. In addition
to such information as the Master Servicer and the Trustee are obligated to
provide pursuant to other provisions of this Agreement, if so requested by the
Depositor, each of the Master Servicer and the Trustee shall provide such
information which is available to the Master Servicer and the Trustee, as
applicable, without unreasonable effort or expense regarding the performance or
servicing of the Mortgage Loans (in the case of the Trustee, based on the
174
information provided by the Master Servicer) as is reasonably required to
facilitate preparation of distribution reports in accordance with Item 1121 of
Regulation AB. Such information shall be provided concurrently with the
Remittance Reports in the case of the Master Servicer and the Monthly Statement
in the case of the Trustee, commencing with the first such report due not less
than five Business Days following such request.
(c) The Trustee shall not have any responsibility to file any items
(other than those generated by it) that have not been received in a format
suitable (or readily convertible into a format suitable) for electronic filing
via the XXXXX system and shall not have any responsibility to convert any such
items to such format (other than those items generated by it or that are readily
convertible to such format). The Trustee shall have no liability to the
Certificateholders, the Trust Fund, the Master Servicer, the Depositor or the
NIM Insurer with respect to any failure to properly prepare or file any of Form
10-D to the extent that such failure is not the result of any negligence, bad
faith or willful misconduct on its part.
Section 11.03 Form 8-K Filings.
The Master Servicer shall prepare and file on behalf of the Trust
Fund any Form 8-K required by the Exchange Act. Each Form 8-K must be signed by
the Master Servicer. Each of the Master Servicer (and the Master Servicer shall
cause any Subservicer to promptly notify) and the Trustee shall promptly notify
the Depositor and the Master Servicer (if the notifying party is not the Master
Servicer), but in no event later than one (1) Business Day after its occurrence,
of any Reportable Event of which it has actual knowledge. Each Person shall be
deemed to have actual knowledge of any such event to the extent that it relates
to such Person or any action or failure to act by such Person. Concurrently with
any Subsequent Transfer, CHL shall notify the Depositor and the Master Servicer,
if any material pool characteristic of the actual asset pool at the time of
issuance of the Certificates differs by 5% or more (other than as a result of
the pool assets converting into cash in accordance with their terms) from the
description of the asset pool in the Prospectus Supplement.
Section 11.04 Form 10-K Filings.
Prior to March 30th of each year, commencing in 2007 (or such
earlier date as may be required by the Exchange Act), the Depositor shall
prepare and file on behalf of the Trust Fund a Form 10-K, in form and substance
as required by the Exchange Act. A senior officer in charge of the servicing
function of the Master Servicer shall sign each Form 10-K filed on behalf of the
Trust Fund. Such Form 10-K shall include as exhibits each (i) annual compliance
statement described under Section 3.17, (ii) annual report on assessments of
compliance with servicing criteria described under Section 11.07 and (iii)
accountant's report described under Section 11.07. Each Form 10-K shall also
include any Xxxxxxxx-Xxxxx Certification required to be included therewith, as
described in Section 11.05.
If the Item 1119 Parties listed on Exhibit Z have changed since the
Closing Date, no later than March 1 of each year, the Master Servicer shall
provide each of the Master Servicer (and the Master Servicer shall provide any
Subservicer) and the Trustee with an updated Exhibit Z setting forth the Item
1119 Parties. No later than March 15 of each year, commencing in 2007, the
Master Servicer and the Trustee shall notify (and the Master Servicer shall
cause any
175
Subservicer to notify) the Depositor and the Master Servicer of any Form 10-K
Disclosure Item, together with a description of any such Form 10-K Disclosure
Item in form and substance reasonably acceptable to the Depositor. Additionally,
each of the Master Servicer and the Trustee shall provide, and shall cause each
Reporting Subcontractor retained by the Master Servicer or the Trustee, as
applicable, and in the case of the Master Servicer shall cause each Subservicer,
to provide, the following information no later than March 15 of each year in
which a Form 10-K is required to be filed on behalf of the Trust Fund: (i) if
such Person's report on assessment of compliance with servicing criteria
described under Section 11.07 or related registered public accounting firm
attestation report described under Section 11.07 identifies any material
instance of noncompliance, notification of such instance of noncompliance and
(ii) if any such Person's report on assessment of compliance with servicing
criteria or related registered public accounting firm attestation report is not
provided to be filed as an exhibit to such Form 10-K, information detailing the
explanation why such report is not included.
Section 11.05 Xxxxxxxx-Xxxxx Certification.
Each Form 10-K shall include a certification (the "Xxxxxxxx-Xxxxx
Certification") required by Rules 13a-14(d) and 15d-14(d) under the Exchange Act
(pursuant to Section 302 of the Xxxxxxxx-Xxxxx Act of 2002 and the rules and
regulations of the Commission promulgated thereunder (including any
interpretations thereof by the Commission's staff)). No later than March 15 of
each year, beginning in 2007, the Master Servicer and the Trustee shall (unless
such person is the Certifying Person), and the Master Servicer shall cause each
Subservicer and each Reporting Subcontractor and the Trustee shall cause each
Reporting Subcontractor to, provide to the Person who signs the Xxxxxxxx-Xxxxx
Certification (the "Certifying Person") a certification (each, a "Performance
Certification"), in the form attached hereto as Exhibit X-1 (in the case of a
Subservicer or any Reporting Subcontractor of the Master Servicer or a
Subservicer) and Exhibit X-2 (in the case of the Trustee or any Reporting
Subcontractor of the Trustee), on which the Certifying Person, the entity for
which the Certifying Person acts as an officer, and such entity's officers,
directors and Affiliates (collectively with the Certifying Person,
"Certification Parties") can reasonably rely. The senior officer in charge of
the servicing function of the Master Servicer shall serve as the Certifying
Person on behalf of the Trust Fund. Neither the Master Servicer nor the
Depositor will request delivery of a certification under this clause unless the
Depositor is required under the Exchange Act to file an annual report on Form
10-K with respect to the Trust Fund. In the event that prior to the filing date
of the Form 10-K in March of each year, the Trustee or the Depositor has actual
knowledge of information material to the Xxxxxxxx-Xxxxx Certification, the
Trustee or the Depositor, as the case may be, shall promptly notify the Master
Servicer and the Depositor. The respective parties hereto agree to cooperate
with all reasonable requests made by any Certifying Person or Certification
Party in connection with such Person's attempt to conduct any due diligence that
such Person reasonably believes to be appropriate in order to allow it to
deliver any Xxxxxxxx-Xxxxx Certification or portion thereof with respect to the
Trust Fund.
Section 11.06 Form 15 Filing.
Prior to January 30 of the first year in which the Depositor is able
to do so under applicable law, the Depositor shall file a Form 15 relating to
the automatic suspension of reporting in respect of the Trust Fund under the
Exchange Act.
176
Section 11.07 Report on Assessment of Compliance and
Attestation.
(a) On or before March 15 of each calendar year, commencing in 2007:
(1) Each of the Master Servicer and the Trustee shall deliver
to the Depositor and the Master Servicer a report (in form and substance
reasonably satisfactory to the Depositor) regarding the Master Servicer's
or the Trustee's, as applicable, assessment of compliance with the
Servicing Criteria during the immediately preceding calendar year, as
required under Rules 13a-18 and 15d-18 of the Exchange Act and Item 1122
of Regulation AB. Such report shall be signed by an authorized officer of
such Person and shall address each of the Servicing Criteria specified on
a certification substantially in the form of Exhibit Y hereto delivered to
the Depositor concurrently with the execution of this Agreement. To the
extent any of the Servicing Criteria are not applicable to such Person,
with respect to asset-backed securities transactions taken as a whole
involving such Person and that are backed by the same asset type backing
the Certificates, such report shall include such a statement to that
effect. The Depositor and the Master Servicer, and each of their
respective officers and directors shall be entitled to rely on upon each
such servicing criteria assessment.
(2) Each of the Master Servicer and the Trustee shall deliver
to the Depositor and the Master Servicer a report of a registered public
accounting firm reasonably acceptable to the Depositor that attests to,
and reports on, the assessment of compliance made by Master Servicer or
the Trustee, as applicable, and delivered pursuant to the preceding
paragraphs. Such attestation shall be in accordance with Rules
1-02(a)(3)and 2-02(g) of Regulation S-X under the Securities Act and the
Exchange Act, including, without limitation that in the event that an
overall opinion cannot be expressed, such registered public accounting
firm shall state in such report why it was unable to express such an
opinion. Such report must be available for general use and not contain
restricted use language. To the extent any of the Servicing Criteria are
not applicable to such Person, with respect to asset-backed securities
transactions taken as a whole involving such Person and that are backed by
the same asset type backing the Certificates, such report shall include
such a statement that that effect.
(3) The Master Servicer shall cause each Subservicer and each
Reporting Subcontractor to deliver to the Depositor an assessment of
compliance and accountant's attestation as and when provided in paragraphs
(a) and (b) of this Section 11.07.
(4) The Trustee shall cause each Reporting Subcontractor to
deliver to the Depositor and the Master Servicer an assessment of
compliance and accountant's attestation as and when provided in paragraphs
(a) and (b) of this Section.
(5) The Master Servicer and the Trustee shall execute (and the
Master Servicer shall cause each Subservicer to execute, and the Master
Servicer and the Trustee shall cause each Reporting Subcontractor to
execute) a reliance certificate to enable the Certification Parties to
rely upon each (i) annual compliance statement provided pursuant to
Section 3.17, (ii) annual report on assessments of compliance with
servicing criteria
177
provided pursuant to this Section 11.07 and (iii) accountant's report
provided pursuant to this Section 11.07 and shall include a certification
that each such annual compliance statement or report discloses any
deficiencies or defaults described to the registered public accountants of
such Person to enable such accountants to render the certificates provided
for in this Section 11.07.
(b) In the event the Master Servicer, any Subservicer, the Trustee
or Reporting Subcontractor is terminated or resigns during the term of this
Agreement, such Person shall provide documents and information required by this
Section 11.07 with respect to the period of time it was subject to this
Agreement or provided services with respect to the Trust Fund, the Certificates
or the Mortgage Loans.
(c) Each assessment of compliance provided by a Subservicer pursuant
to Section 11.07(a)(3)shall address each of the Servicing Criteria specified on
a certification substantially in the form of Exhibit Y hereto delivered to the
Depositor concurrently with the execution of this Agreement or, in the case of a
Subservicer subsequently appointed as such, on or prior to the date of such
appointment. An assessment of compliance provided by a Subcontractor pursuant to
Section 11.07(a)(3)or (4) need not address any elements of the Servicing
Criteria other than those specified by the Master Servicer or the Trustee, as
applicable, pursuant to Section 11.07(a)(1).
Section 11.08 Use of Subservicers and Subcontractors.
(a) The Master Servicer shall cause any Subservicer used by the
Master Servicer (or by any Subservicer) for the benefit of the Depositor to
comply with the provisions of Section 3.17 and this Article XI to the same
extent as if such Subservicer were the Master Servicer (except with respect to
the Master Servicer's duties with respect to preparing and filing any Exchange
Act Reports or as the Certifying Person). The Master Servicer shall be
responsible for obtaining from each Subservicer and delivering to the Depositor
any servicer compliance statement required to be delivered by such Subservicer
under Section 3.17, any assessment of compliance and attestation required to be
delivered by such Subservicer under Section 11.07 and any certification required
to be delivered to the Certifying Person under Section 11.05 as and when
required to be delivered. As a condition to the succession to any Subservicer as
subservicer under this Agreement by any Person (i) into which such Subservicer
may be merged or consolidated, or (ii) which may be appointed as a successor to
any Subservicer, the Master Servicer shall provide to the Depositor, at least 15
calendar days prior to the effective date of such succession or appointment, (x)
written notice to the Depositor of such succession or appointment and (y) in
writing and in form and substance reasonably satisfactory to the Depositor, all
information reasonably requested by the Depositor in order to comply with its
reporting obligation under Item 6.02 of Form 8-K.
(b) It shall not be necessary for the Master Servicer, any
Subservicer or the Trustee to seek the consent of the Depositor or any other
party hereto prior to the utilization of any Subcontractor. The Master Servicer
or the Trustee, as applicable, shall promptly upon request provide to the
Depositor (or any designee of the Depositor, such as the Master Servicer or
administrator) a written description (in form and substance satisfactory to the
Depositor) of the role and function of each Subcontractor utilized by such
Person (or in the case of the Master
178
Servicer, any Subservicer), specifying (i) the identity of each such
Subcontractor, (ii) which (if any) of such Subcontractors are "participating in
the servicing function" within the meaning of Item 1122 of Regulation AB, and
(iii) which elements of the Servicing Criteria will be addressed in assessments
of compliance provided by each Subcontractor identified pursuant to clause (ii)
of this paragraph.
As a condition to the utilization of any Subcontractor determined to
be a Reporting Subcontractor, the Master Servicer or the Trustee, as applicable,
shall cause any such Subcontractor used by such Person (or in the case of the
Master Servicer, any Subservicer) for the benefit of the Depositor to comply
with the provisions of Sections 11.07 and 11.09 of this Agreement to the same
extent as if such Subcontractor were the Master Servicer (except with respect to
the Master Servicer's duties with respect to preparing and filing any Exchange
Act Reports or as the Certifying Person) or the Trustee, as applicable. The
Master Servicer or the Trustee, as applicable, shall be responsible for
obtaining from each Subcontractor and delivering to the Depositor and the Master
Servicer, any assessment of compliance and attestation required to be delivered
by such Subcontractor under Section 11.05 and Section 11.07, in each case as and
when required to be delivered.
Section 11.09 Amendments.
In the event the parties to this Agreement desire to further clarify
or amend any provision of this Article XI, this Agreement shall be amended to
reflect the new agreement between the parties covering matters in this Article
XI pursuant to Section 10.01, which amendment shall not require any Opinion of
Counsel or Rating Agency confirmations or the consent of any Certificateholder
or the NIM Insurer.
If, during the period that the Depositor is required to file
Exchange Act Reports with respect to the Trust Fund, the Master Servicer is no
longer an Affiliate of the Depositor, the Depositor shall assume the obligations
and responsibilities of the Master Servicer in this Article XI with respect to
the preparation and filing of the Exchange Act Reports and/or acting as the
Certifying Person, if the Depositor has received indemnity from such successor
Master Servicer satisfactory to the Depositor, and such Master Servicer has
agreed to provide a Xxxxxxxx-Xxxxx Certification to the Depositor substantially
in the form of Exhibit AA and the certifications referred to in Section 11.07.
Section 11.10 Reconciliation of Accounts.
Any reconciliation of Accounts performed by any party hereto, or any
Subservicer or Subcontractor shall be prepared no later than 45 calendar days
after the bank statement cut-off date.
179
IN WITNESS WHEREOF, the parties hereto have caused their names to be
signed hereto by their respective officers thereunto duly authorized as of the
day and year first above written.
CWABS, INC.,
as Depositor
By: /s/ Xxxxxx Xxxxx
-------------------
Name: Xxxxxx Xxxxx
Title: Vice President
COUNTRYWIDE HOME LOANS, INC.,
as a Seller
By: /s/ Xxxxxx Xxxxx
-------------------
Name: Xxxxxx Xxxxx
Title: Executive Vice President
PARK MONACO INC.,
as a Seller
By: /s/ Xxxxxx Xxxxx
-------------------
Name: Xxxxxx Xxxxx
Title: Vice President
PARK SIENNA LLC,
as a Seller
By: /s/ Xxxxxx Xxxxx
-------------------
Name: Xxxxxx Xxxxx
Title: Assistant Vice President
COUNTRYWIDE HOME LOANS SERVICING LP,
as Master Servicer
By: COUNTRYWIDE GP, INC.
By: /s/ Xxxxxx Xxxxx
-------------------
Name: Xxxxxx Xxxxx
Title: Senior Vice President
THE BANK OF NEW YORK,
as Trustee
By: /s/ Xxxxxxx Xxxxxxx
-------------------
Name: Xxxxxxx Xxxxxxx
Title: Assistant Treasurer
THE BANK OF NEW YORK (solely with respect to
its obligations under Section 4.01(d))
By: /s/ Xxxx Xxxxxxxx
---------------------
Name: Xxxx Xxxxxxxx
Title: Vice President
THE BANK OF NEW YORK TRUST COMPANY, N.A.
as Co-Trustee
By: /s/ Xxxxxx Xxxxx
----------------
Name: Xxxxxx Xxxxx
Title: Vice President
STATE OF CALIFORNIA )
) ss.:
COUNTY OF LOS ANGELES )
On this 30th day of November, 2006, before me, a notary public in
and for said State, appeared Xxxxxx Xxxxx, personally known to me on the basis
of satisfactory evidence to be a Executive Vice President of Countrywide Home
Loans, Inc., one of the corporations that executed the within instrument, and
also known to me to be the person who executed it on behalf of such corporation
and acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Xxxxxx Xxxxxx
-------------------------
Notary Public
[Notarial Seal]
STATE OF CALIFORNIA )
) ss.:
COUNTY OF LOS ANGELES )
On this 30th day of November, 2006, before me, a notary public in
and for said State, appeared Xxxxxx Xxxxx, personally known to me on the basis
of satisfactory evidence to be a Senior Vice President of Countrywide GP, Inc.,
the parent company of Countrywide Home Loans Servicing LP, one of the
organizations that executed the within instrument, and also known to me to be
the person who executed it on behalf of such limited partnership and
acknowledged to me that such limited partnership executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Xxxxxx Xxxxxx
-------------------------
Notary Public
[Notarial Seal]
STATE OF CALIFORNIA )
) ss.:
COUNTY OF LOS ANGELES )
On this 30th day of November, 2006, before me, a notary public in
and for said State, appeared Xxxxxx Xxxxx, personally known to me on the basis
of satisfactory evidence to be a Vice President of CWABS, Inc., one of the
corporations that executed the within instrument, and also known to me to be the
person who executed it on behalf of such corporation and acknowledged to me that
such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Xxxxxx Xxxxxx
-------------------------
Notary Public
[Notarial Seal]
STATE OF CALIFORNIA )
) ss.:
COUNTY OF LOS ANGELES )
On this 30th day of November, 2006, before me, a notary public in
and for said State, appeared Xxxxxx Xxxxx, personally known to me on the basis
of satisfactory evidence to be a Vice President of Park Monaco Inc., one of the
corporations that executed the within instrument, and also known to me to be the
person who executed it on behalf of such corporation and acknowledged to me that
such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Xxxxxx Xxxxxx
-------------------------
Notary Public
[Notarial Seal]
STATE OF CALIFORNIA )
) ss.:
COUNTY OF LOS ANGELES )
On this 30th day of November, 2006, before me, a notary public in
and for said State, appeared Xxxxxx Xxxxx, personally known to me on the basis
of satisfactory evidence to be an Assistant Vice President of Park Sienna LLC,
one of the entities that executed the within instrument, and also known to me to
be the person who executed it on behalf of such entity and acknowledged to me
that such entity executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Xxxxxx Xxxxxx
-------------------------
Notary Public
[Notarial Seal]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 30th day of November, 2006 before me, a notary public in and
for said State, appeared Xxxxxxx Xxxxxxx, personally known to me on the basis of
satisfactory evidence to be an Assistant Treasurer of The Bank of New York, a
New York banking corporation that executed the within instrument, and also known
to me to be the person who executed it on behalf of such corporation, and
acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Xxxxxx Xxxxxxx
----------------------------
Notary Public
[Notarial Seal]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 30th day of November, 2006 before me, a notary public in and
for said State, appeared Xxxx Xxxxxxxx, personally known to me on the basis of
satisfactory evidence to be a Vice President of The Bank of New York, a New York
banking corporation that executed the within instrument, and also known to me to
be the person who executed it on behalf of such corporation, and acknowledged to
me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Xxxxxx Xxxxxxx
----------------------------
Notary Public
[Notarial Seal]
STATE OF CALIFORNIA )
) ss.:
COUNTY OF LOS ANGELES )
On this 30th day of November, 2006, before me, a notary public in
and for said State, appeared Xxxxxx Xxxxx, personally known to me on the basis
of satisfactory evidence to be a Vice President of The Bank of New York Trust
Company, N.A., one of the corporations that executed the within instrument, and
also known to me to be the person who executed it on behalf of such corporation
and acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Xxxxxx Xxxxxx Xxxxxxxx Xx.
--------------------------------------
Notary Public
[Notarial Seal]
Exhibits A-1
through A-15
[Exhibits A-1 through A-15 are photocopies of such
Certificates as delivered.]
[See appropriate documents delivered at closing.]
A-1
Exhibit B
Exhibit B is a photocopy
of the Class P Certificates
as delivered.
[See appropriate document delivered at closing.]
B-1
Exhibit C
Exhibit C is a photocopy
of the Class C Certificates
as delivered.
[See appropriate document delivered at closing.]
C-1
Exhibit D
Exhibit D is a photocopy
of the Class A-R Certificate
as delivered.
[See appropriate documents delivered at closing.]
D-1
Exhibit E
Exhibit E is a photocopy
of the Tax Matters Person Certificate
as delivered.
[See appropriate documents delivered at closing.]
E-1
Exhibit F-1 and F-2
[Exhibits F-1 and F-2 are schedules of Mortgage Loans]
[Delivered to Trustee at closing and on file with the Trustee.]
F-1
EXHIBIT G-1
FORM OF INITIAL CERTIFICATION OF TRUSTEE
[Date]
[Depositor]
[Sellers]
[Master Servicer]
Re: CWABS Asset-Backed Certificates, Series 2006-21
Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing
Agreement dated as of November 1, 2006 (the "Pooling and Servicing Agreement")
among CWABS, Inc., as Depositor, Countrywide Home Loans, Inc., as a Seller, Park
Monaco Inc., as a Seller, Park Sienna LLC, as a Seller, Countrywide Home Loans
Servicing LP, as Master Servicer, the undersigned, as Trustee, and The Bank of
New York Trust Company, N.A., as Co-Trustee, the undersigned, as Trustee, hereby
certifies that, as to each Mortgage Loan listed in the Mortgage Loan Schedule
(other than any Mortgage Loan paid in full or listed in the attached list of
exceptions) the Co-Trustee has received:
(i) the original Mortgage Note, endorsed by manual or facsimile
signature in blank in the following form: "Pay to the order of ______________,
without recourse", or, if the original Mortgage Note has been lost or destroyed
and not replaced, an original lost note affidavit, stating that the original
Mortgage Note was lost or destroyed, together with a copy of the related
Mortgage Note; and
(ii) a duly executed assignment of the Mortgage or a copy of such
assignment, in either case in the form permitted by Section 2.01 of the Pooling
and Servicing Agreement.
Based on its review and examination and only as to the foregoing
documents, such documents appear regular on their face and related to such
Mortgage Loan.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Pooling and Servicing Agreement. The Trustee makes no representations as to: (i)
the validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in each Mortgage File of any of the Mortgage Loans
identified on the Mortgage Loan Schedule or (ii) the collectibility,
insurability, effectiveness or suitability of any such Mortgage Loan.
G-1-1
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
The Bank of New York,
as Trustee
By:
----------------------------------
Name:
Title:
G-1-2
EXHIBIT G-2
FORM OF INTERIM CERTIFICATION OF TRUSTEE
[Date]
[Depositor]
[Sellers]
[Master Servicer]
Re: CWABS Asset-Backed Certificates, Series 2006-21
Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing
Agreement dated as of November 1, 2006 (the "Pooling and Servicing Agreement")
among CWABS, Inc., as Depositor, Countrywide Home Loans, Inc., as a Seller, Park
Monaco Inc., as a Seller, Park Sienna LLC, as a Seller, Countrywide Home Loans
Servicing LP, as Master Servicer, the undersigned, as Trustee, and The Bank of
New York Trust Company, N.A., as Co-Trustee, the undersigned hereby certifies
that [, with respect to the Subsequent Mortgage Loans delivered in connection
with the Subsequent Transfer Agreement, dated as of __________ (the "Subsequent
Transfer Agreement") among CWABS, Inc., as Depositor, Countrywide Home Loans,
Inc., as a Seller, Park Monaco Inc., as a Seller, Park Sienna LLC, as a Seller,
and The Bank of New York, as Trustee], except as listed in the following
paragraph, as to each [Initial Mortgage Loan][Subsequent Mortgage Loan] listed
in the [Mortgage Loan Schedule][Loan Number and Borrower Identification Mortgage
Loan Schedule] (other than any [Mortgage Loan][Loan Number and Borrower
Identification Mortgage Loan Schedule] paid in full or listed on the attached
list of exceptions) the Co-Trustee has received:
(i) the original Mortgage Note, endorsed by manual or facsimile
signature in blank in the following form: "Pay to the order of _______________
without recourse", with all intervening endorsements that show a complete chain
of endorsement from the originator to the Person endorsing the Mortgage Note
(each such endorsement being sufficient to transfer all right, title and
interest of the party so endorsing, as noteholder or assignee thereof, in and to
that Mortgage Note), or, if the original Mortgage Note has been lost or
destroyed and not replaced, an original lost note affidavit, stating that the
original Mortgage Note was lost or destroyed, together with a copy of the
related Mortgage Note and all such intervening endorsements;
(ii) in the case of each [Initial Mortgage Loan][Subsequent Mortgage
Loan] that is not a MERS Mortgage Loan, the original recorded Mortgage or a copy
of such Mortgage, with recording information, and in the case of each [Initial
Mortgage Loan][Subsequent Mortgage Loan] that is a MERS Mortgage Loan, the
original Mortgage or a copy of such Mortgage, with recording information, noting
thereon the presence of the MIN of the [Initial
G-2-1
Mortgage Loan][Subsequent Mortgage Loan] and language indicating that the
[Initial Mortgage Loan][Subsequent Mortgage Loan] is a MOM Loan if the [Initial
Mortgage Loan][Subsequent Mortgage Loan] is a MOM Loan, with evidence of
recording indicated thereon, or a copy of the Mortgage certified by the public
recording office in which such Mortgage has been recorded;
(iii) in the case of each [Initial Mortgage Loan][Subsequent
Mortgage Loan] that is not a MERS Mortgage Loan, a duly executed assignment of
the Mortgage to "Asset-Backed Certificates, Series 2006-21, CWABS, Inc., by The
Bank of New York, a New York banking corporation, as trustee under the Pooling
and Servicing Agreement dated as of November 1, 2006, without recourse" or a
copy of such assignment, with recording information, or, in the case of each
[Initial Mortgage Loan][Subsequent Mortgage Loan] with respect to property
located in the State of California that is not a MERS Mortgage Loan, a duly
executed assignment of the Mortgage in blank (each such assignment, when duly
and validly completed, to be in recordable form and sufficient to effect the
assignment of and transfer to the assignee thereof, under the Mortgage to which
such assignment relates);
(iv) the original recorded assignment or assignments of the Mortgage
or a copy of such assignments, with recording information, together with all
interim recorded assignments of such Mortgage or a copy of such assignments,
with recording information (in each case noting the presence of a MIN in the
case of each MERS Mortgage Loan);
(v) the original or copies of each assumption, modification, written
assurance or substitution agreement, if any; and
(vi) the original or duplicate original lender's title policy or a
copy of lender's title policy or a printout of the electronic equivalent and all
riders thereto or, in the event such original title policy has not been received
from the insurer, any one of an original title binder, an original preliminary
title report or an original title commitment, or a copy thereof certified by the
title company, with the original policy of title insurance to be delivered
within one year of the Closing Date.
In the event that in connection with any [Initial Mortgage
Loan][Subsequent Mortgage Loan] that is not a MERS Mortgage Loan the applicable
Seller cannot deliver the original recorded Mortgage or all interim recorded
assignments of the Mortgage satisfying the requirements of clause (ii), (iii) or
(iv), as applicable, the Trustee has received, in lieu thereof, a true and
complete copy of such Mortgage and/or such assignment or assignments of the
Mortgage, as applicable, each certified by the applicable Seller, the applicable
title company, escrow agent or attorney, or the originator of such [Initial
Mortgage Loan][Subsequent Mortgage Loan], as the case may be, to be a true and
complete copy of the original Mortgage or assignment of Mortgage submitted for
recording.
Based on its review and examination and only as to the foregoing
documents, (i) such documents appear regular on their face and related to such
[Initial Mortgage Loan][Subsequent Mortgage Loan], and (ii) the information set
forth in items (i), (iv), (v), (vi), (viii), (ix) and (xv) of the definition of
the "Mortgage Loan Schedule" in Section 1.01 of the Pooling and Servicing
Agreement accurately reflects information set forth in the Mortgage File.
G-2-2
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Pooling and Servicing Agreement. The Trustee makes no representations as to: (i)
the validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in each Mortgage File of any of the [Initial Mortgage
Loans][Subsequent Mortgage Loans] identified on the [Mortgage Loan
Schedule][Loan Number and Borrower Identification Mortgage Loan Schedule] or
(ii) the collectibility, insurability, effectiveness or suitability of any such
Mortgage Loan.
G-2-3
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
The Bank of New York,
as Trustee
By:
---------------------------------
Name:
Title:
G-2-4
EXHIBIT G-3
FORM OF DELAY DELIVERY CERTIFICATION
[Date]
[Depositor]
[Sellers]
[Master Servicer]
Re: CWABS Asset-Backed Certificates, Series 2006-21
Gentlemen:
[Reference is made to the Initial Certification of Trustee relating
to the above-referenced series, with the schedule of exceptions attached
thereto, delivered by the undersigned, as Trustee, on the Closing Date in
accordance with Section 2.02 of the Pooling and Servicing Agreement dated as of
November 1, 2006 (the "Pooling and Servicing Agreement") among CWABS, Inc., as
Depositor, Countrywide Home Loans, Inc., as a Seller, Park Monaco Inc., as a
Seller, Park Sienna LLC, as a Seller, Countrywide Home Loans Servicing LP, as
Master Servicer, the undersigned, as Trustee, and The Bank of New York Trust
Company, N.A., as Co-Trustee.] The undersigned hereby certifies that [, with
respect to the Subsequent Mortgage Loans delivered in connection with the
Subsequent Transfer Agreement, dated as of __________ (the "Subsequent Transfer
Agreement") among CWABS, Inc., as Depositor, Countrywide Home Loans, Inc., as a
Seller, Park Monaco Inc., as a Seller, Park Sienna LLC, as a Seller, and The
Bank of New York, as Trustee,] as to each Delay Delivery Mortgage Loan listed on
the Schedule A attached hereto (other than any [Initial Mortgage
Loan][Subsequent Mortgage Loan] paid in full or listed on Schedule B attached
hereto) it has received:
(1) the original Mortgage Note, endorsed by manual or facsimile
signature in blank in the following form: "Pay to the order of _______________
without recourse", with all intervening endorsements that show a complete chain
of endorsement from the originator to the Person endorsing the Mortgage Note
(each such endorsement being sufficient to transfer all right, title and
interest of the party so endorsing, as noteholder or assignee thereof, in and to
that Mortgage Note), or, if the original Mortgage Note has been lost or
destroyed and not replaced, an original lost note affidavit, stating that the
original Mortgage Note was lost or destroyed, together with a copy of the
related Mortgage Note and all such intervening endorsements;
(2) in the case of each [Initial Mortgage Loan][Subsequent Mortgage
Loan] that is not a MERS Mortgage Loan, a duly executed assignment of the
Mortgage to "Asset-Backed Certificates, Series 2006-21, CWABS, Inc., by The Bank
of New York, a New York banking corporation, as trustee under the Pooling and
Servicing Agreement dated as of November 1, 2006, without recourse" or a copy of
such assignment, with recording information,
G-3-1
or, in the case of each [Initial Mortgage Loan][Subsequent Mortgage Loan] with
respect to property located in the State of California that is not a MERS
Mortgage Loan, a duly executed assignment of the Mortgage in blank (each such
assignment, when duly and validly completed, to be in recordable form and
sufficient to effect the assignment of and transfer to the assignee thereof,
under the Mortgage to which such assignment relates).
Based on its review and examination and only as to the foregoing
documents, such documents appear regular on their face and related to such
Mortgage Loan.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Pooling and Servicing Agreement. The Trustee makes no representations as to: (i)
the validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in each Mortgage File of any of the [Initial Mortgage
Loans][Subsequent Mortgage Loans] identified on the [Mortgage Loan
Schedule][Loan Number and Borrower Identification Mortgage Loan Schedule] or
(ii) the collectibility, insurability, effectiveness or suitability of any such
[Initial Mortgage Loan][Subsequent Mortgage Loan].
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
The Bank of New York,
as Trustee
By:
--------------------------------
Name:
Title:
G-3-2
EXHIBIT G-4
FORM OF INITIAL CERTIFICATION OF TRUSTEE
(SUBSEQUENT MORTGAGE LOANS)
[Date]
[Depositor]
[Sellers]
[Master Servicer]
Re: CWABS Asset-Backed Certificates, Series 2006-21
Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing
Agreement dated as of November 1, 2006 (the "Pooling and Servicing Agreement")
among CWABS, Inc., as Depositor, Countrywide Home Loans, Inc., as a Seller, Park
Monaco Inc., as a Seller, Park Sienna LLC, as a Seller, Countrywide Home Loans
Servicing LP, as Master Servicer, the undersigned, as Trustee, and The Bank of
New York Trust Company, N.A., as Co-Trustee, the undersigned hereby certifies
that, as to each Subsequent Mortgage Loan listed in the Loan Number and Borrower
Identification Mortgage Loan Schedule (other than any Subsequent Mortgage Loan
paid in full or listed in the attached list of exceptions) the Trustee has
received:
(1) the original Mortgage Note, endorsed by manual or facsimile
signature in blank in the following form: "Pay to the order of _______________
without recourse", with all intervening endorsements that show a complete chain
of endorsement from the originator to the Person endorsing the Mortgage Note
(each such endorsement being sufficient to transfer all right, title and
interest of the party so endorsing, as noteholder or assignee thereof, in and to
that Mortgage Note), or, if the original Mortgage Note has been lost or
destroyed and not replaced, an original lost note affidavit, stating that the
original Mortgage Note was lost or destroyed, together with a copy of the
related Mortgage Note and all such intervening endorsements; and
(2) a duly executed assignment of the Mortgage or a copy of such
assignment with recording information, in either case in the form permitted by
Section 2.01 of the Pooling and Servicing Agreement.
Based on its review and examination and only as to the foregoing
documents, such documents appear regular on their face and related to such
Mortgage Loan.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Pooling and Servicing Agreement. The Trustee makes no representations as to: (i)
the validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in each Mortgage File of any of
G-4-1
the Subsequent Mortgage Loans identified on the Loan Number and Borrower
Identification Mortgage Loan Schedule or (ii) the collectibility, insurability,
effectiveness or suitability of any such Subsequent Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
The Bank of New York,
as Trustee
By:
--------------------------------
Name:
Title:
G-4-2
EXHIBIT H
FORM OF FINAL CERTIFICATION OF TRUSTEE
[Date]
[Depositor]
[Master Servicer]
[Sellers]
Re: CWABS Asset-Backed Certificates, Series 2006-21
Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing
Agreement dated as of November 1, 2006 (the "Pooling and Servicing Agreement")
among CWABS, Inc., as Depositor, Countrywide Home Loans, Inc., as a Seller, Park
Monaco Inc., as a Seller, Park Sienna LLC, as a Seller, Countrywide Home Loans
Servicing LP, as Master Servicer, the undersigned, as Trustee, and The Bank of
New York Trust Company, N.A., as Co-Trustee, the undersigned hereby certifies
that[, with respect to the Subsequent Mortgage Loans delivered in connection
with the Subsequent Transfer Agreement, dated as of __________ (the "Subsequent
Transfer Agreement") among CWABS, Inc., as Depositor, Countrywide Home Loans,
Inc., as a Seller, Park Monaco Inc., as a Seller, Park Sienna LLC, as a Seller
and The Bank of New York, as Trustee,] as to each [Initial Mortgage
Loan][Subsequent Mortgage Loan] listed in the [Mortgage Loan Schedule][Loan
Number and Borrower Identification Mortgage Loan Schedule] (other than any
[Initial Mortgage Loan][Subsequent Mortgage Loan] paid in full or listed on the
attached Document Exception Report) it has received:
(i) the original Mortgage Note, endorsed by manual or facsimile
signature in blank in the following form: "Pay to the order of _________________
without recourse", with all intervening endorsements that show a complete chain
of endorsement from the originator to the Person endorsing the Mortgage Note
(each such endorsement being sufficient to transfer all right, title and
interest of the party so endorsing, as noteholder or assignee thereof, in and to
that Mortgage Note), or, if the original Mortgage Note has been lost or
destroyed and not replaced, an original lost note affidavit, stating that the
original Mortgage Note was lost or destroyed, together with a copy of the
related Mortgage Note and all such intervening endorsements;
(ii) in the case of each [Initial Mortgage Loan][Subsequent Mortgage
Loan] that is not a MERS Mortgage Loan, the original recorded Mortgage or a copy
of such Mortgage, with recording information, and in the case of each [Initial
Mortgage Loan][Subsequent Mortgage Loan] that is a MERS Mortgage Loan, the
original Mortgage or a copy of such Mortgage, with recording information, noting
the presence of the MIN of the [Initial Mortgage Loan][Subsequent Mortgage Loan]
and language indicating that the [Initial Mortgage Loan][Subsequent Mortgage
Loan] is a MOM Loan if the [Initial Mortgage Loan][Subsequent
H-1
Mortgage Loan] is a MOM Loan, with evidence of recording indicated thereon, or a
copy of the Mortgage certified by the public recording office in which such
Mortgage has been recorded];
(iii) in the case of each [Initial Mortgage Loan][Subsequent
Mortgage Loan] that is not a MERS Mortgage Loan, a duly executed assignment of
the Mortgage to "Asset-Backed Certificates, Series 2006-21, CWABS, Inc., by The
Bank of New York, a New York banking corporation, as trustee under the Pooling
and Servicing Agreement dated as of November 1, 2006, without recourse" or a
copy of such assignment, with recording information, or, in the case of each
[Initial Mortgage Loan][Subsequent Mortgage Loan] with respect to property
located in the State of California that is not a MERS Mortgage Loan, a duly
executed assignment of the Mortgage in blank (each such assignment, when duly
and validly completed, to be in recordable form and sufficient to effect the
assignment of and transfer to the assignee thereof, under the Mortgage to which
such assignment relates);
(iv) the original recorded assignment or assignments of the Mortgage
or a copy of such assignments, with recording information, together with all
interim recorded assignments of such Mortgage or a copy of such assignments,
with recording information (in each case noting the presence of a MIN in the
case of each MERS Mortgage Loan);
(v) the original or copies of each assumption, modification, written
assurance or substitution agreement, if any; and
(vi) the original or duplicate original lender's title policy or a
copy of lender's title policy or a printout of the electronic equivalent and all
riders thereto or any one of an original title binder, an original preliminary
title report or an original title commitment, or a copy thereof certified by the
title company.
If the public recording office in which a Mortgage or assignment
thereof is recorded has retained the original of such Mortgage or assignment,
the Trustee has received, in lieu thereof, a copy of the original Mortgage or
assignment so retained, with evidence of recording thereon, certified to be true
and complete by such recording office.
Based on its review and examination and only as to the foregoing
documents, (i) such documents appear regular on their face and related to such
Mortgage Loan, and (ii) the information set forth in items (i), (iv), (v), (vi),
(viii), (ix) and (xv) of the definition of the "Mortgage Loan Schedule" in
Section 1.01 of the Pooling and Servicing Agreement accurately reflects
information set forth in the Mortgage File.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Pooling and Servicing Agreement. The Trustee makes no representations as to: (i)
the validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in each Mortgage File of any of the [Initial Mortgage
Loans][Subsequent Mortgage Loans] identified on the [Mortgage Loan
Schedule][Loan Number and Borrower Identification Mortgage Loan Schedule] or
(ii) the collectibility, insurability, effectiveness or suitability of any such
[Initial Mortgage Loan][Subsequent Mortgage Loan].
H-2
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
The Bank of New York,
as Trustee
By:
--------------------------------
Name:
Title:
H-3
EXHIBIT I
TRANSFER AFFIDAVIT FOR THE CLASS A-R CERTIFICATES
STATE OF )
) ss.:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as
follows:
1. The undersigned is an officer of _______________, the proposed
Transferee of an Ownership Interest in a Class A-R Certificate (the
"Certificate") issued pursuant to the Pooling and Servicing Agreement, dated as
of November 1, 2006 (the "Agreement"), by and among CWABS, Inc., as depositor
(the "Depositor"), Countrywide Home Loans, Inc., as a Seller, Park Monaco Inc.,
as a Seller, Park Sienna LLC, as a Seller, Countrywide Home Loans Servicing LP,
as Master Servicer, The Bank of New York, as Trustee, and The Bank of New York
Trust Company, N.A., as Co-Trustee. Capitalized terms used, but not defined
herein or in Exhibit 1 hereto, shall have the meanings ascribed to such terms in
the Agreement. The Transferee has authorized the undersigned to make this
affidavit on behalf of the Transferee.
2. The Transferee is not an employee benefit plan that is subject to
Title I of ERISA or to section 4975 of the Internal Revenue Code of 1986, nor is
it acting on behalf of or with plan assets of any such plan. The Transferee is,
as of the date hereof, and will be, as of the date of the Transfer, a Permitted
Transferee. The Transferee will endeavor to remain a Permitted Transferee for so
long as it retains its Ownership Interest in the Certificate. The Transferee is
acquiring its Ownership Interest in the Certificate for its own account.
3. The Transferee has been advised of, and understands that (i) a
tax will be imposed on Transfers of the Certificate to Persons that are not
Permitted Transferees; (ii) such tax will be imposed on the transferor, or, if
such Transfer is through an agent (which includes a broker, nominee or
middleman) for a Person that is not a Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability for
the tax if the subsequent Transferee furnished to such Person an affidavit that
such subsequent Transferee is a Permitted Transferee and, at the time of
Transfer, such Person does not have actual knowledge that the affidavit is
false.
4. The Transferee has been advised of, and understands that a tax
will be imposed on a "pass-through entity" holding the Certificate if at any
time during the taxable year of the pass-through entity a Person that is not a
Permitted Transferee is the record holder of an interest in such entity. The
Transferee understands that such tax will not be imposed for any period with
respect to which the record holder furnishes to the pass-through entity an
affidavit that such record holder is a Permitted Transferee and the pass-through
entity does not have actual knowledge that such affidavit is false. (For this
purpose, a "pass-through entity" includes a regulated investment company, a real
estate investment trust or common trust fund, a partnership, trust or estate,
and certain cooperatives and, except as may be provided in Treasury Regulations,
persons holding interests in pass-through entities as a nominee for another
Person.)
I-1
5. The Transferee has reviewed the provisions of Section 5.02(c) of
the Agreement (attached hereto as Exhibit 2 and incorporated herein by
reference) and understands the legal consequences of the acquisition of an
Ownership Interest in the Certificate including, without limitation, the
restrictions on subsequent Transfers and the provisions regarding voiding the
Transfer and mandatory sales. The Transferee expressly agrees to be bound by and
to abide by the provisions of Section 5.02(c) of the Agreement and the
restrictions noted on the face of the Certificate. The Transferee understands
and agrees that any breach of any of the representations included herein shall
render the Transfer to the Transferee contemplated hereby null and void.
6. The Transferee agrees to require a Transfer Affidavit from any
Person to whom the Transferee attempts to Transfer its Ownership Interest in the
Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate substantially in the
form set forth as Exhibit J-1 to the Agreement (a "Transferor Certificate") to
the effect that such Transferee has no actual knowledge that the Person to which
the Transfer is to be made is not a Permitted Transferee.
7. The Transferee does not have the intention to impede the
assessment or collection of any tax legally required to be paid with respect to
the Class A-R Certificates.
8. The Transferee's taxpayer identification number is _____.
9. The Transferee is a U.S. Person as defined in Code section
7701(a)(30).
10. The Transferee is aware that the Class A-R Certificates may be
"noneconomic residual interests" within the meaning of proposed Treasury
regulations promulgated pursuant to the Code and that the transferor of a
noneconomic residual interest will remain liable for any taxes due with respect
to the income on such residual interest, unless no significant purpose of the
transfer was to impede the assessment or collection of tax. In addition, as the
holder of a noneconomic residual interest, the Transferee may incur tax
liabilities in excess of any cash flows generated by the interest and the
Transferee hereby represents that it intends to pay taxes associated with
holding the residual interest as they become due.
11. The Transferee has provided financial statements or other
financial information requested by the Transferor in connection with the
transfer of the Class A-R Certificates to permit the Transferor to assess the
financial capability of the Transferee to pay such taxes.
* * *
I-2
IN WITNESS WHEREOF, the Transferee has caused this instrument to
be executed on its behalf, pursuant to authority of its Board of Directors,
by its duly authorized officer and its corporate seal to be hereunto affixed,
duly attested, this ____ day of _____________, 20__.
[NAME OF TRANSFEREE]
By:
--------------------------------
Name:
Title:
[Corporate Seal]
ATTEST:
-------------------------
[Assistant] Secretary
Personally appeared before me the above-named _____________, known
or proved to me to be the same person who executed the foregoing instrument and
to be the ____________ of the Transferee, and acknowledged that he executed the
same as his free act and deed and the free act and deed of the Transferee.
Subscribed and sworn before me this ____ day of _______, 20__.
-------------------------------------
NOTARY PUBLIC
My Commission expires the ___ day of
, 20__.
I-3
Certain Definitions
"Ownership Interest": As to any Certificate, any ownership interest
in such Certificate, including any interest in such Certificate as the Holder
thereof and any other interest therein, whether direct or indirect, legal or
beneficial.
"Permitted Transferee": Any person other than (i) the United States,
any State or political subdivision thereof, or any agency or instrumentality of
any of the foregoing, (ii) a foreign government, International Organization or
any agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in section 521 of the Code) that
is exempt from tax imposed by Chapter 1 of the Code (including the tax imposed
by section 511 of the Code on unrelated business taxable income) on any excess
inclusions (as defined in section 860E(c)(1) of the Code) with respect to any
Class A-R Certificate, (iv) rural electric and telephone cooperatives described
in section 1381(a)(2)(C) of the Code, (v) an "electing large partnership" as
defined in section 775 of the Code, (vi) a Person that is not a citizen or
resident of the United States, a corporation, partnership, or other entity
(treated as a corporation or a partnership for federal income tax purposes)
created or organized in or under the laws of the United States, any state
thereof or the District of Columbia, or an estate whose income from sources
without the United States is includible in gross income for United States
federal income tax purposes regardless of its connection with the conduct of a
trade or business within the United States, or a trust if a court within the
United States is able to exercise primary supervision over the administration of
the trust and one or more United States persons have authority to control all
substantial decisions of the trustor unless such Person has furnished the
transferor and the Trustee with a duly completed Internal Revenue Service Form
W-8ECI, and (vii) any other Person so designated by the Trustee based upon an
Opinion of Counsel that the Transfer of an Ownership Interest in a Class A-R
Certificate to such Person may cause any REMIC formed hereunder to fail to
qualify as a REMIC at any time that any Certificates are Outstanding. The terms
"United States," "State" and "International Organization" shall have the
meanings set forth in section 7701 of the Code or successor provisions. A
corporation will not be treated as an instrumentality of the United States or of
any State or political subdivision thereof for these purposes if all of its
activities are subject to tax and, with the exception of the Federal Home Loan
Mortgage Corporation, a majority of its board of directors is not selected by
such government unit.
"Person": Any individual, corporation, limited liability company,
partnership, joint venture, bank, joint stock company, trust (including any
beneficiary thereof), unincorporated organization or government or any agency or
political subdivision thereof.
"Transfer": Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate, including the acquisition of a Certificate by the
Depositor.
"Transferee": Any Person who is acquiring by Transfer any
Ownership Interest in a Certificate.
I-4
Section 5.02(c) of the Agreement
(c) Each Person who has or who acquires any Ownership Interest in a
Class A-R Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions, and
the rights of each Person acquiring any Ownership Interest in a Class A-R
Certificate are expressly subject to the following provisions:
(1) Each Person holding or acquiring any Ownership Interest in a
Class A-R Certificate shall be a Permitted Transferee and shall promptly
notify the Trustee of any change or impending change in its status as a
Permitted Transferee.
(2) Except in connection with (i) the registration of the Tax
Matters Person Certificate in the name of the Trustee or (ii) any
registration in the name of, or transfer of a Class A-R Certificate to, an
affiliate of the Depositor (either directly or through a nominee) in
connection with the initial issuance of the Certificates, no Ownership
Interest in a Class A-R Certificate may be registered on the Closing Date
or thereafter transferred, and the Trustee shall not register the Transfer
of any Class A-R Certificate, unless the Trustee shall have been furnished
with an affidavit (a "Transfer Affidavit") of the initial owner or the
proposed transferee in the form attached hereto as Exhibit I.
(3) Each Person holding or acquiring any Ownership Interest in a
Class A-R Certificate shall agree (A) to obtain a Transfer Affidavit from
any other Person to whom such Person attempts to Transfer its Ownership
Interest in a Class A-R Certificate, (B) to obtain a Transfer Affidavit
from any Person for whom such Person is acting as nominee, trustee or
agent in connection with any Transfer of a Class A-R Certificate and (C)
not to Transfer its Ownership Interest in a Class A-R Certificate, or to
cause the Transfer of an Ownership Interest in a Class A-R Certificate to
any other Person, if it has actual knowledge that such Person is not a
Permitted Transferee.
(4) Any attempted or purported Transfer of any Ownership Interest in
a Class A-R Certificate in violation of the provisions of this Section
5.02(c) shall be absolutely null and void and shall vest no rights in the
purported Transferee. If any purported transferee shall become a Holder of
a Class A-R Certificate in violation of the provisions of this Section
5.02(c), then the last preceding Permitted Transferee shall be restored to
all rights as Holder thereof retroactive to the date of registration of
Transfer of such Class A-R Certificate. The Trustee shall be under no
liability to any Person for any registration of Transfer of a Class A-R
Certificate that is in fact not permitted by Section 5.02(b) and this
Section 5.02(c) or for making any payments due on such Certificate to the
Holder thereof or taking any other action with respect to such Holder
under the provisions of this Agreement so long as the Transfer was
registered after receipt of the related Transfer Affidavit and Transferor
Certificate. The Trustee shall be entitled but not obligated to recover
from any Holder of a Class A-R Certificate that was in fact not a
Permitted Transferee at the time it became a Holder or, at such subsequent
time as it became other than a Permitted Transferee, all payments made on
such Class A-R Certificate at and after either such time. Any such
payments so recovered by the Trustee shall be paid and delivered by the
Trustee to the last preceding Permitted Transferee of such Certificate.
I-5
(5) The Master Servicer shall use its best efforts to make
available, upon receipt of written request from the Trustee, all
information necessary to compute any tax imposed under section 860E(e) of
the Code as a result of a Transfer of an Ownership Interest in a Class A-R
Certificate to any Holder who is not a Permitted Transferee.
The restrictions on Transfers of a Class A-R Certificate set forth
in this Section 5.02(c) shall cease to apply (and the applicable portions of the
legend on a Class A-R Certificate may be deleted) with respect to Transfers
occurring after delivery to the Trustee of an Opinion of Counsel, which Opinion
of Counsel shall not be an expense of the Trustee, the Sellers or the Master
Servicer to the effect that the elimination of such restrictions will not cause
any constituent REMIC of any REMIC formed hereunder to fail to qualify as a
REMIC at any time that the Certificates are outstanding or result in the
imposition of any tax on the Trust Fund, a Certificateholder or another Person.
Each Person holding or acquiring any ownership Interest in a Class A-R
Certificate hereby consents to any amendment of this Agreement that, based on an
Opinion of Counsel furnished to the Trustee, is reasonably necessary (a) to
ensure that the record ownership of, or any beneficial interest in, a Class A-R
Certificate is not transferred, directly or indirectly, to a Person that is not
a Permitted Transferee and (b) to provide for a means to compel the Transfer of
a Class A-R Certificate that is held by a Person that is not a Permitted
Transferee to a Holder that is a Permitted Transferee.
I-6
EXHIBIT J-1
FORM OF TRANSFEROR CERTIFICATE FOR CLASS A-R CERTIFICATES
Date:
CWABS, Inc.
as Depositor
0000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
The Bank of New York
as Trustee
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: CWABS, Inc. Asset Backed
Certificates, Series 2006-21
Ladies and Gentlemen:
In connection with our disposition of the Class A-R Certificates, we
certify that we have no knowledge that the Transferee is not a Permitted
Transferee. All capitalized terms used herein but not defined herein shall have
the meanings assigned to them in the Pooling and Servicing Agreement dated as of
November 1, 2006, among CWABS, Inc., as Depositor, Countrywide Home Loans, Inc.,
as a Seller, Park Monaco Inc., as a Seller, Park Sienna LLC, as a Seller,
Countrywide Home Loans Servicing LP, as Master Servicer, The Bank of New York,
as Trustee, and The Bank of New York Trust Company, N.A., as Co-Trustee.
Very truly yours,
-------------------------------------
Name of Transferor
By:
---------------------------------
Name:
Title:
X-0-0
XXXXXXX X-0
FORM OF TRANSFEROR CERTIFICATE FOR
PRIVATE CERTIFICATES
Date:
CWABS, Inc.,
as Depositor
0000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
The Bank of New York,
as Trustee
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: CWABS, Inc. Asset-Backed Certificates,
Series 2006-21, Class [ ]
Ladies and Gentlemen:
In connection with our disposition of the above-captioned
Certificates we certify that (a) we understand that the Certificates have not
been registered under the Securities Act of 1933, as amended (the "Act"), and
are being disposed by us in a transaction that is exempt from the registration
requirements of the Act, (b) we have not offered or sold any Certificates to, or
solicited offers to buy any Certificates from, any person, or otherwise
approached or negotiated with any person with respect thereto, in a manner that
would be deemed, or taken any other action which would result in, a violation of
Section 5 of the Act. All capitalized terms used herein but not defined herein
shall have the meanings assigned to them in the Pooling and Servicing Agreement
dated as of November 1, 2006, among CWABS, Inc., as Depositor, Countrywide Home
Loans, Inc., as a Seller, Park Monaco Inc., as a Seller, Park Sienna LLC, as a
Seller, Countrywide Home Loans Servicing LP, as Master Servicer, The Bank of New
York, as Trustee, and The Bank of New York Trust Company, N.A., as Co-Trustee.
Very truly yours,
----------------------------------
Name of Transferor
By:
--------------------------------
Name:
Title:
J-2-1
EXHIBIT K
FORM OF INVESTMENT LETTER (NON-RULE 144A)
Date:
CWABS, Inc.,
as Depositor
0000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
The Bank of New York,
as Trustee
000 Xxxxxxx Xx., 0X
Xxx Xxxx, Xxx Xxxx 00000
Re: CWABS, Inc. Asset-Backed Certificates,
Series 2006-21, Class [ ]
Ladies and Gentlemen:
In connection with our acquisition of the above-captioned
Certificates we certify that (a) we understand that the Certificates are not
being registered under the Securities Act of 1933, as amended (the "Act"), or
any state securities laws and are being transferred to us in a transaction that
is exempt from the registration requirements of the Act and any such laws, (b)
we are an "accredited investor," as defined in Regulation D under the Act, and
have such knowledge and experience in financial and business matters that we are
capable of evaluating the merits and risks of investments in the Certificates,
(c) we have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (d) either (i) we are not an employee benefit plan
that is subject to the Employee Retirement Income Security Act of 1974, as
amended, or a plan or arrangement that is subject to Section 4975 of the
Internal Revenue Code of 1986, as amended, nor are we acting on behalf of any
such plan or arrangement, or using the assets of any such plan or arrangement to
effect such acquisition or (ii) if the Certificates have been the subject of an
ERISA-Qualifying Underwriting, we are an insurance company which is purchasing
such Certificates with funds contained in an "insurance company general account"
(as such term is defined in Section V(e) of Prohibited Transaction Class
Exemption 95-60 ("PTCE 95-60")) and the purchase and holding of such
Certificates are covered under Sections I and III of PTCE 95-60, (e) we are
acquiring the Certificates for investment for our own account and not with a
view to any distribution of such Certificates (but without prejudice to our
right at all times to sell or otherwise dispose of the Certificates in
accordance with clause (g) below), (f) we have not offered or sold any
Certificates to, or solicited offers to buy any Certificates from, any person,
or otherwise approached or negotiated with any person with respect thereto, or
taken any other action which would result in a violation of Section 5 of the
Act, and (g) we will not sell, transfer or otherwise dispose of any
K-1
Certificates unless (1) such sale, transfer or other disposition is made
pursuant to an effective registration statement under the Act or is exempt from
such registration requirements, and if requested, we will at our expense provide
an opinion of counsel satisfactory to the addressees of this Certificate that
such sale, transfer or other disposition may be made pursuant to an exemption
from the Act, (2) the purchaser or transferee of such Certificate has executed
and delivered to you a certificate to substantially the same effect as this
certificate, and (3)the purchaser or transferee has otherwise complied with any
conditions for transfer set forth in the Pooling and Servicing Agreement.
All capitalized terms used herein but not defined herein shall have
the meanings assigned to them in the Pooling and Servicing Agreement dated as of
November 1, 2006, among CWABS, Inc., as Depositor, Countrywide Home Loans, Inc.,
as a Seller, Park Monaco Inc., as a Seller, Park Sienna LLC, as a Seller,
Countrywide Home Loans Servicing LP, as Master Servicer, The Bank of New York,
as Trustee, and The Bank of New York Trust Company, N.A., as Co-Trustee.
Very truly yours,
----------------------------------
Name of Transferee
By:
-------------------------------
Authorized Officer
K-2
EXHIBIT L
FORM OF RULE 144A LETTER
Date:
CWABS, Inc.,
as Depositor
0000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
The Bank of New York,
as Trustee
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: CWABS, Inc. Asset-Backed Certificates,
Series 2006-21, Class [ ]
Ladies and Gentlemen:
In connection with our acquisition of the above-captioned
Certificates we certify that (a) we understand that the Certificates are not
being registered under the Securities Act of 1933, as amended (the "Act"), or
any state securities laws and are being transferred to us in a transaction that
is exempt from the registration requirements of the Act and any such laws, (b)
we have such knowledge and experience in financial and business matters that we
are capable of evaluating the merits and risks of investments in the
Certificates, (c) we have had the opportunity to ask questions of and receive
answers from the Depositor concerning the purchase of the Certificates and all
matters relating thereto or any additional information deemed necessary to our
decision to purchase the Certificates, (d) either (i) we are not an employee
benefit plan that is subject to the Employee Retirement Income Security Act of
1974, as amended, or a plan or arrangement that is subject to Section 4975 of
the Internal Revenue Code of 1986, as amended, nor are we acting on behalf of
any such plan or arrangement, or using the assets of any such plan or
arrangement to effect such acquisition or (ii) if the Certificates have been the
subject of an ERISA-Qualifying Underwriting, we are an insurance company which
is purchasing such Certificates with funds contained in an "insurance company
general account" (as such term is defined in Section V(e) of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60")) and the purchase and holding
of such Certificates are covered under Sections I and III of PTCE 95-60, (e) we
have not, nor has anyone acting on our behalf offered, transferred, pledged,
sold or otherwise disposed of the Certificates, any interest in the Certificates
or any other similar security to, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Certificates, any interest in the
Certificates or any other similar security from, or otherwise approached or
negotiated with respect to the Certificates, any interest in the Certificates or
any other similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or taken
any other action, that would constitute a distribution of the Certificates under
the Securities Act or that would render the disposition of the
L-1
Certificates a violation of Section 5 of the Securities Act or require
registration pursuant thereto, nor will act, nor has authorized or will
authorize any person to act, in such manner with respect to the Certificates,
(f) we are a "qualified institutional buyer" as that term is defined in Rule
144A under the Securities Act and have completed either of the forms of
certification to that effect attached hereto as Annex 1 or Annex 2. We are aware
that the sale to us is being made in reliance on Rule 144A. We are acquiring the
Certificates for our own account or for resale pursuant to Rule 144A and
further, understand that such Certificates may be resold, pledged or transferred
only (i) to a person reasonably believed to be a qualified institutional buyer
that purchases for its own account or for the account of a qualified
institutional buyer to whom notice is given that the resale, pledge or transfer
is being made in reliance on Rule 144A, or (ii) pursuant to another exemption
from registration under the Securities Act.
All capitalized terms used herein but not defined herein shall have
the meanings assigned to them in the Pooling and Servicing Agreement dated as of
November 1, 2006, among CWABS, Inc., as Depositor, Countrywide Home Loans, Inc.,
as a Seller, Park Monaco Inc., as a Seller, Park Sienna LLC, as a Seller,
Countrywide Home Loans Servicing LP, as Master Servicer, The Bank of New York,
as Trustee, and The Bank of New York Trust Company, N.A., as Co-Trustee.
Very truly yours,
----------------------------------
Name of Transferee
By:
-------------------------------
Authorized Officer
L-2
ANNEX 1 TO EXHIBIT L
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the parties listed
in the Rule 144A Transferee Certificate to which this certification relates with
respect to the Certificates described therein:
As indicated below, the undersigned is the President, Chief Financial
Officer, Senior Vice President or other executive officer of the Buyer.
In connection with purchases by the Buyer, the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because (i) the Buyer
owned and/or invested on a discretionary basis either at least
$100,000,000 in securities or, if Buyer is a dealer, Buyer must own and/or
invest on a discretionary basis at least $10,000,000 in securities (except
for the excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being calculated in
accordance with Rule 144A and (ii) the Buyer satisfies the criteria in the
category marked below.
___ Corporation, etc. The Buyer is a corporation (other than a bank,
savings and loan association or similar institution), Massachusetts
or similar business trust, partnership, or charitable organization
described in Section 501(c)(3)of the Internal Revenue Code of 1986,
as amended.
___ Bank. The Buyer (a) is a national bank or banking institution
organized under the laws of any State, territory or the District of
Columbia, the business of which is substantially confined to banking
and is supervised by the State or territorial banking commission or
similar official or is a foreign bank or equivalent institution, and
(b) has an audited net worth of at least $25,000,000 as demonstrated
in its latest annual financial statements, a copy of which is
attached hereto.
___ Savings and Loan. The Buyer (a) is a savings and loan association,
building and loan association, cooperative bank, homestead
association or similar institution, which is supervised and examined
by a State or Federal authority having supervision over any such
institutions or is a foreign savings and loan association or
equivalent institution and (b) has an audited net worth of at least
$25,000,000 as demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
___ Broker-dealer. The Buyer is a dealer registered pursuant to Section
15 of the Securities Exchange Act of 1934.
___ Insurance Company. The Buyer is an insurance company whose primary
and predominant business activity is the writing of insurance or the
reinsuring of
L-3
risks underwritten by insurance companies and which is subject to
supervision by the insurance commissioner or a similar official or
agency of a State, territory or the District of Columbia.
___ State or Local Plan. The Buyer is a plan established and maintained
by a State, its political subdivisions, or any agency or
instrumentality of the State or its political subdivisions, for the
benefit of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan within the meaning
of Title I of the Employee Retirement Income Security Act of 1974.
___ Investment Advisor. The Buyer is an investment advisor registered
under the Investment Advisors Act of 1940.
___ Small Business Investment Company. Buyer is a small business
investment company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958.
___ Business Development Company. Buyer is a business development
company as defined in Section 202(a)(22) of the Investment Advisors
Act of 1940.
The term "securities" as used herein does not include (i) securities of
issuers that are affiliated with the Buyer, (ii) securities that are part
of an unsold allotment to or subscription by the Buyer, if the Buyer is a
dealer, (iii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iv) bank deposit notes and certificates of
deposit, (v) loan participations, (vi) repurchase agreements, (vii)
securities owned but subject to a repurchase agreement and (viii)
currency, interest rate and commodity swaps.
For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Buyer, the Buyer used the
cost of such securities to the Buyer and did not include any of the
securities referred to in the preceding paragraph, except (i) where the
Buyer reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect
to the cost of those securities has been published. If clause (ii) in the
preceding sentence applies, the securities may be valued at market.
Further, in determining such aggregate amount, the Buyer may have included
securities owned by subsidiaries of the Buyer, but only if such
subsidiaries are consolidated with the Buyer in its financial statements
prepared in accordance with generally accepted accounting principles and
if the investments of such subsidiaries are managed under the Buyer's
direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the
Buyer is not itself a reporting company under the Securities Exchange Act
of 1934, as amended.
The Buyer acknowledges that it is familiar with Rule 144A and understands
that the seller to it and other parties related to the Certificates are
relying and will continue to rely on the statements made herein because
one or more sales to the Buyer may be in reliance on Rule 144A.
L-4
Until the date of purchase of the Rule 144A Securities, the Buyer will
notify each of the parties to which this certification is made of any
changes in the information and conclusions herein. Until such notice is
given, the Buyer's purchase of the Certificates will constitute a
reaffirmation of this certification as of the date of such purchase. In
addition, if the Buyer is a bank or savings and loan is provided above,
the Buyer agrees that it will furnish to such parties updated annual
financial statements promptly after they become available.
------------------------------------
Print Name of Buyer
By:
--------------------------------
Name:
Title:
Date:
-----------------------------
L-5
ANNEX 2 TO EXHIBIT L
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees That are Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the parties listed
in the Rule 144A Transferee Certificate to which this certification relates with
respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because Buyer is part of a
Family of Investment Companies (as defined below), is such an officer of the
Adviser.
In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is
an investment company registered under the Investment Company Act of 1940,
as amended and (ii) as marked below, the Buyer alone, or the Buyer's
Family of Investment Companies, owned at least $100,000,000 in securities
(other than the excluded securities referred to below) as of the end of
the Buyer's most recent fiscal year. For purposes of determining the
amount of securities owned by the Buyer or the Buyer's Family of
Investment Companies, the cost of such securities was used, except (i)
where the Buyer or the Buyer's Family of Investment Companies reports its
securities holdings in its financial statements on the basis of their
market value, and (ii) no current information with respect to the cost of
those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.
___ The Buyer owned $ in securities (other than the excluded securities
referred to below) as of the end of the Buyer's most recent fiscal
year (such amount being calculated in accordance with Rule 144A).
___ The Buyer is part of a Family of Investment Companies which owned in
the aggregate $ in securities (other than the excluded securities
referred to below) as of the end of the Buyer's most recent fiscal
year (such amount being calculated in accordance with Rule 144A).
The term "Family of Investment Companies" as used herein means two or more
registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue
of being majority owned subsidiaries of the same parent or because one
investment adviser is a majority owned subsidiary of the other).
The term "securities" as used herein does not include (i) securities of
issuers that are affiliated with the Buyer or are part of the Buyer's
Family of Investment Companies, (ii) securities issued or guaranteed by
the U.S. or any instrumentality thereof, (iii) bank deposit notes and
certificates of deposit, (iv) loan participations, (v) repurchase
L-6
agreements, (vi) securities owned but subject to a repurchase agreement
and (vii) currency, interest rate and commodity swaps.
The Buyer is familiar with Rule 144A and under-stands that the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates are relying and will continue to rely on the statements made
herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own
account.
Until the date of purchase of the Certificates, the undersigned will
notify the parties listed in the Rule 144A Transferee Certificate to which
this certification relates of any changes in the information and
conclusions herein. Until such notice is given, the Buyer's purchase of
the Certificates will constitute a reaffirmation of this certification by
the undersigned as of the date of such purchase.
-----------------------------------
Print Name of Buyer or Adviser
By:
--------------------------------
Name:
Title:
IF AN ADVISER:
-----------------------------------
Print Name of Buyer
Date:
------------------------------
L-7
EXHIBIT M
FORM OF REQUEST FOR DOCUMENT RELEASE
Loan Information
Name of Mortgagor:
---------------------------------
Master Servicer
Loan No.:
---------------------------------
Trustee
Name:
---------------------------------
Address:
---------------------------------
Trustee
Mortgage File No.:
---------------------------------
The undersigned Master Servicer hereby acknowledges that it has
received from _______________________________________, as Trustee for the
Holders of Asset-Backed Certificates, Series 2006-21, the documents referred to
below (the "Documents"). All capitalized terms not otherwise defined in this
Request for Document Release shall have the meanings given them in the Pooling
and Servicing Agreement dated as of November 1, 2006 (the "Pooling and Servicing
Agreement") among CWABS, Inc., as Depositor, Countrywide Home Loans, Inc., as a
Seller, Park Monaco Inc., as a Seller, Park Sienna LLC, as a Seller, Countrywide
Home Loans Servicing LP, as Master Servicer, The Bank of New York, as Trustee,
and The Bank of New York Trust Company, N.A., as Co-Trustee.
( ) Mortgage Note dated ___________, ____, in the original principal sum of
$________, made by __________________, payable to, or endorsed to the
order of, the Trustee.
( ) Mortgage recorded on _________________ as instrument no. ________________
in the County Recorder's Office of the County of ________________, State
of _______________ in book/reel/docket _______________ of official records
at page/image _____________.
( ) Deed of Trust recorded on _________________ as instrument no.
________________ in the County Recorder's Office of the County of
________________, State of _______________ in book/reel/docket
_______________ of official records at page/image _____________.
( ) Assignment of Mortgage or Deed of Trust to the Trustee, recorded on
_________________ as instrument no. __________ in the County Recorder's
Office of
M-1
the County of __________, State of _______________ in book/reel/docket
_______________ of official records at page/image _____________.
( ) Other documents, including any amendments, assignments or other
assumptions of the Mortgage Note or Mortgage.
( ) _______________________________________________
( ) _______________________________________________
( ) _______________________________________________
( ) _______________________________________________
The undersigned Master Servicer hereby acknowledges and agrees as follows:
(1) The Master Servicer shall hold and retain possession of the
Documents in trust for the benefit of the Trust Fund, solely for the
purposes provided in the Pooling and Servicing Agreement.
(2) The Master Servicer shall not cause or knowingly permit the
Documents to become subject to, or encumbered by, any claim, liens,
security interest, charges, writs of attachment or other impositions nor
shall the Master Servicer assert or seek to assert any claims or rights of
setoff to or against the Documents or any proceeds thereof.
(3) The Master Servicer shall return each and every Document
previously requested from the Mortgage File to the Trustee when the need
therefor no longer exists, unless the Mortgage Loan relating to the
Documents has been liquidated and the proceeds thereof have been remitted
to the Certificate Account and except as expressly provided in the Pooling
and Servicing Agreement.
(4) The Documents and any proceeds thereof, including any proceeds
of proceeds, coming into the possession or control of the Master Servicer
shall at all times be earmarked for the account of the Trust Fund, and the
Master Servicer shall keep the Documents and any proceeds separate and
distinct from all other property in the Master Servicer's possession,
custody or control.
[Master Servicer]
By ____________________________________
Its ____________________________________
Date: _________________, ____
M-2
EXHIBIT N
FORM OF REQUEST FOR FILE RELEASE
OFFICER'S CERTIFICATE AND TRUST RECEIPT
ASSET-BACKED CERTIFICATES,
Series 2006-21
__________________________________________ HEREBY CERTIFIES THAT HE/SHE IS AN
OFFICER OF THE MASTER SERVICER, HOLDING THE OFFICE SET FORTH BENEATH HIS/HER
SIGNATURE, AND HEREBY FURTHER CERTIFIES AS FOLLOWS:
WITH RESPECT TO THE MORTGAGE LOANS, AS THE TERM IS DEFINED IN THE POOLING AND
SERVICING AGREEMENT DESCRIBED IN THE ATTACHED SCHEDULE:
[ALL PAYMENTS OF PRINCIPAL AND INTEREST HAVE BEEN MADE.] [THE PURCHASE PRICE FOR
SUCH MORTGAGE LOANS HAS BEEN PAID.] [THE MORTGAGE LOANS HAVE BEEN LIQUIDATED AND
THE RELATED [INSURANCE PROCEEDS] [LIQUIDATION PROCEEDS] HAVE BEEN DEPOSITED
PURSUANT TO SECTION 3.13 OF THE POOLING AND SERVICING AGREEMENT.] [A REPLACEMENT
MORTGAGE LOAN HAS BEEN DELIVERED TO THE TRUSTEE IN THE MANNER AND OTHERWISE IN
ACCORDANCE WITH THE CONDITIONS SET FORTH IN SECTIONS 2.02 AND 2.03 OF THE
POOLING AND SERVICING AGREEMENT.]
LOAN NUMBER:_______________ BORROWER'S NAME:_____________
COUNTY:____________________
[For Substitution or Repurchase Only: The Master Servicer certifies that [an]
[no] opinion is required by Section 2.05 [and is attached hereto].]
I HEREBY CERTIFY THAT ALL AMOUNTS RECEIVED IN CONNECTION WITH SUCH PAYMENTS,
THAT ARE REQUIRED TO BE DEPOSITED IN THE CERTIFICATE ACCOUNT PURSUANT TO SECTION
3.05 OF THE POOLING AND SERVICING AGREEMENT, HAVE BEEN OR WILL BE CREDITED.
____________ _____________________
DATED:____________
/ / VICE PRESIDENT
/ / ASSISTANT VICE PRESIDENT
N-1
Exhibit O
Exhibit O is a photocopy
of the Depository Agreement
as delivered.
[See appropriate documents delivered at closing.]
O-1
EXHIBIT P
FORM OF SUBSEQUENT TRANSFER AGREEMENT
SUBSEQUENT TRANSFER AGREEMENT, dated as of ____________, 200[_]
(this "Subsequent Transfer Agreement"), among CWABS, INC., a Delaware
corporation, as depositor (the "Depositor"), COUNTRYWIDE HOME LOANS, INC., a New
York corporation, in its capacity as a seller under the Pooling and Servicing
Agreement referred to below ("CHL"), PARK MONACO INC., a Delaware corporation,
in its capacity as a seller under the Pooling and Servicing Agreement ("Park
Monaco"), PARK SIENNA LLC, a Delaware limited liability company, in its capacity
as a seller under the Pooling and Servicing Agreement ("Park Sienna" and,
together with CHL and Park Monaco, the "Sellers") and The Bank of New York, a
New York banking corporation, as trustee (the "Trustee");
WHEREAS, the Depositor, CHL, Park Monaco, Park Sienna, the Trustee,
Countrywide Home Loans Servicing LP, as Master Servicer, and The Bank of New
York Trust Company N.A., as Co-Trustee, have entered in the Pooling and
Servicing Agreement, dated as of November 1, 2006 (the "Pooling and Servicing
Agreement"), relating to the CWABS, Inc. Asset-Backed Certificates, Series
2006-21 (capitalized terms not otherwise defined herein are used as defined in
the Pooling and Servicing Agreement);
WHEREAS, Section 2.01(b) of the Pooling and Servicing Agreement
provides for the parties hereto to enter into this Subsequent Transfer Agreement
in accordance with the terms and conditions of the Pooling and Servicing
Agreement;
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration the receipt and adequacy of which are hereby
acknowledged the parties hereto agree as follows:
(a) The "Subsequent Transfer Date" with respect to this Subsequent
Transfer Agreement shall be ________ __, 200[_].
(b) The "Subsequent Transfer Date Purchase Amount" with respect to
this Subsequent Transfer Agreement shall be $_______________.
(c) The Subsequent Mortgage Loans conveyed on the Subsequent
Transfer Date shall be subject to the terms and conditions of the Pooling and
Servicing Agreement.
(d) Annex I hereto sets forth a list of the Mortgage Loans which are
Delay Delivery Mortgage Loans.
(e) In case any provision of this Subsequent Transfer Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions or obligations shall not in any way
be affected or impaired thereby.
(f) In the event of any conflict between the provisions of this
Subsequent Transfer Agreement and the Pooling and Servicing Agreement, the
provisions of the Pooling and Servicing Agreement shall prevail.
P-1
(g) This Subsequent Transfer Agreement shall be governed by, and
shall be construed and enforced in accordance with the laws of the State of New
York.
(h) The Subsequent Transfer Agreement may be executed in one or more
counterparts, each of which so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument.
P-2
IN WITNESS WHEREOF, the parties to this Subsequent Transfer
Agreement have caused their names to be signed hereto by their respective
officers thereunto duly authorized as of the day and year first above written.
CWABS, INC.,
as Depositor
By:
----------------------------------
Name:
Title:
COUNTRYWIDE HOME LOANS, INC.,
as a Seller
By:
----------------------------------
Name:
Title:
PARK MONACO INC.,
as a Seller
By:
----------------------------------
Name:
Title:
PARK SIENNA LLC,
as a Seller
By:
----------------------------------
Name:
Title:
X-0
XXX XXXX XX XXX XXXX,
not in its individual capacity,
but solely as Trustee
By:
----------------------------------
Name:
Title:
P-4
Annex I
Mortgage Loans for which All or a Portion of a Related Mortgage File is not
Delivered to the Trustee on or prior to the Subsequent Transfer Date
P-5
EXHIBIT Q
[RESERVED]
Q-1
EXHIBIT R
[RESERVED]
R-1
EXHIBIT S-1
[RESERVED]
X-0-0
XXXXXXX X-0
[RESERVED]
S-2-1
EXHIBIT T
OFFICER'S CERTIFICATE WITH RESPECT TO PREPAYMENTS
ASSET-BACKED CERTIFICATES,
Series 2006-21
[Date]
Via Facsimile
The Bank of New York,
as Trustee
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sir or Madam:
Reference is made to the Pooling and Servicing Agreement, dated as
of November 1, 2006, (the "Pooling and Servicing Agreement") among CWABS, Inc.,
as Depositor, Countrywide Home Loans, Inc., as a Seller, Park Monaco Inc., as a
Seller, Park Sienna LLC, as a Seller, Countrywide Home Loans Servicing LP, as
Master Servicer, The Bank of New York, as Trustee, and The Bank of New York
Trust Company, N.A., as Co-Trustee. Capitalized terms used herein shall have the
meanings ascribed to such terms in the Pooling and Servicing Agreement.
__________________ hereby certifies that he/she is a Servicing
Officer, holding the office set forth beneath his/her name and hereby further
certifies as follows:
With respect to the Distribution Date in _________ 20[ ] and each
Mortgage Loan set forth in the attached schedule:
1. A Principal Prepayment in full or in part was received during the
related Prepayment Period;
2. Any Prepayment Charge due under the terms of the Mortgage Note
with respect to such Principal Prepayment was or was not, as indicated on the
attached schedule using "Yes" or "No", received from the Mortgagor and deposited
in the Certificate Account;
3. As to each Mortgage Loan set forth on the attached schedule for
which all or part of the Prepayment Charge required in connection with the
Principal Prepayment was waived by the Master Servicer, such waiver was, as
indicated on the attached schedule, based upon:
(i) the Master Servicer's determination that such waiver would
maximize recovery of Liquidation Proceeds for such Mortgage Loan,
taking into account the value of such Prepayment Charge, or
T-1
(ii)(A) the enforceability thereof is limited (1) by
bankruptcy, insolvency, moratorium, receivership, or other similar
law relating to creditors' rights generally or (2) due to
acceleration in connection with a foreclosure or other involuntary
payment, or (B) the enforceability is otherwise limited or
prohibited by applicable law; and
4. We certify that all amounts due in connection with the waiver of
a Prepayment Charge inconsistent with clause 3 above which are required to be
deposited by the Master Servicer pursuant to Section 3.20 of the Pooling and
Servicing Agreement, have been or will be so deposited.
COUNTRYWIDE HOME LOANS, INC.,
as Master Servicer
By:
----------------------------------
Name:
Title:
T-2
SCHEDULE OF MORTGAGE LOANS FOR WHICH A PREPAYMENT WAS RECEIVED DURING THE
RELATED PREPAYMENT PERIOD
-------------------------------------------------------------------------------
Loan Number Clause 2: Yes/No Clause 3: (i) or (ii)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
T-3
EXHIBIT U
FORM OF SWAP CONTRACT
[See document delivered at closing.]
U-1
EXHIBIT V-1
FORM OF SWAP CONTRACT ASSIGNMENT AGREEMENT
[See document delivered at closing.]
V-1-1
EXHIBIT V-2
FORM OF SWAP CONTRACT ADMINISTRATION AGREEMENT
[See document delivered at closing.]
V-2-1
EXHIBIT W
FORM OF MONTHLY STATEMENT
[On file with the Trustee.]
W-1
EXHIBIT X-1
FORM OF PERFORMANCE CERTIFICATION
(Subservicer)
Re: The Pooling and Servicing Agreement dated as of November 1, 2006
(the "Pooling and Servicing Agreement") among CWABS, Inc., as
Depositor, Countrywide Home Loans, Inc., as a Seller, Park Monaco
Inc., as a Seller, Park Sienna LLC, as a Seller, Countrywide Home
Loans Servicing LP, as Master Servicer, The Bank of New York, as
Trustee, and The Bank of New York Trust Company, N.A., as
Co-Trustee, and [Subservicing Agreement] dated as of [ ] (the
"Agreement")
I, ________________________________, the _______________________ of [NAME
OF COMPANY] (the "Company"), certify to the Depositor and the Master Servicer,
and their officers, with the knowledge and intent that they will rely upon this
certification, that:
(1) I have reviewed the servicer compliance statement of the Company
provided in accordance with Item 1123 of Regulation AB (the "Compliance
Statement"), the report on assessment of the Company's compliance with the
servicing criteria set forth in Item 1122(d) of Regulation AB (the
"Servicing Criteria"), provided in accordance with Rules 13a-18 and 15d-18
under Securities Exchange Act of 1934, as amended (the "Exchange Act") and
Item 1122 of Regulation AB (the "Servicing Assessment"), the registered
public accounting firm's attestation report provided in accordance with
Rules 13a-18 and 15d-18 under the Exchange Act and Section 1122(b) of
Regulation AB (the "Attestation Report"), all servicing reports, officer's
certificates and other information relating to the servicing of the
Mortgage Loans by the Company during 200[ ] that were delivered by the
Company to the Depositor, the Master Servicer and the Trustee pursuant to
the Agreement (collectively, the "Company Servicing Information");
(2) Based on my knowledge, the Company Servicing Information, taken
as a whole, does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in
the light of the circumstances under which such statements were made, not
misleading with respect to the period of time covered by the Company
Servicing Information;
(3) Based on my knowledge, all of the Company Servicing Information
required to be provided by the Company under the Agreement has been
provided to the [Depositor] [Master Servicer];
(4) I am responsible for reviewing the activities performed by the
Company as a servicer under the Agreement, and based on my knowledge and
the compliance review conducted in preparing the Compliance Statement and
except as disclosed in the Compliance Statement, the Servicing Assessment
or the Attestation Report, the Company has fulfilled its obligations under
the Agreement; and
X-1-1
(5) The Compliance Statement required to be delivered by the Company
pursuant to the Agreement, and the Servicing Assessment and Attestation
Report required to be provided by the Company and by any Subservicer or
Subcontractor pursuant to the Agreement, have been provided to the Master
Servicer. Any material instances of noncompliance described in such
reports have been disclosed to the Master Servicer. Any material instance
of noncompliance with the Servicing Criteria has been disclosed in such
reports.
Date: _________________________
By: ________________________________
Name:
Title:
X-1-2
EXHIBIT X-2
FORM OF PERFORMANCE CERTIFICATION
(Trustee)
Re: The Pooling and Servicing Agreement dated as of November 1, 2006
(the "Pooling and Servicing Agreement") among CWABS, Inc., as
Depositor, Countrywide Home Loans, Inc., as a Seller, Park Monaco
Inc., as a Seller, Park Sienna LLC, as a Seller, Countrywide Home
Loans Servicing LP, as Master Servicer, The Bank of New York, as
Trustee, and The Bank of New York Trust Company, N.A., as Co-Trustee
I, ________________________________, the _______________________ of [NAME
OF COMPANY] (the "Company"), certify to the Depositor and the Master Servicer,
and their officers, with the knowledge and intent that they will rely upon this
certification, that:
(1) I have reviewed the report on assessment of the Company's
compliance with the servicing criteria set forth in Item 1122(d) of
Regulation AB (the "Servicing Criteria"), provided in accordance with
Rules 13a-18 and 15d-18 under Securities Exchange Act of 1934, as amended
(the "Exchange Act") and Item 1122 of Regulation AB (the "Servicing
Assessment"), the registered public accounting firm's attestation report
provided in accordance with Rules 13a-18 and 15d-18 under the Exchange Act
and Section 1122(b) of Regulation AB (the "Attestation Report"), [all
reports on Form 10-D containing statements to certificateholders filed in
respect of the period included in the year covered by the annual report of
the Trust Fund] (collectively, the "Distribution Date Statements");
(2) Assuming the accuracy and completeness of the information
delivered to the Company by the Master Servicer as provided in the Pooling
and Servicing Agreement and subject to paragraph (4) below, the
distribution information determined by the Company and set forth in the
Distribution Date Statements contained in all Form 10-D's included in the
year covered by the annual report of such Trust on Form 10-K for the
calendar year 200[ ], is complete and does not contain any material
misstatement of fact as of the last day of the period covered by such
annual report;
(3) Based solely on the information delivered to the Company by the
Master Servicer as provided in the Pooling and Servicing Agreement, (i)
the distribution information required under the Pooling and Servicing
Agreement to be contained in the Trust Fund's Distribution Date Statements
and (ii) the servicing information required to be provided by the Master
Servicer to the trustee for inclusion in the Trust Fund's Distribution
Date Statements, to the extent received by the Trustee from the Master
Servicer in accordance with the Pooling and Servicing Agreement, is
included in such Distribution Date Statements;
(4) The Company is not certifying as to the accuracy, completeness
or correctness of the information which it received from the Master
Servicer and did not
X-2-1
independently verify or confirm the accuracy, completeness or correctness
of the information provided by the Master Servicer;
(5) I am responsible for reviewing the activities performed by the
Company as a person "performing a servicing function" under the Pooling
and Servicing Agreement, and based on my knowledge and the compliance
review conducted in preparing the Servicing Assessment and except as
disclosed in the Servicing Assessment or the Attestation Report, the
Company has fulfilled its obligations under the Pooling and Servicing
Agreement; and
(6) The Servicing Assessment and Attestation Report required to be
provided by the Company and by Subcontractor pursuant to the Pooling and
Servicing Agreement, have been provided to the Master Servicer and the
Depositor. Any material instances of noncompliance described in such
reports have been disclosed to the Master Servicer and the Depositor. Any
material instance of noncompliance with the Servicing Criteria has been
disclosed in such reports.
Date: _________________________
By: ________________________________
Name:
Title:
X-2-2
EXHIBIT Y
FORM OF
SERVICING CRITERIA TO BE ADDRESSED IN
ASSESSMENT OF COMPLIANCE STATEMENT
The assessment of compliance to be delivered by [the Master
Servicer] [Trustee] [Name of Subservicer] shall address, at a minimum, the
criteria identified as below as "Applicable Servicing Criteria":
-----------------------------------------------------------------------------------------------------------------------------------
Applicable Servicing
Servicing Criteria Criteria
-----------------------------------------------------------------------------------------------------------------------------------
Reference Criteria
-----------------------------------------------------------------------------------------------------------------------------------
General Servicing Considerations
----------------------- --------------------------
1122(d)(1)(i) Policies and procedures are instituted to monitor any performance or other
triggers and events of default in accordance with the transaction agreements.
----------------------- --------------------------
1122(d)(1)(ii) If any material servicing activities are outsourced to third parties, policies
and procedures are instituted to monitor the third party's performance and
compliance with such servicing activities.
----------------------- --------------------------
1122(d)(1)(iii) Any requirements in the transaction agreements to maintain a back-up servicer
for the mortgage loans are maintained.
----------------------- --------------------------
1122(d)(1)(iv) A fidelity bond and errors and omissions policy is in effect on the party
participating in the servicing function throughout the reporting period in the
amount of coverage required by and otherwise in accordance with the terms of
the transaction agreements.
----------------------- --------------------------
Cash Collection and Administration
----------------------- --------------------------
1122(d)(2)(i) Payments on mortgage loans are deposited into the appropriate custodial bank
accounts and related bank clearing accounts no more than two business days
following receipt, or such other number of days specified in the transaction
agreements.
----------------------- --------------------------
1122(d)(2)(ii) Disbursements made via wire transfer on behalf of an obligor or to an investor
are made only by authorized personnel.
----------------------- --------------------------
1122(d)(2)(iii) Advances of funds or guarantees regarding collections, cash flows or
distributions, and any interest or other fees charged for such advances, are
made, reviewed and approved as specified in the transaction agreements.
----------------------- --------------------------
The related accounts for the transaction, such as cash reserve accounts or
accounts established as a form of overcollateralization, are separately
maintained (e.g., with respect to commingling of cash) as set forth in the
1122(d)(2)(iv) transaction agreements.
----------------------- --------------------------
1122(d)(2)(v) Each custodial account is maintained at a federally insured depository
institution as set forth in the transaction agreements. For purposes of this
criterion, "federally insured depository institution" with respect to a
foreign financial institution means a foreign financial institution that meets
the requirements of Rule 13k-1(b)(1) of the Securities Exchange Act.
----------------------- --------------------------
1122(d)(2)(vi) Unissued checks are safeguarded so as to prevent unauthorized access.
----------------------- --------------------------
Y-1
-----------------------------------------------------------------------------------------------------------------------------------
Applicable Servicing
Servicing Criteria Criteria
-----------------------------------------------------------------------------------------------------------------------------------
Reference Criteria
-----------------------------------------------------------------------------------------------------------------------------------
1122(d)(2)(vii) Reconciliations are prepared on a monthly basis for all asset-backed
securities related bank accounts, including custodial accounts and related
bank clearing accounts. These reconciliations are (A) mathematically accurate;
(B) prepared within 30 calendar days after the bank statement cutoff date, or
such other number of days specified in the transaction agreements; (C)
reviewed and approved by someone other than the person who prepared the
reconciliation; and (D) contain explanations for reconciling items. These
reconciling items are resolved within 90 calendar days of their original
identification, or such other number of days specified in the transaction
agreements.
----------------------- --------------------------
Investor Remittances and Reporting
----------------------- --------------------------
1122(d)(3)(i) Reports to investors, including those to be filed with the Commission, are
maintained in accordance with the transaction agreements and applicable
Commission requirements. Specifically, such reports (A) are prepared in
accordance with timeframes and other terms set forth in the transaction
agreements; (B) provide information calculated in accordance with the terms
specified in the transaction agreements; (C) are filed with the Commission as
required by its rules and regulations; and (D) agree with investors' or the
trustee's records as to the total unpaid principal balance and number of
mortgage loans serviced by the Servicer.
----------------------- --------------------------
1122(d)(3)(ii) Amounts due to investors are allocated and remitted in accordance with
timeframes, distribution priority and other terms set forth in the transaction
agreements.
----------------------- --------------------------
Disbursements made to an investor are posted within two business days to the
Servicer's investor records, or such other number of days specified in the
1122(d)(3)(iii) transaction agreements.
----------------------- --------------------------
Amounts remitted to investors per the investor reports agree with cancelled
1122(d)(3)(iv) checks, or other form of payment, or custodial bank statements.
----------------------- --------------------------
Pool Asset Administration
----------------------- --------------------------
1122(d)(4)(i) Collateral or security on mortgage loans is maintained as required by the
transaction agreements or related mortgage loan documents.
----------------------- --------------------------
Mortgage loan and related documents are safeguarded as required by the
1122(d)(4)(ii) transaction agreements
----------------------- --------------------------
1122(d)(4)(iii) Any additions, removals or substitutions to the asset pool are made, reviewed
and approved in accordance with any conditions or requirements in the
transaction agreements.
----------------------- --------------------------
1122(d)(4)(iv) Payments on mortgage loans, including any payoffs, made in accordance with the
related mortgage loan documents are posted to the Servicer's obligor records
maintained no more than two business days after receipt, or such other number
of days specified in the transaction agreements, and allocated to principal,
interest or other items (e.g., escrow) in accordance with the related mortgage
loan documents.
----------------------- --------------------------
1122(d)(4)(v) The Servicer's records regarding the mortgage loans agree with the Servicer's
records with respect to an obligor's unpaid principal balance.
----------------------- --------------------------
1122(d)(4)(vi) Changes with respect to the terms or status of an obligor's mortgage loans
(e.g., loan modifications or re-agings) are made, reviewed and approved by
authorized personnel in accordance with the transaction agreements and related
pool asset documents.
----------------------- --------------------------
1122(d)(4)(vii) Loss mitigation or recovery actions (e.g., forbearance plans, modifications
and deeds in lieu of foreclosure, foreclosures and repossessions, as
applicable) are initiated, conducted and concluded in accordance with the
timeframes or other requirements established by the transaction agreements.
----------------------- --------------------------
Y-2
-----------------------------------------------------------------------------------------------------------------------------------
Applicable Servicing
Servicing Criteria Criteria
-----------------------------------------------------------------------------------------------------------------------------------
Reference Criteria
-----------------------------------------------------------------------------------------------------------------------------------
1122(d)(4)(viii) Records documenting collection efforts are maintained during the period a
mortgage loan is delinquent in accordance with the transaction agreements.
Such records are maintained on at least a monthly basis, or such other period
specified in the transaction agreements, and describe the entity's activities
in monitoring delinquent mortgage loans including, for example, phone calls,
letters and payment rescheduling plans in cases where delinquency is deemed
temporary (e.g., illness or unemployment).
----------------------- --------------------------
1122(d)(4)(ix) Adjustments to interest rates or rates of return for mortgage loans with
variable rates are computed based on the related mortgage loan documents.
----------------------- --------------------------
1122(d)(4)(x) Regarding any funds held in trust for an obligor (such as escrow accounts):
(A) such funds are analyzed, in accordance with the obligor's mortgage loan
documents, on at least an annual basis, or such other period specified in the
transaction agreements; (B) interest on such funds is paid, or credited, to
obligors in accordance with applicable mortgage loan documents and state laws;
and (C) such funds are returned to the obligor within 30 calendar days of full
repayment of the related mortgage loans, or such other number of days
specified in the transaction agreements.
----------------------- --------------------------
1122(d)(4)(xi) Payments made on behalf of an obligor (such as tax or insurance payments) are
made on or before the related penalty or expiration dates, as indicated on the
appropriate bills or notices for such payments, provided that such support has
been received by the servicer at least 30 calendar days prior to these dates,
or such other number of days specified in the transaction agreements.
----------------------- --------------------------
1122(d)(4)(xii) Any late payment penalties in connection with any payment to be made on behalf
of an obligor are paid from the servicer's funds and not charged to the
obligor, unless the late payment was due to the obligor's error or omission.
----------------------- --------------------------
Disbursements made on behalf of an obligor are posted within two business days
to the obligor's records maintained by the servicer, or such other number of
1122(d)(4)(xiii) days specified in the transaction agreements.
----------------------- --------------------------
1122(d)(4)(xiv) Delinquencies, charge-offs and uncollectible accounts are recognized and
recorded in accordance with the transaction agreements.
----------------------- --------------------------
Any external enhancement or other support, identified in Item 1114(a)(1)
through (3)or Item 1115 of Regulation AB, is maintained as set forth in the
1122(d)(4)(xv) transaction agreements.
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
[NAME OF MASTER SERVICER] [NAME OF
TRUSTEE] [NAME OF SUBSERVICER]
Date: _________________________
By: ________________________________
Name:
Title:
Y-3
EXHIBIT Z
[FORM OF] LIST OF ITEM 1119 PARTIES
ASSET BACKED CERTIFICATES,
Series 200_-__
[Date]
-------------------------------------------------------------------------------
Party Contact Information
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Z-1
EXHIBIT AA
FORM OF
XXXXXXXX-XXXXX CERTIFICATION
(Replacement Master Servicer)
(On file with Trustee)
AA-1
SCHEDULE I
PREPAYMENT CHARGE SCHEDULE AND PREPAYMENT CHARGE SUMMARY
[Delivered to Trustee at closing and on file with the Trustee.]
S-I-1
SCHEDULE II
COLLATERAL SCHEDULE
-----------------------------------------------------------------------------------------------------------------------------------
Characteristic Applicable
Section Loan Group 1 Loan Group 2
-----------------------------------------------------------------------------------------------------------------------------------
Single-Family Detached Dwellings 2.03(b)(32) 77.40% 69.01%
-----------------------------------------------------------------------------------------------------------------------------------
Two- to Four-Family Dwellings 2.03(b)(32) 4.16% 4.59%
-----------------------------------------------------------------------------------------------------------------------------------
Low-Rise Condominium Units 2.03(b)(32) 4.15% 6.61%
-----------------------------------------------------------------------------------------------------------------------------------
High-Rise Condominium Units 2.03(b)(32) 0.39% 0.91%
-----------------------------------------------------------------------------------------------------------------------------------
Manufactured Housing 2.03(b)(32) 0.00% 0.43%
-----------------------------------------------------------------------------------------------------------------------------------
PUDs 2.03(b)(32) 13.89% 18.08%
-----------------------------------------------------------------------------------------------------------------------------------
Earliest Origination Date 2.03(b)(33) 6/28/2006 8/25/1998
-----------------------------------------------------------------------------------------------------------------------------------
Prepayment Penalty 2.03(b)(35) 65.87% 76.23%
-----------------------------------------------------------------------------------------------------------------------------------
Investor Properties 2.03(b)(36) 3.39% 4.82%
-----------------------------------------------------------------------------------------------------------------------------------
Primary Residences 2.03(b)(36) 95.81% 94.17%
-----------------------------------------------------------------------------------------------------------------------------------
Lowest Current Mortgage Rate 2.03(b)(48) 4.125% 5.000%
-----------------------------------------------------------------------------------------------------------------------------------
Highest Current Mortgage Rate 2.03(b)(48) 12.875% 14.500%
-----------------------------------------------------------------------------------------------------------------------------------
Weighted Average Current Mortgage Rate 2.03(b)(48) 8.493% 8.090%
-----------------------------------------------------------------------------------------------------------------------------------
Lowest Gross Margin 2.03(b)(51) 2.250% 2.250%
-----------------------------------------------------------------------------------------------------------------------------------
Highest Gross Margin 2.03(b)(51) 7.990% 12.590%
-----------------------------------------------------------------------------------------------------------------------------------
Weighted Average Gross Margin 2.03(b)(51) 6.521% 6.059%
-----------------------------------------------------------------------------------------------------------------------------------
Date on or before which each Initial Mortgage Loan has a
Due Date 2.03(b)(52) 12/1/2006 11/1/2006
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Adjustable Rate Mortgage Loans
(other than Two-Year,
Applicable Three-Year and Five-Year Two-Year Hybrid Three-Year Hybrid Five-Year Hybrid
Adjustment Date Section Hybrid Mortgage Loans) Mortgage Loans Mortgage Loans Mortgage Loans
-----------------------------------------------------------------------------------------------------------------------------------
Latest Next
Adjustment Date 2.03(b)(34) 5/1/2007 11/1/2008 11/1/2009 11/1/2011
-----------------------------------------------------------------------------------------------------------------------------------
S-II-1
SCHEDULE III
40-YEAR TARGET SCHEDULE
Month of 40-Year
Distribution Date Target ($)
----------------- ----------
December 2016 37,110,716
January 2017 36,597,534
February 2017 36,091,326
March 2017 35,591,997
April 2017 35,099,456
May 2017 34,613,610
June 2017 34,134,368
July 2017 33,661,642
August 2017 33,195,343
September 2017 32,735,385
October 2017 32,281,682
November 2017 31,834,148
December 2017 31,392,702
January 2018 30,957,261
February 2018 30,527,743
March 2018 30,104,069
April 2018 29,686,159
May 2018 29,273,936
June 2018 28,867,322
July 2018 28,466,243
August 2018 28,070,622
September 2018 27,680,387
October 2018 27,295,465
November 2018 26,915,783
December 2018 26,541,271
January 2019 26,171,858
February 2019 25,807,477
March 2019 25,448,059
April 2019 25,093,537
May 2019 24,743,844
June 2019 24,398,916
July 2019 24,058,688
August 2019 23,723,096
September 2019 23,392,077
October 2019 23,065,571
November 2019 22,743,515
December 2019 22,425,850
January 2020 22,112,516
February 2020 21,803,455
March 2020 21,498,608
S-III-1
Month of 40-Year
Distribution Date Target ($)
----------------- ----------
April 2020 21,197,919
May 2020 20,901,332
June 2020 20,608,791
July 2020 20,320,241
August 2020 20,035,629
September 2020 19,754,901
October 2020 19,478,004
November 2020 19,204,886
December 2020 18,935,498
January 2021 18,669,787
February 2021 18,407,704
March 2021 18,149,201
April 2021 17,894,228
May 2021 17,642,739
June 2021 17,394,685
July 2021 17,150,020
August 2021 16,908,699
September 2021 16,670,676
October 2021 16,435,906
November 2021 16,204,346
December 2021 15,975,951
January 2022 15,750,680
February 2022 15,528,490
March 2022 15,309,338
April 2022 15,093,185
May 2022 14,879,989
June 2022 14,669,710
July 2022 14,462,309
August 2022 14,257,746
September 2022 14,055,984
October 2022 13,856,985
November 2022 13,660,710
December 2022 13,467,123
January 2023 13,276,188
February 2023 13,087,869
March 2023 12,902,130
April 2023 12,718,936
May 2023 12,538,253
June 2023 12,360,047
July 2023 12,184,284
August 2023 12,010,931
September 2023 11,839,955
October 2023 11,671,325
November 2023 11,505,008
S-III-2
Month of 40-Year
Distribution Date Target ($)
----------------- ----------
December 2023 11,340,973
January 2024 11,179,189
February 2024 11,019,626
March 2024 10,862,253
April 2024 10,707,041
May 2024 10,553,960
June 2024 10,402,982
July 2024 10,254,078
August 2024 10,107,219
September 2024 9,962,379
October 2024 9,819,530
November 2024 9,678,644
December 2024 9,539,696
January 2025 9,402,658
February 2025 9,267,505
March 2025 9,134,211
April 2025 9,002,752
May 2025 8,873,102
June 2025 8,745,236
July 2025 8,619,131
August 2025 8,494,762
September 2025 8,372,106
October 2025 8,251,140
November 2025 8,131,841
December 2025 8,014,185
January 2026 7,898,152
February 2026 7,783,718
March 2026 7,670,862
April 2026 7,559,563
May 2026 7,449,800
June 2026 7,341,550
July 2026 7,234,795
August 2026 7,129,514
September 2026 7,025,686
October 2026 6,923,293
November 2026 6,822,313
December 2026 6,722,729
January 2027 6,624,521
February 2027 6,527,671
March 2027 6,432,160
April 2027 6,337,969
May 2027 6,245,082
June 2027 6,153,480
July 2027 6,063,146
S-III-3
Month of 40-Year
Distribution Date Target ($)
----------------- ----------
August 2027 5,974,062
September 2027 5,886,211
October 2027 5,799,577
November 2027 5,714,144
December 2027 5,629,894
January 2028 5,546,812
February 2028 5,464,882
March 2028 5,384,088
April 2028 5,304,415
May 2028 5,225,847
June 2028 5,148,369
July 2028 5,071,967
August 2028 4,996,626
September 2028 4,922,332
October 2028 4,849,069
November 2028 4,776,825
December 2028 4,705,585
January 2029 4,635,336
February 2029 4,566,064
March 2029 4,497,755
April 2029 4,430,398
May 2029 4,363,978
June 2029 4,298,483
July 2029 4,233,900
August 2029 4,170,217
September 2029 4,107,422
October 2029 4,045,502
November 2029 3,984,446
December 2029 3,924,242
January 2030 3,864,878
February 2030 3,806,343
March 2030 3,748,625
April 2030 3,691,713
May 2030 3,635,597
June 2030 3,580,265
July 2030 3,525,707
August 2030 3,471,912
September 2030 3,418,870
October 2030 3,366,570
November 2030 3,315,003
December 2030 3,264,158
January 2031 3,214,025
February 2031 3,164,595
March 2031 3,115,859
S-III-4
Month of 40-Year
Distribution Date Target ($)
----------------- ----------
April 2031 3,067,806
May 2031 3,020,427
June 2031 2,973,713
July 2031 2,927,656
August 2031 2,882,245
September 2031 2,837,473
October 2031 2,793,330
November 2031 2,749,808
December 2031 2,706,899
January 2032 2,664,593
February 2032 2,622,884
March 2032 2,581,762
April 2032 2,541,219
May 2032 2,501,248
June 2032 2,461,841
July 2032 2,422,990
August 2032 2,384,688
September 2032 2,346,926
October 2032 2,309,698
November 2032 2,272,996
December 2032 2,236,814
January 2033 2,201,143
February 2033 2,165,977
March 2033 2,131,309
April 2033 2,097,133
May 2033 2,063,441
June 2033 2,030,226
July 2033 1,997,483
August 2033 1,965,205
September 2033 1,933,385
October 2033 1,902,017
November 2033 1,871,095
December 2033 1,840,613
January 2034 1,810,565
February 2034 1,780,944
March 2034 1,751,746
April 2034 1,722,964
May 2034 1,694,592
June 2034 1,666,624
July 2034 1,639,057
August 2034 1,611,882
September 2034 1,585,096
October 2034 1,558,694
November 2034 1,532,669
S-III-5
Month of 40-Year
Distribution Date Target ($)
----------------- ----------
December 2034 1,507,016
January 2035 1,481,731
February 2035 1,456,808
March 2035 1,432,243
April 2035 1,408,030
May 2035 1,384,164
June 2035 1,360,642
July 2035 1,337,457
August 2035 1,314,606
September 2035 1,292,084
October 2035 1,269,886
November 2035 1,248,008
December 2035 1,226,446
January 2036 1,205,195
February 2036 1,184,250
March 2036 1,163,608
April 2036 1,143,264
May 2036 1,123,215
June 2036 1,103,456
July 2036 1,083,983
August 2036 1,064,792
September 2036 1,045,880
October 2036 1,027,242
November 2036 1,008,875
S-III-6
